WORLD TRADE
ORGANIZATIONS/C/8
31 March 1999
(99-1371)
Council for Trade in Services
WORK PROGRAMME ON ELECTRONIC COMMERCE
Interim Report to the General Council
1. The Council for Trade in Services has discussed the work programme remitted to it by the
General Council on the subject of electronic commerce at its meetings of 23 November, 14-
15 December 1998, 9 February and 22-23 March 1999.  The discussions have taken place both in
formal and informal mode, but it was agreed at the outset that in principle substantive discussions
would take place in informal mode, in order to fa cilitate a free exchange of views, and that the
Chairman would present a summary of the discussions  under his own responsibility at the end of each
meeting.  These summaries and records of the formal discussions are contained in the notes of the
relevant meetings and the summaries are now attached to this interim report.  It was also agreed that
the Secretariat should prepare a note dealing with each of the elements contained in the Council’s
work programme; this note was circulated as S/C/W/68 on 16 November 1998.
2. A communication from the United States dealing with the work programme as a whole and
submitted to all of the bodies engaged in it (S/C/7) was presented to the Services Council at its
meeting of 22-23 March.  Communications from the European Community on scope and
classification issues and on domestic regulation (S/C/W/87 and 98) were presented at the November
and March meetings respectively.  Japan also submitted a communication at the March meeting of the
Council (S/C/W/104).
3. Discussions took place on the basis of the twelve subjects to be examined by the Council for
Trade in Services as listed in the work programme.  Since the discussions were informal no agreedconclusions were reached.  This interim report therefore records the views expressed and
distinguishes those issues on which there appeared to be an approach to a common understanding and
those requiring considerable further examination.  In no case should any record of this interim report
be used to imply that a final view has been re ached on any issue; all remain open for further
discussion.
4. While discussion will continue on all of the issues so far considered, Members agreed that
some issues would require substantial further study before their implications could be properly
understood.  On some other issues, however, discussions had progressed closer towards a common
understanding.  Issues on which a common understanding appeared to be emerging include the
following:
− The electronic delivery of services falls within the scope of the GATS, since the Agreement
applies to all services regardless of the means by which they are delivered, and electronicdelivery can take place under any of the four modes of supply.  Measures affecting the
electronic delivery of services are measures affecting trade in services and would therefore be
covered by GATS obligations.
− The technological neutrality of the Agreement would also mean that electronic supply of
services is permitted by specific commitments unless the schedule states otherwise.S/C/8
Page 2
− All GATS provisions, whether relating to general obligations (e.g. MFN, transparency,
domestic regulation, competition, payments and transfer, etc.) or specific commitments
(Market Access, National Treatment or Additional Commitments), are applicable to the
supply of services through electronic means.
5. The discussions have also identified a number of issues which require considerable further
examination.  Those include:
− The need to clarify the distinction between modes 1 and 2 in situations where a service is
being delivered electronically on a cross-border basis or through consumption abroad.
− The need to give consideration to the classification and scheduling of new services likely to
arise in the context of electronic commerce.
− The need to clarify the classification and improve the scheduling of Internet access and other
related services, and to clarify their relationship with telecommunications commitments and
the obligations in the Annex on Telecommunications.
− The question whether certain products delivered electronically might be classified as goods,
and therefore subject to GATT disciplines, rather than as services.
− The need for further discussion of the question of likeness, particularly in relation to the MFN
and national treatment principles.
− The need for further work on the implications of Article VI for domestic regulations affecting
electronic commerce.
− The need to clarify the scope of the Annex on Telecommunications in relation to access to
and use of Internet access and other related services.
− The applicability of the principles contained in the reference paper on basic
telecommunications to electronic commerce and whether there is a need to consider thedevelopment of any additional disciplines under the GATS.
− The need to study further the application of customs duties on electronic transmissions.
− The question of the proper valuation of electronically transmitted products in the context of
encrypted electronic payments and related issues.
6. It should be emphasized that this is not a complete list of the issues which have been
discussed and will continue to be discussed by the Council.S/C/8
Page 3
ANNEX
Chairman’s Summaries of Informal Discussions
It was agreed that since the substantive discussions in the Council took place in informal
mode, the Chairman would present a summary of the discussions, prepared under his own
responsibility, at the end of each meeting.  After circulation to Members for comment, these were
incorporated in the notes of the relevant meetings.  They remain the responsibility of the Chairman.
The summaries are set out below.  At the meeting of 23-24 November the Council held a first
discussion of each of the issues on its work programme.  At subsequent meetings a number of issues
were taken up for a second, more detailed discussion.
