A fundamental structural change affecting services trade is the proliferation of Internet use, with the number of users said to be doubling every year. In contrast to some 4.5 million in 1991, there were over 500 million users by the end of 2000. Encryption technologies to address data security concerns have advanced sufficiently for online sales to accelerate.
The rapid changes in information technology and telecommunications have resulted in a virtually borderless global economy allowing any service that can be digitized and transmitted electronically to be produced and delivered anywhere in the world. Electronic commerce may thus prove a “great equalizer” that helps to reduce, even eliminate, distance-related barriers to trade, but it can also exacerbate a so-called “digital divide” vis-Ó-vis countries with infrastructural deficiencies. For regions presently without Internet access, going “on-line” can make the difference between international market integration or increasing marginalization.
The Internet provides a low-cost, highly efficient way to approach potential customers world-wide. It will have multiple influences on trade flows and, possibly, trade negotiations. One of the biggest challenges is creating a regulatory environment for e-business and e-trade that is responsive to the rapid changes in technology. E-governance initiatives and comprehensive IT development strategies can help to build familiarity among policy makers and trade negotiators.
The Doha Declaration has continued the moratorium not to impose customs duties on electronic transmissions (document WT/MIN(01)/DEC/1, para.34). Debate continues on whether some products, which can be delivered both on a physical carrier and in purely electronic form (e.g., computer software), should best be classified as services or goods. The classification of such transactions determines whether GATT or GATS applies, with potentially important implications for WTO Members’ legal obligations in the areas concerned.
The second WTO Ministerial Conference in 1998 had adopted a Declaration on Global Electronic Commerce “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.” Discussions in relation to GATS have focused on the idea of maintaining the integrity of the GATS definition of trade in services (Article I:2), which does not rule out any technological means by which the services may be supplied.
GATS provisions may be relevant, at least indirectly, to many concerns surrounding the formulation of e-commerce/Internet law and policy. For example, the general exceptions (Article XIV) may actually govern most measures designed to deal with on-line privacy protection, illegal or illicit content, cyber crime and fraud, enforcement of contracts, consumer protection, and taxation. Governments may even resort to measures that are otherwise inconsistent with GATS obligations — bearing in mind that disciplines on the use of the exception are built into the provision itself. Specifically, such measures must be “necessary” to meet the objective concerned (i.e. the stated objective cannot effectively be met without resort to inconsistent measures), they may not discriminate unjustifiably against particular countries, and may not be used as disguised trade restrictions (i.e. used as a “back door” means to protect markets).
The role of the WTO, and GATS, will be to ensure that the broad economic advantages of multilateral rules and obligations will accrue to electronic supplies, just as they do to other forms of trade. Judging by some of the negotiating proposals (e.g. on telecom and computer services) submitted thus far by both developed and developing country Members, there is a widely held view that GATS bindings can be used to strengthen countries’ capacity to take advantage of e-commerce and narrow the digital divide. In addition to telecom and computer services, financial payments services, advertising services, and delivery services have also been mentioned as components of an e-commerce enabling “infrastructure”. Various professional services and IT services, “back-office” services in particular, as well as education and health services are among the potential beneficiaries in developing countries of improved e-commerce and Internet capacity. Fora other than the WTO may be equipped to deal with technical issues such as authentication, encryption, internet governance and domain names or cultural and human resource issues such as encouragement of diversity in local and linguistic content, computer literacy, and education.