As one of the thirteen private sector members of the U.S. Working Group on FTAA Electronic Commerce, I was pleased to actively participate in the formulation and submission of the recommendations contained in this report.

For Immediate Release
Wednesday November 10, 1999

Contact: Morrie Goodman
Chuck Melley

U.S. Secretary of Commerce William M. Daley Welcomes FTAA Report by Electronic Commerce Experts

Washington - U.S. Commerce Secretary William M. Daley welcomed an e-commerce report by the Free Trade Area of the Americas' Joint Committee of Experts on Electronic Commerce. "Report with Recommendations to Ministers," is the culmination of 18-months of discussion within the Free Trade Area of the Americas. Government and private sector experts from throughout the Western Hemisphere made over 40 recommendations to FTAA Ministers on how to increase and broaden the benefits of electronic commerce. 

"The report by the FTAA's Joint Committee of Experts on Electronic Commerce gives a major boost to our efforts to create a seamless global marketplace for electronic commerce," Daley said. "Its recommendations will serve as a valuable guide for FTAA governments as they put in place the legal and policy frameworks that will permit ecommerce to benefit their citizens and communities," continued Secretary Daley, who thanked the 13 U.S. private sector experts who contributed to the Joint Committee's work, in a public-private sector collaboration.

The report notes that global electronic commerce could climb to $2-3 trillion by 2005, when negotiations to create a Free Trade Area of the Americas are scheduled to conclude. By then, Latin America is expected to double its participation rate to 10 percent of the world's Internet users.

According to the report, ecommerce can help the FTAA countries expand their trade, increase their global competitiveness and hasten their integration into a unified, regional market. The dividends could be especially high for the region's smaller companies and smaller economies which traditionally have been hampered by limited information, high market entry costs and distance from major markets. The Joint Committee concludes that electronic commerce "can make an important contribution to future sustainable economic growth in the Western Hemisphere." 

To obtain these benefits, the Joint Committee warns that international cooperation will be necessary to avoid having national approaches fragment regional and global markets. Sounding themes that are in accord with the Administration's "Framework for Global Electronic Commerce" (July 1997), the Joint Committee calls for governments to create a public policy environment for electronic commerce that is flexible, stimulates innovation and competition, and does not favor any particular technology. 


The report acknowledges the private sector's leading role in stimulating the growth of electronic commerce, through investment, innovation and commercial practices that build confidence and trust.

Among the recommendations, the Joint Committee's experts urge FTAA governments to:

The full report is available in English and Spanish on the FTAA's website ( The U.S. Department of Commerce heads the U.S. delegation to the Joint Committee, which will provide further recommendations to FTAA Ministers at their next meeting in Argentina in Spring 2001.


FTAA-Joint Government-Private Sector Committee of Experts on Electronic Commerce

Report with Recommendations to Ministers


Submitted by

Chair: Dale Marshall, Barbados
Vice-Chair: Ruben Morales, Guatemala

FTAA Joint Government-Private Sector Committee of Experts on Electronic Commerce

Report with Recommendations to Ministers

September 1, 1999




Composition, Scope and Function of the Committee 

Establishment of the FTAA Joint Government-Private Sector Committee of Experts on Electronic Commerce was set out in the San Jose Ministerial Declaration of March 1998 (paragraph 19), and subsequently endorsed by Heads of State in the Santiago Summit Declaration of April 1998. The status of the Committee is that of a non-negotiating body, with its composition drawn from both public officials and private sector experts in the area of electronic commerce. Membership in the Committee is open to all FTAA governments. Private-sector experts in the Committee are identified by government representatives on the basis of their expertise in the issues considered, and with a view toward establishing balanced geographic representation. 

The Joint Government-Private Sector Committee of Experts on Electronic Commerce was requested by Vice Ministers to:

". . . .make recommendations to ministers on how to increase and 
broaden the benefits of electronic commerce and, in particular, how 
electronic commerce should be dealt with in the context of the FTAA 

The Joint Committee held five meetings over the past year with broad participation averaging 20 countries. Private sector experts attended all of the meetings. The Committee was chaired by Senator Dale Marshall of Barbados, with Ruben Morales from Guatemala elected as Vice Chair. A detailed summary of the deliberations of the Joint Committee was prepared by the Chair.

