The WTO, the Internet and Trade in Digital Products: EC-US Perspectives. By Sacha Wunsch-Vincent, Oxford: Hart Publishing, 2006. ISBN 1841135739, 295 pp.

The delivery of content products (films, images, and music files) over the Internet has recently attracted much attention and controversy, especially from the point of view of the challenge which peer-to-peer represents for protecting the rights of authors. Much of this attention and controversy, however, has remained limited to domestic—or at best regional in the case of the EU—environments and legal systems. Much less has been said and studied about the truly global dimension of this set of issues, which can be seen at best as a paradox, and at worst as a dangerous lacuna, considering the global nature of the Internet. A central pillar of the new edifice shaping in front of our eyes is of course the emergence of new business models, which is the focus of this book.

In this impressive volume, Sacha Wunsch-Vincent relies on a thorough historical and institutional analysis to show that the World Trade Organization (WTO) had given itself all the necessary tools to address some of the most pressing challenges of our times as early as the 1990s, when the phrase ‘electronic commerce’ was first heard on its premises. In spite of this prescience, however, the inability of the WTO to transcend some of its institutional and legal limitations and the reluctance of some of its key members to introduce sufficient flexibility in some of their own attitudes and positions have left us with a rather depressing landscape of half built edifices, unconnected avenues, and dead-ends. It also draws important lessons from previous attempts and failures, which should constitute a basis for a revitalization of the relevant negotiations in the WTO.

What is at stake? The Internet has changed radically the ways in which we produce and trade goods and services. One of the most rapidly growing segments of international trade is made of ‘content products’ (digitalized text, images, or sounds, but also software, video games, and other forms of digital entertainment) which can be sent and received as bits of information over international networks such as the Internet. Largely because of its novelty, this fast-growing segment of international trade [Ditigally Delivered Content Products (DDCPs)] is currently characterized by a remarkable absence of obstacles and hindrances such as tariffs. The expected role of the WTO, in this area, should hence be to shield that segment from protectionist pressures and provide contractual multilateral guarantees and instruments to keep it as free as it currently is. In theory, this should not be more difficult than what the General Agreement on Tariffs and Trade (GATT) (and then the WTO) have been doing for decades, i.e. to identify, quantify, and dismantle barriers to international trade in areas where they existed. As this book convincingly shows, however, some die-hard realities of international relations and some stubborn institutional constraints of existing institutions (the WTO in this case) make things much more difficult in reality than what common sense would suggest.

What are we talking about? The author does a great job at defining the field of his study and the forces at play. The book focuses exclusively on ‘commercial exchange’, i.e. those for which a price is being paid by the user to the seller (e.g. this excludes peer-to-peer from the scope of the study), and it naturally considers only transactions for which either the product or the user crosses a national border. The main reason why DDCPs constitute the fastest expanding part of international trade is their economic nature—such products being characterized by (a) high upfront investments and production costs, (b) negligible distribution costs, and (c) the virtual ability to reach any market on the planet instantaneously. Limitations to such expansion are largely technical (some parts of the globe remaining unconnected) and techno-legal (the growth of illegal distribution—e.g. over peer-to-peer networks—limiting the growth of legal segments of trade). However, it is clear that as the amount of bandwidth available continues to increase (especially in developing countries) and as access to global networks spreads across platforms [computers, personal digital assistants (PDAs), cell phones, etc.], trade in DDCP is going to grow exponentially. Hence, the WTO has a major role to play in keeping this growth as organized as possible, and as free as possible.

What the book shows with a clinical passion for detail is that, since 1998, when the e-commerce work program was initiated in the WTO, opportunities have repeatedly been missed to provide the guarantees and tools to secure a free trade environment for DDCP: sterile discussions on classifications (are DDCP goods or services?), lack of interest in making the e-commerce moratorium (by which members committed not to impose duties on DDCP) permanent, and the WTO’s inability to look beyond its established negotiating structures and mechanisms have combined to bog down the process. This has been compounded by the attitudes of major trading powers (the US and the EU), characterized by a self-limited flexibility to negotiate, and, in the case of the US, a tendency to revert to bilateral and regional agreements (e.g. with Chile, Australia, and Singapore), which, as the author shows, will have at best mixed consequences for the dynamics of multilateral efforts. The slow pace of WTO discussions is also leaving the door open for other discussions, held in other institutional contexts (such as UNESCO’s recent Convention on Cultural Diversity), which may complicate even further the tasks of trade negotiators in the future.

So, this is a very convincing, very thorough, and very pessimistic analysis of why one of the most promising areas of international trade (for growth, job creation, and global wealth creation) remains on unchartered waters. Dealing with a remarkably complex set of legal, institutional, and historical issues, the author does an outstanding job at summarizing the arguments and providing highly readable synoptic tables of existing instruments and positions. The only shortcoming of the book—certainly due to the fact that it tells an unfinished story—is that it does not offer any hint of what could ‘save the day’: the emergence of China as ‘the other trade power’?; the spreading of new business models affecting intellectual property (e.g. in the open source world)?; the success of efforts conducted elsewhere [World Intellectual Property Organization (WIPO), UNESCO, and International Telecommunication Union (ITU)]?; or new concerns and strategies emanating from the private sector (e.g. triple-play)?

The solid analysis provided by Sacha Wunsch-Vincent is more likely to be part of a much-needed effort to revisit governance under the light of globalization. The Internet has changed our lives much more deeply than most of us ever thought possible. Trade is one area in which the Internet has contributed to generate formidable challenges and enormous potential. Whether the WTO will prove able to adapt to this new context, or whether it will become one of the first casualties of ‘digital trade’, remains to be seen. It is more than likely, however, that other areas (intellectual property, but also labour, taxation, education, and justice) will rapidly face the same seismic shocks and that the international community as a whole will be pressed to identify the proper governance mechanisms and institutions to address the resulting challenges.

This book is a must read for all practitioners, analysts, and researchers interested in multilateral trade negotiations. It will also be a valuable source of reflection for anyone trying to understand and anticipate how deeply international relations are and will be affected by the information revolution.

Last but not least, the author of this review would like to pay tribute to the choice made by the publisher (Hart) to resist recent tendencies to replace footnotes with endnotes. This choice is not only an expression of respect for the author and the readers but also a significant contribution to the value and usefulness of a book like this one.