Generative AI in Cross-Border Trade: Classification Conundrum and Governance Divergence under WTO Rules

The proliferation of Generative Artificial Intelligence (Generative AI) presents a systemic challenge to the multilateral trading system, centred on its unresolved legal classification. The determination of whether Generative AI constitutes ‘goods’ under General Agreement on Tariffs and Trade (GATT) or ‘services’ under General Agreement on Trade in Services (GATS) is a strategic choice that dictates the applicable legal regime and shapes the permissibility of divergent national regulations. This article dissects this dilemma, arguing that a generalized ‘goods’ classification is legally and strategically untenable. Proceeding from a services-based framework, the analysis examines the significant tensions between emerging national AI regulations and core World Trade Organization (WTO) disciplines, particularly under GATS and the TradeRelated Aspects of Intellectual Property Rights (TRIPS) Agreement. This legal analysis further illuminates the divergent regulatory philosophies of the regulations, and the corresponding strategic responses available to different national blocs. The article concludes by advocating for international cooperation to adapt the multilateral trading system, ensuring a predictable, rulesbased environment for the digital economy.