International Trade

Other Issues - E-Commerce

Electronic Commerce and Work Programme in WTO

Brief Note on Electronic Commerce in WTO

Recognising that Global Electronic Commerce is growing and creating new opportunities for trade, Trade Ministers at the Second Ministerial Conference of WTO, Geneva (17-20th May, 1998), adopted a Declaration  to commence a work programme on the subject in the General Council of WTO, for making recommendations to the next Ministerial Conference. In the meanwhile, it was decided to continue with the current practice of not imposing customs duty on electronic transmissions, a decision which was also to be reviewed at the Third Ministerial Conference. The work programme involving the relevant WTO bodies was to take into account "the economic, financial and development needs of developing countries", and also the work being undertaken in other international fora on this subject. Commerce Minister, in his statement at WTO, emphasized that a standstill on export duties on electronic transmission should be precursor to a more dynamic regime of technology flows and free movement of professionals and technicians in this field. The Geneva Declaration has formed the basis of zero duty on electronic commerce from May 1998 to December, 1999. The Third Ministerial Conference of WTO at Seattle could not review the work programme relating to e-commerce. Thereafter, no decision has yet been taken on the issue of extending the period of zero duty on e-commerce.

A process is underway in the General Council of WTO to discuss and deliberate on the various multilateral trade issues raised by Members. The objective of the process is to make recommendations on these issues. While it is the generally held view that goods ordered electronically but delivered physically would continue to attract the existing disciplines of WTO, unresolved issues remain in cases of electronic delivery of goods and services. Some of these issues are being discussed in the various bodies of the WTO including in the Council for Trade in Services, Council for Trade in Goods, TRIPS Council and Committee for Trade & Development. The deliberations have centered around the following issues:

- Characterisation:- How should electronic transmissions be characterized i.e., are such transmissions, goods, or services or something else? Can legal disciplines of GATT be applied to digitized contents delivered through electronic means, in as far as these contents could be characterized as goods?

- Market Access related to e-commerce:- Whether conduct of trade by electronic means would change the obligations laid down in the tariff bindings contained in schedules of member countries. How sould customs duties be applied to electronic transmissions?

- Classification:- How should digitalized products be classified and the extent to which harmonized system (HS) of classification could be applicable to such products?

-Rules of Origin:- To what extent would rules of origin be applicable to an electronic commerce setting as sophisticated technology allowing for easy duplication and unlimited routing of digitalized data made it difficult to find out where a transmission actually originated?

- Standardisation relating to e-commerce:- The current expansion of electronic commerce was based on the freedom of transactions and standards needed to be developed to promote electronic commerce and not to prevent such a development. Should WTO aim at developing general disciplines and principles apart from setting specific standards for electronic commerce?

- Copyright and related rights:- A number of issues arise out of electronic commerce in connection with copy right and related rights, in the light of changes that digital networks have brought to the way that works and other protected materials are created, produced, distributed and used. These include implications for definition of publication, right of re-production, right of communication, moral rights, right holder, protected subject matter, limitations and collective management. Where would these be addressed?

- Scope of GATS with respect to electronic delivery of service:- Would electronic delivery of services fall within the scope of General Agreement on Trade in Services (GATS) since the agreement applies to all services regardless of the means by which they are delivered? If GATS discipline is applied to electronic delivery of services what implications does it have on the previous commitments undertaken in respect of the different services sectors? Are MFN obligations applicable to the supply of services through electronic means?

- Development dimension of e-commerce:- The importance of taking into account revenue and fiscal implications of electronic commerce for developing countries and the importance of developing human resources and critical infrastructure in this regard.

- Zero duty on electronic transmission :- There are proposals that the zero duty on e-commerce be extended for an indefinite period. In case coming few years witness a substantial growth in digitized delivery of goods and services, would this not lead to foreclosing of options for revenue likely to accrue in future?

World Trade Organization
WT/MIN(98)/DEC/2
25 May 1998
(98-2148)

MINISTERIAL CONFERENCE
Second Session
Geneva, 18 and 20 May 1998

Adopted on 20 May 1998

Ministers,
Recognizing that global electronic commerce is growing and creating new opportunities for trade,
Declare that:

The General Council shall, by its next meeting in special session, establish a comprehensive work programme to examine all trade-related issues relating to global electronic commerce, including those issues identified by Members. The work programme will involve the relevant World Trade Organization ("WTO") bodies, take into account the economic, financial, and development needs of developing countries, and recognize that work is also being undertaken in other international fora. The General Council should produce a report on the progress of the work programme and any recommendations for action to be submitted at our third session. Without prejudice to the outcome of the work programme or the rights and obligations of Members under the WTO Agreements, we also declare that Members will continue their current practice of not imposing customs duties on electronic transmissions. When reporting to our third session, the General Council will review this declaration, the extension of which will be decided by consensus, taking into account the progress of the work programme.

