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The World Bank

ELECTRONIC COMMERCE STRATEGIES: THE BASIC ELEMENTS OF AN ENABLING ENVIRONMENT FOR E-COMMERCE. LEGAL AND REGULATORY ASPECTS. UNCTAD Geneva Palais des Nations July 11, 2001. David Satola Senior Counsel. The World Bank. The World Bank. LEGAL AND REGULATORY ASPECTS

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The World Bank

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  1. ELECTRONIC COMMERCE STRATEGIES: THE BASIC ELEMENTS OF AN ENABLING ENVIRONMENT FOR E-COMMERCE LEGAL AND REGULATORY ASPECTS UNCTAD Geneva Palais des Nations July 11, 2001 David Satola Senior Counsel The World Bank

  2. The World Bank LEGAL AND REGULATORY ASPECTS OF ENABLING ENVIRONMENT STRATEGY • BACKGROUND • PROCESS • THEMES • SELECTED LEGAL ISSUES

  3. The World Bank LEGAL AND REGULATORY ASPECTS OF ENABLING ENVIRONMENT STRATEGY BACKGROUND

  4. The World Bank If you build it, will they come? “Do you want to test whether a people is given to industry and commerce? Do not sound its ports or examine the wood from its forests or the produce of its soil. The Spirit of trade will get all these things and, without it, they are useless. Examine whether this people’s laws give men the courage to seek prosperity, freedom to follow it up, the sense and habits to find it and the assurance of reaping the benefit” Alexis de Tocqueville

  5. The World Bank It’s Transformational In the developing world, in the “off-line” economy, capital flows are generally outward … • …but capital formation has changed • knowledge • local content

  6. Government (“G”) Business (“B”) Consumer (“C”) Government G2G – coordination G2B – information G2C – information Business B2G – government procurement B2B-e-commerce between businesses B2C – e-commerce in consumer markets Consumer C2G – e.g., tax compliance C2B – price & other comparisons C2C – auction markets The World Bank Types of E-commerce Activities Intven, et al., Legal and Regulatory Aspects of E-commerce and the Internet (Forthcoming) World Bank Jonathan Coppel, E-Commerce: Impacts and Policy Challenges 4 (OECD Economic Department Working Paper No. 252 23 June 2000)

  7. The World Bank LEGAL AND REGULATORY ASPECTS OF ENABLING ENVIRONMENT STRATEGY PROCESS

  8. The World Bank Development Strategy ICT Production Growth Poverty Alleviation • Remove barriers to entry •  efficiency  cost • Pro-entry regulation • Legal & Regulatory certainty

  9. The World Bank Reform Process Issue Identification & Resolution Stage 1 Stage 2 Stage 3 Status Quo Issues Strategies Implementation Policies & Objectives LEGAL REFORM • Broad Public Consultation • Stakeholder Buy-in • Local Ownership

  10. The World Bank Reform Sequencing Policy & Market Structure Options Legislation Regulatory Framework Market Entry Current Market New Market

  11. The World Bank Law as an Instrument of Social Policy • South Africa: Electronic Communications and Transactions Bill - • Nationalization of domain name registration? • Moldova: Law on Informatics – • Privacy, databases, “.md” regulation • United States: USA PATRIOT ACT – • Privacy policy in an uncertain age

  12. The World Bank LEGAL AND REGULATORY ASPECTS OF ENABLING ENVIRONMENT STRATEGY THEMES

  13. The World Bank Principles Create an enabling environment of predictability & certainty through good governance and respect for the Rule of Law • Preference for market-based approaches • Make use and entry easy • Enhance access • Promote Certainty/ Confidence • Enhance transactional enforceability • Harmonize/Standardize • Neutrality – commerce • Neutrality - technology • Protect Intellectual Property • Protect Consumer Rights

  14. The World Bank [Re]-Defining the Role of the State Avoid industry and political capture by establishing transparency and independence through structural & financial separation of policy, regulation and ownership functions Gov’tDetermines Policy RegulationRegulates Sector Owner/OperatorProvides Services

  15. The World Bank LEGAL AND REGULATORY ASPECTS OF ENABLING ENVIRONMENT STRATEGY SELECTED LEGAL ISSUES

  16. The World Bank Selected Legal Issues - Overview • National v. International Dimension • UNCITRAL, WTO, EU, Hague • Models vs. Conventions • Harmonization/Standardization • UNCITRAL, WTO, EU • Role of Regulators/Regulation • PKI • Domain Name Registration • Competition • Forbearance • Privacy • EU v. US Approach • Reponses to Terrorism (AML) • Intellectual Property Rights • Role of IPRs and Development • Local Content • Technological Convergence / Emergence of Competition Law Principles • VoIP • ccTLD Registration (South Africa) • ADR • Incentives • Content • Taxation • Jurisdiction (Hague Convention)

