JOB/GC/170, JOB/CTG/12  
JOB/SERV/277, JOB/IP/29  
JOB/DEV/53  
16 February 2018  
(18-1023) Page: 1/4 
General Council  
Council for Trade in Goods  
Council for Trade in Services  
Council for Trade -Related Aspects of  
 Intellectual Property Rights  
Committee on Trade and Development  Original: English  
 
WORK PROGRAMME ON EL ECTRONIC COMMERCE  
REMOVING CYBERSPACE TRADE BARRIERS: TOWA RDS A DIGITAL TRADE ENVIRONMENT WITH 
RECIPROCALLY EQUAL A CCESS  
Non-Paper from the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu  
The following non -paper, dated 15 February 2018, is being circulated at the request of the 
delegation of the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu . 
 
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1  INTRODUCTION  
1.1.  The benefits that the Internet brings to international trade are already widely acknowledged, 
and enjoyed by t raditional international trade operators and new Internet business operators alike. 
Across great geographical distances and strict political and state boundaries, both suppliers and 
custo mers are now able to find each other easily and freely in the cyberspace. The Internet 
reduces their costs of marketing, transaction and administration. Online systems streamline the 
order -placement process.  
1.2.  Several research studies indicate that land -locked developing countries and small - and 
medium -sized enterprises (SMEs) are benefiting more from the availability of the Internet than 
developed countries and large multinational companies, mainly because the Internet has enabled 
the former to connect with overseas customers that were either impossible or too expensive to 
reach before.   
1.3.  On the other hand, it is also widely agree d that the cyberspace should not be outside the law. 
The rules that govern offline activities should apply equally to online matters . Driven by a variety 
of policy objectives , government  regulations on cyberspace activities can take different  forms. 
Intervention into the  data-flow is a commonly -used tool. For example, mandatory data localization 
requires that personally identifiable in formation (PII) be stored in domestic servers, protecting the 
privacy of the data owners and preserving the domestic authority 's access to those data.  
Governments can also intervene in Internet traffic, directly or with assistance from Internet service 
providers (ISPs), to filter online requests and to block access to certain websites  with immoral or 
illegal content.  
1.4.  It should be noted that, i n the digital era, having access to the Internet and being able to 
reach or to be reached via the Internet is a fun damental and necessary condition of participation.  
Given the increasingly widespread us e of the Internet in the practice  of international trade, 
government intervention  in the cross-border transmission of information by electronic means may 
well cause trad e concerns . For instance, s uch government interventions increase the marketing, 
transaction and administration costs of suppliers , which weakens their positions versus JOB/GC/170 • JOB/CTG/12 • JOB/SERV/277 • JOB/IP/29 • JOB/DEV/53  
 
