RESTRICTEDWORLD TRADE
ORGANIZATIONWT/GC/W/90
14 July 1998
(98-2779)
General Council
15 July 1998
WTO AGREEMENTS AND ELECTRONIC COMMERCE
This note has been prepared by the Secretariat to assist Members in their deliberations on trade-related
issues pertaining to global electronic commer ce pursuant to the Ministerial Declaration on Global
Electronic Commerce.  It briefly discusses how WTO Agreements and previously agreed work
programmes relate to global electronic commerce.  The note is not meant in any way to prejudge the
range of issues that Members may wish to examine.
General Agreement on Trade in Services
Introduction
1. International trade in services is conducted to a very large and increasing extent through
electronic means.  Indeed, the revolution in computer technology caused many services, previously
regarded as essentially non-tradable, to be recognised as eminently tradable and as potentially
important contributors to international trade a nd development.  More than any other factor, it
overturned the old misconception of "trade in services" as a contradiction in terms.  Cross-bordertrade in particular was greatly facilitated by the availability of electronic means of delivery and the
ease with which services products can be converted into digitised information flows.  The negotiation
of the GATS established the first framework of international law and multilateral commitments within
which this trade could take place on a secure basis.
2. In the realm of services trade, electronic commerce can be defined as comprising three
different types of transaction, all of which require consideration:
(a) the provision of Internet access services themselves – meaning the provision of
access to the net for businesses and consumers;
(b) the electronic delivery of services, meaning transactions in which services products
are delivered to the customer in the form of digitised information flows;
(c) the use of the Internet as a channel for distribution services, by which goods and
services are purchased over the net but delivered to the consumer subsequently in
non-electronic form.
The Legal Framework
3. The GATS covers all services except those supplied in the exercise of governmental
authority, and all measures affecting the supply of se rvices.  It defines trade in services as the supply
of a service through any of the four modes specified in Article 1.1 The modes distinguish between
services transactions on the basis of the territorial presence of the supplier and the consumer of the
                                                     
1 The four modes of supply are:  (1) cross-border, where the service is supplied from the territory of one Member
into another;  (2) consumption abroad, where the consumer purchases a service which is delivered in the territory of another
Member;  (3) commercial presence, where the service supplier of one Member establishes a subsidiary or a branch in anotherMember to supply a service;  (4) presence of natural persons, where the service is supplied by a person working in the
territory of another Member.WT/GC/W/90
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service.  The Agreement makes no distinction between the different technological means by which a
service may be delivered - whether in person, by mail, by telephone or across the Internet. The supply
of services through electronic means is therefore covered by the Agreement in the same way as all
other means of delivery.  As is the case throughout the WTO system, the legal regime which governs
a given transaction is determined by the nature of the product which is traded, not by the technique ofproduction or delivery:  in the same way, if it were agreed that some category of electronically
delivered products, hitherto unclassified, should be classified and treated as goods, their importation
would be subject to whatever tariff bindings or other GATT obligations were applicable.
4. Legal obligations in the GATS apply to all measures affecting the supply of services:  the
term "affecting" has been interpreted
2 to cover not only measures which directly govern the supply of
a service but also measures which indirectly affect it.  Measures affecting the electronic delivery of
services are "measures affecting trade in services" in the sense of Article I of the GATS, just as theywould be if imposed on delivery by any other means.  Thus, for example, a charge on the import of a
service by electronic means - "import" here meaning transactions under any mode of supply – would
be a measure affecting trade in services.  This means that when a Member has scheduled a
commitment on a given service, it may not impose a charge on the import of that service, whether
done electronically or otherwise, if that would impair the level of access guaranteed in its nationalschedule.
5. The GATS legal framework contains two types of provisions:  general obligations and
specific commitments.  Some general obligations apply to all services, whether or not market-access
commitments have been undertaken on them.  Most notable of these are provisions relating to MFN
treatment, transparency, domestic regulation, participation of developing countries and monopoliesand exclusive service suppliers.  Other general obligations are applicable only to sectors where a
Member has scheduled specific commitments.  These include certain disciplines on domestic
regulation and the behaviour of monopolies, payments and transfers and, of particular relevance to
electronic commerce and the Internet access providers who make it possible, the provisions in the
Annex on Telecommunications which ensure suppliers of scheduled services access to and use ofpublic telecommunications networks and services.  The second part of the legal framework consists of
specific commitments to grant market access and na tional treatment, subject to whatever limitations
may be entered in the schedule, to foreign suppliers of the specified service.  The national treatment
commitment covers any measure that affects the supply of the service in question.
