The Growth of E-Commerce in International Trade and its Possible Effects on the Environment

By Eric Letvin 

  1 IntroductionElectronic commerce or e-commerce promises to be an exciting and innovative change to the way that trade is currently conducted. The methods of doing business are changing rapidly and the amount of business conducted on the internet is growing and will continue to flourish.E-commerce represents both an opportunity and a threat to international trade and the environment. Currently, there is no substantial data to support either position. In addition, there are no policies or regulations that are specifically designed for environmental issues in e-commerce. Organizations that are responsible for monitoring and implementing international trade policies and practices such as the World Trade Organization (WTO), European Union (EU), the United States Department of Commerce (DOC) and non-governmental organizations (NGOs) have only just begun to study the effects of e-commerce or have yet to review all of the issues involved.E-commerce will, in the near future, change not only the way trade is conducted, but will also change the volume of

goods traded between countries. E-commerce is also changing manufacturing and distribution systems, product design, and the relationship between the producer and consumer. Whether or not the effects of these changes will be positive for developed and developing countries is yet to be determined.The changes to the current trading volume could have a negative effect on some international environmental objectives such as sustainable development. There is also a potential for developing countries to be further exploited by developed countries as e-commerce matures. In addition, there are questions as to whether the internet will increase the "digital divide" between the "have and have-nots."While e-commerce may threaten to negatively impact some aspects of international trade and the environment, there are some "green" companies who are looking at e-commerce as a way to positively impact trade and the environment. These companies have some innovative business models that will likely bring environmentally-friendly goods to both consumers and businesses. There are some other likely environmental benefits to be gained from the growth of e-commerce such as a reduction in the need for warehouses and retail stores, and a further reduction in the need for the associated finished materials, energy, and land consumed by these structures.

2 Description of E-CommerceElectronic commerce can be defined as "any form of business transaction in which the parties interact electronically rather than by physical exchanges or direct physical contact." This practice has the potential to revolutionize our economy thanks to the internet. Many companies are taking advantage of this explosive market and have created web sites directed at marketing products via e-commerce to both businesses and consumers.Most people can understand Business-to-Consumer (B2C) e-commerce.. Many Americans have used B2C e-

commerce websites such as CDnow.com and egghead.com which sell compact disks and computer equipment respectively. The unprecedented growth of these companies has been widely publicized.Forrester Research has estimated that total United States internet sales will grow from $51 billion in 1998 to $551 billion in 2001 (7.3% of the U.S. GDP). Of this, online B2C transactions in America were worth $20 billion in 1999 and are predicted to grow to $184 billion by 2004. A recent survey by Ernst & Young suggested that 39 million Americans, making up 17% of households, shopped online in 1999. Goldman Sachs forecasts that electronic shopping could account for 15-20% of all US retail sales by 2010.Many consumers prefer shopping electronically rather than shopping at "brick-and-mortar" retailers located in shopping malls. Some B2C companies only exist to consumers on the internet; for example, Amazon.com, a B2C website who sells books, music, hardware, toys and electronics has 17 million accounts as of February 2000 which is up from 6 million just one year earlier. In addition, during the holiday shopping season in 1999, the company experienced peak shipping of approximately $16 million in one day, more than total company sales in the entire year of 1996. Amazon.com is also expanding internationally. Just one year after launch, Amazon.com's European stores recorded $71 million in combined sales in just the fourth quarter of 1999, up over 360 percent from the fourth quarter of 1998.Business-to-Business or B2B e-commerce is more difficult to understand than B2C e-commerce, but it is important to study because it is predicted to dwarf B2C commerce in size. Forrester research expects domestic B2B e-commerce to grow to $1.5 trillion in 2003 and $7.3 trillion by 2004. Their predictions of numbers for B2B companies in 2003 are about 14 times greater than their estimate for B2C e-commerce. Merrill Lynch predicts that both

