More importantly for the first time the use of the Internet in commerceallows for the trade in skilled labour without resulting in the movement ofpeople, as domestic requirements of products of skilled labour can be metoffshore, for example by countries with strong technical manpower resourceslike India.

A core issue relating to e-commerce is the application of GATT and GATSrules to it. This is a crucial question because it determines to what extentcountries can independently regulate any trade done via the Internet. Thisin turn will determine to what extent this particular form of trade can betaxed. The question is whether or not trade on the Internet can beclassified as goods and services. Determining this will determine whether ornot GATT or GATS or a combination of the two agreements will apply. Howeverthe difficulty will arise only when these goods are delivered over theInternet. In that case it has to be established as to which multilateralagreement will be applicable.

It could be argued that deliveries over the Internet should be treated asservices and that GATS should apply. But the counter argument is that whathappens in cases where the deliveries over the Internet have correspondinggoods being delivered in physical form and consequently GATT rules apply tothose goods. Can it be possible that the same goods can be treated under twodifferent set of rules due to two different methods of delivery of the samegood?

A train of thought seems to suggest that if the GATT rules are enforced inthis case then the agreement of member states to dismantle tariff barrierswill be beneficial to the Internet trade. The benefits will primary come inthe form of a complete absence of discriminatory domestic tariffs. Customsduties will anyway be brought to zero; thus giving a boost to trade. Howeverthe consensus in the last round of trade negotiations has been the positionthat this nature of trade will fall under the category of services ratherthan goods and will be taxed accordingly. In the latter case there could becases of discriminatory taxation. One extreme view put forward recently hasbeen to abandon both and come up with an entirely new position of governingInternet trade by evolving a new mechanism independent of both GATT andGATS.

However, it has been found that Internet service providers already arecovered under GATS rules while trade done on the net have correspondingtrades done in physical form, either goods or services and hence the rulesrequire to govern these kind of transmissions can be found in both GATT andGATS. It must however be mentioned that no country so far has levied anycustom duties on e-commerce.

India would be prime beneficiary if the management of e-commerce is broughtunder the GATT since Indian software exports are growing exponentially and acustom free zone would only enhance India's position in this regard. India'ssoftware exports are currently valued at over $4 billion. India's imports inthe digitised form, account for barely one per cent of imports therefore itwill not be harmful to Indian's interests at all. While India hasconsiderable strengths in software exports it has yet to develop thesestrengths in content creation, which is the strength of companies in the USand Europe.

In addition India has only a small fraction of Internet users of just half amillion out of the estimated 147 million users worldwide. This is a smallnumber as compared to the Internet population of the US which comprises alarge chunk of total Internet users. Hence India's proportion of e-trade isminuscule compared to the developed nations which account for about 92 percent of e-trade volumes.

While the question of applicability of rules is the critical component ofnegotiations as far as India is concerned; there are other equally crucialpoints for negotiations that needs to be pushed as India's agenda. Forexample domain name management is dominated by American companies andorganisations. The National Science Foundation (NSF) and the DefenseAdvanced Research Project Agency (DARPA) both of the US, control theregistration of domain names. Network Solutions Inc, a Virginia-basedcompany acts as the sole registry for Generic Top Level Domains (such as.com, .org or .net).

In addition to this there is the question of the possibility of trademarkinfringement of .com domain names. The control of trademark laws lie vestedwith national governments while the domain names are being allotted by USprivate companies which could come into conflict with existing trademarks.There are other issues that need to be considered such as the creation andimplementation of e-commerce laws (especially permitting use of digitalsignatures). These laws will also include circumventing problems such as theappropriate jurisdiction in respect of enforcing intellectual propertyrights (IPRs), considering the cross-border nature of transactions. Also thequestion that will need to be addressed is, what kind of remedies will beavailable in case of infringement of IPRs.

The legal aspects should also deal with ensuring that communications acrossthe net are safe from unauthorised access or modification. Protection ofprivacy is also of paramount importance and will have to addressed. Butcountries like India must also realise that successful negotiations puttingit in a favourable position is not the end of the matter. For any degree ofsuccess in e-commerce it is crucial that the supporting infrastructure suchas quality and adequacy of power and telecom services are adequate.