the world bank david satola senior counsel electronic commerce strategies: the basic elements of an...

The World BankThe World BankDavid Satola David Satola

Senior CounselSenior Counsel

ELECTRONIC COMMERCE STRATEGIES:ELECTRONIC COMMERCE STRATEGIES:THE BASIC ELEMENTS OF ANTHE BASIC ELEMENTS OF AN

ENABLING ENVIRONMENT FOR E-ENABLING ENVIRONMENT FOR E-COMMERCECOMMERCE

UNCTADUNCTADGenevaGeneva

Palais des NationsPalais des NationsJuly 11, 2001July 11, 2001

LEGAL AND REGULATORY ASPECTSLEGAL AND REGULATORY ASPECTS

The World BankThe World BankThe World BankThe World Bank

LEGAL AND REGULATORY ASPECTSLEGAL AND REGULATORY ASPECTSOF ENABLING ENVIRONMENT OF ENABLING ENVIRONMENT

STRATEGYSTRATEGY

•BACKGROUNDBACKGROUND

•PROCESSPROCESS

•THEMESTHEMES

•SELECTED LEGAL ISSUESSELECTED LEGAL ISSUES



STRATEGYSTRATEGY

BACKGROUNBACKGROUNDD


If you build it, will they come?If you build it, will they come?

““Do you want to test whether a Do you want to test whether a people is given to industry and people is given to industry and commerce? Do not sound its ports or commerce? Do not sound its ports or examine the wood from its forests or examine the wood from its forests or the produce of its soil. The Spirit of the produce of its soil. The Spirit of trade will get all these things and, trade will get all these things and, without it, they are useless. Examine without it, they are useless. Examine whether this people’s laws give men whether this people’s laws give men the courage to seek prosperity, the courage to seek prosperity, freedom to follow it up, the sense and freedom to follow it up, the sense and habits to find it and the assurance of habits to find it and the assurance of reaping the benefit”reaping the benefit”

Alexis de TocquevilleAlexis de Tocqueville

It’s Transformational It’s Transformational


In the developing world, in the “off-line” economy, In the developing world, in the “off-line” economy, capital flows are generally outward …capital flows are generally outward …

……but capital formation but capital formation has changedhas changed

•knowledgeknowledge

•local contentlocal content


Government Government (“G”)(“G”)

Business Business (“B”)(“B”)

Consumer Consumer (“C”)(“C”)

GovernmentGovernment G2G – G2G – coordinationcoordination

G2B – G2B – informationinformation

G2C – G2C – informationinformation

BusinessBusiness B2G – B2G – government government procurementprocurement

B2B-e-B2B-e-commerce commerce between between businessesbusinesses

B2C – e-B2C – e-commerce in commerce in consumer consumer marketsmarkets

ConsumerConsumer C2G – e.g., tax C2G – e.g., tax compliancecompliance

C2B – price & C2B – price & other other comparisonscomparisons

C2C – auction C2C – auction marketsmarkets

Jonathan Coppel, E-Commerce: Impacts and Policy Challenges 4 (OECD Economic Department Working Paper No. 252 23 June 2000)

0500

1,0001,5002,0002,5003,0003,5004,0004,5005,000

2004 Est.

B2CB2B

Intven, et al., Legal and Regulatory Aspects of E-commerce and the Internet (Forthcoming) World Bank

Types of E-commerce ActivitiesTypes of E-commerce Activities



STRATEGYSTRATEGY

PROCESSPROCESS


ICTICT ProductionProduction GrowthGrowthPoverty Poverty

AlleviationAlleviation

•Remove barriers to entryRemove barriers to entry

efficiency efficiency cost cost

•Pro-entry regulationPro-entry regulation

•Legal & Regulatory certaintyLegal & Regulatory certainty

Development StrategyDevelopment Strategy


Status Quo

Issues Implementation

Reform ProcessReform ProcessIssue Identification & ResolutionIssue Identification & Resolution

Strategies

Policies &Objectives

Stage 3Stage 3Stage 2Stage 2

Stage 1Stage 1

LEGAL REFORMLEGAL REFORM

Broad Public ConsultationBroad Public Consultation

Stakeholder Buy-inStakeholder Buy-in

Local OwnershipLocal Ownership


Policy &Market

Structure Options

Legislation

Cur

rent

Mar

ket

Market Entry

New

M

arke

t

Reform SequencingReform Sequencing

RegulatoryFramework


Law as an Instrument of Social Law as an Instrument of Social PolicyPolicy

• South Africa: South Africa: Electronic Communications and Electronic Communications and Transactions Bill - Transactions Bill -

Nationalization of domain name Nationalization of domain name registration?registration?

