What For? E-Commerce Provisions in Asia-Pacific Preferential Trade Agreements and the Future of Digital Trade Governance

Thesis completed in partial fulfillment of the requirement for the Master of Laws (LL.M.) in

International and European Law: International Investment and Trade Law programme at

Amsterdam Law School

July 2020

Student

Eunjung Oh

Student Number

12799475

Title

What For? E-Commerce Provisions in Asia-Pacific Preferential Trade

Agreements and the Future of Digital Trade Governance

Supervisor

Dr. Ingo Venzke

Length

11973 words of content (footnotes included)

University of Amsterdam, Faculty of Law

Amsterdam Law School

What For? E-Commerce Provisions in Asia-Pacific Preferential

Trade Agreements and the Future of Digital Trade Governance

Eunjung Oh

Abstract

The expansion of global digital market and electronic commerce (e-commerce) is aided by the

rapid advancement in information and telecommunication technologies (ICT) and the internet of

things (IoT). As a result of the current impasse of the Doha Development Round, WTO member

states have shifted their attention to preferential trade agreements (PTAs) to promote global

governance on e-commerce. This paper evaluates the elements of e-commerce provisions in

bilateral and mega-regional PTAs and analyzes the development towards digital liberalization in

the Asia-Pacific region. At the same time, the paper makes note of the stakes of developing

countries that are under pressure to keep up with the changing dynamic of global economy.

These countries find themselves locked in difficult position, as they are expected to accelerate

their conclusions over major e-commerce negotiations while the effects of such proposals are yet

difficult to predict. This is especially the case for ASEAN member states that are mutual

signatories of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership

(CPTPP) and the Regional Comprehensive Economic Partnership (RCEP).

Keywords: Digital Economy, Electronic Commerce, International Trade Law, WTO Law,

Preferential Trade Agreements, Free Trade Agreements, Asia-Pacific, Developing Countries,

Cross-Border Data Flow, CPTPP, RCEP

Contents

Acronyms and Abbreviations ... 1

I. INTRODUCTION ... 2

II. Is the Existing Trade Law Dated? ... 4

A. Rewind: WTO Work Programme and Moratorium on E-Commerce ... 6

B. Classification Issues: To Apply GATS or GATT Commitments, or Both?... 8

III. Assessing E-Commerce Rules in Preferential Trade Agreements ... 11

A. Anatomy of E-commerce Provisions in PTAs: Key Elements ... 11

Definitions ... 11

Non-Discriminatory Treatment of Digital Products ... 13

Elimination of Digital Customs Duties ... 13

Cross-Border Data Flows and Data Localization ... 15

Intellectual Property (IP) Provisions ... 17

Cooperation ... 17

Recognition of the applicability of WTO rules to e-commerce ... 18

B. Evolution of E-Commerce Regulations on Bilateral/Plurilateral Level in the Asia-Pacific

Region ... 18

Paperless trading [2000-2002] ... 18

Emergence of e-commerce chapters [2003] ... 19

Mixed picture of e-commerce regulations [2004-2011]... 19

New generation of e-commerce liberalization [2014+] ... 20

C. Two Competing Mega-Regional Paths in the Asia-Pacific: CPTPP and RCEP ... 21

IV. Understanding the Dilemmas of the Developing Countries in Digital Governance ... 23

A. Data Commercialization, Privacy Protection, and Concern for Digital Colonialism ... 24

B. Weighing the Benefits and Balancing between Multiple Jurisdictions... 26

APPENDIX A. List of Tables and Figures ... 32

Table 1. Digital Trade Components and Applicable WTO Rules ... 32

Table 2. Accomplishments by the WTO versus PTAs in Response to Digital Trade Issues

Raised in WTO Work Programme on E-Commerce ... 32

Table 3. Comparison of CPTPP and RCEP E-Commerce Chapters ... 33

Figure 1. Evolution of PTAs with E-commerce Provisions ... 35

Figure 2. Parties to PTAs with E-commerce Provisions... 35

Figure 3. Evolution of average number of e-commerce provisions by country ... 36

Appendix B. Selected list of e-commerce provisions in PTAs ... 37

ASEAN-Australia-New Zealand FTA (AANZFTA)... 38

Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) ... 40

EU-Japan EPA ... 45

Japan-Mongolia EPA ... 47

Regional Comprehensive Economic Partnership (RCEP) ... 50

Singapore-Australia FTA ... 55

US-Korea FTA (KORUS)... 60

US-Singapore FTA (USSFTA) ... 62

WTO Work Programme on E-Commerce ... 63

1

Acronyms and Abbreviations

APAC

Asia-Pacific

ASEAN

Association of Southeast Asian Nations

CPTPP

Comprehensive and Progressive Agreement for Trans-Pacific Partnership

EPA

Economic Partnership Agreement

FTA

Free Trade Agreement

GATS

General Agreement on Trade in Services

GATT

General Agreement on Tariffs and Trade

GDPR

General Data Protection Regulation

GVCs

Global Value Chains

ICT

Information and Communication Technologies

IoT

Internet of Things

IP

Intellectual Property

ITA

Information Technology Agreement

MFN

Most-Favoured Nation

RCEP

Regional Comprehensive Economic Partnership

PTA

Preferential Trade Agreement

RTA

Regional Trade Agreement

SMEs

Small and Medium-Sized Enterprises

TBT

Agreement on Technical Barriers to Trade

TFA

WTO Trade Facilitation Agreement (2017)

TNC

Transnational Corporation

TPP

Trans-Pacific Partnership

TRIPS

Agreement on Trade-Related Aspects of Intellectual Property Rights

WTO

World Trade Organization

2

I. INTRODUCTION

The internet and the rapid development in digital technology have significantly changed the

traditional means and modes of international trade over the past few decades. Industrial production

processes are being replaced with adoption of 3D printing, smart goods and IoT, and business

models are also adapting to these developments.

_{Purchase and delivery of goods and services are}

now being operated by digital platforms run by major corporations such as Google and Amazon.

However, as printed books and music CDs become substituted by e-books and music streaming

and downloading services, the classification of goods and services becomes blurry, making it more

challenging for governments to determine which rules apply.

The present rules of the WTO, namely the General Agreement on Trade in Services (GATS)

and the General Agreement on Tariffs and Trade (GATT), have resulted from the negotiations in

the 1994 Uruguay round.

Considering that digital trade is a novel concept which emerged at a

later stage than when the Uruguay round took place, WTO faces criticism that its trade rules are

not suitable for governing the new global trade dynamics.

Since the collapse of the 2001 Doha

Development Agenda negotiations, Member States have continuously called for the need to reform

the WTO.

Therefore, WTO member states have been resorting to preferential trade agreements

(PTAs), with expectations to obtain more benefits in an efficient manner than from the WTO.

A

growing number of new generation PTAs now dedicate a special chapter on e-commerce or include

relevant provisions.

These agreements mainly propose: (1) elimination or reduction of customs

duties on e-transmissions, (2) prohibition of data localization requirements, and (3) the enabling

of free flow of data across borders.

