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					INTERNET COMMERCE & TRADE POLICY:
    International Initiatives for E-Trade

              Stuart S. Malawer




               Dr. Malawer ... (2008)       1
The Internet in the U.S.




     Dr. Malawer ... (2008)   2
       Web & E-Commerce in the News ….
Global Transactions in a Multijurisdictional World.




                 Dr. Malawer ... (2008)               3
Dr. Malawer ... (2008)   4
[E]lectronic commerce creates new challenges and opportunities for trade for
members at all stages of development, and we recognize the importance of creating
and maintaining an environment which is favourable to the future development of
electronic commerce.
           …………. WTO / DOHA Declaration (Nov. 2001).




                              Dr. Malawer ... (2008)                                5
“Electronic commerce (business transactions on the Web) and the
information technology (IT) industries that make “e-commerce”
possible are growing and changing at breathtaking speed,
fundamentally altering the way Americans produce, consume,
communicate and play.”
        ……. The Emerging Digital Economy II (1999)




                         Dr. Malawer ... (2008)                   6
“(T)he Internet will make trade and international business far easier than
ever before …. In trade policy we are developing broad principles through
specific objectives at the WTO ….”
         …. “E-Commerce in American Trade Policy,” (June 1999)




                             Dr. Malawer ... (2008)                          7
“The pace of technological development and the borderless environment created
by the Internet drives a new paradigm for government and private sector
responsibilities. Creating the optimal conditions for the new digital economy to
flourish requires a new, much less restrictive approach to the setting of rules.”
                 …. Emerging Digital Economy (1998)




                             Dr. Malawer ... (2008)                                 8
     Today’s global economic landscape is defined by two main features
  -- the vast impact of the information technology revolution and the
dramatic expansion of international trade. The Internet is redefining
business models worldwide and creating new paradigms and economic
                               transactions.
    ……. Former Governor James S. Gilmore, III, Governor of Virginia and
    Chairman, Federal Commission on Internet Taxation (1999).




                        Dr. Malawer ... (2008)                            9
    Aspects of the Internet & Global Trade ……

•   One transaction subject to multiple jurisdictions.
•   Uncertainty in national legal & tax systems.
•   Global & transborder.
•   Decentralized.
•   Inability of one state to regulate.
•   ”Network of Networks.”
•   Helps to communicate & conduct business.
•   Revamping domain name process & resolving trademark conflict.
•   States, nations, regional and international institutions are now only beginning to assess
    and reevaluate the state of governance.
     – State budget crisis in the United States is driving states to tax the expanding online
         sales as a means of alleviating budgetary deficits.




                                Dr. Malawer ... (2008)                                      10
•   Private sector favors a “market-led, market-driven & self-regulatory environment.”
•   General consensus emerging that need some global governance to avoid chaotic &
    divergent national regulation.
•   No consensus as to application of trade rules or WTO disciplines to Internet trade &
    commerce. (Internet-trade specific or technologically neutral.)
•   Basic Problems for the WTO:
      – Definition of Internet trade -- “Trade in Goods” or “Trade in Services”?
      – Revise the existing agreements or a new unique one (Trade Related to Economic
          Commerce / TREC)?
•   Newer Issue – Where states are enforcing national policies at odds with the policies of
    the home states of Internet companies.
      – E-Gambling (new 2006 U.S. legislation & EU’s threat to bring WTO claim.
•   Continuing Issue -- Regarding the backbone of the Internet – Global
    telecommunications still primarily American (ICANN)but have growing interest in
    changing this through international institutions (ITC).




                                Dr. Malawer ... (2008)                                        11
                    Transnational Transactions &
                    Multijurisdictional Legal Issues –
                    Private Transactions & Litigation.


                                         Online sale



            U.S.                      Publication of article
                                                                        EU
                                                                                            Suit filed in EU


• Case #1 -- Place of Contract (Contract).                  •Case #1 – Consumer accesses websites.
• Case #2 -- Place of Publication (Tort).                   •Case #2 -- Individual claims libel action.
                                                           •Case # 3 – Requires payment of sales tax.
• Case # 3 – Place of Sale (Tax).
•Location of Server & Company in U.S.
                                                                            •ISSUES:
                                                                            •Jurisdictional Issue.
                                Server Located in Third Country?
                                                                            •Choice of Law.
                                                                            •Judgment Enforcement.

