The Internet has facilitated a new wave of economic growth and development. Businesses across the world - both big and small - have taken advantage of the scale, scope, and access that the Internet provides to reach new markets and consumers. A small business in rural America can now reach an individual consumer in the European Union (EU) without any physical footprint in the EU. This type of transaction was not possible before the advent of electronic commerce (e-commerce). Moreover, this type of transaction requires a revaluation of a trade regime that was created with only the largest multinational corporations able to truly engage in international trade.
The US has created trade policy governing cross-border e-commerce transactions largely through recent free trade agreements (FTAs). Since 2000, every FTA the US has signed has contained a chapter on e-commerce. These chapters have included important protections for the digital economy (e.g., no tax on digital goods, transparency in regulation, and free flow of information).Yet, these chapters have often taken a very narrow view of the issues that they have sought to tackle. It is worthwhile, a decade after these provisions were first written, to revisit and update them to better reflect the nature of modern e-commerce.
There are a number of additional issues that are imperative to e-commerce that have not been addressed in past trade regulation. E-commerce often results in the cross-border transfer of digital services. These digital services must be protected against trade-distortive and domestic discriminatory preferences. Moreover, nation-states often rely on narrow interpretations of intellectual property law to restrict the cross-border transfer of e-commerce products and services.
These non-traditional barriers to trade must be broken down. Internet intermediaries provide essential services that drive e-commerce. Strong limitations on liability must be guaranteed for these intermediaries. Finally, small businesses are only starting to engage in e-commerce. Future trade regulation should facilitate the growth of small businesses engaged in e-commerce.
This article begins by describing the rapid growth of the e-commerce economy. It then reviews the history of past US free-trade agreement e-commerce provisions and suggests how to improve and update these provisions. The document then describes a host of additional e-commerce related issues that should be addressed in trade policy moving forward.Journal of World Trade