Overview of Electronic Commerce in the Western Hemisphere

Electronic commerce will be one of the principal means for conducting trade in 2005 when the Free Trade Area of the Americas is concluded. Already global electronic commerce stands at an estimated US$100 billion and is expected to grow exponentially to about US$2-3 trillion by 2005*. During the same period, the number of Internet users worldwide is forecast to jump from today's 171 million to 345 million.

Within the Western Hemisphere, a significant disparity currently exists among the countries of the region with respect to Internet use and electronic commerce. For example, some 35 percent of U.S. and 25 percent of Canadian citizens use the Internet, whereas most Latin American countries have less than 3 percent of their citizens on-line. A similar disparity exists in regional expenditures on electronic commerce.

At the same time, the recent growth of Internet use in Latin America has been among the most rapid in the world. Latin America at present accounts for only about 8 million Internet users, but by the year 2003 it is estimated that there could be as many as 34 million users in the region. Under this scenario, Latin America would double its participation rate from 5 percent to approximately10 percent of the world's Internet users. Moreover, experts expect over half of all Internet users in the year 2005 to speak a language other than English, with comparable gains made in the posting of non-English content, thereby broadening usage and eroding language barriers. 

These developments suggest that while electronic commerce holds tremendous potential for expanding trade throughout the Western Hemisphere and for increasing the region's competitiveness in international markets, the challenge lies in ensuring that electronic commerce contributes to the integration and development of the whole Hemisphere. Attention will need to be paid to address the opportunities and create an enabling environment in order to avoid the deepening of inequalities in the access and use of information technologies that could widen the social and economic gap between and within countries of the Western Hemisphere.

Electronic commerce can help overcome the comparative disadvantages created by long distances and geographic barriers, and make it possible to access each other's markets at substantially lower costs. The dividends could be especially high for the region's smaller companies and smaller economies which traditionally have been hampered by limited information, high market entry costs and distance from markets. While the most immediate gains are likely to be in business-to-business electronic commerce, especially in the banking and financial services, online purchases by consumers will continue to grow. Both are expected to be drivers of electronic commerce.

Throughout the Hemisphere, companies should enjoy higher growth and improved economic efficiency and profitability, while purchasers/consumers benefit from broader product choice and lower prices. For governments, information technologies facilitate the means to reach citizens and offer new opportunities for information exchange and transparency, training, learning, and development. At the same time, governments can cut the costs of their activities, whether operating, procurement or contracting. The resulting productivity gains should propel the economies of FTAA members, lead to a higher standard of living for FTAA citizens, and generate new opportunities for the well-being and development of our communities. 

The Joint Committee concludes that electronic commerce can make an important contribution to future sustainable economic growth in the Western Hemisphere. 

However, there are challenges that must be overcome in order to take full advantage of the potential economic and social benefits offered by electronic commerce.

With respect to infrastructure, the growth of electronic commerce in the Western Hemisphere is slowed by barriers in the form of low quality of telecommunications infrastructure, narrow bandwidth, and high connection costs in some countries. The reliability and costs associated with delivery of goods present additional barriers. 

Increasing participation and expanding Internet use in all countries of the Hemisphere will depend upon raising awareness among individuals and companies, especially small and medium enterprises, and building a skilled human resource base able to use and create with digital technologies. 

Legal, commercial and financial frameworks were created to deal with physical transactions and may currently be insufficient to secure the enforcement of contracts, ensure the validity of electronic signatures, and effectively protect intellectual property rights to support the growth of electronic transactions. Low credit card use in the region is also a problem.

The electronic medium does not initially create the trust characteristic in "face-to-face" transactions. Uncertainty currently exists among consumers, both individuals and businesses, that they may not be afforded similar protections in the online world as they are in the physical world with regard to privacy, security, authentication, and consumer protection.

