#180 THE G|O BRIEFING, MAY 17, 2024

A Tax on Streaming? Epic Battle Rages at the WTO | UAE Rejects UN Criticism of Abusive Anti-Terrorism Charges | In Geneva, the First AI Arms Control Talks? | Op-Ed: The Unbearable Lightness of Anti-Zionism

Today in the Geneva Observer:

Paying Customs Duties to Stream Movies? An Epic Battle is Raging at the World Trade Organization

We don’t pay customs duties when streaming movies or music, or when we conduct e-commerce transactions; the result of a decision taken 26 years ago by the World Trade Organization (WTO). But during the last ministerial conference (MC13) held in Abu Dhabi in February, some emerging economies finally succeeded in pushing the trade body to kill the moratorium. The reaction from the large economies including the EU, China, Japan and Canada, which want the measure either indefinitely extended or made permanent, was swift. Close to 90 countries—more than half the organization’s 164 member states—decided to defy the decision. As a result, according to a former WTO official, "left for dead, an e-commerce deal at the WTO is suddenly back in play."

E-commerce is among the priorities of Dr. Ngozi, WTO’s Director General. Digital services trade is by far the fastest growing segment of international commerce and shows no signs of declining. It is a roughly $4 trillion-a-year business, according to the International Monetary Fund (IMF). Governments have been grappling with the issue of how to regulate e-commerce since the internet boom of the late 90s. Should taxes and tariffs be applied to this new form of commerce, they wondered then? In 1998, against the backdrop of a rapidly growing internet, the WTO opted, somewhat hurriedly, to forgo the imposition of custom duties on electronic transmissions—an agreement officially set to expire in 2026 unless a new deal is reached. The moratorium was contentious from the start, but became increasingly so for some countries with the rapid growth of global e-commerce.

Emerging economies, notably South Africa, India and Indonesia, have for years argued for the right to collect state revenue from e-commerce transactions, and at the MC13, India and South Africa finally “succeeded in bringing the curtain down on [the] 1998 WTO agreement […]. The Ministerial Conference text flatly states that by 31 March 2026 at the latest, the moratorium will expire—meaning WTO members will be free to slap duties on e-commerce,” explains Keith Rockwell, a former WTO spokesperson. But following a revolt by 90 WTO member countries, an “e-commerce deal at the WTO is suddenly back in play,” the now senior researcher at the Hinrich Foundation wrote in a recent paper.

Revolt at the WTO puts e-commerce deal back in play | Article | Hinrich Foundation
An e-commerce deal in the making among 90 of the WTO’s 166 members would shake the multilateral body to its foundations. Read more from Keith Rockwell.

According to several sources in Geneva, a long-awaited agreement on e-commerce could see the light of day as early as this July. By all accounts, it will have been an epic battle, with lasting repercussions, WTO watchers say.

Multilateralism vs Plurilateralism

The WTO operates by consensus, meaning that a single member state can prevent a multilateral agreement from being reached. But WTO rules also allow countries to negotiate in smaller groups, a process called plurilateralism. This is the path Australia, Japan and Singapore, the three co-sponsors of the proposed e-commerce agreement, have chosen as they try to move forward and clinch a deal. It is, however, a process that some smaller economies including India, South Africa and Indonesia, openly oppose.

The burgeoning plurilateralism, Rockwell analyzes, finds its origin in the continued and growing frustration of some of the organization’s most powerful members at seeing smaller countries consistently blocking progress in negotiations on topics ranging from fisheries subsidies to public food stockholding or, in this case, e-commerce. The atmosphere during the post-Abu Dhabi Ministerial Conference was described to The G|O as often “toxic and vitriolic” by a knowledgeable source.

“Since MC13 […], members’ exasperation with the multilateral body’s paralysis in advancing trade policy has been mounting,” the former WTO official writes. Rockwell, one of the most astute and well-informed observers of the WTO, reveals that in frustration at the decision to kill the moratorium, in late April, under the co-sponsorship of Australia, Japan and Singapore, 90 members “moved swiftly to establish new global rules for digital trade.”