6. Because of the way in which it can render the distance between supplier and consumer
virtually irrelevant, it is perhaps natural to think of electronic commerce essentially in terms of
cross-border trade - GATS modes 1 (cross-border supply) and 2 (consumption abroad).  But it is
important to bear in mind that Mode 3 and 4 also cover the electronic delivery of the service.  A
company supplying financial services, for example, on the basis of a commitment under Mode 3,
would be entitled to supply its services electronically unless the schedule stipulates otherwise.  Inmany service sectors, this is of such fundament al importance that a commitment which excluded the
right of electronic supply would be of little value.  Equally, under Mode 4, a professional who is
supplying a service in the territory of another Member is entitled to deliver the service by electronic
means.
Internet Access Services
7. Electronic commerce requires access to the Internet network. In recent years what is
essentially a new service has arisen – the commercial provision of Internet access – which must be
distinguished from the supply of other services through the medium of the Internet. Companies
provide access in return for a fee, which in competitive markets is quite low.  For this purpose they
                                                     
2 See report of the Panel on "European Communities – Regime for the Importation, Sale and Distribution of
Bananas – Complaint by the United States" (WT/DS27/R/USA).WT/GC/W/90
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need access to telecommunications networks, usually by way of leased circuits.  In many countries
where the provision of telecommunications services  is still a public monopoly, the monopoly provider
is likely to be the only supplier of Internet access. In countries which have liberalised their
telecommunications regime, competing internet acces s providers (IAPs) may offer access to the Web,
with a different array of supporting services. Ten Members have made explicit commitments on thesupply of these services in the negotiations on basic telecommunications.  Such explicit commitments
are clearly necessary where monopoly or other access limitations apply to most telecoms services, but
it is desired to liberalize Internet access.  Members which have committed to full liberalization of
basic telecoms have not in general felt it necessary to specify Internet access services, because they
list a number of services often available over Internet.  The status of IAPs in relation to GATS rights
and obligations in some instances would appear to merit further examination.  As with all services, the
absence of commitments does not of course mean that market access for IAPs is impossible:  it mayindeed be the case that provision of the service is not permitted, but it may equally mean only that
there is no guarantee of continued access.
8. In the context of the negotiations on Basic Telecommunications, the Chairman proposed in
January 1997 an interpretative note, which was adopted by the Group on Basic Telecommunications
and attached to its report to the Services Council and which confirmed the principle that commitmentsundertaken were technology-neutral: in the absence of an indication to the contrary, any commitment
would be assumed to cover local, long distance and international services for public and non-public
use, on a facilities or resale basis, and using any technological means of supply (cable, radio, satellite,
Internet, etc.).  It also indicated that any commitment on private leased circuit services, unless
otherwise indicated, would permit suppliers to sell or lease any type of network capacity for the
supply of services listed in any other telecommunications service sub-sector.
9. Article VIII of the GATS, on monopolies and exclusive service suppliers, contains relevant
disciplines on discriminatory and anti-competitive behaviour, and other behaviour that would
undermine specific commitments, by monopoly suppliers.  It could require governments to ensure that
exclusive suppliers of Internet services (e.g. a national telecoms monopoly) do not frustratecommitments made on other services which are being supplied by Internet.  Moreover, where
competitive IAPs are extended market access, Article VIII and the Telecoms Annex would require
that they be given reasonable and non-discriminatory access to the leased circuits they require.
Additional commitments on the behaviour of major suppliers of telecoms services were assumed by
the great majority of participants in the basi c telecommunications negotiations.  The regulatory
principles embodied in the "Reference Paper" which has been scheduled by the great majority of
participants in the basic telecoms negotiations go vern anti-competitive cross-subsidization, the terms
of interconnection, the misuse of information, licensing criteria, transparency and other matters
relevant to the prevention of abuse of dominant market positions.
Electronic Supply of Services
10. The great bulk of commerce and of international trade conducted over the Internet is the sale
of services.  In this section we consider the supply of a service to the customer in digitised form – in
which the entire transaction takes place electronically.  It is impossible to quantify the value ofservices sold in this way because, in addition to the well known inadequacies of services statistics,
most transactions carried out over the Internet go unrecorded: but the vast scale of electronic delivery
of services can be appreciated from the mere fact that currency and securities trading is
overwhelmingly done electronically.  There are many services which can be supplied electronically,
but there are some in which electronic delivery is especially important:  they include financialservices, telecommunications, the entertainment sector and many professional services.
11. Electronic banking and securities trading have long been the norm in transactions between
financial institutions and are increasingly becoming so between businesses.  Most of the world's major
securities and derivatives exchanges provide electronic transactions facilities and the settlement andWT/GC/W/90
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clearing of financial transactions are also done electronically.  On the other hand, on the retail level,
only relatively few of the world's major banks yet provide on-line banking services.  This situation is
expected to change rapidly, as the cost of handling a transaction at a traditional branch is estimated to
be more than a hundred times greater than the cost of using the Internet.  In the insurance sector,
on-line sales and service are expected to replace most traditional sales through agents or telephoneservices.  Various forms of financial advice and personal services are well adapted to electronic
delivery, but the speed of their development may depend on the security and privacy of financial
transactions over the Internet.
