BRIEF NOTE ON ELECTRONIC COMMERCE IN WTO
1.Genesis of E Commerce in World Trade Organisation
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.
2. Work Programme related to E-commerce and deliberations in various bodies of WTO.
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?
- Future work in WTO: Should further work on electronic commerce in the WTO be carried on as at present in the respective subsidiary bodies or should there be a horizontal group devoted solely to electronic commerce?
This note is being put up on the Department of Commerce NIC Web site. Department of Commerce would be happy to receive comments and suggestions on the issues highlighted, which may be e-mailed to the following address: