WORLD TRADE
ORGANIZATIONWT/COMTD/W/110
5 March 2003
(03-1258)
Committee on Trade and Development
WORK ON ELECTRONIC COMMERCE IN THE COMMITTEE
 ON TRADE AND DEVELOPMENT
Background Note by the Secretariat
1. At the 42nd Session of the Committee on Trade and Development (CTD), Members requested
that the Secretariat provide information on work carried out in the CTD on electronic commerce
(e-commerce).  This note aims to respond to that request and has been prepared under the Secretariat's
own responsibility and is without prejudice to the positions of Members or to their rights and
obligations under the WTO.
I. BACKGROUND
2. A "Declaration on Global E-commerce"1 was adopted by Ministers on 20 May 1998 at the
Second Ministerial Conference.  Ministers recognised that global e-commerce was growing which
created new opportunities for trade and declared that:
"The General Council shall, by its next meeting in special session, establish a
comprehensive work programme to examine all trade-related issues relating to global
e-commerce, including those issues identified by Members.  The work programme
will involve the relevant World Trade Organization ("WTO") bodies, take into
account the economic, financial, and development needs of developing countries, andrecognize that work is also being undertaken in other international fora.  The General
Council should produce a report on the progress of the work programme and any
recommendations for action to be submitted at our third session."
3. In addition, they agreed to a moratorium stating that:
"Without prejudice to the outcome of the work programme or the rights and
obligations of Members under the WTO Agreements, we also declare that Members
will continue their current practice of not imposing customs duties on electronic
transmissions."
4. A comprehensive "Work Programme on E-commerce"
2 was subsequently adopted by the
General Council in September 1998 under which issues related to e-commerce would be examined by
four subsidiary bodies: the Council for Trade in Services, the Council for Trade in Goods, the Council
for TRIPS and the Committee on Trade and Development.  Each of these bodies was requested toreport back to the General Council.  As far as the CTD is concerned the Work Programme states that:
                                                     
1 WT/MIN(98)/DEC/2
2 WT/L/274WT/COMTD/W/110
Page 2
"The Committee on Trade and Development shall examine and report on the development
implications of e-commerce, taking into account the economic, financial and development
needs of developing countries.  The issues to be examined shall include:
- effects of e-commerce on the trade and economic prospects of developing countries,
notably of their small- and medium-sized enterprises (SMEs), and means of
maximizing possible benefits accruing to them;
- challenges to and ways of enhancing the participation of developing countries in
e commerce, in particular as exporters of electronically delivered products:  role ofimproved access to infrastructure and transfer of technology, and of movement of
natural persons;
- use of information technology in the inte gration of developing countries in the
multilateral trading system;
- implications for developing countries of  the possible impact of e-commerce on the
traditional means of dist ribution of physical goods;
- financial implications of e-co mmerce for developing countries."
II. WORK IN THE CTD
5. Work on e-commerce in the CTD began before the overall WTO "Work Programme on
Electronic Commerce" had been adopted.  The issue was raised under "Other Business" already at the
18
th Session of the CTD held in November 1997.3  The delegation of Egypt then stated that recent
developments of the Internet and the technology associated with it provided new opportunities for the
expansion of trade in both goods and services in de veloped and developing countries alike.  There was
no doubt that electronic trade would increase significantly in the years to come and that a number ofinternational organizations had started to address issues related to electronic trade in an active manner,
like UNCTAD, and UNCITRAL.  Furthermore, the High-Level Meeting for Least-Developed
Countries had addressed the issue of the use of information technology as a means to enhance exports
from LDCs.  He suggested that it therefore would be appropriate to discuss the issue of electronic
trade in goods and services in the CTD and informed Members that his delegation intended to presentan informal paper to the Committee.
6. More substantive discussions were thus initiated at the 19
th Session of the CTD in
March 1998 with the submission by the delegation of Egypt of a paper on "E-commerce in Goods and
Services"4 in which four objectives were identified for addressing the issue:
(i) to deepen the understanding of e-commerce and deal with it in a coherent and
balanced manner, focusing on the use of e-commerce in integrating developing
countries into the Multilateral Trading System (MTS);
(ii) to examine the role of the WTO in bridgi ng the information gap in the area of trade
between developed and developing countries;
                                                     
