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E-commerce

Updates

16 Feb 2017

Аs part of a campaign for protecting consumers’ rights in the US, five public interest groups called on the Federal Trade Commission to take a number of steps to protect consumers, and promote competition and innovation. The suggestions state that the FTC must enforce existing consent orders; it should incorporate public comments on proposed settlement agreements; it should mandate fair information practices in consumer privacy settlements; it should promote transparency; it should seek greater authority to protect American consumers; it should bring more actions based on ‘unfairness’ authority; it should oppose mergers that consolidate user data and threaten privacy; it must produce concrete outcomes from Commission workshops; it should enforce the Privacy Shield and COPPA; and it must support the establishment of a Data Protection Agency in the US.

1 Feb 2017

The continuing government Internet ban in English-speaking areas of Cameroon is paralysing banks and affecting the economy. The ban was implemented in an attempt to quash opposition, but the lack of Internet has affected business and other areas, as well as media and journalism, with journalists resorting to sending reports by SMS. As collateral effects, ATM services have been suspended, and even civil servants' pay has been interrupted, in spite of last year's United Nations Human Rights Council resolution condemning disruption of access.

17 Jan 2017

The Canadian government is considering to impose a so-called 'Netflix tax' on digital services bought from foreign companies over the Internet. Currently, Internet companies as Netflix do not apply Canadian sales taxes to the bills they send to Canadian customers, while Canadian firms do collect federal and provincial taxes. Canada has already endorsed OECD's 'destination principle', which specifies that sales taxes apply to the jurisdiction in which the customer resides. Yet, this endorsement does not oblige companies to enforce such a sales-tax regime.

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E-commerce has been one of the main engines promoting the growth of the Internet over the past 15 years. The importance of e-commerce is illustrated by the title of the document that initiated the reform of Internet governance and established ICANN: the 1997 Framework for Global Electronic Commerce, which states that ‘the private sector should lead’ the Internet governance process and that the main function of this governance will be to ‘enforce a predictable, minimalist, consistent, and simple legal environment for commerce’. These principles are the foundation of the ICANN-based Internet governance regime.

The choice of a definition for e-commerce has many practical and legal implications. Specific rules are applied depending on whether a particular transaction is classified as e-commerce, such as those regulating taxation and customs.

For the US government, the key element distinguishing traditional commerce from e-commerce is the online commitment to selling goods or services. This means that any commercial deal concluded online should be considered an e-commerce transaction, even if the realisation of the deal involves physical delivery. For example, purchasing a book via Amazon.com is considered an e-commerce transaction even though the book is usually delivered via traditional mail. The WTO defines e-commerce more precisely as: ‘the production, distribution, marketing, sale, or delivery of goods and services by electronic means’. The EU approach to e-commerce deals with ‘information society services’ that cover ‘any service normally provided  for remuneration, at a distance, by means of electronic equipment for the processing (including digital compression) and storage of data, and at the individual request of a recipient of a service’.

 

The WTO and e-commerce

As the key policy player in modern global trade, the WTO has established a system of agreements regulating international trade. The major treaties are the General Agreement on Tariffs and Trade (GATT) dealing with the trade in goods, the General Agreement on Trade in Services (GATS), and the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS). Within this framework, the WTO regulates many relevant e-commerce issues, including telecommunication liberalisation, IPR, and some aspects of ICT development.

Although e-commerce has been on the WTO’s diplomatic back-burner, various initiatives have arisen and a number of key issues have been identified.

 

Other international e-commerce initiatives

One of the most successful and widely supported international initiatives in the field of e-commerce is the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Electronic Commerce. The focus of the Model Law is on mechanisms for the integration of e-commerce with traditional commercial law (e.g. recognising the validity of electronic documents). The Model Law has been used as the basis for e-commerce regulation in many countries.

Another initiative designed to develop e-commerce is the introduction of e-business XML (ebXML) by the United Nations Centre for Trade Facilitation and Electronic Business (UN/123 CEFACT).

The OECD’s activities touch on various aspects related to e-commerce, including consumer protection and digital signatures. The OECD emphasises promotion and research regarding e-commerce through its recommendations and guidelines.

UNCTAD is particularly active in research and capacity-building, focusing on the relevance of e-commerce to development. Every year it monitors the evolution of the information economy in a report which assesses the role of new technologies in trade and development.

