E-commerce, WTO and developing countries

The increasing use of Internet gives rise to important policy issues relating to both multilateral rules of international trade and national economic policy. At the multilateral level, the members of the World Trade Organisation (WTO) must decide whether the General Agreement on Tariffs and Trade (GATT) or General Agreement on Trade in Services (GATS) should be applied to international trade on Internet. Or, will the member countries' interests be best served by an entirely separate discipline in this area? If Internet commerce is treated as a service, should it be considered cross-border trade or consumption abroad? And how can market access for the member countries be improved in this important area? At the national level, countries must decide which policies will best improve the provision of Internet services and facilitate trade through this medium. The developing countries interested in promoting this medium may have to speed up their efforts to build the telecommunications industry and to create financial infrastructure necessary for electronic transactions' (for example, credit cards). They may also find it necessary to relax the rules governing direct foreign investment. Countries such as India, that have a large potential to export services electronically, may find it beneficial to actively negotiate trade liberalisation in services with developed countries. In the present paper, I discuss these multilateral and national aspects of e-commerce. A key distinguishing feature of the paper is its focus on developing countries. In Sections 2-4, I offer an analytic discussion of the issues relating to multilateral rules applicable to Internet commerce. In Section 5, I focus on the implications of e-commerce for developing countries and discuss possible policy measures the countries may wish to take to maximise the benefits from it. I conclude the paper in Section 6.