April 9, 2001
Original: English - Spanish
FTAA - JOINT GOVERNMENT-PRIVATE SECTOR COMITTEE OF
SECOND REPORT WITH RECOMMENDATIONS TO MINISTERS
Chair: Ramiro Soto Platero, Uruguay
Vice-Chair: Richard Simpson, Canada
November 22, 2000
The FTAA Joint Government Private Sector Committee of Experts on
Electronic Commerce (“the Joint Committee”) was established by the Western
Hemisphere Trade Ministers in the San Jose Ministerial Declaration of
March 1998, which was endorsed by Heads of State within the Santiago
Summit Declaration of April 1998. The Trade Negotiations Committee
directed the Joint Committee to “make recommendations to ministers on how
to increase and broaden the benefits of electronic commerce and, in
particular, how electronic commerce should be dealt with in the context of
the FTAA negotiations.”
Participation in the Joint Committee is open to all FTAA governments.
Private sector representatives with expertise in the issues under
discussion have also been invited by government representatives to attend
the Joint Committee’s meetings.
During its first mandate, the Joint Committee held five meetings with
broad participation averaging 20 countries and produced a “Report with
Recommendations” to the Ministers in the autumn of 1999. In the Toronto
Ministerial Declaration, the FTAA Trade Ministers thanked the Joint
Committee for its report and asked that the Joint Committee continue to
meet as a non-negotiating group over the following eighteen months with
the focus of work being the development of recommendations in compliance
with the Joint Committee’s mandate in time for the next meeting of the
FTAA Trade Ministers.
During the year, the Joint Committee, under the leadership of the Chair,
Ramiro Soto Platero, representative of the Uruguayan private sector, and
the Vice-Chair, Mr. Richard Simpson from Canada, has held four meetings,
under the work program established at the beginning of the year 2000,
which contemplated presentations and discussions on access and
infrastructure, small and medium sized enterprises, on-line payment
systems, authentication and certification, and other information issues
(intellectual property, taxation, consumer protection, online content
These issues were addressed through the presentation of national
experiences and best practices as well as discussions of relevant
cross-border aspects. The valuable contributions made by the Tripartite
Committee were appreciated by the experts as the work of the Committee
The meetings of the Joint Committee on electronic commerce have been both
effective and welcome in ensuring discussion amongst all of the countries
of the FTAA area. The Joint Committee is able to play the useful role of
(a) facilitating the sharing of information among countries on their
domestic approaches to electronic commerce and (b) providing advice on the
international aspects of these issues, including their implications for
trade policies. In this respect, the Joint Committee’s work has revealed a
number of areas where governments need to ensure compatibility of domestic
laws, policies, rules and standards across jurisdictions, some of which
may relate to the conduct of the FTAA negotiations.
2. The Development of Electronic Commerce
1.1. Overview of Electronic Commerce in the Hemisphere
Electronic commerce maintained its growth trend in 2000, both globally and
throughout the Hemisphere. Constant technological innovation with respect
to Internet access has aided in the expansion of on-line trade, thus
enabling larger segments of the population to have the possibility to
share in the benefits of on-line commercial transactions and enabling
companies – including small and medium sized enterprises – to become part
of the process, with an attendant increase in competitiveness and scale.
The available indicators show that the greatest impetus to the growth and
development of electronic commerce is taking place in the
business-to-business sector (B2B). As part of this process, and in
relation to the international marketing of goods and services, advances
are being made in at least two respects:
a) Through the adoption of electronic commerce as a tool for enterprises
to market goods and services on the international market, by putting into
service web sites/ electronic sites designed for that purpose such as
“vertical markets” or “business community” type structures.
b) Through the development of technology platforms such as the Internet,
which make it possible to address operational aspects of the international
marketing of goods and services by digitizing the procedures and
During its work over the past year, the Joint Committee has noticed a
number of positive trends in e-commerce in Latin America, the Caribbean
and North America: a large increase in access to information technologies
by people of many countries; substantial growth in local language Internet
content; development of entirely new industries, with substantial positive
employment impacts; increased availability of risk capital to support the
realization of the dreams of new entrepreneurs; and technological
developments which may accelerate broader access to the benefits of
business-to-consumer (B2C) and business-to-business (B2B) e-commerce.
Despite these positive trends, which reflect in part the effects of
successful government policies and private actions, much more work needs
to be done.
Latin America and the Caribbean have high rates of growth in the number of
Internet users, and are increasing their share in the global electronic
market. A great disparity still exists in the Hemisphere in terms of
access to the global network, as well as a significant asymmetry in the
volume and value of electronic commerce in the Americas. Thus, different
levels of technological development, if not an obstacle, remain a major
challenge to the achievement of an equal sharing of the benefits
throughout the Hemisphere through the balanced expansion of electronic
commerce. Overcoming the different levels of technological development
should be among the priorities of the countries of the Hemisphere,
particularly when electronic commerce is being discussed. In this
exercise, collaboration among all the sectors involved, both public and
private, will be of great relevance in terms of investments and support
for dynamic technological innovation.
Despite continued and sustained growth in electronic commerce, the
Hemisphere will have to face the challenges that lie ahead in this field,
mainly by creating the social and economic conditions necessary for
information technology to contribute towards overcoming income
disparities, employment, education and development within and among the
countries of the Hemisphere.
The countries of the region have made efforts to boost and facilitate
access to information technologies and have sought to create a regulatory
framework commensurate with their domestic needs and conducive to the
development of electronic commerce on a non-discriminatory basis. The
countries of the region must persevere in stimulating information
technology development, and encouraging the participation of a greater
number of people in the benefits flowing from such technologies, including
through electronic commerce.
The Internet and electronic commerce represent significant social and
economic potential for all countries of the Western Hemisphere. Dynamic
national strategies to develop infrastructure, to enhance access, to
increase participation in the Internet economy especially for SMEs, and to
create the legal foundations for online payments, electronic signatures
and certification are critical for the development of e-commerce across
the Americas. At the same time, since e-commerce is inherently borderless
and global in scope, measures to enable and promote domestic growth must
also be contemplated to allow the effective conduct of e-commerce between
Governments also have important roles to play with respect to these
issues, whether within their own countries and/or globally, which entails
cooperation, information dissemination and promotion activities.
1) Access and Infrastructure
Challenges and Opportunities
At its most fundamental level the growth of electronic commerce is
grounded in creating the right conditions for telecommunications and
Internet growth. The Joint Committee’s meetings this year began with the
issues surrounding the development of and access to advanced
telecommunications technologies since the precondition to the realization
of the social and economic potential of e-commerce and the Internet must
clearly be the possession of an adequate and affordable telecommunications
infrastructure. In fact, the Joint Committee’s discussion of access and
infrastructure reflected the concern that all of the countries of the
Western Hemisphere, and all citizens and regions within each country,
should have the opportunity to participate. While the number of Internet
users in the hemisphere is growing rapidly there are still segments of the
population that do not have ready access to the telecommunications
infrastructure and, therefore, to the Internet. The challenge for each
individual government is how to encourage the development of a vibrant,
high-quality, low-cost telecommunications infrastructure which all
citizens have the opportunity to access.
FTAA countries have recognized the importance of expanding access to the
Internet for purposes of economic growth and development. Several
• their positive experiences in introducing competition and in
progressively liberalizing their telecommunications markets;
• competition in telecommunications markets, including local telephone
service, has had a positive effect on investment in the sector, on
development of infrastructure, increased innovation, higher penetration
rates and lower prices for consumers of telecommunications services;
• these trends demonstrate that policies which encourage competition in
telecommunications have stimulated Internet usage, local content
development, and e-commerce - which in turn stimulate further investment
in the e-commerce infrastructure;
• lower per-minute cost or (especially) flat-rate prices for local service
significantly increase both the number of individuals on-line and the time
each user spends on-line;
• robust competition in information technology markets is driving down the
cost of equipment used to access and operate the Internet;
• several countries have sought to make it cheaper to get and stay
• several governments are taking steps to reduce the cost of leased lines
used to connect to the Internet backbone by allowing competition, and/or
by regulating prices set by dominant operators.
In addition to physical networks, an electronic commerce transaction
depends on a wide array of enabling factors sometimes called the
“electronic commerce value-chain.” Consequently, the widespread growth of
electronic commerce as a means of doing business depends on the existence
and accessibility of a range of goods, services and procedures, such as
telecommunications services, electronic payment systems, transportation
and distribution systems, as well as legal or regulatory factors such as
the enforceability of electronic contracts and efficient customs clearance
Access also relies on the existence of adequate levels of digital literacy
since the knowledge, skills and familiarity of citizens with computer
technologies will determine their ability to take advantage of electronic
commerce. Measures to expand digital literacy throughout the population
will not only increase the overall growth of e-commerce but also tend to
assure a more even distribution of its benefits within society. A number
of FTAA countries have therefore placed high priority on computer
awareness, education and training as a means of promoting access to the
networks and technologies related to e-commerce.
Building on recommendations from the Joint Committee’s First Report to
Ministers, FTAA Governments should:
• Promote vibrant and fair competition:
• Maintain an independent, effective, fair and transparent oversight body.
- At the different levels of telecommunications services (that could be
suppliers of telecommunications and computing hardware, telecommunications
carriers, telecommunications resellers, and associated services suppliers
such as e-commerce services suppliers).
- Among telecommunications services provided through all types of
technological means (including wireline, wireless, cable, and satellite
- In the allocation of fundamental resources such as spectrum and
- Through the oversight of domestic competition authorities or
communications regulators to ensure that no anti-competitive conditions
The national regulator is critical in setting the tone for the
telecommunications market and will be key in providing regulatory
certainty, ensuring non-discriminatory treatment of market participants
(both domestic and foreign), and in preventing anti-competitive behavior.
In turn, this healthy environment will provide the certainty required to
attract the large investments required for infrastructure development.
• Allow the marketplace to decide how to expand the availability of
data-capable infrastructure (wireline, wireless, cable, satellite, etc.)
able to support electronic commerce applications. As technological
platforms that have been different historically converge to a similar set
of capabilities, FTAA governments should promote competition across
communications platforms through technology-neutral regulations.
• While recognizing the possibility that governments might need to
regulate for legitimate public policy objectives, there is great value in
allowing the free development of Internet services to continue by avoiding
the imposition of regulations that might impede its development.
• Establish regulatory regimes that permit a broad range of pricing
strategies, including unmetered rates, for services used to access the
Internet and adopt cost-based approaches to interconnection pricing.
• Ensure that all information service providers have access to facilities,
networks, and network services, including access to the local loop, on a
nondiscriminatory and cost-based basis.
• Take steps to facilitate efficient testing and certification procedures
for IT products.
• Seek to provide access and affordable service to all members of society:
- Administer Universal Service programs for basic telephone service in a
transparent, nondiscriminatory, and competitively neutral manner, so as to
be no more burdensome than necessary.
- Place governmental information and services online, in order to provide
them more efficiently and effectively, and to increase the uptake of
information technologies by business and citizens.
- Maximize efforts to bring voice and data services to under-served
populations, by coordinating efforts from all social sectors involved.
• Take steps to improve e-commerce fulfillment, including implementation
of the business facilitation measures for express shipments agreed to at
the Toronto Ministerial.
• Pursue efforts to develop a clear, predictable, nondiscriminatory,
stable yet flexible legal and regulatory framework, which is conducive to
the expansion of access to information and telecommunication technologies.
• With the support and collaboration of the public and private sector,
place a high priority on computer awareness, education, and training as a
means of promoting access to the networks and technologies related to
2) Small and Medium-Sized Enterprises
Challenges and Opportunities
Small and medium sized enterprises are an important part of a national
economy and countries in the hemisphere greatly benefit from the
creativity and entrepreneurship that come from small business. Exciting
opportunities exist for SMEs in the uptake of electronic commerce. Both
research studies and business experience indicate that the adoption of
electronic commerce will enable SMEs to continue to lead in the
development of jobs and growth across the FTAA, to create new forms of
commerce and to improve the standard of living in individual
jurisdictions. In many ways, SMEs are in a strong position to take
advantage of the opportunities offered by the Internet and e-commerce.