• Moldova: Moldova: Law on InformaticsLaw on Informatics – – Privacy, databases, “.md” regulationPrivacy, databases, “.md” regulation

• United States: United States: USA PATRIOT ACTUSA PATRIOT ACT – – Privacy policy in an uncertain agePrivacy policy in an uncertain age



STRATEGYSTRATEGY

THEMESTHEMES


PrinciplesPrinciples

•Preference for Preference for market-based market-based approachesapproaches

•Make use and entry Make use and entry easy easy

• Enhance access Enhance access

• Promote Certainty/ Promote Certainty/ ConfidenceConfidence

•

•Enhance Enhance transactional transactional enforceabilityenforceability

•Harmonize/Harmonize/StandardizeStandardize

•Neutrality – Neutrality – commercecommerce

•Neutrality - Neutrality - technologytechnology

•Protect Intellectual Protect Intellectual Property Property

•Protect Consumer Protect Consumer Rights Rights

Create an enabling environment of Create an enabling environment of predictability & certainty through good predictability & certainty through good

governance and respect for the Rule of Lawgovernance and respect for the Rule of Law


Avoid industry and political capture by establishing Avoid industry and political capture by establishing transparency and independence through structural & transparency and independence through structural &

financial separation of policy, regulation and financial separation of policy, regulation and

ownership functionsownership functions

Gov’tGov’tDetermines Determines

PolicyPolicy

RegulationRegulationRegulates Regulates

SectorSector

Owner/OperatorOwner/OperatorProvides ServicesProvides Services

[Re]-Defining the Role of the [Re]-Defining the Role of the StateState



STRATEGYSTRATEGY

SELECTED LEGAL SELECTED LEGAL ISSUESISSUES


Selected Selected Legal IssuesLegal Issues - - OverviewOverview

• National v. International National v. International DimensionDimension– UNCITRAL, WTO, EU, HagueUNCITRAL, WTO, EU, Hague– Models vs. ConventionsModels vs. Conventions

• Harmonization/Harmonization/StandardizationStandardization– UNCITRAL, WTO, EUUNCITRAL, WTO, EU

• Role of Regulators/RegulationRole of Regulators/Regulation– PKIPKI– Domain Name RegistrationDomain Name Registration– CompetitionCompetition– ForbearanceForbearance

• PrivacyPrivacy– EU v. US ApproachEU v. US Approach– Reponses to Terrorism (AML)Reponses to Terrorism (AML)

• Intellectual Property RightsIntellectual Property Rights– Role of IPRs and DevelopmentRole of IPRs and Development– Local ContentLocal Content

• Technological Convergence / Technological Convergence / Emergence of Competition Law Emergence of Competition Law PrinciplesPrinciples– VoIPVoIP– ccTLD Registration (South ccTLD Registration (South

Africa)Africa)• ADRADR

• IncentivesIncentives• ContentContent• TaxationTaxation• Jurisdiction Jurisdiction (Hague Convention)(Hague Convention)

The World BankThe World BankThe World BankThe World BankThe World BankThe World BankThe World BankThe World Bank

The Usual SuspectsThe Usual Suspects

Laws Laws Affecting Affecting [e-][e-]CommerceCommerce(“off-line” commerce (“off-line” commerce ++))

•Laws relating to Infrastructure Laws relating to Infrastructure LiberalizationLiberalization

•Contract Formation Contract Formation (click-(click-through, browse through)through, browse through)

•Recognition of Digital Recognition of Digital Signature/Digital ContractSignature/Digital Contract

•Public/Private Key RegulationPublic/Private Key Regulation

•CompetitionCompetition

•PrivacyPrivacy

•Intellectual PropertyIntellectual Property

•Domain NamesDomain Names

•Consumer protectionConsumer protection

•TaxTax

•Customs/Customs/ImportImport, FDI , FDI restrictionsrestrictions

•Banking/Financial Banking/Financial (exchange (exchange controls, payment systems)controls, payment systems)

•Dispute ResolutionDispute Resolution

•Liability Liability (content)(content)


International Dimension of International Dimension of

National Law Enabling Environment National Law Enabling Environment •Harmonization/Standardization – Harmonization/Standardization – How How

much, how far?much, how far?

