In my last post, I offered a quick take arguing that, in the context of the WTO e-commerce negotiations, governments should rethink necessity tests in exceptions clauses. I was hoping to make the point as broadly as possible, so I focused on the general exceptions clause in the consolidated e-commerce negotiating text, rather than the exceptions clauses related to specific obligations. What I missed was that one of the exceptions provisions I quoted was an extremely broad one. I think it was the one put forward by China, although I'm not 100% sure (maybe someone can clarify). Quoting this particular exception provision may have distracted a bit from my main point, so let me try to make it again, this time using some of the exceptions put forward in the context of the proposed cross-border data flow obligations.
After various formulations of the cross-border data flow obligation in Section B.2(1), para. 5 of the consolidated text, there are several alternative exceptions provisions set out in para. 6, as follows:
B.2. Flow of information
(1) [Cross-border transfer of information by electronic means / Cross-border data flows]
....
6. [Alt 1:
[This Article does not/Nothing in this Article shall] prevent a [Party/Member] from adopting or maintaining a measure inconsistent with paragraph 5 [that is necessary] to achieve a legitimate public policy objective, provided that the measure:
(a) is not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on trade; and
(b) does not impose restrictions on transfers of information greater than are [necessary/required] to achieve the objective.]
[Alt 2:
Nothing in this Article shall prevent a [Party/Member] from adopting or maintaining measures inconsistent with paragraph 5 to achieve a legitimate public policy objective, provided that the measure is not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination or a disguised [restriction on trade/barrier to the transfer of information and to trade through electronic means]].
[Alt 3:
Nothing in this Article shall prevent a [Party/Member] from adopting or maintaining:
(a) measures inconsistent with paragraph 5 to achieve a legitimate public policy objective, provided that the measure is not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on trade; or
(b) any measure that it considers necessary for the protection of its essential security interests.
For greater certainty, a legitimate public policy objective includes the protection for privacy.]
[Alt 4:
[Parties/Members] may adopt and maintain the safeguards they deem appropriate to ensure the protection of personal data and privacy, including through the adoption and application of rules for the cross-border transfer of personal data. Nothing in the agreed disciplines and commitments shall affect the protection of personal data and privacy afforded by the [Parties'/Members'] respective safeguards.]
The document explains the source of each alternative as follows:
Paragraph 6:
• Alt 1 based on text proposals by JP, US, CT, CA and UK.
• Alt 2 based on text proposals by SG and BR.
• Alt 3 based on text proposal by KR.
• Alt 4 based on text proposal by EU.
What we have then is Alt 1, which includes a necessity test; Alt 2 with no necessity test; Alt 3 with no general necessity test but a "considers necessary" (with "considers" meaning lots of deference) for security interests; and Alt 4 with no necessity test, but only a narrow range of policies covered. It appears, then, that there are a number of different conceptions of the proper scope of exceptions to a cross-border data flow obligation, and thus perhaps a chance for WTO Members to discuss the implications of different exceptions language.
One reason I'm raising all this right now is that the text just got leaked. But another is that there is a new team at USTR being put into place, and some of that team is made up of progressive-ish types who are interested in policy space, so I thought this might be a good time to raise fundamental questions like this one. One of USTR's criticisms of the Appellate Body has been the legal standard under GATT Article III:4 and its impact on policy space (see, e.g., p. 10 here). But the necessity test is also relevant to these issues. So here's my question for the progressives recently appointed to positions at USTR (and to any others who are sympathetic to these concerns): How sure are you that the necessity test is what you want in the context of e-commerce rules? When I read WTO cases analyzing necessity, I'm not convinced that this standard achieves the proper balance between removing trade barriers while preserving policy space.
Based on the above e-commerce proposals, it seems like the official U.S. position is that necessity tests work in exceptions provisions. Perhaps it is worth taking another look at this.