They tend to be more flexible, adaptable and quick to respond to new
technologies and market opportunities as they lack the management layers
and bureaucracies that encumber decision-making. Many SMEs recognize the
Internet as a valuable means to promote their product, establish a
corporate presence on the Web and provide customer service.
Although the Internet vastly expands the potential market available to
SMEs, the challenges of electronic commerce are more acute for SMEs than
for larger business enterprises. SMEs' limited resources make them more
vulnerable to fraud and failure and often more reluctant to take on the
risks associated with new ventures such as e-commerce. Another challenge
facing SMEs' participation in e-commerce is the shortage of trained
technical workers who can effectively manage the changing technology and
fully tap opportunities to increase efficiency, lower supply costs, and
reach new markets. SMEs may be less able to devote resources to attracting
and retaining technically qualified workers.
Both the private sector and the government, jointly and separately, can
assist with policies and programs to help solve the problems of SMEs.
Several FTAA governments have developed programs that reach out to SMEs to
provide tools and training to enable them to take advantage of e-commerce
to increase their sales through exporting and to manage their business
more efficiently. Governments in the region are striving to make their
programs, products and services available through the Internet. Specific
efforts in some countries have included the use of virtual trade shows,
software toolkits, training programs, and web-based counseling and
The private sector - often SMEs themselves - are offering services to
companies who wish to trade on the Internet but lack the technological
know-how or the manpower to do so. Services assist firms to go online and
develop and integrate e-commerce solutions for all of their business
operations. Support to SMEs is also available to develop guidelines for
advertising, marketing, contracting and resolving complaints, which is
particularly important in assisting SMEs to attract and retain satisfied
customers in the electronic marketplace. Efforts are also underway to
create portals, business-to-business exchanges, procurement networks, and
other tools to promote exporting over the Internet, in relation to which,
private-public sector partnerships are also developing in some countries.
Finally, self-assessment tools are becoming available to assist SMEs to
evaluate their e-commerce readiness and to identify their needs and
Throughout the Western Hemisphere, SMEs represent the vast bulk of
enterprises. As such, steps to promote and support their efforts to engage
in e-commerce will reap substantial benefit for the region. Building on
recommendations from the Joint Committee’s First Report to Ministers, FTAA
• Encourage SMEs to familiarize themselves with available electronic
commerce tools, by undertaking activities to disseminate information on
options, opportunities and challenges and to promote the use of electronic
commerce and telecommunication technologies, in order to improve
participation in international markets.
• Continue to cooperate with and encourage the private sector to offer
educational opportunities via the Internet and to disseminate information
on the advantages and benefits of using new technologies to conduct
commercial transactions and to improve overall efficiency and productivity
by integrating electronic commerce into business operations.
• Support cooperation and promote efforts by local business organizations
and small and medium sized enterprises to develop sites where SMEs can
network, post information, and exchange ideas about best practices and
lessons learned, in order to facilitate investment, job creation,
increased competitiveness, and the use of more advanced technologies.
• Support the search for solutions to the obstacles faced by SMEs in fully
utilizing electronic commerce, encouraging companies that provide
electronic commerce business services to develop products tailored to the
needs of SMEs and to cooperate with these companies to develop and promote
SME export portals, affordable and secure payment systems, SME training
programs, and regional technical centers.
• Continue national efforts to make government products and services
available via the Internet, helping SMEs to build their Internet skills.
3) Online Payment Systems
Challenges and Opportunities
The availability of effective electronic payment systems is a significant
element of electronic commerce, enabling wholesale and retail businesses
to move their business-to-business (B2B) and business-to-consumer (B2C)
marketing and sales onto the web with minimal concerns about completing
the financial portion of the transaction. However, the on-line environment
presents challenges related to fraud, security risks, consumer protection
and privacy protection that should be adequately addressed. In addition,
the cross-border supply of payment services raises issues about the
standards and roles applicable to domestic payment systems and their
interoperability with foreign systems, and about the level of consumer
protection available for consumers who make use of foreign payment
The Americas could benefit from participation in the burgeoning electronic
payments markets associated with e-commerce. Yet, today, payment systems
based on credit cards are widely perceived to be inadequate as credit
cards are unavailable for many potential e-commerce consumers in the
region and relatively expensive for small and medium-sized enterprises
(SMEs), including retailers. Many have identified these issues as
contributing to the relatively slow entrance by existing bricks-and-mortar
retailers into e-commerce in the Americas and to the relatively low levels
of consumer purchases on the Internet.
New technologies for payment are underway in the region that should help
address these problems for both business and consumers. For B2C
e-commerce, and some SME applications, banks and other companies are
creating novel approaches to supplement traditional methods. These include
e-commerce charges and payments incorporated into existing utility bills;
taking advantage of existing credit relationships, use of debit cards, new
payment technologies such as bar code scanning, smart cards, electronic
wallets and cellular telephones; deployment of new security technologies
and prepaid cards with small amounts of purchasing power for citizens who
lack access to traditional credit. But there is more work to be done by
FTAA Governments and the private sector.
The continued growth in electronic commerce depends significantly upon the
development of an efficient and secure cross-border financial services
infrastructure. FTAA Governments, the financial sector and retailers need
to look at payment systems used to support e-commerce in the Americas if
they are to accelerate the growth of e-commerce and broaden its benefits
for the region's citizens.
As the relationships between financial institutions and their online
business customers become increasingly complex and interdependent the
ability of financial institutions to meet their customers' investment,
cash management and foreign exchange needs as part of online payment
support services will be critical to the customer's ability to compete in
The private sector is responding quickly to develop electronic payment
solutions to enable e-commerce. To encourage innovation and confidence in
the development of effective and secure payment systems, FTAA Governments
• Work cooperatively among themselves, and with the private sector, as
electronic payment systems develop, in order to keep apprised of policy
implications and to ensure that governmental activities flexibly
accommodate the needs of the emerging marketplace.
• Build on the existing work of governments, the private sector, and
international organizations to improve information sharing and cooperation
in combating security threats to payments systems, cross-border fraud,
illicit financial transactions, and threats to the integrity of the
• Examine, with the private sector, online payment systems, with a view to
removing possible obstacles to the deployment of alternative online
payment methods, thereby accelerating participation in B2B e-commerce,
especially by SMEs, and fostering efforts to provide greater access to
innovative technologies for Internet purchases by consumers and SMEs
without traditional access to credit.
• Develop policies in conjunction with the private sector that foster
flexible, innovative approaches in the development of alternative payment
mechanisms. Efforts should be directed at improving the efficiency and
lowering the costs while ensuring the security of cross-border payments
• Cooperate with the private sector, including chambers of commerce,
banking and retail associations, and universities to educate SMEs and
retailers about effective e-commerce models in the region and payment
• Stimulate efforts by the financial and retail sectors to develop and
identify for the public websites utilizing secure payment technologies and
practices and respecting consumer privacy, and cooperate with the private
sector to educate consumers and business and provide them with the
information they need to decide whether and how to participate confidently
• Encourage banks, payment card companies and retailers to work to achieve
an appropriate sharing of risk and costs among themselves to promote
broader participation in e-commerce by the region’s retailers, SMEs, and
financial institutions, while protecting consumers from unreasonable
liability for fraudulent and unauthorized electronic payment transactions.
• Support policies and procedures designed to promote transparency in the
regulation of payments systems, including standard-setting, the
application process, and judicial, arbitral, and/or administrative review.
4) Certification and Authentication
Challenges and Opportunities
In the electronic world, where parties do not have face-to-face contact
and may not know each other even by reputation, authentication
technologies help identify the parties and provide means by which they can
reliably sign documents, assent to transactions, and verify documents'
integrity. As such, they play an important role in building user
confidence in e-commerce.
But technology is not sufficient in and of itself. The development of
electronic commerce requires legal recognition, functional equivalence and
non-discrimination as regards electronic signatures, as well as
technological neutrality in order to avoid locking consumers and
businesses into one technology that may not suit their needs and erecting
artificial barriers to the development of new technologies.
For their part, companies are increasingly employing authentication
methods in electronic markets through closed systems. A closed system is
established by a voluntary agreement under private law in which
participants specify in advance how they will conduct business, including
what method of logging on to the system and signing they will use. Through
closed systems, participants may access information, utilize services, and
engage in transactions. Many closed systems employ electronic agents,
computer programs that initiate or respond to messages on behalf of an
entity or individual without contemporaneous human participation.
In closed systems, mutual trust has already been established between the
parties through their agreement. Thus, these agreements can be relied upon
to govern the system, provided that the legal rules for e-commerce
recognize and enforce private law agreements with respect to
authentication methods and other operational aspects of closed systems,
including the use of electronic agents. Closed systems constitute the
backbone of B2B e-commerce.
FTAA countries have a range of views as to the appropriate role of
government in regulating the activities of certification authorities
(CAs). However, there is agreement that competition and non-discrimination
are important principles in the provision of certification services.
Various national approaches to the establishment and governance of
certification authorities and their activities can co-exist. These
approaches may include varying elements of industry self-regulation and/or
governmental regulation. In order to facilitate electronic commerce,
however, it is important that these varying approaches be made compatible
with each other.
Building on recommendations from the Joint Committee’s First Report to
Ministers, FTAA Governments should:
• Take steps to identify and remove legal barriers that hinder the
recognition of electronic transactions, including recognizing the legal
validity of electronic signatures and documents, taking into consideration
the enabling provisions of the 1996 UNCITRAL Model Law on Electronic
• Make efforts to ensure that their electronic signature legislation is
• Ensure the legal validity of electronic records and evidence for use in
court and other official proceedings, independently of the authentication
and certification technology used.
• Afford parties to a B2B transaction the freedom to determine by private
law agreement the appropriate technological and business methods of
authentication and give the parties’ agreement legal effect, including
possible means for resolving disputes, without prejudice to applicable
• Recognize the importance that the private sector must play in the
development and deployment of authentication and certification
technologies, and promote the participation of all relevant social sectors
in the process of formulation of policies and laws in this area.
• Make efforts to ensure that laws and regulations do not discriminate
against electronic authentication methods, or against national or foreign
providers of authentication services, and do not erect barriers to the
provision of authentication services by any of them.
• Work with the private sector to encourage the development and deployment
of authentication systems that provide adequate protection against fraud
and identity theft, are consistent with respecting individuals' personal
privacy, and do not impede use by creating barriers.
In addition to the above subjects, the Joint Committee also noted the
importance of other issues in relation to the development of electronic
commerce, such as consumer protection and the protection of intellectual
property online. Although not examined in detail, the Committee believes
that such issues warrant further attention from governments within the
context of the FTAA.
5) Consumer Protection
Challenges and Opportunities
Increasing competition in the global electronic marketplace offers
consumers new and substantial benefits, including convenience, access to a
wider range of goods and services and the ability to gather and compare
information online, resulting in the possibility of obtaining reduced
transaction costs, and better prices, quality and service. These benefits
cannot be fully realized, however, without consumer confidence in domestic
and international e-commerce. The key elements for building consumer
confidence in electronic commerce include: protection from fraud and from
misleading and unfair conduct and commercial practices; respect for
consumer privacy; private sector initiatives; global cooperation; consumer
and business education, and effective means of dispute resolution.