In the business sector, the most active international organisations are the International Chamber of Commerce, which produces a wide range of recommendations and analyses in the field of e-commerce; and the Global Business Dialogue, which promotes e-commerce in both the international and the national context.

 

Regional initiatives

The EU developed an e-commerce strategy at the so-called Dot Com Summit of EU leaders in Lisbon (March 2000). Although it embraced a private and market-centred approach to e-commerce, the EU also introduced a few corrective measures aimed at protecting public and social interests (the promotion of universal access, a competition policy involving consideration of the public interest, and a restriction in the distribution of harmful content).

The EU adopted the Directive on Electronic Commerce as well as a set of other directives related to electronic signatures, data protection, and electronic financial transactions. In the Asia-Pacific region, the focal point of e-commerce co-operation is the Asia-Pacific Economic Co-operation (APEC). APEC established the E-Commerce Steering Group, which addresses various e-commerce issues, including consumer protection, data protection, spam, and cybersecurity. The most prominent initiative is APEC’s Paperless Trading Individual Action Plan, which aims to create paperless systems in cross-border trade.

Events

Instruments

Conventions

Judgements

Resolutions & Declarations

Wuzhen World Internet Conference Declaration (2015)

Standards

Recommendations

Other Instruments

COMESA Model law on electronic transactions

Resources

Articles

The Anti Tax Avoidance Package - Questions and Answers (2016)
Taxation and Today's Digital Economy (2015)
Withholding Taxes in the Service of BEPS Action 1: Address the Tax Challenges of the Digital Economy (2015)
A Policymaker's Guide to Internet Tax (2013)
The Impact of Internet Content Regulation (2002)
E-Commerce Law

Publications

Internet Governance Acronym Glossary (2015)
An Introduction to Internet Governance (2014)

Papers

Personal Data Storage in Russia (2015)
Aid for eTrade: Accelerating the Global eCommerce Revolution (2014)
Study on the Economic Impact of the Electronic Commerce Directive (2007)

Reports

2016 Special 301 Report (2016)
Advancing Digital Societies in Asia (2016)
UNCTAD B2C E-commerce Index 2016 (2016)
The 2016 National Trade Estimate Report on Foreign Trade Barriers (2016)
The Economic Impact of Rural Broadband (2016)
e-Commerce in India: A Game Changer for the Economy (2016)
The Digital Economy & Society Index (DESI) 2016 (2016)
A New Regulatory Framework for the Digital Ecosystem (2016)
2016 Digital yearbook (2016)
Connectivity: Broadband Market Developments in the EU (2016)
Trade Facilitation and Paperless Trade Implementation Survey 2015 (2015)
Addressing the Tax Challenges of the Digital Economy (2015)
OECD Digital Economy Outlook 2015 (2015)
Country Factsheets for the Digital Single Market (2015)
Information Economy Report 2015 - Unlocking the Potential of E-commerce for Developing Countries (2015)
Taxation and the Digital Economy: A Survey of Theoretical Models (2015)
The Global Information Technology Report 2015: ICTs for Inclusive Growth (2015)
Digital Trade in the U.S. and Global Economies, Part 2 (2014)
Design and Development of Initiatives to Support the Growth of e-Commerce via Better Functioning Parcel Delivery Systems in Europe (2014)
Commission Expert Group on Taxation of the Digital Economy (2014)
The Impact of Online Intermediaries on the EU Economy (2013)
Consumer Market Study on the Functioning of E-commerce and Internet Marketing and Selling Techniques in the Retail of Goods (2011)
Study on the Liability of Internet Intermediaries (2007)
Case Studies of E-commerce Activity in Rural and Small Town Businesses (2007)
Consumption Taxation of Cross Border Services and Intangible Property in the context of E-commerce: Guidelines on the Definition of Place of Consumption (2003)
Summary of the Results of the Public Consultation on the Future of Electronic Commerce in the Internal Market and the Implementation of the Directive on Electronic Commerce (2000/31/EC)
Cyberlaws and Regulations for Enhancing E-commerce: Case studies and Lessons Learned

Other resources

Economic Internet Toolkit for African Policy Makers (2015)
Harmonizing Intermediary Immunity for Modern Trade Policy (2014)
E-commerce in Developing Countries: Opportunities and Challenges for Small and Medium-Sized Enterprises (2013)
Questionnaire on the Future of Electronic Commerce and the Implementation of the E-Commerce Directive (2010)
A Guide for Business to the Electronic Commerce (EC Directive) Regulations 2002 (SI 2002/2013) (2002)
International Sources of Electronic Commerce Regulation (2001)

