Worldwide: World Trade And Internet Filtering

Last Updated: 24 March 2015
Article by Karan Gandhi and Shweta Vashist

Most Read Contributor in India, September 2016


The advent of the internet as a dominant tool, indispensable to trade, communications and surveillance has enabled new forms of social interaction, activities, and organizing, thanks to its basic features such as widespread usability and access. The expeditious evolution of the internet-based retailing has led to a system of commerce, outside the ambit of the ordinary business regulatory structure resulting in a rapidly accelerating contribution of E-commerce to overseas trade and investment. The emergence of the internet as a worldwide market place has, however led to various challenges. One of the most important challenges faced by countries and businesses is that of Internet Filtering or the control over the content being displayed, exchanged on the World Wide Web.

When one country attempts to regulate the content of a web page, the repercussions could be far-reaching. There have been many instances that have taken place across the world where the act of one nation to filter its web content has affected the other ,,inturn giving rise to variouscontroversies. In one such instance, the United States of America put a ban on online gambling in its country, which triggered an adverse reaction from the countries who were the suppliers of such services. In yet another incident, the incumbent telephone company of Mexico made various attempts to ban the citizen's access to a Voice over IP service (Skype), in the light of increasing competition. Both these examples raise various legal questions about internet filtering, such as their legality, whether they constitute restrictive trade practices and what is the forum that can adjudicate on matters arising out of this process.



With the advent of the internet technology, the World Trade Organisation has found itself in a position where it is central to all the trade related disputes. The logic behind this is that at the time of the creation of the World Trade Organisation, all the member countries agreed to liberalize their economies to promote and ensure free trade amongst the member countries. The striking feature of the internet technology is that it creates a world of trade without any physical barriers, unlike the ordinary trade practices. The controversy arises in regulating the cross-border transactions that take place over the internet. I In such cases that the jurisdictional issue arises. Who would have the jurisdiction to adjudicate on the matter and from what agreement would such an authority derive the jurisdiction to adjudicate the matter? Even if there is a body to regulate such matters, would the decision passed by such a body be binding on the parties at different locations?.

The WTO plays a crucial role when it comes to filtering because the very aim and purpose of the organisation is to provide for a healthy and sound business environment, liberalization of services, by way of market access and national treatment of like products. Now, when a country imposes a filter, other than those for moral , religious or political purposes, then the same is equivalent to imposing a ban or any kind of a restrictive condition on trade and the WTO principles stand against the restrictive trade conditions. The important question here however is that do the principles of Market access and National treatment extend beyond what would be the simple and strict interpretation of the texts of the WTO and apply to the internet an internet filtering as well? If the answer to this question is a yes, then does the WTO system specify any legal limits within which filtering can be allowed or beyond which filtering would violate its fundamental principles?

The General Agreement on Trade in Services focuses on the International Trade of providing various services. The closest the founders of GATS came to internet related technology were the telecommunication services. The founders had not anticipated the gigantic leap in the communication technology, namely the internet. They envisioned the internet as a service in itself, but an ironical situation arose by the transition of the internet a service in itself to the medium through which other services were provided.

The most vital part of the GATS agreement are the market access rules, which aims to remove the disparity between the various exporters of goods and the various disparities between the domestic product or domestic producers and foreign products or foreign producers. B GATS provides a framework wherein each and every country that is a signatory makes certain commitments. These commitments are made in respect of allowing market access to other member countries into their domestic economies. However, this leads to its own set of complexities, since such a policy of free market access and national treatment could come into conflict with the interests of the domestic market of that country. This means that if an act of filtering is kept in the light of domestic norms, it may not be in contradiction to the GATS. However, if seen from the perspective of international trade, such an act may qualify as being violative of the articles of GATS. This complexity can be explained by the help of an example. The U.S.A., in the infamous "gambling conflict", banned the internet based gambling services, while allowing gambling to continue in casinos. In this instant case, the mode of service was filtered. Caribbean countries that were affected by this ban on online gambling referred the issue to the WTO. American representatives argued that such a policy was not discriminatory and did not violate the provisions of the GATS Agreement since it did not discriminate amongst any of the of the exporters of gambling services online, as it imposed a ban equally on all of them. They claimed that there was a total ban on the gambling services carried out online. However, the panel adjudicating the matter came to the decision that the act on the part of the U.S. Government did not constitute a complete ban since it allowed the gambling services in casinos to continue while disallowing the gambling services via the internet. It was held to be in violation of the commitment made by U.S. towards free market access. Even though this decision came under scrutiny, it plays a vital role in the history of international trade politics because this decision is the one and only decision passed by the WTO on the trade related to the internet, while subconsciously passing the sole judgment on internet filtering. The importance of this decision comes from the fact that it confirms that the commitments made by nations to free market access are applicable beyond what may be considered as the technical interpretation. By this judgment, the WTO, through its bench highlighted that the GATS applied to internet based trade as well. The decision came as a much awaited legislation as there was a large amount of ambiguity surrounding e- commerce and the increasing instances of internet filtering.