                                    Dr. Malawer ... (2008)                                           12
                                      Newer Internet Issue.
                        Global Web Transactions & Foreign Law Compliance.
                                 (A Growing Foreign Policy Issue.)




                                                              France                            Foreign criminal law
Yahoo Case        U.S.                                                                        restricts sales specified of
                                 Advertising Sale of Good
                                                                                                   specified goods.
                                                                     Newer 2007 Case: YouTube & Copyright of clips
                                                                                 (Belgium court case).

                                                                                         Foreign civil law subjects
 WSJ Case         U.S.                                      Australia                  news coverage to jurisdiction
                                        News Articles
                                                                                                & liability.


                                                                                         Foreign criminal law restricts
  Pending        U.S.                                           China                    certain coverage (censorship).
  Problem.                             News Articles



                      Issues: The impact of national law on global Internet transactions? What is
             the role of domestic law in restricting such transactions? This is a growing & major foreign
                              policy issue. Clash of local & global interests. Problem of a
                       decentralized legal system in dealing with global actions – no final arbiter.


                                                 Dr. Malawer ... (2008)                                                 13
Critical Issues Confronting Global Internet Trade.



                                                 Legal
                                                                  Scope of
        Increasing                                                Services
        Demand                   Commercial


                     Technical




                       Past            Present           Future




                              Dr. Malawer ... (2008)                         14
            Government Debate & Discussion.


•   Global trade institutions are only now beginning to address the dramatic challenges of
    Internet trade and electronic commerce.
•   Framing policy issues and contending principles by various international institutions
    are now only in its infancy.




                               Dr. Malawer ... (2008)                                        15
                         U.S. Government

•   Some Early Documents:
      – “A Framework for Global Electronic Commerce” (July 1997).
      – “First Annual Report of the U.S. Government Working Group on Electronic Commerce”
         (November 1998).
      – “The Emerging Digital Economy” (1998, 1999, 2000).
•   States have been active in considering a broad range of legislation impacting Internet
    transactions, such as the Uniform Computer Information Technology Act (UCITA) that
    concerns licensing of software. Virginia is one of the few states to have adopted it. (2000).
•   Some recent federal legislation:
      – E-signatures (digital signatures) now authorized. “Electronic Signatures in Global and
         National Commerce Act.” (2000).
      – “The 1998 Digital Millennium Copyright Act” imposes new restrictions on violating
         digital copyrights extraterritorially.




                                 Dr. Malawer ... (2008)                                     16
          Current U.S. Law on Taxation of Online Sales.

•   The federal commission on Internet taxation was unable to reach a consensus on federal or
    state taxation of Internet transactions. (Suggested extending moratorium on new taxes on the
    Internet.)
•   Federal moratorium on new taxation of the Internet (for example, access charges). (“Internet
    Tax Freedom Act,”1998), and extended to Nov. 2003). In November 2004 this was extended to
    November 2007.
      – Issue of extension was caught up with considering VoIP as part of Internet.
•   U.S. Supreme Court (Quill Case, 1992) refuses to obligate firms to collect sales taxes for other
    jurisdictions unless the sellers has a presence in that jurisdictions.
      – Buyers may still be required to pay their own states the sales taxes for online purchases.
          (Never happens.)
      – Granholm v. Heald (S. Ct. 2005) – “ The Wine Case” – held that states cannot restrict
          foreign shippers if they did not so restrict state sellers of wine for selling directly to
          consumers. Big win for Internet sales.
•   States are attempting to change this in light of gigantic budget deficits since the demise of the
    “New Economy” & the “Internet / Telecom bubble.”




                                         Dr. Malawer ... (2008)                                         17
                State Taxes & Online Sales.




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                               Dr. Malawer ... (2008)                             18
     Multijurisdictional Tax Issue (U.S.).



    N.Y.                                     Virginia
                    Online Sale.

•Buyer               Problem:                  •Seller
            • Collection of Sales Tax.         •Seller has no
            [States need the money. Budget     physical presence
            crisis.]                           in N.Y.

            • S. Ct. does not require out-
            of-state collection of another
            state’s sales tax.
            •Consumer is to pay own state.
            •States proposing sales tax
            simplification & congressional
            change of law.
                   Dr. Malawer ... (2008)                          19
Six Emerging Principles as to Global Governance.