Trade diplomats in Geneva confirmed to The G|O that the text of the proposed agreement is near completion and that its co-sponsors are now confident that a deal will be reached in the next few months. Not all proponents of the agreement favor a permanent moratorium, “but such is the eagerness for a deal that a large and growing majority of proponents are ready to go ahead regardless.” Most likely, however, the new deal will not call for a permanent moratorium but would extend its renewal period from 2 to 10 years.

“What is most remarkable is that most of these 90 WTO members now favor keeping the benefits from such an agreement exclusively for those who sign on to it,” Rockwell explains. It would mean a departure from the current WTO rules that would “upend one of the fundamental tenets of the WTO. A deal along these lines would mean discarding the multilateral institution’s traditional ‘most favored nation’ (MFN) terms, wherein all members are accorded equal treatment—so that favorable terms extended to any single partner automatically apply to all other WTO members. […] What the e-commerce deal’s plurilateral proponents now want is for those who stand outside the agreement to lose both the obligations and the privileges of an e-commerce deal. Non-signatories would not be subject to its rules but nor would they share in its benefits.”

It would be the first ever international agreement regulating e-commerce, aside from the 1998 moratorium. Some trade diplomats caution that several controversial issues had to be eventually left out to ensure approval of the EU, the US and China. “Over the last months, the scope and ambition of the treaty has clearly been reduced,” a source privy to the negotiations told The G|O.

WTO | Trade Topics - Electronic commerce - Declaration
The WTO is the only international body dealing with the rules of trade between nations. At its heart are the WTO agreements, the legal ground-rules for international commerce and for trade policy.

“Ambitious supporters of global rules in e-commerce may frown on the fact that the agreement sets aside negotiations on broader rules pertaining to the crossborder flow of data, the forced harboring of data on domestic servers, and the forced transfer of source code,” admits Rockwell in his note. “But the plurilateral nature of these negotiations—part of a burgeoning trend toward ‘flexible multilateralism’—increases the likelihood that, down the road, this ‘organic’ text can be updated to include new measures,” he adds.

Shifting Dynamics

Rockwell’s paper offers a rare behind-the-scene glimpse at trade negotiations and what he sees as the shifting dynamics at play at the trade body. “New life,” he writes, “is convulsing the beleaguered global rule-making institution. It may herald deep and long-term shifts in how WTO business is conducted and, in turn, lead to a renaissance of the organization.

“A significant shift is in train and this may be just the beginning. Members are starting to discuss other new ways of operating in the WTO, from broadening the way flexible multilateralism works to developing the concept of ‘responsible consensus’ to blunt the poisonous misuse of the consensus principle,” Rockwell asserts.

Interestingly, there are growing calls in India asking the Modi government to recognize the new reality and change its stance on the plurilateral process. The Investment Facilitation Development Agreement (IFDA) is a plurilateral effort endorsed by 127 WTO members, mostly developing countries, which aims to streamline bureaucratic processes, enhance investment environment, and promote foreign direct investment.

WTO | Investment facilitation for development

“The practice of holding discussions at the WTO in less-than-multilateral formats is neither new nor illegal. It is widely acknowledged that such discussions can occur. […] India needs to think through these aspects carefully. India’s resistance [to plurilateral agreements] contradicts its claims to champion the Global South’s interests and risks sidelining itself from vital negotiations that could benefit developing countries,” two respected independent trade experts recently wrote in the Financial Express, India’s financial paper.

“Maybe, just maybe, the coming months will show a new determination to break with the past and seriously address the organization’s shortcomings,” concludes Keith Rockwell in his analysis. “The alternative is a continued drift to irrelevance.”


United Arab Emirates Rejects UN Concerns on Mass Trial as Death Penalty Verdicts Feared

The United Arab Emirates, which brought fresh charges against dozens of previously-convicted critics while hosting the COP28 climate conference with great fanfare, is defying UN experts who have denounced the “spurious” terrorism charges, The Geneva Observer has learned.