Meeting of 23-24 November 1998
Members’ comments on the Secretariat Note were of a preliminary nature.  Since it was
suggested that we should keep a record of progress  in this area, I am going to present a relatively
detailed description of our discussion.
Scope
There was agreement that the electronic delivery of services falls within the scope of the
GATS.  Several delegations said that it was important to affirm the technological neutrality of theGATS but some delegations wished to see more discussion of this notion.  The basic framework of
the four modes of supply was generally perceived to be adequate to deal with the electronic delivery
of services.  There remained, nevertheless, a need to clarify the distinction between the first two
modes, cross border supply and consumption abroad.  While the approach to this problem suggested
in paragraph 8 of the Secretariat paper was seen as useful, there was some concern that it might besimplistic.  Practical examples were seen as a useful way to test the feasibility of the suggested
approach. One delegation suggested that it may also be relevant to examine whether the location of
internet servers in the territory of a Member may resemble commercial presence.
Some delegations suggested that the interpretation of  the term “measures affecting trade in services”
in a recent report of a WTO panel and the Appe llate Body was unduly wide.  One delegation noted
that bodies which have responsibility for the administration or the assignment of domain names were
not necessarily exercising powers delegated by governments.
MFN
Delegations expressed the need for more discussion on the question of likeness and its
relationship to the notion of technological neutrality.  One delegation noted that while in principleintra-modal distinctions based on the technique of delivery could be challenged as inconsistent with
MFN, it remained possible for a Member to make such distinctions when defining the scope of its
specific commitments in a particular sector.  The delegation pointed to the role played by the
Chairman’s Note dealing with technological neutrality in the basic telecommunications negotiations.
Transparency
It was noted that the application of Article III on transparency to electronic commerce was
straightforward.S/C/8
Page 4
Increasing participation of developing countries
Delegations emphasized the need to enhance participation of developing countries in
electronic commerce.  In this context, it was important to liberalize market access in areas of export
interest for developing countries.  Participation in electronic commerce did not necessarily requirehuge capital or sophisticated technology so even the small and medium enterprises in developing
countries could compete. There were already numerous stories of successful participation by
developing country firms in electronic commerce, and it would be helpful to collect more evidence of
such successes.  One delegation noted that limited access to encryption technology may pose a
problem for developing countries. Another delegation noted that developing countries needed to
liberalize access to their own markets so that their consumers could benefit fully from electronic
commerce.
One delegation had hoped to see more detailed analysis of this item in the Secretariat paper.
Future work should examine how electronic co mmerce would affect the supply and demand for
services, as well as the competitiveness of developing countries; successful partnerships between
developed countries and developing countries and between the public and private sectors;  anddifficulties and challenges for developing countries, in particular, their small and medium enterprises
and the possible need for technical assistance. The need to take advantage of the work in UNCTAD
and the Committee on Trade and Development was emphasized.
Domestic regulation
More work was required to examine the implications of domestic regulation for electronic
commerce.  One delegation raised the question of how the issue of liability and the notion of “more
burdensome than necessary” could be applied to electronic commerce.  One delegation noted that
paragraph 3 of Article VI of the GATS had not been mentioned in the paper and deserved attention.Another delegation noted that there was evidence that Member’s commitments on Mode 4 referred to
regulations which were more burdensome than necessary.
Competition-related Provisions
In general existing GATS provisions, particularly the annex on Telecommunications and the
Reference paper, were seen as adequately covering competition concerns.   One delegation, however,wanted an assessment of whether there were any loopholes in existing provisions, and an analysis of
how the existing provisions applied to internet access providers.  One delegation doubted that the
development of electronic commerce would reduce the scope for trade restrictive business practices,
as had been suggested in the Secretariat Paper.
Specific Commitments
Delegations generally agreed with the analysis in the Secretariat Paper.  It was important not
to undermine existing commitments by suggesting that electronic delivery of services was not covered
by the GATS.  But it was necessary, particularly in the light of paragraph 32, to discuss howrestrictions on the technical means of delivery should be treated.  The emergence of electronic
commerce should not provide a reason to schedule new restrictions.  Rather the specification of some
modes in the schedules as unbound due to technical un feasibility may need to be reviewed in the light
of technological developments.  It was also important to examine how the national treatment
commitment applied to the first two modes.  Some delegations questioned the relevance ofArticle XXIII:3 dealing with non-violation complaints, as discussed in paragraph 32.
