The Construction of a System of Digital Trade Rules from the

Perspective of International Law: Study on Soft Law Practices Based

on the WTO Joint Statement Initiative on e-Commerce

Xinran Xie

College of Foreign Languages, Zhongnan University of Economics and Law, Wuhan, Hubei, China

Keywords: Digital Trade Rules, Soft Law, WTO.

Abstract: Soft law, characterized by its flexibility, non-binding nature, and form adaptability, has emerged as a pivotal

instrument for reconciling divergent national interests in digital trade governance. The World Trade

Organization's (WTO) Joint Statement Initiative on Electronic Commerce exemplifies institutionalized soft

law practice, yet critical provisions remain con-tested due to persistent disagreements among member states.

This study examines the viability and limitations of soft law in structuring multilateral digital trade rules,

proposing a theoretical pathway to overcome governance impasses. The analysis proceeds in three stages，

first, a conceptual delineation of soft law within digital trade contexts, clarifying its definitional boundaries

and functional attributes; second, an evaluation of soft law's regulatory efficacy through risk-benefit analysis,

emphasizing its dual capacity to foster trade liberalization while preserving regulatory sovereignty; third, a

normative argument for optimizing soft law's institutional potential through innovative governance

mechanisms, drawing practical insights from WTO negotiations.

1 INTRODUCTION

With the deepening of the digital technology

revolution and the reconfiguration of global value

chains, digital trade has emerged as a key driver of

global economic growth. WTO statistics show that

the scale of global digital services trade exceeded

$6.8 trillion in 2023, accounting for over 60% of total

services trade-evidently, the construction of its

regulatory framework is directly pivotal to reshaping

the global economic governance order.

However, the current landscape of global digital

trade rules exhibits pronounced fragmentation. On

one hand, driven by considerations of implementation

efficiency and national economic interests, countries

increasingly favor constructing regional digital trade

agreements over establishing a unified global

regulatory system. Agreements such as CPTPP and

RCEP have developed distinct regulatory features in

this context. On the other hand, the WTO, as the most

authoritative platform for global economic

cooperation, faces a structural mismatch: its

foundational frameworks, the General Agreement on

Trade in Services (GATS) and General Agreement on

Tariffs and Trade (GATT), were formulated in the era

of traditional trade, prioritizing goods and

conventional services rather than emerging digital

issues. This institutional lag in WTO digital trade

rules has further exacerbated regulatory

fragmentation.

Against this backdrop, soft law has increasingly

become a critical tool for governments, enterprises,

and organizations to navigate negotiation deadlocks,

owing to its unique regulatory flexibility. Unlike hard

law, soft law features institutional designs such as

non-binding commitments, progressive obligations,

and open-ended clauses-arrangements that

temporarily circumvent sovereignty-sensitive

conflicts while moderately guiding trade behaviors

through normative constraints. The WTO’s Joint

Statement Initiative on Electronic Commerce (JIS)

exemplifies this mechanism: 86 participating

economies reached preliminary consensus on issues

including cross-border data flows and duty-free

electronic transmissions. However, provisions such

as the Digital Tax Exemption and Source Code

Disclosure ban in the JIS remain ambiguously

worded, highlighting a core challenge of soft law

Xie, X.

The Construction of a System of Digital Trade Rules from the Perspective of International Law: Study on Soft Law Practices Based on the WTO Joint Statement Initiative on e-Commerce.

DOI: 10.5220/0014382100004859

Paper published under CC license (CC BY-NC-ND 4.0)

In Proceedings of the 1st International Conference on Politics, Law, and Social Science (ICPLSS 2025), pages 407-412

ISBN: 978-989-758-785-6

407

governance, its reliance on voluntary compliance

risks reducing it to a symbolic framework observed

only by a subset of parties.

Notwithstanding these challenges, soft law’s

institutional advantages outweigh its inherent

limitations as the optimal solution to balance national

regulatory autonomy and digital trade liberalization.

This study employs literature analysis, textual

interpretation, and comparative methods to

synthesize scholarly perspectives, identify research

gaps through critical literature review, and situate its

contributions within the field. By examining the JIS

as a case study, it delineates soft law’s characteristics,

advantages, and drawbacks relative to other legal

forms, and analyzes its practical applications. The

study concludes that amid the rapid evolution of the

digital economy and the unsettled nature of global

digital governance, the central challenge lies not in

debating the primacy of soft law versus hard law, but

in maximizing soft law’s value to accumulate

international consensus for future multilateral

rulemaking.

