Ecommerce Chapter in FTAs Shintaro Hamanaka Institute of

E-commerce Chapter in FTAs Shintaro Hamanaka Institute of Developing Economies (IDE-JETRO) APEC E-Commerce Business Alliances Forum Jinjaing, China 28 -20 June 2016

Contents • WTO/GATS and E-commerce • FTAs (especially US FTAs) and e-commerce • TPP E-commerce chapter – China as a shadow negotiator

WTO and E-commerce • Declaration on Global Electronic Commerce (1998, 2 nd Ministerial) – E-commerce: undefined. – Moratorium: Not to impose customs duties on electronic transmissions • Moratorium extended several times. – What is electronic transaction? • Medium of transmission vs content of transmission • Digital products delivered by traditional medium. • Council by Council approach – Services, Goods, TRIPS and CTD. • No significant progress – partly because of the status of DDA. • Paperless trade – TFA “Each Member shall, where appropriate, endeavour to accept paper or electronic copies of supporting documents required for import, export, or transit formalities. ”

GATS and E-commerce • “Traditional” services delivered by new means (electronic transaction) – Technological neutrality • E-banking < banking services • Online-shopping < distribution services • “New” services such as search engine – Already included somewhere (e. g. telecommunication)? Maybe no consensus. – Given the current service classification used by many WTO members (W 120), it is unlikely that e-commerce is committed in the schedules.

US FTAs and E-commerce • All US FTAs have some provisions on E-commerce – Australia, Chile, Singapore, Bahrain, Morocco, Oman, Peru, CAFTA-DR, Panama, Columbia, and Korea – US-Korea the most substantial so far (4 pages) • E-commerce undefined. Defined terms are: – Computing facilities – Digital product – Electronic authentication – Electronic transmission – Personal information – Unsolicited commercial electronic message

E-commerce Chapter in US FTAs • Duties: No duties and fees on digital products delivered either by electronic transmission or traditional medium. – Origin of digital products • US FTAs: Digital products produced outside its territory • Korea-Singapore: Digital products produced in the territory of other party • • Electronic authentication and electronic signature Online consumer protection Paperless trade (best endeavor) Cross-border information flow (best endeavor)

TPP E-commerce Chapter • Duties: no duties on electronic transmissions (not on “digital products”) – Origin: Digital products produced in the territory of another party. • Location of facilities (Art 14. 13) – No Party shall require a covered person to use or locate computing facilities in that Party’s territory as a condition for conducting business in that territory. • Source code (Art 14. 17) – No Party shall require the transfer of, or access to, source code of software owned by a person of another Party, as a condition for the import, distribution, sale or use of such software, or of products containing such software, in its territory.

TPP E-commerce Chapter • Unsolicited messages (Art 14. 14) Each Party shall adopt or maintain measures regarding unsolicited commercial electronic messages that: require suppliers of unsolicited commercial electronic messages to facilitate the ability of recipients to prevent ongoing reception of those messages; require the consent • Domestic Electronic Transactions Framework (Article 14. 5) Each Party shall maintain a legal framework governing electronic transactions consistent with the principles of the UNCITRAL Model Law on Electronic Commerce 1996 or the United Nations Convention on the Use of Electronic Communications in International Contracts • Cooperation (Art 14. 15) – SMEs (best endeavor)

Sensitive Issues? • Information Flow – Past US FTAs • Best endeavor + Relatively broad scope • KORUS: “shall endeavor to refrain from imposing or maintaining unnecessary barriers to electronic information flows across borders” (Art 15. 8). – TPP • Obligation + relatively limited scope • Art 14. 11: “Each Party shall allow the cross-border transfer of information by electronic means, including personal information, when this activity is for the conduct of the business of a covered person (investment, investor and service suppliers). ” • Cyber security – TPP: best endeavor • The Parties recognise the importance of: • (a) building the capabilities of their national entities responsible for computer security incident response; and • (b) using existing collaboration mechanisms to cooperate ….