1 _{R. S. Neeraj, ‘Trade Rules for the Digital Economy: Charting New Waters at the WTO’ (2019] 18 World Trade}

Review S1, S121-S122.

2 _{See J P Meltzer, ‘Governing Digital Trade’ (2019) 18 World Trade Review S1, S23-S24.}

3 _{J L González and J Ferencz, ‘Digital Trade and Market Openness’ (2018) 217 OECD Trade Policy Papers, 34.} 4 _{M I Latif, ‘Uruguay Round of GATT and Establishment of the WTO’ (2012) 65 Pakistan Institute of International}

Affairs 1, 53.

5 _{M E Janow and P C Mavroidis, ‘Digital Trade, E-Commerce, the WTO and Regional Frameworks’ (2019) 18}

World Trade Review S1, S1.

6 _{See WTO, ‘Annual Report for 2018’ (Appellate Body 2019) WT/AB/29, 6-7.}

7 _{See Meltzer, ‘Governing Digital Trade’ (n 2), S44; R Wolfe, ‘Learning about Digital Trade: Privacy and}

Commerce in CETA and TPP’ (2019) 18 World Trade Review S1, S64-S66; R H Weber, ‘The Expansion of E-commerce in Asia-Pacific Trade Agreements’ (10 September 2015) ICTSD < https://www.ictsd.org/opinion/the-expansion-of-e-commerce-in-asia-pacific-trade-agreements>.

3

This paper investigates e-commerce provisions negotiated in the PTA arena to promote

liberalization of commerce and explores the following question: what framework(s) of

e-commerce governance do PTAs provide, and why does developing countries’ concerns over the

context of e-commerce liberalization matter for the future of e-commerce governance? This study

particularly examines in great detail the development of PTAs with e-commerce provisions

initiated in the Asia-Pacific region. A plethora of existing literatures has already focused on trade

agreements initiated by the U.S. and the EU (i.e. NAFTA, CETA, TTIP), but few have provided

insight on how trade agreements initiated by Asia-Pacific countries approach e-commerce

regulation. Furthermore, this paper introduces the e-commerce chapter of the most recent regional

negotiation initiated by the ASEAN member states, the Regional Comprehensive Economic

Partnership (RCEP), and provides comparative analysis with another key mega-regional

agreement, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

To add clarity to the following discussions, it is important to define some terminologies.

The term “Asia-Pacific (APAC)” in this paper refers to countries located in the Western Pacific

Ocean. It encompasses Northeast, South, and Southeast Asia, and Oceania. This paper primarily

focuses on the ASEAN+6 (Australia, China, India, Japan, Korea, and New Zealand) countries.

“Electronic commerce (E-commerce)”, synonymous with digital trade, is not explicitly defined,

but will be used to refer to transfer of digital products, services, and data through electronic

transmission.

_{A trade agreement with at least two parties have various nomenclatures, inter alia,}

free trade agreement (FTA), preferential trade agreement (PTA), regional trade agreement (RTA),

or economic partnership agreement (EPA), but there is lack of clarity in distinguishing the meaning

and scope of these terms. Although “RTA” appears to be the generally used term among literature

to encompass various forms of trade agreements,

this paper prefers to use the term “PTA” to

include agreements signed between countries that are not from the same region.

Therefore,

“Preferential Trade Agreement (PTA)” will be used to indicate all bilateral/plurilateral/regional

10 _{The widespread use of “regional trade agreements” as an overarching term may be based on the World Bank,}

which defines it as an agreement between two or more governments that “define the rules of trade for all signatories.” See World Bank, ‘Regional Trade Agreements’. (April 5, 2018).

<https://www.worldbank.org/en/topic/regional-integration/brief/regional-trade-agreements> accessed June 14, 2020.

11 _{This aligns with the position in the World Trade Report 2011. See WTO, ‘World Trade Report 2011: The WTO}

and Preferential Trade Agreements: from co-existence to coherence’; Also economists, such as Bhagwati, prefers to use “PTA” or “RTA” rather than “FTA” to avoid discriminating non-members of an agreement. He also proceeds to use the term “RTA” to indicate agreements on customs unions, regional trading blocs, and free trade areas.

4

trade agreements termed as RTAs, FTAs, and EPAs, which give preferential access to participating

parties.

This study is structured as follows. Chapter 2 following the introduction (Chapter 1) lays

out previous initiatives within the WTO with regards to digital trade, concluding that significant

change has not taken place despite the efforts. Following a brief overview of the current WTO

rules, an analysis of initiatives in the WTO Declaration on Global Electronic Commerce (1998)

and the limitations in the e-commerce moratorium is provided. The remaining section elaborates

on the classification challenges in relation the GATT and GATS commitments and analyzes what

the Panel and the Appellate Body have said on previous disputes on classification.

Following the discussion on the shortcoming of WTO rules, Chapter 3 offers an in-depth

analysis of e-commerce provisions in PTAs. It will first identify the most common provisions in

e-commerce chapters and then review how e-commerce liberalization movement evolved in the

APAC region. The later section of this chapter will look into the newest mega-trade agreements

and negotiations initiated by countries from the APAC region, namely the CPTPP and the RCEP.

Chapter 4 covers the concerns of developing countries towards implementation of these

e-commerce provisions. Continuing the discussions on PTAs on Chapter 3, this chapter addresses

some risks associated with certain provisions of e-commerce chapters with particular emphasis on

the cross-border data transfer. It also discusses divergent interests among developing countries and

how they have expressed their views towards e-commerce liberalization initiatives.

Based on the discussions above, chapter 5 summarizes the implications of growing

e-commerce provisions in PTAs. It concludes that while PTAs do present a more concrete mandate

on e-commerce, WTO member states also need to return to the unresolved discussions in the GATS

and work towards a more inclusive future digital governance.

II. Is the Existing Trade Law Dated?

WTO Agreements form the foundation of international trade law and consist of a set of enforceable

rules governing trade of goods, services, and protection of intellectual property (see Table 1 of

Appendix A),

though lack of success of the multilateral regime on certain issues have stimulated

5

action in preferential venues.

_{Before the introduction of the e-commerce work programme, the}

WTO has adopted the Information Technology Agreement (ITA)

_{and the Fourth Protocol on}

Basic Telecommunications Services

to cover technologies that affect trade to liberalize digital

trade. However, no significant developments have been made with regards to regulating intangible

products and online service trade.

Although the Doha Development Round was intended to serve

this purpose, developed countries have shown reluctance to continue the agenda,

which faces

criticism from the African Group and the Least Developed Countries (LDCs), who resist the

adoption of new e-commerce proposals until the Doha round addresses the asymmetries of existing

rules of the WTO.

One may argue that there is no need to amend existing law in response to every emergence

of new innovation; opponents of WTO reform suggest WTO laws are flexible and resilient in

nature.

The principle of non-discrimination, enshrined in most-favored nation (MFN)

and

national treatment provisions,

is a key element of WTO that could potentially provide better

protection to States than new regulations, particularly in the domain of intellectual property

rights.

