WORLD TRADE
ORGANIZATIONWT/GC/W/253
14 July 1999
(99-2915)
General Council Original:  English
PREPARATIONS FOR THE 1999 MINISTERIAL CONFERENCE
Electronic Commerce
Communication from Japan
The following communication, dated 13 July 1999, has been received from the Permanent
Mission of Japan.
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Proposal
1. A free trading environment, avoiding unnecessary regulations, should be developed so that
the benefits of electronic commerce can be fully realized.
2. Discussions on issues relating to the development of such an environment, which could
include developing international rules, should co ntinue under the auspices of the General Council.
Treatment of the issues for the next round of negotiat ions should be examined in this process by the
time of the Seattle Ministerial Conference.  Such discussion process should also account for the
opinions of business communities and experts.  It is also necessary to streamline the relationship
between work in the WTO and the work being carried out in other international organizations, such as
the UNCITRAL and the OECD.
3. With respect to the treatment of digital contents  transmitted electronically, it is appropriate to
examine the issue further so that the principles stipulated under the GATT, namely the most-favoured-
nation treatment, national treatment and the general elimination of quantitative restrictions, can be
applied to such contents.
4. When discussing this issue from a legal and technical point of view, Members should
maintain the current practice of not imposing customs duties on electronic transmissions. Developed
countries should extend cooperation toward the smooth participation of developing countries in
electronic commerce-related markets through, for example, the provision of relevant information.
5. Measures for privacy and consumer protection, etc., have legitimate policy objectives in
themselves.  However, a balanced approach is important in order to ensure that such measures do notdevelop into unnecessary regulations in view of developing a free trading environment.
Background
6. The rapid development of the Internet and other kinds of information technology has led to an
explosive increase in commercial activities using digital networks (electronic commerce) for orders,settlements and the distribution of goods and services. In Japan, ¥8.6 trillion was produced inWT/GC/W/253
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business-to-business transactions in 1998 and is forecast to boom to ¥68 trillion by the year 2003.
Business-to-consumer transactions are also expected to grow from ¥65 billion to ¥1.16 trillion over
the same period, actually increasing by as much as 48 times. This area, therefore, nurtures enormous
market potential.
7. Electronic commerce also has the following three main merits:
(a) by directly linking producers and consumers, it reduces the various costs entailed by
such factors as distribution, and thereby facilitates cross-border transactions;
(b) entrepreneurs with original ideas have a chance to realize substantial profits, while
avoiding heavy production costs;
(c) as a company's clients are Internet users spreading across the globe, markets are not
restricted to within national borders, but rather expand world-wide.
8. While electronic commerce is an area that has been growing rapidly over a brief period of
time, countries are still exploring what laws should be applied to such transactions.  A free trading
environment, without unnecessary regulations, should be developed so that the benefits of electronic
commerce can be fully realized.
9. Fora such as the WTO, the UNCITRAL and the OECD have been engaged in initial
considerations on international rules that shall serve as a framework for government measures.  Active
considerations on the various aspects of electronic commerce have been undertaken at the WTO in the
Council for Trade in Goods, th e Council for Trade in Services, the Council for TRIPS and the
Committee on Trade and Development, and those bodies shall be submitting reports to the GeneralCouncil by the end of July.  It is our observation, however, that issues have yet to be structured from a
more integrated perspective.
10. For example, Japan agrees that the GATS disciplines should be applied to the acts of
supplying digital contents by electronic means. However, as it is not entirely clear what disciplines
should be applied to the digital contents themselves, for example, software, further consideration isneeded. Such consideration should be directed so that the GATT principles of the most-favoured-
nation treatment, national treatment and the general e limination of quantitative restrictions will apply
to such digital contents.
11. It is desirable that the WTO Members continue their current practice of not imposing customs
duties on electronic transmissions while Members discuss this issue from a legal and technical pointof view.  Such discussions should cover the tr eatment of electronic transmissions in the
WTO Agreement.
12. Furthermore, in considering the need for the formulation of international rules in the WTO
and the scope thereof, the relationship between the work under the WTO and the considerations being
undertaken by other bodies such as the UNCITRAL and the OECD needs to be streamlined.
13. Drawing from the reports, which are scheduled to be submitted in July to the General Council
from the Council for Trade in Good s, the Council for Trade in Services, the Council for TRIPS and
the Committee on Trade and Development, efforts should be made during the lead-up period to the
Seattle Ministerial Conference to identify issues, e.g. from those listed in paragraphs 10 to 12, and to
reach conclusions on the treatment of such issues related to the development of an appropriate
environment for electronic commerce.WT/GC/W/253
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14. Developed countries should cooperate toward the smooth participation of developing
countries in electronic commerce-related markets through, for example, the provision of relevant
information.
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