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The WTO and Digital Trade (GATS (General agreement on trade in services)..…
The WTO and Digital Trade
GATS (General agreement on trade in services)...started being negotiated in 1987, finished 1994...so not made for digital age, but parts have been adapted to it, and parts of GATS apply broadly to digital services so can be useful
no definition of service in GATS...basically anything you can trade but can't drop on your foot...but what about book v e-book
Characteristics of services
Sometimes combined with a good or IP
typically cannot be stored or ereserved
some traditional services require physical proximity (doctor, barber)
not tangible, difficult o quantify full economic value
Many services are produced and consumed simultaneously
Scope and Coverage
does not include service supplied in exercise of governmental authority
Article 1 outlines ways services can be traded and between who (4 different modes)
These 4 modes are in the schedules, with different categorizations for different services for each 4 modes
GATS Architechture
certain measures are covered by the general GATS Obligation...like MFN
Most Favored neighbour is key...once you extend something to one WTO member, you have to extend it to all WTO members
Other GATS disciplines apply only to measures listed in GATS schedules
obligations covering measures that should not be listed in schedules cannot be compromised or evaded by entries in the schedules
National treatment is corrolary to MFN...meaning country will not treat their own domestic supplier better than a foreign supplier
National Treatment and MFN are the core principles underlying the entire system
General obligation in GATS
MFN
applies to all services, whether or not listed in schedules
no derogations unless negotiated in 1994
transparency
Non discriminatory domestic regulation
Recognition
Access to and use of basic telecoms
Payments and transfers
Monopolies and exclusive providers
Some specific exceptions to free trade agreements that are made by a subset of members
Mutual Recognition of qualifications
GATS commitments subjects to schedules
Market Access
National Treatment
additional commitments
**
schedules do not bind laws...they bind a level of access or standard of treatment
Legal Consequences of a services Commitment
Negative list vs positive list distinction for schedules
Most GATS legal obligations consist of, or flow from, bargained for specific commitments in a members schedule
Positive listing for market access and national treament
national treatment 2 step process...similar services, then check discrimination
negative listing for MFN
If a member has a commitment, must allow for payment and the other services for that commitment to be met
This includes access to public telecom networks
3 schedules in GATS relevant to digital trade
Communications services
Business services (which includes data processing services)
GATS article XIV exceptions
Similar to the GATT exception
article XIV necessary to protect public morals and public order, human animal or plant life or health or to secure compliance with GATS consistent laws or regulations (ie a country can deny a service in line with one of their policies in one of these areas)
But no exception for environment or conservation, which there is in GATT
What is meant by the public morals exception?
US gambling case and the China AV case are relevant here
WTO Panel says public morals denotes standards or right or wrong conduct maintained by or on behalf of a community or nation
Must be 'necessary' though (which came up in China AV case)
What does necessary mean
close fit between the measure between the measure and the policy exception than if the measure was only 'relating to the policy'
ranges from indispensable to contributing to (Korea Beef case)
relevant factors to see if it is necessary(ec asbestos, us gambling cases)
6 more items...
If you want to make a case that your measure falls within an article 14 exception, the first step is show that it fits within one of the policy categories below, and then step 2 you go to the article 14 pre amble (called chapeau) and see if it is consistent with that
Burden of proof is on WTO member alleging a breach...then the burden of proof switches to the defending measure to show that the measure falls within one of the exceptions
privacy exception is in Article 14(d) of GATS, article XX in GATT
could be related to GDPR...EU might argue their privacy standard falls in those exceptions and doesn't actually unduly violate their schedule commitments
korea beef case relevant to this provision
remember that the steps of analysis are 1) is it within an exception 2)is it necessary 3) is it consistent with the chapeau (and this one speaks towards the actual APPLICATION, whereas the step 1 exceptions are more just looking at the measure generally)
Chapeau is basically international law principle and norm of good faith (from US shrimp Turtle case)
GATS article 16 is Market access
GATS article 14c is privacy exception
Cybersecurity is GATS article 14b
WTO Jurisprudence and Digital Trade through GATS
US gambling WTO case
had the US made a commitment on online gambling services?
and then was there a national treatment or market access violation
US said no.
Appellate body said that service providing is technology neutral
IN the end, US has just decided not to comply with this decision
China Market Access for AV products and services
Key Issues on appeal
Are films goods or services
Interpretation of china's GATS commitments
AB upheld panel decision that GATS commitment includes distribution of digitized recordings
China Electronic Payments Case
activities not necessarily explicitly listed in a schedule are necessarily included within the scope of the definition of that subsection because they must operate together for the payment and monetary transmissions to be supplied
finding of discrimination-violation of National treatment with respect to UnionPay (china) compared with other payment services such as VISA and Mastercard
query whether data localization is a commercial presence requirement, may be inconsistent with GATS commitment
GATT
MFN and National Treatment are key concepts in GATT as well
Technical Barriers to Trade Agreement (TBT)
This agreement will apply to Blockchain, IOT and AI
Technical regulations to be based on international standards where they exist, and need to justify departures. WTO is more negative rights (non discrimination), whereas TBT is a more positive one
Setting of international standards must be made available for all members to participate in its development
Mutual recognition agreements are encouraged
Could be some good topics here to do with whether something is goods or services, or related to blockchain
WTO Telecommunications Annex
lays out principles for competition in the telecommunications sector
WTO telecoms reference paper is now embodiment of competition principles
basically requires each member to have competition law specific to telecommunications sector. Doesn't have to be exact same, but must be some thing equivalent
WTO information and Technology Agreement
pluryilateral agreement, ITA 1 finalized in 1996
ITA 2 finalized in 2015, 50 members, approx 90% trade in covered ICT products
Tough within WTO to do pluryilateral agreements since there is MFN
Trade Facilitation Agreement
Came into force in February 2017
De minimus duties (in US about 1000 dollars) is important for small and mid sized enterprises that export import. High level is seen as better by importers, but domestic country don't always see it that way
TRIPS (Trade related Intellectual property rights agreement)
All WTO to have similar levels of copyright and IP
Phase in period for developing countries
Section 301 processes??? US towards china. this agreement keeps US from doing 301 threats. They still do 301 reports, but don't go for sanctions without going through dispute resolution process
incorporates the Paris and Berne treaties
establishes minimum standards for patents and copyrights
Fair Use not reflected in this agreement, since US isn't sure how other common law jurisdictions would interpret it in the courts (heavy content industry lobbying)
WTO Understanding on Commitments in Financial Services
Members agree not to prevent transfers of information or the processing of financial information, including transfers of data by electronic means
WTO ministerial (11th), Buenos Aires 2017
Work Programme on Electronic Commerce, have agreed to maintain current practice of not imposing customs duties on electronic transmissions
Difficult negotiations, not much done