•Treaty/Convention vs. Model lawTreaty/Convention vs. Model law

•InstitutionsInstitutions

•WTOWTO

•UNCITRALUNCITRAL

•EUEU

•Hague ConferenceHague Conference


GATT covers GoodsGATT covers Goods GATS covers ServicesGATS covers Services

Source: WTOSource: WTO

but the online world poses new but the online world poses new challengeschallenges

• Consideration of classification of Consideration of classification of downloadable media, software, etcdownloadable media, software, etc

• ““Examination”Examination” “Negotiation”“Negotiation”

Key area where developing countries can Key area where developing countries can play a roleplay a role

http://www.wto.org/index.htm

The World BankThe World BankThe World BankThe World BankThe World BankThe World BankThe World BankThe World Bank

•certificationcertification

•data privacy protectiondata privacy protection

UNITED NATIONS COMMISSION ON UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW INTERNATIONAL TRADE LAW

Electronic Commerce LegislationElectronic Commerce Legislation

UNCITRAL Model Law on Electronic Commerce with Guide to UNCITRAL Model Law on Electronic Commerce with Guide to EnactmentEnactment

1996 1996 with additional article 5 bis as adopted in 1998with additional article 5 bis as adopted in 1998

UNCITRAL Model Law on Electronic Signatures with Guide to UNCITRAL Model Law on Electronic Signatures with Guide to EnactmentEnactment

20012001 •recognition of data messagesrecognition of data messages

•validity of digital signaturesvalidity of digital signatures

•encryptionencryption

http://www.un.org/

http://www.un.org/


E-commerce Directive - Directive 2000/31/EC of 8 June E-commerce Directive - Directive 2000/31/EC of 8 June 20002000Electronic Signature Directive - Directive 1999/93/EC of 13 Electronic Signature Directive - Directive 1999/93/EC of 13 December 1999December 1999Distance Contracts Directive - Directive 1997/7/EC of 20 May 1997Distance Contracts Directive - Directive 1997/7/EC of 20 May 1997

Selected DirectivesSelected Directives

Data Protection Directive (Draft) – COM 2000 385Data Protection Directive (Draft) – COM 2000 385

http://www.un.org/

http://www.un.org/

http://www.un.org/

http://www.un.org/


National Law Dimension of National Law Dimension of

Enabling Environment Enabling Environment

4 Highlighted Themes4 Highlighted Themes

•Convergence/Convergence/CompetitionCompetition

•Intellectual PropertyIntellectual Property

•ADRADR

•RegulationRegulationSource for national legislation:Source for national legislation:

http://www.bakernet.com/ecommerce/http://www.bakernet.com/ecommerce/


Convergence implies increasing Convergence implies increasing reliance on Competition Law & reliance on Competition Law &

PolicyPolicy• Two general components:Two general components:

Prevent abuses of dominant positionPrevent abuses of dominant position Prohibit anticompetitive arrangementsProhibit anticompetitive arrangements

• Protect Protect processprocess not not competitorscompetitors• Enhance efficiencyEnhance efficiency• Promote public interestPromote public interest• Stimulate developmentStimulate development P

olic

y

L

aw


Role of Intellectual Property Role of Intellectual Property Rights And DevelopmentRights And Development

Open Software & Open Standards in South Africa: A critical Open Software & Open Standards in South Africa: A critical Issue for Addressing the Digital Divide Issue for Addressing the Digital Divide http://http://www.naci.org.za/docs/opensource.htm.

