Regulation of services traded electronically

1
Regulation of services traded electronically

• WTO Symposium on Cross-Border
• Supply of Services
• Geneva, 28-29 April 2005
• Massimo Geloso Grosso
• Trade Directorate, OECD

2
Overview

• Scope of the presentation
• Enhanced trade opportunities
• Regulatory environment
• Examples of market access and national treatment
  measures
• Examples of domestic regulatory measures
• Impact on electronic supply
• Existing good regulatory practices
• Transparency
• General simplification of regulatory requirements
• Recognition and regulatory cooperation

3
Scope of the presentation

• Do services traded electronically face particular
  problems from cross-border services restrictions
  and regulations?
• Focus only on services traded electronically
• Existing restrictions on modes 1 and 2
• MA, NT and domestic regulatory measures
• It does not cover
• Regulations designed to govern the conduct of
  e-supply (privacy, security)
• Measures affecting enabling services for e-supply
  (such as telecom)

4
Enhanced trade opportunities

• High-speed, real time and capacity to carry rich
  data of Internet greatly increases the extent
  and types of services that can be traded
• Business services (legal, accounting,
  architectural, advertising, real estate, computer
  and related)
• Distribution services (wholesale and retailing)
• Financial services (lending, trading in
  securities)
• Health services (hospital services)
• Education services (post-secondary and adult)
• Tourism (travel agencies)

5
Enhanced trade opportunities (cont.)

• Internet has increased efficiency and
  opportunities for supply via modes 1 and 2, in
  many cases providing alternatives for modes 3 and
  4
• Can be critical for developing countries in light
  of limited capital and slow progress on mode 4
• By reducing transaction and other costs of
  trading over distance, Internet also increases
  the range of traders
• SMEs can again benefit particularly developing
  countries

6
Regulatory environment

• The question remains as to the extent to which
  regulatory environments allow trade to occur
• These services are highly regulated to achieve a
  range of public-policy objectives
• A review of Members schedules reveals use of
  several restrictions and regulatory measures
• Although there is often a gap between commitments
  and actual regimes
• There is also a variety of domestic regulatory
  measures
• Not barriers to trade per se but can become so in
  the way they are administered
• Given the range of possible measures falling
  under Art. VI, the focus here is on those under
  Art. VI. 4

7
Examples of market access and national treatment
measures (modes 1 2)
8
Examples of domestic regulatory measures (Art.
VI.4)
9
Impact on electronic supply

• These restrictions seem to pose no special
  problems to on-line suppliers
• E.g. limitations on foreign firms activities
• It could be argued that they are more difficult
  to enforce
• In some cases may become non-applicable in the
  digital world
• Restrictions on opening hours for retailers
• May create distortion of competition between
  on-line and off-line trade
• Or benefits as e-supply develops?

10
Impact on electronic supply (cont.)

• The perception of the impact of regulations seems
  greater by virtue of the enhanced trade
  possibilities
• Commercial presence/residency requirements can
  have a greater impact on e-supply in light of its
  scale
• Absence of recognition in many jurisdictions
  places particular burden on the on-line trader
• Lack of transparency and delays may cause greater
  problems for electronic supply given that speed
  is one of the expected benefits
• In some cases on-line suppliers may face
  particular problems
• Licenses must be applied for in person or
  electronic versions of documents are not accepted
• Favour a certain digital signature but not others

11
Existing good regulatory practices

• Essentially approaches for ensuring that
  regulations are not overly burdensome are the
  same in the on-line and off-line environments
• Greater transparency
• General simplification of regulatory requirements
  
• Recognition and regulatory cooperation

12
Transparency

• E-supply increases the need for transparency
• Firms must know which rules and regulations are
  applicable in the variety of jurisdictions
• The Internet can help governments in ensuring
  transparency by channelling information to the
  players
• It can provide an accessible, one-stop shop to
  all regulations affecting services traded
  electronically
• Especially helpful to individual entrepreneurs
  and SMEs
• Transparency also requires financial and
  administrative resources
• International assistance
• After the initial investment Internet can reduce
  the cost of making information available
  (compared to traditional means)

13
General simplification of regulatory requirements
14
General simplification of regulatory requirements
(cont.)

• Internet can help minimising the
  trade-restrictive effect of regulations
• Regulations for hard copy documents and in person
  signature (e.g. for accountants) could be
  replaced by electronic submissions of returns and
  digital signatures
• Cumbersome registration procedures which require
  personal attendance over extended periods could
  be replaced by creation of on-line registration
  procedures
• Local experience requirements could be reduced
  with other means of familiarisation, such as
  bridging courses available on-line

15
Recognition and regulatory cooperation

• Internet can
• Make it more difficult to make recognition of
  qualifications a condition for market entry
• Make recognition easier if governments exploit
  its potential fully
• The Web could help create the basis for MRAs
• Foster cooperation between regulators in
  different countries
• Facilitate collaboration between private bodies
  with delegated authority
• University accreditation bodies
• Professional bodies

16
Recognition and regulatory cooperation
(cont.) Internet can help authorities take
account of foreign qualifications and need of
additional requirements

• A customised process that is very information
  intensive
• Need to evaluate foreign systems and the specific
  path followed by the candidate for access

• Common comparative databases of certifying
  institutions
• Curriculum content, training requirements and
  accreditation conditions on the Web
• Provide the foundation for electronic
  accreditation bodies giving a right of entry for
  electronic delivery
• International assistance

17
Main sources

• OECD (2002), Regulation of Services Traded
  Electronically, document TD/TC/WP(2002)13/FINAL
• OECD (1997), International Trade in professional
  Services Assessing Barriers and Encouraging
  Reform
• Drake, W. and K. Nicolaidis (2000), Global
  Electronic Commerce and the General Agreement on
  Trade in Services The Millennium Round and
  Beyond
• Wunsch-Vincent, S. (2001), Electronic Services
  Its Regulatory Barriers and the Role of the WTO
• Primo Braga, C. (2003), E-Commerce Regulation
  New game, New Rules?