D. Choi, S. Ghernaouti-Hélie
An analytical point of view ofAn analytical point of view ofemerging issues of e-commerceemerging issues of e-commercefor the multilateral trading systemfor the multilateral trading system
Daewon ChoiSpecial Assistant to the Executive Secretary
and Secretary of the Commission
UNESCAP E-mail: [email protected]
Pr. Solange Ghernaouti-HélieVice-Dean - Ecole des HEC
University of LausanneE-mail:[email protected]
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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
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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
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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
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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)
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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
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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
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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
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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
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Explanation 6.
• WTO premise of Most Favored Nation can not be applied to DTS
• DTS requires Most Favored NETWORK, thus departs from MTS premise
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Explanation 7.
• MTS has clear jurisdiction and choice of law
• In cyberspace, jurisdiction and applicable law are not straightforward
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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
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Explanation 9.
• MTS converts data into price
• DTS converts price into data
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Explanation 10.
• In sum, Global Trading System needs to manage convergence of:
– Multilateral Trading System
– Digital Trading System
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E-coordination at the meta level
• Transaction Process LayersInternational Trade (eg. Multilateral Trading System)
– E-Commerce (eg. Intermediary)– Cyber Business (eg. Digital Trading System)
• Component Layers– Information Exchange– Secure Transactions– Dispute Settlement
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Global Trading System (GTS) = f(MTS, DTS)
MTS: Multilateral Trading System (WTO)MTS: Multilateral Trading System (WTO)
DTS: Digital Trading System (Virtual)DTS: Digital Trading System (Virtual)
Meta-Level Interface
MTSMTS
DTSDTS
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The Internet Today
FTP Server
Web ServerDocuments
Database
Database
Application
Application
Web ServerDocuments
Web ServerDocuments
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Step 1: Metadata
FTP Server
Web ServerDocuments
Database
Database
Application
Application
Web ServerDocuments
Web ServerDocuments
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Step 2: DTS Components
FTP Server
Database
Database
Application
Application
Web ServerDocuments
Web ServerDocuments
Web ServerDocuments
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Step 3: DTS Development
Repository
Registry
Repository
Registry
FTP Server
Web ServerDocuments
Database
Database
Application
Application
Web ServerDocuments
Web ServerDocuments
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Step 4: Digital Trading Agents
FTP Server
Web ServerDocuments
Database
Database
Application
Application
Web ServerDocuments
Web ServerDocuments
Registry
Registry
Registry
Registry
Agent
Agent
Agent
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Step 5: Digital Trading System
FTP Server
Web ServerDocuments
Database
Database
Application
Application
Web ServerDocuments
Web ServerDocuments
Registry
Registry
Registry
Registry
Agent
Digital Dispute Settlement
Agent
E-Trust Intermediaries
E-Payment Process Services
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Public DomainBusiness Citizens
ERP/ Transaction
ERP/ Transaction
JobShop
System
JobShop
System
VANVAN HTTPHTTPPublic ServicesProcess
Applications
Public ServicesProcess
ApplicationsUN/EDIFACT
UN/EDIFACTBrowser
Browser
Dispute Settlement Mechanism
E-Public Goods and E-Government
Public ServicesCollaboration Hub
Public ServicesCollaboration Hub
XMLXMLXMLXML
XML Message Service
XML Message Service
AdapterAdapter
XML Message Service
XML Message Service
AdapterAdapter
ProcessIntegration
ProcessIntegration
FinancialServices
InformationServicesXMLXML XMLXML
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Dispute Resolution
Secure Transaction
Data Exchange
MTS ETS DTS
International Trade
E-Commerce Cyber Business
Components of Global Trading System
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Dispute Resolution
Secure Transaction
Data Exchange
Global Trading System
International Trade
E-Commerce Cyber Business
Doc.EDI
Sig. VAN
CDR. WTO
EDI.Web
E-sig.PKI
ADR
(ICC, OECD)
XML, XSL
CA. DRM
DDR
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Financial Services
Dispute Resolution
Secure Transaction
Data Exchange
WTO E-Commerce Programme
International Trade
E-Commerce Cyber Business
ITA
Basci Telcom Services
Competition Policy
E-Commerce
Trade Facilitation
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Proposed Dir VAT 7/2000
Dispute Resolution
Secure Transaction
Data Exchange
EU E-Commerce Framework
International Trade
E-Commerce Cyber Business
Database Protection Dir 96/9
Personal Data Protec Dir 95/46
E-Monex Dir
E-Sig Dir 99/93
ADR. Art 17, E-C Dir 2000/31
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Patent Coop Treaty
Dispute Resolution
Secure Transaction
Data Exchange
WIPO Digital Agenda
International Trade
E-Commerce Cyber Business
Madrid Marks
Hague Ind. Design
WCopyR.Treaty
WPerfor.Phono Tr
gTLDs
Artit.Media Centre
E-Rights
Global Licensing of Digital Assests(study)
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Dispute Resolution
Secure Transaction
Data Exchange
BIS Payment and Settlement Systems
International Trade
E-Commerce Cyber Business
Basel Accord
Pay & Settlement
Intl Accounting Stdd
Risk Manag .for E-Banking & E-Money
Real Time Gross Settl Systems
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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
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Proposition
• Needs for Functional Equivalence– Technical neutrality – Legal neutrality
• Policy Instruments• National Coordination• International Cooperation• Digital Collaboration
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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
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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
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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
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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