Consumer protection agencies around the world have begun to address the
increased need to cooperate in efforts to combat fraudulent, deceptive,
and unfair practices on-line. This cooperation has included the sharing of
information and experiences, joint action, and coordination. Furthermore,
efforts are underway in international fora, such as OECD, APEC, the
International Chamber of Commerce, the Hague Conference on Private
International Law and the Global Business Dialogue on Electronic Commerce
(GBDe) to develop cooperative arrangements and means to protect consumers
in the context of cross-border e-commerce. These efforts include private
sector recommendations, international guidelines, and public workshops.
6) Intellectual Property Protection
Challenges and Opportunities
The ability to perfectly copy electronic data, to distribute it instantly
on a global basis, and the growth of e-commerce raise a number of key
issues for holders of intellectual property and governments related to the
adequate and effective protection of copyrighted works online. Authors,
producers of copyrighted works, and performing artists must be able to
have confidence that their copyrighted works will be protected online.
Legal protection of intellectual property in the online environment
preserves incentives for the creation of local content and encourages its
world-wide dissemination. Consumers also must have confidence that they
can rely on trademarks as trusted indicators of the origin and quality of
their on-line purchases.
7) Online Distribution of Content
Challenges and Opportunities
The countries of the Hemisphere are among the most active in the world in
terms of generating “content” suitable for online distribution. Every day
sees a growth in the global reserve of music, film and audiovisual
fixations, computer software, training programs, literature, journalism,
etc., through contributions resulting from the creative ingenuity and
entrepreneurial capacity of the Americas. Ensuring the online distribution
of content is an important factor in increasing economic output from
electronic commerce should be a priority for the governments of the FTAA
Currently, the distribution of content through placement on web sites and
subsequent downloading, or through forms of distribution from a single
source to multiple users, such as simulcasting, is one of the most active
forms of electronic commerce. However, producers of content who work in
the countries of the Hemisphere are suffering important economic losses
due to the unauthorized distribution and/or use of content by third
3. Future Work of the Committee
During the second phase of work in the FTAA, the Joint Experts Committee,
under its ongoing work plan, deepened its examination of selected issues
pivotal to the development and integration of electronic commerce in the
region. The Joint Experts Committee’s discussions centered on ‘real world’
challenges and opportunities, and practical aspects of electronic
commerce, with a focus on being able to:
• go online – Access and Infrastructure
• get small business online – Small and Medium-sized Enterprises (SMEs)
• enter into contracts online – Authentication and Certification
• make a purchase online – Online Payment Systems
Through discussions of national experiences and lessons learned, the Joint
Experts Committee has improved regional awareness and understanding of the
policies and practices that will expand and broaden the benefits of
electronic commerce for the Western Hemisphere. As e-commerce
technologies, market conditions and practices continue to evolve rapidly,
new issues and solutions emerge. Sharing experiences and information on
e-commerce problems and solutions will enhance e-commerce growth, trade
flows and economic integration in the region.
The Joint Committee also should continue to keep abreast of ongoing work
in other international fora, and stimulate discussion of timely e-commerce
issues. The Joint Committee considers that the following topics could be
the subject of future work, and agrees that the priorities will be
determined during the next period: i) effective consumer protection, with
a particular focus on: protection from fraudulent, misleading or unfair
commercial practices/conduct, respect for the privacy of the consumer,
private sector initiatives, effective means of dispute resolution, and
international cooperation in these areas; ii) “e-government”; iii) the
digital divide between and within countries of the Western Hemisphere; iv)
the impact of electronic commerce on social development, training and
formation/ education of human resources through the use of information
technologies; v) the production of digital content and its on-line
distribution; vi) implications for customs and taxes of cross-border
electronic transactions.; and vii) the security of electronic
At the same time, we recommend that the Joint Committee begin to address
e-commerce issues as they relate to the FTAA negotiations. The Joint
Experts Committee is not a negotiating group, and FTAA negotiations on
e-commerce related obligations should occur in the respective FTAA
negotiating groups, not in this Committee. Nonetheless, the Internet and
e-commerce are revolutionizing the way that international business is
conducted, from how information is communicated, to how contacts are made,
records kept, supply chains operated, products delivered, and disputes
resolved. The FTAA is the first comprehensive trade agreement to be
negotiated since this electronic business revolution, and will need to
reflect this new reality. In order to ensure that the final FTAA agreement
is relevant and current, the Joint Committee should explore through
national experiences and the hands-on knowledge of its private sector
participants how e-commerce is changing the conduct of international
business and inform negotiating groups regarding the nature of these
changes. Among the negotiating groups that might benefit from the Joint
Committee’s technical input are the Negotiating Groups on Market Access,
Services, and Government Procurement.
There is continued interest within the Joint Committee to share national
experiences and analyze broadly the factors that lead to their success or
failure in areas to be determined.
The Joint Committee thanks the Tripartite Committee and the FTAA
Secretariat for their support.
ANNEX – National Experiences
1.- Access and Infrastructure
In 1997, the Department of Communications approved the web communications
access model 0610. This new numeration will enable the ISP servers to have
a special number to differentiate between a normal telephone call and one
for accessing the Internet. Therefore, after being connected for twelve
(12) minutes, the subscriber will have a rebate in the pulse rate that,
depending on the time of day, could lead to a 40% discount.
Argentina also initiated in 1998 a telecommunications deregulation plan
which paved the way for a gradual, progressive and orderly sectorial
access. This deregulation involved local calls, long distance calls and
The purpose of this plan, completed in November 2000, with the opening up
of the local market, was to increase competition in this sector, to lower
the actual telecommunications costs and to increase access opportunities
for the users.
In addition, mobile telephones have had rapid growth over the last few
years. This has opened the way for the creation of mobile lines with
Educ.ar is the first state-run Internet company in Argentina. Its purpose
is to wire the whole Argentine Republic’s education system to the Internet
and open up access to the most recent technological advances. Its main
objective is to be a tool to make education more democratic.
The development of Educ.ar was based on three basic pillars: an
educational content portal, a teacher training plan and a connectivity
plan. The first stage will involve connecting middle schools with a
student population of 2,845,066. This will almost quadruple the total
number of people presently connected to the Internet in Argentina.
The second stage will involve connecting primary schools with a student
population of 7,778,534. This will be almost a tenfold increase in the
number of people who presently have access to the Internet
c) Electronic Government
Within the framework of the National Modernization of the State Plan,
initiated by the Argentine Government, the Electronic Government
Initiative plays a vital role as an important tool to realize a major
portion of the horizontal and vertical reforms that are an integral part
The “Electronic Government” concept includes all those activities based on
modern computer technologies, in particular the internet which the State
is developing to increase public administration efficiency, improve
services offered to the people and provide a far more transparent
framework for government activities than is presently the case.
Those activities cover internal aspects dealing with the administration of
public bodies, widespread distribution of information on government
actions, as well as the provision of more and better services to the
A few examples of the activities covered in the Electronic Government
Concept are: a “paperless” public administration; remote access to the
services offered by the State twenty-four (24) hours a day, three-hundred
and sixty-five days (365) a year or development of portals offering better
and faster access to government information.
This project also covers the creation and maintenance of a “single wicket”
access point to all national government activities.
The portal address (URL) is www.gobiernoelectronico.ar, but can also be
reached through www.info.gov.ar.
This program encourages the use of interactive and multimedia technologies
to stimulate community integration processes, promote efficiency and
productivity, develop electronic government practices and provide quality
information and services to the people and institutions. There is a pilot
project in the Cordoba Municipality of La Carlota.
e) Virtual Museums
The purpose of this program is to bring our present cultural heritage on
line under the mandate of the National Department of Culture.
2.- On-Line Payment System
The National Payments System is the realization of the electronic
compensation project for methods of payment proposed in 1996. This System
provides the infrastructure to administer in a far more efficient, simple,
fast and reliable way, all payments between commercial parties in any type
of business community. That infrastructure may be utilized in a Business
to Business environment (for example, a business with all its suppliers
and/or clients) or in a Business to Consumer environment (for example, a
business providing public services with its clients). Businesses can only
have access to that infrastructure through the banks that are the gateway
to this multi-bank payment system.
This System has two basic initiatives called “high value” and “low value”.
The purpose of this differentiation is essentially not to distinguish
transactions by their total amounts, but rather to highlight the different
characteristics and possible users of each service. “High value” covers
inter-bank payments or money transfers between the various banking
institutions. “Low value” targets inter-business payments or payments by
the end-customers to the businesses. In the latter case, it is based on
the fact that all payments processed through the banking system in
Argentina will be paid electronically.
There has been in the private banking sector a significant increase of
portals, over the last year, to facilitate client access to banking
information, including on-line payments for services.
3.- Certification and Authentication
The protection of property and security of transactions appears to be the
focal point for the debate dealing with regulations and laws for
electronic commerce. In this respect, Argentina is working to enact
There are a number of projects before Parliament dealing with the
recognition of digital signatures for legal proceedings.
Moreover, within the country, Law 24.624 recognizes as originals documents
drafted with first generation electronic or optical platforms, reproduced
from originals of any kind, contained in this type of software, that
cannot be erased.
4.- Consumer Protection
The Consumer Protection Law 24240 does not explicitly mention transactions
carried out through electronic commerce. It is, however, understood that
the same protection would apply by extension.
In 1999, the Sixth Court of the Criminal Tribunal of the Federal Capital
handed down a ruling stating that electronic mail has the same legal
protection as that granted to traditional private correspondence.
Introduction: Internet and Electronic Commerce in Brazil
The development of Internet in Brazil began in 1989 with the pioneering
work of a handful of academic institutions and non-governmental
organizations. This was actively encouraged by the federal government
through the Ministry of Science and Technology, as well as by several
state governments. Between 1991 and 1993 an early version of Internet
services with points in 21 provinces was implemented by the National
Research Network (RNP). In 1995, a federal government decision defined the
general rules governing the provision of Internet services in Brazil, and
today there are approximately 450,000 “hosts”.
The number of Internet users in Brazil was estimated at 300,000 in 1996, a
figure thought likely to have grown to five million by 2000. The latest
projections see the number of users doubling between now and 2002, mainly
as a result of cheaper computer equipment and greater supply of telephone
About US$450 million worth of transactions were carried out electronically
in Brazil during 1999, mostly of the business-to-business (B2B) variety;
this accounted for 88% of all electronic business in Latin America.
E-commerce in Brazil is expected to grow to US$3.2 billion by 2003. In
1999, almost 90% of all e-commerce transactions in Brazil were carried out
by “old economy” firms, 42% of them belonging to the financial sector.
Books, CDs, computers and accessories, and tourism services are the most
widely sold products in virtual stores.
Given the importance of e-commerce, there has been a rise in government
initiatives to develop and support this activity. Such initiatives have
included the creation of the Electronic Commerce Executive Committee,
which is expected to have both private-sector and academic participation.
In the Internet age, the government needs to promote universal access and
greater use of electronic media, in order to make its administration more
efficient and transparent at all levels. The creation and maintenance of
equitable universal services for citizens is a public policy priority.
In 1993, a number of ministries began to use the Internet to disseminate
information in their respective areas, and two years later the number of
Federal Government sites on the web had grown considerably. An independent
analysis in early 1996 identified Brazil as a pioneer in the Americas in
posting government information on the Internet. The variety of information
provided at both federal and state levels has increased recently, and the
Ministry of Planning has created a system for accessing this information
through the federal government site at
There are several applications at the federal government level that make
use of information and communications technology, and these have the
potential to revolutionize the management of public services in their
respective areas of action:
a) Income Tax Declaration: It has been possible to submit income tax
returns by electronic data transmission since 1995, and over the Internet
since 1997. As many as 70% of all income tax returns filed by natural
persons, along with 80% of those filed by corporations, were submitted
electronically in 1998;
b) Tax collection: The Integrated Inter-State Trade Operations Information
System (SINTEGRA) is currently being implemented throughout the country.
