THE GATS & ELECTRONIC COMMERCE

1. THE GATS & ELECTRONIC COMMERCE Lee Tuthill Trade in Services Division WTO, Geneva www.wto.org

2. Common to all Short text of Articles - the “Framework” Sectoral and other Annexes Individual Schedules of Commitments MFN Exemptions(only at outset & if needed) What is GATS?

3. GATS:Obligations & Commitments

4. What is E-commerce? • Customer sits down at a computer or other access device: computer services • Logs onto internet: communication services • Goes to a web site with promotional information: advertising services • Orders a product: distribution services and pays for it: financial services • Then can download product or have it mailed to home address: delivery services

5. Internet Access - A prerequisite Source: ITU World Telecommunication Indicators Database

6. GATS Commitments on E-commerce “infrastructure”

7. E-Commerce & International Trade • Allows businesses to raise global awareness of their products and services. • Increases awareness by households and industries of foreign products and increase their accessibility • Assists nationals in getting a better deal on imported products. Importers will enjoy cost savings comparable to those of domestic producers from use of e-commerce • The economy makes better use of existing capital and labour (through technological change) and more capital is invested • More employment as a result of increased labour that is made available through greater use of e-commerce

8. Effect on exports? Source:E-Commerce - beyond 2000 , Australian National Office for the Information Economy, 1999

9. GATS Obligations? If GATS makes no distinction between the different technologies to supply services: • Measures affecting electronic delivery, just as for other means of delivery, are covered by GATS • Many existing GATS obligations are relevant • Often seen as cross-border supply and consumption abroad, e-commerce also used in commercial presence & by natural persons

10. Domestic Regulationunder GATS Traditional approaches to licensing, technical standards, and qualification requirements may need to be adapted to facilitate E-commerce Examples: • Qualification and certification requirements for professional services: Can these be satisfied by non-resident suppliers? • Licencing of financial services: How easily can licenses be obtained or adapted for “Net” banking? Such regulations, not formally considered trade barriers, are subject to a work program to help ensure that they do not hamper trade

11. GATS Exceptions The exceptions touch on many important E-commerce legal issues GATS (& GATT) cannot override policies to: • protect morals or maintain order • protect life or health • prevent deception & fraud or deal with contract defaults • protect individual privacy and confidentiality • secure safety

12. Disciplines to reduce trade impact But, the Exceptions must: • not be applied in an arbitrary way or that is unjustifiably discriminatory • not be used as disguised restrictions on trade, i.e. to achieve closed markets rather than the stated policy goal • be “necessary” to achieve the policy objectives sought, i.e. could a less trade restrictive means achieve the desired result?

13. GATS Commitments Top sectors are e-commerce “leaders” (by number of countries)

14. Tourism over Internet? Business cost of a travel reservation (US$) $10.00 $2.00 On-line Travel agent Source: Andersen consulting (1998)

15. Tourism on-line

16. Business cost of a typical banking transaction On-line financial services? 1.4 1.2 US$1.27 1 0.8 0.6 0.4 Business cost of a brokerage transaction US$0.27 0.2 US$0.01 0 Branch Branch ATM ATM Internet Internet 160 140 120 100 80 $150 60 $10 40 $69 20 0 Full- Full- Discount Discount Online Online Source: Andersen Consulting service service broker broker broker broker

17. Banking on-line

18. Telecommunications To send a 42 page document -- What would you choose? Cost (US$) Time Air Mail 7.40 5 days Courier 26.25 24 hours Fax 28.83 31 minutes Internet e-mail 0.095 2 minutes Source: Northern River Venture cited in ITU Challenges to the Network 1997

19. TelecommunicationsVoice over Internet

20. On-line Advertising Services

21. Consumers on-line worldwide "Despite all

22. On-line shopping... Distribution Services

23. E-Commerce:Business as usual?

24. The Doha round of trade negotiations? More commitments in e-critical sectors Improved cross border access Emerging economy interests? Regulatory considerations

25. Global CompaniesB2B E-trade ambitions

26. Don’t forgetsmall & medium businesses

27. Can they E-trade?

28. Can professional services go on line? GATS Commitments (by number of governments)

29. E-enabledservices outsourcing

30. Cross Border AccessGATS Commitments... (By number of governments)

31. GATS Cross Border AccessWhere do we stand? 70% or more of industrialized country Members commit to barrier-free access to their markets for cross border supply of: • Data processing, software implementation, and other computer-related services • Travel agency, tour operator and tourist guide services • Professional services such as advertising, architecture and engineering • Management consulting and market research

32. Cross border Access... Developing Economies • In tourism services, where by far the greatest number have committed -- 25% list no barriers to cross-border market access for travel agencies and tour operators • In most computer services, around 30% have taken commitments -- between 10-13% list no barriers to cross border supply • Between 25-35% commit on professional services, such as management consulting, engineering, architecture and accounting -- only 6-7% offer free cross-border access

33. The Doha Ministerial Declaration “...electronic commerce creates new challenges and opportunities for trade for Members at all stages of development, and we recognize the importance of creating and maintaining an environment which is favourable to the future development of electronic commerce.” “We agree ... “… to maintain our current practice of not imposing customs duties on electronic transmissions ...