E-Commerce, Wto And Developing Countries

In this paper, I discuss the policy issues e-commerce raises for the World TradeOrganization (WTO) and developing countries. I advocate three policy prescriptions.First, it will be most appropriate to classify e-commerce as trade in services withGATS discipline applied to it. Developing countries should ensure that e-commerceis not classified as goods trade with a permanent zero custom duty pact. Such an out-come would liberalize all e-commerce by default, undermining their bargainingpower.Second, at present there is some disagreement about whether international Inter-net transactions should be classified as cross-border trade or consumption abroad. Inmaking their commitments in the UR and post-UR negotiations in services, countriespresumably viewed these transactions as cross-border trade. Therefore, Internettransactions would be best classified as cross-border trade.Finally, developing countries such as India that have the capacity to exportskilled services through Internet should aggressively negotiate market access with de-veloped countries in the future WTO negotiations. This involves negotiations on twofronts. One, they should seek liberalization by developed countries in sectors inwhich they have a comparative advantage. And two, they should seek recognition oftheir education, qualifications, requirements met, or licenses or certificates granted inthe markets of other countries.Electronic commerce offers unprecedented opportunities to both developing anddeveloped countries. In the short run, the gains are likely to be concentrated in devel-oped countries but, in the long run, developing countries have more to benefit. This isbecause, in the short run, developing countries lack the infrastructure necessary totake full advantage of Internet. But in the long run, they can leap frog, skipping someof the stages in the development of information technology through which developedcountries have had to pass.