international and domestic B2B e-commerce in 2003 to be approximately $2.5 trillion; they predict international B2B e-commerce to be 38% of all B2B e-commerce. One analyst stated that "the B2B sub-invention may just be the most profound innovation of our times" and that B2B e-commerce "may represent one of the largest new market opportunities to arise in our lifetimes."Many companies, both large and small, have recently begun to tap into this growing market. Although their process is somewhat different, most of these companies hope to allow customers to utilize internet-based procurement automation. B2B companies plan to reduce market inefficiencies in getting products and services from suppliers to buyers. B2B e-commerce has the potential to support such changes on a global scale. E-commerce further enables companies to be more efficient and flexible in their internal operations, to work more closely with their suppliers, and to be more responsive to the needs and expectations of their customers.B2B e-commerce will also undoubtedly affect international trade. It allows companies to select the best suppliers for their needs regardless of their geographical location, and to sell to a global market. Some of the advantages promised to users of B2B e-commerce include:◦ Shorter transaction and fulfillment cycles◦ Lower procurement administrative costs◦ Reduced operating expenses◦ Increased company profits◦ Improved inventory management practicesThe single greatest driver for the rapid expansion of B2B e-commerce companies is the cost savings. Researchers believe that as inefficient tasks are improved, the savings may be as high as 65%.

3 Companies in Environmental E-CommerceAn analysis of the potential of both B2B and B2C e-

commerce to affect international trade and the environment must first begin with a study of some of the young companies. Many of these companies are counting on receiving a significant percentage of the predicted e-commerce explosion in the next several years. Undoubtedly, it is some of these companies that will define the standards of both domestic and international e-commerce. It would be virtually impossible to study all of the components of these businesses currently using e-commerce, therefore, only selected companies will be explored in this analysis. Where appropriate, companies that have the potential to positively affect international trade and the environment will be the focus of discussion.2.1 B2CThere are currently many B2C e-commerce web sites with more being created all the time. Some new and innovative companies display the potential use of e-commerce to increase the trade in goods that will enhance sustainable development and environmental awareness to consumers. In addition, some of these companies will also likely increase the flow of trade from developing countries to developed countries.There is speculation that the internet may make it more feasible for consumers to become aware of the environmental characteristics of products. It is further believed that consumers across many nations will work to "disseminate information more quickly and widely than ever before."One such organization that may benefit from these potential advancements is The International Federation for Alternative Trade (IFAT). IFAT is a federation of producers and "alternative" trading organizations (ATOs) that represent a global network of 143 ATOs in 47 countries. Within IFAT, producers of handicrafts and food products from developing countries come together directly with buyers and managers of ATOs. IFAT hopes that their website will "cast aside the traditional trading system of

middlemen and create an alternative way of doing business" that they believe is more equitable for the developing countries. Their objectives are to improve the livelihood and well-being of disadvantaged people in developing countries and to change unfair structures of international trade.Another B2C company, Greenbuilder.com, was created to provide online information and guidance documents on how to "build green" (using environmentally-friendly products). They also provide information about seminars and conferences on greenbuilding and include a searchable database of greenbuilders throughout the US. One example of a service provided by Greenbuider.com is a location on their website where sellers can list their sustainably-built homes.Ecomall.com contains a comprehensive listing of "green" or environmentally-friendly companies by category. They claim to be the "earth's largest environmental shopping center." Their web site is geared towards the educated, environmentally-conscious consumer. Ecomall.com also includes a B2B listing of environmentally-conscious companies.2.2 B2BB2B companies can be separated into two groups � horizontal (across many industries) and vertical (within an industry). Horizontal companies facilitate the purchase and sale of goods and services between a wide-range of industries. In the short history of B2B e-commerce, hundreds of vertical companies have already emerged in industries ranging from metals and livestock to printing and chemicals.Clients utilizing horizontal companies are predicted to suffer high startup costs because for B2B products and services to work properly, they have to be integrated into existing computer systems. One analyst compared this problem to "hooking up a Ferrari to a wooden cart."For vertical B2B companies, operations are different; they

