E-commerce is becoming one of the key mantras of branching out and marketing, in the business circle. Technological convergence, deep metropolitan/rural penetration of personal computers, increasing computer literacy and training, liberalization of telecommunication insurance plan and the option of cheap Internet connectivity are factors that affected both consumer as well as business tendencies in favour of E-Commerce.
For business residences 'the lure of performing global operations via a web site is becoming irresistiblebecause a full page on the World Wide Web can reach web surfers in every state in the nation as well as perhaps every nation on the planet. ' Attracted to the options of E-Commerce, for a possible market growth, and with wish of exploiting more avenues of trade in the international market, Internet has become another market, though online.
DEFINITIONS OF E-COMMERCE
As commercial trades over the Internet has captured the interest of businessmen, policy-makers, regulators and academics, they described it using various terminologies such as Electronic Commerce Internet Commerce etc. and also to grasp the essence of these terms various efforts have been designed to define them in a variety of ways.
1. Qualitative and small definitions
Paying great attention to the qualitative changes the web has specifically taken to electronic commercial deals; some define E-Commerce as buying and selling of goods and services via the Internet. In the same manner some define it more narrowly concentrating on the advantages of business-to-consumer ventures on the web. They define E-Commerce as retail sales to consumers that the purchase and payment happen on open systems like the Internet.
Criticisms against these definitions
These definitions have a tendency to limit the potential of electronic commerce and its own broader monetary implications by totally forgetting the Business-to-Business trades and Consumer-to-Consumer transactions that take place using the Internet. The reality is that E-Commerce ventures are much numerous and bigger than Business-to-business and Consumer-to-Consumer business in conditions of income and exchange size. By the same token, this explanation also fails to consider E-Commerce deals done through other settings of electronic systems like telephones and fax machines.
2. Broad Meanings of E-Commerce
All forms of transactions relating to commercial activities, including both organizations and individuals, that are based on the processing and transmitting of digitized data, including content material, sound, and aesthetic images.
According to this view, the use of Internet is not needed for E-Commerce and includes all types of transactions that process and transmit digitized data including words, sound and visible images. A good commercial transaction relating mobile phone lines and fax machines would come under the definition of E-Commerce.
The request of information and communication technologies to one or more of three basic activities related to commercial deals: (1) creation and support, that is, sustaining creation, circulation, and maintenance chains for bought and sold goods and services; (2) transfer preparation, that is, getting product information in to the market-place and delivering buyers and sellers into contract with each other; and (3) purchase completion, that is, concluding ventures, transferring repayments, and acquiring financial services.
IMPORTANT ISSUES IN GLOBAL E-COMMERCE
In the modern times E-Commerce has ever more surfaced as an important means of business and trade. But at exactly the same time it offers posed various difficulties to national coverage creators and legislators in regards to its governance. Furthermore, its blessed global nature has generated various jurisdictional issues, boosting controversies over who must have authority to choose in case of a dispute as well as how they must be handled. Due to these reasons E-Commerce and its own governance are involved in various insurance policy dilemmas and issues. The next issues need special attention.
1)Issues relating to Access: Gain access to issues include access to infrastructure,
access to content, common access.
2)Issues relating to Trust: The various trust related issues are privateness, security, consumer protection and content rules.
3)Issues relating to Ground Rules: Issues associated with ground guidelines are issues of taxation, intellectual property rights, commercial regulations including contract legislations, international trade and requirements are classified as floor rules-related issues.