It is also possible that WTO could manage to tackle issues on standards, trade facilitation,

subsidies, and government procurement by adhering to its basic principles rather than focusing on

the technology itself. For example, the WTO Agreement on Trade Facilitation (TFA), adopted in

the 2013 Ministerial conference in Bali and entered into force on February 2017, will contribute

to enhancing efficiency of global trade by reducing customs and other excessive trade barriers.

13 _{M Burri, ‘The Regulation of Data Flows Through Trade Agreements’ (2017) 48 Georgetown Journal of}

International Law, 410; A D Mitchell and N Mishra, ‘Data at the Docks: Modernizing International Trade Law for the Digital Economy’ (2018) 20 Vanderbilt Journal of Entertainment & Technology Law, 1078.

14 _{See WTO, Ministerial declaration on trade in Information Technology Products [13 Dec 1996] WT/MIN (96)/16.} 15 _{See Fourth Protocol to the General Agreement on Trade in Services [30 Apr. 1996] Annex I, WTO Doc. S/L/20}

(entered into force 1 Jan. 1998).

16 _{Burri, ‘The Regulation of Data Flows’ (n 13), 410-411.}

17 _{S Donnan, ‘US Calls Time on Doha Trade Negotiations’ (13 December 2015) Financial Times}

<https://www.ft.com/content/2f9a7ee4-a190-11e5-bc70-7ff6d4fd203a>

18 _{J Kelsey, ‘How a TPP-Style E-Commerce Outcome in the WTO would Endanger the Development Dimension of}

the GATS Acquis (and Potentially the WTO)’ (2018) 21 Journal of International Economic Law, 274.

19 _{Burri, ‘How Should the WTO Respond to the Data-Driven Economy?’ (2020); also see F H Easterbrook,}

‘Cyberspace and the Law of the Horse’ (1996) 207 U. Chic. Legal F.

20 _{Rules on MFN can be found in GATT Article I, GATS Article II, TRIPS Article 4.}

21 _{Rules on national treatment can be found in GATT Article III, GATS Article XVII, TRIPS Article 3.}

22 _{See S K Sell, Private Power, Public Law: The Globalization of Intellectual Property Rights (CUP 2003); Burri (n}

13), 411.

23 _{Agreement on Trade Facilitation Ministerial Decisions [7 December 2013] WT/MIN(13)36; Global Alliance for}

Trade Facilitation, ‘The Trade Facilitation Agreement: A Simple Guide’, available at:

6

Under the TFA, Member States are required to publish information of all laws, regulations, and

procedures affecting trade, including transit procedures, duty rates, and import fees. Most of this

information must be made available on the Internet.

Moreover, regarding WTO jurisprudence on

dispute settlement, the Panel and the Appellate Body have clarified in the famous US—Gambling

dispute that the obligations under the GATS are also applicable to electronically supplied

services.

They have also clarified key notions of services regulation, such as likeness and the

scope of the “public morals/public order” defense under the general exceptions of article XIV of

GATS.

However, skepticism remains as many issues discussed in the framework of the 1998

WTO Work Programme on Electronic Commerce remains unresolved or lacks clarification.

Also,

there remains a particularly visible dilemma over goods-services classification.

A. Rewind: WTO Work Programme and Moratorium on E-Commerce

At the Second Ministerial Conference in May 2998, WTO member states issued a Ministerial

Declaration on global e-commerce

which called for a Work Programme on e-commerce, later

adopted in September the same year.

_{The key feature of the Work Programme on is that it utilized}

existing multilateral trade agreements to address e-commerce related issues, by designating

specific issues to respective WTO Councils and Committees as follows:

▪

Council for Trade in Services (CTS): treatment of e-commerce in GATS legal framework

(i.e. MFN, domestic regulation, national treatment, customs duties, market access

commitments, classification issues);

▪

Council for Trade in Goods: relevant aspects to GATT (1994) and Annex 1A of WTO

Agreement (i.e. customs duties, classification issues, market access to and for digital

products);

▪

Council for TRIPS: IP matters (i.e. protection and enforcement of copyright and

trademarks, new technologies, access to technology);

24 _{See WTO, ‘Trade Facilitation’, <http://www.wto.org/english/tratop_e/tradfa_e/tradfa_e.htm> (accessed 21 April,}

2020).

25 _{Appellate Body Report, US—Gambling (7 April 2005), WT/DS285/AB/R}

26 _{M Krajewski, ‘Playing by the Rules of the Game? Specific Commitments after US—Gambling and Betting and}

the Current GATS Neotiations’ (2005), 32 Legal Issues Econ. Integration 417, 438.

27 _{WTO, ‘Work Programme on Electronic Commerce’ (adopted 25 Sept. 1998) WTO Doc. WT/L/274.} 28 _{WTO, ‘Ministerial Declaration on Global E-Commerce’ (20 May 1998), WT/MIN(98)/DEC/2.} 29 _{WTO, ‘Electronic commerce’ <https://www.wto.org/english/tratop_e/ecom_e/ecom_e.htm>} 30 _Ibid.

7

▪

Committee on Trade and Development: examination of considerations for developing

countries (i.e. effects of e-commerce on prospects of developing countries, use of

information technology in the integration process, considerations to enhance participation

of developing countries).

Meanwhile the Declaration also included a political statement (the WTO Duty-free Moratorium

on Electronic Transmissions) calling upon Members to “continue their current practice of not

imposing customs duties on electronic transmissions.”

Table 2 in Appendix A attached to this

paper presents a checklist comprised of questions CTS raised as part of the work programme.

Although GATS-specific inquiries in the Work Programme will not be discussed in detail due to

the interest of this paper,

these initiatives are relatively forward-looking with respect to

e-commerce issues.

Nevertheless, despite the fact the Work Programme included fair amount of easily

achievable agenda, i.e. confirming the applicability of WTO rules and commitments to services

traded electronically, it has failed to draw substantial results to date.

This is because the WTO

members, particularly the developed countries, have been maintaining a minimalistic stance

towards implementing the Work Programme, as can be inferred from the Hong Kong Ministerial

Declaration of 2005:

We take note that the examination of issues under the [Work Programme on E-Commerce]

is not yet complete. We agree to reinvigorate that work […] We declare that Members will

maintain their current practice of not imposing customs duties on electronic transmissions

until our next Session.

As a result, the Work Programme remains at a state of incompleteness and Member States continue

to prolong the agenda to each subsequent Ministerial Conference.

Only the duty-free moratorium

on electronic transmissions, which every WTO Member state can consent to, have drawn some

results, but even the moratorium came to a deadlock at the Fifth Ministerial Conference in 2004.

The 2009 and the 2013 Ministerial Conference both provisionally extended the moratorium on

e-31 _{WT/MIN(98)/DEC/2 (see footnote 5)}

32 _{For further information on agenda pertaining to GATS, see W. Drake and K. Nicolaidis, ‘Global Electronic}

Commerce and the GATS: The “Millennium Round” and Beyond’, in P. Sauvé and R.M. Stern (eds.), GATS 2000;

New Directions in Services Trade Liberalisation (Washington D.C.: The Brookings Institution, 2000), 399-437. 33 _{Wunsch-Vincent, ‘Trade Rules for the Digital Age’ (n 9)}

34 _{See Hong Kong Ministerial Declaration of December 2005 (para. 46)}

35 _{See WTO, ‘WTO Members Agree to Extend E-Commerce, Non-Violation Moratoriums’ (10 December 2019)}

8

commerce

_{and the 2019 General Council decision also simply agrees to maintain the current}

practice of lifting customs duties on electronic transmissions and restated that Member states

would continue working on the Work Programme.