hope to attract many buyers and sellers within a specific industry. As more buyers and sellers are attracted to the company, the B2B company will become more successful. Some vertical companies plan to host multiple vertical platforms where they attract buyers and sellers in more than one industry. An example of a multiple-vertical B2C company is Amazon.com offering vertical portals selling music, videos and books.2.2.1 B2B HorizontalSome horizontal B2B companies design software to allow buyers and sellers to exchange data on inventories and prices. In this case, buyers can intelligently monitor their inventory and forecast demand to optimize their purchases from a seller. A more advanced design offered by other companies allows buyers and sellers on a network to exchange similar information. Some companies that operate these types of platforms are Commerce One and Ariba. Most B2B e-commerce companies do not publish confidential information about the complications involving international trade, therefore it is difficult to speculate on the problems that may be involved.One B2B company that is aggressively attempting to move all types of goods across the globe is Pronetlink.com. Not only are they simply focusing on electronically bringing buyers and sellers together to move product, they are deeply involved with international trade as well. In the near future, they will create a "horizontal trade platform that can be modularized into any vertical portal." This company represents a higher-level horizontal B2B business model and it is possible that the future of international e-commerce may appear similar to Pronetlink�s vision. Pronetlink also offers their clients many services related to international trade: procurement, logistics, finance, insurance and product certification.Pronetlink is not simply trying to sell products and bring industries together, "that�s the easy part" they are focused on "actually moving that product from point A to

point B in all the restrictions that are involved in it." Pronetlink claims that most B2C and B2B sites that move "just product are not capable, nor do they care about taking the time to worry about tariff regulations, compliance issues, freight forwarding problems, insurance, credit insured financing. They are not offering services to find a solution for tariff requirements, to provide forms needed for moving global product, and regulations compliance, (do I need EU certification for this product?)." If Pronetlink.com is correct, much work needs to be completed before international B2B trade is properly conducted on the internet.2.2.2 B2B VerticalThere are many environmental e-commerce companies that operate a vertical platform. By definition, any company offering e-commerce directed at users in the environmental field is operating a vertical platform. These companies can be further dissected into two groups: companies that offer targeted information to businesses within a specific environmental industry so that the companies may enter into trading transactions themselves, and companies that will actually facilitate the trade itself within a specific industry. In other words, some companies merely capture and organize industry-specific information which will allow companies to trade on their own, while others are actually involved in direct domestic or international trade between businesses.A good example of a company that is offering information targeted to a specific business in the environmental industry is Sustainablebusiness.com, a company dedicated to promoting sustainable business practices. Sustainablebusiness.com's mission is "to be the Internet destination for B2B e-commerce, information, and networking in the field of sustainable business." They plan "to use knowledge-based internet technology to vastly accelerate the integration of sustainable business practices into business strategy and procurement." The

two of the major sectors of sustainablebusiness.com include:• Sustainable Business Insider � "a monthly, online

magazine that extracts news, articles, and columns from 35 sustainable business trade publications and individuals", and

• Business Opportunities � a sector that is designed to help "green businesses find resources they need to expand and helps investors find promising opportunities." Here, businesses can post their needs for investors, partners or distributors.

A similar company to Sustainablebusiness.com is CoopAmerica.com. Co-op America "provides the economic strategies, organizing power and practical tools for businesses and individuals to address today's social and environmental problems." One of the four programs housed within this company is the Green Business Program. Its purpose is "to start and support small socially and environmentally responsible businesses; to publicizes the success of these businesses and to give people access to the growing green business sector." In addition, CoopAmerica.com provides the "the Green Pages; an online catalog of thousands of socially and environmentally responsible businesses, products and services."The internet has also assisted in the creation of numerous secondary materials markets. Several web sites have been designed to assist companies find buyers for materials they no longer need which in turn reduces waste disposal costs. One such B2B company, chemconnect.net helps chemical companies "to convert product needs, surpluses and shortages into instant trading offers that reach a global market."Another B2B vertical company directly involved with trading in excess materials is recycle.net. The company is designed for anyone who wishes to buy, sell or trade any recyclable material or used items on the internet.