A. Issues associated with Access
The following are the key issues related to gain access to. If E-Commerce is to propagate into the people inside a country as well as internationally, these issues must be dealt with and resolved in a timely manner at the local and international levels.
i. Usage of infrastructure
In order to perform commercial transactions online, consumers and business people must first get access to telecommunications sites and services, including backbone networks. Once connection to the networks and services is guaranteed, subsequently, their capacities and quality become very important to the users. It really is thus of critical importance for E-Commerce to ensure a proper and efficient access be accessible.
ii. Usage of content
While usage of infrastructure is a necessary condition for individuals to look at and participate in E-Commerce, numerous kinds of content transmitted over this infrastructure are also critical elements for the success of E-Commerce. The material have to be competitive as well as respecting the ethnical principles of others.
iii. Universal access
Connectivity to telecommunications systems is a prerequisite for enjoying the benefits associated with E-Commerce. While using increasing importance of Information and Communication Technologies in our every day lives, universal availability of various communication services, including basic phone service, is regarded as a principal insurance policy target in competitive market environment. At the same time a large quantity of men and women are even without the essential telephone services. This distance on the planet population is called as digital divide.
Digital split and widespread access
"The term digital divide identifies the difference between those individuals with effective usage of digital and it, and the ones without usage of it. It offers the imbalances in physical usage of technology, as well as the imbalances in resources and skills had a need to effectively participate as an electronic resident. In others words, it is the unequal gain access to by some customers of the contemporary society to information and communications technology, and the unequal acquisition of related skills. " The OECD identifies the digital divide as "the gap between individuals, homes, businesses and geographic areas at different socio-economic levels in regards to both to their opportunities to access information and communication technologies and also to their use of the web for a wide variety of activities. "
The digital separate impacts the people's capacity to access modern Information and Communication Solutions, which in turn impedes their capacity to access Internet and E-Commerce.
B. Issues associated with Trust
There is a need of trust when we engage in a relationship or discussion with other people. Generally lack of knowledge of those individuals requires us to take chances in the relationship or connection. Renowned scholar Arrow says "virtually every commercial business deal has within itself an element of trust, certainly any business deal conducted over a period of time. " Any type of commercial transaction presupposes trust between the transacting parties. In virtually any contract functions to it must trust each other and perform their area of the deal. In normal deals the guidelines and types of procedures for interacting with instances of breach of trust are ready laid down. But this is still a challenge in E-Commerce.
1)Level of privacy and data protection
3)Consumer Coverage, and
Generally it is presumed that level of privacy is a necessary precondition for trust. But the increase of electronically mediated transactions over the info and communication network raises regulatory concerns on the collection, storing and manipulation of personal information without consent or even knowledge of consumers. Databases of consumer information may contain private information. There's a chance that without the consent or understanding of consumers, those directories may be distributed to or sold to others to whom the consumers havent chosen to give their private information. Because of these things the protection of privateness has emerged as you of the most crucial insurance plan issues among policy-makers, businesses and consumers. At the same time the progress of E-Commerce is undoubtedly connected with and depends on the collection, storing of personal information obtained by voluntary and involuntary consumer monitoring. Taking these exact things into consideration the duty of the plan creators to balance these conflicting hobbies becomes difficult.
The full probable of E-Commerce can't be achieved before system is capable of providing the same degrees of trust found in traditional commercial transactions. This can be accomplished only if consumers of E-Commerce are assured of the security of transmitted information. Among the leading security concerns of E-Commerce confidentiality, authentication and integrity of information are most important.
Encryption technology and trust
E-Commerce security can be explained as "a protection of any information learning resource from the dangers and hazards in the confidentiality, authenticity andintegrity of the digital transactions transmitted via a network" Using the swift increase of amount and scope of information stream via the electronic networks boosts concerns of fraudulence and misuse of data. To resolve this problem a reliable and strong cryptographic mechanism has to be used.
What is encryption?
Encryption is a process for safeguarding information by scrambling the articles to make it difficult and time consuming for an unauthorized recipient to unscramble and view the information. To place it another way it renders electronic digital information unreadable, thus guaranteeing confidentiality, security and integrity of the info. Its applications include guarding files from theft or unauthorized gain access to, keeping communications secure from interception, and enabling secure ventures.
iii. Consumer protection
Competition among the business enterprise: Your competition results in an increasing access of businesses in to the E-market and the trend of these visitors to go for unethical and unfair trade practices are also on the increase.
