INF/ECOM/5  
 
25 March  2019 
(19-1854) Page: 1/4 
 Original: English  
 
JOINT STATEMENT ON E LECTRONIC COMMERCE I NITIATIVE* 
COMMUNICATION FROM T HE UNITED STATES  
The following communication, dated 12 April 2018, is being circulated at the request of the 
delegation of the United States.  
 
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1  INTRODUCTION  
1.1.  The United States is pleased to engage with like -minded WTO Members in exploratory work 
toward nego tiations on digital trade1 and is encouraged by the diversity of WTO Members that have 
signed onto the Joint Statement and attended the inaugural meeting.  The United States offers this 
paper in response to the request by the co -chairs of the Joint Statemen t initiative for submissions.  
1.2.  This paper outlines trade provisions that represent the highest standard in safeguarding and 
promoting digital trade.  As is increasingly the case for all WTO Members, digital trade is essential to 
the U.S. economy.  Digital tra de also increasingly serves as a critical driver of global economic 
growth.  According to UNCTAD, the sale of goods and services over the Internet was worth $25.3 
trillion in 2015, and that value continues to rise.2 Meanwhile, firms across all sectors of al l sizes, 
including small - and medium -size enterprises, are leveraging innovative Internet services to enable 
machine learning, drive the Internet of things, and achieve the efficiencies necessary to compete in 
a global economy.  Comprehensive, ambitious tra de disciplines will benefit developed and developing 
countries alike by ensuring that the global digital economy remains an open, fair, and competitive 
commercial environment in which all participants can prosper.  
1.3.  The trade provisions described below have been developed over time in response to real -world 
digital trade barriers and would provide consumers and companies with commercially significant 
guarantees.  Meaningful trade rules can support the role of the digital economy in promoting global 
economic gr owth and development while also allowing governments to address the growing concerns 
of Internet users about the security and privacy of their personal data.  Achieving consensus on such 
provisions  would also demonstrate the WTO' s ability to respond to tran sformations in the global 
economy.  
1.4.  The United States offers this paper for discussion and without prejudice to any future 
negotiating position and looks forward to work ing with other M embers toward a successful outcome.  
2  FREE FLOWS OF INFORM ATION  
2.1.  The cross -border flow of data is increasingly the lifeblood of international trade.  According to 
the McKinsey Global Institute, cross -border data flows generated $2.8 trillion in economic value in 
                                                
* This document was originally circulated as JOB/GC/ 178 dated 12 April 2018.  
1 The WTO defines "electronic commerce " as the "production, distribution, marketing, sale or delivery of 
goods and services by electronic means. " Common usage, however, increasingly defines e -commerce as 
commerce in goods enabled by the Internet; other international organizations have adopted this narrower 
definition.  The United States prefers the greater clarity of the term "digital trade, " which more clearly 
encompasses all trade -related aspects of commerce by electronic means —including all elements of the WTO 
definition of "electronic commerce "—and employs this term t hroughout this document.  
2 UNCTAD.  "Information Economy Report 2017: Digitalization, Trade and Development. " 2017. 
http://unctad.org/en/PublicationsLibrary/ier2017_en.pdf.  INF/ECOM/5  
 
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  2014—a greater impact on world GDP than global trade in goods.3 This value is continuing to grow, 
as firms of all sizes across all industries leverage the economic and security advantages of distributed 
data storage and processing.  Trade rules that guarantee the ability to move data in the most 
economically and technically efficient manner —subject to reasonable safeguards like the protection 
of consumer data when it is exported —can support growth across all sectors of the economy.  Such 
rules would include:  
• Cross -Border Transfer of Data : Internet users must be able to move da ta as they see fit.  
Trade rules can ensure that both consumers and companies are able to move data across 
borders without arbitrary or discriminatory restrictions.  
 
• Preventing Data Localization : The economies of scale afforded by Internet -enabled services 
reduce costs, improve quality of service, and strengthen cybersecurity for firms.  Trade rules 
can ensure that companies are not required to build or employ unique, capital -intensive 
digital infrastructure in every jurisdiction they serve, allowing them to better serve their 
customers.  
 
