Do WTO Commitments Remain Tenable in the Age of Data? Renegotiating the Rules-Based System for the Data-Driven Economy

Abstract

The adaptation of commercial frameworks to the digital environment has been underway for many years. Well-developed e-commerce regimes have already been developed in major regional trade agreements; the WTO is playing catch up - and it is imperative that it do so, both to make available the benefits of e-commerce to the full range of WTO members and for its own credibility. However, even the most advanced regional trade agreements are struggling to keep up with the rapidly evolving system and the main action in developing new norms for the digital economy is in domestic regulatory sandboxes. The most challenging issue facing the WTO is the new geopolitical security divide that has emerged between the United States and China. The WTO Agreement was framed for a unipolar world, in which “inert” goods and services were traded across borders that could be rigorously policed. This framework is challenged on multiple fronts in a multipolar, online world of smart products. Options to move forward include GATT Article XXVIII/GATS Article XXI renegotiation of WTO commitments across the security divide; conditional MFN in areas where parties agree to appropriate protocols to manage the risks in the digital environment; and a new détente agreement to narrow the range of issues subject to the new national security concerns. An up-front, open and low-rhetoric renegotiation seems infinitely preferable to a high-rhetoric acrimonious decoupling.

Keywords: WTO, DEPA, digital transformation, e-commerce, national security, data

JEL Classification: F13