Global E-Commerce Regulation - Regulating A Cyberspace Without Borders

REGULATING A CYBERSPACE WITHOUT BORDERS

A regulatory problem of mounting concern was how to implement national regulations in a borderless Internet world. Most regulations of the Internet largely applied existing, physical-world rules to cyberspace, and didn't address the possibility that essential parts of an electronic transaction might lie outside national borders. The Internet increasingly made borders superfluous, and the full potential of the Internet, particularly for commerce, was based on this characteristic. This fueled the growing calls for international regulatory bodies to oversee developments in cyberspace.

For instance, according to the U.S. Federal Trade Commission's e-commerce regulation report Consumer Protection in the Global Electronic Marketplace: Looking Ahead, released in September 2000, online shoppers may be vulnerable to compromised security of their financial information when shopping at foreign Web sites due to the uneven nature of international privacy and security measures. The FTC encouraged the U.S. government to be proactive in working with other countries toward harmonization and stronger enforcement of international consumer-protection laws.

While the FTC report advocated a degree of uniformity in global e-commerce rules, it stopped short of advocating any particular organization to set or enforce such regulations. Rather, it envisioned a future Internet world in which private industry groups and governments established an alternative dispute resolution procedure and came to internationally accepted standards of fair marketing practices. It also saw a prominent role for self-regulation born of "private sector initiatives," in which industry groups agreed to standard business practices that would address the industry's specific needs.

Countries with more closed economic systems, such as China, were mixed in their reactions to and regulation of e-commerce. While the Chinese government encouraged e-commerce and was investing in the infrastructure to make China competitive in the online marketplace, it continued to maintain tight controls on the development of Chinese e-commerce, strictly implementing a legal framework for e-commerce to reflect the nation's interest. After linking to the Internet in 1994, China gradually implemented new laws regulating Internet access and the registration of domain names. By the late 1990s and early 2000s, however, new legislation was abundant. China was unusual, for instance, in maintaining strict controls over domestic encryption technology via state-controlled encryption authorization. Most countries, concerned with the security of their domestic networks, protected their encryption systems via export controls, but allowed encryption to circulate more or less freely domestically.

In December 1999, the Chinese Ministry of Information Industry (MII) unveiled its guidelines for the development of Chinese e-commerce, which broadly sought to sketch out a legal framework in which China could become competitive in international e-commerce, but also which "fits the global scheme of things," according to MII Deputy Minister Lu Xinkuei. This caveat was read by many analysts as a signal that China intended to continue its tight grip on the reins of e-commerce and Internet use in China. The guidelines themselves seemed to bear this out, as they stipulated that the Chinese government would manage e-commerce development and implement laws and launch businesses with an eye toward maintaining Chinese national security.

In some cases, the regulation of global e-commerce gets caught up in broader international trade politics. As America's Network reported, the Association of Petroleum Exporting Countries (APEC) was leading a charge to create equitable cost systems for connecting to international Internet circuits. Telecommunications operators and Internet service providers (ISPs) from the countries of the Pacific Rim, in particular, had long argued that, even though U.S. ISPs use them, they must bear the entire cost of connecting to international circuits in the region. The U.S. generally favored leaving these issues for the market to decide. While it was unclear just who should regulate such fees, the United States and Canada, according to America's Network, were increasingly isolated in their calls to keep governmental regulation out of such decisions. APEC proposed placing authority with the World Trade Organization or even the International Telecommunication Union to settle disputes over the matter.

International dispute resolution, whether between different companies or between companies and consumers, drew greater attention from regulators in the early 2000s, particularly in Europe, where the Brussels Convention and Rome Convention began carving out the space for dispute resolution and enforcement of fair international e-commerce practices. The Brussels Convention allowed consumers involved in a disputed transaction to sue in either their own country or the country in which the business resides as long as there was a specific advertisement or invitation to the consumer that prompted the purchase. The Rome Convention, meanwhile, aimed to coordinate the laws of different countries so those who sue couldn't choose the courts in one country over another for any particular advantage.

The European Union, particularly its governing body the European Commission, has been more aggressive than the United States in playing an active role in e-commerce regulation. In large part, this proactive approach came about because the European Union was already in the midst of a much wider economic integration, for which precise rules, structures, and commercial complications still needed to be ironed out. In this case, leaving the e-commerce framework more open to self-regulation, according to EU administrators and analysts, would only create more confusion and possibly impede the development of e-commerce in Europe. This in turn could diminish the EU's global competitiveness just at the moment it was getting on its feet. In 2000, the European Council and the European Commission devised the eEurope Action Plan, which, as part of its broader goals to stimulate wider use of the Internet and e-commerce, called for a creating a comprehensive legal environment to legislate and enforce guidelines for European e-commerce.