JOB/GC/128, JOB/CTG/7  
JOB/SERV/264, JOB/IP/24  
JOB/DEV/45  
30 June 2017 
(17-3535) 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  
THE PARADIGM SHIFT O F DIGITAL TRADE  
Non-Paper fr om the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu  
The following non -paper, dated 30 June 2017, is being circulated at the request of the delegation 
of the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu.  
 
_______________  
 
 
1  INTRODUCTION  
1.1.  We very much welcome and  appreciat e the revival of discussions among Members on e-
commerce  and digital trade for the first time since the 10th WTO Minister ial Conference. We  also 
support the proposals of Members to address the emerging trend of digital protectionism , and to 
promote a free and open Internet.  As a co-sponsor of the already submitted proposal  
"REINVOGORATING DISCUSSIONS ON ELECTRONIC COMMERCE" (JOB/GC/96/Rev.1) , we now 
wish to subm it this non -paper to suggest that Members use a different and fresh approach to 
looking at e -commerce or digital trade . This should help to  further clarify the concepts and to 
identify the issues that should be dealt w ith by the WTO.  In other words, the approaches 
contained in this non -paper are not intended to replace but to supplement the existing proposals.  
In so doing, we hope to contribute to the in -depth discussion of many inherent issues of e -
commerce in future occasions, of course including the 11th Ministerial Conference.  
1.2.  Despite the fact that WTO Members have been discussing e -commerce at various times over  
the last two decades , progress has been limited. As pointed out in the communication from 
Canada, the E uropean Union and other co -sponsors1 that: 
[P]olicy advocates have used various terms to define aspects of this trade – e-trade, e -
commerce, digital trade etc. The General Council decision establishing the Work Programme 
on Electronic Commerce (WT/L/274) d efined the term "electronic commerce" broadly 
enough to cover all of these concepts – "the production, distribution, marketing, sale or 
delivery of goods and services by electronic means.  
1.3.  We consider that there is nothing wrong or right about the definiti on of terms, but all 
definitions are meant to serve a purpose; they should be workable and implementable in order to 
be useful in guiding policy proposals.  
1.4.  In the WTO context, if our discussion is based on a very narrow definition of digital trade, 
then of  course consensus would be easier to achieve. However, the result may not reflect what 
companies and especially SMEs really need . On the other hand, a very broad definition of digital 
                                                
1 JOB/GC/116 , JOB/CTG/4, JOB/SERV/248, JO B/IP/21, JOB/DEV/42 (13 January  2017) . JOB/GC/128 • JO B/CTG/7 • JOB/SERV/264 • JOB/IP/24 • JOB/DEV/45  
 
- 2 - 
 
  trade would probably make consensus very difficult to achieve. For this reason, we would like to 
suggest adopting the deductive approach  to dig out the fundamental issues associated with digital 
trade, and  hopefully  to help Members engage in a deep er discussion on e -commerce. From this 
point of view , the old characterization b y Nicolas Negroponte in his well -known classic book, Being 
Digital  (1995), may serve as a good starting point .  
2  THE DIGITAL REVOLUTI ON: TWO NEGROPONTE  TRANSFORMATIONS   
2.1.  According to Negroponte, the digital revolution would imply two major transformations:  
 Atoms/bits transformation ：A transformation from atoms to bits in the digital world. 
Atoms are the basic units of physical products, whereas bits are the basic units of digital 
content.  
 Static/mobile switch ：A transformation of static devices (such as TV) be coming mobile 
(e.g., mobile phones) and the dynamic air transmission becoming static broad -band 
fibre, commonly known as the "Negroponte Switch" . 
2.2.  From now on we simply call these two changes "the Negroponte transformations"  in the 
digital era. These abstra ct changes allow us to capture some of the unique features of the digital 
world, and also help us to focus on the principles we should adopt when thinking about what 
strategies to pursue in the e -commerce discussion within the WTO.  
2.3.  The WTO has its comprehe nsive set of rules under the GATT, the GATS and the TRIPs 
Agreement, etc. Our fundamental proposition is that an e -commerce environment should become 
a new topic for discussion only if qualitatively different new problems arise, which the original 
articles  and rules in GATT, GATS and TRIPs cannot deal with satisfactorily. This is said without 
prejudice to the application of the principle of “technolog ical neutrality ”, which “seems to be 
largely shared among WTO Members” . We are simply of the view that in th is new digital era 
Members need to pay close attention to the evolution and consequences of e -commerce, such as 
the emergence of completely new business models made possible by technological advancement, 
and there is a constant need to review how and wheth er existing WTO rules apply and remain 
appropriate.   
2.4.  With respect to the meaning of "qualitatively different", we suggest it should contain the 
following three aspects:  
 A qualitative difference should be intrinsically different from a quantitative  
differe nce. For instance, airline transportation efficiency increases the shipment and the 
extent of various trading operations, however we do not necessarily need to amend the 
WTO rules to accommodate the efficiency improvements in transportation. Flying at 500 
km/hour is just quantitatively different from flying at 400 km/hour; there's no qualitative 
difference.  
 A qualitative difference should not be pertinent only to a small group of 
products; it usually involves an industrial perspective or wider spectrum of 
goods.  Again, using the enhancement of airline transportation efficiency as an example, 
it may make the international shipment of fresh flowers possible, but fresh flowers are 
just a small set of products, and no qualitative change in trade is expected, ev en if more 
flowers are traded as a result. The GATT should be able to deal with such small changes, 
so there is no need to open a new discussion. To take another example, it is only when 
the speed of communication becomes fast enough that GPS as a product becomes 
commercially possible; GPS per se  causes no change in regulation by the GATT rules, 
because it is just a single product change caused by an improvement in the efficiency of 
communications, not an industry -wide change. By contrast, if the increase i n 
communication speed causes widespread changes in the IoT (the Internet of things) of 
which GPS is a special kind, then it may deserve a new related discussion.  
 A qualitative change is definitely not merely a change of communication pattern 
from telephon e to Internet.  The Internet is faster and more widespread than the 
telephone or telegram, but we should consider this Internet impact in more detail. If it is JOB/GC/128 • JOB/CTG/7 • JOB/SERV/264 • JOB/IP/24 • JOB/DEV/45  
 
