RESTRICTED
WORLD TRADE WT/GC/W/85
23April 1998
ORGANIZATION(98-1669)
Original: English
ELECTRONIC COMMERCE
Communication from theEuropean Communities andtheirMember States
Thefollowing communication hasbeen received on23April 1998 from theEuropean
Communities andtheirmember States.
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Electronic commerce, andinparticular theInternet, isfastbecoming anormal waytotrade.
Approximately onehundred countries nowadays haveaccess totheInternet, there arealready around
20million Internet hosts andaround 100million Internet users world-wide. Business-to-business
commerce overtheInternet in97reached circa7billion ECU. Thispattern ofgrowth ofthedigital
economywillnotonlycontinue,butincreaseinthefuturetothebenefitofbothdevelopedanddeveloping
countries. Bytheyear2000 thenumber ofInternet users isexpected tobe250million andby2002
thevalue ofgoods andservices traded electronically between business isexpected toapproach 300
billion ECU1.Theoverall network-generated revenue by2001 isexpected toreach US$1trillion2.
Itis,however, worth noting thatthese figures needtobeassessed withcertain caution, asthere are
notrulyreliable dataonelectronic commerce. Thenumber ofactivities thatcanbetraded electronically
isinconstant growth :virtual malls, entertainment services, audio-visual services, professional services,
banking andother financial facilities, educational activities, etc…
From atrade point ofview, electronic commerce isnotacompletely newphenomenon. The
features ofelectronic commerce relate closely tothose oftradebytelephone mailorfax.On-line trade
hasbeenrecognized bytheWTO system since itscreation in1995, inparticular intheGATS Annex
onTelecommunications3which guarantees thatwhenever aWTO Member hasspecific market access
andnational treatment commitments foraparticular service sector/sub-sector, suchcommitments apply
alsotothose services sectors/sub-sectors when provided inelectronic form.
1Communication from theCommission totheCouncil, theEuropean Parliament, theEconomic andSocial
Committee andtheCommittee oftheRegions -"Globalisation andtheInformation Society -Theneed for
strengthened international coordination", COM/98/0050 of4February 1998.
2Report ofJuly1997, ActivMedia.
3TheGATS Annex onTelecommunications establishes thateachMember shallensure thatservice suppliers
ofanyother WTO Member areaccorded access toanduseofpublic telecommunication transport network and
services onreasonable andnondiscriminatory terms andconditions forthesupply ofaservice included inits
Schedule.WT/GC/W/85
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TheWTO isalready apredictable international legal environment fortheregulation of
international trade. Ithasacrucial roletoplayintheincreasing andunrestricted expansion of
international electronic commerce, together withother international organizations. However, given
theprojected largeexpansion ofelectronic commerce, acomprehensive debate byWTO Members seems
urgently needed onhowtheWTO provisions apply tothevarious forms ofelectronic transactions in
order toseewhether andhowgreater legalcertainty could beprovided. TheECandtheirMember
States believe thatthiscomprehensive debate should alsocover adiscussion onwhether there may
beaneedforclarifying certain WTO provisions when theyapply toelectronic trade, whether some
ofthemneedtoberevised, orwhatactions maybedesirable inorder toavoid discriminatory restrictions
affecting thedevelopment ofelectronic commerce.
TheECandtheirMember States welcome theinitiatives bytheUnited States, Canada and
Australia intheGeneral Council andEgypt intheCommittee onTrade andDevelopment aswellas
thestudy oftheWTO Secretariat onelectronic commerce. These initiatives contribute totheoverall
consideration ofWTO related matters onelectronic commerce.
Proposal foraWTO initiative onelectronic commerce
1. WTO consideration ofelectronic commerce should becomprehensive andrequires adebate
among WTO Members astowhether theapplication ofsome oftheWTO provisions thatalready apply
toon-line commerce needtobeclarified orcomplemented and,where necessary, berevised inrelation
toelectronictransactions.Thisdiscussioncouldleadtoanagreedbasicsetofprinciplesontheapplication
oftheWTO disciplines toelectronic commerce.