12. Telecommunication services are an essential part of the infrastructure for electronic
commerce, and GATS commitments on telecommunication services have great value in ensuring
access to the infrastructure.  Internet, while originally viewed as computer service, has with the
convergence of telecoms and computer technology become widely considered a telecoms service.They are also among the services which may be delivered across the Internet.  According to the
understanding on the technological neutrality of basic telecommunications commitments,
commitments on voice, fax and data, for example, would include the provision of such services over
the Internet unless it is stipulated to the contrary in the schedule.  The relevance of the Annex on
Telecommunications and the Reference Paper on regulatory principles has been referred to above.
13. Professional services, including all forms of consultancy, accountancy, medical and education
services are increasingly available on-line.  Any in formation-based service is likely to lend itself to
electronic delivery, and the accessibility of the Internet to individuals and small firms is likely to
increase the ability of self-employed professionals and small businesses to compete in international
markets.
Electronic Commerce as a Form of Distribution Services
14. The preceding section dealt with products which can be delivered electronically.  It is
important to distinguish from this a second form of electronic commerce in which goods, and services
which cannot be delivered electronically, are ordered and paid for on-line but are delivered to the
customer in tangible form.  The electronic stage of such transactions is a form of distribution services– wholesaling or retailing – and one which is growing very rapidly.  By far the greater part of these
transactions hitherto have been business-to-business;  companies have increasingly ordered and
purchased their supplies on-line.  However, electronic shopping by ordinary consumers is also
increasing.  On-line supermarkets have been followed by specialised retailers and wholesalers of
products of all kinds. Commitments on distribution services under the GATS include electronic
distribution, meaning the right to offer and sell goods and services on the Internet.
15. From a legal point of view the purchase of goods in this way is no different from ordering and
paying for them by telephone or mail.  If the goods ordered have to be imported, the importation will
be subject to whatever tariff bindings and other GATT obligations are applicable.  Tariffs applied to
imported goods or services in this context are not covered by the standstill on customs duties on
electronic transmissions which was agreed at the second Ministerial Conference in May 1998.
16. Services which cannot be delivered electronically are offered for sale and purchased on the
Internet on a large scale.  For example, travel and hotel reservations, and the sale of airline tickets, are
large and rapidly growing forms of electronic distribution.  The selling and marketing of air transport
services and computer reservation system services are two of the sub-sectors of the air transport
industry which are covered by the GATS and they are very largely dependent on access to the
Internet.WT/GC/W/90
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17. It should be borne in mind that a commitment on distribution services is not a commitment to
allow the supply of any service or good which may be offered for sale over the Internet.  It is
obviously possible to buy on the Internet goods whose importation is not permitted and services for
which there is no market access commitment in the country of the buyer.  In the same way, a fully
liberal commitment on basic telecommunications confers rights to supply telecommunicationsservices;  it is not a commitment to allow the supp ly of any service – banking services for example –
which can be provided by telephone.
Exceptions Provisions
18. Article XIV of the GATS contains general exceptions which are obviously relevant to
electronic commerce.  The Article permits Members to take any measure they think necessary to
achieve certain public policy objectives, including the protection of public morals and the
maintenance of public order.  Since both forms of electronic commerce – the supply of services onlineand the electronic retailing and wholesaling of goods and services – depend to some extent on the
security and privacy of communications, it is worth noting that Article XIV(c) permits Members to
take any necessary measures to protect the privacy of the personal data of individuals and the
confidentiality of individual record and amounts, and to prevent deceptive and fraudulent practices.
Article XIV bis provides similar legal cover for actions a Member considers necessary to
protect its essential security interests.  Like other such exceptions provisions, Article XIV is subject to
a safeguard against abuse in that measures taken under it may be challenged by other Members on the
ground that they are not necessary, or are more restrictive than necessary, to achieve the stated
objective.  Nor should they be applied in a manner which constitutes unjustifiable discrimination
between Members or a disguised restriction on trade in services.
Agreement on Trade-Related Aspects of Intellectual Property Rights
Introduction
19. The expected growth of electronic commerce is closely linked with the growing importance
of intellectual property.  Indeed, much of the trade on the Internet and other electronic
communications networks involves selling or licensing of information, cultural products andtechnology protected by intellectual property.  Selling books has become one of the most popular
forms of commerce on the Internet, and selling other products such as sound recordings is growing.
While many books, CDs or films ordered over the Internet are still delivered by mail, the Internet is
increasingly used also as a means of delivering products to customers.  This is common as regards
news, articles and other commercial and technological information, and a growing share of computer
software is sold this way.  Once the capacity of the networks and end-users' equipment allows,
communications networks will increasingly provide a vehicle to deliver products such as soundrecordings and films directly to homes.