Its aim is to facilitate information exchange between taxpayers and tax
authorities in the individual states, as well as information exchange
c) Health: The “National Health Card” (Portuguese acronym: CNS) is a
Health Ministry initiative to computerize all public health services in
the Single Health Care System (SUS), by providing an identification card
to all users. The system is currently being piloted with a population of
about 12 million people.
d) Legislative Process: The “Interlegis Project”, which was initiated in
1997 by the federal Senate, has the aim of establishing a network for
legislative communication and participation throughout the country,
linking information systems between the federal, state and municipal
e) Government Procurement: “ComprasNet” is an on-line system created by
the Ministry of Planning giving access to all federal government tenders,
as well as other services and facilities to enhance the transparency of
procurement and business opportunities for companies.
“Information Society Program”
In August 1999, the Information Society Program Implementation Group
(SOCINFO) was set up under the aegis of the Ministry of Science and
Technology, in response to a proposal made by the National Science and
Technology Council. The program, which cost about R$3.4 billion (US$2
billion) to implement, was officially launched by the President of the
Republic in December 1999.
The Information Society Program envisages action by federal, state and
municipal governments in conjunction with relevant social sectors, and
seeks to ensure the viability of a new stage of Internet development and
applications in Brazil. The program includes training for research and
development, as well as guaranteeing advanced communication and
information services. Its goal for the next four years is to lay the
foundations for a substantial increase in the information economy’s share
in the total Gross Domestic Product (today estimated at 10%) and thereby
help to reduce the country’s social and regional inequalities.
Within these general objectives, SOCINFO has established specific goals in
the following areas: science and technology; education; culture; health;
social applications; environment and agriculture; industry; commerce;
public finance; information and media; entrepreneurship; investment;
technology creation and transfer; government activities; education for the
information society; and follow-up and evaluation. Further details on the
Information Society Program can be found at
Brazil does not yet have specific laws on e-commerce, but there is intense
legislative activity in this area, with a number of bills of varied scope
and approach currently before the National Congress. The Model Law on
Electronic Commerce drawn up by UNCITRAL serves as a benchmark in the
corresponding legislative debates.
Brazil’s financial institutions are currently the leaders in
private-sector e-commerce activity, after investing in computerization for
several years. There is even one entirely “virtual” bank in the country,
and another with its own satellites for data transmission. Brazil’s
financial sector is also very active in the area of electronic payment
In other sectors of the economy, most firms have not yet reached the point
where they can accomplish the full cycle of e-commerce transactions. Among
retailers, the best examples are supermarkets (where between 1% and 2% of
sales by the large chains take place over the Internet), along with
bookshops, CD stores, and computer and accessory retailers. The tourism
sector has also seen significant growth. The current trend in the
private-sector B2B transactions is for existing business between companies
to migrate to the electronic domain (Internet and Intranet); thus far,
however, no new business has been created.
The “PROER Especial” project, undertaken by the Brazilian Small Business
and Microenterprise Support Service (SEBRAE,
www.sebrae.com.br), is an
example of the encouragement being given to the formation of SME networks
in Brazil. The aim is to promote economic diversity and enterprise
complementarity, along with sustainable and competitive productive
1. Access and Infrastructure
Over the past 20 years, Canada has gradually introduced competition to
virtually all areas of communications in the pursuit of improved
infrastructure and increased access to efficient and affordable
communications services for both residential and business consumers.
Canada has privatized state-owned operators and eliminated monopolies in
satellite and international telecommunications services. These
developments have stimulated a dynamic telecommunications market which has
brought about innovation, improved quality of service and a dramatic
reduction in prices for business and residential telephony services and
Internet access which makes the Canadian market the least expensive in the
world (OECD Communications Outlook, 1999).
More recently, the “Connecting Canadians” initiative, launched in 1997,
has resulted in a substantial increase in Internet access levels, both for
businesses and citizens. It became the catalyst for the development of a
comprehensive strategy on e-commerce (involving awareness raising,
fostering adoption and use, policy development, international presence and
leadership, and public-private sector partnership). Another key element of
the Connecting Canadians initiative is the current federal government
focus on government-on-line.
Current Canadian objectives revolve around universal access and
connectivity, effective use of networks in support of e-commerce and
public services and aggressive broadband deployment.
2. Small and Medium-Sized Enterprises (“SMEs”)
The Canadian strategy with regard to SMEs has focused on awareness
raising, adoption and use of e-commerce, and on better measuring and
analyzing new business models emerging with the “new economy”. The
Canadian strategy is built on a strong partnership with key federal
agencies, such as the Business Service Centers, and with the private
sector. Special projects, such as an electronic Business Service Centre,
are being implemented to provide assistance to SMEs through information,
guidance and contacts relevant to e-commerce.
The Canadian private sector has also taken an active role in the area. The
Canadian E-Business Opportunities Roundtable is a voluntary group of
Canadian business leaders and educators who are committed to fostering the
development of e-business in Canada. One of the key objectives of the
Roundtable was to create a comprehensive fact-based understanding of the
state of e-business in Canada, including the challenges and opportunities
for SMEs. The Roundtable has held a number of regional conferences to
communicate the nature of the e-business challenge to the SME community.
SMEs have indicated strong support for this type of activity and have
recommended continued information seminars and practical workshops,
development of means to assess the advantages of using e-commerce,
development of an internship program for recent graduates (e-corps) to go
to SMEs and help them integrate e-commerce in their business activities,
creation of accessible one-stop information resources for SMEs, time
-limited economic incentives to stimulate e-commerce adoption, and
information sessions from industry associations on currently available
on-line security solutions.
3. Online Payment Systems
Electronic payment systems in Canada are growing in importance. Debit and
credit card payments have surpassed traditional paper-based payment
instruments in terms of volume of transactions. In 1998, 53 per cent of
cashless transactions were made using debit and credit cards, 31 per cent
using cheque, 9 per cent by credit transfer, and 7 per cent by direct
debit. A recent survey undertaken for the Canadian Bankers Association
found that 63 per cent of Canadians now use ABM, telephone banking or the
Internet as their primary means of conducting financial transactions.
The Canadian Payment Association’s Automated Clearing and Settlement
System provides a mechanism for the processing and settlement of a number
of electronic payment instruments, such as credit transfers and
pre-authorized debits. The CPA also operates the Large Value Transfer
System, an electronic payment system established in 1999, that provides
irrevocable same-day finality of payment. The CPA is analyzing issues
associated with the possible use of an Automated ClearingHouse in Canada,
and is exploring linkages with the proposed Worldwide Automated
The CPA will be implementing a public key infrastructure to facilitate the
growth of on-line Internet payments. The CPA intends to become a root
certification authority for CPA members and other qualified institutions
electing to act as certification authorities. As a root certification
authority, the CPA will ensure consistency in the standards applicable to
the issuance of digital certificates, which authenticate the identity of
users conducting electronic transactions.
The Interac Association operates Canada’s only national ABM and electronic
funds transfer/point-of-sale (EFTPOS) network. Canada has the most EFTPOS
terminals per inhabitant in the world and is behind only Japan in having
the most ABMs per inhabitant.
Canada’s major financial institutions are developing electronic bill
presentment and payment (EBPP) schemes that allow consumers to receive and
pay bills on-line from a single website. EBPP will likely reduce the
number of cheques used for bill payments. Financial institutions are also
continuing to test forms of electronic cash, such as Mondex and VisaCash.
Among the policy issues of interest to Canada in relation to electronic
payment systems are network access and competition, consumer protection,
security, privacy, and the regulatory framework appropriate for
institutions issuing electronic cash.
4. Certification and Authentication
The Canadian experience in building trust in the electronic environment
includes legal and policy measures regarding electronic signatures,
privacy and cryptography. Canadian legislation, the “Personal Information
Protection and Electronic Documents Act” was recently passed and came into
effect on January 1, 2001. It establishes the legal framework governing
the collection, use and disclosure of personal information in the federal
domain. The Act also provides an electronic alternative for doing business
with the government. It contains provisions covering the use of secure
electronic signatures, electronic evidence in the courts, and
government-on-line measures. Equivalent legislation is also being
introduced by provinces.
A public consultation document on Authentication and Certification has
recently been released by the Canadian government. It seeks views from all
stakeholders on how to proceed with the establishment of Certification
Authorities (“CAs”). The Canadian approach recognizes the leadership role
of the private sector in designing a proper accreditation mechanism.
Cryptography technologies form a relatively new but vibrant market in
Canada and elsewhere. The Canadian government issued a policy statement in
October, 1998, which permitted the import and use of cryptography products
with no mandatory key recovery requirement or licensing regime.
A number of initiatives have been undertaken in Colombia since the
mid-1990s to foster the use of information technologies (IT).
Based on these initiatives and with a firm determination to take full
advantage of the benefits offered by such technologies, in early 2000
Colombia adopted as its long-term strategy in this area a high-level
policy called " Connectivity Agenda : The Leap to Internet." Its purpose
is to promote a broad-based and overall increase in the use of information
technologies with a view to improving the competitiveness of the
production sector, modernizing public and government institutions, and
socializing access to information.
This is based on an understanding that information technologies are tools
that will make it possible to develop a new economy, build a more modern
and efficient State, ensure universal access to information, and
effectively acquire and use knowledge, all of which are fundamental
elements for the development of modern societies.
The Connectivity Agenda is a series of strategies implemented through
specific interconnected programs and projects aimed at fostering social
and economic development in Colombia through an extensive increase in the
use of information technologies.
The Agenda seeks to create a favorable environment and conditions for the
different sectors, so that each can assimilate and exploit information
technologies and, accordingly, produce a positive impact that will
contribute to the achievement of certain objectives.
To achieve the proposed objectives, six strategies and their corresponding
lines of action were identified:
1. Access to information infrastructure
• Strengthen the national telecommunications infrastructure
2. Use of IT in educational and training processes on the use of IT
• Provide access to information technologies for the majority of
Colombians, at more affordable prices
• Foster the use of information technologies as an educational tool
3. Use IT in businesses - on-line businesses
• Train Colombians in the use of information technologies
• Upgrade the skills of human resources specializing in the development
and maintenance of information technologies
• Increase people’s awareness of the importance of using information
• Foster the adoption of information technologies by the production sector
4. Foster the development of the domestic information technology industry
• Create a favorable environment for developing the information technology
5. Generate content
• Promote the national content industry
6. On-line government
• Support the generation of content and on-line services
• Improve State operations and efficiency
• Improve State transparency and strengthen social control over public
• Strengthen the State's function of service to citizens through the use
of information technologies
In line with these general strategies, a group of programs and projects
considered necessary at the outset were launched. The most important were:
creation of a government Intranet and application of information
technologies in government; strengthening the national telecommunications
infrastructure; establishing community Internet access centers; fostering
and regulating electronic commerce; defining tariff schedules for
accessing Internet; using information technologies as an educational tool,
In regard to the first two, which in the language traditionally used by
the Joint Government-Private Sector Committee of Experts on Electronic
Commerce correspond to the issue of "government as model user," several
important advances were made. In the first phase, all entities of the
central government were to provide on-line information to the public by
December 31, 2000. Two other phases are planned: one to offer the public
the possibility of processing various transactions on-line (by December
31, 2001), and the other, to process administrative procurement on-line
(by June 30, 2002). In addition, the government portal
www.gobiernoenlinea.gov.co was designed and implemented.
Work is also under way to design a training project for government
employees on the use of information technologies.
Significant progress has also been made on other fronts: foreign trade
formalities can be processed over the Internet; and the submission of tax
declarations, the payment of taxes administered by the Directorate of
National Taxes and Customs, and tax withholding at the source have been
authorized since 1999 through the Electronic Declaration and Payment
Regarding access to information infrastructure, regulations were defined
for reducing the cost of access to Internet, which now requires payment of
a basic telephone rate of about US$8.00 per month. Bidding procedures for
the installation and operation of Internet access centers in numerous
municipalities of the country are moving forward, as are those for the
acquisition, installation and maintenance of 650 computer science
classrooms in public schools throughout the country.
