JOB/GC/178  
 
12 April 2018  
(18-2236) Page: 1/4 
General Council  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.  
 
_______________  
 
1  INTRODUCTION  
1.1.  The United States is pleased to engage with like -minded WTO Members in exploratory work 
toward negotiations 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 St ates 
offers this paper in response to the request by the co -chairs of the Joint Statement initiative for 
submissions.  
1.2.  This paper outlines trade provisions that represent the highest standard in safeguarding and 
promoting digital trade.  As is increasingly t he case for all WTO Members, digital trade is essential 
to the U.S. economy.  Digital trade 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 all 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 trade disciplines will benefit developed 
and developing countries alike by ensuring that the global digital economy remains an open, fair, 
and competitive commercial envir onment 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 growth 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 
transformations 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.  
                                                
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 organiza tions 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.  JOB/GC/178  
 
- 2 - 
 
  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 
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 ru les would include:  
 Cross -Border Transfer of Data : Internet users must be able to move data 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, capi tal-
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 t he world.  Trade rules, including rules 
ensuring access to networks, can ensure that governments 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 
protect 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 continue 
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 protections 
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 proprietary 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 techn ology that 
works best for them.  By dis -incentivizing investment and innovation, these strategies undercut the 
global economy and require responsive trade rules.  Such rules should include:  
                                                
3 McKinsey Global Institute.  "Digital Globalization: The New Era of Global Flows. " February 2016. 
www.mckinsey.com/business -functions/digital -mckinsey/our -insights/digital -globalization -the-new-era-of-
global -flows.  JOB/GC/178  
 
- 3 - 
 
   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 legitima te regulatory goals.  
 
 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 competi tion 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 con cern for 
customers and companies alike.  Fortunately, tools and strategies 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.  Cybersecurity 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 th at firms have the ability to adhere to best practices in protecting digital 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 could 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 governments 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 continues 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 
business 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 in novative services.  Further, 
governments can encourage the development of 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 traditional communication 
services.  
 JOB/GC/178  
 
- 4 - 
 
   Open Government Data : Facilitating public access to and use of government information 
fosters economic and social development and encourages innovative new uses o f 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 can suppress vibrant online forums and stifle innovation in 
services that depend on user engagement.  Trade rules can guarantee that merely storing, 
processing, 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: basic competitive safeguards, 
guaranteed rights to interconnection, transparent licensing and allocation of spectrum, and an 
independent regulator.  Every WTO member —especially those looking to increase co mpetition 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 substantia l and growing trade in goods purchased over the Internet 
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 exporters 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 important 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 
reasonable de minimis  level ensures that small - and medium -sized exporters can participate fully 
in the global economy.  
__________