Convergence: When convergence offers bundles of communication services in the same program, the provision of reliable and detailed product and price information are more crucial for the consumers. The consumers must be comfortable that they will be secured in the digital marketplace just as much as they are in the true marketplace. There are plenty of consumer security issues identified at various international community forums as crucial for the further development of electronic commerce.
1)Fairness and truthfulness in advertising. A number of the online retailers advertise their products and services in an unfair and unethical way in order to attract more variety of customers. In real space business the clients can approach various regulators and courts with grievances. But this is difficult in e commerce specifically in the context of e-commerce across nationwide borders. A little retail customer may find difficulty in nearing an authority in another country where the seller can be found.
2)Labeling and other disclosure requirements such as promises, product expectations and technical specs: Each country offers its own criteria in labeling, quality of the merchandise and terms and conditions regarding assurance. In the cross border e-commerce if these standards are not maintained it might be difficult for a customer to seek treatment against this.
3)Refund mechanism in the case of cancelled orders, defective products, returned purchases and lost deliveries etc. This is another serious concern in the e-commerce. Demonstrating the cancellation of orders, or a defect in the goods or services etc would be based upon him proving these situations. Taking the global mother nature of e-commerce it might be really difficult to get the money back from the seller.
1)Online scams: The cases of online frauds are on the increase. Somebody who loses money in any of such frauds may face difficulty in enforcing his privileges.
2)Privacy safety: It is also important that confidential information such as credit-based card information, bank account amount etc. should be guarded. Internet is a medium through which these information are very often misused.
3) Authentication and security of information: Similarly a typical consumer would also face difficulty in verifying the authentication and security information within an online atmosphere.
4)Insufficient Consumer education: Many folks who use online programs to activate in commercial activities fail to understand the vulnerability of Internet and taking appropriate safeguards.
In order produce a trust-conducive environment for electric commerce consumer safeguard issues should be answered. The governments throughout the world will have to device reliable safety mechanisms by using industry and more. As a useful form of aid, the new Information and Communication Solutions may be used by regulators and consumer advocates for devising progressive alternatives for consumer protection and education.
iv. Content regulation
With the starting of borders and markets and the reduction of barriers to nearly every form of communication, there will undoubtedly be sure types of transmitting that will be deemed inappropriate, unpleasant or harmful to certain segments of consumers and users of E-Commerce. Adult materials, hate talk against minors and sedition are leading examples of those expressions that increase public concerns. There are many conflicting passions in these issues. For example those who bother about the vulnerability of minors to these harmful Internet items advocate for regulatory treatment by government. At the same time another class dispute against such intervention on the ground of speech and expression. That is a challenge for policy designers that the condition should be fixed without deterring the expansion of E-Commerce.
C. Problems with respect to ground rules
2)Intellectual Property Rights
4)Commercial legislations and standards
- Issues regarding classification
- Issues regarding source and place of residence
- Double taxation and taxes evasion
Issues regarding classification
The main issue regarding classification is that whether E-Commerce ventures are thought to be orders of goods or services. This is actually important for cross-border ventures because different classes of transactions are treated in different ways for tax purposes. Quite simply the question could be the applicability of General Contract on Tariffs and Trade (GATT) or Basic Contract on Trade in Services (GATS).
Traditionally, goods are treated as end products that can be converted into a tangible or physical product. But Services are intangibles that cannot be changed into physical goods. If E-Commerce deals were grouped as sales of goods, GATT rules would apply since when goods are physically moved across nationwide borders, they are usually put through tariff as the GATT rules apply. On the other hand, if E-Commerce trades were categorised as sales of service, GATS rules would apply where tariffs will not be applied. At the same time a clear distinction between goods and services is actually baffling in E-Commerce.
An example because of this issue is given below. When software is purchased electronically and then is shipped bodily in a Disc, it could be categorised as goods and are at the mercy of tariffs. The dilemma arises when the program is directly downloaded from the web across the boundary. It really is unclear whether this software should be grouped as goods or services and what multilateral guidelines would apply to them. Due to this problem of classification, in 1998, the WTO member says agreed to a two-year moratorium on tariffs on E-Commerce.