While struggling to reach a conclusion as to when does the internet filtering actually violate the GATS, the point of consideration will be whether the filter, the ban or any other sort of restriction on the Internet related business are services be allowed under the exception to the GATS commitments, in the light of the interests of the states. In the absence of a comprehensive International Agreement that is passed specifically on internet related trade and services, the burden of proof lies on the nation conducting filtering to provide justifications as to why the filtering was done and to prove to the WTO that the filtering either lies within the exceptions stated in the articles of GATS or that the act of filtering is carried out in such a way that it is not causing any discrimination between nations and is the best interests of the country imposing such a filter, to the extent that the absence of the filter shall cause unjust and irrevocable damages to the country.



China is one of the most interesting models when it comes to internet filtering. It has come under great scrutiny for two reasons: Firstly, because the Chinese government has undertaken one of the most stringent and consequently controversial internet filtering regimes. The irony of the situation is that on the other hand the Chinese government has made relatively extensive commitments to liberalise trade across borders. Despite making such a commitment to free international trade, the Chinese government has indulged in what some may describe as the heavy-duty regulation of the internet. This stand of the Chinese government which is inconsistent with its action gives way to an extensive debate about the effectiveness of the World Trade Organisation and GATS.

In its sectoral commitments, China aims to liberalise "wholesale or retail trade services away from a fixed location2. A direct interpretation would indicate that it includes overseas online trade. This creates further confusion as to whether the term "fixed location" includes companies like e-bay. Now if China puts any sort of restraint on the online delivery of services, then it would be considered to be a clear violation of Article XI of GATT. Article XI the "General Elimination of Quantitative Restrictions" states that: "No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licenses or other measures, shall be instituted or maintained by any contracting party on the importation of any product of the territory of any other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party3."

This means that if the above assumption is applied, then a bar or any kind of filtering of the online trade providing services would stand as violation to GATS and GATT. However, this does not simple end here. The fear of most international companies is that what if such censorship is exercised by the use of the exceptions provided under the GATS framework, such as the maintenance of public order with a hidden inanition to implement a protectionist measure. In 2014 itself, the Chinese government imposed a ban on Google. The users informed the media that when they made attempts to access the search engine, they were re-directed to the Hong-Kong version of Google. If sources are to be believed, then this was an advent of the pro-democracy outrage and demands by the citizens at Tiananmen Square. The Chinese government, by its governance policy imposes stringent measures on any ant-communist or pro-democracy movement, and this was one more such move on the part of the Chinese government.

Keeping in mind the above example, the Chinese government undertakes internet filtering as a very serious task. The irony of the situation is that both GATS and GATT are no more than mere agreements and the Chinese government can, at any point in time declare that it would not abide this agreement. These are not stringent legislations, non-adherence to which would invite punishments, which is why their implementation becomes questionable. Thus, it has become easy for China to circumvent the principles of GATS in its own favour, like it has been doing for a while now. Hence, it can be concluded that even though violations to the GATS such as internet filtering remain unquestioned now, but with the speed at which the internet and e-commerce is growing, this problem will have to be addressed by WTO in the near future.


Skype is a kind of a Voice over IP, which makes use of the internet instead of traditional routes of calling such as phone lines, to provide telephonic and video graphic services from one corner of the world to the other. This service has gained immense popularity across the world because it makes international calling convenient with minimal calling costs. Since this technology does not use the general phone lines to connect individuals globally, but instead it makes use of the internet, these costs are reduced drastically. This makes communication through Skype and similar Voice over IP applications used widely throughout nations, especially when it comes to international calling. The business generated by the Voice Over IP giant, Skype is claimed to be valued at $ 2.6 billion. The issue that now arises in regard to such a technology is that domestic telecommunication companies have begun to feel their presence due to the loss of revenue. International calling has always been a great source of revenue for these companies. However, with the advent of Voice Over IP applications such as Skype, there has been a drastic decrease in their business, giving them the incentive to resort to practices such a self-initiated filtering or coercion on the government to impose a filter on such applications. The best example of such an incident lies with China. A set of individuals, prior to the accession of China to the WTO in 1997 had allowed the public to make use of an American website to make international calls in their shop at a much cheaper rate as compared to the ordinary price of internet calling. In line with the pressure by the incumbent phone company, the Chinese police raided the shop and shut the business run by these individuals down. The court however, passed an order in favour of the businessmen on the grounds that there was no specific law that deemed the business practice that they carried outs illegal and illegitimate.

