USCIB RESPONSE TO THE EUROPEAN COMMISSION QUESTIONNAIRE

ON THE SERVICES ASPECTS OF THE

WTO WORK PROGRAMME ON ELECTRONIC COMMERCE

(Submitted June 30, 1999)

The United States Council for International Business (USCIB) appreciates the opportunity to offer its views on the European Commission “Questionnaire on the Services Aspects of the WTO Work Programme on Electronic Commerce.”  The USCIB has been actively engaged in electronic commerce issues and looks forward to working with governments to promote an open and competitive electronic commerce marketplace.

The USCIB, representing 300 global corporations, professional firms and business associations, is the American affiliate of the International Chamber of Commerce.  It also serves as the U.S. affiliate of the Business Industry Advisory committee (BIAC) to the OECD, and the International Organization of Employers (IOE).  As such, it officially represents U.S. business positions in the main intergovernmental bodies, and vis-à-vis foreign business communities and their governments.

USCIB members believe that electronic commerce is another means of transacting business rather, than an industry sector in its own right.  Put differently, electronic commerce is merely another delivery mechanism.  Therefore, we fully concur with the emerging consensus within the WTO Council on Services that:

·         Measures affecting electronic delivery of services are measures affecting trade in services, and would therefore be covered by all GATS commitments and obligations; and

·         The GATS is technologically neutral.  Thus, the electronic supply of services is permitted by specific commitments of WTO Members unless the schedule of commitments states otherwise.

Given this emerging consensus, it is essential that the WTO Services 2000 Negotiation serves as a forum to ensure countries make meaningful and improved market opening commitments in a broad spectrum of industry sectors.  Without market opening commitments that ensure cross-border transactions, electronic commerce cannot reach its full potential in that it will constrain and fragment national markets.

Therefore, the USCIB is fully supportive of a WTO work programme that promotes electronic commerce.  Our members have agreed upon the following set of principles concerning electronic commerce that they urge WTO Ministers to adopt at the WTO Seattle Ministerial:

·         Current WTO obligations, rules, disciplines and commitments are technology neutral and apply to e-commerce, including, GATT, GATS and TRIPS;

·         Governments should refrain from enacting trade-related measures that have the effect of impeding, actually or potentially, international e-commerce, even if enactment of such measures would not otherwise violate existing international legal obligations;

·         When a legitimate policy objective necessitates enactment of a specific measure that impedes or threatens to impede international e-commerce, countries agree to enact the least trade-restrictive means available that is otherwise consistent with such country’s WTO obligations;

·         Measures implemented that have an effect on e-commerce, whether or not such measures are subject to specific obligations under the WTO, shall be implemented in a manner consistent with the following fundamental principles of international trade law:

-         National treatment/non-discrimination;

-         Most Favored Nation;

-         Transparency, including with respect to domestic regulation; and

-         Notification, review and consultation.

Box 2 of the Questionnaire identifies important issues that will have a direct impact on the WTO work programme to promote electronic commerce.  USCIB members would like to express their views on these issues:

Modes of Supply:

All services that can be supplied physically pursuant to the four modes of supply can also be supplied electronically, though the mode does not translate perfectly.  Accordingly, as indicated above, the supply of services by electronic means is covered by the GATS and therefore different modes of supply and their corresponding market access and national treatment commitments will be associated with different types of electronic transactions.  The ability to provide services across borders in specific industry sectors is a prerequisite for the robust development and growth of electronic commerce. 

Classification:

Governments should ensure that any classification of electronic transactions creates neutral treatment with other means of conducting international trade, so as to avoid distorting the delivery choices of businesses and consumers.  Premature classification of particular electronic transactions can limit the growth of electronic commerce by limiting such delivery choices.  In order to ensure neutrality, it is essential that the consequences of a definitive classification of a given electronic transaction as a good or a service are carefully analyzed and considered before such decisions are made.  USCIB members do not support, at least at this juncture, a determination that differentiates a physical delivery of a product as a good and an electronic delivery of a product as a service.

Domestic Regulations: 

Given that USCIB members believe that current WTO obligations, rules, disciplines and commitments, including GATS are technology neutral, Article VI (Domestic Regulations) is applicable.  Article VI should apply to all domestic regulations that have an effect on relevant commitments scheduled under the GATS.  Specifically, measures that affect electronic commerce should comply with Article VI.  However, the USCIB has consistently stated that such measures should be minimal, targeted, and achieve limited and well-defined public interest objectives.   The USCIB is pleased that the European Commission, the OECD and the U.S., Canadian and Japanese governments, among others, have accepted in principle a market-driven, industry-led approach to the development of electronic commerce.  Consistent with that policy, governments, in the first instance, should allow the private sector to develop solutions based on market forces rather than mandate regulatory solutions.  This is particularly important in the dynamic and rapidly changing electronic commerce market.

Customs: 

USCIB members strongly support making permanent the current standstill on custom duties on electronic transmissions.  Making permanent the standstill will help ensure that electronic commerce achieves its full potential.  Moreover, such a policy is practical given that electronic transmissions do not physically pass a customs agent, thereby making assessment of customs virtually impossible.

Internet Access and Related Services as Telecommunications Services and Application of the Reference Paper on Basic Telecommunications:

We believe that existing telecommunications regulatory frameworks are ill suited for the Internet.  Since historically, telecommunication services have been provided by government-owned or government-sanctioned monopolies, encouraging the movement to competitive telecommunications markets has required the development of a pro-competitive regulatory framework that relies, to some extent, on sector-specific, ex ante rules.  The genesis of the Internet and that of and electronic commerce have been markedly different.  Since its inception, electronic commerce has been driven by highly competitive firms operating in an open and dynamic market.  A fundamental aspect of such a market is the requirement that Internet Service Providers be given fair and non-discriminatory access to the underlying telecommunications infrastructure of the major supplier.

Because the Internet has a very different legacy than telecommunications, a market-driven approach, rather than regulation, is most appropriate for electronic commerce.  Thus, the USCIB does not support extending the provisions of the GATS Reference Paper on Basic Telecommunications on interconnection to the Internet or to major suppliers of Internet access and network services.  

USCIB members believe the best way to support the continued growth of electronic commerce is through market-driven, industry-led initiatives and the application of general competition laws of WTO Member states.  It is important to note, however, that the USCIB believes that it is premature at this time to introduce a general competition framework within the context of the WTO.  Even so, we do recognize sector specific pro-competitive regulatory principles should be considered in sectors that demonstrate clear competitive failure.  However, we do not consider Internet access, Internet network, and Internet certification services to be characterized as such a sector.

Finally, we attach the Alliance for Global Business (AGB) Discussion Paper on the Trade Related Aspects of Electronic Commerce.  We hope that these comments and the AGB Paper are helpful.  Please do not hesitate to contact us if you have any questions. 

For further information, please contact David Fares (tel:  +1.212.703.5061; email: dfares@uscib.org), Director of Electronic Commerce, or Lara Purser (tel:  +1.212.703.5068; email: lpurser@uscib.org), Manager of Telecommunications and Information Policy, at our New York office.  Thank you for your consideration.

Sincerely,

Ronnie L. Goldberg

Senior Vice President

Policy and Program