One delegation noted that in addition to the three types of transactions identified in
paragraph 27, there may be a fourth where the internet was used to provide telecommunicationsS/C/8
Page 5
services.  It was also pointed out that the statement in paragraph 28 that electronic commerce required
access to the internet was not accurate because there were forms of electronic commerce which relied
on other electronic means.  The importance of the distinction between the means of delivery and the
content delivered was noted, though there was a recognition that the distinction may in some cases be
blurred.
The need for work on classification was emphasized by several delegations, to deal with the
emergence of new services as well as to clarify the treatment of internet  access providers.
Customs Duties
The need was expressed for more study of this issue.Classification
Delegations agreed with the analysis in the paper that electronic delivery of services was
covered by the GATS.  However, some delegations noted  that the question of whether allelectronically delivered products were services needed further examination.  If certain electronically
delivered products were deemed not to be services, then it would be helpful to have concrete
examples.  The issue of classification was of practical significance because it would determine the
nature of the trade regime for the relevant products.  In deciding whether some such products should
not be treated as services, it was important to take into account the need to maintain legal clarity.  Itwas agreed that the subject should continue to be discussed in the Council for Trade in Services.  One
delegation noted that it may be premature to reach a definite conclusion on the classification issue in
the Services Council, since this was a cross-cutting issue which was also being discussed in the
Council for Trade in Goods, and would even tually be taken up in the General Council.
Meeting of 14-15 December 1998
Scope
A number of delegations commented on the paper submitted by the European Communities
on the issues of scope and classification and introduced in the formal session. In discussing the
relevance of the four modes of supply for electronic commerce, Members agreed that services couldbe supplied electronically under any of the modes; under modes three and four, for example, with
respect to established juridical and natural persons who used electronic means to reach their
customers in the host country.  Members also noted the importance of modes 1 and 2 for electronic
commerce, and the difficulty of allocating specific transactions as between these two modes.  Several
delegations expressed interest in the suggestion in  the Secretariat’s paper (S/C/W/68) that the real
function of the modes is to classify commitments and measures taken under them rather than to
classify transactions, and that the essential di stinction between modes one and two would be made
according to whether the measure in question restricts the ability of suppliers to supply the service on
a cross-border basis or whether it restricts the ability of domestic consumers to buy the service abroad.
One delegation noted the importance of the issue of the place of jurisdiction, that is establishing thelocation of electronic transactions for legal purposes. Members agreed that it was necessary to look at
these issues in more detail.
Members agreed that the GATS applied to all services regardless of the means of technology
by which they were delivered.  This was further reinforced by the fact that in no area of the WTOwere there different rules for different techniques of delivery.  It was noted that the principle of
technological neutrality also applied to sche duled commitments, unless the schedule specified
otherwise: it was therefore possible for Members to schedule commitments in a non-technologically
neutral manner.  It was suggested that consideration should be given to how technological neutralityS/C/8
Page 6
in electronic commerce would apply to existing commitments and to certain new services.  There was
discussion of the classification of internet access services, of their status as services in their own right
and of their relationship to telecommunications commitments and the obligations in the Annex on
Telecommunications. It was agreed that this too required further study.
Some delegations noted that the process should still focus at this particular stage on
identifying questions rather than seeking definitive answers to all the issues raised by electronic
commerce in services.  In this respect one delegation noted that it was important to take advantage of
the work on electronic commerce which was being done in other international organizations.
Classification issues
Members agreed that all services delivered electronically were covered by the GATS.
Several delegations said that they had not developed a position on the classification of electronically
delivered products which if delivered by non-electronic means would not be considered services.  One
delegation argued that electronic commerce could involve two categories of products, services and
intangible goods; electricity was an example of a product considered as an intangible good in theWTO system.  Another delegation argued that some physical goods, such as magazines, incorporated
many services: it was not clear that if the magazine were  supplied on-line, incorporating  the same
services but not the physical supports, it should not itself be considered a service.  It was also said that
with respect to digitalized information which co uld be downloaded and incorporated into physical
goods there were aspects which had to be examined by the TRIPS Council.
One delegation said that there were three different kinds of transmission involved in
electronic commerce: (1) electronic transmissions consisting solely of telecommunications, such as
electronic mail; (2) electronic transmissions used to order goods over the internet, which were
subsequently delivered physically; and (3) electronic transmissions in which services are ordered anddelivered electronically. All of these transactions fell within the scope of the GATS, due to the
technologically neutral nature of the Agreement;  and internet  access services were covered by
existing commitments in telecommunications and by the GATS Annex on telecommunications.