In an international controversy, Skype had been blocked from the internet by the company of Mexico, Telemex. A large number of immigrants flocked from Mexico to the United States of America for employment, hence making long distance immensely popular in the country. The introduction of Skype in the country meant huge losses for Telemex. Hence, it made various attempts to prevent the citizens of Mexico from accessing the web page of Skype. These frugal attempts to block and take down this Voice over IP service was driven with the intention to curb the competition it created in the domestic market. While this anticompetition practice may seem like an isolated incident, it is indeed not. Many such cases have been reported in the International domain. The blocking of various Voice over IP services has not just been restricted to China and Mexico. A Similar incident has been reported in Qatar in 2005. It is also pertinent to not the Voice over IP is altogether "illegal" in Cuba. These incidents highlight the deeper issue as to whether such acts of internet filtering would amount to a restrictive trade practice.

The answer to this controversy may lie in the 1998 Agreement on Basic Telecom Services. The main intention of this Agreement was to place a regulation on the domestic telecom giants on using any anticompetitive activities against the international or multi-national companies. If interpreted in a liberal way, this agreement should ideally apply to internet based services as well and should include the Voice Over IP technology. Since the intention of the incumbent companies, in both the cases mentioned above was to eliminate competition, it should ideologically be regulated under the GATS.


The internet today is expanding at an exuberant pace and so is the international trade which is carried out, by the use of the internet as a medium. The consequence of this expansion of global trade without barriers has given rise to various controversies and has raised vital questions on the legal aspects of e-commerce taking place around the world. The main problem that arises in the current scenario is that of interpretation. Since the World Trade Organization is the primary body for the facilitation of international trade, in the absence of any alternative agreement that deals specifically with the world trade on the internet, it is expected to regulate the internet related trade disputes as well. The issue of interpretation crops up in such a situation because at the time of the formation of the WTO and its subsequent agreements related to trade such as the GATT and GATS, the founders did not envision such a gigantic boom in the internet technology and nor did they anticipate the effect it would have on world trade and the politics surrounding it. There are various crucial questions that arise in this regard. The first is whether the texts of these agreements like GATS and GATT should be applied to the world trade of the internet at all, since they were not meant to apply to the trade in goods and services carried out by the medium of the internet, when they were drafted. The second question is that even if the WTO decides to undertake the responsibility to regulate the internet trade, would it fall under the ambit of GATT of GATS. The last and the most fundamental question on is the to what extent is control and regulation of the internet services by the government of a nation justified and when so such regulations take the shape of a barrier to international trade.

While these questions continue to be unanswered, the decision given by the panel appointed by the WTO in the U.S.A. Gambling matter put the world in a predicament. This decision given by the WTO in respect of online gambling can be used to come to an inference that in an indirect way, the WTO has confirmed the view that the legal texts of GATS and GATT would apply to internet related disputes as well. However, even if these texts are applied to the internet based international trade, then the enforceability would raise issues, since any nation can at any point declare that it would not honor the commitments made by it to the WTO. The only way of ensuring the enforcement is by way of economic coercion. What ads to the global controversy on internet filtering is the extensive level at which China carries out internet regulation despite the specific commitments made by it to liberalize trade in services. Hence, even though these activities on the part of the Chinese government have not been challenged so far, keeping in mind the changing global scenario, it would definitely be obligated to justify internet filtering carried out by it in the upcoming years.

The absence of an international agreement has nurtured major ambiguity and has been the root cause of a number of international controversies. The formation and execution of such a regulatory mechanism that may take the form of an international treaty, convention or an agreement, has been pending for a long time now. Keeping in mind the rapidly accelerating growth rate of internet trade globally, these challenges will only grow in the upcoming future. In the light of the above, we would like to conclude by suggesting that initiative should be taken on an international platform to formulate a global policy that not only regulates the trade on the internet, but aims to achieve such a scenario in the internet market place of the world that nurtures and facilitates free trade.


1. Vth Year Student, University School of Law and Legal Studies, GGSIP University

2. China's Sectoral Commitments , as provided by the WTO ,available online at

3. ; accessed on 1 December, 2014

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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