  17. The World Bank The World Bank The Usual Suspects Laws Affecting [e-]Commerce (“off-line” commerce +) • Laws relating to Infrastructure Liberalization • Contract Formation (click-through, browse through) • Recognition of Digital Signature/Digital Contract • Public/Private Key Regulation • Competition • Privacy • Intellectual Property • Domain Names • Consumer protection • Tax • Customs/Import, FDI restrictions • Banking/Financial (exchange controls, payment systems) • Dispute Resolution • Liability (content)

  18. The World Bank International Dimension of National Law Enabling Environment • Harmonization/Standardization – How much, how far? • Treaty/Convention vs. Model law • Institutions • WTO • UNCITRAL • EU • Hague Conference

  19. The World Bank • GATT covers Goods • GATS covers Services but the online world poses new challenges • Consideration of classification of downloadable media, software, etc • “Examination”“Negotiation” • Key area where developing countries can play a role Source: WTO

  20. The World Bank The World Bank UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW Electronic Commerce Legislation UNCITRAL Model Law on Electronic Commerce with Guide to Enactment 1996 with additional article 5 bis as adopted in 1998 UNCITRAL Model Law on Electronic Signatures with Guide to Enactment 2001 • recognition of data messages • validity of digital signatures • encryption • certification • data privacy protection

  21. The World Bank Selected Directives E-commerce Directive - Directive 2000/31/EC of 8 June 2000 Electronic Signature Directive - Directive 1999/93/EC of 13 December 1999 Distance Contracts Directive - Directive 1997/7/EC of 20 May 1997 Data Protection Directive (Draft) – COM 2000 385

  22. The World Bank National Law Dimension of Enabling Environment • 4 Highlighted Themes • Convergence/Competition • Intellectual Property • ADR • Regulation Source for national legislation: http://www.bakernet.com/ecommerce/

  23. The World Bank Convergence implies increasing reliance on Competition Law & Policy • Two general components: • Prevent abuses of dominant position • Prohibit anticompetitive arrangements Policy Law • Protect process not competitors • Enhance efficiency • Promote public interest • Stimulate development

  24. The World Bank Role of Intellectual Property Rights And Development Protection of property rights vs. promotion of open standards • TRIPS • National Treatment • Minimum Standards • Dispute Resolution • Protect rights to ensure inward FDI, importation of necessary hardware/software • Preserves international standards • Innovation, Incentives in existing rights holders • Still protects rights • Scalability • Transaction costs • Develop local content, product, use local languages • Encourage local innovation entrepreneurs • Encourage local use • Promotes public good, prevents brain drain Open Software & Open Standards in South Africa: A critical Issue for Addressing the Digital Divide http://www.naci.org.za/docs/opensource.htm.

  25. The World Bank ADR • Create incentives for non-adversarial resolution to disputes to boost confidence • Effectiveness of ADR vs. Courts in changing market place behavior • Integrated vs. Distributional • Recognition within existing national legal systems • Flexible and scalable • Industry orientation • Permits rapid introduction of best practices, related, relevant experiences • Addresses situations not dealt with by existing law • Transparency! • Enforcement!

  26. The World Bank Comprehensive Incentive [de] –Regulation of E-commerce Infrastructure Regulation where necessary –the Bespoke approach How Much? Forbearance? Industry Self-regulation? Pipes & Wires “Middleware” Banking & Finance • Liberalization • Access • Competition • IPRs • Import • Encryption • ccTLD • Competition • Credit • Payment/Clearance Systems • Exchange Controls • Tax (VAT) • AML

  27. The World Bank WBG, IFC and infoDev projects, April 02

  28. Algeria – Comprehensive reform India – Advice on e-com Moldova – Advice on e-com & e-sign laws Morocco - Advice on e-com & e-sign laws Romania - Comprehensive reform South Africa – Advice on e-com Tunisia - Advice on e-com & e-sign laws Ukraine - Comprehensive reform Viet Nam - Advice on e-com & e-sign laws The World Bank Selected E-commerce Activities

  29. The World Bank Selected E-commerce Activities • Incubator Initiative $25 Million through 2005 • E-commerce projects: • BSAOL – Buy South Africa On-line (Direct sales) • B2bprice now.com Philippines agricultural project • Annual Donors Meeting, December 2002 Shanghai , China • Annual Meeting Symposium will feature trade –related aspects of e-commerce

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