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Microsoft Urges Duty-Free Cyberspace On WTO

28 November 1999

The world's biggest software maker Microsoft has urged the World Trade Organization (WTO) to make cyberspace a permanently duty-free zone when it meets next week for talks in Seattle.

Presenting a paper on electronic issues and world trade at a press conference in Brussels last week, the chairman of Microsoft Europe, Middle East and Africa, Bernard Vergnes made Microsoft's position clear: "We believe if possible in Seattle WTO members should agree that customs duties will not be applied to electronic transmissions on the Internet.''

The Microsoft paper focuses on preventing trade barriers in electronic commerce using a light-handed regulatory approach. It estimates that e-commerce revenue is expected to increase globally to somewhere between $350 and $500 billion and will make-up 5.0 to 9.4 percent of global sales revenue by 2002.

The two key principles espoused in the Microsoft paper are that e-commerce must not be subject to more rigid rules than those applicable to traditional commerce, and that any WTO agreement reached should be technologically neutral by not favouring or tying itself to any particular type of technology. In 1998 the WTO introduced a temporary ban on applying duties to electronically transmitted products such as music, software and digital books. Although the US government has said that it wants this ban made permanent at the Seattle round of talks, there is significant opposition to agreeing to such a final statement, particularly from developing countries.

Mr Vergnes said developing countries "probably don't understand fully the benefits they could get from a very open and very free e-commerce environment and are taking a stand of opposing that moratorium". Mr Vergnes also voiced Microsoft's opposition to the EU's proposal for re-classifying electronically delivered merchanise, including software, as services.

"It would be sort of stupid to see the same product classified differently whether it's delivered on a CD for example or delivered electronically. It's the same product -- we believe it should be treated equally and as goods,'' he said.

Unfortunately, like all governments, the EU is often 'sort of stupid'.


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