B. Classification Issues: To Apply GATS or GATT Commitments, or Both?

Governance of international trade of goods and services pivots on the GATS

and the GATT

,

supported by the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS),

the Agreement on Technical Barriers to Trade (TBT) and the Agreement on the Application of

Sanitary and Phytosanitary Measures (SPS). GATS and GATT provide different set of rules for

trade in services and goods, respectfully, and the applicability of one agreement precludes the

applicability of the other agreement.

However, the arrival of digital products, such as physical

goods ordered over the internet, digitizable media, 3D manufactured products, and smart goods,

has muddied the waters of GATT-GATS based classification.

This is legally challenging since

the level of trade liberalization of a digital product is determined based on the choice of regulatory

trade discipline.

A single platform such as online games, for example, already has a wide array of

possibilities for categorization under present WTO rules. It can be classified under computer

categories and related services, or alternatively under value-added telecommunications services,

or under entertainments; each of these categories encompass a different set of obligations.

Taking

electronically-transmitted data intrinsic to a service into account further complicates the issue;

should this form of data transfer then be viewed separately or as part of the traditional form of

services?

If online platforms and their services are to be classified as computer services, states

would have lesser freedom and would have to grant full access to foreign services and service

36 _{WTO, ‘Work Programme on Electronic Commerce: Decision of 2 December 2009’ (11 December 2009)}

WT/L/782; WTO, ‘Work Programme on Electronic Commerce: Ministerial Decision of 7 December 2013’ (11 December 2013) WT/L/907

37 _{WTO, ‘Work Programme on Electronic Commerce: General Council Decision’ (11 December 2019) WT/L/1079} 38 _{General Agreement on Trade in Services (15 April 1994), Marrakesh Agreement Establishing the World Trade}

Organization, Annex 1B, 1869 UNTS 183 (hereby GATS).

39 _{General Agreement on Tariffs and Trade (15 April 1994), Marrakesh Agreement Establishing the World Trade}

Organization, Annex 1A, 1867 UNTS 187 (hereby GATT).

40 _{Neeraj (n 1), S124.} 41 _{Neeraj (n 1), S124-S128.}

42 _{R Cooney and A T F Lang, ‘Taking Uncertainty Seriously: Adaptive Governance and International Trade’}

(2007) 18 EUR. J. INT’L. L. 523, 524; A T F Lang and J Scott, ‘The Hidden World of WTO Governance’ (2009) 20 EUR. J. INT’L. L. 575-614.

43 _{R H Weber and M Burri, Classification of Services in the Digital Economy (Springer 2013), Chapter 3.} 44 _{Ibid, see also S Peng, ‘GATS and the Over-the-Top Services: A Legal Outlook’ (2016) 50 J. World Trade 21.}

9

suppliers. This also implies that states would have to treat them no less favorable than they treat

domestic services and suppliers according to the GATS commitments.

_{International trade law}

offers scant clarity regarding the classification status of IoT devices, whether they constitute a

good or service.

The Appellate Body has made some attempts to take a more flexible approach towards the

classification dilemma, which could potentially serve as guidelines to governing digital products.

In China—Audiovisual Products, the Appellate Body has interpreted schedules of specific

commitments as “sufficiently generic that what they apply to may change over time”,

and in

EC—Bananas III and Canada—Autos, it clarified that the GATT and the GATS are not mutually

exclusive and could overlap.

EC—Bananas III

was the primordial dispute in which the WTO

Dispute Settlement Body had to decide whether the measure targeted a good or a service. The

interpretation employed by the Appellate Body offers some help with the classification of IoT

devices. The Appellate Body of the WTO found that “particular measures could be found to fall

within the scope of both GATT and GATS”, and that “such measures include those that involve a

service relating to a particular good or a service supplied in conjunction with a particular good”.

In Canada—Periodicals,

the dispute involved a tax on split-run periodicals equal to 80%

of the value of all the advertisements contained in the split-run edition. In response to the U.S.’

allegation of national treatment obligation violation under the GATT, Canada argued that the tax

was targeting advertising services, which were not bound by obligations under the GATT. The

Appellate Body, concurring with the Panel Report, rejected Canada’s characterization of the

measure; it observed that the final product was a “good comprised of two components: editorial

content and advertising content”.

Both components can be viewed as having services attributes,

but they combine to form a physical product, which is he periodical itself. The finding of the

Appellate Body expressly acknowledges that a product can be a good and simultaneously have

service attributes. Moreover, it has also laid down that the adjudicating body should primarily

focus on examination of the measure at issue rather than on examination of the product itself while

45 _{Burri (n 13), 414.}

46 _{Appellate Body Report, China—Audiovisual Products (21 Dec. 2009) WTO Doc. WT/DS363/AB/R, para. 396.} 47 _{See Appellate Body Report, EC—Bananas (9 Sept. 1997) WTO Doc. WT/DS27/AB/R; Appellate Body Report,} Canada—Autos (31 May 2000) WT/DS139/AB/R, WT/DS142/AB,R.

48 _{Appellate Body Report, EC—Bananas (n 47).} 49 _{Ibid., para 221.}

50 _{Appellate Body Report, Canada—Periodicals (30 June 1997) WT/DS31/AB/R.} 51 _{Ibid., pp. 17}

10

determining whether the GATT or the GATS would be the controlling agreement.

_{The finding}

of the Appellate Body that the “measure at issue in this appeal […] is a measure which clearly

applies to goods” (this finding has been reconfirmed in China—Audiovisuals

) evades the need to

determine whether an i.e. IoT product is a good or a service by choosing to focus on the measure

instead; if the concerned measure targets the service component, GATS would apply, and if the

measure targets the goods attribute, the GATT would apply.

However, this does not resolve the core issue of classification. So as to determine whether

a measure is targeting the “service attribute” or “goods attribute” of a product, there has to be a

conclusive understanding on whether that attribute is a good or a service. In the absence of

consensus on whether data flow constitutes a good or a service, the Dispute Settlement Body would

still have no answer to the question on whether the “measure at issue” is targeting a good or service

when the measure concerns regulation of data flow. Also as incidences of “servicification” of

manufactured products grow, it would become more difficult in the future to reason against this

blurring of boundaries between goods and services.

The dispute settlement of the WTO has been used sparingly to address such measures

despite the regulatory barriers to digital trade.

E-commerce is cross-cutting in nature, not only

affecting international trade but also touching upon delicate political issues such as human rights,

Internet governance, and economic development. Due to the uncertainty surrounding how WTO

rules apply to digital trade, the outcome of bringing disputes on digital trade (i.e. challenging a ban

on a search engine like Google or a social networking service like Facebook) before the WTO still

presents an unclear image. Since the panel and Appellate Body reports upon the adoption of the

DSB might affect domestic regulation on online censorship, data protection, and Internet

governance, this is a sensitive matter.

