Trade in Electronic Commerce Services Under the WTO: The Need to Clearly Classify Electronic Transmissions as Services and Not Tariff-Liable

Abstract

Written in 2001, this essay asks: should the World Trade Organization (WTO) classify electronic transmissions as a service, and thus tariff-free under the General Agreement on Trade in Services (GATS), or should the WTO classify electronic transmissions as a good, and thus subject to tariffs under the General Agreement on Trade (GATT)?

First, for the sake of legal certainty, the WTO should take the appropriate steps to definitively classify electronic transmissions as a service and classify them as not tariff liable. Not tariff liable means a good is not subject to custom duties. Electronic transmission refers to "digitalized information transmitted by electronic means." Because they imply an exchange of digital information, electronic transmissions are a dynamic, highly technical, and evolving form of cross-border transactions. Because electronic transmissions are a dynamic and evolving type of transaction, the WTO should classify them as a service. With this, the WTO's complex legal framework for services can adapt to the evolving technological nature of electronic transmissions.

Second, this essay argues: by defining electronic transmissions as service, WTO Members will be able to benefit from eventual liberalization in the service sector. Without this definition, Members will remain debating the characterization of cross-border electronic transmissions. This debate will delay and stall any substantive liberalization for trade in electronic transmissions services.

Section I of this essay reports on state of confusion and indecision in the WTO surrounding the issue of whether all electronic transmissions are services and whether electronic transmissions are custom duty free. Section II presents the various perspectives in the electronic transmissions debate. This debate refers to whether electronic transmissions are a good or a service. There is a discussion of the arguments for classification as goods and for classification as services. Section III examines how electronic transmissions fall within the GATS legal framework.

Keywords: e-commerce, GATS, WTO, trades in services, electronic transmissions, GATT, World Trade Organziation