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ITI in Geneva: Can the WTO Remain Relevant to the Digital Economy?

I’m on the ground in Geneva, Switzerland, as negotiators discuss the time periods for eliminating tariffs on technology products listed under the World Trade Organization’s (WTO) Information Technology Agreement (ITA). Many critics say the WTO cannot keep up with evolving business and consumer dynamics around the world. The WTO’s Doha Development Agenda (DDA) negotiations are increasingly irrelevant to the global business community. WTO members have negotiated regional and bilateral free trade agreements to compensate for the lack of a large-scale deal under the DDA. But the ITA is the one bright spot on the WTO’s resume. This summer the WTO served as a forum for meaningful global trade negotiations, when a large group of WTO members agreed on an expanded list of products to add to existing list under the outmoded ITA, which dates back to 1997.

Some countries are seeking long timeframes for eliminating their tariffs - in theory to provide their industries with more time to adjust to new competitive dynamics. Many others are advocating that participants choose to have zero tariffs on all the products in the list immediately upon entry into force of the updated ITA. This is a position that ITI fundamentally supports, since any tariffs on these products result in higher costs for the innovative businesses that want to purchase them. Lower costs will yield more trade and therefore more innovation, which many WTO members need to raise their standards of living, productivity, and competitiveness. For the WTO to remain relevant to the information and communications technology (ICT) sector, and indeed to the global economy, it needs to get this deal done by the time Kenya hosts the 10th WTO Ministerial Conference in mid-December in Nairobi. Dragging the negotiations into 2016 will just be another missed opportunity for the WTO to provide a significant economic jolt to the innovation taking place in both developed and developing countries and prove that it is a functioning forum for negotiations.

The WTO, like Asia-Pacific Economic Cooperation (APEC) forum, also should look to the future (or present, if you will) and do meaningful work to promote ‘digital trade’. The U.S. International Trade Commission in its second report on digital trade defines it as “U.S. domestic commerce and international trade in which the Internet and Internet-based technologies play a particularly significant role in ordering, producing, or delivering products and services.” Digital trade includes e-commerce (i.e. using the Internet to shop for, order, and ship physical products), an issue the WTO has worked on throughout its existence, but also many new issues to the WTO, such as using ICT to move flows of digital product and content, services, and information and data across borders.

This week, ITI, together with DIGITALEUROPE, are starting a conversation on digital trade at the annual WTO Public Forum meetings in Geneva. Our joint session on October 2, Innovation, Digital Trade, and the WTO will be an exploration of what digital trade is and how it can promote and advance innovation, particularly in developing countries. More importantly, it is a conversation among experts on why we must enforce existing WTO rules related to digital trade and should consider drafting new rules to prevent discriminatory behavior by governments that can prohibit or constrain flows of digital trade. Our hope is that this conversation provides ideas to the WTO for new issues it could put on its near-term agenda at the WTO Ministerial Conference in Nairobi.

For the U.S., ensuring free flows of digital trade is a key negotiating objective under the new Trade Promotion Authority (TPA) granted to the executive branch by Congress. 
Under this objective, the United States Trade Representative (USTR) is pursuing new rules on digital trade in multiple negotiations, including the Trans-Pacific Partnership, Transatlantic Trade and Investment Partnership, and Trade in Services Agreement. USTR’s “digital dozen” covers many important issues for ITI and our members, such as prohibiting the use of data localization requirements. If these key agreements include strong digital trade disciplines, exploring whether to introduce similar disciplines at the WTO would be a natural next step. ITI recognizes that such an endeavor will take time but is very much worth pursuing for the sake of the WTO, innovation, and economic growth in all WTO members.

Our next stop is in Istanbul, Turkey, at the G-20 Trade Ministers Meeting, the B-20 Digital Economy Conference, and the International Chamber of Commerce Digital Economy Commission meetings. ITI will be delivering the same messages that we delivered at APEC and the WTO: if governments want digital trade to flourish, they must address and eliminate forced localization measures, in particular data localization requirements.

Public Policy Tags: Trade & Investment, Forced Localization