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D. Choi, S. Ghernaouti-Hélie An analytical point of view of emerging issues of e-commerce for the multilateral trading system Daewon Choi Special Assistant.

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Presentation on theme: "D. Choi, S. Ghernaouti-Hélie An analytical point of view of emerging issues of e-commerce for the multilateral trading system Daewon Choi Special Assistant."— Presentation transcript:

1 D. Choi, S. Ghernaouti-Hélie An analytical point of view of emerging issues of e-commerce for the multilateral trading system Daewon Choi Special Assistant to the Executive Secretary and Secretary of the Commission UNESCAP E-mail: daewon.choi@un.org Pr. Solange Ghernaouti-Hélie Vice-Dean - Ecole des HEC University of Lausanne E-mail:sgh@hec.unil.ch

2 Prof. S. Ghernaouti-Hélie 2 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

3 Prof. S. Ghernaouti-Hélie 3 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

4 Prof. S. Ghernaouti-Hélie 4 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

5 Prof. S. Ghernaouti-Hélie 5 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)

6 Prof. S. Ghernaouti-Hélie 6 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

7 Prof. S. Ghernaouti-Hélie 7 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

8 Prof. S. Ghernaouti-Hélie 8 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

9 Prof. S. Ghernaouti-Hélie 9 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

10 Prof. S. Ghernaouti-Hélie 10 Explanation 6. WTO premise of Most Favored Nation can not be applied to DTS DTS requires Most Favored NETWORK, thus departs from MTS premise

11 Prof. S. Ghernaouti-Hélie 11 Explanation 7. MTS has clear jurisdiction and choice of law In cyberspace, jurisdiction and applicable law are not straightforward

12 Prof. S. Ghernaouti-Hélie 12 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

13 Prof. S. Ghernaouti-Hélie 13 Explanation 9. MTS converts data into price DTS converts price into data

14 Prof. S. Ghernaouti-Hélie 14 Explanation 10. In sum, Global Trading System needs to manage convergence of: –Multilateral Trading System –Digital Trading System

15 D. Choi, S. Ghernaouti-Hélie The Global Trading System: Architecture and Coordination

16 Prof. S. Ghernaouti-Hélie 16 E-coordination at the meta level Transaction Process Layers International Trade (eg. Multilateral Trading System) –E-Commerce (eg. Intermediary) –Cyber Business (eg. Digital Trading System) Component Layers –Information Exchange –Secure Transactions –Dispute Settlement

17 Prof. S. Ghernaouti-Hélie 17 Global Trading System (GTS) = f(MTS, DTS) MTS: Multilateral Trading System (WTO) DTS: Digital Trading System (Virtual) Meta-Level Interface MTS MTS DTS DTS

18 Prof. S. Ghernaouti-Hélie 18 The Internet Today FTP Server Web Server Documents Database Application Web Server Documents

19 Prof. S. Ghernaouti-Hélie 19 Step 1: Metadata FTP Server Web Server Documents Database Application Web Server Documents

20 Prof. S. Ghernaouti-Hélie 20 Step 2: DTS Components FTP Server Database Application Web Server Documents

21 Prof. S. Ghernaouti-Hélie 21 Step 3: DTS Development Repository Registry Repository Registry FTP Server Web Server Documents Database Application Web Server Documents

22 Prof. S. Ghernaouti-Hélie 22 Step 4: Digital Trading Agents FTP Server Web Server Documents Database Application Web Server Documents Registry Agent

23 Prof. S. Ghernaouti-Hélie 23 Step 5: Digital Trading System FTP Server Web Server Documents Database Application Web Server Documents Registry Agent Digital Dispute Settlement Agent E-Trust Intermediaries E-Payment Process Services

24 Prof. S. Ghernaouti-Hélie 24 Public Domain BusinessCitizens ERP/ Transaction Job Shop System VAN HTTP Public Services Process Applications UN/EDIFACTBrowser Dispute Settlement Mechanism E-Public Goods and E-Government Public Services Collaboration Hub XML XML Message Service Adapter XML Message Service Adapter Process Integration Financial Services Information Services XML

25 Prof. S. Ghernaouti-Hélie 25 Dispute Resolution Secure Transaction Data Exchange MTS ETS DTS International Trade E-CommerceCyber Business Components of Global Trading System

26 Prof. S. Ghernaouti-Hélie 26 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

27 Prof. S. Ghernaouti-Hélie 27 Financial Services Dispute Resolution Secure Transaction Data Exchange WTO E-Commerce Programme International Trade E-CommerceCyber Business ITA Basci Telcom Services Competition Policy E-Commerce Trade Facilitation

28 Prof. S. Ghernaouti-Hélie 28 Proposed Dir VAT 7/2000 Dispute Resolution Secure Transaction Data Exchange EU E-Commerce Framework International Trade E-CommerceCyber 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

29 Prof. S. Ghernaouti-Hélie 29 Patent Coop Treaty Dispute Resolution Secure Transaction Data Exchange WIPO Digital Agenda International Trade E-CommerceCyber Business Madrid Marks Hague Ind. Design WCopyR.Treaty WPerfor.Phono Tr gTLDs Artit.Media Centre E-Rights Global Licensing of Digital Assests(study)

30 Prof. S. Ghernaouti-Hélie 30 Dispute Resolution Secure Transaction Data Exchange BIS Payment and Settlement Systems International Trade E-CommerceCyber Business Basel Accord Pay & Settlement Intl Accounting Stdd Risk Manag.for E- Banking & E-Money Real Time Gross Settl Systems

31 Prof. S. Ghernaouti-Hélie 31 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

32 Prof. S. Ghernaouti-Hélie 32 Proposition Needs for Functional Equivalence –Technical neutrality –Legal neutrality Policy Instruments National Coordination International Cooperation Digital Collaboration

33 Prof. S. Ghernaouti-Hélie 33 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

34 Prof. S. Ghernaouti-Hélie 34 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

35 Prof. S. Ghernaouti-Hélie 35 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

36 Prof. S. Ghernaouti-Hélie 36 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

37 D. Choi, S. Ghernaouti-Hélie Thank you for your attention

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