Recycle.net created the "Recyclers Exchange", a free world-wide information exchange for those companies and individuals who buy, sell or trade recyclable commodities or materials and used or surplus equipment. A company, for example, wishing to trade low density polyethylene (LPDE) may use recycle.net to link to the find buyers and sellers for this specific material. Currently on their LPDE market, there is a company in New Delhi, India that "requires 100 Metric Tons per on an ongoing basis" and their price is $400 USD per Metric Ton. Currently, recycle.net only has links to recycling networks in Canada and the United States, but they have plans to expand the network worldwide. There is a small section for individual consumers who are trying to buy or sell recycled goods. Companies such as these should help to reduce waste materials which may be a substantial benefit to the environment.Perhaps the most innovative attempt to incorporate e-commerce into the environment is made by greenonline.com. Greenonline.com appears to incorporate both types of vertical B2B companies. They are an "electronic marketplace for information, news, communication, products, materials and services pertaining to environmental e-commerce" and they "provide an open forum for companies to buy and sell environmental products and commodities worldwide."Greenonline.com does not offer all of the trading services provided by some of the more advanced B2B companies, but they allow users "to meet, research and negotiate, close the deal and execute the transaction." In this case, the users execute the transaction on their "internal systems", not on greenonline.com.Environmental companies can take advantage of several markets offered by greenonline.com including emissions trading, brownfields, recyclables, and conservation and technologies. Relating to the emissions market, greenonline.com predicts that trading will likely develop

with respect to greenhouse cases resulting from the discussions at the Fifth Conference of the Parties to the United Nations Framework Convention on Climate Change. According to greenonline.com, a "handful of pilot allowance trading programs are operating in other countries", therefore they predict a potential international market for trading of emissions of carbon dioxide, methane, nitrous oxides, hydrofluorocarbons, perfluorocarbons and sulfur hexaflouride. Greenonline.com has the capability to actually facilitate an emissions trade between two companies operating internationally.Similar to recycle.net, greenonline.com has a vertical platform for companies interested in posting descriptions of any materials, facilities, or equipment available or sought for reuse or recycling. According to greenonline.com, "any company, organization, or person posting within the system may create a listing summarizing their offerings and/or provide a link to a site on another system with relevant information."

3 International E-CommerceMost of the increased B2B e-commerce transactions are not expected to be conducted at the international level, at least not in the near future. A 1998 World Trade Organization (WTO) report predicted only $60 million in international trade over the internet by 2001, which would represent 0.02% of total estimated e-commerce. These numbers are far less than the international e-commerce numbers predicted by Merrill Lynch [1 billion by 2003].International e-commerce has the potential to radically change the aspects of international trade by overcoming the traditional barriers of distance between markets and lack of information about market opportunities. The European Union (EU) predicts that electronic commerce offers the possibility of changes in business that are so radical that they may re-define the market or create entirely new markets.

3.1 International Issues with E-commerceThe WTO and the EU have embraced the reality of e-commerce and have begun to study both the potential and possible problems that e-commerce may bring. For example, the EU now has an entire website dedicated to e-commerce. The WTO�s Committee on Trade and Development recently held a seminar on electronic commerce and development in developing countries. At this seminar, most of the questions were related to B2C e-commerce, the speaker had to remind the developing countries that the future direction of e-commerce would be B2B and not B2C. Also at this seminar, a representative from Venezuela stated that there was a "lack of knowledge in developing countries on the immediate and long-term impact of e-commerce."Internet usage by WTO member countries is predicted to continue to increase. In 1991, there were less than 5 million internet users, by 2000 the WTO predicts that there will likely be 300 million internet users.Concerns have already been raised about the legal and administrative changes that may be necessary to address new e-commerce and transaction models facilitated by the internet. Issues that are being discussed by both the EU, WTO and private companies include:• Privacy• Data protection / Security• Intellectual property rights• Applicable Law / Jurisdiction• Taxes• StandardizationThe WTO has reminded its member countries that products which are bought and paid for over the internet through e-commerce and are physically delivered are subject to existing WTO rules on trade in goods.The US Treasury Department recently published a paper concerning e-commerce in which they mentioned several areas of concern for tax administrators including "the

effective elimination of national borders." They also predicted that tax-related compliance challenges would only increase because of (1) the potential increase in anonymous and untraceable transactions, (2) difficulty in identifying parties to communications and transactions and (3) problems in verifying records when transactions are conducted electronically.The United States Department of Commerce (DOC) has recently been aggressively promoting e-commerce with its significant trading partners. On a recent trade mission to Brazil, Argentina, Uruguay and Chile, DOC secretary William Daley announced that the United States signed a bilateral initiative to promote electronic commerce with these countries. Other countries where the DOC has already signed bilateral initiatives include the United Kingdom, the Netherlands, Australia, Japan, and Egypt. In December of 1999, President Clinton sent a memorandum to the heads of executive departments and agencies directing them to adopt policies that will remove barriers to private sector investment in internet applications, and increase global trade.The DOC is also active in closing the "digital divide" regarding access to technology and information between economic and ethnic groups within the United States. A recent DOC-sponsored report found that while more Americans than ever have access to telephones, computers and the internet, there was a significant and increasing "digital divide" separating American "haves and have-nots". The report indicated that African American and Hispanic Americans were two-fifths as likely to have access to the internet as white Americans. A recent survey comparing web ownership and use by African Americans and whites in the United States also discusses the "digital divide". The survey found that whites were twice as likely to own a computer and six times as likely to have recently used the internet in low-income families. Although the results were found to be significantly related to income