TheECandtheirMember States believe thattheconsideration ofelectronic commerce byWTO
Members should focus onthose aspects ofelectronic commerce which arerelated totradeandtherefore
ofdirect relevance fortheWTO. Electronic commerce hasapotential impact onawiderange oftrade
aspects which should beexamined byWTO Members within theexisting WTO bodies concerned. As
outlined below, forsome ofthese issues itissuggested toinitiate adebate onelectronic commerce
which could leadtothecodification ofanagreed setofbasic principles. With regard toother trade
aspects --suchasintellectual property rights, Government Procurement Agreement andtransparency,
ITAPhase II,andtradefacilitation --theECandtheirMember States encourage progress onaddressing
theirelectronic commerce dimension inparallel withthisinitiative, toensure acoherent approach.
2. TheECandtheirMember States believe thatadebate should beinitiated intheWTO onthe
following trade-related aspects ofelectronic commerce. Apossible outcome ofthiscomprehensive
discussion could beacodification ofanagreed setofbasic principles onelectronic commerce, aimed
atclarifying theapplication ofWTO provisions toelectronic trade andunderpinning market access
andnational treatment conditions bound byWTO Members andapplicable toelectronic transactions:
(a) Status ofelectronic transactions intheWTO
TheECandtheirMember States believe thatthedebate byWTO Members onthetreatment
ofelectronic commerce intheWTO should becomprehensive andbegin withanassessment astowhat
WTO provisions are,orarenot,applicable toelectronic transactions aswellasthelegaltreatment
ofthose transactions inrelation tothemain WTO principles, inparticular theGATS. Thisrequires,
interalia,aspecific discussion ontheapplication ofessential legalconcepts suchas"like" servicesWT/GC/W/85
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inrelationtoon-lineandtraditionaltrade.Theselegalconsiderationsarecrucialinsofarastheydetermine
themarket access commitments bound intheWTO forelectronic services atpresent orinthefuture,
aswellastheapplication ofbasic WTO principles suchasthose on"non-discrimination" ornational
treatment. Ultimately theway"likeservices" areinterpreted willhaveimplications onthewaydomestic
regulation andindirect taxation areapplied toelectronic transactions.
(b) Specific issues
TheECandtheirMember States believe thatthefollowing issues should alsobeconsidered:
(i) Apossible commitment byWTO Members tomaintain current practice byagreeing
nottoimpose anysortofduties ontheimport ofservices provided across border byelectronic
means. These duties cover anynewcharges onelectronic transactions which would actina
similar form ascustom duties ongoods. These charges donotinclude indirect taxes applied
toelectronic transactions onanational treatment basis, ortotariffs ongoods ordered
electronically anddelivered physically. Thistermdoesnotapply either tocharges which are
already listed intheschedules ofcommitments ofWTO Members andwhich areapplied in
amanner consistent withtheWTO provisions.
(ii) Adiscussion withaviewtoensure theeffective protection ofprivacy ofindividuals
withregard totheelectronic processing ofpersonal datainparticular oninformation networks.
Some countries havealready established dataprotection systems which allow international
transfers ofpersonal datatocountries providing anadequate levelofprotection ofprivacy.
Keyquestions areeffective compliance withanaccepted setofbasic principles andwhere
necessary redress fortheindividuals intheexercise oftheirrights. Adiscussion inWTO should
aimtoensure alevel oftrustbetween WTO Members sufficient toavoid anyblockages of
tradeflows ortrade distortions onthegrounds ofdataprotection, since those blockages could
haveaserious negative effect onelectronic commerce transactions. Thus, itwilleasetrade
byelectronic means, since theabsence ofeffective, objective andtransparent dataprotection
rulesmaybecome animpediment tothedevelopment ofelectronic commerce. Inthisregard,
theprovisions ofArticles IIIandXIVoftheGATS areparticularly relevant. Article IIIcontains
obligations ontransparency. Article XIVallows fortheadoption andenforcement ofmeasures
fortheprotection ofprivacy, provided theydonotconstitute adiscrimination oradisguised
restriction ontrade andthisshould beretained.
(iii) Adiscussion onwhether electronic commerce raises anynewissues ofcompetition
andwhether existing WTO provisions which areapplicable toon-line transactions, forexample
those ofArticle IXoftheGATS (restrictive business practices) aresufficient inorder totackle
thespecificcharacteristicsofanyanti-competitivepracticesonelectroniccommercetransactions,
suchasthose related tomis-use andabuse ofinformation orunjustifiable restrictions toaccess
to,anduseof,electronic orinformation networks suchastheinternet.
