RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/W/183
30 November 2000
(00-5175)
Council for Trade in Services Original:  English
COMMUNICATION FROM THE EUROPEAN COMMUNITIES
AND THEIR MEMBER STATES
Electronic Commerce Work Programme
The attached communication has been received from the delegation of the European
Communities and their Member States with the request that it be circulated to Members of the
Council for Trade in Services.
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1. At its meeting of 17 July 2000, the General Council agreed to an approach on E-commerce
comprising the following three elements:
(i) to agree to reinvigorate the work in the WTO on e-commerce on a practical basis,
which was understood to be without prejudice to any delegation's position on the
status of the 1998 Declaration;
(ii) to invite the four subsidiary bodies:  i.e. the Goods, Services and TRIPS Councils and
the Committee on Trade and Development, to pick up where they had left off in their
work on e-commerce within their respective spheres of competence, identify cross-
sectoral issues, and report back to the General Council at its regular meeting inDecember 2000;  and
(iii) to agree to consider how best to organise the General Council's work on e-commerce
in light of the reinvigorated work of the subsidiary bodies, including the question of
an ad hoc  task force to assist in consideration of subsidiary body reports and cross-
sectoral issues.
2. On 6 October 2000, the Council for Trade in Services confirmed the adoption of a progress
report (S/L/74) to the General Council on its discussions under the work programme on e-commerce.
3. The following communication is submitted as a contribution to the resumption of the work
programme mandated by the General Council.  Its objectives are:
• To highlight the main issues, on which, in the view of the European Communities and
their Member States, the discussions leading to the adoption of the progress report
have not yet reached a conclusion;
• To recall the approach of the European Communities and their Member States on
these open issues, in view of pursuing the discussion under the second phase of thework programme;S/C/W/183
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• To propose to focus the discussion also on the E-commerce issues which are relevant
to the on-going services negotiations; they also comprise the issue of a possiblechecklist of services needed to be able to conduct E-commerce.
I. WHAT REMAINS TO BE DONE
4. A number of issues have been left open by the report, most notably:
- the issue of classification of electronic deliveries and Applicability of customs duties,
- issues related to the application of the Telecommunications Annex and the Reference
Paper to Internet-related services.
5. In order to make progress on the issues that have been left open, and with a view to clarifying
them for the on-going services negotiations, the EC and their Member States submit to the Council for
Trade in Services the following elements for discussion:
• Classification and applicability of customs duties.  The CTS report S/L/74 notes
that members endorsed the view that the vast majority of all products delivered
electronically are services and that there was thus disagreement on a limited number
of these deliveries. It mentions that it was agreed that concrete examples should be
considered to pursue work on this issue. Accordingly, those members who have
identified some electronic deliveries that may not be classified as services should
bring them forward in the forthcoming discussions and explain why they should notbe classified as services.
An additional issue is whether e-commerce may have given rise to any new services,
and, if any, how these new services shall be classified in the existing nomenclature.
Finally, the question of whether or not custom duties could apply to services or
electronic transmissions deserves further consideration.
• Telecommunications issues.  The fact that the notion of “public telecommunications
transport networks and services” of the telecommunications annex cover internet
access and network services has been questioned, based on the argument that the
Internet would be a network of networks, which includes public and private networks.
But the notion of public networks, as defined by the Telecommunications annex,cannot be construed restrictively to mean  only networks owned by publicly-owned
companies and with a universal service obligation: this would considerably diminish
the scope and obligations of the Telecom Annex, such as the flexibility that it
provides for any service provider (e.g. in financial services) to use any protocol to
carry out its service.  Indeed, the Telecommunications annex offers a wider definitionthat includes internet access and network services when they are “required, explicitly
or in effect , by a Member to be offered to the public generally” and “permit
telecommunications between and among defined network termination points”.
Also, the issue of application of the reference paper to internet related services was
raised.  The ITU has discussed the issue and has adopted a recommendation at the
ITU Montreal conference. It would be fruitful to have exchanges on this issue.S/C/W/183
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II. THE EC APPROACH TO E-COMMERCE
6. The EC and their Member States find useful to recall that their approach to e-commerce is
based on the simple premise that e-commerce is commerce, that it is only the form by which the
commercial transaction is performed which may be  new, and not its substance: this has important
consequences, as in the EC view, the discussions in the work programme have confirmed that existingWTO rules and obligations are directly applicable to commerce performed electronically or otherwise.
In this respect, the European Communities and their member States wish to draw the attention to the
non-exhaustive list of trade principles which it proposed as a contribution to the work programme
(WT/GC/W/306) to clarify how GATS provisions and commitments apply to e-commerce.  It is
considered useful to recall those of the proposed principles which the EC considers relevant to the
discussions on the issues that have been left open:
(a) Classification/customs duties.  Electronic deliveries consist of supplies of services
which fall within the scope of the GATS, and the current practice of not imposing
customs duties on such electronic supplies shall be maintained.
(b) Internet access and network services are telecommunication services.  The obligations
of the GATS Telecoms Annex on ‘access to and use of’ public telecommunications
networks and services apply to internet access and internet network services. Theprovisions of the GATS Reference Paper on Basic Telecommunications are also
applicable.
III. PREPARING THE GATS NEGOTIATIONS
7. While electronic commerce appears as a powerful new form of conducting business in many
service sectors, a limited number of sectors are critical to initiating and completing any e-commercetransaction.  Any electronic delivery requires, whatever the content of the delivery, the availability of
a communications service and computer application  services, an advertising service and a payment
service. Additionally the process of  electronic order and physical delivery of a good is a distribution
service. All these services are fundamental to the smooth operation of e-commerce (they are "e-
commerce infrastructure services").   We should be aware that market access and/or national treatmentrestrictions in these services sectors will impact negatively the provision of goods or services via
electronic commerce.
8. In fact, in order to facilitate international trade via e-commerce, so that all members may reap
its benefits in a mutually satisfactory manner, we n eed to facilitate the availability of the e-commerce
critical services.  One way to achieve this, is to consider a checklist on those telecommunications,
computer-related, advertising, distribution and payment services (“e-commerce infrastructure
services”) in the on-going service negotiations.
9. This checklist, based on the concept highlig hted in the EC communication (S/CSS/W/3),
could be a useful tool for negotiators, as an agreed basis for request/offer negotiations. A tentative and
non-exhaustive list of the sub-sectors that may be considered relevant in this cluster is set out in
Annex.S/C/W/183
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ANNEX
E-COMMERCE INFRASTRUCTURE SERVICES
A number of services constitute the infrastructure of e-commerce. Using the classification
provided by document S/C/W120, they could be listed in the following way (some refinement may be
needed) :
- in the telecommunications sector, the services involved are mainly:
a. voice services
b. Packet-switched data transmission services
c. Circuit-switched data transmission services
g. Private leased circuit services
h. Electronic maili. Voice mail
j. On-line information and data base retrieval
k. electronic data interchange (EDI)
l. enhanced/value-added facsimile services, incl.
store and forward, store and retrieve
m. code and protocol conversion
n. on-line information and/or data processing (incl. transaction processing)
- in the computer-related services (in particular in order to take software downloading and
implementation into account):
a. Consulting services related to the installation of computer hardwareb. Software implementation services
c. Data processing services
d. Data base services
- in distribution services:
b. Wholesale trade services
c. Retailing services
- advertising servicesS/C/W/183
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- in the banking services - at least
d. All payment and money transmission services
f. Trading for own account or for account of customers:
- foreign exchange
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