Processes

WSIS Forum 2016 Report

Several sessions at the WSIS Forum discussed e-commerce related issues. In Action Line C7 E- business - Leveraging ICT to Support the SDG on Trade Growth for Least Developed Countries (session 116) it was noted that, in LDCs, e-commerce is crucial for small and medium enterprises (SMEs). However, challenges - such as poor connectivity, complexities related to import and export, and other trade barriers - need to be tackled. Participants in the session shared experiences of businesses in Bangladesh, Sri Lanka, and Zambia. 

It was also stressed that e-commerce has the potential to reduce costs for SMEs and integrate small economies into the international trade system, and that innovation is a key factor in strengthening e-commerce. Panellists in New Frameworks for Policy Experimentation Fostering ICT4D (session 134) said that innovation is the missing link between the analogue and the digital economies. SMEs and the middle class of communities can disappear if local regulations do not promote a good balance between local-global players and analogue-digital businesses. 

In a session dedicated to the postal network - Putting Public Assets to Work (session 159 ) - panellists highlighted the work that several UN organisations - including the ITU, the WTO, UNCTAD, and the UPU - as well as many other entities, are undertaking in the area of e-commerce, with the aim of encouraging economic development. 

 

IGF 2015 Report

During this year’s IGF, economy-related topics were often linked to novel economic dynamics of the Internet industry. One of them was Internet Plus – described during ‘Internet Plus’ to Fuel Industry Evolution (WS 110) – as a model that integrated mobile Internet, cloud computing, and the Internet of Things, with the aim of scaling for production and creating smart factories. The more ubiquitous platforms for mobile payments (WS 56) also boosted the Internet economy.

To keep the Internet engine running, innovation is key, especially when it comes to intellectual property. Unlocking Internet Economy through Copyright Reform (WS 167) addressed the consequences of copyright policies on Internet innovation, with the session organisers arguing that the current Internet innovation system, characterised by ‘multinational corporations, fledging start-ups, telecommunications providers, content creators and consumers [forming] increasingly complex value chains’, often contradicts the copyright regime.

Developments in the digital economy also have consequences on employment. Digital Economy, Jobs and Multistakeholder Practices (WS 29) discussed the short-term phenomenon of job losses due to automation, which is believed will be offset by the job-creating impact of innovation in the long term.

Apart from the role of copyright policies and the impact on employment, the consequences of trade agreements (WS 7) and tax strategies (WS 200) on the Internet economy and business sector were discussed.

One particular view on taxation was that it was considered a hindrance to access. A typical example offered by a Facebook representative during Revenue Streams that Grow & Sustain Internet Economies (WS 241) was that of connectivity taxes: import duties, sales taxes of devices and sales taxes on the purchase of data plans are being imposed at various points in the value chain between a user buying a device and actually being able to use it. ‘Typically, you tax things you want less of. If you want more connectivity and you’re imposing additional taxes, or you want more affordability and you’re imposing additional taxes, that’s a hindrance, not something that helps to facilitate what you’re trying to achieve.’

The discussion on the Internet economy also looked at the development aspect, which was the topic of a number of workshops. With reference to taxation and developing countries, a panellist in Economics of the Global Internet (WS 207), said that despite the economic benefits of accessing ICTs, this did not mean that taxation was not required, but that a more balanced fiscal policy was needed.

In How to Bridge the Global Internet Economy Divide (WS 97), a Google representative anchored the discussion to geographical realities: ‘Both regions have challenges, but slightly different. In Europe it’s about scaling and in Africa it is more about access.’ The main challenge,  therefore – as suggested in the main session on Internet Economy and Sustainable Development – was how to narrow the divide and empower developing countries. Additionally, we need to tap in to the potential of the Internet economy as a social and economic equaliser.

Notwithstanding, an important interplay between three areas of digital policy – cybersecurity, human rights, and Internet business – is unfolding. In the workshop bearing the same name, panellists discussed this interplay which has had a large impact on a wide range of social issues, citing as an example the current migration crisis to demonstrate the dynamics of the ‘triangle’. As the diagram presented during the workshop illustrated, this interplay deeply permeates other aspects of digital policy.

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