Moreover, Members that adopt a guarded or interventionist

approach in e-commerce regulation tend to be warier of the limits of the GATS framework in

taking account of domestic policy concerns such as addressing privacy or consumer protection

52 _{Appellate Body Report, Canada—Periodicals (n 50), pp. 18.} 53 _{Appellate Body Report, China—Audiovisuals (n 46).}

54 _{See for example, Appellate Body Report, China—Publications and Entertainment Products (21 December 2009)}

WT/DS363/AB/R; Appellate Body Report, US—Gambling (n 25); Panel Report, Mexico—Telecoms (2 April 2004), WT/DS204/R.

55 _{C Barfield, ‘China’s Internet Censorship: A WTO Challenge is Long Overdue’ (29 April 2016) American}

11

concerns or protecting public order.

_{As a result, other solutions are sought—for example,}

regulating bilateral solutions such as the Privacy Shield between the EU and the U.S. or relevant

rules in PTAs within a smaller group of like-minded countries.

III. Assessing E-Commerce Rules in Preferential Trade Agreements

The lack of progress on digital trade governance in WTO context has stimulated WTO member

states to actively seek other measures through which they can better incorporate their interests and

efficiently attain their targets for digital development. Rapid proliferation of PTAs in recent years

demonstrate this trend in international trade policy. As of July 2020, there are currently 305 PTAs

in force, of which 182 PTAs contain provisions related to e-commerce.

Provision on digital trade

was first included in the 2000 Jordan-US FTA

and the concept of an e-commerce chapter was

pioneered by the 2003 FTA between Australia and Singapore (SAFTA).

Provision on data flow

was first introduced in the Korea-US FTA from 2007.

Provisions on e-commerce can usually be

found in the following locations: (1) in a separate chapter dedicated to e-commerce topics; (2) in

chapters on cross-border service supplies; (3) in ICT chapters; (4) through TRIPS-plus provisions

that concern IP law in digital trade.

A. Anatomy of E-commerce Provisions in PTAs: Key Elements

This section will entertain a number of commonly included e-commerce provisions in PTAs. A

full list of topics including those not discussed in this section can be observed from Table 3 of

Appendix A.

Definitions

Definitions of key terms are crucial, as they determine the scope of application of individual

e-commerce provisions. Although the terms selected for definition and the language of definition

itself may vary depending on the type of agreement, e-commerce provisions typically define the

56 _{Note: negotiations of the Transatlantic Trade and Investment Partnership (TTIP) revealed the EU’s reluctance to}

negotiate on standards of data protection in trade agreements. See J Fontanella-Khan, ‘Data Protection Ruled out of EU-US Trade Talks’ (2013) FIN. Times.

57 _{M Burri, ‘Designing Future-Oriented Multilateral Rules for Digital Trade’ in (eds) P Sauve and M Roy, Research} Handbook on Trade in Services (2016) 331, 343-44.

58 _{WTO, ‘Regional Trade Agreements Database’ <https://rtais.wto.org/UI/PublicMaintainRTAHome.aspx>; Burri}

and Polanco, ‘Digital Trade Provisions in Preferential Trade Agreements: Introducing a New Dataset’ (2019). 6.

59 _{See Jordan-US FTA, Article 7. Concluded on 24 Oct 2000, entered into force 17 December 2001.} 60 _{See SAFTA. Concluded on 17 February 2003, entered into force on 28 July 2003.}

61 _{M Elsig and S Klotz, ‘Data flow-related provisions in preferential trade agreements.’ (2018) World Trade Institute}

12

following terms: “digital product”, “electronic authentication”, “electronic transmission”, and

“unsolicited commercial electronic message”.

Starting from early US FTAs, e-commerce provisions—particularly the ones in the US,

Canada, and Singapore FTAs—include a definition of what constitutes a digital product.

TPP

(and now CPTPP)

is an example with such provision. According to Article 14.4 of TPP, a digital

product refers to “a computer programme, text, video, image, sound recording or other product

that is digitally encoded, produced for commercial sale or distribution, and that can be transmitted

electronically”. It is further added that the term “does not include a digitized representation of a

financial instrument, including money”

_{nor in any way to be understood as a reflection of “a}

Party’s view on whether trade in digital products through electronic transmission should be

categorized as trade in services or trade in goods”.

It should again be noted that while this

definition is commonly found in most US, Canadian, and Singaporean FTAs; other trade

agreements do not necessarily include a separate definition of the term.

E-commerce provisions also commonly cover the definition of the term electronic

authentication. According to Article 2 Chapter 10 of ASEAN-Australia-New Zealand FTA

(AANZFTA), it refers to “the process of testing an electronic statement or claim, in order to

establish a level of confidence in the statement’s or claim’s reliability”.

_{In the TPP, it is defined}

as “the process or act of verifying the identity of a party to an electronic communication or

transaction and ensuring the integrity of an electronic communication”.

_{The general idea is}

similar, although the exact language differs slightly.

PTAs are more uniform with the definition of electronic transmission or transmitted

electronically, which generally refers to transmission generated by electromagnetic means.

The

definition of electronic transmissions is relevant for the provision on customs duties. Other terms

observed in the definitions section of e-commerce chapters include digital certificates, trade

administration documents, or carrier medium. The choice of terms to be defined and to what extent

62 _{Wu, ‘Digital Trade-Related Provisions in Regional Trade Agreements: Existing Models and Lessons for the}

Multilateral Trade System’ (Geneva: ICTSD and IDB 2017) RTA Exchange, 9.

63 _{Note: In CPTPP, chapter on e-commerce remains unchanged from the original TPP agreement.} 64 _{TPP, Article 14.1 and footnote 2}

65 _{TPP, footnote 3 to Article 14.1} 66 _{AANZFTA, Chapter 10 Article 2(b)} 67 _{(CP)TPP, Article 14.1}

68 _{See for example CPTPP, Article 14.1; Korea-Australia FTA, Article 15.10; Singapore-Australia FTA, Article}

13

the definition of terms are to be included in e-commerce provisions depend on PTAs; while

agreements such as the CPTPP include an extensive list of definitions, some agreements do not

include any. Given the growing sensitivity of personal data, it is likely that more PTAs in the future

would include definitions of terms such as personal information and computing facilities.

Non-Discriminatory Treatment of Digital Products

More robust forms of e-commerce chapters aim to extend the principle of non-discrimination and

MFN treatment to digital products and commerce. The special provision on CPTPP for example,

which emulates the Singapore-Australia FTA, mandates non-discrimination of like digital

products as follows:

No Party shall accord less favourable treatment to digital products created, produced,

published, contracted for, commissioned or first made available on commercial terms in the

territory of another Party, or to digital products of which the author, performer, producer,

developer or owner is a person of another Party, than it accords to other like digital products.

Similar language goes for the US-Singapore FTA:

A Party shall not accord less favourable treatment to some digital products than it accords

to other digital products.