Issues regarding source and place of residence
The direct duty system in any country would normally be clear regarding who's liable for fees and, for those who are what income is at the mercy of tax. Traditionally, source and home are two basic concepts, which determine these questions.
Residence is regarded as "the country with which a taxpayer gets the closest personal links, and source as the country with which income has its closest financial connection" Direct taxes are usually levied by a country on "the local and foreign income of its residents and on the home source income of non-residents. " Similarly the assortment of direct taxes relies somewhat on proof physical connection. Likewise like the physical connection, everlasting establishment is also very important to determine a particular tax jurisdiction like where country income has been made which is therefore taxed. According to Article 5 of the OECD Model Taxes Convention, long term establishment means "a set place of business through which the business of an enterprise is wholly or partly carried on. " Which means that places of business that are mobile aren't regarded as a permanent establishment. E-Commerce poses a significant problem to tax administration with respect to this idea of long term establishment. Since E-Commerce will not be done from a long term generally in most circumstances taxation would be normally difficult.
Double taxation and taxes evasion
As E-Commerce has increased the number of online suppliers who tend to be subjected to two times taxation and duty evasion have also significantly increased, posing serious problems to national tax systems. In order to solve these problems in E-Commerce and reconcile different national positions, the OECD has developed a couple of rules to set up an internationally constant and harmonized taxation platform. Because of this work, the OECD has proposed the Taxation Framework Conditions in 1998. In these construction conditions, five basics of international taxation for E-Commerce were shown to help countrywide governments to execute internationally constant taxation guidelines. Those five guidelines are neutrality, efficiency, certainty and ease, performance and fairness, and versatility.
ii. Intellectual Property Rights
The problems with respect to IPR's in E-Commerce form a behemothic group of terminology and understanding. Therefore, it may be analysed as another branch of analysis and hence is out of the opportunity of this newspaper.
iii. International trade
a. Could it be a trade in Goods or Trade in Services?
The answering of the concern is very crucial because E-Commerce transmissions will be at the mercy of the different WTO guidelines, depending on whether such a transmitting is categorized as trade in goods or services. If it is considered trade in goods, the GATT rules apply. Alternatively, if it is thought to be trade in services, it is at the mercy of the GATS rules. There are lots of differences between these two pieces of trade guidelines in terms of program of Country wide Treatment, Most Favorite Land, and Quota guidelines. The National Treatment basic principle obliges countries to treat all overseas products add up to their similar home products. Beneath the GATT, this process pertains to all goods as a general obligation. However, it is not a generalobligation under the GATS, under which it only applies to sectors in which participants have explicitly slated commitments. Furthermore under GATS, member says can make conditions or constraints on their application of the National Treatment principle, which may restrict the market access of Foreign Service providers.
This issue also significant for identifying custom duties or Tariffs because the GATT guidelines impose custom tasks on all imported goods as the GATS guidelines do not impose custom responsibilities on services, which is specially critical for expanding countries where custom duties account for a considerable portion of national revenues. To be able to ensure that the unresolved classification issue will not hamper the development of E-Commerce, countries made a decision not to impose custom obligations on E-Commerce transmission in the 1998 WTO Ministerial Conference Declaration on Global Electronic Business.
Similarly the theory of Most Favorite Land obliges countries to take care of all foreign products similarly. This principle pertains to all commitments considered under the GATT, necessitating any benefits directed at one member country to be wanted to all other members as well. Under the GATS, the theory also applies to all services generally. However, members receive a one-time opportunity to exempt themselves from the responsibility of MFN in service areas of their own choosing. In addition to the principles of National Treatment & most Favored Region, the GATT and GATS rules fluctuate on whether quantitative limitations, namely Quotas, are permitted or not. The GATT prevents member governments from using Quotas to restrict market access whereas the GATS prohibits it only in sectors in which a member has made a committed action to provide market gain access to without limits. As identified above, credited to these differences between your GATT and GATS, the classification concern regarding electronic transmitting has important implications for international trade via E-Commerce since it will lead to significantly different treatment of something.
b. 'Cross-Boarder Supply' or 'Intake Abroad'?