2 LITERATURE REVIEW

Academics hold divergent views on the definition of

soft law, its role in global governance, and its

significance for constructing global digital trade

rules. A minority of scholars caution that while soft

law offers flexibility in digital trade governance, its

limitations are notable—for example, its applicability

is primarily confined to low-politics domains, with

restricted influence in high-politics arenas where

sovereignty sensitivities are acute (He,2017). A

substantial body of research focuses on soft law’s

regulatory function in emerging digital economy

sectors such as artificial intelligence (AI). Scholars

argue that soft law has been and will remain a primary

normative tool in AI governance, as it establishes

substantive expectations for parties that rely on

collaborative compliance rather than governmental

enforcement mechanisms (Marchant &

Gutiérrez,2023). Proposed optimization pathways for

soft law span areas including AI ethics, personal data

protection, and cross-border data flows, emphasizing

its capacity to reconcile national regulatory autonomy

with global liberalization objectives (Zhang,2024).

However, these studies often lack holistic analysis,

particularly in underlining soft law’s structural

limitations in digital trade-omissions that may lead to

practical challenges in implementation and one-sided

prescriptions for improvement.

Research on digital trade rules exhibits a

fragmented nature, with most scholarships

concentrating on isolated regulations within specific

national or regional contexts, examining their origins,

impacts, and evolutionary trajectories. Far less

attention is paid to the role of global institutions like

the WTO. Notable exceptions include calls for the

WTO to centralize digital trade governance-either

through a standalone multilateral agreement

dedicated to digital economy regulation or by

leveraging tripartite competition among the U.S., EU,

and China as a catalyst for inclusive development,

where smaller economies can utilize the WTO

platform to advance their digital agendas (Sona,2022;

Aaronson & Leblond,2018). Analyses of WTO e-

commerce negotiations reveal significant divergences

among major economies, such as the U.S., EU, China,

Japan, on core issues, underscoring the necessity for

the WTO to maintain neutrality in mediating these

disputes (Abendin & Duan,2021). Academics

generally adopt an objective yet constructive stance

on international organizations’ roles: while

acknowledging that institutions like the WTO lag

behind the digital economy’s rapid evolution, they

actively explore pathways to enhance WTO-led

rulemaking-aiming to bridge the digital divide and

balance competing interests through incremental,

consensus-based reforms.

3 OVERVIEW OF THE SOFT

LAW ON DIGITAL TRADE

3.1 Theoretical Explanation of Soft

Law for Digital Trade Page

In academic discourse, neither soft law nor digital

trade soft law has achieved a universally accepted

definition. Synthesizing diverse perspectives, this

section provides a theoretical explication of key

concepts through four dimensions: connotation,

typology, characteristics, and functions.

The concept of soft law traces its origins to

international law, referring to regulatory instruments

that lack the compulsory binding force of traditional

law but shape actors’ conduct through shared

normative consensus and behavioral guidance.

Unlike conventional international law-which

prescribes legal liabilities and enforcement

ICPLSS 2025 - International Conference on Politics, Law, and Social Science

408

mechanisms-soft law derives its regulatory efficacy

from negotiated consent and rational persuasion.

Normatively, soft law can be categorized into three

forms. Firstly, resolutions, declarations, joint

statements, and frameworks adopted by

international/regional organizations or multilateral

forums (e.g., JIS); secondly, voluntary accords

concluded through diplomatic consultations between

states, such as the United States-Mexico-Canada

Agreement (USMCA), which balance flexibility with

collaborative objectives; thirdly, technical norms,

industry codes, and conduct guidelines developed by

non-governmental actors (e.g., ISO international

standards), offering granular, sector-specific

operational guidance. In the digital trade context,

these categories serve distinct roles. The first

category provides foundational frameworks for

harmonizing domestic regulations and facilitating

international rulemaking; the second addresses

sector-specific gaps; and the third delivery targeted,

technologically aligned guidance-collectively

fostering adaptive governance.

Soft law’s core characteristics-non-mandatories,

consultativeness, and flexibility-define its regulatory

logic, while in the digital trade context, these are

intertwined with technical dependency and

sovereignty sensitivity.

