RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/W/98
23 February 1999
(99-0729)
Council for Trade in Services Original: English
COMMUNICATION FROM THE EUROPEAN COMMUNITIES AND
THEIR MEMBER STATES
Work Programme on Electronic Commerce
The following communication has been received from the delegation of the
European Communities and their Member States with the request that it be circulated to the Members
of the Council for Trade in Services.
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This paper contains the position of the EC and its Member States on the applicability of
Article VI (domestic regulation) of the GATS to services provided electronically. It also analysesspecific aspects of Article VI in relation to electronic commerce.
Applicability of Article VI
Article VI of the GATS indicates that in areas where specific commitments are undertaken,
Members should ensure that measures of general application affecting trade in services are
administered in a reasonable, objective and impartial manner. Furthermore, according to Article VImeasures relating to qualification requirements and procedures, technical standards and licensing
requirements should not constitute unnecessary barriers to trade in services.
The European Communities and its Member States agree with the WTO Secretariat’s analysis
(S/C/W/68) that Article VI does apply to regulations or standards affecting the electronic supply of
services. Article VI is relevant where specific commitments are undertaken (see communication from
the EC of scope and classification issues of 23 November 98). Thus, this Article applies not only toregulations and standards relating to content services, but also to those relating to transport of content
services by telecommunications means whenever Members had undertaken commitments in those
sectors in their schedules. Article VI would also ap ply to the distribution services involved in the
electronic ordering of goods when Members have commitments on distribution services under the
GATS.
Necessity tests: ‘not more burdensome than necessary’ domestic regulation
In the electronic commerce environment one of the most active debates at present is the
balance between public regulation and business-self -regulation. Businesses claim that electronic
commerce developments should be primarily industry-led. This principle is recognised by many
administrations. At the same time it is widely recognised that some government regulation protecting
basic public interests (public health, consumer and data protection, security of the transactions, etc) is
necessary in the e-commerce world as much as in the non-digital one. The balance between those two
recognised objectives is at the core of any international discussions between business andS/C/W/98
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governments on electronic commerce. The importance of avoiding ‘excessive’ and/or ‘restrictive’
government regulation is becoming clear. There is therefore a need, - recognised by governments and
industry as well as consumers -, for a clear indication as to what regulation would be ‘legitimate’ and
non-restrictive for e-commerce transactions.
Services can be provided electronically in a global manner by making them available to any
internet user on the web. Each WTO Member is authorised to apply domestic regulation requirements
to services which are provided on-line. In this respect, Article VI indicates that WTO Members’
regulation should not constitute ‘unnecessary barriers to trade’ and should not be ‘more burdensome
than necessary to ensure the quality of the service’. Although these criteria are useful to set the limits
to public regulation on e-commerce, their generality leaves open some unresolved questions:
- Article VI does not specify what domestic regulation to protect public interest and the
civil society would meet the ‘reasonable’, ‘unnecessary barriers to trade’ and ‘not
more burdensome than necessary’ criteria of Article VI. Thus, whether regulation
complies or not with the necessity test of Article VI is not clear-cut.
- In addition, in the e-commerce context, services are often provided by making
services available through a web site accessible from any country. In practice,
governments have already started exploring possibilities to limit the electronic
provision of certain services in their territory (for example when there is non-
compliance from services suppliers with th eir legitimate regulatory requirements)  In
some cases service suppliers have been required to make their web inaccessible to
consumers from a given WTO country. It could be questioned whether this
requirement for services providers would be a ‘reasonable’ measure in the sense of
Article VI.
In the view of the EC and its Member States, it would be worth exploring in the Council for
Trade in Services whether the criteria of Article VI of the GATS may need to be further specified in
relation to electronic commerce in order to make clearer the necessity test that all domestic regulation
should be complying with. In particular, we believ e it would be worth discussing whether a list of
regulatory objectives  – for example, consumers’ protection, universal service, and security of the
transactions, as well as those covered by Arti cle XIV of the GATS, among others - could be
established. Those public policy objectives could justify imposing ‘specific’ domestic regulation on
services provided electronically. In any case, such  regulation would need to be itself reasonable,
objective and impartial in accordance with Article VI.1.
“Reasonable administration” of measures of general application
Article VI indicates that measures of general application should be administered in a
reasonable manner. The criterion of reasonableness is not specified. There may be therefore a need to
analyse further the reasonableness criteria in relation to the electronic provision of services. This
criterion would cover, among others, the fact that domestic regulation applicable to content services
would not be applied to transport services consisting in the transmission of content.  It wouldtherefore be worth analysing whether internet service providers could not be deemed obliged to
comply with measures of general application regulating content services that they transmit.S/C/W/98
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Technical standards
Article VI indicates that technical standards should not constitute unnecessary barriers to
trade in services. The European Communities and its Member States consider this concern to be
particularly relevant as far as electronic commerce is concerned. As indicated by the WTO Secretariatin its note (S/C/W/68), worldwide provision of services via the internet require the largest
interoperability. Technical standards should therefore not hinder the development of electronic
commerce.
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This communication is without prejudice to further notes on other aspects of the WTO work
programme that the European Communities and their Member States may present in the future.
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