20. While this note mainly deals with issues concerning trade on electronic communications
networks, it should be noted that intellectual proper ty plays an important role also in promoting the
development of the infrastructure of such networks, i.e. software, hardware and other technology that
make up information highways.  It provides protection to the results of investment in the developmentof new information and communications technology, thus giving the incentive and the means to
finance research and development aimed at improv ing such technology.  In addition, a functioning
intellectual property regime facilitates transfer of information and communications technology in the
form of foreign direct investment, joint ventures and licensing.  The TRIPS provisions on intellectual
property are designed to contribute to the promotion of technological innovation and to the transferWT/GC/W/90
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and dissemination of technology to the mutual ad vantage of producers and users of technological
knowledge.3
21. Information and communications technology will affect the way intellectual property is
administered and managed.  It is increasingly used to improve the efficiency of, and cooperation
between, national, regional and international intellectual property offices (patent and trademarkoffices).  This will benefit the clients of these offices in the form of better and faster services,
including shorter periods in acquiring intellectual property rights and better access to industrial
property information
4.  One of the basic objectives of the patent system is to facilitate the
dissemination of technological knowledge. Communicat ions networks can be used to facilitate access
from anywhere in the world to the valuable and extensive technological information contained in
patent documents.  As regards copyright and related rights, collective management organizations have
traditionally been among the first to utilize new information technologies in licensing the use of
international repertoires of protected works and distributing revenues to numerous right holders in
different countries.  Communications technologies will enable collecting societies to improve the
services they provide both to right holders and users of protected materials.  Electronic copyright
management systems may make individual licensing and distribution of revenue feasible in areas
where the vast numbers of works, right holders and users have until now made collectivearrangements necessary.
22. The basic notions and principles of intellectual property have survived over a century of rapid
economic, social and technological change.  The traditional objectives of the system as reflected in the
current international norms would appear to remain  valid even in "cyberspace".  This would suggest
that implementation of the TRIPS Agreement would have an important role in facilitating thedevelopment of electronic commerce and the necessary infrastructure.  On the other hand,
technological and economic developments have often prompted adjustments to existing types of
intellectual property rights, and the creation of new types of rights, as well as giving rise to new
problems of enforcement.  In the same way the development of global electronic networks has raised
new types of issues that may need to be addresse d at the national and/or international level.  The
following discusses some of these issues that have been raised in the areas of copyright and related
rights, and trademarks and other distinctive signs.  The list of issues referred to is not intended to be
exhaustive, and new issues are likely to emerge as more experience is gained with trade over
communications networks.
23. Among the issues that have arisen are the problems that concern the difficulties in
determining the applicable law in certain situati ons.  While the following discussion is limited to
copyright and related rights, and trademarks, it should be borne in mind that these problems reflect amore general legal question that relates to the "borderless" nature of the Internet, and to the difficulty
of determining the applicability of territorially based laws and regulations to activities carried out on a
global network.  Finding workable solutions to these issues in the area of intellectual property, as well
as in other areas, will require increased cooperation among governments and within the private sector.
Copyright and related rights
24. Digital technology has already fundamentally changed the way that protected materials are
created, produced and used.  It has also led to the emergence of new types of products, notably
computer programs and databases.  The Internet  and other electronic networks now provide a new
means for the distribution of protected materials.  However, secure conditions for such distribution are
a precondition for these new possibilities to be fully  exploited.  Copyright owners will be reluctant to
                                                     
3 See Article 7 of the TRIPS Agreement.
4 Some intellectual property offices already exchange information over the Internet.  In March 1998,
the Assemblies of the Member States of WIPO approved the establishment of a Global Information Network forintellectual property offices (WIPO
NET).WT/GC/W/90
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put their protected materials on the net as long as they fear that the Internet may lead to uncontrolled
dissemination and copying of phonograms, films, co mputer programs and other protected materials,
which will seriously undermine copyright industries.  Also service providers and others involved in
the process of making materials available to end users will need clear rules to be able to plan how to
develop their services.
25. The TRIPS Agreement obliges WTO Members to comply with the substantive obligations of
the Paris Act of 1971 of the Berne Convention for the Protection of Literary and Artistic Works
(Berne Convention).  The traditional principles of  international copyright law as contained in the
Berne Convention, originally concluded in 1886 a nd updated through periodic revisions, have proven
to be sufficiently flexible to have been able to accommodate new categories of works, and ways of
creating and using protected materials in the digital environment.  The right of reproduction, provided
under the Berne Convention and incorporated by reference into the TRIPS Agreement, continues to bea central element of protection even in the digital environment.  The TRIPS Agreement reinforces the
application of that and other rights contained in the Berne Convention through more effective
enforcement, monitoring of compliance with the ob ligations, and application of the dispute settlement
mechanism.