Non-mandatories manifest how legal obligations

are articulated and enforced: soft law instruments

typically employ permissive language such as "strive

to," or "endeavor to," as seen in JIS Article 5, which

states that "Members shall endeavor to promote the

mutual recognition of electronic signatures" rather

than imposing binding mandates. This lack of legal

compulsion does not equate to ineffectiveness;

instead, soft law derives mandatories from

reputational incentives and collaborative norms,

fostering compliance through shared expectations

rather than punitive measures. Flexibility emerges in

the interpretive latitude of rules and the adaptability

of implementation mechanisms, allowing members to

tailor obligations to their developmental contexts-for

example, selectively adopting clauses or adjusting

compliance timelines. This adaptive approach

ensures regulatory frameworks can evolve alongside

technological advancements, providing practical

leeway while maintaining normative coherence. The

consultative nature of soft law formation-

characterized by inclusive stakeholder participation

and consensus-building—is particularly vital in an

era of fragmented multilateralism, where divergent

national interests and uneven developmental stages

risk paralyzing hard law negotiations.

In digital trade, technical dependency arises from

the need to align regulatory frameworks with the

rapid pace of digital innovation, because that rule

governing data flows, encryption standards, and

interoperability must reflect evolving technical

architectures to avoid obsolescence. Sovereignty

sensitivity stems from contentious issues like data

localization and digital sovereignty, where soft law’s

flexible wording offers a compromise mechanism.

For instance, JIS uses phrases like "encourages

members to minimize restrictions" in its data

localization provisions, a formulation that

accommodates China’s regulatory requirements

under the Data Security Law to govern critical data

exports while respecting the U.S. emphasis on digital

liberalization.

3.2 Challenges and Opportunities of

Soft Law for Digital Trade

Based on the above analysis, it’s not difficult to find

that soft law has a positive role to play in the

regulation of the global digital trade order. However,

it still faces challenges.

Chief among these is the risk of diminished

effectiveness in balancing interest. Developing

countries often adopt cautious or opposing stances

toward the free flow of cross-border data due to

concerns over digital sovereignty and security, while

developed economies exhibit incompatible regulatory

models-such as the U.S. emphasis on industry self-

regulation and the EU’s stringent privacy standards-

creating tensions that are hard to reconcile within

multilateral frameworks like the WTO (Abendin &

Duan,2021). This misalignment between national

regimes and international soft law, coupled with

inter-state regulatory contradictions, risks reducing

soft law to a "lowest common standard" that lacks

substantive harmonizing power, as parties prioritize

minimal concessions over meaningful collaboration.

Compounding this is the challenge of conflict

between regional digital trade rules and multilateral

soft law instruments. Businesses face escalating costs

from dual compliance, while economies with

competing interests are pressured to choose between

divergent frameworks. This may incentivize the

creation of new, narrower agreements, leading to

greater fragmentation of global rules.

A third challenge lies in the absence of robust

implementation mechanisms. While instruments like

JIS include provisions such as Article 14’s

The Construction of a System of Digital Trade Rules from the Perspective of International Law: Study on Soft Law Practices Based on the

WTO Joint Statement Initiative on e-Commerce

409

"prohibition of misleading commercial practices,"

they often lack clear definitions-for instance, failing

to specify metrics for "reasonable network

management" as mentioned in Article 13-and omit

formal dispute-resolution frameworks for cross-

border conflicts. This ambiguity creates interpretive

flexibility that can be exploited. It may lead to market

disorder and erode soft law’s normative authority.

Given these challenges, soft law guiding the

construction of a system of rules for digital trade is

still the current global trend and has major advantages

over other forms of regulation. There are two main

reasons.

Soft law demonstrates superior applicability in

digital trade governance compared to hard law

constrained by low efficiency. First, rigid regulatory

frameworks impose prohibitive entry barriers for

SMEs and market participants in the digital

economy’s emerging subfields (Marchant &

Gutierrez,2023). In contrast, soft law’s low

negotiation costs and adaptive implementation

mechanisms enable inclusive participation from

resource-constrained innovators and jurisdictions

seeking cross-border cooperation. Second, soft law’s

deliberate ambiguity creates operational flexibility

for states to balance regulatory sovereignty with trade

liberalization objectives, achieving provisional

equilibrium between efficiency and security

imperatives (Zheng & Snyder,2023; Zhang,2024). Its

normative influence materializes through de facto

adoption: For instance, non-binding OECD

guidelines on data flows-particularly principles like

purpose limitation and data minimization-have

gained global traction via ISO/IEC 27001 compliance

frameworks, demonstrating soft law’s capacity to

shape corporate practices without formal mandates.

