TPP’s Electronic Commerce Chapter


 This post is the first in a series of posts on the final text of the Trans-Pacific Partnership (“TPP”).  The final TPP text, which was released on November 5, 2015, is available here.

Notwithstanding its title, the TPP’s chapter on Electronic Commerce (Chapter 14) includes commitments that apply well beyond traditional e-commerce to a wide range of digital communications and trade affecting nearly every sector of the economy.  Although variations on some of these commitments can be found in prior U.S. free trade agreements or other international instruments, the chapter includes several novel commitments, including on cross-border data transfers, forced localization of computing facilities, and compelled disclosure of software source code.  While the commitments are subject to important carve-outs, exceptions, and limitations, violations of these commitments may be challenged by TPP governments pursuant to the dispute settlement mechanism set out in Chapter 28.

Key Commitments

For U.S. companies, some of the key commitments in Chapter 14 are as follows:

Beyond these provisions, the e-commerce chapter addresses several other issues, including methods of electronic authentication and the validity of e-signatures; maintenance of laws on online privacy, consumer protection, and spam (“unsolicited commercial electronic messages”); the benefits of “paperless trading,” and other matters.  Certain of these provisions impose obligations on the Parties, while others merely require Parties to “endeavor” to adopt or implement them.

The entire chapter falls within the scope of the dispute settlement provisions of Chapter 28.  Although the e-commerce commitments are not covered by the investor-state dispute settlement (“ISDS”) provisions of Chapter 9, a government measure that violates a commitment in the e-commerce chapter might also violate an investment commitment in Chapter 9, and to that extent be subject to ISDS.

Additional Limitations

In addition to the commitment-specific limitations and exceptions already discussed, the e-commerce provisions are subject to additional limitations that apply to the entire chapter.  These include:

Finally, the commitments set forth in Chapter 14 do not apply to any non-conforming measures (i.e., measures that do not conform to commitments set forth in the TPP) identified by a Party.  Article 14.18 also provides that Malaysia is exempt from the commitments in Article 14.4 (non-discriminatory treatment of digital products) and 14.11 (cross-border data transfers) for two years, while Viet Nam is exempt from both of these commitments, and from Article 14.13 (forced localization of computing facilities), for two years.

Conclusion

If adopted as drafted, the TPP’s e-commerce chapter includes several noteworthy commitments that provide a basis to challenge non-tariff barriers to digital trade and commerce confronting companies in TPP countries.  However, when evaluating the benefits and enforceability of these commitments, it is important also to consider the carve-outs, exceptions and limitations to these commitments, including any applicable non-conforming measures.


© 2025 Covington & Burling LLP
National Law Review, Volume V, Number 317