April 2002

The Grupo de Trabajo de COMERCIO ELECTRÓNICO [hereafter Working Group on Electronic Commerce] was created in April 1998 to act in a non-negotiating capacity as a joint committee of public and private sector experts and academics specializing in ELECTRONIC COMMERCE. Its objective is to augment and expand the benefits of ELECTRONIC COMMERCE, and to help determine how this field should be treated in FTAA negotiations.

With this mandate in mind, our Group began examining the aspects of electronic commerce deemed most important in the context of the FTAA process.

Strengthening of information technology (IT) infrastructure comes down to providing access that permits suitable private sector competition in telecommunications while facilitating interconnection under reasonable conditions which gradually bring down the costs associated with basic Internet access and use.

Another important aspect has to do with reducing the cost for the purchase of the technology tools that are essential to electronic commerce, for which reason we urge the government to introduce the tariff reductions called for in the Information Technology Agreement as soon as possible.

Technical standards are necessary to ensure the necessary interoperability of networks at the world level. To this end the government should support wherever possible the efforts of independent entities to establish technical standards by CONSENSUS, and thus avoid imposing local, national or regional standards that compromise the universality of the elements which make ELECTRONIC COMMERCE possible.

To increase participation it is recommended that the government take the important step of itself becoming a model user of ELECTRONIC COMMERCE by offering public services online, for example. This will no doubt yield other benefits as well in terms of savings, efficiency and productivity.

As a further step in this direction, it is important that the government develop a joint effort aimed at encouraging small and medium-sized enterprises (SMEs) to participate in ELECTRONIC COMMERCE. To encourage SMEs, the government should conduct an advertising campaign which targets that sector and explore methods of adapting its trade promotion programs to introduce SMEs in international markets via ELECTRONIC COMMERCE.

It is equally important to deal responsibly with serious aspects such as intellectual property rights, taxes and methods of payment. A multisectoral approach is therefore recommended as a means of adapting these aspects for purposes of promoting the growth of ELECTRONIC COMMERCE.

Others topics of importance have to do with the legal instruments that are essential for building confidence in the market, instruments such as digital signatures and nonrepudiation of electronic certification. It is the responsibility of the government to promulgate the laws and regulations needed to protect the rights of consumers and suppliers alike.

In this area it is important to maintain the same framework of consumer protection rules, modifying these as necessary to reflect the nature of the new medium and ensuring that consumers using ELECTRONIC COMMERCE receive protection which is no less than that enjoyed by those engaging in traditional transactions.

Finally, the government must study the current legal system and rules governing jurisdiction to ensure that these do not contain gaps or create barriers to ELECTRONIC COMMERCE. In all cases they may take as models the laws that the WTO and other organizations are developing to promote the adoption of ELECTRONIC COMMERCE.

• In order to provide the necessary bandwidth for guaranteeing access to basic telecommunications service, the government must update its regulations to promote greater competition among private sector providers of telecommunications services. Policies that promote competition, facilitate interconnection under reasonable conditions and permit private investment, will help to reduce the cost for basic access and use of the Internet, as well as fostering development of telecommunications infrastructure.
   
• Promote the creation of local network access points (local NAPs), i.e. local interconnection systems for transmission of data between different Internet service providers (ISPs).
   
• To facilitate widespread participation in electronic commerce, the government must provide public access points to the Internet, for example in schools, libraries, community centers and public telephone offices.
   
• To lower the cost of the essential devices required for engaging in electronic commerce, the government is urged to apply the tariff reductions specified in the Information Technology Agreement (ITA) as soon as possible.

• In order to promote the interoperability of telecommunication networks and services, the government must wherever possible support the setting of technical standards by international agencies and/or independent national entities acting by consensus.
   
• The government must avoid imposing local, national or regional standards that hinder the universality of the Internet and may constitute new barriers to trade, inasmuch as that universality is the single most important characteristic allowing electronic commerce over the Internet.