The like product treatment concerns both physically- and digitally- delivered products. PTAs that

set non-discrimination requirement of like digital products may have additional provisions

defining the scope of the obligation. Examples of these additional stipulations include not

extending the scope of application to broadcasting,

exclusion of government procurement or

subsidies,

or inconsistency with obligations in the TRIPS agreement or Intellectual Property

Chapter.

Elimination of Digital Customs Duties

Nearly all PTAs contain a provision that sets an obligation not to impose customs duties on digital

products. See Singapore-Australia FTA and US-Singapore FTA, for example:

Neither Party shall impose customs duties on electronic transmissions, including content

transmitted electronically, between a person of a Party and a person of the other Party.

69 _{Wu ‘Digital Trade-Related Provisions in Regional Trade Agreements’ (n 62), 9-10.} 70 _{(CP)TPP, Article 14.4.1}

71 _{US-Singapore FTA, Article 14.3.3} 72 _{(CP)TPP, Article 14.4.4}

73 _{Japan-Mongolia EPA, Article 9.4.2} 74 _{Singapore-Australia FTA, Article 5.2} 75 _{Singapore-Australia FTA, Article 4.1}

14

A Party shall not apply customs duties or other duties, fees, or charges on or in connection

with the importation or exportation of digital products by electronic transmission.

The significance of this duty-free moratorium is that it contributes to wider adoption of digital

trade between PTA members, particularly pertaining to physical goods that can be digitized, such

as e-books, movies, and music.

For some countries, this obligation of non-imposition of customs

duties is the core of the e-commerce chapter, as it is one of the few legally binding digital trade

related obligation in the PTA.

This is the case in EU-Central America Association Agreement,

the Canada-Jordan FTA, and the India-Singapore Comprehensive Economic Cooperation

Agreement.

The prohibition of imposing customs duties is limited to digital products belonging

to PTA partners and does not extend to non-PTA partners based on MFN principle. Furthermore,

in most cases, this obligation extends to all forms of digital products regardless of their origin,

since it is complicated to track the source of a digital product when data can flow across borders

and various jurisdictions. It should be noted, however, that some PTAs choose a narrower approach

and do consider the rule of origin. Japan-Switzerland EPA, for instance, includes a requirement

that “upon request by the other Party, [each Party shall] explain how it determines the origin of a

digital product in implementing its obligations under paragraph 1”

and “shall cooperate in

international organisations and for a to foster the development of criteria determining the origin of

a digital product, with a view to considering the incorporation of such criteria into this

Agreement.”

_{Korea-Singapore FTA does not explicitly state this requirement but it can be}

inferred that it also takes the narrower approach.

Settlement of how to handle customs duties is crucial for digital trade, because while digital

products can be bought and be transferred online via Internet, it is also possible to carry the

physical form across borders.

Some PTAs may be more vocal on distinguishing these different

means of transmission, while others may not explicitly address this difference. In case of

Korea-76 _{US-Singapore FTA, Article 14.3.1}

77 _{WTO, ‘Fiscal Implications of the Customs Moratorium on Electronic Transmissions: The Case of Digitisable}

Goods’ (20 December 2016), JOB/ GC/114.

78 _{Wu ‘Digital Trade-Related Provisions in Regional Trade Agreements’ (n 62), 13.}

79 _{See EU-Central America Association Agreement, Article 201; Canada-Jordan FTA, Article 3.1; India-Singapore}

Comprehensive Economic Cooperation Agreement, Article 10.4

80 _{Japan-Switzerland EPA, Article 73.3} 81 _{Japan-Switzerland EPA, Article 73.4} 82 _{Korea-Singapore FTA, Article 14.4.1}

83 _{For example, think of ordering an e-book online by Amazon versus getting delivered a hard copy book to your}

15

Singapore FTA, the e-commerce chapter leaves the discretion to the governments of involved

parties “to determine the customs value of an imported carrier medium bearing a digital product

in accordance with the customs Valuation Agreement.”

Provisions in US FTAs are more specific

regarding digital products transmitted physically; customs duties are generally prohibited on

“digital products by electronic transmission”,

_{but when digital products are physically}

transmitted, customs value is to be determined based on the “cost or value of the carrier medium

alone” regardless of the actual “cost or value of the digital product stored on the carrier medium.”

Some PTAs clarify that the elimination of customs duties does not preclude members from

imposing internal taxes. CPTPP adds that the obligation “shall not preclude a Party from imposing

internal taxes, fees or other charges on content transmitted electronically, provided that such taxes,

fees or charges are imposed in a manner consistent with this Agreement.”

Similar language is

found in for example US-Morocco FTA,

the Additional Protocol to the Framework Agreement

of the Pacific Alliance,

and Costa Rica-Singapore FTA,

to list a few.

Cross-Border Data Flows and Data Localization

The provisions governing data (i.e. data flows, data protection, data localization) are of

considerable importance to privacy protection, and the scope significantly varies depending on

which regions are involved in the agreement. The concept of data flow has been introduced in a

relatively early stage, considering that it was addressed in the 2000 New Zealand-Singapore Closer

Economic Partnership Agreement (CEPA)

and was presented as a distinct provision in the 2007

KORUS e-commerce chapter, which places an intermediate level of commitment under the

statement that each Parties “shall endeavor to refrain from imposing or maintaining unnecessary

barriers to electronic information flows across borders”.

The first binding provision on

cross-border data flow is found in the 2014 Mexico-Panama FTA, which provides that each Party “shall

allow its persons and the persons of the other Party to transmit electronic information, from and to

84 _{Korea-Singapore FTA, Article 14.4.2} 85 _{US-Singapore FTA, Article 14.3.1}

86 _{See for example, US-Colombia Trade Promotion Agreement (COTPA), Article 15.3.2} 87 _{(CP)TPP, Article 14.3.2}

88 _{Footnote 1 to US-Morocco FTA, Article 14.3.1: “paragraph 1 does not preclude a Party from imposing internal}

taxes or other internal charges on digital products, provided that these are imposed in a manner consistent with this Agreement.”

89 _{Additional Protocol to the Framework Agreement of the Pacific Alliance, Article 13.4} 90 _{Costa Rica-Singapore FTA, Article 12.1.2}

91 _{CEPA, Annex 2.1, Schedule of Commitments of New Zealand} 92 _{KORUS, Article 15.8}

16

its territory, when required by said person, in accordance with the applicable legislation on the

protection of personal data and taking into consideration international practices.”

_{The (CP)TPP}

e-commerce chapter at a later stage has adopted a harder commitment on data-flow regulation;

Article 14.11 stipulates that each Party “shall allow the cross-border transfer of information by

electronic means, including personal information, when this activity is for the conduct of the

business of a covered person”

and nothing “shall prevent a Party from adopting or maintaining

measures […] to achieve a legitimate public policy objective.”

Further discussion on this

(CP)TPP provision will follow in section C and Chapter IV, since there is controversy over the

risk of data appropriation upon liberalizing digital trade. Trade agreements adopted post-(CP)TPP

have incorporated similar hard commitments in data-related provisions and proceeds further to

clarify the conditions in which restriction over data flow does not amount to “legitimate public

policy objective”.

Recent PTAs, such as the Korea-US FTA (KORUS), tend to more explicitly

include commitment on cross-border data flows, albeit it being hortatory in nature.