- 3 - 
 
  used in communicating the placing of orders and the specification of terms, then the 
faster commu nication speed via email does not constitute a qualitative difference from 
communicating via telephone. But, if it takes the form of the widespread adoption of the 
Internet by SMEs, then it does imply qualitatively different business opportunities.  
3  QUALITA TIVE CHANGES IN TRAD E WITH NEGROPONTE TRANSFORMATIONS  
3.1.  We shall go on to argue that Negroponte transformations are often a necessary condition of 
identifying qualitative changes. Here is the reasoning. Qualitative changes always happen with a 
cause; it is impossible to observe a qualitative transformation without there being a fundamental 
digital -related technological aspect in the background. In fact, we are about to see that most of 
the important observations concerning e -commerce are very much related to  the Negroponte 
transformations. Let us proceed with some examples of qualitative change:  
 Trade in goods  
The traditional trade and shipment of newspapers, magazines, CDs and journals in the form 
of atoms are in principle all replaceable by the digital tran smission of bits. So, instead of 
shipping, for example, The Economist magazine from England to New York, publishers now 
just transmit the PDF files from London to New York, and use the local machine to print 
them out. This kind of replacement is almost uni versal for all sorts of printings. Because the 
shipment of atoms is completely inefficient compared with the transmission of bits, all the 
physical commodities that can be transformed to bits face a qualitative change of 
trade mode . Obviously, this is a qualitative change of trade pattern.   
The bits/atoms switch in the future may be much broader than we may think today, 
especially if we consider the possible future development of 3 -D printing. To the extent that 
material science is compatible with printing,  the international trade can be divided into the 
two categories: 1) the transmission of blue -prints and 2) the local 3 -D printing of 
commodities. Blue -prints contain information, and they can be transmitted by bits. Then the 
trade pattern changes from the shipment of thousands of final products to few 
shipments of just one 3 -D printing machine  (and perhaps some raw material) plus the 
digital transmission of blue -prints. This, also, is a qualitative change of trade pattern . 
 Trade in services  
When the communi cation speed becomes faster, many kinds of international services 
become possible. One well -known example identified by Thomas Friedman is real -time 
remote diagnostics. An example of the broader type of service is remote medical care, in 
which the doctor r eads patients’ various health signals from a distance, and provides 
diagnosis, medical suggestions, and even prescriptions. Thus, fast transmission creates all 
kinds of remote service possibilities and changes the act of travelling and making a physical 
visit (which uses atoms, such as cars and airplanes) to an audio or video connection (which 
is the transmission of bits). Again, this is a typical  atoms/bits transformation. Again, this is a 
qualitative change of trade in services.  
3.2.  Additionally w hen a lot of  mobile/static switches take place, there will be some spill -over 
changes in other areas, which may also be qualitative changes. We note that the Negroponte 
switch is correlated with the transmission speed of bits. Fibre transmission is notably much faster  
than air transmission. When the bits transmission speed is fast enough, it becomes more efficient 
to shift the processing, compiling and calculation of data to a central location, rather than diversify 
such work into various individual terminals. The smar ter central station can very efficiently 
transmit the result to the mobile device anyway.  
3.3.  Thus, while all the individual devi ces are "turning dumb", the work of smart calculation is left 
to a central computing centre. When the devices are "turning dumb", t here must be a place for 
"turning smarter", which is often referred to as the cloud. Again, clouds are in cyberspace; and, 
interestingly, clouds cannot be defined or claimed by countries or borders either.  JOB/GC/128 • JO B/CTG/7 • JOB/SERV/264 • JOB/IP/24 • JOB/DEV/45  
 
- 4 - 
 
  4  SUGGESTIONS   
4.1.  In this non -paper, we introduce a deductive approach rather than the traditional inductive 
approach to the discuss ion of  issues of the digital trade.  Rather than starting with business surveys 
or Member -specific problem identification, which is the inductive approach that has been  employed  
previously, we should try using t he deductive approach  model to clarify the fundamental problems 
of digital trade versus traditional trade . Using the deductive approach, we see that the atoms/bits 
transformation and the static/mobile Negroponte switch change  the trade pattern  significantly . 
This deductive approach helps us condense the existing diversified topics being discussed in WTO 
into 5 or 6 specific ones, which we shall cover in our companion technical reports.  
4.2.  We encourage Members to use new concepts such as the deductive approach and Negroponte  
transformations  to facilitate future policy discussions on e -commerce and digital trade.  
__________