MFN
It was noted that the issue of likeness was central to the application of MFN.  One speaker
suggested that the overall objective of a discussion on this point should be to further the liberalisation
and growth of electronic commerce.  The first question to be addressed was whether electronically
delivered products and those delivered by more traditional methods should be considered “like
products”.  In this respect account should be taken of the important role of customisation in electronic
commerce and of the fact that the customisation process included a wide range of operations such asdesigning, marketing, wholesaling, retailing and delivery, which went beyond distribution services, as
currently covered by the GATS.  The delegation also stressed the specific nature of digitalized
content, which could be stored and accessed  repeatedly. Another delegation argued that likeness
depends on the attributes of the products in question, rather than on the technological means of their
delivery.
Transparency
As in the preliminary discussion held in the Council meeting of 23 and 24 November 1998, it
was noted that the application of Article III on transparency to electronic commerce wasstraightforward.S/C/8
Page 7
Increasing participation of developing countries
Members agreed that work in the Services Council should focus also on the Secretariat paper
on electronic commerce presented before the Committee on Trade in Development.  Several
delegations supported the idea of holding a seminar next year to examine development aspects ofelectronic commerce.  There was support for the idea that appropriate non-governmental and private
sector organizations should be invited to participate.   It was suggested that the seminar should
provide the opportunity to examine examples of success stories by developing countries’ service
suppliers in electronic commerce and to share ideas on how to increase technical assistance in this
area.  It was also suggested that the seminar coul d focus on all issues relating to electronic commerce,
including development.  If the seminar were to focus on development issues only, it might be
combined with the seminar on that subject being organised by the Committee on Trade inDevelopment.  The point was made that Article XXV as well as Article IV was relevant to the
increasing participation of developing countries.
Meeting of 9-15 February 1999
Domestic Regulation
Members agreed that the provisions concerning domestic regulations in Article VI of the
GATS applied to electronic commerce transactions in services and that its function, as in othercontexts, is to ensure that regulations in this area do not constitute unnecessary barriers to trade.  One
delegation added that in its view Article VI as it stood was sufficient for this purpose and that for the
time being no amendment of the Article was necessary to address regulation in this area.  It was noted
that electronic commerce was an area where rapid economic growth had been fostered by the
existence of very little regulation and that the emphasis in the field of domestic regulation should beon keeping regulation to a minimum, in order to fa vour further growth.  It was also suggested that
consideration should be given to the constraints facing developing countries in fulfilling legitimate
regulatory objectives in this field and to ensuring that technical barriers to trade encountered by
developing countries were also effectively dealt with.
Some delegations pointed to the Reference Paper on regulatory principles in basic
telecommunications as a possible model for the development of rules on domestic regulation inelectronic commerce.  It was also pointed out that the development of Article VI disciplines and their
effective application was important in order to ensu re that existing specific commitments relevant to
electronic commerce were not nullified or impaired by measures of domestic regulation.
One delegation noted that Article VI applied to all aspects of domestic regulation affecting
electronic commerce.  It would therefore cover, in  transactions involving the electronic delivery of
services, regulations affecting both the transport function and the content of the transaction, as well as
the regulations affecting distribution services provided electronically.  Three issues required
consideration in the area of domestic regulation:  (i) whether it would be desirable to agree under
Article VI a group of regulatory policy objectives justifying the imposition of regulatory restrictionsin electronic commerce, with a view to minimising unnecessary barriers to trade;  (ii) whether it
would be advantageous to distinguish between regulations applying to content and regulations
applying to transport;  and (iii) whether it would be desirable to request an Internet service provider to
make inaccessible to consumers a web site which does not comply with domestic regulation.
Another delegation suggested that it was important to be informed about the relevant work of
other international organizations in this field, for example that of UNICITRAL on a proposal for an
international convention on electronic transactions which covered important aspect of domestic
regulation.S/C/8
Page 8
Market Access
Members agreed that the principle of technological neutrality applied to GATS commitments,
meaning that market-access commitments cover the supply of the committed service by all
technological means, including electronic means.  It was however suggested that there were a number
of services highly relevant to electronic commerce in which there were very few specific
commitments, and that the Council might conduct an examination of the implications of this
phenomenon.  A number of Members expressed agreemen t with the categorization in the Secretariat’s
Note (S/C/W/68) of electronic commerce in services under three types of transaction – (a) Internet
access services;  (b) electronic delivery of services;  and (c) use of the Internet as a medium for
distribution services – the sale of goods and services subsequently delivered in non-electronic form.