    •   Private sector should lead.
    •   No undue market restrictions.
    •   Simple legal environment.
    •   Recognize uniqueness of Internet.
    •   The Internet changes everything, business models and government.
    •   Facilitate globalization of E-Commerce and E-Trade via Internet, for
        example, greater liberalization of markets (telecommunications).




                          Dr. Malawer ... (2008)                               20
                    Nine General Issues.
•   Customs & taxation.
•   UCC for electronic commerce.
•   Electronic payment systems.
•   Intellectual property protection.
•   Privacy (data transfers).
•   Cyber Security.
•   Content.
•   Technical standards.
•   Newer Trade (& Foreign Policy).--Telecommunications Infrastructure,
    Information Technology & Internet.
     – Telephone access, connection charges & other restrictions as trade issues
          (U.S. complaints concerning Japan & Mexico to the WTO / DSU).
     – FDI into domestic telecom & Internet industries. (Many foreign telecoms are
          still state owned.)




                          Dr. Malawer ... (2008)                                     21
                                 European Union.
•   Some early documents:
     – “Then Need for Strengthened International Cooperation” (1998).
     – “E-Commerce -- 1st Communication” (1999).
     – “Lisbon Conference -- Internet” (2000).
•   Major points:
     – Issues concerning the Internet have progressed from technical to commercial to legal.
          • “Consumer jurisdiction.”
     – The electronic marketplace requires an appropriate framework.
     – Global uncertainty (with different subnational, national and regional responses) will
        hamper the electronic marketplace.
     – Want the WTO to give this comprehensive consideration:
          • Electronic transmissions across borders.
          • Data protection systems.
          • Competition.




                                     Dr. Malawer ... (2008)                                    22
•   Some Recent Developments:
     – The U.S. & the EU have agreed upon an accord as to electronic data privacy – “Safe
          Harbor” .
     – EU commences taxing some Internet transactions.
     – Lisbon Summit (2000) set reforms to counter U.S. domination of Internet Revolution.
          “Internet Management, 1998-2000,” (Commission Communication)
     – Provisions for “consumer jurisdiction” in Internet litigation.
•   *“EU Web site for E-Commerce”:
    http://europa.eu.int/information_society/topics/ebusiness/ecommerce/index_en.htm
•   *“E.U. Web site on Legal Aspects of E-Commerce”:
    http://europa.eu.int/information_society/topics/ebusiness/ecommerce/8epolicy_elaw/law_eco
    mmerce/index_en.htm
•   “European Union”: http://europa.eu.int/index_en.htm




                                  Dr. Malawer ... (2008)                                   23
                      World Trade Organization.
•   Important Documents:
     – DOHA Agenda concerning E-Commerce (Ministerial Declaration of Nov. 2001).
     – “WTO General Council & E-Commerce Program,” (Dec. 2000)
     – “Electronic Commerce & The Role of the WTO,” (March 1998).
     – “Declaration on Global Electronic Commerce,” (May 1998).
•   Important Issues:
     – Is E-commerce “trade in goods” or “trade in services” or a new specific agreement?
          • U.S. position – “Technology Neutral.”
     – Major problems as to data transfer and taxation and privacy.
            (data transfers, sales tax, customs, byte …)
     – Telecom has followed a highly regulated model. The Internet has developed in an
        unregulated environment.
          • How to increase global governance of the Internet by not imposing unnecessary
              governmental restrictions & disincentives at all levels.




                                   Dr. Malawer ... (2008)                                   24
•   E-commerce link on the WTO Website:
    http://www.wto.org/english/tratop_e/ecom_e/ecom_e.htm
•   “Declaration on “Global Electronic Commerce” (May 1998) requests work program (&
    moratorium / standstill on customs tax on electronic transmissions.
    http://www.wto.org/english/tratop_e/ecom_e/mindec1_e.htm
•   General Council established work program (Sept. 1998).
•   Issues not resolved at Seattle Ministerial (Nov. 1999) or DOHA Ministerial (Nov. 2001). E-
    Commerce is part of DOHA agenda.
    http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_e.htm#electronic
•   EU believes that e-commerce can be enhanced if WTO members make deeper market
    opening commitments on commercial services generally (greater liberalization).
•   WTO held a seminar in 2002 on the revenue aspects of global e-commerce and impact on
    development for LDC’s.




                                    Dr. Malawer ... (2008)                                       25
                               ITU / WIPO / UNCTAD.