The UAE, like Saudi Arabia a wealthy Gulf monarchy and OPEC (Organization of the Petroleum Exporting Countries) heavyweight, has been seeking to burnish its international image despite its poor human rights record. But a secretive mass trial currently held in booming Abu Dhabi has undercut its greenwashing and “soft power” campaign, revealing a darker side of the emirate where the rule of law remains under assault, activists say.

“It is very hard to get information on the detainees because most of them are detained incommunicado. The hearings are held in secret, and they don’t have adequate legal representation,” Falah Sayed of the MENA (Middle East and North Africa) Rights Group told me this week. Such “repression of civil society in the context of an international conference” was highly concerning, she said.

“The judgment should come out in June but it is not confirmed,” Sayed said, noting that there has also been a “complete media blackout.”

Use of Torture

Ben Saul, UN special rapporteur on the promotion and protection of human rights and fundamental freedoms while countering terrorism, sent a joint letter in January on behalf of a dozen UN experts, voicing concerns about the new charges brought against 84 of the original 133 defendants indicted in 2011 for demanding democratic reforms.

The UN experts expressed concern about the “alleged irregularities in the latest trial” in Abu Dhabi Federal Appeal Court, including a lack of fair trial guarantees and the use of torture to extract forced confessions. If convicted, some of the accused could face the death penalty or life imprisonment.

“It is a terrible example of the misuse of counter-terrorism measures against civil society and a crackdown on civic space,” Saul told a debate at the Swiss Press Club in Geneva in March. The latest prosecutions had had a “chilling effect” on dissent in the international trading hub, he added.

“Those on trial include prominent activists and dissidents already serving long prison sentences based on abusive charges,” the New York-based group Human Rights Watch said last month. “This unfair mass trial is a farce, and the allegations of torture and gross fair trial violations lay bare the UAE’s hollow rule of law and utter lack of access to justice.”

The UAE government, in an initial written response in March which coincided with an ongoing Human Rights Council session, told the UN experts that it needed an additional month to conduct “a full investigation” into their query.

Denial of Allegations

In a subsequent reply being reported here for the first time, in an April 8 letter to the UN experts, the government said: “The UAE respectfully denies the allegations and premature conclusions contained in the Joint Communication,” adding, “The judiciary in the UAE is independent and is protected from any form of interference by other powers," and “The UAE recognizes and protects the fair trial rights of all individuals under its jurisdiction.” The concerns voiced by the UN investigators on freedom of expression were “unfounded and misguided,” it insisted.

The UAE letter, which failed to address any individual cases highlighted in the UN letter, was “very generic and broad,” a UN source said.

Volker Turk, UN High Commissioner for Human Rights, also raised the UAE case in his global update delivered to the Human Rights Council in early March. “In the United Arab Emirates, another mass trial is underway based on counter-terrorism legislation that contravenes human rights law. In December, new charges were brought against 84 people, including human rights defenders, journalists and others who were already in prison. Several were nearing the end of their sentence or have been arbitrarily held in detention after completion of their sentence,” he told the forum, whose current members include the UAE.

“I remain concerned about broader patterns of suppression of dissent and the civic space in the country, and I urge the Government to review domestic laws in line with international human rights recommendations,” Turk said.

Solitary Confinement

As concerns mount and the verdicts approach, the cases of some of the individual Emirati defendants may be cited in the annual report on reprisals which Turk’s office is due to issue in June, UN sources told The Geneva Observer.

Ahmed Al-Nuaimi is an education specialist who was convicted in absentia to 15 years in prison in 2013 as part of the original group of defendants. His brother Khalid, who competed his lengthy prison term last October, is still detained under the 2014 counter-terrorism law. Khalid’s detention was declared unlawful by the UN Working Group on Arbitrary Detention last year.