_________

WT/MIN(98)/DEC/2DECLARATION ON GLOBAL ELECTRONIC COMMERCE
- Adopted on 20 May 1998

Adopted by the General Council on 25 September 1998

1.1 The Declaration on Global Electronic Commerce adopted by Ministers at the second session of the Ministerial Conference urged the General Council to establish a comprehensive work programme to examine all trade-related issues relating to global electronic commerce, taking into account the economic, financial, and development needs of developing countries, and to report on the progress of the work programme, with any recommendations for action, to the Third Session. The General Council therefore establishes the programme for the relevant WTO bodies as set out in paragraphs 2 to 5. Further issues may be taken up at the request of Members by any of these bodies. Other WTO bodies shall also inform the General Council of their activities relevant to electronic commerce.

1.2 The General Council shall play a central role in the whole process and keep the work programme under continuous review through a standing item on its agenda. In addition, the General Council shall take up consideration of any trade-related issue of a cross-cutting nature. All aspects of the work programme concerning the imposition of customs duties on electronic transmission shall be examined in the General Council. The General Council will conduct an interim review of progress in the implementation of the work programme by 31 March, 1999. The bodies referred to in paragraphs 2 to 5 shall report or provide information to the General Council by 30 July 1999.

1.3 Exclusively for the purposes of the work programme, and without prejudice to its outcome, the term "electronic commerce" is understood to mean the production, distribution, marketing, sale or delivery of goods and services by electronic means. The work programme will also include consideration of issues relating to the development of the infrastructure for electronic commerce.

1.4 In undertaking their work, these bodies should take into account the work of other intergovernmental organizations. Consideration should be given to possible ways of obtaining information from relevant non-governmental organizations.

2.1 The Council for Trade in Services shall examine and report on the treatment of electronic commerce in the GATS legal framework. The issues to be examined shall include:

• scope (including modes of supply) (Article I);

• MFN (Article II);

• transparency (Article III);

• increasing participation of developing countries (Article IV);

• domestic regulation, standards, and recognition (Articles VI and VII);

• competition (Articles VIII and IX);

• protection of privacy and public morals and the prevention of fraud (Article XIV);

• market-access commitments on electronic supply of services (including commitments on basic and value added telecommunications services and on distribution services) (Article XVI);

• national treatment (Article XVII);

• access to and use of public telecommunications transport networks and services (Annex on Telecommunications);

• customs duties;

• classification issues.

3.1 The Council for Trade in Goods shall examine and report on aspects of electronic commerce relevant to the provisions of GATT 1994, the multilateral trade agreements covered under Annex 1A of the WTO Agreement, and the approved work programme. The issues to be examined shall include:

• market access for and access to products related to electronic commerce;

• valuation issues arising from the application of the Agreement on Implementation of Article VII of the GATT 1994;

• issues arising from the application of the Agreement on Import Licensing Procedures;

• customs duties and other duties and charges as defined under Article II of GATT 1994;

• standards in relation to electronic commerce;

• rules of origin issues;

• classification issues.

Council for TRIPs

4.1 The Council for TRIPS shall examine and report on the intellectual property issues arising in connection with electronic commerce. The issues to be examined shall include:

• protection and enforcement of copyright and related rights;

• protection and enforcement of trademarks;

• new technologies and access to technology.

5.1 The Committee on Trade and Development shall examine and report on the development implications of electronic commerce, taking into account the economic, financial and development needs of developing countries. The issues to be examined shall include:

• effects of electronic commerce on the trade and economic prospects of developing countries, notably of their small- and medium-sized enterprises (SMEs), and means of maximizing possible benefits accruing to them;

• challenges to and ways of enhancing the participation of developing countries in electronic commerce, in particular as exporters of electronically delivered products: role of improved access to infrastructure and transfer of technology, and of movement of natural persons;

• use of information technology in the integration of developing countries in the multilateral trading system;

• implications for developing countries of the possible impact of electronic commerce on the traditional means of distribution of physical goods;

• financial implications of electronic commerce for developing countries