One delegation noted that while a number of Members had included a specific entry on
“Internet access services” in their telecommunications commitments many others had not, even
though the commitments were intended to cover these services:  consideration should be given to the
need for a specific entry in all cases.  Another delegation stated that the GATS fully applied to alltransport and content aspects of electronic commerce.  Only a few Members had specific
commitments in access services, but the obligations of the Annex on Telecommunications on access
and use would apply to all other Members in sectors where they had specific commitments.
Commitments on telecommunications would apply to the use of Internet as a means to provide
telecommunications services such as voice telephony and e-mail, and commitments on distributionservices would apply to the on-line ordering and delivery of products.  Regarding content services, the
relevant sectoral commitments would apply on the basis of technological neutrality.
Another delegation noted that there was no doubt that the GATS applied to electronic
transport services and to all traditional services supplied electronically.  It was also clear that theGATS applied to the transport of other digitalized information, which, if supplied in a non-electronic
form, might not constitute a service.  The delegation suggested however that while the digitalized
information content, as opposed to the supply of the content, might in some cases be regarded as a
product subject to the application of GATT principles, such as MFN, national treatment and the
prohibition of quantitative restrictions, the question whether it should be so regarded needed further
reflection.  Another delegation concurred that in the case of electronic commerce in intangible goods,
the transmission clearly represented a service, while the content might not.  However it was said inreply that it was not possible to apply the principle of technological neutrality to the provision of some
services but not to others.
It was noted that the use of the Internet by consumers to conclude transactions abroad would
greatly increase the economic significance of commitments under Mode 2 - consumption abroad.  Aquestion was raised concerning the possibility of applying restrictions on the technological means of
supplying a service under Article XVI.
National Treatment 
It was the general view that the principle of technological neutrality applied to all GATS
specific commitments, including all market access and national treatment aspects.  One delegation
noted that on the basis of technological neutrality services provided electronically and services
provided non-electronically were like services under the GATS, and thus subject to the national
treatment rule.  Another delegation noted that there could have been differences between the conceptsof likeness under GATT and GATS and that further work was needed to clarify this issue.S/C/8
Page 9
Access and Use of PTTNS
Delegations noted that the Annex on Telecommunications applied to access to and use of the
Internet network.  One delegation also suggested that point 5 in the Annex, which requires access to
and use of public telecommunications transport networks and services for the supply of a serviceincluded in the schedule, also prohibited technical restrictions.  Another delegation noted that the
Annex only applied to sectors where specific commitments had been undertaken and that in a number
of sectors crucial to electronic commerce there were limited or no commitments.  Moreover, the
Annex on telecommunications did not apply to certain issues such as points of interconnection and
numbering, which were important for electronic commerce.
It was noted that the Annex guaranteed access and use of public telecommunication networks
for Internet access providers, but it was not clear whether it also guaranteed service suppliers access to
and use of Internet providers’ services.  Since it might be important for service suppliers to have the
right of access to Internet providers’ services, there was a need to further clarify this matter.
Meeting of 22-24 March 1999
Competition (Articles V III and IX)
It was noted that the expansion of electronic commerce might help reduce the extent of
restrictive business practices, inter alia, by facilitating market entry for smaller service suppliers.  It
was also noted, however, that monopolies and restrictive business practices might pose serious
obstacles to electronic commerce and that in this respect it was important to clarify the reach of
existing GATS principles.  It was pointed out that the applicability of the Annex on
Telecommunications and of the Reference Paper on regulatory principles on telecommunications toInternet access providers and to electronic transmission was of central importance to the work
programme and that further clarification was needed on this point.  One delegation noted that in the
debate on competition it was necessary to take account of the limited reach of WTO and GATS rules
in this area and of the exploratory work which was taking place in the Working Group on the
Interaction between Trade and Competition Policy.
In discussion of the scope of the rules on competition safeguards in the telecommunications
Reference Paper, questions were raised concerning the applicability of its principles to major
suppliers of telecommunications services involved in electronic commerce and to major suppliers who
engaged in related services such as software, certification and authentication and to
telecommunications supplied via the Internet.  It wa s suggested that it might be necessary to develop
competition safeguards applying to all aspects of electronic commerce.  It was argued thatArticle VIII on monopolies only applied to monopolies formally established or authorised by a
government, not to suppliers who had gained a dominant position without government intervention,
and that Article IX only facilitated consultations between Members, without providing any
substantive rule on restrictive business practices.  Articles VIII and IX only applied to service
suppliers, and therefore not to software producers.