“It is hard to get any information from the government, they don’t answer any questions about detainees,” Ahmed Al-Nuiami, who now lives in Britain, told the Swiss Press Club event. “We know that all detainees [have been] in solitary confinement for a long time, some for more than two years now.”

 By Stephanie Nebehay

A Discreet but Possibly Historic Geneva Meeting between the US and China on AI Risks and Safety

When the history books are written on security in the artificial intelligence age, a discreet meeting held in Geneva last Tuesday (May 14) may well feature prominently as the first official AI ‘arms control’ talks, even if Washington made clear from the beginning that the meeting would not involve negotiations.

According to US media reports, the Geneva meeting had nevertheless been a year in the making, following intense back-channel discussions between Washington and Beijing. Joe Biden and Xi Jinping finally agreed upon the event during their meeting in San Francisco last November, a clear confirmation that while AI is developing at a fast pace, the dangers and risks it poses for global security are real, and that despite their intense rivalry, the only AI superpowers with enough capacity to develop and train the most advanced and sophisticated AI systems and applications should come to the table to avert potential catastrophe. 

“In a candid and constructive discussion, the United States and PRC (People’s Republic of China) exchanged perspectives on their respective approaches to AI safety and risk management,” Adrienne Watson, spokesperson for the US National Security Council said in a communiqué, adding, without elaborating, that “the United States also raised concerns over the misuse of AI, including by the PRC. The United States affirmed the need to maintain open lines of communication on AI risk and safety as an important part of responsibly managing competition.”

Statement from NSC Spokesperson Adrienne Watson on the U.S.-PRC Talks on AI Risk and Safety | The White House
Special Assistant to the President and Senior Director for Technology and National Security Tarun Chhabra and Department of State Acting Special Envoy for Critical and Emerging Technology Seth Center led an interagency U.S. delegation with officials from the White House, the Department of State, and the Department of Commerce to meet with a PRC delegation including the…

Beijing, meanwhile, criticized Washington and “expressed a stern stance on the US restrictions and pressure in the field of artificial intelligence.” But China’s Foreign Ministry statement distributed on social media also said that both sides recognized that if AI offers opportunities, “it also poses risks.”

Some AI founders themselves have warned that the danger posed by AI could exceed that of the nuclear bomb. Many security experts, however, say the analogy may be irrelevant in the context of arms control. If some of the lessons learned during the nuclear era are to inform AI arms control, they contend, then it is essential to understand the differences—and why the challenge of controlling AI risks might indeed be much greater.

Pause Giant AI Experiments: An Open Letter - Future of Life Institute
We call on all AI labs to immediately pause for at least 6 months the training of AI systems more powerful than GPT-4.

In an often quoted 2023 article in Foreign Affairs, Henry Kissinger and Graham Allison summarized these differences this way: Nuclear weapons were developed by governments; AI systems are mostly developed by private entrepreneurs. Nuclear weapons were and remain extraordinarily difficult to produce, requiring complex infrastructure to enrich uranium or develop delivery means; other than massive computing power, AI is dematerialized. Nuclear weapons can be counted; AI is invisible. Lastly, arms control agreements of the past could be negotiated over time, as the development of nuclear weapons was relatively slow; the speed and pace at which AI is being developed—and potentially developing itself—creates an unprecedented urgency in controlling it before it spreads more widely.


Op-Ed: The Unbearable Lightness of Anti-Zionism

By Shlomo Ben-Ami*

Israel’s sins in the occupied territories are inexcusable, and the military campaign that is destroying Gaza is criminally lacking in sound political objectives. But if anti-Zionists declare every Israeli to be nothing more than a mouthpiece for power, there will be nobody with whom to make peace in the future.

*Shlomo Ben-Ami is a former Foreign Affairs Minister of Israel

Today's Briefing: Philippe Mottaz - Stephanie Nebehay

Op-ed: Shlomo Ben-Ami 

Editorial assistance: David Jenny

Edited by: Dan Wheeler

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