26. In addition to requiring compliance with the basic standards of the Berne Convention, the
TRIPS Agreement clarifies or adds certain specific points.  As regards digital technology, it confirms
that computer programs, whether in source or object code, must be protected as literary works, and
clarifies that databases and other compilations of data or other material must be protected as such
under copyright even where the databases include data that as such are not protected under copyright.
On-line communications have given rise to certain new issues, which have been addressed in two new
WIPO treaties on copyright matters that were adopted, under the auspices of WIPO,  in December
1996 (see Annex for details).
27. When discussing the impact of digital technology on copyright and related rights, we should
not lose sight of the fact that the most immediate risk faced by copyright industries is the production
and distribution through traditional means of pi rated sound recordings, films, software, CD-ROMs,
etc.  Such products have become increasingly vulnerable to piracy, given the ease and diminishing
costs of digital copying, and the fact that digital information can be copied over and over again
without any loss of quality.  In this respect, the TR IPS Agreement aims to ensure that effective means
are available to right holders to enforce their intellectual property rights.  The Agreement also
provides for rental rights in respect of computer  programs and phonograms, and in certain situations,
cinematographic works, given that uncontrolled rental of such works, whether in digital or analogue
form, may lead to widespread unauthorized copying.  In addition, WTO Members have agreed tocooperate with each other with a view to elim inating international tr ade in goods infringing
intellectual property rights.  Experience in the fight against traditional forms of piracy, and increased
cooperation between agencies responsible for enforcemen t, will also help to prepare for action against
possible new forms of online piracy.
28. While we should not underestimate the challenges posed by global communications networks
to the regulation and enforcement of copyright and related rights, we should bear in mind the great
new opportunities such networks provide.  For consumers, the Internet may give wider choice of
information and cultural products irrespective of their place of residence, and for authors, publishers
and producers, it may lower the costs of and barriers to entering the global market.  Transaction costs
and transaction times are likely to fall rapidly.  However, this positive scenario requires thatgovernments and the private sector are able to find and implement a proper mixture of regulatory,
contractual and technological measures, and to improve public awareness of the role of copyright and
related rights in the information society.
Trademarks and other distinctive signsWT/GC/W/90
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29. Protection of trademarks and other distinctive signs aims to stimulate and ensure fair
competition between producers and to protect consumer s by enabling them to make informed choices
between various goods and services.  In electronic commerce, brand recognition is essential for
suppliers of goods and services.  For consumers who buy products and services at a distance, it may
be increasingly necessary to rely on the reputation attached to trademarks and other distinctive signs,as they do not have an opportunity to establish a personal contact with the seller of those products, or
to inspect the products and services before buying them.
30. The TRIPS Agreement provides that any sign, or any combination of signs, capable of
distinguishing the goods and services of one undertaking from those of other undertakings, must be
capable of constituting a trademark.  In order to obtain protection, a company generally registers a
trademark in each country in which it operates.
5 Registration is made in respect of specified goods or
services.  The owner of a registered trademark has an exclusive right to prevent others from using inthe course of trade identical or similar signs for goods or services which are identical or similar to
those in respect of which the trademark is registered, if such use would result in a likelihood of
confusion.  The Agreement contains additional obligations in respect of well-known marks:  the
registration of a mark must be refused or cancelled, and its use must be prohibited, if it conflicts with
a well-known mark.
31. The use of trademarks on the Internet raises a number of questions.  Under what
circumstances and in which jurisdiction(s) does such use of a mark constitute an infringement of a
registered trademark?  If the use is considered to constitute an infringement in one country, what
remedies should be available, in particular if the transmission originates in another country?  Under
national laws, use of a trademark may be a condition for registration, or for maintenance ofregistration;  does the use of a trademark on the Internet satisfy such requirements, and if so, in which
countries?  Identical or similar trademarks may be owned by different persons in different countries;
the use of such trademarks on the Internet by one or more of the right owners may lead to conflicts.  Is
the current territorially-based system of registration of trademarks sufficient for the emerging
borderless electronic marketplace?
32. A specific issue that has received much attention concerns the relationship between
trademarks and Internet domain names.
6  Some of the problems stem from the fact that under each
top-level domain name there can be only one of each particular second-level domain name, which are
usually allocated on a first-come, first-served basis within each top-level domain name.  On the other
hand, the same trademarks may co-exist in different categories of products or services, and in
different territories.  In addition, there have been problems such as "warehousing" of second-level
domain names corresponding to well-known trademarks for the purpose of selling them to trademarkowners.  At the same time, easily memorable domain names have themselves become commercially
valuable assets, akin to intellectual property.  One of the questions that has arisen is under what
circumstances and under which jurisdiction(s) the use of a domain name that is identical or similar to
                                                     
5 It is possible to obtain protection for trademarks in more than one country through certain regional
trademark offices.  The Madrid Agreement Concerning the International Registration of Marks provides for theinternational application of registration of trademarks at the International Bureau of WIPO.
