Towards a permanent Customs standstill on e-commerce?

by Chakravarthi Raghavan

GENEVA: The proposals and ideas for a comprehensive work programme on "electronic commerce", formulated at an informal meeting of WTO heads of delegations on 8 July could stretch, but achieve the main US objective of a permanent standstill on customs levies on electronic transmissions and commerce.

The US suggestions on electronic commerce, and the work programme (mandated by the Geneva Ministerial meet), were put forward in a non-paper, providing an outline of a programme as "guidance".

According to the US, GATS, the TRIPs Council and the Committee on Trade and Development should undertake work on electronic commerce and the General Council should be kept informed of any review on electronic commerce undertaken by the WTO committee on government procurement.

Also, the General Council is to conduct examination of all "trade-related issues" relating to global electronic commerce, and in this, take into account economic, financial and development needs of developing countries, in particular the benefits that electronic commerce can bring to developing countries to enhance their trade, including by small and medium-sized companies.

The US non-paper also wants to provide for periodic exchange of views on activities in other fora such as UNCTAD, OECD, WIPO and the UN Commission on International Trade Law (UNCITRAL); encourage WTO members to invite private sector companies and organizations to contribute informally to the work programme (through projects and seminars to inform WTO members):

  • examine ways in which WTO members could use electronic commerce to facilitate compliance with WTO agreements; and examine the generic issues on electronic commerce raised in the WTO study.

In preparing a report to the 3rd Ministerial Conference in 1999, the General Council is asked to coordinate the reviews by the WTO bodies, include information on the activities of the committee on government procurement.

The US also wants the General Council, in preparing the recommendations, to "review making permanent the commitment of Members to not impose customs duties on electronic transmissions."

A permanent standstill was the original demand of the US.

But the Geneva WTO Ministerial decision, while declaring that Members should "continue their current practice" of not imposing customs duties on electronic transmissions, has also said that in reporting to the 3rd Ministerial, the General Council "will review this declaration, the extension of which will be decided by consensus, taking into account the progress of the work programme."

EC's proposal

In its non-paper, the EC identified ten trade issues to be covered by the programme:

  • examination of legal treatment of electronic transmissions in relation to the "main WTO principles", in particular the GATS, including on the application of legal concepts such as "like" services (on which MFN, and national treatment commitments may be involved);

  • customs duties on electronic transmissions;

  • privacy, in relation to Art. XIV of GATS (the General Exception clause); and competition in relation to Art. IX of GATS (business practices of service providers and consultations between members), which the EC suggests may have implications for domain names (at the moment an American monopoly);

  • electronic commerce and developing countries;

  • intellectual property; trade facilitation; government procurement; information technology; and standards.

In preliminary comments and interventions, Switzerland wanted a clear definition of electronic commerce and how it relates to the WTO work, and the trade-related aspects of such commerce and their applicability to the current proposals. Canada felt it would be difficult to say what could be included under "electronic commerce", while Australia wanted "flexibility" as also clarity on what aspects were involved in the WTO remit.

Egypt said the issue could be looked at thematically or through aspects of the general market infrastructure. It could support either, but the work programme should look at development aspects in a cross-cutting way.

Supported by India, Egypt also wanted the involvement of the International Telecommunications Union (ITU) and the International Trade Centre in the work programme. India also wanted the work programme to cover the issues of technology transfer, movement of natural persons and the access to networks.

Brazil favoured a comprehensive examination, but only of trade-related aspects so that the WTO was not overwhelmed with issues of marginal relevance to the organization.

Japan wanted the process in the WTO bodies to be coordinated by the General Council, while Indonesia (for the ASEAN) wanted focus on legal aspects, as also on trade facilitation, development aspects and infrastructural costs.

Hong Kong-China said too much work should not be left to subsidiary bodies (given difficulties of small delegations to attend all such meetings) and the work should be confined to trade-related and development aspects. The WTO Secretariat is to come up with a report by mid- July's formal meeting of the General Council on the current legal framework. (Third World Economics No. 189, 16-31 July 1998)

Chakravarthi Raghavan is the Chief Editor of the South-North Development Monitor (SUNS).