• Prohibiting Web Blocking : A free and open Internet enables users to take advantage of a 
wealth of information and services anywhere in the world.  Trade rules, including rules 
ensuring access to networks, can ensure that gove rnments do not arbitrarily block or filter 
online content, nor require Int ernet intermediaries to do so.  
 
3  FAIR TREATMENT OF DIGIT AL PRODUCTS  
3.1.  WTO Members have long recognized the importance of ensuring fair, nondiscriminatory, duty -
free treatment of digital products and services.  Digital products like apps, songs, books, games, and 
videos are created disproportionately by small businesses, individual artists, and entrepreneurs —
who are generally least able to overcome trade barriers.  WTO Members can pr otect these creators 
from unfair treatment and guarantee that they can sell their products on a level playing field around 
the world through the continued application of free trade principles to digital products.  These 
principles include:  
• Duty-Free Treatment of Digital Products : Since 1998, WTO Members have agreed not to 
impose customs duties on electronic transmissions —this agreement clearly requires the 
tariff-free treatment of digital products.  Trade rules can ensure that governments con tinue 
and make permanent the practice of eschewing customs duties on digital products.  
 
• Non-Discriminatory Treatment of Digital Products : The principle of non -discrimination is at 
the core of the global trading system.  Trade rules can ensure that these pr otections against 
discrimination apply when products are digitized a nd distributed electronically.  
 
4  PROTECTION OF PROPRI ETARY INFORMATION  
4.1.  Many of the most innovative participants in the digital economy are in the business of investing 
in and monetizing pro prietary information, such as computer source code, algorithms, and trade 
secrets.  Any condition on market access that requires the disclosure of such information puts these 
business models at risk —particularly if such disclosure results in transfer of the  information to a 
competitor.   Likewise, mandating the use of a certain technology or standard where legitimate 
alternatives exist undermines the ability of firms to choose the technology that works best for them.  
By dis -incentivizing investment and innova tion, these strategies undercut the global economy and 
require responsive trade rules.  Such rules should include:  
• Protecting Source Code : Firms should not have to share their source code, trade secrets, or 
algorithms as a condition of market access.  Trade  rules can ensure that governments do not 
mandate access to such proprietary information or share it with local firms, while preserving 
the ability of authorities to achie ve legitimate regulatory goals.  
 
                                                
3 McKinsey Global Institute.  "Digital Globalization: The New E ra of Global Flows. " February 2016. 
www.mckinsey.com/business -functions/digital -mckinsey/our -insights/digital -globalization -the-new-era-of-
global -flows.  INF/ECOM/5  
 
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  • Barring Forced Technology Transfer : Conditioning market access on forced transfers of 
technology deters foreign investment and prevents local firms from accessing world -class 
digital services.  Trade rules can prohibit requirements to transfer technology, trade secrets, 
or other proprietary information.  
 
• Barring Discriminatory Technology Requirements : Requiring the use of a national technology 
as a condition of market access undermines a core strength of the digital economy: the 
competition between alternative technological solutions, based on market needs  and 
demands.  Trade rules can prevent arbitrary mandates to use national technology.  
 
5  DIGITAL SECURITY  
5.1.  Ensuring the security of digital networks, data, and transactions is a growing concern for 
customers and companies alike.  Fortunately, tools and strategi es exist that can help mitigate 
cybersecurity threats and minimize the impact of incidents when they occur.  Unfortunately, some 
governments have taken highly prescriptive approaches to cybersecurity that have severely 
restricted digital trade.  Cybersecurit y also is increasingly cited as a rationale for restrictions on the 
free flow of information.  While trade provisions cannot address all cybersecurity issues, certain rules 
can ensure that firms have the ability to adhere to best practices in protecting dig ital security and 
prevent the most market -distortive approaches.  These provisions include:  
• Encryption : Encryption is an important tool to guarantee privacy and security in the digital 
realm.  Trade rules can ensure that suppliers are able to use innovative and secure encryption 
technology, while providing for government access to data consistent with applicable law.  
Given the pervasiveness of encryption throughout the digital ecosystem, restricting its use 
or mandating country -specific encryption standards c ould seriously impede digital trade.  
 
