Last year, I did some blog posts and a short paper that looked at the wording of the provision in digital trade chapters/agreements on "Non‐Discriminatory Treatment of Digital Products." The basic point was that the usual language in this provision refers to "digital products," but during the USMCA legal scrub this was changed to "a digital product," which could be significant for the interpretation of the provision (the same language was used in the U.S.-Japan Digital Trade Agreement). In particular, the change could be seen to reflect the GATT/WTO debate over whether to compare the entire group of foreign and domestic products, or to compare individual foreign and domestic products, and the change was likely to steer the outcome in the direction of the flawed individual‐product comparison.
The point of my paper was to convince the U.S. to go back to the group approach, but I was also interested in how other countries -- who had been using the group-oriented "digital products" language in agreements such as the CPTPP, DEPA and certain bilateral agreements -- would approach the issue going forward. We now have the example of the recently negotiated EU-New Zealand FTA to look at, with New Zealand as an important player on these issues as it helps lead the effort on the DEPA. So what did the EU and New Zealand do with the provision? The Digital Trade chapter of their FTA is here (Chapter 12). To my surprise, it doesn't have this provision at all.
Why not have this provision in there, when New Zealand at least was part of previous agreements that used it? (The EU never had it in its brief "electronic commerce" chapters or in its digital trade chapter proposals as far as I can tell). My understanding is that they thought the non-discrimination principle was already covered by other provisions. For one thing, Chapter 2, on National Treatment and Market Access for Goods, has a basic national treatment provision:
National Treatment on Internal Taxation and Regulation
1. Each Party shall accord national treatment to the goods of the other Party in accordance with Article III of the GATT 1994[, including its Notes and Supplementary Provisions][1]. To this end, Article III of the GATT 1994 [and its Notes and Supplementary Provisions are] [is] incorporated into and made part of this Agreement, mutatis mutandis.
Presumably this would apply to digital products, although we could get into debates over the scope of "goods" vs. "products," as well as when something digital is actually a service.
In addition, the provisions on cross-border data flows in digital trade chapters act as non-discrimination obligations even though they don't use that term.
After having seen this development in the EU-NZ FTA, I thought about other recent FTAs and what they might be doing with the issue. Also to my surprise, the UK-Australia FTA digital trade chapter takes the same approach as in the EU-NZ FTA, as do the digital trade chapter in the UK-NZ FTA and the UK-Singapore Digital Economy Agreement (although these cross-border data flows provisions look very different than the EU-NZ ones, which is interesting).
This all makes me wonder whether my criticism of the U.S. approach scared some people off from these provisions entirely. If so, that may not be a bad result in terms of avoiding too much intrusion into domestic policy-making. If other provisions do the job, perhaps it's better not to have duplicative provisions out there that are vague and could lead to overbroad obligations. But whether these provisions should be included depends on what exactly the negotiators thought they were supposed to accomplish.
It will be very interesting to see how the U.S. approaches these issues in the IPEF, although it may be a while before we see any text.