The WTO e-commerce negotiations further

validate soft law’s institutional credibility. While

persistent disagreements persist on sensitive issues

like cross-border data flows, consensus-building on

most agenda items reflects soft law’s viability as a

transitional governance tool (Burri,2022). The

WTO’s inclusive platform, governed by transparent

and impartial procedures, fosters multilateral trust-a

prerequisite for meaningful engagement among

states, businesses, and consumers (Hagemann,2018).

Through iterative soft law commitments,

stakeholders gradually align divergent interests

within dynamic digital trade ecosystems, laying

groundwork for potential hard law codification. This

evolutionary trajectory not only addresses immediate

governance gaps but also establishes sustainable

pathways for institutionalizing global trade norms.

4 SOFT LAW-ORIENTED RULE-

BUILDING PATH

4.1 Multilateral Consultation and

Interest Balancing Mechanism

The focus of this part is to balance the demands of

countries at different levels of development. In this

regard, the modularized design of DEPA can be used

to allow member countries to choose the types of

implementation clauses according to their capacity.

For example, technology-neutral clauses could be

categorized as immediate obligations (Category A),

while clauses requiring infrastructure development

could be categorized as transitional obligations

(Category C) (Burri, etal.,2024). In order to promote

the balance of interests, on the one hand, it is

necessary to incentivize high-developed countries to

provide technical and human resources assistance to

low-development countries, and on the other hand, it

is also necessary for developing countries to enhance

political mutual trust and unite to seek a path of

development. The former can be realized by

improving market access through soft law, giving

certain incentives to developed countries that actively

trade with developing countries, lowering trade

barriers, and supporting developing countries to

integrate into digital trade more quickly. The latter

can be achieved through measures such as

information sharing among developing countries to

enhance integration, and the WTO is the largest

platform to support the integration of less developed

countries into the global digital market, which reveals

the importance of updating the rules within the WTO

framework (Sona,2022).

4.2 Synergistic Rules of Hard and Soft

Law

Hardening of soft law may cause harms such as

chaotic regulatory order, inappropriate regulatory

subjects, and weakening of the authority of the law.

To prevent this, the synergy between soft law and

hard law needs to be realized through the

convergence of the rules and the transformation of

domestic law. In this process, soft law is used to

respond quickly to the needs of all parties, and hard

law is used to ensure fair competition (Panahi,2024).

ICPLSS 2025 - International Conference on Politics, Law, and Social Science

410

This part emphasizes the role of WTO. Firstly, GATS

has been proven to be inefficient in dealing with

digital trade issues, while WTO is recognized by

countries as an international platform capable of

setting uniform rules and resolving disputes (Abendin

& Duan,2021; Aaronson & Leblond,2018).

Therefore, the rules within the WTO framework

should be updated on the basis of coordinating the

interests of all parties and protecting less-developed

countries by fully drawing on the existing high-

standard international economic and trade rules, such

as learning from the provisions of the CPTPP that

encourage digital liberalization and learning from the

strict provisions on privacy protection in the GDPR.

In addition, domestic law transformation is the key to

enhancing the effectiveness of soft law. China has

responded quickly to problems in the digital market

through soft law such as the Anti-Monopoly

Guidelines for the Platform Economy (Zheng &

Snyder,2023). The Cooperation and Review

Mechanism (CVM) established by the EU, which

realizes a mix of hard and soft law and produces

positive results, can also be drawn upon by the WTO

(Stefan,2024).

4.3 Innovative Regulatory Systems

To give full play to the advantages of the technology-

dependent nature of the soft law on digital trade,

digital technology should be utilized to establish a

platform or institution for real-time supervision of the

implementation of the soft law by members, while the

dispute settlement mechanism should be improved in

order to provide guarantees for the effective

implementation of the soft law. For example, the

WTO review mechanism can be used to publicize the

assessment results on a regular basis, creating

pressure for compliance. Considering the uneven

levels of development of all parties, it is also

necessary to help developing countries enhance the

application capacity of blockchain regulatory tools

and narrow the divide digital governance through

technical training and infrastructure assistance

provided by WTO and some developed countries. On

this basis, we should further strengthen the

intelligence of compliance supervision by all parties,

for example, when the data localization measures of

a member country exceed the scope of "reasonable

network management" allowed by JIS, the system can

automatically generate a risk report. In order to make

up for the ambiguity of the dispute resolution

mechanism in the soft law provisions, WTO can also

draw on the GDPR "one-stop regulatory" mechanism

and set up a Digital Trade Dispute Resolution

Centerin WTO to resolve trade conflicts through

arbitration, mediation, negotiation and other multi-

dimensional methods. The WTO can also draw on the

GDPR "one-stop regulation" mechanism to set up a

"digital trade dispute mediation center" in the WTO

to resolve trade conflicts through arbitration,

mediation, consultation and other diversified

methods.