Whether or not the region successfully meets these challenges will depend in large part on the approach that FTAA governments and private sectors adopt toward this innovative medium.

Electronic commerce is inherently global and transcends borders. Electronic commerce policies and activities (national, regional, public or private sector) will be most effective if they are compatible with a global approach. International cooperation is necessary to avoid having national approaches fragment regional and global markets, and unduly restrict trade. Governments, business, consumers and academia must work collaboratively to create an environment in which electronic commerce can grow to maximize the social and economic benefits for all.

Governments should act to meet the public interest and create a policy and regulatory environment for electronic commerce which is flexible, stimulates innovation and competition, and does not favor any particular technology. The private sector should play a leading role in stimulating the growth of electronic commerce through investment and innovation. It also has a key role to play in partnership with governments and consumers to ensure that commercial practices build trust and confidence in electronic commerce, including through effective self-regulation where appropriate.

The Joint Committee urges FTAA Trade Ministers to consider the growth of electronic commerce a priority for the region and to act expeditiously to realize its potential.

With a view toward increasing and broadening the benefits of electronic commerce in the Hemisphere, the Joint Committee makes the following recommendations.



A) Strengthening the Information Infrastructure

Network Access/Competition

Taking advantage of global electronic commerce depends upon access to efficient and reliable telecommunications networks. In many FTAA countries, this will require significant investment in developing infrastructure, which in turn will rely heavily on attracting private capital. Regulation, directed at encouraging competition and ensuring that providers can reach end-users and each other under reasonable and non-discriminatory terms and conditions, will tend to promote investment and infrastructure development and enable e-commerce services and applications to be accessed easily. 



The continued growth of electronic commerce requires global interoperability. The private sector, through voluntary associations and through contributions to intergovernmental organizations, has developed standards around which telecommunications networks are currently built. These market-driven standards serve to ensure interoperability, allow interconnection, broaden market acceptance, reduce costs and allow large systems, such as the Internet, to be built from equipment and software provided by a large number of manufacturers. Organizations with broad membership, transparent practices, and which are responsive to the market are more likely to develop widely acceptable standards.



B) Increasing Participation

Governments as Model Users

FTAA Governments and their citizens can benefit significantly from providing services online and using new technologies to meet citizens? needs. Governments can reduce costs with resulting fiscal savings, be more efficient and productive, provide new and improved services, make available greater amounts of useful information, increase transparency, increase citizen involvement, and ensure their economies participate in the emerging digital economy by utilizing the tools of electronic commerce. Because of their unique role and greater resources, governments can serve as catalysts for the development of electronic commerce within their countries. The benefits so generated will have a positive impact on the expectations of the private sector.


Smaller Economies

Electronic Commerce has the potential to provide smaller economies with improved access to information, improved means and ease of communications to business contacts, lower priced products, reduction of barriers to entry to world markets, reduced transactions costs and improved potential for delivery of services. Thus, electronic commerce can enhance innovation and economic efficiency for the region as a whole. 


Engaging Small/Medium Enterprises (SMEs) in Electronic Commerce

As one of the most dynamic features of a growing economy, SMEs play a critical role in creating employment and enhancing GDP in the Western Hemisphere. The use of electronic commerce by the SME community could reduce traditional barriers to entry such as distance and size and enable them to be more competitive in the international economy. 



Currently, business-to-business electronic commerce comprises the largest share of electronic commerce activity, accounting for approximately 70 percent of its estimated total value. For the immediate future, it is likely that the volume of business-to-business electronic commerce will preserve its dominance over business-to-consumer transactions.


Raising Skills and Awareness

Education and lifelong learning will be essential if electronic commerce is to realize its full potential. At the same time, electronic commerce offers new opportunities for training and education such as through distance learning.