An interesting

exception is the trajectory of the EU, since the EU has been more reluctant when it comes to digital

trade rules in FTAs, particularly concerning data flows. This is since the EU members are required

to abide to the commitments of the General Data Protection Regulation (GDPR), which presents

high standards of data regulation. Instead of including a binding provision, a clause can be found

both in the 2018 EU-Japan EPA and the Digital Trade chapter of the currently ongoing negotiations

on EU-Mexico Modernized Global Agreement, which notes that parties will resume the discussion

on whether there is a need to add data flow provision to the given treaty once specified period has

passed since the implementation of the agreement.

Also note that data flow provisions are

sometimes found in chapters on services, since data flows are interlinked with sectors providing

financial and telecommunication services.

In comparison to provisions on data flows, all provisions on data localization to this date

have binding nature.

The first incidence of including data localization provision is the 2015

Japan-Mongolia FTA, which states that Parties are prohibited from requiring “a service supplier

93 _{Mexico-Panama FTA, Art. 14.10} 94 _{(CP)TPP Article 14.11.2}

95 _{(CP)TPP Article 14.11.3}

96 _{See USMCA, Article 11.19, footnote 6} 97 _{KORUS, Art. 15.8.}

98 _{EU-Japan EPA Article 8.81; EU-Mexico Modernised Global Agreement, Digital Trade Chapter, Article XX} 99 _{Burri and Polanco, ‘Digital Trade Provisions in Preferential Trade Agreements’ (n 58), 22-23.}

17

of other Party, an investor of the other Party, or an investment of an investor of the other Party in

the area of the former Party, to use or locate computing facilities in that area as a condition for

conducting its business”.

The TPP has included similar provision in 2015, which has been kept

intact in the CPTPP.

It also further clarifies that “each Party may have its own regulatory

requirements regarding the use of computing facilities, including requirements that seek to ensure

the security and confidentiality of communications” and that “nothing shall prevent a Party from

adopting or maintaining [inconsistent measures] to achieve a legitimate public policy objective”,

provided that the measure is (1) non-discriminatory and non-arbitrary, and (2) does not exceed the

requirements.

Most trade agreements following the (CP)TPP have adopted the wording of the

(CP)TPP template, with the exception of the 2017 Argentina-Chile FTA, which merely states that

States are to “recognize the importance” of not requiring local computer facilities, rather than

having a directly binding nature.

Intellectual Property (IP) Provisions

IP is a more recent terrain that caught the attention of PTAs. Although this paper primarily focuses

on the provisions in the e-commerce chapter, several components of the Intellectual Property

Rights chapter are noteworthy to mention in line with digital trade. These provisions impose

requirements regarding country-code top-level domain (ccTLD) domain names,

require

ratification or affirm commitments in the WIPO internet treaties,

mandate enforcement

mechanisms against those attempting to circumvent technological protection measures (TPMs),

specify requirements of internet service providers (ISPs) in exchange for ISP liability,

and

provide protection of rights management information (RMIs).

These provisions can provide

protection for rightsholders against illegal downloads and distribution of digital products.

Cooperation

Parties of PTAs mention a range of areas requiring regulatory cooperation which encompasses

commitments to collaborate on initiatives to govern cross-border digital transactions

and

101 _{Japan-Mongolia FTA, Article 9.10} 102 _{(CP)TPP, Article 14.13}

103 _Ibid.

104 _{Argentina-Chile FTA, Article 11.7} 105 _{(CPT)PP, Article 18.28}

106 _{(CPT)TPP, Article 18.7}

107 _{See for example, EU-Korea FTA, Article 10.12; (CPT)TPP Article 18.68} 108 _{(CPT)TPP, Article 16.11.29}

109 _{(CPT)TPP Article 18.69}

18

facilitate the incorporation of e-commerce into SMEs.

_{A small number of PTAs also include}

provisions to provide assistance, ranging from technical support to training and capacity building,

from a developed country to its developing PTA partner. An example is the EPA between EU and

CARIFORUM States to aid CARIFORUM states in obtaining sufficient information and

improving service supplier capacities to comply to the EU standards and regulations.

Recognition of the applicability of WTO rules to e-commerce

A common form of provision prominent in US FTAs

as well as in several Singaporean FTAs

specifies that the parties explicitly affirm to the WTO rules regarding matters affecting

e-commerce.

Such provision is absent from the CPTPP, however.

B. Evolution of E-Commerce Regulations on Bilateral/Plurilateral Level in the

Asia-Pacific Region

Paperless trading [2000-2002]

The expansion of PTAs arrived at a later period in the APAC region comparison to the U.S. or the

EU, where number of trade agreements greatly expanded in the 1990. Although mid-1990s was an

era in which the APAC region was opening up trade relationships and gearing towards

multilateralism, the ongoing political and historical unsettlement in the region delayed

implementation of PTAs.

In particular, the North Asian countries (i.a. Korea, China, Japan,

Hong Kong) have not been part of the global PTA game before 2000.

A few exceptions are, for

example, the Closer Economic Cooperation (CER) between Australia and New Zealand in 1983

and the South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA)

signed in 1981. The dynamic noticeably changed, however, in the aftermath of the 1997 financial

crisis. More attention was brought to PTAs and the call for institutional cooperation increased.

Starting from 1998, trade negotiations accelerated and more than 15 PTAs including APAC

countries have entered into force within the first five years.

111 _{Japan-Mongolia EPA, Article 9.12.3} 112 _{EU-CARIFORUM EPA, Article 121.} 113 _{US-Panama FTA Article 14.1.1}

114 _{See for example, Costa Rica-Singapore FTA, Article 12.1.1; Panama-Singapore FTA, Article 13.1;}

Korea-Singapore FTA, Article 14.2.1; CECA Article 10.1

115 _{See Table 1 in Annex A.}

116 _{T Feridhanusetyawan, Preferential Trade Agreements in the Asia-Pacific Region (2005). IMF, Issue 2005-2149,}

5-6.

117 _Ibid.

118 _{For example, trade initiatives/negotiations took place between Korea and Japan, ASEAN and China, Singapore}

19

Although e-commerce was yet a novice concept during this period, some bilateral

agreements in APAC region began recognizing the need for digital trade and have included

“paperless trading” chapters. For example, Chapter 4 of the Closer Economic Partnership (CEP)

between Singapore and New Zealand includes provisions on paperless trading and mentions the

aim of implementing the “APEC Blueprint for Action on Electronic Commerce” by calling parties

to the agreement to adopt “an electronic environment that supports electronic business applications

between each Customs administration and its trading community”.

Singapore has also included

a chapter on paperless trading in the New Age Economic Partnership (2002)

agreement with

Japan, emphasizing the need for cooperation on paperless trading and calling upon parties to

recognize electronic versions of trade related documents.

A Joint Committee on Paperless

Trading has also been established under Article 44.

Emergence of e-commerce chapters [2003]

The concept of ‘e-commerce chapter’ was first introduced in the Singapore-Australia FTA

(SAFTA) in 2003. Elements included in this e-commerce chapter include definitions,

commitments on transparency

_{and customs duties,}

_{reference to the UNCITRAL Model Law}

on Electronic Commerce,

and e-certification.

