Electronic Commerce

This page deals with international trade policy related aspects of electronic commerce, in particular the WTO Electronic Commerce Work Programme.

The WTO Work Programme on Electronic Commerce

The WTO began considering the implications of electronic commerce in 1998 with the launch of the Electronic Commerce Work Programme. This followed a decision by the Second Ministerial Conference in Geneva in May 1998 "to examine all trade-related issues relating to global electronic commerce" and "the economic, financial and development needs of developing countries". The Fourth Session of the Ministerial Conference in Doha in 2001, noting the progress made by the Work Programme and the importance of creating an environment favourable to the future development of e-commerce, agreed to its continuation with a view to assessing it at the Fifth Session in Cancun in September 2003.

The General Council agreed to maintain, until the Fifth Ministerial Conference, the existing institutional arrangements for handling the Work Programme, namely that the Councils for Trade in Services, Trade in Goods and TRIPS, and the Committee on Trade and Development would examine and report on aspects of electronic commerce relevant to their respective areas of competence. The General Council were charged with keeping this process under constant review and to consider any cross-cutting trade related issue.

The key cross-cutting issue has been the disagreement over the classification, for WTO purposes, of certain products, that is digitised products with a physical equivalent - should they be classified as a service as the EU believes and hence under the GATS, or as a good as the US asserts and so under the GATT? Other cross-cutting issues include jurisdiction and applicable law, fiscal and revenue implications, provision of technical assistance to developing countries and issues relating to the development of e-commerce in general.

A key aspect of the negotiations has been the Customs Duty Moratorium on electronic transmissions. This was adopted by the Geneva Ministerial in 1998 and whilst lapsed following the collapse of the Seattle Ministerial, is now in force and we hope to see it continued at the Fifth Ministerial in Cancun in September 2003.

There are two other relevant WTO work areas. The first is the host of relevant negotiations on liberalising trade in services, which are germane to several aspects of e-commerce, in terms of services which allow e-commerce to function better and those which will benefit most from its application. Negotiations on this opened in Geneva on 25 February 2000.

The second is the question of developing the Information Technology Agreement (ITA) under which signatories (currently 60 accounting for over 90% of world trade in IT products) accord duty free treatment to an agreed range of IT products. The UK is anxious for progress to be made on this too, in terms o widening the range of goods and tackling non-tariff barriers.

Why is electronic commerce important?

Electronic commerce offers the prospect of rapid growth, especially through the expansion of Internet services and digital television. Growth in cross-border transaction volume is expected to be just under 10% annually over the decade from 1997, to a total of 4.6 billion transactions worldwide in 2007. In 2002 the size of the total UK e-commerce market is estimated to be £57 billion, of which £47 billion is business to business and £ 10 billion is business to consumers.

Electronic commerce is revolutionising trade in many services, as well as providing many new opportunities for trade in conventional goods. Electronic commerce is also an important tool for Trade Facilitation, as well as providing substantial opportunities for public procurement to be more transparent and efficient.

Electronic commerce is a valuable means for all companies trading internationally but it offers particular benefits to Small and Medium-sized Enterprises (SMEs) and developing countries by facilitating direct access to the global market.

The UK position

The UK has contributed substantially to the EU position on the WTO Work Programme on Electronic Commerce. The Doha Ministerial Conference sanctioned continuation of the Work Programme and requested a report on progress by the Fifth Session of the Ministerial Conference, in Cancun. September 2003.

In parallel, negotiations started on 25 February 2000 on liberalising further trade in services. An account of progress made is given on the DTI web page on Trade in Services. It is important that service sectors necessary for e-commerce to flourish, and services which can benefit most from the application of e-commerce, are given priority during the negotiations. The UK believes that e-commerce must be integrated into the multilateral trading system as soon as possible. E-Commerce must fit within the wider framework of multilateral trade policy which has been developed over the last fifty years to secure open markets - while, for example, ensuring proper protection for Intellectual Property Rights (IPRs) – and that those rules must also be developed as necessary to ensure that the benefits e-commerce has to offer, such as global prosperity, can be fully realized.

The UK believes that electronic commerce should continue to be free of customs duties. The UK will continue to engage on the debate as to whether all electronic commerce, including on-line delivered products, should be classified as services for WTO purposes. Meanwhile it should be noted that goods delivered physically even if ordered and paid for electronically, still remain subject to normal Customs controls and payment of duties and taxes, as goods, governed by the Information Technology Agreement.

Further Information

On 19/20 June 2000, the European Council in Santa Maria da Feira, Portugal, agreed to implement the objective set out by the Lisbon Council of 23/24 March 2000 to draw up a comprehensive E-Europe Action Plan. Copies of the Action Plan "e-Europe 2002 – An information society for all" and consequent developments are available from the European Commission’s website.

Apart from the WTO, the Organization for Economic Cooperation and Development (OECD) has produced detailed recommendations on a number of issues related to e-commerce such as taxation and enhancing access.

The contribution that e-commerce can make to UK competitiveness is fully set out in the December 1998 White Paper "Our Competitive Future – Building the Knowledge Driven Economy" The Government’s wider strategy on e-commerce is set out in the Performance and Innovation Unit’s Report "E-Commerce@its.best.uk". A strategy for delivering Government services electronically is set out in the report "Electronic Government Services for the 21st Century published in September 2000". On 11 October 2001, the government published a report "Business in the Information Age/ International Benchmarking Study" which benchmarks the extent to which UK businesses are using Information and Communication Technologies (ICTs) against those in France, Germany, Sweden, the US, Canada and Japan. It is available from UK online for business

For information on security aspects, on the EU Electronic Commerce Directive, on the EU Signatures Directive and on the UK Electronic Commerce Act, consult the site for the Communications and Information Industries Directorate. For consumer protection related aspects, consult the Departmental site for the Consumer Affairs Directorate. For information on the EU Data Protection Directive see the Home Office site or the Office of the Data Protection Registrar.

For more information about the government's overall approach to e-commerce and e-government visit the Office of the E-Envoy.

Contact: Simon Collingwood
Tel: 020 7215 4572
Fax: 020 7215 4499
E-mail: simon.collingwood@dti.gov.uk

Last updated 26 August 2003