ELECTRONIC COMMERCE Work continues on issues needing clarification

The growing importance of electronic commerce in global trade led WTO members to adopt a declaration on global electronic commerce on 20 May 1998 at their Second Ministerial Conference in Geneva, Switzerland.

The declaration directed the WTO General Council to establish a comprehensive work programme to examine all trade-related issues arising from electronic commerce, and to present a progress report to the WTO’s Third Ministerial Conference in Seattle, November 1999.

The 1998 declaration also included a so-called moratorium stating that “members will continue their current practice of not imposing customs duties on electronic transmission”.

The work programme was adopted by the WTO General Council on 25 September 1998. It continued after the 1999 Ministerial Conference.


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The Doha decision

At the Fourth Ministerial Conference in Doha in 2001, ministers agreed to continue the work programme as well as to extend the moratorium on customs duties. In paragraph 34 of the Doha Declaration, they instructed the General Council to report on further progress to the Fifth Ministerial in Cancún, in 2003.

Under the work programme, issues related to electronic commerce were examined by the Services, Goods and TRIPS (intellectual property) councils, and the Trade and Development Committee. During the course of the work programme a number of background notes on the issues were produced by the WTO Secretariat and many members submitted documents outlining their own thoughts.


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The issues

The following is a summary of the main points which emerge from these reports since the beginning of the work programme in 1998, and from several dedicated discussions on e-commerce issues held under the auspices of the General Council:

Three types of on-line services transactions were identified:

  • Transactions for a service which is completed entirely on the Internet from selection to purchase and delivery,
  • Transactions involving “distribution services” in which a product, whether a good or a service, is selected and purchased on-line but delivered by conventional means,
  • Transactions involving the telecommunication transport function, including provision of Internet services.

WTO members hold the general view that the General Agreement on Trade in Services (GATS) does not distinguish between technological means of supplying a service, and that its provisions apply to the supply of services through electronic means.

A difference of views emerged on whether certain products (e.g. software, the texts of books) when delivered electronically should be classified as goods or services. Until the advent of the internet these products (e.g. software on CD-ROMs) were only delivered by conventional means, and they were classified and regulated as goods under General Agreement on Tariffs and Trade (GATT). The question now arises as to whether these products, when delivered electronically, should still be treated as goods and therefore be subject to GATT rules, or whether they should be classified as services and be subject to the GATS framework.

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Since then

After the Doha Ministerial Declaration, the General Council agreed to hold “dedicated” discussions on cross-cutting issues, i.e. issues whose potential relevance may “cut across” different agreements of the multilateral system. So far, there have been five discussions dedicated to electronic commerce, held under the General Council’s auspices.

The issues discussed included: classification of the content of certain electronic transmissions; development-related issues; fiscal implications of e-commerce; relationship (and possible substitution effects) between e-commerce and traditional forms of commerce; imposition of customs duties on electronic transmissions; competition; jurisdiction and applicable law/other legal issues.

Participants in the dedicated discussions hold the view that the examination of these cross-cutting issues is unfinished, and that further work to clarify these issues is needed.

 Other material:
> Electronic commerce
> Doha declaration