Anthony J. Pennings, PhD


It’s the E-Commerce, Stupid

Posted on | May 7, 2023 | No Comments

The U.S. developed a comparative advantage in Internet e-commerce partly because of its policy stance. It recognized from early on, when it amended the charter of the National Science Foundation to allow commercial traffic, that the Internet had vast economic potential. Consequently, a strategic U.S. policy agenda on e-commerce emerged as a high priority in the mid-1990s.

On July 1, 1997, the Clinton administration held a ceremony in the East Room of the White House to announce their new initiative, A Framework for Global E-Commerce. Essentially it was a hands-off approach to net business to be guided by the following five principles:

– The private sector should lead the development of the Internet and electronic commerce.
– Government should avoid undue restrictions on electronic commerce.
– Where government is needed, its aim should be to support and enforce a predictable, minimalist, consistent and simple legal environment for commerce.
– Governments should recognize the unique qualities of the Internet.
– Electronic commerce over the Internet should be facilitated on a global basis.

Clinton also asked Treasury Secretary, Robert Rubin to prevent “discriminatory taxes on electronic commerce” and the U.S. Trade Representative, Charlene Barshefsky, to petition the World Trade Organization to make the Internet a free-trade zone within the year. On February 19, 1998, the U.S. submitted a proposal to the WTO General Council requesting that bit-based electronic transmissions continued to be spared arduous tariffs.[1]

The WTO adopted the Declaration on Global Electronic Commerce on May 20, 1998. Members agreed to “continue their current practice of not imposing customs duties on electronic transmissions.” They also set out to study the trade-related aspects of global Internet commerce, including the needs of developing countries and related work in other international forums.[2]

Later that year, the OECD held a ministerial meeting on electronic commerce in Canada, where the WTO General Council adopted the Work Program on Electronic Commerce. In addition, the September meeting mandated the WTO’s Council for Trade in Services to examine and report on the treatment of electronic commerce in the GATS legal framework.

The WTO already protected e-commerce from taxation until 2001 by the time of “The Battle for Seattle” ministerial meeting in the state of Washington. But concerns were growing as e-commerce took off during the “dot-com craze” of the late 1990s. Particularly, the E.U. and other trade concerns worried about the unfettered ability of software products to be downloaded. France also attacked Yahoo! because its auction site trafficked in Nazi memorabilia. It got the search company to remove the items and established a precedent for a nation-state to police a website in another country. The WTO produced a definition of e-commerce that suggests some of the difficulties in developing meaningful trade policy.

The WTO defined E-commerce as “the production, advertising, sale, and distribution of products via telecommunications networks.” This extensive characterization has made it challenging to classify e-commerce as falling under the framework of the GATT, GATS, or TRIPs agreements. Each had different parameters that influenced the rollout of e-commerce technologies such as the Internet and Internet Protocol Television (IPTV). Nevertheless, the long-awaited convergence of digital technologies required an overarching multilateral trade framework.


[1] WTO information on e-commerce from Patrick Grady and Kathleen MacMillan’s (1999) Seattle and Beyond: The WTO Millennium Round. Ottawa, Ontario: Global Economics Ltd.
[2] The Geneva Ministerial Declaration on Global Electronic Commerce. Second Session Geneva, 18 and 20 May 1998 at

Citation APA (7th Edition)

Pennings, A.J. (2023, May 7). It’s the E-Commerce, Stupid.



AnthonybwAnthony J. Pennings, PhD is a professor at the Department of Technology and Society, State University of New York, Korea. From 2002-2012 was on the faculty of New York University where he taught comparative political economy, digital economics and traditional macroeconomics. He also taught in Digital Media MBA atSt. Edwards University in Austin, Texas, where he lives when not in the Republic of Korea.


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