Think Piece

New WTO Trade Rules for Bits and Bytes?

November 2015
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The major trading nations have been busy with trade agreements—free, preferential, and bilateral—incorporating Trade-Related Aspects of Intellectual Property Rights (TRIPS)-plus and World Intellectual Property Organization (WIPO) Internet Treaty provisions into their respective schedules, impacting the trade in digital intangible products. As communication networks have evolved from real-time, point-to-point dedicated circuit-switched connections over copper cable to complex multipoint, packet-switched connections over distributed fibre optic networks worldwide, the value and speed of communication has expanded exponentially. Now, complex audiovisual media services run over a series of layers in the packet-switched chain. Dominance is not just about control of the physical infrastructure layer but all layers of the Internet protocol stack from application and messaging to content layers where most of the intellectual property resides. But the question is—will such trade agreements take account of these nuanced changes and will they be stepping stones or stumbling blocks to any future multilateral provision on digital trade?

This paper briefly looks at some of the more recent and larger FTAs, although many of the operative provisions for some, such as the Trade in Services Agreement (TiSA), are still not in the public domain. Nevertheless, the wording of provisions in agreements, such as the Korea-United States Free Trade Agreement (KORUS), provides a good overview of what has been achieved. Dispute resolution procedures in FTAs/PTAs are not uniform and there is concern that judgments, perhaps through private arbitration procedures, will create a patchwork of rules for digital trade. Certainly, the World Trade Organization (WTO) could strengthen its role in monitoring the performance and impact of the new PTAs on the horizon, in effect becoming a more significant source of information on these agreements than previously and matching its existing strengths in adjudication and negotiation. Regulation in the communications sector has generally favoured separating content from infrastructure. Nevertheless, when it comes to delivering digital products (whether goods and/or services) over a network, the very nature of the delivery method requires a holistic view to traditionally separate goods and services regulation, content, and infrastructure regulation. This paper points to (a) expanding and deepening existing WTO commitments; (b) encouraging the WTO Secretariat to ensure that amendments to TiSA are made in line with existing General Agreement on Trade in Services (GATS) commitments and/or improving upon current provisions specifically for digital trade; or (c) pursuing a single new instrument for the digital economy.

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