All of this is being done under a telecommunications policy that for years
has sought to expand coverage, modernize infrastructure and diversify the
services provided, as needed for the process of social development, and
for the liberalization, growth and internationalization of the economy.
These objectives have been pursued through the following mechanisms:
fostering competition, encouraging private sector participation, and
strengthening public enterprises. In this regard, Colombia's
telecommunications sector was one of the first in Latin America to begin
the liberalization process.
With regard to the regulation of electronic commerce, Colombia has had a
law on this subject in effect since 1999, which is based in large part on
the Model Law on Electronic Commerce adopted by the United Nations
Commission on International Trade Law (UNCITRAL).
The law on electronic commerce aims to ensure the integrity, reliability
and security so critical for both data messages and electronic commerce,
since they have to do with operations and transactions conducted
electronically between parties, through telematic networks (open or
closed), involving no direct or physical contact between the parties.
Digital signatures, digital certificates and the certification services
provided by certification agencies are tools that will provide security to
the data messages used in completing a given action or business
Decree 1747 of September 11, 2000 is a regulation of the law that governs
certification agencies and the certificates they issue.
Certification Entities are legal persons, notaries or consuls, who are
authorized primarily to issue certificates relative to digital signatures,
authenticate signatures in connection with communications based on digital
signatures, and carry out some other related tasks.
The decree identifies two types of certification agencies; both of which
must be authorized by the Office of the Superintendent for Industry and
• Closed: those that provide services to a closed circle of persons (i.e.,
a bank and its clients)
• Open: those that provide services to the general public
In the case of closed agencies, the requirements of the Superintendent are
minimal, primarily because the responsibility they assume for the
certificates they issue is minimal.
The principal requirements for accrediting an open certification agency
are: a minimum equity capital, a guarantee from an insurance agency or
establishment of a trust contract having autonomous equity, in order to
cover possible damages caused in the performance of their activities.
There are also some infrastructure and resource requirements, as well as
certain security procedures and systems required for qualifying that the
system is reliable in the exercise of its activity.
Foreign certification agencies must accredit a domicile in Colombia even
if their infrastructure is abroad.
The decree also establishes a series of duties of the certification
agencies in order to ensure that they carry out their activities in the
best possible manner.
On another level, in mid-2000, a plan of action was launched to foster
electronic commerce, the aim of which is, among other things, to generate
trust and raise the awareness of consumers, businesses and various
government sectors regarding the advantages offered by electronic
commerce, in order to foster an increased use thereof.
In this connection, it is worth noting that steps are being taken to
provide small and medium-size enterprises (SMEs) with training in
electronic commerce and with soft credits so as to encourage them to
acquire information technology.
Similarly, intellectual property and copyright legislation are being
revised to ensure suitable protection of transactions in electronic
commerce; consumer protection regulations are also being adjusted, in
order to ensure that on-line consumers receive appropriate protection.
For about two years now, Costa Rica has been implementing a variety of
technology-based development initiatives focused on three key areas: (i)
New Society; (ii) New Government; and (iii) New Economy. These, in turn,
are founded on the three basic pillars of electronic commerce development
in Costa Rica, namely education, telecommunications and infrastructure,
and regulatory framework. E-commerce thus forms part of Costa Rica’s
global development strategy.
The leading projects currently being undertaken include: the Teacher
Training Center (CEFOF); the recent Digital Signature Bill, which is
intended to give legal force to the electronic signature and electronic
document, and to regulate accreditation and certification activities;
projects to open up the Internet market and the new high-speed network
being developed by the Costa Rican Electricity Institute, the national
telecoms services provider (National Interconnection Program "Border to
A variety of intellectual property laws have been passed recently within
Costa Rica’s basic regulatory framework, which protect IP rights in the
e-commerce domain. These include ratification of the WIPO Copyright Treaty
(WTC), and the Law on Procedures for Enforcing Intellectual Property
The government and the private sector are also undertaking several other
major technology-based development initiatives. These include: the Digital
Government Office, whose overriding goal is to provide guidance for
national strategy in the “new government” area; the “free e-mail for all
Costa Ricans” project (costarricense.com and correos.cr); the
private-sector initiative to set up specialized human resource training
centers and training staff in the software area (CENFOTEC); the e-SMEs and
CostaRicaMarketplace.com project being developed by the foreign trade
promotion agency, which seeks to establish a forum for SMEs to take
advantage of the benefits of electronic commerce.
All of these initiatives aim to insert Costa Rica fully into the new
digital era and enhance the country’s development by taking advantage of
the opportunities afforded by technology. This national strategy also aims
to expand Internet access to all Costa Ricans, and for firms, schools,
institutions and individual citizens to all become familiar with the use
of e-commerce and be able to share in its benefits.
The Government of El Salvador is carrying out an economic and social
reform program to achieve a fair and faster economic growth that will
achieve the development and creation of the necessary wealth to
improvement the quality of life of all the people in El Salvador and has,
therefore, signed an agreement with the World Bank for Loan IBRD number
3946 – ES, to finance the Technical Assistance Project for Improved
Competitiveness. Within one of the components of the Project,
“Technological Capacity”, the decision was made to support the integration
of one of the fastest growing ways of doing business in the last few
years: Electronic Commerce. Since very few enterprises within the country
have access to the internet, they have not been able to penetrate this
market and are, therefore, losing opportunities to do business. This
assistance involves encouraging businessmen to embrace these new
technologies, training on their uses, risks and benefits and the
integration of businesses into virtual sales.
A legal framework, as well as an information mechanism on the security of
communications, must be established in El Salvador to stimulate electronic
commerce and assure the private sector that its business transactions on
the Internet remain totally secure.
Here are the objectives and actions in the “Technological Capacity”
component part of the project presently being developed in El Salvador.
1.1. Stimulate the development of electronic commerce in the country
through the national private sector by providing consultation, technical
assistance, training and/or seminars.
1.2. Promote the dissemination of the use of an Information Technology
2.1. Support the establishment of the National Electronic Commerce Working
Groups who will define the guidelines, policies and even the laws that
will be the backbone and stimulus for the integration of the national
private sector into electronic commerce.
2.2. Support the establishment of virtual business sites (electronic
commerce) in at least three sectors of the clusters.
2.3. Support the creation of a local critical mass to promote the
dissemination and establishment of electronic commerce in El Salvador.
There are four stages to the project:
1. General Incentive for the Use and Exploitation of Information
The purpose of this stage is to support the dissemination of the use and
exploitation of Information Technology focusing on the utilization of the
INTERNET and targeting three different groups in society:
1. Small and Medium Enterprise (SME) businessmen focusing particularly on
the businesses in the Clusters.
2. University professors and students.
2. Support the Establishment of a General Environment for the
Implementation of Electronic Commerce.
The purpose of this stage is to support the establishment of a global
general environment for the implementation of electronic commerce in El
Salvador through point support in the form of technical assistance and/or
training by the Working Groups mandated with its national development:
1. Working Group on Security.
3. Establishment of Electronic Commerce in the Clusters’ Enterprises.
2. Working Group on the Legal Framework.
3. Working Group on Electronic Culture
The purpose of this stage is to support the establishment of electronic
commerce in at least three enterprises/sectors of the Clusters, whether it
be associative or through pilot or key enterprises particularly for those
4. Follow-up and Dissemination of Experiences.
The purpose of this stage is to continue to further the establishment of
electronic commerce that would require the following actions:
1. The results achieved in electronic commerce by the Program supported
2. Testimonials of experiences learnt in the process.
El Salvador, particularly in other areas, has very progressive legislation
for intellectual property that provides electronic commerce rights
protection. Moreover, El Salvador has signed a number of international
agreements to strengthen intellectual property protection and guarantees.
Access and infrastructure
Liberalization and deregulation are the basis for Internet development
and, as part of a telecommunications sector development strategy, Mexico
has undertaken the following initiatives:
• Privatization of the state monopoly, TELMEX, in 1990.
• Enactment of the Federal Telecommunications Act in 1995.
• Creation of the Federal Telecommunications Commission as an independent
regulatory body in 1996.
• Five (5) different communications regulations are issued between 1996
1. Long distance services;
2. International long distance services;
3. Local services;
4. Public telephony; and,
5. Satellite communications.
These initiatives resulted in making the domestic telecommunications
market more attractive to foreign investors and, consequently, Mexican
consumers can benefit from the investments and new technologies that they
Mexico drew up and implemented a sustainable long-term process for
regulatory reform in the telecommunications sector. The transition from a
state monopoly to a market economy was rapid in most of the
telecommunications sector, which consequently led to an improved quality
in services. The TELMEX licensing concession included very innovative
asymmetric regulations for its time.
The problem confronting Mexico is not a regulatory or liberalization
problem for access to the local network, but rather one of infrastructure
investment to increase telephone ownership.
Small and Medium Enterprises (SME’s)
The government of Mexico lends support to the development and integration
of the SME’s into the productive process through the Sistema de
Información Empresarial Mexicano (SIEM) (Enterprise Information System of
Mexico). SIEM is an informational, promotional and consultative tool
available through the Internet (www.siem.gob.mx) for the industries,
businesses and services operating in Mexico. It identifies the supply and
demand of products and services of the registered enterprises and
therefore becomes a virtual business center. Similarly, it provides an
equal promotional opportunity to smaller enterprises in relation to major
Certification and Authentication
The private sector and the Congress of the Union worked closely with one
another to make the appropriate amendments to the legal framework in order
to provide a totally secure environment for economic agents wishing to do
Those amendments incorporate the principles of the UNCITRAL Model Law on
Electronic Commerce, the consumer protection guidelines of the OECD and
the legal structure of Mexico.
The electronic commerce reforms were published in the “Diario Oficial de
la Federación”(Official Gazette of Mexico) on 29 May 2000 and included:
iv. Civil Matters. The Parties signing an agreement may express their will
or offer a good or service through electronic means.
v. Procedural Matters. Information generated or communicated through
electronic means is recognized fully as evidence.
vi. Commercial Matters. The use of electronic means is recognized for the
provision of goods or services through electronic means, and establishes
the obligation to retain the information whereby contracts, agreements or
commitments have been signed giving rise to rights and obligations, and
that is generated or transmitted through electronic means.
vii. Social Matters. The OECD guidelines for the promotion and protection
of consumer rights covering transactions made through electronic means are
viii. Administrative Matters: Notifications, summons, injunctions,
requests for reports or documents, resolutions or promotions made by
individual persons may be made through electronic means. Certification of
the means of identification is the responsibility of each government
agency or decentralized body in accordance with the Secretaría de
Contraloría y Desarrollo Administrativo (Department of Finance and
Administrative Development) stipulations.
These reforms are contained in a general legal framework that legally
recognizes transactions made through electronic means and provides
security and confidence to the consumers.
A reform containing five (5) regulations covering electronic commerce was
published in the Diario Oficial de la Federación (Official Gazette of
Mexico) on 29 May, 2000 that adds a chapter on electronic transactions to
the Federal Law for Consumer Protection and deals with: i) confidentiality
in the handling of the information provided by the consumer to the
supplier; ii) the supplier’s obligation to offer secure methods to protect
the information provided by the consumer; iii) the supplier’s obligation
to provide to the consumer, prior to the transaction, his official
business address, telephone numbers and other means that the consumer may
need to submit complaints or request explanations; iv) the supplier’s
obligation to monitor the marketing practices aimed at the vulnerable
sectors of society such as children, the sick and the elderly; and, v) the
inclusion of the violation of specific consumer protection provisions in
transactions made through electronic means as an offense with its
This reform contains the guidelines approved by the OECD Committee on
Consumer Policy in the field of electronic commerce to promote and protect
consumer rights in such transactions.