3 WT/COMTD/M/18
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(iii) to examine how e-commerce and recent proposals on a possible global framework for
e-commerce would affect the supply and demand of goods and services, the market
structure, labour markets and competition;  and
(iv) to share experience on issues related to e-commerce.
7. While introducing their paper, the delegation of Egypt indicated that information technology
in general and e-commerce in particular could be instrumental in enhancing the participation of
developing countries in the MTS if the right approach was followed.  There was a real fear that if the
necessary steps were not taken, that mode of trade might remain beyond the reach of many developing
countries.  The current trade of developing countries, particularly in products that might be
transmitted digitally, could be diverted if developing counties did not participate actively in
e-commerce as early as possible in the process.
8. The paper submitted by the delegation of Egypt also enumerated a number of policy areas
related to e-commerce and made a number of specific proposals, including:
- to request the WTO Secretariat to prepare a factual paper on WTO provisions and
activities that were most relevant to e-commerce;
- to request the WTO Secretariat to prepare an analytical paper on how to enhance the
participation of developing countries in e-commerce and the use of information
technology in the integration of developing countries in the MTS.  That issue was
related to the infrastructural problems of developing countries;
- to request the WTO Secretariat to communicate with relevant international
organizations to provide the CTD with information on their activities in areas closelyrelated to e-commerce;
- to convene a special session of the CTD to address the issue of e-commerce;  and
- to request the WTO Secretariat to organize a joint seminar with UNCTAD and ITC to
allow for a better understanding of the issues involved in e-commerce focusing on
their development implications.
9. The submission by the delegation of Egypt gave rise to a lengthy discussion and it was
suggested that informal consultations be held on how best to proceed with the subject.  The Chairman
drew two conclusions from those consultations which were held in April 1998.
5  First, that there was a
widely-shared need for an educational process on e-commerce and that, to that end, account should be
taken of work in other organizations, notably UNCTAD.  Second, that Members needed to avoid
unnecessary overlap amongst different WTO bodies in discussing e-commerce.
10. Following the discussions in the CTD, the Secretariat was requested to prepare a note on the
development dimension of e-commerce.  A Secretariat note, entitled "Development Implications of
E-commerce" was circulated in November 1998.6  That note concluded that the range of products with
the potential to be transmitted electronically was vast and included financial and insurance services,
various audiovisual products (e.g. films, games and music), travel (e.g. airline tickets and hotelreservations) professional services (e.g. medical, legal and architectural services) news and
information services (e.g. wire services online and databank retrievals), telecommunications services
                                                     
5 WT/COMTD/M/21
6 WT/COMTD/W/51WT/COMTD/W/110
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and services related to other information technology and software.  It also stated that some developing
countries already counted as significant suppliers on world markets of those products; for example,
computer software and services were India's largest export earner, and Barbados and Mauritius were
but two small economies that were significant exporters of financial services.  However, the use of
e-commerce in its broadest sense, might facilitate trade in other products of actual or potential interestto developing countries.  For consumers in developing countries, where the small size of the domestic
market and distance from other markets might imply that international trade in some products is
relatively uneconomic, e-commerce might lead to  an increased choice of products, lower priced
products, products of better quality and faster delivery of products that can be transmitted
electronically.  Producers, in turn, could benefit by using e-commerce for at least some aspects of
their commercial activities (such as marketing, sales,  etc.), even if their principal exports, primary
commodities for example, could be traded only by traditional methods.  In addition, electronicmethods applied to customs and port services had shown their worth through Electronic Data
Interchange or use of specialized systems such as ASYCUDA.
7  Those considerations implied that
building capacity to use the opportunities presented by e-commerce, as a means of conducting and
facilitating trade, should be one of the priorities in developing countries' trade policies.  The
difficulties should not be underestimated.  The note showed that effective use of e-commerce requireda degree of investment in both physical and human infrastructures, including specialized education
and training as well as an appropriate legal framework for conducting commerce electronically.
Nevertheless, the benefits in terms of reduction of trading "distance", information on markets and
reduction in transaction costs appeared considerable.
11. There were extensive discussions on all aspects of the Secretariat note at informal
consultations on 23 November 1998, and at the 23
rd Session of the CTD in December 1998.
Discussions centred around the potential benefits for developing countries and the potential problems
they might face and included issues related to the human and physical infrastructure necessary to
benefit from e-commerce, access to knowledge and technology, legal issues and what the role of the
WTO should be.
12. As requested by Members, a one-day seminar on E-commerce and Development was held on
19 February 1999.8  The two broad themes treated by the speakers at the seminar were "Potential for
E-commerce for Business in Developing Countries" and "Infrastructure and Regulation Issues at the
Government Level".  In the discussions, Members raised issues such as the definition of e-commerce,
possible revenue losses for developing countries, practical difficulties that practitioners of
e-commerce were likely to encounter, the role of small and medium enterprises (SMEs) in
e-commerce, how governments can promote e-commerce, the importance of infrastructure problemsin e-commerce, how the movement of natural persons would be affected by e-commerce, whether
there was reason to believe that e-commerce would be any different than other technology intensive
sectors such as medicine and telecommunications where developing countries had not been able to
match the resources of the developed countries, e-commerce opportunities for developing countries,
including the elimination of middlemen in trade, reduced transaction costs, increased trade between
developing countries through Trade-Points, better outreach into markets of developed countries, and
the use of the new medium for education and health.
13. At the 24
th Session of the CTD there was a continued discussion of the points raised at the
seminar.  In a communication from the Chairman of the CTD, dated 7 April 1999, and addressed to
the Chairman of the General Council, the CTD transmitted its interim report on progress made in theimplementation of the WTO Work Programme on E-commerce.
9  The United Nations Economic
Commission for Europe (UN/ ECE) was invited to make a presentation at the 25th Session in
                                                     
