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An analytical point of view of emerging issues of e-commerce for the multilateral trading system

An analytical point of view of emerging issues of e-commerce for the multilateral trading system. Daewon Choi Special Assistant to the Executive Secretary and Secretary of the Commission UNESCAP E-mail: daewon.choi@un.org Pr. Solange Ghernaouti-Hélie Vice-Dean - Ecole des HEC

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An analytical point of view of emerging issues of e-commerce for the multilateral trading system

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  1. An analytical point of view ofemerging issues of e-commercefor the multilateral trading system Daewon Choi Special Assistant to the Executive Secretary and Secretary of the Commission UNESCAP E-mail: daewon.choi@un.org Pr. Solange Ghernaouti-Hélie Vice-Dean - Ecole des HEC University of Lausanne E-mail:sgh@hec.unil.ch

  2. Purpose of the presentation • Examine the relationship between the digital trading system and the multilateral trading system in the context of the WTO agreements • Explore to what extent the incompatibility and interoperability can be manifested in the global trading system • It takes up the case of trade in services by examining the relationship between the GATS / WTO and e-commerce. • It emphasizes that the key to understanding this relationship is to compare two main variables: the "GATT legal parallel" contained in the GATS as a backward legacy, and the "Cyberspace-related aspects" of e-commerce as a forward linkage

  3. How the Internet-related technology is affecting the existing multilateral trade agreements? • Multilateral Trade Agreements such as: • General Agreement on Tariffs and Trade (GATT) 1994 • General Agreement on Trade in Services (GATS) • Trade-Related Aspects of Intellectual Property Rights (TRIPS) • quasi-nascent multilateral agreement on investment (MAl) • The interactions between Multilateral trading System and Digital Trading System will determine the course and direction of the global trading system • The process leading towards interoperability and convergence between these two variables will entail the extent of coherence and governance of the global trading system

  4. Main hypothesis • Global Trading System is increasingly consisting of: • Multilateral Trading System (MTS) • Digital Trading System (DTS) • Two systems have distinct operating architectures: • Most Favored Nation • Most favored Network

  5. Explanation 1. • New Technology Development has engendered new elements of trading system unforeseen at the time of Uruguay Round for WTO agreements • WTO agreements have taken on conventional classification approach: - GATT (goods) - GATS (services) - TRIPS (Intellectual Property Rights)

  6. Explanation 2. • Goods are becoming digital: • CD-ROM via Internet is a mere data • Customs checkpoint does not correspond to cyber-border • Thus, taxation is difficult

  7. Explanation 3. • GATS uses classification of services (modes of supply) reflecting the physical world: • Cross-border • Consumption abroad • Commercial presence • Movement of natural persons • In cyberspace, these modes are blurred, thus inappropriate to classify the digital services

  8. Explanation 4. • TRIPS has been conceived prior to the Internet data protection and management • In cyberspace, enforcement of intellectual property rights requires network surveillance, in addition to TRIPS enforcement mechanism

  9. Explanation 5. • Dispute settlement mechanism in MTS is well developed and enforceable • WTO Dispute Settlement Body • In DTS, dispute settlement can not be purely based on a court system, and requires an out-of-court mechanism or Alternative Dispute Resolution • Online Dispute Resolution

  10. Explanation 6. • WTO premise of Most Favored Nation can not be applied to DTS • DTS requires Most Favored NETWORK, thus departs from MTS premise

  11. Explanation 7. • MTS has clear jurisdiction and choice of law • In cyberspace, jurisdiction and applicable law are not straightforward

  12. Explanation 8. • MTS (WTO) deals with reducing tariff and non-tariff barriers • DTS should deal with establishment of data management, digital pricing mechanism, and harmonization of operating system

  13. Explanation 9. • MTS converts data into price • DTS converts price into data

  14. Explanation 10. • In sum, Global Trading System needs to manage convergence of: • Multilateral Trading System • Digital Trading System

  15. The Global Trading System:Architecture and Coordination

  16. E-coordination at the meta level • Transaction Process Layers International Trade (eg. Multilateral Trading System) • E-Commerce (eg. Intermediary) • Cyber Business (eg. Digital Trading System) • Component Layers • Information Exchange • Secure Transactions • Dispute Settlement

  17. Meta-Level Interface Global Trading System (GTS) = f(MTS, DTS) • DTS • MTS MTS: Multilateral Trading System (WTO) DTS: Digital Trading System (Virtual)

  18. The Internet Today Database FTP Server Application Web ServerDocuments Web ServerDocuments Web ServerDocuments Application Database