•   International Telecommunications Union (ITU) -- responsible for the infrastructure (radio
    spectrum) & telecom standardization.
•   World Intellectual Property Organization (WIPO) – concerned with intellectual property rights.
    Issued its final report concerning domain names and resolving disputes (April 1999) and now has
    an active arbitration system.
      – WIPO and ITU are coordinating efforts concerning dispute resolution (WIPO Arbitration
         & Mediation Center).
      – “Intellectual property has become a central element in economic and cultural policy in a
         world in which markets are distributed across the globe.” (Domain Name Process, April
         1999).
      – WIPO is one of the “arbitrators” under the ICANN Rules (UDRP) for resolving domain
         name & trademark disputes.
      – ICANN – “Internet Corporation for Assigned Names & Numbers” – possible model for
         greater global governance (private / public cooperation in one entity). But ran into
         governance trouble recently.
      – See: “Primer on E-Commerce & IP Issues” (May 2000).
      – UNCTAD issues annual reports on E-commerce and developing countries. E-Commerce &
         Development Report (UNCTAD, annual report).




                                      Dr. Malawer ... (2008)                                    26
               Emerging Transnational Lobbying.


•   Private sector (computer and telecommunication firms) beginning to organize
    transnationally to influence global institutions -- as to global governance initiatives
    concerning E-commerce & trade.
•   The GBDe (Global Business Dialogue on Electronic Commerce), one of the first such
    transnational alliances, was formed in early 1999. It consists of the world’s leading
    computer and telecommunication firms.
•   Attempting to reach a joint approach on behalf of U.S., European and Asian firms
    concerning self-regulation of all aspects of online commerce.
•   Attempting to overcome national and cultural differences.
•   Website for GBDe (specifically for E-commerce): http://www.gbd.org/
•   Website for Global Economic Forum (general): http://www.weforum.org




                                   Dr. Malawer ... (2008)                                     27
•   It embodies the spirit and dynamic features of the digital age. Today, the
    GBDe is increasingly recognized as one of the world's leading private
    sector voices on e-commerce policy.
•   Within an extremely short period of time the GBDe has created a process
    which is truly global in scope; demonstrated the willingness of the private
    sector to engage seriously in the policy development process; and issued
    detailed, consensus-based recommendations on crucial e-commerce
    issues.

                                                        [ From GBDe website. ]



                                                                        http://www.gbd.org/
                               Dr. Malawer ... (2008)                                    28
                            Concluding Suggestions.


•   Global governance via the WTO & other global institutions.
•   Need cooperation of sovereign governments.
•   Need to ensure that global action fosters harmonization in order to ensure a restriction-free
    system.
•   WTO to consider sufficient agreements that addresses the “service / goods issue.”
•   Private sector to organize transnationally to engage the various international institutions.
•   Governments and global institutions to be an “enabler” of a market-driven system.
•   International institutions other than the WTO such as WIPO, ITU, UNCITRAL, OECD,
    UNCTAD & ISO need to play complementary roles.
•   The role of ICANN is still undecided as to global governance (and not unilateral U.S.
    governance) as relating to the Internet backbone and domain names. [World Summit on
    Information Society -- ITU.]
•   Update – In 2009 the U.S. sand the new Obama administration backed off its dominance of
    ICAAN and increased foreign nations participation.




                                   Dr. Malawer ... (2008)                                      29
                       Several Articles.


•   Malawer, "The Digital Global Economy." (NYSBA 1998).
•   Malawer, "Internet Commerce & Trade Policy," 48 Virginia Lawyer 46 (June /
    July 1999). (Click here)
•   Malawer, "Domain Names & Global Trade." (May 2000). (Click here)
•   Malawer, "Global Governance of E-Commerce & Internet Trade: Recent
    Developments," 50 Virginia Lawyer 14 (June / July 2001). (Click here.)
•   "Who Controls the Internet? “ Foreign Affairs (Nov. / Dec. 2005).




                         Dr. Malawer ... (2008)                                  30
“In  conclusion, the inherently transnational nature of
global computer networks and the Internet must lead to
greater and more creative international cooperation ….
(A)s Internet trade enters a more legalistic era, newer rules
need to be clearly enunciated. Those rules should follow
and reflect market forces.”
….. Malawer, “Internet Commerce & Trade Policy,” (July 1999)




                     Dr. Malawer ... (2008)                     31

				
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