7 Automated System for Customs Data developed by UNCTAD.
8 WT/COMTD/18
9 WT/GC/23WT/COMTD/W/110
Page 5
June 1999.  The purpose of the presentation was to address some development implications of
e-commerce and examine how electronic business could be used by developing and transition
countries to build capacity.  It addressed three key issues:  first, the fact that electronic business
consisted of international supply chains;  second, the importance of trade facilitation to ensure smooth
movement of goods across borders so that the efficiency gains from e-commerce were effectivelyrealised;  and third, the importance of capacity building to allow developing countries to participate in
e-commerce.
10  At the 25th and 26th Sessions the CTD debated a document which summarised points
regarding e-commerce made in meetings of the CTD and during the Seminar.  That list was meant to
form part of the CTD submission to the General Council.  The CTD subsequently adopted its
contribution  in accordance with the mandate set out in the September 1998  Work Programme and sent
it to the General Council.11
14. The General Council agreed, on 17 July 2000, to reinvigorate the overall WTO Work
Programme on E-commerce on a practical basis.  That was understood to be without prejudice to any
delegation's position on the status of the 1998 Ministerial Declaration on E-commerce
(WT/MIN(98)/DEC/2).  At the 30th Session of the CTD the Chairman said that four subsidiary bodies,
including the CTD, had been invited to resume their work on e-commerce within their respective
spheres of competence, identify cross-sectoral issues, and report back to the General Council inDecember 2000.  The Chairman drew attention to earlier work in the CTD on the topic, culminating in
the report to the General Council in July 1999.
12  In order to consider its new report to be submitted to
the General Council in December 2000, the CTD met informally on 25 October 2000, joining the
briefing on e-commerce being provided by the secretariats of the ITC, ITU, UNCTAD and
WTO during the second Geneva Week for Non-Reside nt Members and Observers.  On the basis of the
briefing and the subsequent discussion, the Chairman provided a draft report to the 31st Session of the
CTD.  The Committee agreed that the Chairman forward his report, as amended, to the General
Council.12  The CTD considered that it would be useful to conduct further work on the topic and
included a seminar on e-commerce in its work programme for 2001.
15. At the 34th Session Members were to indicate the type of work they wished the CTD to carry
out on e-commerce and the topics they preferred to treat in the context of the General Council.
Members mentioned issues such as the need to perfect human resources in e-commerce,
infrastructure, how developing countries businesses compete in e-commerce, the classification of the
content of electronic transmissions, the relationship between traditional means of trade and e-
commerce, technical assistance, various national and international legal issues, the impact of
e-commerce on development, options to bridge the digital divide, the impact of e-commerce on
investment opportunities, its implications for education, public health, and the development and smalland medium-enterprises, analysis of the elements which had helped e-commerce businesses become
successful and how those might be replicated by individual Members or industries at a national level,
how to facilitate the e-commerce environment, and the involvement of other international
organizations in e-commerce.  The delegation of Cuba presented a communication entitled "Need for
Unrestricted Global E-commerce"
13 to the 34th Session of the CTD which the Committee took note of.
16. As requested by Members, a seminar on "Government Facilitation of E-commerce for
Development" was held under the auspices of the CTD on 14 June 2001.  The seminar contained
four sessions on regulation and deregulation, promotion of modern information and communication
technologies, education and information, and government coordination.  The presentations and the
questions focused on some of the ways in which governments and international organizations canfacilitate e-commerce, how that in turn impact on development and the preconditions for success.  The
                                                     
