Some E-Commerce Aspects of Service Delivery in WTO Law. Chi Carmody Faculty of Law University of Western Ontario

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1 Some E-Commerce Aspects of Service Delivery in WTO Law Chi Carmody Faculty of Law University of Western Ontario

2 The WTO Agreement WTO created in 1994; now has 157 members WTO is an umbrella consisting of disciplines on: goods (GATT) services (GATS) trade-related intellectual property (TRIPS) electronic delivery of services principle of coherent interpretation of WTO disciplines: a treaty interpreter must read all applicable provisions of a treaty in a way that gives meaning to all of them, harmoniously". (Argentina Footwear (AB)).

3 The Matrix of WTO Law WTO Agreement generally follows an obligation/exception or obligation/right matrix. broad obligations MFN, NT followed by limited exceptions GATT Art. XX, GATS Art. XIV

4 Exception-versus-Right Distinction in WTO Law In cases where one provision permits, in certain circumstances, behaviour that would otherwise be inconsistent with an obligation in another provision, and one of the two provisions refers to the other provision, the Appellate Body has found that the complaining party bears the burden of establishing that a challenged measure is inconsistent with the provision permitting particular behaviour only where one of the provisions suggests that the obligation is not applicable to the said measure. Otherwise, the permissive provision has been characterized as an exception, or defence, and the onus of invoking it and proving the consistency of the measure with its requirements has been placed on the responding party. (EC Hormones (AB))

5 GATS Exception (GATS Art. XIV) GATS Art. XIV Members may impose measures (a) necessary to protect public morals or to maintain public order; (b) necessary to protect human, animal or plant life or health; (c) necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement including those relating to: (i) the prevention of deceptive and fraudulent practices or to deal with the effects of a default on services contracts; (ii) the protection of the privacy of individuals in relation to the processing and dissemination of personal data and the protection of confidentiality of individual records and accounts; (iii) safety;

6 Interpreting Exceptions in WTO Law exceptions in some measure champion minority rights and divergent interests (Qureshi) exceptions: 1. onus of proof is on the invoking party 2. in national practice, exceptions are interpreted strictly 3. aims and objectives of the WTO Agreement must be taken into account in interpreting exceptions, leading to a more nuanced approach. WTO aims and objectives include trade liberalization special and differential treatment

7 GATS and Domestic Regulation (GATS Art. VI) In sectors where specific commitments are undertaken, each Member shall ensure that all measures of general application affecting trade in services are administered in a reasonable, objective and impartial manner.

8 Recent Developments in the TPP Negotiations July 2012 U.S. business groups called on governments in TPP to support a U.S. proposal aimed at ensuring free flow of data across borders. U.S. foresees binding language obligating TPP countries: i. not to block the cross-border transfer of data over the Internet. ii. not require a company to locate its data servers in the country's territory as a condition of doing business there (Inside U.S. Trade, July 22) [iii. to allow business enterprises from TPP parties to transact business through e-commerce platforms without establishing a commercial presence in each country. - proposed]

9 National Positions on Privacy U.S. proposal would apply binding, enforceable language committing TPP countries to generally refrain from blocking the cross-border transfer of all in-bound and outbound data over the Internet, while allowing for a certain number of exceptions Australian proposal, by contrast, would specifically allow TPP countries to put in place restrictions on the free flow of data, so long as the country can justify that they are not disguised barriers to trade, according to the informed source. seven out of the current group of nine TPP partners support the Australian proposal, while the U.S. proposal is supported by one other member.

10 The U.S. Proposal (I) concerning privacy, the U.S. proposal contains a number of options that companies could use to ensure they are protecting sensitive personal data, including an enforceable code of conduct. generally speaking, this approach would allow businesses themselves to come up with the best way to guard sensitive data, but then would make those business practices fully enforceable in some way by TPP governments. The White House included this concept of a code of conduct in its February 2012 Consumer Data Privacy Bill of Rights. Similarly, that document stated that it should be voluntary for companies to sign up to such a code of conduct, but that once companies made commitments under such a code, they would be fully enforceable through the Federal Trade Commission (FTC).

11 The U.S. Proposal (II) That Consumer Data Privacy Bill of Rights was part of an overall blueprint to help improve privacy protections for consumers and ensure that the Internet remains an engine for innovation and economic growth, according to a White House press release issued last February. The blueprint was meant to guide efforts to give users more control over how their personal information is used on the Internet. In the TPP talks, however, Australia had viewed a code of conduct as insufficient to satisfy its current privacy laws, which place strict conditions on transferring personal information outside of borders. In its new draft privacy law, Australia also plans to tighten the rules for sending personal data outside the country still further (Inside U.S. Trade, July 6).

12 Legal Consequences of the U.S./Australia Difference U.S. position focuses on: obligation to allow free flow of data (liberalization approach) onus is on defending country what sort of prefatory language will be attached to the exception (GATS Art. XIV necessary to etc.) and what is the appropriate balancing test? any additional requirements on the invocation of the exception or on its application in fact (i.e. no arbitrary or unjustifiable discrimination, disguised restriction on trade in services as in GATS Art. XIV preamble) Australian position focuses on: presumptive right of country to regulate (regulatory approach) limitations are justifiable so long as they are not barriers to trade reminiscent of WTO regulation in the sanitary and technical areas (SPS/TBT)

13 WTO Work Program on E-Commerce (1998) The purpose of GATS Article VI is to recognize the right of WTO members to regulate services while at the same time ensuring that such regulations do not constitute an unnecessary barrier to trade. During the WTO's Work Programme on E-commerce (1998), it was the general view of the GATS Council that provisions concerning domestic regulation in Article VI of the GATS apply to the supply of services through electronic means. The GATS Council, however, did not articulate how to apply GATS Article VI to ecommerce and there are a number of open issues regarding: the desirable level of regulation affecting e-commerce; a specific Article VI discipline on regulations affecting e-commerce; and the relationship between Article VI and Article XIV with respect to e- commerce.

14 Thank you - Merci