  19. Step 1: Metadata Database FTP Server Application Web ServerDocuments Web ServerDocuments Web ServerDocuments Application Database

  20. Web ServerDocuments Web ServerDocuments Web ServerDocuments Step 2: DTS Components Database FTP Server Application Application Database

  21. Step 3: DTS Development Database Registry FTP Server Application Repository Web ServerDocuments Repository Web ServerDocuments Web ServerDocuments Application Database Registry

  22. Step 4: Digital Trading Agents Agent Database Registry FTP Server Application Agent Registry Web ServerDocuments Registry Web ServerDocuments Agent Web ServerDocuments Application Database Registry

  23. Step 5: Digital Trading System E-Payment Process Services Agent Database Registry FTP Server Application Agent Registry Web ServerDocuments Registry Web ServerDocuments Digital Dispute Settlement Web ServerDocuments Application Database E-Trust Intermediaries Registry

  24. Public Domain Business Citizens Public Services Process Applications UN/EDIFACT Browser HTTP VAN Job Shop System ERP/ Transaction Process Integration Adapter Public Services Collaboration Hub Adapter XML Message Service XML XML Message Service XML Dispute Settlement Mechanism Information Services Financial Services XML XML E-Public Goods and E-Government

  25. Components of Global Trading System MTS ETS DTS Dispute Resolution Secure Transaction Data Exchange International Trade E-Commerce Cyber Business

  26. Global Trading System Dispute Resolution ADR (ICC, OECD) DDR CDR. WTO Secure Transaction Sig. VAN E-sig.PKI CA. DRM Data Exchange Doc.EDI EDI.Web XML, XSL E-Commerce International Trade Cyber Business

  27. WTO E-Commerce Programme Dispute Resolution Financial Services E-Commerce Secure Transaction Competition Policy Basci Telcom Services Trade Facilitation Data Exchange ITA International Trade E-Commerce Cyber Business

  28. EU E-Commerce Framework Dispute Resolution ADR. Art 17, E-C Dir 2000/31 Proposed Dir VAT 7/2000 Secure Transaction E-Sig Dir 99/93 E-Monex Dir Personal Data Protec Dir 95/46 Data Exchange Database Protection Dir 96/9 International Trade E-Commerce Cyber Business

  29. WIPO Digital Agenda Global Licensing of Digital Assests(study) Dispute Resolution Artit.Media Centre gTLDs Secure Transaction WPerfor.Phono Tr E-Rights WCopyR.Treaty Patent Coop Treaty Hague Ind. Design Data Exchange Madrid Marks International Trade E-Commerce Cyber Business

  30. BIS Payment and Settlement Systems Dispute Resolution Risk Manag .for E-Banking & E-Money Pay & Settlement Secure Transaction Real Time Gross Settl Systems Intl Accounting Stdd Data Exchange Basel Accord International Trade E-Commerce Cyber Business

  31. Prospects of E-Coordination • Status Quo: • No change to WTO Agreements • Likely but Not desirable • Revision: • Partial review of WTO Agreements • Likely but Difficult • New Cyber Legal Framework • WTO + ? • Unlikely but Desirable

  32. Proposition • Needs for Functional Equivalence • Technical neutrality • Legal neutrality • Policy Instruments • National Coordination • International Cooperation • Digital Collaboration

  33. Study summary 1. • The first part focus on the setting of an analytical framework for an interplay of multilateral trading system and digital trading system • The second part deals with the implications of this interaction in the context of WTO, more specifically the GATS

  34. Study summary 2. • Possible scenarios of a legal framework on e-commerce, are proposed, which might fall into one of the following outcomes with an eventual overlapping: • (i) qualified extension of the existing multilateral trading system to digital trading system • (ii) substantial revision of the multilateral trading system to accommodate digital trading system • (iii) the establishment of a new agreement on Trade-Related Aspects of Electronic Commerce

  35. Study conclusion 1. • The technological advance will pose significant challenges to legal and regulatory framework of the WTO agreements • Its progress will largely depend on the relationship between technical neutrality and legal neutrality • The extent of legal neutrality could be measured by the degree of: • Legal disparity • Rigidity • Regulatory overshooting at the national, regional and global levels

  36. Study conclusion 2. • The relationship between development of the digital economy legal rigidity and regulatory overshooting, the parity between technical neutrality and legal neutrality, and the interoperability between digital trading system and multilateral trading system will be critical factors for understanding future framework of a global trading system

  37. Thank you for your attention

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