6 Domain names are part of the Internet addressing system, which consists of two elements.  Each
computer has its Internet Protocol address, a numeric id entifier that looks very much like a telephone number.
These numeric identifiers are paired with domain names, user-friendly substitutes for numeric identifiers.  Adomain name typed into a computer is automatically c onverted into the corresponding numeric identifier.  For
example, the WTO's website can be found at http://www.wto.org.  The prefix http://www indicates the protocolto be used and that the site is located on the World Wide Web.  The domain name must have at least two parts: a
top-level domain name (TLD), in this case ".org", and a second-level domain name (SLD), in this example
"wto".  Anyone from any country can register in the main generic TLDs (gTLDs, also called internationalTLDs), currently .com, .org, and .net.  The most popular of them is .com, which is reserved for commercialentities.  Two-letter country code TLDs, which use the ISO 3166 country codes (e.g. .ch for Switzerland), arereserved for entities in a given country.WT/GC/W/90
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a trademark may constitute a trademark infringement, and what remedies should be available for the
trademark holder.  Further consideration is needed to determine whether the above mentioned
problems call for adaptations to the internationa l protection of trademarks. Conflicts between
trademarks and domain names have brought to the fore also the more general question, not limited to
intellectual property, of how best to develop the governance of the domain name system.7
33. While the above discussion has focused on trademarks, it should be borne in mind that similar
issues may arise in respect of other distinctive signs protected by intellectual property rights.  As
regards geographical indications, the TRIPS Agreement requires that interested parties must have the
legal means to prevent the use of indications which mislead the public as to the geographical origin of
the good, and use which constitutes an act of unfair competition.  Additional protection is provided
for geographical indications for wines and spirits.  Other relevant categories of distinctive signs
include state emblems and trade names.
Agreement on Government Procurement
34. The development of electronic commerce is likely to have important implications for
government procurement and international rules on government procurement.  The increased use of
electronic technologies is transforming government purchasing procedures as the way is opened to
electronic advertising, qualification, tendering, selection, payment and, in certain cases, delivery.Quite apart from making traditional procurement procedures and practices more efficient, electronic
tools could open up new ways of conducting procurement, for example through electronic
qualification procedures that would facilitate selective tendering, the tendering of framework
contracts and the selection of off-the-shelf products from electronic catalogues.  At the same time,
government use of electronic commerce faces many of the same challenges as private use:  ensuringdata privacy and security, interoperability of sy stems, and resolving legal issues such as the
acceptance of digital signatures and electronic receipts.
35. While a number of WTO Members – developed, in transition and developing --  are seeking to
harness electronic means of communication for the purpose of making public procurement procedures
more efficient, they are at differing stages in this process.  Some have yet to begin implementation;some others have, in whole or in part, adopted information technology, in particular the Internet, for
publishing notices on procurement opportunities;  some have gone further in also enabling tender
documents to be ordered and maybe delivered through such electronic means;  and some have already
initiated pilot projects by which as much of the procurement process as possible, including all
communications between purchasing entities and tenderers, is conducted electronically.  The stage
reached within individual countries often varies according to entities, contract values and the types of
products or services being procured.
36. The main WTO rules that apply to government procurement are contained in the Agreement
on Government Procurement (GPA) to which 26 WTO Members are signatories.
8  Article XXIV:8 of
the GPA foresees consultations, and if necessary, negotiation of modifications to the Agreement as
the use of information technology in government procurement develops further.  The consultations
should ensure, in particular, that:  (i) the use of information technology promotes the aims of open,
                                                     
7 The relationship between Internet domain names and trademarks has been addressed in two recent
initiatives to develop the Internet domain name system, namely a Memorandum of Understanding on theGeneric Top-Level Domain Name Space of the Internet Domain Name System, signed in Geneva on 1 May1997, and a Statement of Policy on "Management of Internet Names and Addresses", published by theUnited States Department of Commerce on 5 June 1998.  Referring to this statement of Policy, WIPO
announced on 8 July 1998 that it will undertake an international process to develop recommendations
concerning the intellectual property issues associated with Internet domain names, including domain namedispute resolution.
8 Canada;  European Community and its member States;  Hong Kong, China;  Israel;  Japan;  Korea;
Liechtenstein;  Netherlands with respect to Aruba;  Norway;  Singapore;  Switzerland;  United StatesWT/GC/W/90
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non-discriminatory and efficient government procurement through transparent procedures;  (ii)
contracts covered under the Agreement are clearly identified;  and (iii) all available information
relating to a particular contract can be identified.  This provision of the GPA further states that when a
Party intends to introduce innovations, it shall endeavour to take into account the views expressed by
other Parties regarding any potential problems.