5 CONCLUSION

This paper explores the unique value and potential of

soft law in global digital trade governance through a

theoretical analysis and investigation into the

effectiveness of digital trade soft law. While the

institutional effectiveness of digital trade soft law is

constrained by practical limitations, its flexibility and

non-binding nature enable it to serve as a crucial

instrument for balancing national sovereign interests

and advancing digital trade liberalization. By way of

multilateral consultation, refinement of the soft law-

hard law synergy mechanism, and regulatory system

innovation, soft law can progressively evolve from an

"interim solution" to a more established form, thereby

furnishing a robust rule foundation for the Sound

development of global digital trade. Further research

should delve into the empirical assessment of soft law

implementation, examine its application in emerging

technologies, and bolster its enforceability and

credibility via international platforms such as the

WTO. These efforts will contribute to the progress of

the global digital trade governance framework.

REFERENCES

Aaronson, S.A. & Leblond, P. 2018. Another digital divide:

The rise of data realms and its implications for the

WTO. Journal of International Economic Law 21(2):

245-272.

Abendin, S. & Duan, P. 2021. Global e-commerce talks at

the WTO: Positions on selected issues of the United

States, European Union, China, and Japan. World Trade

Review 20(5): 707-724.

Burri, M. 2022. WTO agreement on electronic commerce:

An inquiry into its legal substance and viability.

Georgetown Journal of International Law 53(4): 565-

625.

Burri, M. et al. 2024. The Evolution of Digital Trade Law:

Insights from TAPED. World Trade Review 23(2):

190–207.

The Construction of a System of Digital Trade Rules from the Perspective of International Law: Study on Soft Law Practices Based on the

WTO Joint Statement Initiative on e-Commerce

411

De Búrca, G. & Scott, J. (Eds.). 2006. Law and New

Governance in the EU and the US. Bloomsbury

Publishing.

Hagemann, R. 2018. New rules for new frontiers:

Regulating emerging technologies in an era of soft law.

Washburn Law Journal 57(2): 235-264.

He, Z. 2017. Against the Trend of Globalization and the

Trend of International Soft Law. Journal of Wuhan

University (Philosophy and Social Sciences Edition)

70(4): 54-69.

Marchant, G.E. & Gutierrez, C.I. 2023. Soft Law 2.0: An

Agile and Effective Governance Approach for

Artificial Intelligence. Minnesota Journal of Law,

Science and Technology 24(2): 375-424.

Panahi, T. & de Bittencourt Siqueira, A. 2024. Soft Law,

Hardcore?: Die rechtliche Durchsetzung von

Verhaltenskodizes nach dem Digital Services Act.

VerfBlog. https://verfassungsblog.de/soft-law-dsa-ko-

regulierung/.

Prasad, R. 2023. Cyber Borderlines: Exploring the Interplay

Between E-commerce and International Trade Law.

Studies in Law and Justice 2(4): 1-9.

Sona, V.V. 2022-2023. Incorporation of Digital Trade in

the International Trade Law Regime: Challenges and

Reforms in Modernization. Indian Journal of Law and

Legal Research 4: 1-11.

Ștefan, O. 2024. Preserving the Rule of Law Through

Transnational Soft Law: The Cooperation and

Verification Mechanism. Hague Journal on the Rule of

Law 16(3): 671–692.

Zhang, M. 2024. The International Standard Path for China

to Promote Global Governance of Digital Trade from

the Perspective of Soft Law. Journal of Shanghai

University of International Business and Economics

31(1): 97-109.

Zheng, K. & Snyder, F. 2023. China and EU's Wisdom in

Choosing Competition Soft Law or Hard Law in the

Digital Era: Perfect Match? China-EU Law Journal 9:

25-50.

ICPLSS 2025 - International Conference on Politics, Law, and Social Science

412