and education levels, the study concluded that, even after correcting for income, there were significant differences between whites and African Americans.The "digital divide" is not a problem common to the United States as was shown in the WTO�s Committee on Trade and Development seminar. Many delegates from developing countries complained of slow internet access and even lack of electricity to many portions of their countries. This problem has not gone completely unnoticed. In an effort "to start to narrow the global digital divide and jumpstart the new digital economy in the developing world", the World Bank recently joined with Japan�s Softbank Corporation "to spawn startup internet companies in some 100 developing countries."In May 2000, the DOC will be is sponsoring a National Economic Development Forum focusing on e-commerce called "E-Commerce and the Digital Divide: Meeting the Challenge." The DOC expects "over 1,000 participants including economic development specialists, planners, non-governmental organizations, community based organizations and elected officials to attend the three-day meeting and a number of high profile public and private sector speakers and presenters." They are also planning workshops in several categories including: technical infrastructure, community strategy, entrepreneurial developments and new markets. Currently though, on the extensive agenda there is no mention of any environmental issues.3.2 Problems with B2B E-Commerce and the EnvironmentA logical question to be asked is what affect will this new trend have on international trade and the environment? It is likely that environmental e-commerce will only represent a small percentage of overall e-commerce conducted on the internet. If one were to assume that companies such as Pronetlink will be successful in increasing trade to developed and developing countries � many new

environmental problems may be created. This issue has not yet been mentioned by the WTO or the EU.There are possibilities for conflict within both International Environmental Agreements and the rules of international trade. International Environmental Agreements sometimes impose restrictions with potential effects on trade in order to mitigate environmental degradation caused by certain goods, or by the disposal of, or trade in, certain goods.In 1992, at the Earth Summit in Rio de Janeiro, Brazil, the delegates adopted two key documents: the Rio Declaration, which focused on principles on the general rights and obligations of States with respect to the environment, and Agenda 21, an international road map to achieve sustainable development. Sustainable development is defined as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs."The potential for B2C and B2B e-commerce to impact Agenda 21 is substantial. While many new environmentally conscious consumers may purchase goods from developing countries using ifat.org, the number of businesses that could purchase lumber from Brazil using Pronetlink could dwarf any gains made from environmental e-commerce. Many non-governmental organizations believe that the WTO is focused more on the liberalization of trade rules to increase the volume of goods that flow between countries, than on environmental issues.It is likely that the countries pursuing e-commerce such as the EU countries, Japan and United States will reap its initial benefits. Private industry in these developed countries will likely develop the technology and expertise to exploit e-commerce for their advantage and profit. It is possible that the growth of e-commerce in international trade will create a phenomena similar to the industrial revolution of the 19th century which helped define many of today�s developed countries. The wealthy developed

countries will now have a new and dangerously efficient tool for extracting natural resources from developing countries. Since the United States has been the leader in defining the internet and its uses, it would be logical to assume that private businesses will design their the internet and e-commerce companies to their advantage which would be a further disadvantage to developing countries.The Organisation for Economic Co-operation and Development (OECD) recognizes that "ethnic and racial origin is commonly associated with disparities in income and education, and there appears to be a similar correlation in use of information technology, the internet and, by extension, electronic commerce." A recent OECD publication on e-commerce recognizes that "the possibility of negative externalities has led to considerable speculation and concern regarding the possible creation of information haves and have-nots and provoked policy discussions in a large number of OECD countries." It is likely that the "digital divide" that currently exists in the United States would also be relevant to developing countries.Another foreseeable problem with e-commerce is that it may facilitate illegal trade between nations. One publication has suggested that the internet has made it easier for products banned in one country to be purchased illegally elsewhere. Proof of these types of transactions may be evident as an example, from the current practice of American consumers purchasing pharmaceuticals over the internet that are banned in the United States from overseas companies. It is also possible that the internet may also adversely affect illegal trade in chlorofluorocarbons and endangered species.Surprisingly, to date, the major environmental NGOs and the US Environmental Protection Agency (EPA) have taken virtually no action to study the effects of e-commerce on trade and the environment. There are