37. Furthermore, Article XXIV:7(b) and (c) of the Agreement calls for negotiations on improving
the Agreement and extending its coverage not later than the end of 1998.
38. As preparation for these negotiations, the Parties have been reviewing the Agreement
following a decision to this effect contained in the report of the Committee on Government
Procurement to the Singapore Ministerial Conference in 1996 (GPA/8). In the context of a review
item on simplification and improvement of the Agr eement, the Committee has been carrying out work
on information technology since February 1997.  This work includes consideration of possibleamendments to the provisions of the GPA to reflect recent developments in information technology
and examination of whether procuring entities should have the option of using electronic means of
publication and communication instead of hard copy ones and also whether the minimum periods that
should be allowed to enable suppliers to bid could be reduced to reflect the speed of electronic
communication. At its meeting held on 25 June 1998 the Committee agreed to a target of the thirdMinisterial Conference for the completion of the negotiations on the simplification and improvement
of the Agreement (GPA/M/9).
Working Group on Transparency in Government Procurement
39. The Working Group on Transparency in Government Procurement was established by the
Singapore Ministerial Conference in 1996 "to conduct a study on transparency in governmentprocurement practices, taking into account national policies, and, based on this study, to develop
elements for inclusion in an appropriate agr eement".  Since November 1997, the Group has been
pursuing its discussion of the issues before it and, in the context of its discussion of "other matters
related to transparency", the Group has been addr essing the implications for transparency of the
application of information technology to government procurement.  It has been suggested in theWorking Group that a balance should be found whereby a transparency agreement would not
constitute an unnecessary barrier to progress in the area of information technology and would
accommodate the increasing use of information technology in government procurement in Members,
while ensuring that, because of the lack of uniformity among countries' stages of development in this
area, any requirements for use of information technology in government procurement should be
optional and that the use of information technology tools should not undermine the basic transparency
principle of guaranteeing access to information fo r all.  It has also been suggested that the
development of tools and provision of equipment for the application of information technology was
an area that would fall within the scope of technical cooperation activities under an eventual
transparency agreement.WT/GC/W/90
Page 11
Agreement on Implementation of Article VII of  the General Agreement on Tariffs and Trade
1994
40. In the area of  customs valuation, the WTO Committee on Customs Valuation adopted, at its
meeting of May 1995, the Decision on the Valuation of Carrier Media Bearing Software for Data
Processing Equipment, which had been originally adopted by the Tokyo Round Committee in 1984.This Decision applies in the case in which a carrier media bearing software, i.e., the tape or diskette
containing data, is imported, and provides Members with two options:  it allows them to levy duties
on the basis, either of the value of the carrier medi um (which is negligible), or of the value of the
carrier medium and the value of the software (which is usually high).  Whichever practice is adopted
has to be applied on an MFN basis and notified to the Committee.
Ministerial Declaration on Trade in Information Technology Products
41. The Ministerial Declaration on Trade in Information Technology Products, referred to
commonly as the Information Technology Agreement (I TA), sets out to eliminate tariffs and other
duties and charges on a wide range of informa tion technology products by the year 2000.  The
products concerned are identified in the Declaration and, in general, fall under six groups, viz.,
computers, telecommunication equipment, semiconduc tors, semiconductor manufacturing and testing
equipment, software and scientific instruments.  These products form the physical infrastructure ofelectronic commerce.  Forty-four participants in the Ministerial Declaration have submitted their
schedules of concessions on these products and will reduce their tariffs accordingly.
Trade Facilitation
42. Following the mandate by Ministers in Singapore to undertake exploratory and analytical
work, drawing on the work of other relevant international organizations on the simplification of tradeprocedures in order to assess the scope of WTO rules in this area, discussions are on-going in the
Council for Trade in Goods.  These discussions en compass the rôle that electronic commerce has in
facilitating the cross-border movements of goods and services, particularly within the transport sector
and in the context of customs administration.  Information-technology-based management of data
which is received, manipulated and sent electronically by traders, government authorities, and otherparticipants in the trade transaction process, bears considerable potential for savings in costs and time,
both for governments and for importers and exporters, and may enable many small and medium-sized
companies to engage for the firs t time in international transactions.  It is widely understood that
information technology is an essential tool to support the modernization and simplification of customs
controls and procedures, including the application of risk assessment techniques which would allow
selective examination of shipments.  Elimination of these "invisible" administrative barriers to entry
and cost factors would ensure that the benefits of market-access commitments are fully realized.  Thecurrent revision process of the Kyoto Convention on the simplification and harmonization of customs
procedures (carried out under the auspices of the World Customs Organization) contains numerous
references to the use of information technology in customs administration, and will provide guidelines
to ensure the application of best practices by customs administrations in this area.