Access And Infrastructure
Peru modernized the telecommunications sector in the early 1990s with the
promulgation of its Ley de Telecomunicaciones, which created an oversight
body -- the Organismo Supervisor de Inversión Privada en
Telecomunicaciones or OSIPTEL – that began supervising private investment
in telecommunications in July of 1993, replacing the the sector’s
regulatory agency, the Comisión Reguladora de Tarifas de
Telecomunicaciones. This change represented a shift in thinking about the
role of the State, which moved from its position as monopoly operator, to
the role of promoter and regulator of the development of its
telecommunications market within a framework of free competition and
retained the power to establish mechanisms for the prevention of unfair
business practices of any kind.
An essential requirement for the development of electronic commerce is the
existence of fully operational communications networks accessible to all.
Users must have access to these networks through their own or a shared
(community Internet access point) system which enables them to participate
in electronic commerce. While fixed systems predominate for the Internet,
the use of wireless technology through traditional cellular telephones,
radio bands and satellite networks is recording rapid growth.
The following measurements of access to telecommunications infrastructure
for purposes of electronic commerce are based on a study carried out this
year for APEC by the Ministry of Industry, Tourism, Integration and
International Negotiations (MITINCI), working in conjunction with the
Instituto Peruano de Comercio Electrónico (IPCE).
In Peru there are 6-10 telephone lines per 100 inhabitants. Between 1% and
25% of the population has access to wireless digital communications
systems. Only 1-5% of Peruvians are able to access the Internet over
wireless digital systems. On the other hand, 1-5% of the population
currently has access to the Internet through the cable network.
It is well established that electronic commerce has a greater need for
bandwidth than traditional telephony. In this respect, in Peru the average
speed of connection available to non-commercial users is less than 56
Kbps, whereas the average for commercial users is between 56 and 384 Kbps,
with maximum speeds of 1.6-4.5 Mbps. Meanwhile, the maximum speed of
connection for those with wireless access to the Internet is under 56
Households with Internet service, as well as some business users who
access the Internet through dial-up connections, pay two types of fees:
those charged by their ISP and those generated by telephone charges for
Internet traffic. The ISP fees are intended to cover the cost of Internet
access. These fees are not subject to regulation since there is
unrestricted competition in the Internet access market.
The Internet traffic fees are designed to cover the cost of the means used
for connection with the ISP. Non-dedicated traffic must pay a per-minute
fee, whereas dedicated traffic is charged a fixed amount. These fees are
likewise determined by the market since the local telephone companies and
local carriers have also been deregulated.
Analysis of the reliability of Peru’s infrastructure shows a break-down
rate of less than 2% with respect to failure of dial-up connections,
whether due to busy signal or interruption. At the same time, the ratio
for loss of data packets is lower than 5%.
Market conditions for infrastructure services and terminal equipment
require a breakdown according to the socio-economic level of the
population. Some 97% of individuals in socio-economic levels "A" and "B"
own a telephone, 48% own a computer, and only 18% have access to the
Internet from their home. Of those in socio-economic level "C", 65% own a
telephone, 5% have a computer, and virtually none has Internet access.
Finally, in levels “D" and "E", 22% have a telephone, only 1% own
computers, and none has access to the Internet.
Less than 5% of the population at large have a cellular telephone. By
contrast, approximately 89% of Peruvians own television sets – hence the
development of new technologies for Internet access by this means. In
fact, the cable television network has turned itself into an important
medium for access to the Internet through a series of measures to upgrade
its network and terminal equipment. Similarly, a series of upgrades and
the addition of special equipment to the telephone network have enabled
that medium to offer ADSL service.
It is important to note that in 1999, the percentage increase in Internet
traffic outstripped the rate of growth in traffic on the public switched
telephone network (55% vs. 30%). The implication is that individuals are
intensifying their use of the Internet. Further proof of this may be seen
in the increase in subscribers’ time of connection, which is currently
bordering on 13 hours per month.
It is worth noting that the Internet user base consists primarily of
individuals with dedicated connections, rather than household users who
access the Internet by means of dial-up connections. This user base is
made up of persons employed by public and private agencies, educational
institutions and universities, as well as individuals operating through
community Internet access points, all of which have dedicated lines linked
directly to the Internet.
The community Internet access points are an example of consumer linkage to
the information highway. The number of Internet access points of this type
in Peru is growing and currently stands at approximately 600. The cost for
one hour’s connection in a community Internet access point varies between
S/.2.5 and S/. 4. (US$ 0.70 and US$ 1.15).
The estimated number of Internet portals is around 1,600. It is worth
noting that this market is in a highly competitive phase at the moment,
and consumers are therefore benefiting from reduced prices and a variety
of promotional offers.
The placement in operation of the Peruvian Network Access Point (NAP)
means that local Internet traffic between the different supplier firms
will no longer pass through the international link, but rather will be
managed locally. This will speed up internal communications and access to
the resources on local servers (Web pages, databases, etc.). The NAP is
administered by a totally neutral and non-profit entity whose sole
objective is to promote development of the telecommunications sector. The
creation of Peru’s NAP will greatly improve the system and result in much
faster service. With the signing of this important agreement, Peru becomes
the fifth country in Latin America to obtain this system (the others are
Colombia, Argentina, Chile and Brazil).
Peru still lacks the resources needed for investment in this sector to
ensure adequate infrastructure for information technology and electronic
commerce. It is equally important to point out that the level of
knowledge, awareness and dissemination of electronic commerce and
information technology is unacceptably low. It is widely felt as well that
one of the obstacles to the development of electronic commerce in Peru is
the lack of high-speed digital systems at accessible prices.
Strategies are needed to encourage more widespread use of and access to
the Internet by facilitating and overseeing free competition; developing
other means of access (expanded use of the spectrum); promoting access
pricing based on costs and the nature of the demand; providing training
and raising awareness of the service; developing strategies for ensuring
more widespread knowledge of information technologies, telecommunications
and electronic commerce; connecting to universities and public schools,
and thereby promoting distance learning.
Small and Medium-Sized Enterprises
The New Economy has the wonderful capacity to reinforce the competitive
potential of all enterprises, but most especially those in the SME
category, and to narrow the gap between these and the larger firms. Peru’s
SMEs, with their highly flexible and non-authoritarian organizational
setups, have the ability to assimilate and exploit the new technologies
and incorporate innovative processes to make them more efficient. Their
major disadvantage is that the limited financial resources available to
SMEs do not permit them to gain access to information technology.
Peruvian SMEs suffer from a further disadvantage in that they are
traditionalists: the business community in general is reluctant to adopt
new technologies for the simple reason that Peru lacks a tradition of
Were the SMEs to embrace the adoption of new technologies, which are the
cornerstone of electronic commerce, they could easily streamline their
processes, take better advantage of their market niches, and find many new
commercial opportunities around the world, aided by their inherent
structure and flexibility.
However, the SMEs face two serious limitations in this area: (a) the
traditionalist mindset of its business sector, and (b) the costs involved
in implementing technological solutions.
In Peru, the institution charged with promoting development of the SMEs is
the PromPyme, a government agency that provides business advice for
microenterprises and small firms, registers these enterprises and is
responsible for promoting demand for their products and services, which
may include putting them in contact with potential clients and helping
them participate in government tender calls. In terms of the Internet,
this agency is about to launch its Web page, which will facilitate
consultation and access to its database, and promote the use of
computerized methods in the management of the country’s SMEs.
Another entity with a mandate to foster acceptance of electronic commerce
and its related procedures is the Instituto Peruano de Comercio
Electrónico (IPCE), which provides advisory services in this area and
promotes the use of on-line payment methods and the conduct of business
over electronic media. IPCE is responsible for generating information on
the development of electronic commerce in the Peruvian context. As an
institution created especially to deal with e-commerce, it is available to
answer questions from SMEs on diverse matters related to trade over the
Internet. By visiting its Web page (www.ipce.org.pe), it is possible to
obtain a variety of data that will be of great use to this type of
An important part of IPCE’s mandate relates specifically to allaying the
natural fear felt by individuals and corporate persons in particular, when
applying electronic solutions for the first time. In this way, IPCE
strives to change the thinking of the operators of SMEs to ensure that
they do not miss the opportunity of tapping new markets, or get left
behind in the global economic development which is today designed to take
advantage of this method of doing business.
Another limitation on the ability of Peruvian SMEs to take part in
electronic commerce is the cost of implementing technological solutions.
SMEs have only limited resources to spend under this heading, which
seriously restricts their access to the necessary hardware and software,
and their ability to meet the need for personnel trained in this area.
Accordingly, private enterprise has taken a leading role in the
development of electronic commerce among Peru’s SMEs. There are now a
number of large companies in this market offering global solutions
designed specifically for SMEs. These solutions range from consulting,
sales and provision of integrated technology services, to the hosting of a
firm’s Web page to help it develop electronic commerce. In a further step,
many SMEs have opted to engage an external provider to take over the
entire electronic process at a cost that is significantly lower than that
of developing a complete solution within the firm.
Other SMEs have chosen to join the recently created e-Marketplaces that
have sprung up under large-scale private sector initiatives in Peru, which
not only advertise them as suppliers to potential clients but also permit
SMEs to post more details and information about their firms, and in some
cases even catalogs showing the products that the firm sells. There is a
growing belief that these e-Marketplaces will in future become the
preferred platform for conducting business among large companies and SMEs
alike, as well as between the two. Under the heading of inter-firm
electronic transactions, novel forms of payment designed specifically for
the business sector have been developed in Peru -- including electronic
transfer of funds -- which the SMEs can put to great advantage.
Most of Peru’s SMEs have yet to see the Internet as a market in which to
develop sales, or as a plataform from which to search for new business
opportunities. Many SMEs think that simply having a presence on the
Internet will suffice, and while this is a good first step it means that
they are missing an excellent opportunity to expand their business. It is
here that the above-mentioned institutions can be of assistance. However,
the future of Peru’s SMEs remains promising in any case, owing to the high
level of vitality and flexibility in this sector. Electronic commerce will
provide great benefits for Peruvian SMEs at reasonable cost established by
the market itself, enabling them to reap the benefits of operating on a
modern, efficient, global and profitable medium which, moreover,
represents the future marketplace for businesses aimed at the consumer, as
well as for transactions between the firms themselves.
On-line Payment Systems
A crucial factor for the development of electronic commerce in Peru is the
creation of forms of payment that make it possible to carry out
transactions on line. Considering the B2C experience, statistics show that
the method of payment preferred by Internet users is by credit card.
Unfortunately, Peru does not have the critical mass of cardholders needed
for extending electronic commerce to the majority of its inhabitants. Only
2% of Peruvians own a credit card, which means roughly 500,000
individuals. This is due to the stringent requirements for obtaining
credit cards through any of the commercial banks, making them inaccessible
to the great majority of Peruvians.
This has led Peru’s private sector financial institutions to develop
creative methods for promoting the use of on-line transactions through
ingenious alternatives which are very popular with the public, and which
demonstrate the desire of Peruvians to make purchases on line. The
solutions adopted by these private sector institutions to strengthen
electronic commerce in Peru include debit, commercial credit and special
prepaid Internet cards, cash payment and electronic transfers.
The Instituto Peruano de Comercio Electrónico (IPCE), as the agency
responsible for promoting the use of electronic commerce in Peru, has
determined that 12% of Peru’s Internet users have made at least one
on-line purchase. With respect to payment, IPCE found that the methods of
payment preferred by Internet users in Peru are: credit cards (37%),
prepaid cards (24%), cash (17%), debit cards (12%), electronic transfer of
funds (5%), and none (5%).
Debit cards are held in much greater numbers than in the case of credit
cards, with some 8% of the population owning one – which means that
2,000,000 of these cards have been issued. Many of Peru’s virtual stores
have begun to accept this method of payment given its great popularity
with the Peruvian public, no doubt due to the minimal and simple
requirements for obtaining one.