The difference between a Cross-Boarder Source and Ingestion Abroad is that in former the supplier gets into the jurisdiction of the consumer and in the later the buyer enters the jurisdiction of the dealer. The variation between these two methods has significant implications for market gain access to and domestic restrictions of service trade. Under the GATS, member countries could make commitments to liberalise specific service sectors and these commitments varies depending on modes of supply. Therefore, how E-delivery of service is classified affects just how E-Commerce is regulated in a specific member country. At the same time, unless the classification issue is clarified internationally, companies would be kept with some uncertainty about what guidelines apply in a jurisdiction in which they provide services.
c. Local legislation of E-Commerce and its effect on international trade
Generally national government authorities bring regulation of E-Commerce for
various public insurance policy objectives such level of privacy, intellectual property protection under the law, consumer cover and promotion of national social diversity. But some times these regulations create unneeded trade barriers for conducting E-Commerce. So a proper balance have to be struck between the need of federal government to follow these public plan objectives through home regulation and the necessity to ensure these restrictions do not constitute unnecessary trade barriers which hamper the further development of E-Commerce.
In order to ensure that domestic regulations should not constrain international trade unnecessarily, various guidelines governing domestic laws have been included in international trade contracts. For example, Article VI of the GATS stipulates that WTO participants must be sure that in areas where specific commitments have been made, 'all actions of general program impacting trade in services are given in a reasonable, objective and impartial manner. ' Another example of a global trade agreement regulating domestic legislation is the Research Newspaper on Basic Telecommunications Services. This Newspaper establishes key ideas and requirements that the signatories must follow in enacting nationwide laws and regulations. With respect to E-Commerce, additionally it is critical to help expand discussions and discussions of how and what steps of domestic rules affect electronic commerce across national borders and whether existing procedures of international trade agreements need modification to deal with problems that digital commerce creates.
iv. Commercial law and standards
As E-Commerce has emerged as a significant means of conducting business, there has been an elevated need of changing the existing commercial laws to accommodate this new kind of transaction. The standard and important commercial law concern in E-Commerce is regarding the validity, legal result and enforceability of digital transactions. All most all existing commercial law procedures are drafted on the basis of paper devices and personally written signatures governed by the regulations of one national jurisdiction. Despite the fact that many state governments, including India have legitimately recognized the electric contracts, there are numerous states that have not made any effort yet. Certain requirements for the utilization of newspaper documents and physically written signatures in commercial transactions are considered major hurdles to the development of E-Commerce at both local and global levels. Furthermore, different national rules and regulations governing commercial transactions significantly hamper the worldwide diffusion of digital commerce, which thus raises a need for international harmonization of different countrywide commercial regulations.
1)Dependence on written documents: most nationwide laws and international conventions include provisions demanding certain transactionsto be concluded or evidenced in writing or certain information to be provided on paper.
2)Requirement of personal: A signature or other form of authentication is generally required to establish the identity of the signatory and his intent to associate himself with or be bound by the details of the doc.
3)Requirements of original documents: Certain information or documents should be provided in an original form.
4)Evidential value of Internet deal: Not absolutely all the legal systems have information technology laws that accept electronic orders as acceptable research.
5)Storage of data text messages: The necessity for safe-keeping of certain documents or information in paper form for accounting, duty, audit, research and other legal or administrative purposes constitute an additional barrier to the development of electronic commerce.
6)Documents of subject and negotiability: Replacement unit of negotiable documents of name by an electronic equivalent constitutes the most challenging aspect of implementing electronic commerce in international trade practice.