Protection of property rights vs. promotion of Protection of property rights vs. promotion of open standardsopen standards •Still protects rightsStill protects rights

•ScalabilityScalability

•Transaction costsTransaction costs

•Develop local content, Develop local content, product, use local product, use local languageslanguages

•Encourage local Encourage local innovation entrepreneursinnovation entrepreneurs

•Encourage local useEncourage local use

•Promotes public good, Promotes public good, prevents brain drainprevents brain drain

•TRIPSTRIPS•National TreatmentNational Treatment•Minimum StandardsMinimum Standards•Dispute ResolutionDispute Resolution

•Protect rights to ensure Protect rights to ensure inward FDI, importation inward FDI, importation of necessary of necessary hardware/software hardware/software

•Preserves international Preserves international standardsstandards

• Innovation, Incentives in Innovation, Incentives in existing rights holders existing rights holders

http://www.naci.org.za/docs/opensource.htm


ADRADR•Create incentives for non-adversarial resolution Create incentives for non-adversarial resolution to disputes to boost confidenceto disputes to boost confidence

•Effectiveness of ADR vs. Courts in changing Effectiveness of ADR vs. Courts in changing market place behaviormarket place behavior

•Integrated vs. DistributionalIntegrated vs. Distributional

•Recognition within existing national legal systemsRecognition within existing national legal systems

•Flexible and scalableFlexible and scalable

•Industry orientationIndustry orientation

•Permits rapid introduction of best practices, Permits rapid introduction of best practices, related, relevant experiencesrelated, relevant experiences

•Addresses situations not dealt with by existing lawAddresses situations not dealt with by existing law

•Transparency!Transparency!

•Enforcement!Enforcement!


Comprehensive Incentive [de] –Comprehensive Incentive [de] –RegulationRegulation

of E-commerce Infrastructureof E-commerce Infrastructure

•CreditCredit

•Payment/Payment/Clearance Clearance SystemsSystems

•Exchange Exchange ControlsControls

•Tax (VAT)Tax (VAT)

•AMLAML

Banking & Banking & FinanceFinance

Pipes & Pipes & WiresWires •LiberalizatiLiberalizati

onon

•AccessAccess

•CompetitioCompetitionn

•IPRsIPRs

•ImportImport

•EncryptioEncryptionn

•ccTLDccTLD

•CompetitiCompetitionon

““MiddlewaMiddleware”re”

How Much? Forbearance? Industry Self-How Much? Forbearance? Industry Self-regulation?regulation?

Regulation where necessary –the Bespoke Regulation where necessary –the Bespoke approachapproach


WBG, IFC and WBG, IFC and infoinfoDev projects, April 02Dev projects, April 02


Selected Selected E-commerceE-commerce

ActivitiesActivities

• Algeria – Algeria – Comprehensive reformComprehensive reform

• India – India – Advice on e-comAdvice on e-com

• Moldova – Moldova – Advice on e-Advice on e-com & e-sign lawscom & e-sign laws

• Morocco - Morocco - Advice on e-Advice on e-com & e-sign lawscom & e-sign laws

• Romania - Romania - Comprehensive Comprehensive reformreform

• South Africa – South Africa – Advice on e-Advice on e-comcom

• Tunisia - Tunisia - Advice on e-com & e-Advice on e-com & e-sign lawssign laws

• Ukraine - Ukraine - Comprehensive reformComprehensive reform

• Viet Nam - Viet Nam - Advice on e-com & Advice on e-com & e-sign lawse-sign laws


•Incubator Initiative $25 Million through Incubator Initiative $25 Million through 20052005

•E-commerce projects:E-commerce projects:

•BSAOL BSAOL – Buy South Africa On-line (Direct sales)– Buy South Africa On-line (Direct sales)

•B2bprice now.com B2bprice now.com Philippines agricultural Philippines agricultural projectproject

•Annual Donors Meeting, December Annual Donors Meeting, December 2002 Shanghai , China2002 Shanghai , China

Annual Meeting Symposium will feature trade –Annual Meeting Symposium will feature trade –related aspects of e-commercerelated aspects of e-commerce

Selected Selected E-commerceE-commerce

ActivitiesActivities

the world bank david satola senior counsel electronic commerce strategies: the basic elements of an...

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