Commercial credit cards for use in specific establishments are in great
demand in Peru, far exceeding the quantity of ordinary credit cards held
by Peruvians and nearly equaling the number of debit cards in circulation.
This has led these establishments to seriously consider the possibilities
of the Internet as an additional distribution channel with a built-in
market consisting of a large number of potential clients. In the next few
years, more establishments that issue their own credit cards are expected
to begin using the Internet as an additional market, and to implement
their own models of electronic commerce.
Prepaid cards provide an excellent example of the creativity shown in
designing solutions that promote public access to electronic commerce. A
private sector initiative is now underway in Peru to promote electronic
commerce by means of prepaid cards, which are used like credit cards and
may be accepted in other countries as well. Other projects involving the
use of prepaid cards are scheduled to begin as well, so that the volume of
e-commerce transactions is expected to rise in Peru. A survey conducted by
the IPCE found that 85% of the country’s Internet users are willing to
purchase a prepaid card for use in on-line shopping.
COD payment in connection with electronic commerce is a solution adopted
in very few countries (among these, Peru) since this method runs contrary
to the very nature of e-commerce transactions in that it does not involve
immediate on-line monetary compensation. Nevertheless, cash payment on
delivery is used by many virtual businesses because it provides a larger
base of potential clients. Transactions involving this method of payment
are expected to decline in future.
Electronic transfers, the method of payment long used in the banking
sector, is currently being adapted for B2B transactions in Peru, and is
specifically aimed at the business sector. There is already a
private-sector initiative underway in the Peruvian market which will
provide a platform for payment under an exclusive means of joining the Web
pages of the businesses involved in the electronic transfer process,
offering SMEs the opportunity to become more competitive in the New
Economy through increased efficiency, both in their payments and in
collection of amounts due.
An electronic clearinghouse, the Cámara de Compensación Electrónica, is
also being created in Peru to link the financial system by means of an
interbank network capable of effecting electronic transfers between the
country’s various financial institutions. This platform will accommodate
both the B2B and B2C electronic commerce models since it will permit
automation of payments and collections in the business sector, including
payment of suppliers and employee wages, as well as facilitating automatic
debiting and payments by individuals in virtual stores, with the option of
charging such payments to a specific bank account.
Like people everywhere, Peruvians are reticent to make on-line purchases.
In the end, this comes down to a question of confidence and the security
of the payment method. To offset the problem of lack of confidence, it is
necessary to resort to guarantee agencies; ensuring that the payment
method is secure requires reliance on security protocols.
The SSL (Secure Socket Layer) protocol has been the predominant security
system used in Peru since the arrival of browsers incorporating this
encryption protocol, which permits the transfer of data encrypted by an
algorithm such that the contents of the payment message (e.g. a credit
card number) is unintelligible until it reaches the original receiver.
In February 2000 the SET (Secure Electronic Transaction) security protocol
was launched in Peru. Devised under a joint private sector initiative,
this protocol has greater encryption power and is also capable of
authenticating the entities and individuals taking part in a transaction.
The status of electronic commerce in Peru is rising rapidly, and to
reinforce this trend the private sector and various institutions are
promoting the advantages of its payment methods, security and mode of
application. Peruvians in ever increasing numbers are able to make
purchases over the Internet, and those on-line businesses that offer more
payment options will see a significant increase in the number of their
Certification and Authentication
Peruvian legislation has been updated this year with the addition of new
provisions and amendment of existing laws, creating a legal framework
within which to promote the country’s electronic businesses.
Under the heading of certification and authentication in the transmission
of data messages, Peru already has an act governing electronic signatures
and certification (Law 27269: Ley de Firmas y Certificados Digitales). The
regulations to implement this act are currently being drafted.
Readers will find the text of Law 27269 on the IPCE Web page
This law permits the use and validation of digital signatures in Peru,
according them the same validity and legal effect as a handwritten or
holographic signature, provided that the digital signature meets integrity
and authentication requirements and is not repudiated.
The Peruvian system is based on Certification Bodies (CBs), Registration
and Verification Bodies (RVBs), and the Competent Administrative
A Certification Body is responsible for issuing and administering digital
certificates, and may also carry out the functions of registration and
CBs may delegate the authority for registration and verification to other
entities by agreement. This distinction was introduced so that foreign CBs
would not necessarily have to establish a physical presence in the
country, but rather could delegate the verification function to local
entities under outsourcing contracts.
Registration and Verification Bodies (RVBs), whether they work for foreign
or local CBs, are charged with verifying the information in applications
for digital certificates supplied by natural or juridical persons. Based
on its verification and subject to the information provided, the RVB
advises the CB whether or not to issue the respective digital certificate.
The third element in this system is the State which, acting through the
Competent Administrative Authority (CAA), oversees development of the
digital certification market by controlling registration of CBs and RVBs.
The CAA is responsible for ensuring that the CBs and RVBs meet
international standards and the commitments made in their Declarations of
Certification Policies. The Authority also recommends adoption by the
market of new technology standards applicable to digital signatures and
any other form of electronic signature, provided that it meets integrity
and authentication requirements and is not repudiated.
This law permits free competition in the digital certification market by
not discriminating between digital certificates issued by Peruvian
Certification Bodies and those issued by foreign firms.
The regulations currently in preparation will establish a regulatory
structure that recognizes the electronic signature regime in general
(Principle of Neutrality), as well as devising a specific regime for
In the case of digital signatures, that structure is made up of the CBs,
RVBs and CAA, as well as the hardware, software and procedures that
incorporate the provision of digital certification service.
The law recognizes that a document bearing a digital signature has
probative value between the parties, but does not ensure the legal
validity of the contents of the message which, depending on the type of
instrument, must be prepared by a notary public or other legal authority,
and in accordance with specific legislation governing each case.
Finally, the law seeks to deal with the framework for representation in
the case of juridical persons. Specifically, it seeks to provide a
mechanism by which juridical persons may cancel certificates issued for
the use of their employees in representing them, such that they may revoke
such powers in the same way that this is done in the real world.
To accomplish this, a distinction is made between the holder of a digital
certificate and the user of the digital signature. In the first case, it
is the organization which acquires the certificate, and which, as the
owner of same, may request its cancellation when it sees fit. And in the
second case, the user is a natural person to whom the organization gives
the digital certificate so that he/she may create the corresponding user
code and apply a digital signature to data messages as part of his/her
representation, and within the framework of the powers assigned to that
Source: Instituto Peruano de Comercio Electrónico (IPCE)
Access and Infrastructure
U.S. national experience demonstrates that competition is the means to
achieve widespread availability of telecommunications and information
services. The Telecommunications Act of 1996 provides for accelerating
deployment of telecommunications networks by opening all
telecommunications markets to competition. The framework has spurred
investment in broadband networks and services by all industry segments
using a variety of technologies including telephony, cable TV,
terrestrial, fixed, mobile, wireless and satellite. It also requires the
Federal Communications Commission to ensure that all regions of the nation
have access to advanced telecommunications and information services.
As a result of the Telecommunications Act and other policies that
encourage competition, the availability of telecommunication services
throughout the U.S. has improved and costs are lower. This has stimulated
Internet usage, local content development, and e-commerce – which in turn
stimulates further investment in the e-commerce infrastructure and feeds
into the growth cycle. In the U.S., flat-rate prices for local telephone
service and fixed rate pricing for Internet access have also significantly
increased both the number of individuals online and the time each user
Another key component of Internet availability in the U.S. is
competitively priced leased lines for businesses and Internet Service
Providers (ISPs). These lines are vital to Internet Service Providers in
connecting to the Internet backbone. They also help firms integrate their
supply chains to efficiently reach their customers.
The U.S. has adopted numerous programs to make telecommunications and
information services available to all sectors of the population, bridging
the “digital divide”in under served areas. Programs include the e-rate
program which has led to the connection of classrooms and libraries to the
Internet, Community Technology Centers, and the Department of
Agriculture’s Rural Utilities Service (RUS) which has facilitated the flow
of telecommunications investment to rural America.
Small and Medium Sized Enterprises
The U.S. Government has made access to e-commerce for small and medium
sized enterprises a high priority and is taking steps to address key
obstacles to SME participation in e-commerce by developing export
transaction tools to help companies sell internationally and making all
related federal government programs and products available through the
Internet. U.S. government efforts to help SMEs get online include the use
of virtual trade shows, software toolkits, training programs, and
e-commerce counseling. Examples include:
• www.USATrade.gov - U.S. Commercial Service web site offering access to a
variety of resources for SMEs seeking to export and to participate in
• www.E-ExpoUSA.doc.gov - on-line virtual trade show featuring electronic
trade leads, international exposure, and multimedia;
• Infotechlink.com - targeted to global buyers of information technology
products and services;
• Manufacturing Extension Partnership (MEP) - helps smaller manufacturers
become export ready and will focus on applying e-commerce solutions to
export counseling for manufacturers;
• IT Management Planning Tool - software tool that helps SMEs assess and
manage their IT infrastructure and analyze their e-business readiness;
• Global Technology Network (GTN) www.usgtn.org - a network of domestic
and international partners that assists U.S. small and medium size firms
seeking access to emerging overseas markets.
The existence of efficient and secure domestic payments, clearing, credit
and insurance systems has been critical to the rapid development of
electronic commerce within the United States. Policies which foster
flexible, innovative approaches spurred the development of this financial
services infrastructure, enabling wholesale and retail businesses to move
their B2B and B2C marketing and sales onto the web with minimal concerns
about completing or insuring the financial portion of the transaction.
In the U.S., credit cards are the primary method of payment for online
purchases and their wide acceptance is propelling the U.S. toward a more
cashless society. It is estimated that of the 14 million merchants
worldwide that accept payment cards, over 3.3 million are in the U.S.
Consumer payment cards are held by over 75% of U.S. consumers, with more
than 80% of them
having used their cards in the past month.
While in the United States credit cards are the primary tool for
electronic payment, throughout much of the rest of the Hemisphere, systems
based on credit cards are widely perceived to be inadequate as they are
unavailable for many potential e-commerce consumers in the Americas and
relatively expensive for small and medium-sized business, including
retailers. Although these impediments are seen to be less daunting in the
U.S., for B2C e-commerce and some SME applications, U.S. banks and other
companies are creating novel approaches to supplement traditional payment
methods. These include e-commerce charges and payments incorporated into
existing utility bills, taking advantage of existing credit relationships;
use of debit cards; new payment technologies such as bar code scanning,
smart cards, electronic wallets and cellular telephones; deployment of new
security technologies; and prepaid cards with small amounts of purchasing
power for citizens who lack access to traditional credit.
Historically in the U.S., banks have been the main actors in the payment
systems field because of the preponderance of cash transactions and the
membership requirements of credit card associations. New entrants
utilizing electronic payment approaches described above are increasingly
able to add unique solutions and value to the payments system and new
opportunities for adding value are being created such as person-to-person
These new services are being offered in regulated as well as unregulated
industries in the U.S., creating useful competition as well as new
challenges, raising issues which today are being addressed by government,
industry and consumers.
The evolution of U.S. laws demonstrates the importance of
technology-neutral legislation that respects private parties’ freedom of
contract and does not mandate licensing of CAs. In 1995 the state of Utah
enacted a technology-specific law that gave legal effect only to digital
signatures and required certification entities to be licensed. Its
burdensome requirements on both authentication and licensing caused it not
to be used as a model. Other U.S. states, seeing the inadequacies of the
Utah model, developed their own, often quite different legal rules.
