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Challenges for the Upcoming WTO Negotiations and
Agendas for Future Japanese Trade Policy

Appendix 4
Clarification of Treatment of Electronic Commerce

1. Basic Approach

Enhancement of multilateral cooperation mechanisms and systemic harmonization will be essential in the sound development of international electronic commerce. This should basically be a private sector-driven endeavor, using means such as voluntary regulations to build an international framework, and we welcome private sector discussion currently being undertaken in this direction. At the same time, it will also be important to supplement such efforts through the creation of electronic commerce frameworks in international institutions such as the World Trade Organization, the Organization for Economic Cooperation and Development (OECD) and the World Intellectual Property Organization (WIPO). In particular, because the WTO has a dispute settlement mechanism which ensures implementation by members, it will be essential to the sound development of electronic commerce that the WTO actively build on the results of considerations in other arenas.

In this sense, the WTO should look not only at tariff issues but also undertake discussion toward the development of an international framework for electronic commerce.

2. Specific Issues

  1. Customs Duties on Information Goods

    The current practice of not imposing customs duties to Internet transactions of information goods should be maintained to support the development of electronic commerce.

  2. Issues in Electronic Commerce Classification

    Under the WTO, the General Agreement on Trade and Tariffs (GATT) disciplines are applied to trade in goods, GATS disciplines to trade in services. The GATT covers such issues as Most-Favored-Nation (MFN) treatment, national treatment and prohibition of quantitative regulations, where the GATS allows exemptions and deference in regard to these principles.
    In terms of electronic commerce, rather than attempting to classify the entire area of transactions into either goods or services, different types of electronic transactions should be compared with conventional transactions and the decision made accordingly whether to treat these as trade in goods or services, and in the case of services, the particular sector or sub-sector of service transaction.
    To take the example of transactions of soft music through electronic media, in cases where such transactions are not conducted through an electronic medium, music is sold in the form of CDs, which, as a goods transaction, should be subject to GATT disciplines. On the other hand, transactions such as ticket sales made through electronic media should be categorized as a service transaction.
    Categories of electronic commerce should therefore be clarified using this basic approach, whereupon liberalization negotiations should be advanced within the GATT and the GATS respectively. New rules should be considered only for those transactions which fall outside the existing categories.

  3. Development of an Electronic Commerce Framework

    An international framework for electronic commerce, which includes means for dispute settlement, should be established by having the WTO agreements incorporate the result of the discussions on electronic commerce in other international institutions, obliging members to observe these. Examples are as follows.

    1. Intellectual property rights:
      Work is currently being undertaken by WIPO on copyrights and trademark rights, the results of which should be incorporated into the WTO TRIPS Agreement, thus obliging compliance by WTO members.
    2. Protection of privacy:
      A privacy protection framework needs to be developed within the WTO based on OECD results.

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