Declaration on Global Electronic Commerce
43. The Ministerial Declaration on Global Electronic Commerce adopted on 20 May 1998,
(WT/MIN(98)/DEC/2), ha s two key elements:
44. First, the General Council is required, by its next meeting in special session, to establish a
comprehensive work programme to examine all trade-related issues relating to global electronic
commerce, including those issues identified by Members.  The work programme will involve the
relevant WTO bodies, take into account the economic, financial and development needs of developing
countries, and recognize that work is also being undertaken in other international for a.  The GeneralWT/GC/W/90
Page 12
Council should produce a report on the progress of the work programme and any recommendations
for action to be submitted at the Third Session of the Ministerial Conference.
45. Secondly, Members declared that, without prejudice to the outcome of the work programme
or the rights and obligations of Members under the WTO Agreements, they would continue their
current practice of not imposing customs duties on electronic transmissions.  When reporting to theThird Session of the Ministerial Conference, the General Council will review this declaration, the
extension of which will be decided by consensus, taking into account the progress of the work
programme.WT/GC/W/90
Page 13
ANNEX
On-line communications and the new WI PO Treaties on copyright matters
1. Two important new treaties on copyright matters were adopted under the auspices of the
World Intellectual Property Organization (WIPO) in December 1996, namely the WIPO Copyright
Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT).  The treaties enter intoforce three months after 30 instruments of ratification or accession by states have been deposited with
the Director General of WIPO.
9  These new instruments are self-standing treaties, which build on the
Berne Convention and the TRIPS Agreement, but in some respects go further.  The implementation of
these new treaties will greatly facilitate the creation of a secure and predictable legal environment that
will foster the development of electronic commerce involving online distribution of protected
materials.10
2. The main improvements that relate to the use of works and phonograms on the Internet and
other communications networks concern the right of communication, circumvention of technological
measures and integrity of rights management information.  Authors, performers and phonogram
producers enjoy an exclusive right of authorizing the communication or making available to the
public of their protected material, by wire or wireless means, in such a way that members of the
public may access it from a place and at a time individually chosen by them.  These rights cover, forexample, on-demand delivery of works over the Intern et (Article 8 of the WCT, and Articles 10 and
14 of the WPPT).  The treaties recognize the role that technological measures used by right holders
have in facilitating effective protection.  In order to ensure the effectiveness of such measures,
contracting parties to the treaties must provide adequate legal protection and effective legal remedies
against the circumvention of effective technological measures that are used by authors, performers orproducers of phonograms in connection with the exercise of their rights, and that restrict acts, in
respect of their protected material, which are not authorized by right holders concerned or permitted
by law (Article 11 of the WCT and Article 18 WPPT).  Individual licensing and collective
management of protected materials on the Internet can be facilitated by electronic rights management
information that can be attached to digital copies of works and other material.  The treaties requirecontracting parties to provide adequate and effective legal remedies against any person, who, without
authority, removes or alters such information or distributes copies of protected material knowing that
such information has been removed or altered without authority, and knows or, with respect to civil
remedies, has reasonable grounds to know that it will induce, enable, facilitate or conceal an
infringement of any right covered by the treaties (Article 12 of the WCT and Article 19 of the WPPT).
3. Both the TRIPS Agreement and the WIPO Copyright Treaty recognize that copyright
protection covers compilations of data or othe r material, which by reason of the selection or
arrangement of their contents constitute intellectual creations.  In the course of the preparation of the
Diplomatic Conference that adopted the aforementi oned new WIPO treaties, it was discussed whether
there is a need to supplement this by providing additional protection to economically valuable
elements of databases that require the investment of considerable human, technical and financial
resources but may not benefit from copyright protection.  While the Conference did not take any
                                                     
9 The Treaties were open for signature until the end of 1996.  The are 51 signatories to the WCT and 50
signatories to the WPPT.  At present, two countries have ratified the WCT and one country the WPPT.
10 Certain issues were not addressed in the treaties but were left to be determined at the national level.
These include the issues of online service provider liability and the scope of the reproduction right, i.e. whethertransient reproductions that are produced when protected material is communicated over the Internet are covered
by that right.  These two issues relate to the more general question of which law(s) should apply to the use of
protected material on the Internet.  The "borderless" nature of the Internet may also make it difficult to
determine the "country of origin" of works first published in an electronic form.  Draft Article 3 of the BasicProposal for the Substantive Provisions of the Treaty on Certain Questions concerning the Protection of Literaryand Artistic Works to be considered by the Diploma tic Conference (WIPO document CRNR/DC/4) contained a
clarification in this respect, but the provision was not included in the final text of the WIPO Copyright Treaty.WT/GC/W/90
Page 14
action on the draft treaty on this matter submitted for its consideration, the delegations participating in
the Conference recognized that databases are a vital element in the development of a global
information infrastructure, and expressed their inte rest in examining further the possible implications
and benefits of a sui generis system of protection of databases at the international level. This
examination is underway under the auspices of WIPO.
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