The divergence of approaches, and the threat of inconsistency among the
laws of the 50 U.S. states, led the National Conference of Commissioners
on Uniform State Laws in 1999 to develop the Uniform Electronic
Transactions Act (UETA). UETA gives legal effect to electronic signatures
and documents, but it does not favor any particular technology, nor does
it provide for the licensing of certification entities. The same concern
about divergent approaches caused the U.S. Congress, in June 2000, to
enact the Electronic Signatures in Global and National Commerce Act
(E-SIGN). Like UETA, E-SIGN provides for legal recognition of electronic
signatures and documents, and does not extend presumptions or other legal
benefits to one specific authentication technology. Moreover, E-SIGN
preempts state laws on electronic transactions, other than UETA, unless
they are consistent with the legal rules prescribed in E-SIGN. Thus, state
laws are now superseded to the extent that they give benefits to a
particular technology. Both statutes also importantly respect party
autonomy and give recognition to the acts of electronic agents. In
addition, neither E-SIGN nor UETA provide for the licensing or
accreditation of certification service providers.
The U.S. is actively participating in work conducted at the international
level. The National Law Center for Inter-American Free Trade (NLCITF) is
in the process of developing model rules for electronic signatures and
documents (titled the Uniform Inter-American Rules for Electronic
Documents and Signatures (UIAREDS)) that embody these policy
The U.S. favors an approach to consumer protection in the online
environment that is based upon industry self-regulation, enforcement of
existing legal protections and refining existing consumer protection laws
where necessary to accommodate the unique characteristics of the online
environment. The Department of Commerce is working with the private sector
to develop consumer awareness campaigns and to encourage industry efforts
to help consumers resolve complaints about online purchases and to achieve
effective consumer protection online.
The Federal Trade Commission (FTC) has taken the offensive against
misleading and deceptive practices online through systematic analysis of
the marketplace; rigorous enforcement of existing law; encouragement of
industry self-regulation; education of the consumer and business; and an
inclusive approach to policy making. The FTC Act generally prohibits
unfair or deceptive commercial practices, including practices online. By
the end of 2000, the agency had already brought 165 cases against 562
defendants for violations of the FTC Act online.
The FTC systematically analyzes consumer complaint data to identify and
target the most serious cases of fraud, deception, and identity theft,
coordinate law enforcement efforts, and respond quickly to emerging
problems. Fraud complaints become part of the FTC’s Consumer Sentinel, an
international, multi-state database that uses the Internet to provide
secure access to over 250 law enforcement agencies in the U.S., Canada,
Law enforcement officials around the world have recognized the need to
cooperate and share information and experiences. The U.S. signed
cooperation agreements in 2000 with consumer protection agencies in
Australia and the UK, and is pursuing cooperative arrangements with other
countries as well. The year 2000 culminated with an announcement of a
global law enforcement project, involving 251 actions against online fraud
taken by agencies from 9 countries and 23 states. The U.S. has also been
active on the OECD Committee on Consumer Policy which issued guidelines
that set forth general principles intended to help eliminate some of the
uncertainties consumers and businesses encounter when buying and selling
online. These guidelines encourage private sector initiatives that include
participation by stakeholders including business, government and consumer
representatives, and emphasize the need for cooperation among governments,
business and consumers.
I. ACCESS AND INFRASTRUCTURE
The basic objective of this project undertaken by the National
Telecommunications Administration (ANTEL) is to ensure universal access to
Internet in Uruguay.
To this end, the project will provide each ANTEL client (i.e., the users
of fixed telephony services, currently numbering around 1,100,000) with a
terminal or similar device yet to be defined, under very affordable terms.
This will enable ANTEL’s clients to simultaneously have access to Internet
(through the IP National Network) and make use of telephone services.
An ANTEL portal will be situated on the IP National Network, which will
host public and private sites and the Adinet mail services. Under this
project, Adinet mail will be provided to all clients. Uruguay would be the
first country in the world to undertake a project of this nature, having
as it does certain basic characteristics favorable for such a project,
- a scale or size suitable for implementing such a project, enabling
investments to be highly effective, a goal not feasible at other scales
WHAT ARE ITS PRINCIPAL OBJECTIVES?
- suitable infrastructure: Uruguay is the first country in the Americas to
have a 100% digital network. Its data network provides the greatest
coverage with a variety of state-of-the-art technologies and the best
prices in the region.
• To provide universal access to Internet (enabling all ANTEL clients to
access the “Uruguayan network” and the “world network”), within a period
of approximately 3 years.
• The “second telephone line” project. (The Mercurio project will make it
possible to simultaneously connect an Internet access terminal and a fixed
telephone by means of various technological access mechanisms, including
LMDS, ADSL, E1, nx64, etc.)
• To stimulate the development of local content (both public and private),
enabling content providers to supply information to all ANTEL clients.
These will be accessible to both residents in Uruguay and to users in any
part of the world.
• To significantly increase the bandwidth throughout the network (in line
with the growing needs resulting from increased traffic).
• To bring about an overall reduction of costs
• To foster the development of local and global content
• To host web pages
• To provide access to investors as potential “partners”
• To increase business opportunities for software supplier companies
• To increase business opportunities for hardware supplier companies
• To stimulate local and world information technology
• To increase the volume of telephone traffic
• To increase the volume of data traffic
WHAT WILL MERCURIO OFFER?
In essence, the Mercurio project will offer packages to fixed telephony
users, including a device for accessing Internet and the access technology
at a reduced cost. The packages will be tailored to the different profiles
of the clients, and the access device will vary according to the profile.
To begin with, three likely Internet access devices are being considered:
PC, Internet navigator, and a simple, custom-designed terminal. These
devices will make it possible to provide services to different segments of
clients: those interested in having all computer-related facilities and
those who are not as familiar with the use of a PC but whom the project
aims to keep involved.
In addition to the devices and the access technology, Mercurio will offer
web pages through its portal, which will be designed in due time. Briefly,
the portal will have a virtual campus linked to education, electronic mail
and all the web pages that spark a deep interest in users.
Uruguay's National Committee on the Information Society was created by
decree on August 8, 2000 (Decree N° 225/00) for the purpose of
establishing a national strategy, a national response to the profound and
radical changes that new technologies are producing in the economy, trade,
culture, work, health, education and even in how leisure time is used
throughout the world.
This strategy is described in an Agenda entitled “Uruguay on the Net”
which must be translated into concrete, rapid and effective action at
different levels of implementation, involving the lowest investment
possible in bureaucratic expenses and addressing the time factor, which is
key to all that has been called the New Economy.
II. NATIONAL COMMITTEE ON THE INFORMATION SOCIETY
The priority objective of the National Committee on the Information
Society is to work on the basis of an Agenda for the development of the
Information Society (Uruguay in Network), taking action in five Working
1) TELEMATIC LITERACY:
Knowledge regarding information and communications technologies (ICT) must
be the heritage of the entire society. The work to be undertaken through
this Working Area will address the new role of educators, the structural
changes needed, and the organization of education as a key component for
building the Information Society (IS).
• Develop mechanisms for adapting curricula on an ongoing basis in order
to incorporate ICT (primary, secondary, technical, university education)
• Provide training to the corps of educators in how to use ICT in their
• Study the development of curricula for the new professional profiles
required by the IS.
• Foster the use of new study technologies, through the creation of
multimedia web pages
• Ensure accessibility for all citizens
2) DEVELOPMENT OF TELEMATICS SERVICES FOR CITIZENS AND BUSINESSES
The development of telematic services for citizens and businesses must not
contribute to increasing the gap between those who have access and those
who do not. It will be necessary to stimulate universal access to the
Information Society, primarily through training, computer infrastructure,
access lines, affordable costs, and web pages reflecting citizens’ needs.
• Create public access centers by late 2001
3) MODERNIZATION OF THE PUBLIC ADMINISTRATION
• Install Internet access terminals at Post Offices
• Install Internet access terminals in all public buildings with
considerable public traffic
• Promote events and opportunities, including fairs, contests, meetings,
demonstrations, etc., for introducing
more and more citizens to the use of
• Create the Uruguayan Museum of the Information Society
• Design specific public awareness campaigns for the communications media
regarding the purposes and scope of the national strategy on the
• Foster the implementation of virtual assemblies on topics being
addressed in Parliament
• During this term of government, all State Directorates must adopt new
information and communications technologies in support of their
administrative and service-providing systems.
4) PROMOTION OF AN EFFICIENT TELECOMMUNICATIONS AND INTERNET MARKET
• Develop a regulatory framework and regulations to support the
development of the Information Society.
• Promote the creation of a Parliamentary Committee on the Information
• Conduct a study on legal barriers to the development of the Information
• Identify measures to ensure privacy, security and the protection of
• Promote measures to support electronic commerce
• Adjust tax legislation to electronic commerce
• Design an Internet-based government procurement system
• Re-draft the current law on intellectual property to include protection
of software and data bases
• Promote the use of electronic means for conducting public bidding
• Promote an efficient telecommunications and Internet market
• Develop a telecommunications infrastructure that guarantees the band
width throughout the territory
• Develop a telecommunications infrastructure that guarantees the band
width throughout the country
• Introduce new services, tapping the most advanced technologies (Uruguay
Net, dedicated Internet, frame relay, videoconference services in virtual
classrooms, voice on IP through IPTEL service, and MegaExpress service)
• Develop technical and commercial solutions for incorporating Internet
service access providers into the data network
• Improve benefits on Internet
• Transform UruguayNet into a regional network, so as to reduce the cost
of dial-up connection
• Foster electronic commerce activities.
• Incorporate ANTEL into the Telecenters, making it possible to navigate
and access electronic mail with the use of the chip cards used for public
5) PROGRAM TO SUPPORT THE COMPETITIVENESS OF THE SOFTWARE SECTOR IN
The country’s strategy with regard to the growing internationalization of
the software sector will be based on the development of a Uruguayan
technological software pole called “Polo Uruguay Soft.”
Polo Uruguay Soft will not be associated with a specific physical
location; rather, it refers to a strategy to create a true institutional
and functional network that will help improve the conditions of
competitiveness for the software sector. This institutional network will
cover initiatives along the lines of technological parks.
Physically, Polo Uruguay Soft will occupy a small building where a variety
of functions are coordinated and where various services will be provided
to all the companies of Uruguay's software sector.
The following will be involved in the infrastructure:
• Uruguayan Software Chamber
• Technological Laboratory of Uruguay
• Silicon Plaza
• Uruguay XXI
• Centro Uruguay Soft
III) RECENT LEGISLATION
On December 28, 2000, the Government passed two decrees granting tax
exemptions for the production of software having significant impact. The
first exempted companies dedicated to “producing logical support”
(software) from paying the Income Tax on Industry and Trade (IRIC), during
the January 1, 2001 - December 31, 2004 period.
The second included software development, software advisory services and
call centers in activities considered “export of services” with regard to
the payment of the VAT (value-added tax). Accordingly, these companies
receive the same tax treatment as other exporters, who are reimbursed for
the VAT paid in making their purchases. These measures will have a strong
impact on the development of this domestic industry.
While to date most software exporters do not pay this tax, the decree
covers a very diverse scenario ranging from single-person businesses who
bill as personal service providers, to companies that locate services in
foreign trade zones and, therefore, do not pay domestic taxes. This decree
complements the approval of a software copyright law.
The second decree is based on the fact that "advisory services to foreign
entities and software-related services are activities that are essentially
based on knowledge, the development of which is a priority objective of
the present administration."
IV) OTHER INITIATIVES
Every day, the Internet is becoming more and more commercial in nature.
Companies aim to obtain the best advantages offered by the network, but to
successfully establish businesses and commercial transactions in the
virtual world, the system must be safe.
In order to overcome the insecurity of electronic commerce, Uruguay's
National Chamber of Trade and Services has added Digital Certification, a
service it currently offers to companies throughout the country. On May
25, 2000, the Digital Certificate was officially launched, as a result of
an agreement signed with Spain's Superior Council of Chambers of Commerce
and Industry. Digital Certificates provide international legal guarantees
for communications and business transactions.