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Thursday, May 31, 2012

E-Commerce in Light of International Trade Agreements: The WTO by Bashar Malkawi

E-Commerce has developed after the creation of the WTO in 1994. Consequently, the WTO does not contain specific articles for e- commerce. Nevertheless, there are several WTO agreements related to e-commerce. These WTO agreements include the General Agreement on Trade in Services (GATS) and the Information Technology Agreement (ITA).

The GATS is of particular significance to e-commerce for several reasons. First, the communication services which provide access to e-commerce fall under the GATS.Second, the execution of an electronic transaction necessitates infrastructure services (distribution, payment, etc.) whose liberalization equally falls under the GATS. In view of the acknowledged importance of telecommunication services, the access to public telecommunication networks was incorporated in a separate telecommunication annex.In addition, WTO members agreed to so-called Reference Paper. The Reference paper provides for rules that shall prevent anti-competitive behavior in the telecommunications sector.The Reference Paper includes competition policy principles to ensure access to public telecommunication networks.

The ITA is of a particular significance to e-commerce. WTO members agreed to a common position with regard to trade in information technology (IT) goods. WTO members committed themselves to reduce their tariffs on IT-goods in four steps of twenty-five percent to reach a tariff-free policy by the year 2000.This obligation pertains to a common list of IT-products covering wide range of some 180 information technology products in five major categories: computers and peripheral devices, semiconductors, printed circuit boards, telecommunications equipment (except satellites), and software. The IT covers ninety-five percent of the existing world trade in IT-goods. Thus, the ITA brings advantages to a wide range of production activities.

Largely at the insistence of the U.S. at the WTO Ministerial Conference in 1998, WTO members decided to develop a work program covering e-Commerce.

According to the WTO Work Program on Electronic Commerce, e-commerce is understood to mean the production, distribution, marketing, sale or delivery of goods and services by electronic means. The WTO divides e-commerce transactions into three distinctive stages: the advertising and searching stage, the ordering and payment stage, and the delivery stage. Any or all of these stages may be carried out electronically and may therefore be covered by the concept of e-commerce. In other words, a buyer may purchase a book via the Internet and to be delivered physically later on or he can purchase and download the book via the Internet. In either case, the purchase of the book could be said that it is conducted through e-commerce means.

Despite the fact that the WTO Work Program on Electronic Commerce has been set up in 1998, very little progress has been achieved. The most important issue blocking progress on e-commerce in the WTO agenda is the question of categorization. WTO members differ whether products which were usually sold as goods due to their link to a physical carrier and which can now be delivered online over the net (e.g. music or movies) shall be treated as goods under the General Agreement on Tariffs and Trade (GATT) or as services under the GATS.For example, if a book is ordered online, but is delivered physically, for the purposes of WTO trade rules, it is a good. That makes it subject to the GATT. However, if the book is delivered electronically - downloaded onto the computer � it is unclear whether this digital product should be treated as a good or a service. If goods delivered online were considered goods, they would be subject to few trade restrictions under the GATT such as tariffs .On the other hand, if goods delivered online were considered services, they would be subject to more trade restrictions under the GATS such as market access barriers and discriminatory domestic regulations. For example, if the delivery of films and broadcasts on the Internet is considered services, countries apply their restrictive rules on the distribution and broadcast of audiovisual works to films and television programs transmitted over the Internet. Until the classification debate is resolved, WTO members decided not to impose tariffs on imported electronic transmissions.

There were numerous WTO meetings and seminars producing views and proposals which are reflected in the country statements or the final reports.These meetings would include informal exchange of view-points than the achievement of agreements. Therefore, the classification debate issue continues to be unresolved. There have been no new e-commerce relevant actions at the WTO until now.

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