7) Validity and formation of agreements: While a agreement concluded orally is undoubtedly valid generally in most legal systems, lots of questions and uncertainties occur in the context of agreements concluded by digital means.
a. UNCITRAL Model Rules on Electronic Business, 1996
In the above issues, in order to provide a model for national legislators the United Nations Fee on International Trade Laws Model Legislation on Electronic Business was followed in the entire year 1996. The Model Legislations aims at inserting electronic ventures on par with the legal treatment accorded to traditional paper-based types of orders. The main goal of this Model Law is to harmonise commercial regulation of all the expresses. With this aim the Model Law provides guidelines and norms that validate and recognize contracts developed via electronic communications. For instance, the procedures of the Model law not only determine the characteristics of "original", "writing" and "signature" with regards to electronic ventures but also talk about admissibility and evidentiary weight of data announcements, the development and validity of agreements, and popularity by people to data communications. Since it was used in 1996, many countries, including India, have enacted legislation based on the Model Rules to ensure the enforceability of electric transactions.
b. Changes in legislation relating to popularity of digital signature
- It authenticates the sender of announcements.
- It assures integrity of a message, verifying a message has not been intentionally or accidentally altered during transmitting.
- It ensures the non-repudiation of source and receipt.
Some issues relating to Digital Signatures
Some of the key issues to be addressed in digital signatures include "common requirements for documentation government bodies (CAs), harmonized specialized and functional requirements to be achieved by certain categories of digital personal products, and the legal problems of liability rules and of legal acknowledgement of digital signatures" To resolve the legal problems various international attempts have been made, including the initiatives of the regional organizations, including the Asia-Pacific Economic Assistance website (APEC) and the EU. Few Intergovernmental Organizations, like the OECD and UNCITRAL also have added much in resolving this matter.
UNCITRAL Model Legislations on Electronic Signatures, 2001
The UNCITRAL adopted the Model Regulation on Electronic Signatures in 2001. The Model Rules on Electronic Signature addresses various criteria for reliable electric signatures, the tasks of signatory, certification company and relying party, and the reputation of overseas certificates and signatures. By creating internationally applicable rules and norms, the Model Legislation provides a construction for countries desperate to enact digital personal legislation.
1. Benchmarks can increase price competition by allowing assessment of standard products and applications
2. Criteria can increase compatibility and interoperability, pushing new suppliers to be competitive in producing products and applications related to the root standards
3. Specifications can raise the use of a particular technology, attaching improved economic and efficient value to the technology.
Key International Standard arranging Organisations
Most of the demands for the new standards for E-Commerce are well managed by key international standard setting organizations like the Internet Engineering Task Push, the internet Consortium, Internet Organization for Assigned Names and Figures etc.
a. Internet Engineering Task Make (IETF): Internet Executive Task Power (IETF) is a loosely self-organized international community of experts, network designers and providers, and vendors. The IETF is rolling out new standard technical specs online and made other executive contributions.
b. The World Wide Web Consortium (W3C): The World Wide Web Consortium (W3C) is notable in technical standards and guidelines with regards to content-intensive Internet services. In particular, the W3C has played out a key role in growing common protocols for the progression of the World Wide Web.
c. Internet Company for Assigned Labels and Volumes (ICANN): The
Internet Organization for Assigned Labels and Volumes (ICANN) is a nonearnings voluntary body, which executes an integral standard environment function in relation to governance of Internet labels and numbers.
d. Other Organisations : You can find two other organizations, the International Specifications Business (ISO) and the International Telecommunication Union (ITU), that get excited about communication requirements. These Organisations have been actively engaged in the Internet-related benchmarks activities.
Commercial transaction through Internet and other electronic digital media is so important that in the foreseeable future, the majority of the business-to-business transactions would invariably utilize them. The case is also not different in consumer-to-consumer agreements, at least when the ventures involves two celebrations from faraway places. Possibly the legalities in both these types of e commerce could are more complicated and challenging for the legal system. So it is better that, folks who seek technological assistance for getting into commercial marriage in online systems understand about the law relating to e-commerce.
Kumar Venkatesh and Abhsiehk Shukla
VI Semester (III Time)
Dr. RML Country wide Rules University
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