A number of Members suggested that to facilitate work in this area it would be useful to
consider some concrete examples of restrictive business practices affecting electronic commerce, such
as horizontal agreements, concerted practices and restrictions deriving from vertical integration.
Protection of privacy and public morals and the prevention of fraud
Members noted that Article XIV of the GATS (General Exceptions) applied to the protection
of privacy and public morals and the prevention of fraud, and that measures taken by Members inS/C/8
Page 10
fulfilment of such objectives should be subject to a test of necessity and should not constitute a means
of arbitrary or unjustifiable discrimination nor a disguised restriction on trade in services.  It was
stressed that, as Article XIV constituted an exception provision, it had to be interpreted narrowly, and
its scope could not be expanded to cover other regu latory objectives than those listed in the same
Article.  Doubts were expressed about the appropriateness of developing criteria in the WTO for thepolicy objectives identified in Article XIV, such as the protection of privacy and public morals and
the prevention of fraud.   One delegation suggested that there was no need for the Council to undertake
further work on the interpretation of the principles of Article XIV, such as the necessity test, because,
as in the case of Article XX of the GATT, these issues could only be settled in the context of dispute
settlement.
It was pointed out that in order to ensure effective protection of privacy and prevention of
fraud it was important for developing countries to have access to the most advanced encryption
technology and that access to such technology was often denied to them.  A suggestion was made that
it might be necessary to consider the adequacy of current WTO rules, including those of GATS, to
deal with such matters as competition and the protection of privacy, consumers and intellectual
property rights.
One delegation suggested that in the context of Article VI:4 it might be desirable to draw up a
list of policy objectives which might justify domestic regulatory measures with restrictive effects in
the area of electronic commerce.  Some doubt was expressed as to the desirability of doing so.
Another delegation expressed doubts about the enforceability of measures to restrict the electronicprovision of certain services in Members’ territory.  For example, an obligation for Internet Service
Providers to comply with measures of general application regulating content services might be very
difficult to enforce, particularly since the dist inction between the supply of content and the mere
transport function could be difficult to draw.  On technical standards some Members said that the role
of the WTO should not extent to setting specific standards for electronic commerce.  On the issue ofdomestic regulation and standards a delegation noted that the role of the WTO was that of tackling
trade restrictions, not that of legitimizing restrictions.
Customs duties
Although in principle it was possible to apply customs duties to trade in services, it was
widely recognized that in the case of electronic transmissions this could present serious technicaldifficulties.  It was also said that any discussion on taxation issues had to take account of the general
exception contained in Article XIV of the GATS, which allowed measures inconsistent with
Article XVII which were aimed at ensuring the equi table or effective imposition or collection of direct
taxes.  However, another delegation stressed that the discussion of customs duties should be kept
separate from any discussion of tax issues.  Domestic taxation was within the regulatory competenceof Members and only discriminatory taxation was subject to WTO rules.
It was argued that the current standstill on customs duties applied to electronic transmissions
should become permanent and legally binding.   However, some asked for further examination of this
issue.  Although it was suggested that the issue of the application of customs duties to services wasfully covered by the GATS, further examination of this issue would be appropriate.  It was noted that
there was a close relationship between the issues of classification and customs duties.
One delegation made the point that the political issue concerning the status of the standstill
and the technical issue of the relevance of GATS provisions to customs duties should be kept separateand that the work programme of the Services Counci l should be limited to the second issue.  Some
delegations argued that the debate on customs duties had important implications for revenues and
fiscal policies of developing countries, which were also being considered in the Committee on Trade
and Development.  Another delegation argued that a liberal environment signalled by a commitmentS/C/8
Page 11
on duty-free cyberspace in the WTO could enhance the benefits of internet commerce as an engine for
economic development in developing countries.  One delegation suggested that it was necessary to
study the proper valuation of electronically transmitted products in the context of encrypted electronic
payments and related issues.  Doubts were however expressed as to the relevance of this question in
the context of the work programme.  One delegation expressed the reservation that the relevance tothe GATS of this issue had to be fully justified be fore it could be agreed in the General Council's
interim review that this was an appropriate subject for further study.  It was pointed out that electronic
commerce presented various problems for taxation, including the difficulty of determining where an
electronic transaction had taken place, the value of the transaction, tax evasion and double taxation.
One delegation stressed that these taxation issues involved considerations of equity and that it was
important to ensure that all products would receive the same tax treatment, whether they were
supplied electronically or not.
__________