It also encompasses provisions on consumer

and data protection,

as well as issues of paperless trading.

The e-commerce chapter in SAFTA

is pioneering not only because it is the first PTA in the APAC region introducing an e-commerce

chapter, but also because it is comprehensive in nature; the topics covered in this chapter are still

important factors for regulation at the present time.

Mixed picture of e-commerce regulations [2004-2011]

More divergence among e-commerce chapters of PTAs in the APAC occurred between 2004 and

2011. This was a period when there was no specific pattern among APAC countries and the level

of liberalization significantly varied among agreements.

119 _{Agreement between New Zealand and Singapore on a Closer Economic Partnership (2000), Article 12.}

120 _{Note: Along with the chapter on paperless trading, Article 1 of this agreement states “promoting paperless trading}

between the Parties” as one of the objectives of the Agreement.

121 _{Agreement between Japan and Singapore for a New-Age Economic Partnership, Article 40-43.} 122 _{SAFTA, Article 1 Chapter 14}

123 _{SAFTA, Article 2, Chapter 14} 124 _{SAFTA, Article 3 Chapter 14} 125 _{SAFTA, Article 4 Chapter 14} 126 _{SAFTA, Article 5 Chapter 14} 127 _{SAFTA, Article 6-7, Chapter 14} 128 _{SAFTA, Article 8 Chapter 14}

20

At the lower end of the liberalization scale is the Japan-Philippines EPA in 2006, which

presents a retroactive image by only including a paperless trading chapter, as was reflected in PTAs

in the beginning of the millennium. In comparison, bilateral trade agreements between Australia

and Thailand (2004/2005) and between New Zealand and Thailand (2005) appears to adhere to

more widespread format of an e-commerce chapter as was in the SAFTA. A bit higher up on the

liberalization scale is the Singapore-India Comprehensive Economic Cooperation Agreement

(2006), but it is not as liberalized as the Korea-Singapore FTA (2005/2006) which guarantees full

scale non-discriminatory treatment of digital products and a duty-free moratorium. Although the

e-commerce chapter in Singapore-India CECA is largely alike the one in Korea-Singapore FTA,

the main difference is that the CECA does not include MFN or national treatment regarding digital

products. Furthermore, the ASEAN-Australia-New Zealand PTA of 2009 offers an unusually

extensive e-commerce chapter, which addresses wide range of topics ranging from paperless

trading and data/consumer protection to questions of cooperation.

It should, however, be also noted that large number of PTAs involving China or Japan

during this period do not contain e-commerce chapters because each government was reluctant

towards extensive e-commerce provisions.

The FTA between China and New Zealand in 2008

did include some matters on digital trade, but instead of having a separate e-commerce chapter,

these questions were dealt upon on chapters on TBT and conformity assessments.

New generation of e-commerce liberalization [2014+]

PTAs concluded after 2014 resumed the development towards a more open e-commerce. A

country that has shifted the most is Japan, which has been maintaining a more restrictive stance

during 2004-2011. This change can be observed from the Japan-Australia Economic Partnership

Agreement (JAEPA) of 2014, in which Japan consented to adopt a set of extensive e-commerce

regulations that resembles the regulations set out in the Singapore-India PTA and the

Korea-Singapore PTA. Similar achievement is observed in the Japan-Mongolia EPA (2015), in which the

e-commerce chapter takes an additional step to (1) prohibit the requirement of local computing

facilities,

(2) call upon Parties to regulate unsolicited commercial e-mail,

and (3) prohibit the

129 _{See for example, Japan-ASEAN EPA and other agreements Japan entered with India, Indonesia, Malaysia and}

Vietnam during 2007-2011.

130 _{Japan-Mongolia EPA, Article 9.10} 131 _{Japan-Mongolia EPA, Article 9.7}

21

requirement of transfer of or access to source code.

_{A more recent achievement is the EU-Japan}

EPA, which entered into force in February 2019.

As a result of these developments, a complex web has been formed in the APAC region

through intersection of multiple bilateral, plurilateral and regional trade agreements.

Among

these PTAs, there is variance to what extent digital trade should be liberalized. Some agreements

that are unaffiliated to U.S. trade agreements refrain from including an extensive e-commerce

chapter.

Others contain a mixture of binding and non-binding rules on digital trade and ICT

cooperation, in addition to Asia-Pacific Economic Cooperation (APEC) statements and other

agreements on cooperation.

The free trade area agreement between ASEAN-Australia-New

Zealand (AANZFTA) is also a different model; while it contains a comprehensive e-commerce

chapter with cooperation commitments and deep digital trade rules, the agreement does not contain

e-commerce provision on applicability of WTO rules or services, obligation of non-discrimination,

or a chapter on IP regulation.

Mega PTAs emerged in response to the call for governance over

the extension of GVCs.

C. Two Competing Mega-Regional Paths in the Asia-Pacific: CPTPP and RCEP

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), also

known as the TPP-11, entered into force in December 30

_{, 2018 and represents approximately}

13.5% of global GDP.

This agreement was formed between 11 countries from the Asia-Pacific

region, who were originally signatories to the TPP.

_{Despite the fact that the US is not part of the}

pact, the CPTPP is still widely regarded as a new norm of trade agreements and a template for

132 _{Japan-Mongolia EPA, Article 9.11}

133 _{European Commission, ‘EU-Japan Trade Agreement Enters into Force’ (31 January 2019).}

<http://trade.ec.europa.eu/doclib/press/index.cfm?id=1976#:~:text=31%20January%202019-,EU%2DJapan%20trad e%20agreement%20enters%20into%20force,trade%20zone%20in%20the%20world.>

134 _{See Feridhanusetyawan, Preferential Trade Agreements in the Asia-Pacific Region (n 116), 9-11.} 135 _{See for example, India-Korea FTA and Japan-Vietnam FTA}

136 _{See for example, China-ASEAN FTA, India-Thailand FTA, Maghreb Arab Union; Chauffour and Christophe,} Preferential Trade Agreement Policies for Development: A Handbook (2011), 259.

137 _{Burri and Cottier, Trade Governance in the Digital Age: World Trade Forum (2012), 199.}

138 _{F Kimura and L Chen, ‘Implications of Mega Free Trade Agreements for Asian Regional Integration and RCEP}

Negotiation’ (2016), 1-2.

139 _{Government of Canada, ‘Economic Impact of Canada’s Participation in the Comprehensive and Progressive}

Agreement for Trans-Pacific Partnership’ (16 Feb. 2018). Office of the Chief Economist, Global Affairs Canada <

https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/cptpp-ptpgp/impact-repercussions.aspx?lang=eng>

140 _{Note: The CPTPP replaced the TPP in the aftermath of Trump Administration’s announcement on US’}

withdrawal from the TPP, which precluded the agreement from entering into force. Further overview on the CPTPP can be found on New Zealand Foreign Affairs and Trade website <https://www.mfat.govt.nz/en/trade/free-trade-agreements/free-trade-agreements-in-force/cptpp>