Member countries of the FTAA must promote and make use of electronic commerce in transactions between governments, and between each government and the enterprises and individuals with which it does business, so as to conduct transactions more quickly, at lower cost and with broader coverage. For example, this may be done in areas such as:

• In order to encourage SMEs to make use of the Internet to open new markets, the government must conduct an advertising campaign aimed at these enterprises, clearly demonstrating that electronic commerce can help them penetrate new international markets and showing them how the country’s infrastructure and ancillary services can help them become part of the digital economy.
   
• To ensure that SMEs are able to make use of electronic commerce, the government must cooperate with the country’s trade associations and chambers of commerce in establishing Internet terminals where SMEs can connect to networks, post information and exchange ideas on lessons learned and best practices.
   
• To encourage greater participation by SMEs in international trade the government must explore methods of adapting its trade promotion programs so that they are more effective in helping SMEs to penetrate foreign markets via electronic commerce (e.g. by means of virtual trade fairs and expansion of public/private credit insurance policies to cover these new electronic transactions).

• The government must take an active role and promote cooperation with the efforts of the WTO and WIPO to develop and expand the national and international consensus in issues concerning the intellectual property rights that arise from electronic commerce. The key issues in this area include effective protection for trademarks online, matters involving Internet domain names, and effective copyright protection.

• The government must conduct a multisectoral examination of the tax implications of this new form of trade, and seek the adoption of technologies that facilitate electronic commerce.
   
• To maximize the benefits and promote the growth of electronic commerce, the government must promote adoption of a legal framework which provides broad access to effective payment systems that protect the interests of the business community and consumers alike.

• The government must establish an appropriate framework for electronic commerce in keeping with each country’s legal system. The government of FTAA member countries must identify and eliminate legal barriers that prevent the recognition of electronic records and transactions, and adopt new laws that permit their recognition, taking particular account of the applicable provisions of the Model Law of the United Nations Commission on International Trade Law (UNCITRAL).

• The government must ensure that its regulations governing encryption, particularly the restrictions or certification requirements for the importation or use of encryption, do not represent an unfair barrier to encryption products manufactured abroad.
   
• The government must create an environment that promotes the development by private sector enterprises of technological solutions for improving network security.

• To foster development of electronic commerce, the government must promote appropriate research on legal recognition of electronic signatures following principles designed to maintain technological neutrality.
   
• The government must take steps to discover and revoke legal obstacles to the recognition of nonrepudiation in electronic transactions, including adoption of the enabling provisions of the Model Law of the United Nations Commission on International Trade Law (UNCITRAL).
   
• The government must consider the benefits of permitting the parties engaging in a transaction to choose their method of authentication, according to the requirements of their legal system.
   
• Governments of FTAA member countries must acknowledge the importance of finding flexible and interoperable technological solutions to issues concerning authentication and certification, to be carried out by the private sector.
   
• In the case of electronic transactions between companies, the parties must be allowed to designate the jurisdiction and method of their choice for purposes of settling any disputes that may arise.

• The government must encourage cooperation with other member countries and enterprises within the FTAA in promoting adequate levels of protection for privacy.
   
• Any proposal for protection of the right to privacy must be national in scope, and at the same time must encourage self-regulation based on internationally accepted principles relating to fair access to information practices. The OECD’s Privacy Guidelines, for example, could serve as a valuable reference in this area.
   
• The private sector should be encouraged to develop technological solutions, codes of conduct and other measures to ensure that the privacy of persons is duly protected, in accordance with legal requirements.

• The government must continue to enforce the current consumer protection laws, adapting these where necessary to reflect the new medium so that online consumers receive an effective level of protection which is no less than that afforded consumer in traditional transactions.
   
• The government, together with the private sector, must promote education for companies and consumers on the risks and advantages of conducting electronic transactions on the Internet.
   
• The government, business organizations and consumer groups must work together to draw up consumer protection principles and measures, including preparation of online and easy-to-use mechanisms for resolving consumer complaints.
   
• Electronic commerce is subject to the country’s current legislation governing selection of the applicable laws and jurisdiction in the event of disputes. The government must study the system of laws and jurisdictions applied by other nations in this area, in order to develop a better understanding of how these issues are resolved in the other member countries of the FTAA.