Electronic commerce (E-commerce) was first discussed in the context of the Uruguay Round Agreements, within a work programme established by the WTO General Council on September 25, 1998. The programme described E-commerce as the production, advertising, sale and distribution of products via telecommunications networks. Under the work programme, issues related to electronic commerce have been examined by the Council for Trade in Services (CTS), the Council for Trade in Goods, the Council for TRIPS and the Committee on Trade and Development. The most recent event on E-commerce was the CTS workshop held in June 2013. The workshop aimed to focused on ICT infrastructure development, new business trends, regulatory changes the government has adopted, and other issues relevant to E-commerce. There were three sessions in the workshop; the first session gave an overview of trade and policy trends, the second session was for enterprises to share their experiences and viewpoints on E-commerce, and the last session focused on regulations by examining cases from different countries’ cases.

Digital technology has changed the way human trade was conducted during the last decade and will continue to change it even more dramatically. However, in the current system of trade negotiations there has not been much discussion on E-commerce or other digital -enabled services. There are discrepancies between the negotiatingon system and the digital industry are such that a balanced relationship between digital technology and trade has not been attained. In the workshop, Mr. Hosuk Lee-Makiyama, director of the European Centre for International Political Economy presented spoke on “E-commerce and digital trade provision in trade agreement”, which illustrated the difficulties for E-commerce to fit into the current system of multilateral and bilateral trade negotiations and offered some points for nations and international organizations to transform the current agreement into the one that suits the era of digital technology.

The main difficulty suggested by Mr. Lee-Makiyama is that although E-commerce is gaining more importance in both developed and developing economies. E-commerce or related trade principles is not are neither a priority in the WTO nor in FTAs. Services are tradable now by using digital technology. A nation’s ability to trade therefore depends a lot on its sound environment for digital economy to boom. The multilateral or bilateral systems of trade negotiations both should both concentrates more on E-commerce.

There are many reasons why the current negotiation system does not pay enough attention to E-commerce. Inadequate classification may be the first problem that needs to be solved. Due to the nature of cross-border and the lack of physical appearance make E-commerce hard to be categorized into any particular type of service mode or good. Under the classification of GATS, it is difficult to decide whether to put E-commerce in mode 1 or mode 2 of services. In the Guidelines for scheduling of specific commitment, (S/L/92) mode 1 is defined as the service through telecommunications or mail, and the service suppliers are not present within the territory of the member where the service is delivered while mode 2 is defined as service is delivered outside the territory of the member in the territory of another member, to a service consumer of the member. In that sense, cross- border E-commerce is provided in mode 1 and consumed in mode 2. The internet blurs the boundaries betweeny of mode 1 and mode 2. The old system of classification is not ideal for the new trade model of E-commerce.

Besides, services are delivered through the internet in more forms than the WTO classified. Services can be exported to foreign markets in the form of investments, natural persons, and more commonly through the internet as data. However, in the 1998 Declaration moratorium, the WTO stated that “Members will continue their current practice of not imposing customs duties on electronic transmission”. Since it is hard to identify the nationality of data, the practical use of the moratorium is questionable. In order to build a healthy ground for E-commerce, more discussion on the flow of data is needed.

Another problem raised by Mr. Lee-Makiyama is that the structure of the WTO system is designed to negotiate tariffs for well-defined sectors. Cross-sector issues like E-commerce only resulted in weak commitments on horizontal issues such as technical barriers to trade and investment. The essential part of how digital technology changes the model of trade and how trade principles should be modified is left untouched.

Despite the insufficiency of GATS and the negotiation system for E-commerce, there are still some important contributions the system has made to the digital industry especially through the mechanism of dispute resolution. For example, the principle of technological neutrality is certified by dispute and then becoames part of WTO jurisprudence. Measures on necessity and proportionality on the internet are also important principles created under the dispute mechanism.

Finally, two suggestions are made to harmonize the characteristics of E-commerce and the system of multilateral trade negotiations. The first is that we have to go beyond the current mode-based classification of GATS and to consider more possibilities and forms of services delivered through the internet to draw a map for GATS in the digital era. The second suggestion is that no matter regardless in E-commerce or other digitally enabled services, the free flow of data is the key for the export of services. Therefore, the flow of data should be taken into consideration as top priority under the WTO and FTAs. The flow of data should be considered as a horizontal issue while the ICT industry should be a sector issue because the flow of data is key to E-commerce and all other activities in the digital economy. The free flow of data and the ICT industry should be considered separately to establish common ground for the flow of data under a wider concept.

References:
http://www.wto.org/english/tratop_e/serv_e/wkshop_june13_e/wkshop_june13_e.htm
http://www.ecipe.org/media/external_publication_pdfs/USITC_speech.pdf