Non-discrimination guru Lothar Ehring had a comment on my last post on non-discrimination in digital trade agreements, raising an issue I hadn't noticed: By eliminating a comparison with domestic products, the wording of certain non-discrimination provisions perhaps steers the provisions away from nationality-based discrimination in an even broader way than the singular vs. plural "product" issue that my post focused on.
Before we get into the details, to refresh everyone's memory, here are some examples of the text of the provisions at issue. First, this is the non-discrimination language in the U.S.-Japan Digital Trade Agreement:
Article 8
Non-Discriminatory Treatment of Digital Products
1. Neither Party shall accord less favorable treatment to a digital product created, produced, published, contracted for, commissioned, or first made available on commercial terms in the territory of the other Party, or to a digital product of which the author, performer, producer, developer, or owner is a person of the other Party, than it accords to other like digital products.
Similar language exists in the USMCA digital trade chapter:
Article 19.4: Non-Discriminatory Treatment of Digital Products
1. No Party shall accord less favorable treatment to a digital product created, produced, published, contracted for, commissioned, or first made available on commercial terms in the territory of another Party, or to a digital product of which the author, performer, producer, developer, or owner is a person of another Party, than it accords to other like digital products.
Shifting away from U.S. agreements, here is the CPTPP:
Article 14.4: Non-Discriminatory Treatment of Digital Products
1. No Party shall accord less favourable treatment to digital products created, produced, published, contracted for, commissioned or first made available on commercial terms in the territory of another Party, or to digital products of which the author, performer, producer, developer or owner is a person of another Party, than it accords to other like digital products
And here's the language from the Digital Economic Partnership Agreement (DEPA):
Article 3.3: Non-Discriminatory Treatment of Digital Products
The Parties affirm their level of commitments relating to non-discriminatory treatment of digital products, in particular, but not exclusively:
1. No Party shall accord less favourable treatment to digital products created, produced, published, contracted for, commissioned or first made available on commercial terms in the territory of another Party, or to digital products of which the author, performer, producer, developer or owner is a person of another Party, than it accords to other like digital products.
To help illustrate the point I'm going to make, for comparison here is GATT Article III:4:
The products of the territory of any Member imported into the territory of any other Member shall be accorded treatment no less favourable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use. ...
Notice how Article III:4 explicitly compares the treatment of products from different countries: "treatment no less favourable than that accorded to like products of national origin." Thus, under this provision, you compare the treatment of imported products with the treatment accorded to "like products of national origin." In other words, you compare the treatment of imported products to the treatment of domestic products.
Arguably, the CPTPP and DEPA are nationality-based as well, even though they don't say it explicitly with the same kind of language that Article III:4 uses. In essence, they take the treatment of the group of digital products territorially tied to the complainant, and compare that with the treatment accorded to "other like digital products," presumably domestic products (NT) or products from another country (MFN). Having said that, I think it would be useful to add language clarifying that the discrimination targeted here is nationality-based. For example, in DEPA, "than it accords to other like digital products" could be replaced with something along the lines of "than it accords to domestic like digital products or to like digital products from other countries" (the language may need to be more precise than that).
By contrast, because USMCA/US-Japan refer only to "a digital product," you could make the case that when worded this way, the provision isn't about nationality-based discrimination at all. To take an example, imagine a Mexican law established criteria under which Google Search and Microsoft Bing were treated differently. The U.S. could bring a complaint on the basis that one digital product from the U.S. was treated less favorably than another like digital product from the U.S.
How sure am I that such a complaint would be brought or that a panel would interpret the provision this way? Not very. But I am sure that by using the wording in USMCA/U.S.-Japan, the door has been opened to broad interpretations of this sort.
One caveat to all this is the following. Maybe some governments want non-discrimination in digital trade agreements to go beyond nationality-based discrimination, and to cover discrimination against particular products even if that discrimination isn't based on nationality. If that's the case, I would want to know why they want such a broad provision. What kinds of measures are they targeting here? In the WTO context, there have been occasional attempts to broaden the scope of the non-discrimination provisions beyond nationality-based discrimination. The same thing is true in the investment context. I understand that lawyers bringing cases like to have broader obligations to work with, but as a matter of policy, I don't see why anyone thinks we need obligations that are based on the concept of non-discrimination against certain products, rather than relying on the nationality-based discrimination that has traditionally been at the core of the trading system.
