E-commerce RCEP chapter: Have big tech’s demands fizzled?

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Electronic Frontier Foundation | 4 August 2017

E-commerce RCEP chapter: Have big tech’s demands fizzled?

By JYOTI PANDAY

Post-Mortem of Asia-Pacific regional IGF Panel Discussing Trade Rules

Over the past month, trade officials of the ASEAN group of countries and its six biggest trading partners have been frantically working to finalize the Regional Comprehensive Economic Partnership (RCEP). Expected to be ratified later this year, the RCEP is the largest mega-regional trade treaty currently being negotiated, and the first to include norms and rules on e-commerce.

Despite countries such as Japan, Korea, Australia, and New Zealand pushing for a detailed chapter on e-commerce based on the model of the Trans-Pacific Partnership (TPP), the latest information we have from the negotiating room is that the e-commerce chapter of RCEP will be far less ambitious, dealing mostly with familiar and uncontentious issues such as standards for electronic payments and signatures.

This will displease big tech companies that had hoped that RCEP would include rules on cutting-edge (but more contentious) topics like forced data localization. Data localization rules (such as rules requiring data about local users to be stored on servers within the country) would increase costs for tech companies and raise entry barriers for small competitors.

But some countries favor these rules because it allows them to subject overseas platforms to local privacy regulations, or for more sinister reasons such as making the servers more easily accessible to local surveillance programs. EFF’s position is that although data localization is rarely justified, if rules prohibiting it are to be included in trade agreements, it is essential that each country has adequate privacy and data protection laws to protect their citizens’ data.

Transparency Demands

So far, text specific to e-commerce have not been made publicly available and the leaked Terms of Reference for the Working Group on ecommerce (WGEC) is the only reference to what issues could make an appearance in the RCEP. EFF has been advocating for transparency in trade through the active dissemination of provisions related to digital economy being discussed or included in the RCEP.

We have also been pushing negotiating countries to open up the trade processes in order to bring them into closer alignment with the Internet community’s norms of open, multi-stakeholder governance. Unfortunately, at this late stage of negotiations and amidst intensifying pressure to conclude the agreement the opportunities for broad and meaningful public participation in the RCEP process remain limited.

To address the lack of public inputs and facilitate engagement between RCEP negotiators and affected stakeholders EFF has been organising a series of interventions. We organised a panel on Intellectual Property at the 18th Round in Manila, Philippines and another at the recently concluded 19th round in Hyderabad, India focusing on e-commerce issues. The most recent of these interventions was a panel on ’Trade Rules for the Digital Economy: Asia’s Agreement at the WTO and RCEP’ at Asia Pacific regional Internet Governance Forum (APrIGF) which took place in Bangkok from 26-29 July, 2017.

APrIGF Workshop Report

The discussions kicked off with an overview developments in global trade including shelving of large agreements such as TPP and TISA, the rise of regional treaties such as the NAFTA and RCEP and recent developments at the World Trade Organisation (WTO). While there is little public information on e-commerce provisions in the RCEP, issues included in the TPP as well as industry demands serve as reference for Internet governance areas that could be included.

Professor Peng Hwa, Nanyang Technological University drew upon the important linkages between trade and Internet governance. Different national contexts and agendas are guiding the negotiating parties and their strategies with regards to e-commerce. Given how nascent most issues related to digital economy are, there is need for continued dialogue and a measured approach to developing consensus based global rules.

Rajnesh Singh, Director Asia Pacific Regional Bureau Internet Society highlighted the challenges that trade committees and negotiators face - from uneven representation of nations, and resources to varying interpretation of the same issue. The push to regulate cross-border e-commerce underlines the need for concerted effort from civil society, academia and the technical community to ensure user rights are being inserted in these agreements.

Ms Duangthip Chomprang, Director for Regional Cooperation and Assistance at the International Institute for Trade and Development pointed out key factors behind regional efforts to push ICT issues through trade. First, almost 70% of all global preferential trade agreements are in the Asia Pacific region, and there has also been a steady decoupling between developed and developing countries of the region. This has created the political will to push for provisions on the digital economy. Second an important, if often overlooked linkage is between the United Nations’ Sustainable Development Goals (SDG) which includes provisions to ensure trade and commerce agreements contribute to the achievement of these goals.

While there is a long way to go in improving transparency of the RCEP negotiations it was encouraging to have Mr Akhuputra, Chair the Working Group on e-Commerce (WGEC) to provide insights both into the process and the challenges of including as yet unresolved technological issues. Though the RCEP negotiations are in the 19th round the WGEC has had nine meetings so far. Mr Akhuputra suggested that the next round in South Korea may be the final meeting of the e-commerce negotiators.

Although the text remains secret, the e-commerce chapter is believed to be shorter and less detailed than the chapters on goods and services. Rules and text included will be broad enough to factor for the development gaps between participating countries. A provision likely to make an appearance, since it is included in more than 40% of the 90 trade agreements that are active in the region, covers paperless trade. Provisions for the use of international standards for paperless trade would apply to electronic authentication, e-signatures and e-documents. He highlighted the tensions between push for technologies such as blockchain and smart contracts and inclusion of text in trade agreements that seek "mutual recognition" and compliance with "international standards".

Complicating the work of WGEC are traditional segregations of areas such as goods and services which are not as easy to import in the digital context. For example, rules on electronic transmissions and goods are negotiated separately in trade agreements. However there is no consensus on how to treat electronic transmissions that transform into goods. Provisions on electronic transmission and services could impact the regulation of 3D printing technologies which are expected to shape the future of medical ecosystem in developing and less developed nations.

We are far from seeing which concerns have been addressed or what the final text will look like, but the contours of RCEP on e-commerce are beginning to materialise. Even though these details are just emerging, it may already be too late for civil society to influence the drafting of specific provisions as the WGEC is attempting to freeze the text. However, there remains a small chance that the Trade Negotiating Committee may decide to extend negotiations or open up specific issues.

For now it seems that the e-commerce chapter is going to be less ambitious and contentious than that of the TPP. Nonetheless EFF will continue to maintain a close eye on e-commerce developments in the RCEP, and continue to advocate for better transparency and public access to the negotiations.

You can watch the full video of the discussions in our workshop here: https://www.youtube.com/watch?v=dpFsJjWaeB4&t=744s