Published 12 November 2024
Veiled in near-impenetrable legalese, Article 34 of the 25-page draft WTO agreement on e-commerce holds the key to reviving the global trade body. The unusual clause – inserted as an attempt to dismantle WTO’s “most-favoured-nation” principle – asks hard questions about how and why the organization, set up to salve the painful lessons left by the Second World War, has struggled for decades to succeed.
Almost from the inception of the World Trade Organization, electronic commerce has been on the organization’s agenda. It has a long history and it has not been pretty. For more than 25 years, the organization’s members have been unable to agree even on basic definitions. Efforts to create e-commerce rules have sputtered for many reasons. Foremost among them are the obstacles strewn across the negotiating path by some of the organization’s most important members, including India, South Africa, the United States.
But this state of play is changing. Pushing back a handful of opponents, more than 80 members of the WTO group working on digital trade released a "stabilized text" for the Joint Statement Initiative (JSI) on Electronic Commerce in July 2024, marking the first time the battered trade body has managed to draft global digital rules.
At the heart of the WTO’s failures lie many of the organization’s longest-held canons: decision-making by consensus and non-discrimination in applying the rules. The tradition of taking major decisions by consensus stems from the desire of all WTO members to protect their rights by ensuring that new rules are not forced upon them. Agreed rules are applied to other WTO members on a non-discriminatory basis known as the "most-favoured-nation" (MFN) treatment. A new push to break the deadlock on e-commerce would relegate MFN, meaning it would benefit only those countries that participate in the negotiations while excluding opponents from enjoying any benefits that have been negotiated.
Download National security question at the heart of the WTO e-commerce deal by Keith Rockwell:
Crossing over the finish line of the e-commerce talks will test institutionally entrenched methods of incorporating agreements into the WTO’s legal framework. Cutting across the upheaval over the "most-favored-nation" principle and the practice of consensus lies the politically sensitive question of essential national security in this set of plurilateral negotiations and beyond. This issue is extremely delicate, not least for the United States, but it has become central to any serious discussion on reforming the organization and particularly the WTO’s dispute settlement system, once seen as the organization’s crown jewel but now rendered inoperable by Washington.
The road to the e-commerce agreement offers a template on how the WTO might address its future by fixing the way it makes decisions, writes Hinrich Foundation Senior Research Fellow Keith Rockwell. The playbook, if adopted in future negotiations, would create the means for the plurilateral approach to legalize a WTO agreement without needing a consensus of 166 members. Ultimately, it would restore wind in the sails of a WTO held hostage by members that have used its non-discrimination ideals against the institution itself.
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Author
Keith M. Rockwell
Keith M. Rockwell is a Senior Research Fellow at the Hinrich Foundation. Prior to his retirement in June 2022, Keith served as a Director at the World Trade Organization (WTO) and spokesperson for the organization for more than 25 years. He also is Global Fellow at the Wilson Center.
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