TISA Negotiations: Yes To E-Commerce, Data Flows, No To IPR, Data Protection?

After two years of negotiations, the draft Trade in Services Agreement (TISA) stands at 17 horizontal and sector-specific proposals, negotiators told Intellectual Property Watch after the 2-5 December Geneva round of negotiations. The sector-specific annexes of the agreement, sources confirm, include one on telecommunication and one all e-commerce aspects.

TISA is intended to open up markets for trade in services addressing issues like market access, national treatment and exemptions.

With infrastructure and content issues included in the treaty talks between 23 World Trade Organization members meeting outside the WTO, questions have been raised about including data protection, currently under review in the European Union, and internet provider liability and intellectual property rights protection. Data protection would be unharmed, and intellectual property would not be touched at all, say the parties in Brussels and Bern.

Given “surprises” from earlier trade negotiations, only public scrutiny of texts might lay concerns to rest. Considerations by the negotiators themselves about potential contradictions in texts of the general and sectorial parts illustrate that close scrutiny is necessary. Viviane Reding, rapporteur of the European Parliament for TISA, has pushed for a new EP monitoring group, a novelty for a trade agreement.

Plurilateral Band-Aid to WTO Miss

TISA negotiations started in 2012 under joint chairmanship of the United States, Australia and the EU, convening the “really good friends” to conclude a comprehensive trade in services agreement not possible in the WTO, they agreed.

With services becoming ever more important – and evermore cross-border – the plurilateral agreement should include obligations with regard to most-favoured nation treatment, market access, national treatment, according to the Swiss State Secretariat for Economic Affairs. Export subsidies like the setting up of “centres providing infrastructure in order to support IT or software experts” (an example given among others by the Swiss delegation) could be limited, the Swiss delegation explained in a document its delegates presented at the most recent round.

Work Done, Work Ahead

The December 2014 negotiation round was number 10, according to the EU, nine according to Canada, and at least 14, said Switzerland.

Annexes now exist on financial services, telecommunication, e-commerce, all modes of transport, professional services, delivery services, direct selling, governmental contracts on services, environmental services, energy services and patient mobility, according to the EU Commission. Patient mobility was controversial and opposed at least by the EU.

The group of negotiators has expanded from 16 to 23 parties, according to updated lists. This includes, besides the original convenors, Canada, Chile, Colombia, Costa Rica, Hong Kong, Iceland, Israel, Japan, Liechtenstein, Mexico, New Zealand, Norway, Pakistan, Panama, Paraguay, Peru, South Korea, Switzerland, Taiwan and Turkey. China and Uruguay have indicated interest in joining, negotiating parties report. Both the EU and Switzerland confirmed they are supportive of China’s joining.

What has also changed over the two years can be qualified as a kind of ACTA-effect. The failure of the notorious Anti-Counterfeiting Trade Agreement (ACTA) in Europe and Switzerland and, one might add, a petition to stop the US-EU Trans-Atlantic Trade and Investment Partnership (TTIP) supported by over a million EU citizens, have also resulted in TISA documents being made available online, at least to some extent. But so far TISA has not been included in the transparency initiative just announced by new EU Trade Commissioner Cecilia Malmstroem for TTIP.

Telecom Chapter, Allowing for Access to Competing Networks

The telecom chapter did cover, the Commission explained, “all regulatory issues typical to this sector: access to networks, independence of regulator, non-discriminatory management of frequencies, universal services, number portability.”

The most recent negotiation session on telecommunications had focused in particular on the market access offers, obligations for major suppliers and transparency in the international mobile roaming. In effect, one expert from the EU explained to Intellectual Property Watch, the issues were similar to access rules laid out in the EU Telecom package, allowing competitors to interconnect and use existing networks.

But hidden in the many pages lie some sensitive issues. “Forced localization” and “free flow of data” are two with regard to e-commerce and telecom. “Governments should not require ICT service suppliers to use or establish any local infrastructure, as a condition for the supply of services,” an initial text innocently reads. Yet service localization has developed much more into a menace to some national industries with the revelations of Edward Snowden about massive surveillance.

Brazil in a first reaction declared platform service providers would have to keep data national (in Brazil), and some EU countries like Germany for a while talked about a German or Schengen routing.

Localization also has another aspect, slightly overlooked as experts like Pierre Sauvé, director of external programmes and academic partnerships at the World Trade Institute (WTI) in Bern, have underlined for some time now: the issue of taxation of cross-border services in the digital colonies of large US-based platforms.

With the inclusion of obligations to not obstruct providers of transfers of data, more generally labelled as free flow of information, another topic contentious at least in Europe is on the table: the issue of privacy.

Hot Potato Data Protection

Reding, the former European Commission vice-president pushing for data protection and now a member of the Parliament and rapporteur for TISA, warned in an International Trade Committee (INTA) debate: “What is been discussed as part of e-commerce chapter, according to our sources, it seems that the United States have made proposals which include rules on data flows specifically aimed at creating exemptions to privacy and data protection. You know the position of this house and my position,” Reding told her former colleague in the Cabinet, “and you can imagine that this will not go through.”

Reding has pushed to broaden Malmstroem’s transparency initiative to TISA and to publish the negotiating mandate and the “regulatory chapter.”

Is the concern that data flow provisions will inevitably also touch data protection valid? No, claims the Commission, which underlined that only one of the participants had “proposed two provisions that should ensure free data flows and prohibit requirements to store data locally.” The Commission also underlined, according to that participant, that “such provisions should be without prejudice to data protection requirements.”

The general “exception clauses” of the WTO General Agreement on Trade in Services (GATS) on data protection would apply to it, moreover, and the “EU has asked for further clarification on these proposals and made it very clear that it cannot and will not agree to any language that could potentially prevent the EU from enforcing its own data protection standards,” the Commission said.

The GATS data protection standards, which include an exemption for future data protection measures “not inconsistent with the provisions of this Agreement,” according to the Commission, so far has “never led to any WTO country, either formally or informally, challenging EU rules on data protection,” it said. But the Commission acknowledged that it will have “to analyse very carefully how any data transfer obligations in TISA interact with that existing exception.”

The “devil in the details,” for example, might hide in yet another general exception, the one on national security. This, one expert observer told Intellectual Property Watch, could “empty the substance of the data protection exemption.” The party hinted at, the United States, did not get back on a request for this story.

TISA and the Detail Devils

Without publication of much more information on TISA, conspiracy theories – correct ones and incorrect ones – will continue to flourish, which is only natural when observers have to consider an e-commerce chapter, confirmed to include content issues but declined to have any mentioning of liability for content and platform providers.

How much the devil lies in the details – even for the negotiators themselves – is illustrated perfectly by a Swiss presentation on potential overlaps and contradictions in the general and sectorial parts of the draft text.

“In the annex on professional services, foreign shareholding requirements are mentioned in the form of a prescription not to limit participation of foreign capital and effective control in supplying services through commercial presence (article 5),” the Swiss delegation noted, and added that in the draft texts on electronic commerce and telecommunication services the prescription was not mandatory and read as “’shall endeavour’ or ‘should allow full participation’ (Article 1 of the general provisions).”

With open questions remaining on most, if not all chapters, closure of negotiations in 2015 as somewhat envisaged, is seen as too ambitious by many, but negotiators only give themselves a short break to restart addressing open issues on 9-13 February in Geneva. Depending whose calendar you believe, it is round 10, 11 or 15.