‘Toothless’ JSI Draft

The co-convenors of the proposed plurilateral Joint Statement Initiative (JSI) on electronic commerce have released a draft chair’s text described as "toothless" for its exclusion of disciplines on cross-border data flows, server localization, and source code.

This effort aims to forge an agreement before the European summer break, according to individuals close to the negotiations.  The draft text was disseminated by Australia, Japan, and Singapore.

Launched in January 2019, the negotiations initially saw proponents, especially the United States, advocating for a high-ambition agreement with stringent provisions on eliminating restrictions on cross-border data flows, server localization, and source code. However, following Washington's withdrawal of proposals on these three issues last year, the co-sponsors have been forced to make concessions to render the agreement acceptable to key players like the United States, China, and the European Union, as per sources involved in the negotiations.

An initial review of the latest draft text indicates that the agreement could benefit e-commerce giants such as Amazon, Apple, Alibaba, and Temu. The 33-page third version of the draft Chair’s Text, reviewed by our correspondent, seemingly includes asymmetric provisions on "customs duties on electronic transmissions," "personal data protection," and "development," potentially disadvantaging developing and least-developed countries in the burgeoning field of e-commerce.

In an introductory note, the co-convenors assume full responsibility for this version of the Chair’s Text, stating it reflects their judgment on achieving consensus and incorporates feedback from the March negotiation cluster. They emphasize that this text does not signify the abandonment of any proposals from the comprehensive record of proposals issued in November 2023.

The co-convenors encourage JSI e-commerce participants to consider this third Chair’s Text and its amendments comprehensively, expressing confidence that it represents a commercially meaningful and inclusive package that reflects all participants' views since 2019 and serves as a solid foundation for reaching an agreement.

The forthcoming negotiation round, starting on April 22, will cover various topics including ICT products utilizing cryptography, e-payments, and development, aiming to finalize the text for member approval before the European summer.

The draft covers a range of provisions, from the scope and general provisions in Section A, enabling electronic commerce in Section B, to openness and e-commerce issues in Section C. Notably, it continues the current practice of not imposing customs duties on electronic transmissions, aligning with decisions from the World Trade Organization’s recent ministerial conference.

However, concerns remain about the implications for developing and least-developed countries, particularly regarding customs revenue and digital industrialization. The draft’s approach to personal data protection and development underscores the challenges and disparities among JSI members, emphasizing the need for high standards and support to bridge the digital divide without binding commitments to fund digital industrialization.

Capacity building provisions acknowledge the importance of support for developing and least-developed countries, yet the lack of a clear commitment raises questions about the effectiveness of these measures.

Finally, the text’s institutional arrangements hint at procedural uncertainties, highlighting the ongoing debate among WTO members about the integration of the JSI e-commerce agreement into the WTO framework, reflecting a broader discussion about the future of global e-commerce regulation.