In 1994, when most of the world's trading nations agreed to create the WTO, they also agreed to begin to liberalize trade in services. What no one fully realized at the time (and not all realize now) is that those decisions placed the WTO in the midst of internet regulation. Much internet content can be reached from anywhere, making nearly everyone on the internet a potential importer or exporter of services (and sometimes goods). Hence, almost by accident, the WTO has put itself in an oversight position for most of the national laws and practices that regulate the internet.
Over the last five years, national governments have begun to impose more controls over the internet - in particular, filters that keep certain forms of applications or content out. The inevitable effect is to create barriers to trade in services. Countries have filtered or blocked internet imports without seeming to think twice about the consistency of such actions under WTO law. More such practices will fall under WTO scrutiny in the years ahead. For the most part, WTO oversight will be invisible. Yet in other areas the influence of the WTO will no doubt help shape the future of international internet transactions - and the internet itself.
In its introduction to problems of trade in internet-based services, this paper focuses on two cases: one a country and one a product. The national study is of China, among the world's more comprehensive internet regulators. China makes for an interesting case because as a condition to accession to the WTO, it agreed to what has been called “radical” reform of its service practices. Yet at the same time China is among the world's more active filterers of internet services. As we shall see, these two positions are in tension, and while WTO law leaves much room for exceptions, some of China's restrictions may not be easily justifiable under the GATS.
The second study is of the company Skype, a provider of voice over Internet services. Skype offers free voice telephone services to anyone with an internet connection. As a consequences, incumbent telephony carriers, often state-owned, have a strong competitive interest in preventing Skype from reaching their customers. The instances of Skype blocking in several countries raise interesting trade in services issues.
This paper is meant for two audiences. For those within the world of trade law it clarifies how internet services have leapt beyond what was contemplated in GATS or subsequent telecommunications agreements. The universalization of a network that is a platform for any type of service requires new thinking about how barriers may come about, and how sectoral commitments are interpreted. For those within the world of telecommunications or internet law, this paper introduces the relevance of WTO law to national regulation of internet services. One of the most interesting consequences may be a tempering of what we might call the "Yahoo! Presumption"; that is, the presumption that the burden lies with internet companies to adapt to national legal systems. While still generally true, the tendency in WTO jurisprudence is to put the burden on national governments to justify internet blocking.