RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/W/104
25 March 1999
(99-1204)
Council for Trade in Services Original:  English
COMMUNICATION FROM JAPAN
Work Programme on Electronic Commerce
The following communication has been received from the delegation of Japan with the
request that it be circulated to the Members of the Council for Trade in Services.
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I. BACKGROUND
1. Expansion of Electronic Commerce
1. The flow of electronic commerce has been increasing as its accessibility has been improved
(e.g. shortening the time and reducing the cost of access to networks) through the technical
development of the Internet (e.g. relevant hardware, software and infrastructure).
2. There has been an increase in digital contents on the trade front such as through computer
software or game software, etc. While digital contents have mainly been traded through a “physical”
means such as CD-ROMs, this will increasingly be traded on-line by using the Internet.
2. Process of Developing WTO rules
3. Electronic Commerce will play a much greater role in commercial transactions in the future.
The issue has been discussed in the relevant subsidiary bodies of the General Council based on the
decision of the second WTO Ministerial Meeting.
4. It has not, however, been clearly defined how el ectronic commerce should be treated in the
WTO Agreement from a trade perspective.
II. JAPAN'S VIEW ON THE MAIN ISSUES REGARDING ELECTRONIC
COMMERCE
3. Regulations on Electronic Commerce
5. Securing a "free cyber space" is indispensable for the development of electronic commerce.
As for electronic commerce, the technological innovation in the private sector should be the driving
force for development, and discussion on this issue should be based on a voluntary action by theprivate sector.S/C/W/104
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4. Application of principles, such as Nati onal Treatment, the Most Favoured Nation
Treatment and the General Elimination of Quantitative Restrictions
6. It is necessary to consider securing such principles as the NT, the MFN and the general
elimination of quantitative restrictions on "dig ital contents" to maintain a free environment for
electronic commerce.
7. In order to maintain a free environment for electronic commerce, we must deliberate whether
these principles, which have been applied to the physical medium in which are recorded the digital
contents, are applied to those which are supplied through electronic means.
8. The trade-distortive government regulations can abate the benefits of economic growth driven
by electronic commerce.
9. A free environment of electronic commerce will bring about increasing trade in services and
the subsequent development of technology, thereby contributing to economic growth in developingcountries.
5. Customs Duties on Electronic Transmissions
10. WTO Members should continue their current practice of not imposing customs duties on
electronic transmissions while at the same time discussions by Members should proceed on this issue
from legal and technical points of view, including on its treatment in the WTO agreement.
11. Discussions on how customs duties are treated on electronic transmissions need to take into
account the legal and technical points of view, such as the treatment of transmitted contents under the
WTO agreement, as levying customs duties on electronic transmissions is not denied a priori .
12. This discussion needs to reach a well-balanced conclusion by taking into account the needs of
developing country Members and the necessity to secure a free environment for electronic commerce.
6. The Four Modes of GATS in Electronic Commerce
13. It would, in principle, be useful to apply the existing four modes of the GATS to electronic
commerce.
14. Regarding the distinction between modes 1 and 2, we have categorized the cross-border
supply of services by telephone or facsimile as mode 1.  If we are to take this as an analogy forelectronic commerce, i.e. to replace "telephone or facsimile" with computer networks, the cross-
border supply of services through electronic commerce should also be considered as mode 1.
15. However, if new forms of electronically-supplied services emerge, the distinction between
modes 1 and 2 may become difficult. When such a situation occurs, new consideration on this matter
must be amply given.
7. Access to Telecommunications Networks
16. A sophisticated communication infrastructure is necessary to develop electronic commerce.
The commitments in the Fourth Protocol to the GATS on basic telecommunications not only
accelerates the development of the communication infrastructure among participating Members by
giving them great merit but also contributes to strengthening the international communication network
as a whole. We should thus encourage more Members to make commitments on the obligations
stipulated in this protocol.S/C/W/104
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8. Protection of Privacy, Competition, Intellectual Property Rights and Consumers
17. It is necessary to discuss how we should apply the existing rules to the protection of privacy,
competition, intellectual property rights and consumers.  We need to consider whether it is necessary
to establish new rules.
9. Possible Issues to be Discussed are as Follows
18. When there is a state of monopoly, which could impede the protection of trade in electronic
commerce, is it appropriate to deal with the problems within the framework of the WTO?  If so, we
should examine how best to cope.
19. When problems occur regarding the infringement of privacy or intellectual property rights
due to the growing usefulness (easy access and low costs) of Internet for exchanging information, is it
appropriate to deal with it within the framework of the WTO?  If so, we should again examine how
best to cope.
20. Is it necessary to respond to the above issues through some kind of uniform arrangements
among countries?
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