(c) Bringing thebenefits ofelectronic commerce todeveloping countries
ThisdiscussionbyWTOMembersontheapplicationofWTOprovisionstoelectroniccommerce
should recognise theneed toincrease participation ofdeveloping country Members inelectronic
commerce inlinewiththeprovisions oftheWTO andinparticular Article IVoftheGATS (Increasing
Participation ofDeveloping Countries).WT/GC/W/85
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3. Asindicated above, theECandtheirMember States support andencourage progress onthe
electronic commerce aspects ofsome other trade issues inparallel withthisinitiative ifthebenefits
ofelectronic commerce aretobefully realized. These issues include intellectual property, trade
facilitation, government procurement, andITA. They donotrequire atpresent anewdebate tobe
initiated intheWTO. Itisimportant togiveastrong impetus totheimportant workunder wayinparallel
withthisinitiative:
(a) Asfaraselectronic commerce andintellectual property areconcerned, important work
hasbeenundertaken inWIPO though theadoption, inDecember 1996, oftheWIPO Copyright
Treaty andtheWIPO Performances andPhonograms Treaty. Discussions continue inWIPO
aiming attheadoption ofaProtocol onAudio-Visual Performances andofaTreaty on
Intellectual Property inDatabases. Themost relevant issue istheprompt ratification and
implementation ofthetwoTreaties already adopted. TheWTO hasnotbeeninvolved sofar
inthisdebate, butattheappropriate time, theremight beaneedtoreview theTRIPS Agreement
inorder toimplement theprovisions ofthenewWIPO Treaties.
(b) Tradefacilitationreferstothesimplificationoftradetransactionsandtradingprocedures.
Electronic-based transmissions areanimportant simplification toolinthisrespect. There exists
adegree ofoverlap between tradefacilitation, aspresently discussed intheWTO, andelectronic
commerce: computerization ofinterfaces between governments andtraders; acceptance by
governments, foradministrative purposes, ofelectronically provided trade databased on
commercial datagenerated bycompanies fortrading purposes; measures toensure that
developing countries arenotleftoutoftheshifttoelectronic commerce, etc.Discussions on
trade facilitation andelectronic commerce should therefore gohandinhand.
(c) There isaneedtoensure thatelectronic procurement improves transparency, ensures
non-discrimination anddoesnotcreate newbarriers toopenness oreffective market access
inpublic procurement, particularly forforeign supplies, suppliers andservice providers. Within
theWTO, thereview oftheGovernment Procurement Agreement toadapt ittoadvances in
information technology isofkeyimportance. TheWorking Group onTransparency in
Government Procurement should alsoplayaroleinpromoting theuseoftransparent andeasily
accessible electronic procurement tools.
(d) Inrelation toinformation technology, progress inthediscussions intheframework
oftheITAPhase IIisimportant forthedevelopment ofelectronic commerce.
(e) Last, theglobal nature ofelectronic commerce reinforces theimportance ofopenand
internationally agreed standards topromoting competition inthissector.
4. TheECandtheirMember States believe thattheneedforlegalclarity applies toallaspects
ofelectronic commerce which arerelevant intheWTO, asidentified above. Apartial consideration
ofindividual aspects willnotreach theobjective oflegalclarity andpredictability ontheapplication
ofWTO rules toelectronic trade, which isbecoming increasingly urgent given thefastdevelopment
ofthisnewwayoftrading.
5. Asetofbasic andgeneral principles agreed byWTO Members clarifying theapplication of
WTO rules toelectronic commerce andrevising those rules when necessary willcontribute tothe
development ofelectronic commerce andprevent itsgrowth being damaged byanyabsence oflegal
clarity. Thisdebate would takeplacewithin theexisting WTO bodies orgroups responsible fordifferent
WTO aspects. Inorder toreassure bothindustry andusers inthisrespect, WTO Members should agree
onatarget dateforfinalizing thiscomprehensive debate andreaching agreement onabasic setof
principles, nolaterthanDecember 1998.WT/GC/W/85
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6. TheECandtheirMemberStatesbelievethattheWTOconsiderationoftradeaspectsofelectronic
commerce should bewithout prejudice totheoutcome ofon-going work inother international fora,
notably onthetaxtreatment ofelectronic deliveries.
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TheEuropean Communities andtheirMember States therefore propose thattheWTO General Council
launches adebate initsvarious existing bodies onacomprehensive consideration byWTO Members
ofelectronic commerce along theproposals indicated above inorder toclarify theapplication ofWTO
rules toelectronic commerce andrevising those rules where necessary byatarget datenolaterthan
December 1998. Thevarious WTO bodies would report totheWTO General Council bythatdate.
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