• Cybersecurity : While cybersecurity threats undermine confidence in digital trade, overbroad 
efforts to protect cybersecurity can stifle the digital economy and even reduce security.  
Trade rules can ensure that governme nts build their capabilities to prevent and respond to 
cybersecurity incidents by adopting a risk -based approach to mitigating threats that avoids 
trade -restrictive and trade -distortive outcomes.  
 
6  FACILITATING INTERNE T SERVICES  
6.1.  As the digital economy conti nues to evolve, innovative digital services offer immense new value 
to consumers and other firms.  These innovations sometimes present challenges, and some 
governments have responded by applying legacy regulatory frameworks to new and very different 
busines s models.  For example, "over the top"  (OTT) services, which allow users to communicate by 
voice, text, and video through the Internet, are occasionally subjected to regulations designed for 
telecommunications services, despite the fact that the OTT market is highly competitive and that 
OTT services are typically provided on a cross -border basis.  Regulatory action should address specific 
harms, rather than applying unnecessary rules to innovative services.  Further, governments can 
encourage the development o f innovative Internet services by undertaking certain trade disciplines, 
including:  
• Digitally Relevant Market Access Commitments : The services classifications that form the 
basis for specific commitments under the GATS are seriously outdated, particularly for 
communications services.  Countries should agree that old classifications and commitments 
can apply to new technologies.  Further, new commitments should allow for the cross -border 
supply of Internet -enabled services that compete against tra ditional communication 
services.  
 
• Open Government Data : Facilitating public access to and use of government information 
fosters economic and social development and encourages innovative new uses of that 
information.  Trade rules can encourage governments to  make public information available 
in machine -readable, open formats that can be searched, retrieved, used, reused, and 
redistributed.   
 
• Liability for Non -IP Content : Governments holding Internet intermediaries liable for content 
created by third parties c an suppress vibrant online forums and stifle innovation in services 
that depend on user engagement.  Trade rules can guarantee that merely storing, processing, INF/ECOM/5  
 
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  or transmitting content does not make intermediaries legally liable for the content of that 
data, while still allowing for measures that ensure rigorous enforcement of intellectual 
property rights and criminal laws.  
 
7  COMPETITIVE TELECOM MARKETS  
7.1.  Achieving a competitive telecommunications market is an essential first step for any country 
to overcome the digital divide.  Over 20 years after it was concluded, the WTO Telecommunications 
Reference Paper still describes accurately the stepping stones to a market in which multiple firms 
invest and compete to provide the best services to consumers: b asic competitive safeguards, 
guaranteed rights to interconnection, transparent licensing and allocation of spectrum, and an 
independent regulator.  Every WTO member —especially those looking to increase competition in the 
telecommunications sector —should be ready to adopt the Reference Paper into their GATS schedule 
and provide market access to telecommunications investors and cross -border suppliers.   
8  TRADE FACILITATION  
8.1.  Digital trade includes the substantial and growing trade in goods purchased over the Inter net 
or otherwise facilitated through digital means.  The provisions included in the WTO Trade Facilitation 
Agreement (TFA) can make very direct contributions to digital trade: administrative and at -the-
border barriers are often a bigger problem for exporter s than tariffs.  WTO Members looking to 
promote digital trade should fully implement the TFA.  As the TFA acknowledges, a de minimis 
exemption for customs duties and taxes helps packages move more quickly and smoothly across 
borders, without affecting import ant law enforcement efforts.  A reasonable de minimis level is 
particularly important to small - and medium -sized exporters.  These entities lack the scale to absorb 
tariffs and the infrastructure to comply with customs rules in multiple jurisdictions.  A reas onable de 
minimis  level ensures that small - and medium -sized exporters can participate fully in the global 
economy.  
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