C) Clarifying the Rules of the Market

WTO Agreements

The WTO agreements provide a global framework of rules governing trade in goods, services and intellectual property. In recognition of the increasing use of electronic means of contracting and delivering goods and services, in May 1998, WTO Ministers agreed to establish a work programme to examine how existing agreements apply to electronic transmissions, to identify any new issues and to analyze the effects of electronic commerce on trade and development. At the same time they agreed to continue for one year their existing practice of not applying customs duties to electronic transmissions. Some of the issues being examined in the work programme are:

(1) The classification of products transmitted electronically as goods or services.
(2) The application of various modes of service delivery.
(3) The application to electronic commerce of WTO agreements related to telecom services.

The results of the work programme and the agreement with respect to customs duties will be considered by Ministers at the Third WTO Ministerial in Seattle.


Intellectual Property Protection

On-line distribution of literary or artistic works offers FTAA citizens the enormous possibility of accessing goods and services related to commerce, education, culture, science and training. Ecommerce also enables creators to acquaint the public throughout the world with their works and interpretations, or to disseminate research and studies to the world academic community. The ability to perfectly copy electronic data, to distribute it instantly on a global basis, and the growth of ecommerce raise a number of issues for holders of intellectual property and governments related to the effective protection of intellectual property. 

Recently, several FTAA governments participated in the negotiation of two new WIPO Treaties. The WIPO Copyright Treaty and WIPO Performances and Phonograms Treaty address important issues of copyright in a digital environment.


Internet Governance/ ICANN and ccTLDs

The Internet Corporation for Assigned Names and Numbers (ICANN) is a new, non-profit international corporation formed to oversee the Internet's core technical management functions. By September 2000, ICANN is expected to take over responsibility for coordinating the management of the Domain Names system, the allocation of IP address spaces, the coordination of the adoption of new Internet protocol parameters and the management of the Internet's route server system. These functions are crucial to the Internet and electronic commerce.


Taxation and Electronic Payments

With the advent and recent growth of electronic transactions complementing and in some cases replacing the traditional ways of delivering or exchanging goods and services, governments are faced with a new challenge to their tax administrations. The changing business environment is raising new issues for governments with respect to tax collection and for businesses with respect to their tax liabilities. Many countries have recognized that electronic commerce will not reach its full potential if it is subject to discriminatory tax treatment. Electronic commerce depends upon swift, secure and effective payment systems. This requires an appropriate policy framework.


Contract Law

Electronic commerce depends on the ability of the parties to a transaction to enter into a binding and legally enforceable agreement. Further analysis is required to determine whether electronic commerce issues are adequately covered by existing laws and regulations or whether there is a need to introduce any changes. 


D) Increase Consumer Confidence/Build Market Confidence

Security and Reliability:

Widespread use of strong encryption is essential for electronic commerce to flourish in the Western Hemisphere.


Authentication, Electronic Signatures, and Records

The development and use of authentication technologies play an important role in building user confidence in electronic commerce. Parties to electronic transactions must be able to identify each other with certainty and verify that the content of their messages has not been altered during transmission. Thus, electronic authentication technologies and methods are critical enablers of electronic commerce. 



The facilitation of global electronic commerce is based upon transborder access to information and requires consumer confidence that personal data will not be misused. Guaranteeing the effective protection of data will require cooperation among governments, consumers and the private-sector. Differing approaches may be used, including laws, private sector self-regulation, and/or privacy enhancing technologies. Any approach should ensure that privacy protection regimes are not applied in a discriminatory manner nor impede competition and would be enhanced by international cooperation.


Consumer Protection

Electronic commerce holds the potential to increase consumer choice, stimulate price, quality and service competition, and better inform consumer decision-making. At the same time, electronic commerce could facilitate schemes to defraud consumers, and creates new challenges both for consumers seeking to evaluate risks and for businesses seeking to provide traditional consumer protections in the online environment. 


E) Dealing with Electronic Commerce in the FTAA Negotiations

Electronic commerce has enjoyed a robust growth up to now largely because it has been unencumbered by the kind of trade barriers which have often restrained more conventional economic activities. The continuation of such an environment can continue to provide a major stimulus for the sustained growth of electronic commerce and its attendant benefits.