10 WT/COMTD/M/25
11 WT/COMTD/19
12 WT/COMTD/26
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Chairman presented a report on the seminar, on his own responsibility, to the 35th Session of the
CTD.14
17. The CTD held an informal meeting on 17 July 2001 to discuss further work in the CTD on
e-commerce and development.  The Secretariat had prepared a draft proposal for a programme of
work on e-commerce in the CTD as a basis for the discussion.  The draft proposal was revised in lightof comments made by delegations and taken up again for discussion at the 35
th Session of the
Committee.15  However, no decision was taken at that meeting as Members wished to await the
preparations for the Fourth Ministerial Conference.
18. At its 36th Session, the CTD approved the Work Programme on E-commerce.16  The W o rk
Programme states that "in order to ensure continuity, e-commerce could be a standing item on the
agenda of each of the regular meetings of the CTD."  It also states that "In order to continue to share
country experiences, the CTD could invite one or several delegations (developing and/or developed)to present their experiences, either with respect to a particular aspect of e-commerce, or their general
approach to e-commerce."  Two presentations were made at the 36
th Session of the CTD.  One was a
presentation of a country experience made by the delegation of Panama and the other was a
presentation of the UNCTAD E-commerce and Development Report 2001.17  Members applauded the
efforts made by the Government of Panama to become e-ready and to take government action tofacilitate e-commerce.  Members were particularly interested in the issue of fiscal implications of
e-commerce in the UNCTAD presentation.  The presentation of country experiences continued at the
38
th Session with a presentation by the delegation of Costa Rica.18  Members were impressed with the
systematic approach which the Government of Costa Rica had adopted and with the good
telecommunications infrastructure and access to the Internet in Costa Rica and asked how that hadbeen achieved.  There were questions about the use of e-commerce in the promotion of tourism and
the state and private sectors' share of e-commerce related investment, and about electronic customs
clearance.
19. The CTD Work Programme on E-commerce also envisaged the holding of seminars.  There
was therefore a presentation of the preparations for a seminar on revenue implications of e-commerceat the 38
th Session and the Secretariat invited Members who felt that they had experiences to share
with respect to revenue implications of e-commerce to let the Secretariat know so that those
experiences could be included in the programme.  The Secretariat also welcomed guidance from
delegations as to who to approach in a private sector.  The seminar on "Revenue Implications of
E-commerce" was subsequently held under the auspices of the CTD on 22 April 2002.  As
background, the Secretariat provided a bibliography on revenue implications of e-commerce.19  The
seminar involved a general introduction to the topic with some recent trends in e-commerce, adescription of the taxation-related issues at stake, the situation for developing countries and the WTO
perspective.  Speakers from Malaysia, Barbados and Kenya provided different country perspectives.
Another speaker provided the private sector perspective.  Members said that there was a need to
continue the debate on e-commerce and provide further analytical work including impact studies to
get a clearer picture of the implications of e-commerce for development in fulfilment of the DohaDevelopment Agenda.  The Chairman of the seminar, Ambassador Whalen (Ireland) reported both
orally and in writing on the seminar to the subsequent meeting of the CTD.
20
                                                     
14 Annexed to WT/COMTD/M/35
15 WT/COMTD/W/92
16 WT/COMTD/35
17 WT/COMTD/36
18 WT/COMTD/38
19 WT/COMTD/W/98
20 Annexed to WT/COMTD/M/40WT/COMTD/W/110
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20. The item of e-commerce did not give rise to any substantial discussions at the 37th to the
42nd Sessions of the CTD.  However, at the 41st Session when the Committee received the report of
the Seminar and the delegation of Pakistan called for further work on aspects relating to e-commerce
and development such as infrastructure, investment, availability of hardware and software, awareness,
education and training, the formulation of standards, the granting of S&D for developing countries forinfrastructure development, and assistance in the areas of access to, and transfer of technology such as
the sharing of encryption and security technology to  allow secure transactions, and mechanisms that
facilitate the ability of developing country firms to engage in e-commerce.
21  At the 42nd Session the
delegation of Canada suggested that this document be prepared.22
__________
                                                     
21 WT/COMTD/M/41
22 WT/COMTD/M/42