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  competitors who have access to the Internet, and are able to reach or to be reached via the 
Internet.  
1.5.  In extreme cases, the supplier  subjected to the interventions  will find it very difficult to 
correctly convey its product or service information to potential customers, or even to be 
recognized by those customers. In the end, the supplier can  be completely blocked out from any 
potential customers whatsoever, which is even more serious than just being denied market access .  
1.6.  For illustration purposes, this non -paper uses the term "cyberspace trade barrier" (CTB) to 
refer to the interventions by governments in the cross -border transmission of information by 
electronic means, which can have a restrictive or prohibitive effect on international trade. We note 
that trade barriers can also be created by the inaction of government, such as a lack of protection 
of Internet privacy or the absence of proper signature legislation . However, in order to maintain 
the focus, this dimension is not considered  here.  
2  CLARIFICATION OF THE  MEANING OF "DATA"  
2.1.  In the ongoing WTO talks o n e-commerce,  concerns about CTB measures have been raised to 
some extent in certain proposals. For example, in the United States’ non -paper, three issue items 
are listed separately to address data -flow concerns1. The first description, "enabling cross -border 
data flows"  relates to the tension between the free flow of information  and consumer data 
protection. The second item, "promoting a free and open internet" seems to have an eye on the 
general openness of the Internet . And, t he third item , "preventing l ocalization barrier ", aims to 
address the mandatory local data -centre requirement; data -flow is not specifically mentioned.  
2.2.  In the very comprehensive mapping list  proposed by Canada, Chile, Colombia, Côte d'Ivoire, 
the EU, Korea, Mexico, Moldova, Monteneg ro, Paraguay, Singapore, Turkey and Ukraine2, the 
data-flow and localization issue is placed under the title " measures ensuring openness" . Brazil ’s 
proposal3, which place s "measures ensuring cross -border data flow " also under the title " Measures 
ensuring openness ", suggests a similar approach to  and understanding of the issue.  
2.3.  On the other hand, J apan, in its non -paper4, gives the item "Cross -border Transfer of 
Information by Electronic Means"  a clear description,  viz, "[t]he free flow of digitally encode d 
information, which enables both consumers and suppliers to gain the maximum benefits of the 
digital environment, should be allowed across borders, when this activity is for the conduct of 
business."   
2.4.  We also note, h owever,  that the terms "data" and "info rmation" may be understood in 
overlapping but different ways across the above -mentioned proposals. In some, the term "data" 
seems  to equate to "personal  data" or "transaction data" , because  the privacy protection or 
consumer protection issue is involved. I n others,  the data-flow issue is contemplated in a broader 
context , such as a free Internet.  
2.5.  As mentioned above, the term "cyberspace trade barrier" (CTB) applies here to the trade 
restrictive effects of government interventions in the cross -border transmi ssion of information by 
electronic means.  In this context , the term "data" or "information " should refer to its broadest 
scope: all types of information transmitted via the Internet . Note should also be taken that data 
here refers not only to data generated during the course of , or after the transaction  (e.g. personal 
data provided to foreign online vendors for shipment),  but also to data transmitted before a 
transaction  is made (e.g. online communications with the vendor  regarding price  negotiation ) and 
even before the parties match (e.g. as the consumer s earches the Internet t o find  the best 
vendors).  
2.6.  Traditional trade barriers, which take the forms of customs duty, quotas or other non -tariff 
requirements, generally apply after the transactio n has been formed or completed. By contrast, 
CTBs often prevent potential sellers and consumers from matching with each other via the 
Internet, thus barring any trade opportunities in the first place. Under such circumstances, if the 
                                                
1 JOB/GC/94 (4 July 2016).  
2 JOB/GC/116 /Rev.2  (15 June 2017).  
3 JOB/GC/98 ( 20 July 2016 ). 
4 JOB/GC/100 (2 1 July 2016).  JOB/GC/170 • JOB/CTG/12 • JOB/SERV/277 • JOB/IP/29 • JOB/DEV/53  
 
