Trade Remedy Rules for Digital Services: Inapplicability of GATT-type Safeguard Rules

Abstract

Digitalization considerably complicates the application of previous trade remedy norms to the new and expanding digital services trade, and there is a need to reprioritize and restructure the existing framework to reflect this difference. Emergency safeguard is an essential element in the trade regime, but the classic concept of GATT-type safeguard measures that is based on a dichotomy of tariff and nontariff barriers and clear-cut rules between goods and services are not suitable for regulating the expanding digital services transactions where barriers tend to be much more diverse and less obvious. Hence, a new trade remedy framework must incorporate the elements of convergence, interconnectedness and externality, while taking a sectoral approach, as generic rules on trade remedies that cater to all possible scenarios and sectors are no longer suitable in these realms. It must prioritize rules-making on subsidies and domestic tax schemes, while also considering for issues specific to the digital features such as data flow restrictions and their implications. Digital trade, digital services, trade remedy rules, emergency safeguard, GATT