currently no special environmental regulations or trade barriers that are directed at B2B and B2C e-commerce companies. Ironically, the USEPA has an electronic reporting initiative whose purpose is preparing for the electronic submission of forms such as hazardous waste manifests and discharge monitoring reports.Professor Sui at Texas A&M University recently received a grant from EPA to research "the environmental consequences, measured in terms of energy/material consumption and waste production, of using the internet to facilitate the retailing of tangible goods and products." Professor Sui�s research will provide recommendations to the EPA on how to conduct environmental audits for e-compliance.3.3 Benefits of Environmental E-commerceDespite the potential for e-commerce to degrade existing International Environmental Agreements such as Agenda 21, there is potential for e-commerce to bring together environmentally-conscious consumers and industries. Environmental e-commerce companies will undoubtedly use technology to bring companies together in the global marketplace. Companies such as recycle.net and greenbuilder.com have begun to design vertical portals aimed at environmentally-conscious consumers and Alternative Trading Organizations may also increase environmentally-friendly trade between developing and developed nations.Companies offering specific vertical platforms such as recycle.net may be able to find buyers and sellers of recycled materials, thus promoting sustainable development. Organizations such as Conservation International whose mission is "to protect the Earth's biologically richest areas and help the people who live there improve their quality of life" may also be able to use e-commerce as a tool to further their efforts. These companies and organizations may be able to implement e-commerce practices to conduct debt for nature exchanges

with developing countries. The result of these actions will likely have a positive effect on the global environment.Companies such as greenonline.com may be able to take advantage of international emissions markets if future multi-lateral environmental agreements such as the Kyoto Protocol are approved. A coal-supplied power plant in Germany, for example may be able to trade a ton of nitrous oxide emissions with a plastics factory in Australia.There is also new evidence that the internet and e-commerce may lead to a reduction in air pollution. This may help countries reach their emission targets negotiated in the Kyoto Protocol. A recent report published by the Swedish Environmental Protection Agency shows that the internet has the potential to reduce the amount of fuel that people consume if they buy products online rather than drive to stores. In addition, it has been predicted that the internet has the "potential to vastly improve the need for products, for warehouses and retail stores, and for the materials, energy, and space they consume." Recent research from the Center for Energy and Climate Solutions (CECS) in the United States claims that changes to business caused by the internet may have significant positive effects for the environment. Some of these benefits listed in the study include:• "Internet shopping uses less energy to get a package

from a warehouse to the buyer. The study showed that shipping 10 pounds of packages by overnight air � the, most energy-intensive delivery mode uses 40 percent less fuel than driving roundtrip to the mall.

• By 2007, the internet could avoid the need for some 5% of commercial building space, including up to 1.5 billion square feet of retail space, 1 billion square feet of warehouses, and as much as 2 billion square feet of commercial office space, the equivalent of almost 450 Sears Towers.

• The resulting energy savings from operations and maintenance alone total 53 billion kilowatt hours per

year - the output of more than 21 average power plants - and 67 trillion BTUs worth of natural gas (67 billion cubic feet), preventing the release of 35 million metric tons of greenhouse gases into the atmosphere. Avoided construction of all those buildings saves the equivalent of 10 more power plants worth of energy, and another 40 million metric tons of greenhouse pollution.

• The Internet could save 2.7 million tons of paper every year by 2003, despite increased use of office paper. The resulting annual cut in global warming pollution equals some 10 million tons of carbon dioxide. Both figures could double by 2008.

• Each minute spent driving to the mall uses more than 10 times the energy of a minute spent shopping on line. On-line shopping avoids car trips and reduces congestion. Already, nearly 40 percent of people with Internet access say they go to the store or the mall less often."