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  discussions do not properly  cover data associated with earlier stages in the trading process (i.e., 
the pre -matching phase), then they could not remedy the negative trade effects brought about by 
CTBs.  
3  THE EXISTING WTO RUL ES ON INFORMATION FL OW 
3.1.  The existing WTO rules were largely developed before the dawn of the digital economy. 
Naturally, the information flow  issue was hardly contemplated by the negotiators at the time. The 
analysis below demonstrates that while the GATS and the GATT may set out  disciplines on certain 
aspects of this issue , the overall legal implications are somewhat limited, to say the least. This 
partly explains why no issues of this nature have ever been brought to the dispute settlement 
mechanism of the WTO.  
3.2.  Of the WTO Agreem ents, the GATS may be the one most relevant to the CTB issue. It applies 
to "measures by Members affecting trade in services" (Article I:1 of GATS) , and with its technology 
neutrality, it applies to services supplied through all means, including electronic  means, under 
each mode of supply. This means that WTO Members shall follow, in any event, Article II (MFN) 
and Article III (Transparency) in maintaining any CTB measure.  
3.3.  Beyond MFN and transparency, however, application  of the GATS on the CTB issue could be 
limited . Articles XVI (Market Access), XVII (National Treatment) and VI (Domestic Regulation) of 
the GATS apply only to the service sectors and modes of supply under which the WTO Members 
make specific commitments. Members ’ commitments made in the early '90s, however,  may well 
not match the t echnology realities of today . While t he Central Product Classification (CPC)  system  
keeps being updated by the United Nations Statistics Division , the version on which most WTO 
Members have built their schedules of c ommitments  remains the 1991 version. New Internet 
business  operators may find it difficult and controversial to  fit their business models  into the 
schedule subcategories .  
3.4.  Even for the e -commerce  that is literally encompassed by the existing schedule categories, it 
is still questionable whether the six market access barriers defined in Article XVI of the GATS can 
cover CTB measure s. The overall blockage of a foreign website , either for its failure to comply with 
data localization  requirements or for an y other reasons, may be considered a "limitation on the 
number of service suppliers" under Article XVI:2(a)  of GATS  given its equivalent effect of zero 
quota. It is question able, however, whether  "CTB measures filtering parts of the data flow " falls 
within the meaning of  "limitations on …  the total quantity of service output expressed in terms of 
designated numerical units in the form of quotas or the requirement of an economic needs test"  as 
provided for in Article XVI:2( c) of the GATS.  
3.5.  In the case that a  CTB measure has , in fact, a limiting effect on trade  in goods (such as the 
blockage of a retailing online platform),  one may wonder if Article XI :1 of the GATT  can apply in 
the manner that the CTB  measure is a restriction of a de facto  nature  on the import ation of goods.  
3.6.  This argument has never been tested before panel s or the Appellate Body of the WTO. A 
foreseeable challenge is how to establish the de facto  nature , i.e. the causal link between the CTB 
measure and its alleged impact on trade. It is consistently decided by WTO adjudicators that a low 
level of trade in itself can not be the sole evidence of the impact of a measure. The complainant 
would thus need to answer the di fficult "what if" questions in various forms (e.g., what if  there w as 
no CTB  measure in question ?). 
4  SUGGESTIONS FOR FUTU RE WORK  
4.1.  This non-paper is of the view that the CTB issue should be an essential topic in future WTO 
talks on e -commerce. To leave out th e CTB issue and to mandate further facilitation  on other e -
commerce aspects only would be of little help in enhancing the fairness and efficiency of global e -
commerce . What matters is not the form of the measure but the objective and spirit of the rule 
dedicated to the fairness and openness of the trading system through the elimination of trade 
obstacles in cyberspace.  It is thus essential to secure the free flow of information among Members 
via the Internet, and to ensure that all Members have an unequivoc al right to access each other 's 
network on a reciprocal and equal basis. Trading opportunities may thus  be fully available to all 
participants, especially those of SMEs . JOB/GC/170 • JOB/CTG/12 • JOB/SERV/277 • JOB/IP/29 • JOB/DEV/53  
 
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  4.2.  Members may first consider developing a set of non -binding guiding principles on the C TB 
issue, including but not limited to:  
 Clarifying the existing WTO rules and commitments relating to CTB measures, and;  
 While recognizing Members ' right to regulate online activities, identify ing the scope  of 
legitimate policy objectives for which CTB measures can be justified.   
4.3.  In the long run, Members may further  consider reaching concrete , legal ly-binding disciplines 
on the CTB issue.  Under such disciplines, Members may then confirm their recognition of the 
undesirable effects of CTB measures and commit to ensur ing and securing the free cross -border 
transmission of information by electronic means . In addition  to clearly defining the legitimate  
policy objectives that Members may pursue by applying CTB measures, they may explicitly agree 
on the exceptio nality of the circumstances under which CTB measures are allowed and set out the 
rules such that the application  of CTB measures shall not cause unnecessary obstacles to 
international trade.  
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