Trade Rules and Their Limits: Internet Restrictions as Actionable Trade Barriers

When does a restriction on the internet become a trade barrier? And if it does, how much can trade rules actually achieve? These were the questions I explored in this paper, written in May 2012 while I was a fellow at Georgetown University Law Center’s Institute of International Economic Law.

The internet had created new ways to supply services across borders, but governments retained considerable power over who could reach those markets and on what terms. Licensing requirements, restrictions on access and controls over content could all have commercial consequences for foreign suppliers.

Regulation, protectionism and the rules

Not every restriction is protectionist. Governments have legitimate reasons to protect personal data, combat fraud and enforce intellectual property rights. The difficult question is where legitimate regulation ends and discrimination or disguised protectionism begins.

I examined what the WTO’s existing rules could offer in this setting, particularly the General Agreement on Trade in Services. The paper looks at commitments covering the cross-border supply of services, the exceptions governments can invoke, and what earlier disputes could tell us about the prospects for challenging internet restrictions.

A central point is that the details matter. The commitments a country has made, the services covered and the design of the measure all shape the argument. Describing a policy as an obstacle to online commerce is only the beginning of the analysis.

A legal victory has its limits

The other question is what happens after a successful challenge. My conclusion was that winning a trade dispute and securing a meaningful change in domestic policy are different things. Where internet controls are closely tied to political priorities, a favourable ruling may achieve less than its supporters hope.

The paper also considers the effort to negotiate new rules, including through the WTO and the Trans-Pacific Partnership talks then underway. Those initiatives reflected a recognition that existing disciplines did not answer every question raised by digital commerce. Reaching agreement would also require engaging with the development priorities and interests of countries being asked to accept new commitments.

This is an early contribution to my work on the relationship between trade and technology. It captures the debate as it stood in 2012, but the question running through it is a broader one: how far can international trade rules reach when they encounter deeply held domestic political objectives?

Read the paper

Trade Rules and Their Limits: Internet Restrictions as Actionable Trade Barriers, Simon Lacey. Written 15 May 2012; SSRN records the latest revision as 31 May 2017.

Download the full paper (PDF) · View the paper on SSRN

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