The study completed by CECL that listed the potential environmental benefits of e-commerce indicated that these benefits from B2C e-commerce represent only a fraction of all e-commerce. They stated that "the lesser-known names of business-to-business e-commerce dwarfs the consumer sector in both economic and environmental terms." They used the statistics of the growth of B2B e-commerce by pointing to the fact that "while consumer e-commerce is expected to grow from $7.8 billion in 1998, as of mid-1999, General Electric alone was doing more than billion worth of web-based business annually." CECL concluded that B2B e-commerce "is certain to cut many energy-related costs in manufacturing, including inventories, overproduction, and mistakes." They conclude that there would likely be some environmental benefits associated with e-commerce overall.These statistics and conclusions are impressive and promising, however it is unknown if these same effects will

translate to developing countries. It is likely there may be many environmental benefits from e-commerce similar to those presented in the CECL study.It is important to note that the focus of the CECL study was on the potential reduction of greenhouse gases caused by e-commerce and they did not properly analyze issues relating to international trade and the environment. In addition, there is no guarantee that the internet will have a net positive environmental impact. Experts predicted that the personal computer would result in a "paperless office", but US shipments of office paper increased by 33 percent between 1986 and 1997.

4. ConclusionHow will electronic e-commerce affect the global marketplace and the environment? The answer is unknown. The EU predicts that individuals and companies that have internet access will be presented with entirely new ways of purchasing and selling goods. They compare the overall impact on lifestyle to that of the growth in car ownership or the spread of the telephone.Currently, there are several B2C and B2B companies that will positively affect international trade and the environment. Some of these companies offer exciting and innovative approaches of using e-commerce to advance environmentally-friendly business practices. However, the positive-environmental impact of these companies on the astounding growth of e-commerce is likely to be minimal. The developed countries will likely reap any of these environmental benefits associated with e-commerce because they are the countries that are defining e-commerce and taking advantage of its efficiencies. It is likely that developing countries will suffer the adverse effects of the "digital divide" currently being felt by the consumers in the United States who are not connected to the internet. Any significant environmental benefits to developing countries as a result of e-commerce are not likely to occur for many years.

The United States Department of Commerce has been active in promoting US-based e-commerce companies overseas while the Department of Treasury is struggling to find ways to identify parties to transactions for tax purposes. The United States Environmental Protection Agency is focusing on electronic submission reports but is not actively studying the potential benefits and harms of e-commerce. Clearly, there needs to be improvement in coordination between federal agencies in order to create rules and standards for e-commerce.If Pronetlink is correct that most B2B and B2C companies are not taking the time to worry about tariff regulations and compliance issues, we are several years from determining the real effects on the environment of global e-commerce. If the market analyses are correct, global e-commerce will explode in the next few years. Governments and entities such as the WTO and EU need to rapidly resolve these issues. B2B e-commerce is not going to be an issue will conveniently wait between WTO meetings. The WTO needs to set policies before these cases come to the WTO through the dispute resolution process as this procedure has strict timelines that may impede a fair solution.As B2B and B2C companies begin to take advantage of the network effect and increase the number of users, they will undoubtedly grow rapidly. In addition, as internet usage increases in WTO member countries, new users will take advantage of products and services offered by these companies. Similarly, the global consumers will not wait for the EU, WTO or sovereigns to resolve these e-commerce issues. More work similar to the study completed by CECL needs to be completed on an international level so that the environmental effects of e-commerce, positive and negative can be defined.Governments, trade organizations and e-commerce companies need to begin to focus on how e-commerce will not only change international trade [intellectual property, taxation etc�], they need to focus on how these

issues relate to the environment. These same entities should embrace environmental e-commerce and facilitate its growth.Policies and regulations should be implemented to ensure that e-commerce will not adversely affect the environment. One expert believes that an e-commerce code of management practices should be initiated, addressing the potential environmental impacts of e-commerce. The NGOs along with the WTO and other organizations need to realize the implications of this revolutionary change in international trade and should to create these new policies and regulations.More work should be completed to determine what the effects of international trade and potential the environment will be, how e-commerce will affect existing multi-lateral environmental agreements and the effects of e-commerce on developing countries.Finally, NGOs and the USEPA should embrace e-commerce as a method of achieving "green"-friendly trade that strengthens principles such as sustainable development and increases practices such as debt for nature exchanges.

Endnotes