22 November 2000

Text: Evidence Supports E-commerce's Economic Benefits

Even though electronic commerce is still in its early stage of development, there is strong evidence that countries which participate fully in the digital economy derive remarkable economic benefits, says Assistant Secretary of State E. Anthony Wayne.

"Expanding global participation in the Digital Economy, and the use of e-commerce in particular, is an important feature in our international relations," Wayne said November 17 at the Trans-Atlantic Business Dialogue (TABD). The TABD is a government-business initiative that aims to facilitate closer economic relations between the European Union (EU) and the United States by lowering trade and investment barriers.

Wayne, who is assistant secretary for economic and business affairs, said that in promoting e-commerce globally it is important to use a cross-sectoral approach. To make it work, he said, governments and business must introduce reforms in many of the sectors that support the e-commerce supply chain, "recognizing that e-commerce in most cases continues to involve the physical delivery of goods."

He said also that those reforms must improve efficiency not only in telecommunications but also in systems for transportation, customs, delivery services, electronic payment, and the commercial regulatory environment.

He cites six measures that could form part of a cross-sectoral approach to e-commerce:

-- broader access to the Internet and lower costs.

-- pro-competitive air cargo agreements.

-- non-discriminatory customs processing, as promoted by the revised Kyoto Convention. -- paperless customs clearance procedures.

-- expansion of secure electronic payment systems.

-- and, abandonment of monopoly or other national postal administration protections that limit competition in the package delivery sector.

Following is the text of Wayne's remarks:

(begin text)

Assistant Secretary of State E. Anthony Wayne

Digital Economy Plenary Session
of the Trans-Atlantic Business Dialogue
Cincinnati, Ohio

November 17, 2000

Thank you for this opportunity to comment briefly on how we at the State Department view the Digital Economy.

The Digital Economy has ushered in a promising new era which is dramatically reshaping society and producing numerous economic, political, and cultural benefits. The extent to which economies reap these benefits depends in large part on the extent to which their governments put into place integrated, pro-competitive policies. Faced with this new world of opportunities and challenges, governments are faced with the task of making right choices in determining when to insert themselves or remove themselves from various aspects of the Digital Economy. Even at this early stage, we are seeing strong evidence that countries which participate fully in the Digital Economy derive remarkable economic and social benefits. Simply put, doing business electronically lowers costs. For many reasons, therefore, expanding global participation in the Digital Economy, and the use of e-commerce in particular, is an important feature in our international relations.

In looking at ways to promote e-commerce globally, it seems important to us to take what we term a cross-sectoral approach. It is not enough simply to look at how to make access to the Internet easier and more affordable for millions of people around the world. Nor is it enough to address the many challenges that exist regarding customs duties, taxes, consumer protection, privacy, and electronic authentication issues. We also need to introduce reforms and efficiencies in many of the sectors that support the e-commerce supply chain, recognizing that e-commerce in most cases continues to involve the physical delivery of goods. In addition to telecommunications, then, we need to look closely at systems for transportation, customs, delivery services, electronic payment, and the commercial regulatory environment in countries. A holistic approach that promotes competition, removes barriers and creates efficiencies can help to overcome problems which online merchants are currently experiencing in doing business globally.

Many online merchants in the United States refuse to ship to potential customers overseas due to difficulties in effecting online payments or delays in customs clearance. I assume this is true for European firms, too. Many B2B [business-to-business]components suppliers also experience difficulties participating in global supply chains because of the many inefficiencies, delays and barriers found in the offline sectors that support B2B e-commerce. The approach we are advocating can work to the benefit of developing as well as developed countries. A cross-sectoral approach can help create digital opportunities for developing countries' merchants and producers, and draw them into the globalized New Economy.

Specific measures that could form part of a cross-sectoral approach to e-commerce might include:

-- broadening access to the Internet, and lowering its costs;

-- pro-competitive air cargo agreements;

-- non-discriminatory customs processing, as promoted by the revised Kyoto Convention;

-- paperless customs clearance procedures;

-- expansion of secure electronic payment systems;

-- and, the abandonment of monopoly or other national postal administration protections which limit competition in the package delivery sector.

Achieving widespread reforms and efficiencies in these disparate sectors clearly will be a tall order. Success, at first, may be only piecemeal. Yet we believe that as governments and leaders around the world recognize the importance of becoming an integral part of the New Economy -- and what it takes to achieve that goal -- they will come to see the benefits of the cross-sectoral approach we are advocating. We believe that if they understand the interrelationship between these sectors and accept the value of the overall package, it will make it easier to achieve real progress in each individual sector.

We have already initiated efforts to raise awareness among other governments of what it takes to become an integral part of the New Economy and of the advantages of a cross-sectoral approach to e-commerce. This concept was woven into the G-8 Okinawa Charter on the Global Information Society and it was a part of the recent APEC meetings in Brunei. We will also be working on the concept with the European Union.

Although there are differences, the cross-sectoral approach complements the E-commerce work program and the initiative to pursue in the WTO services negotiations national treatment and expanded market access commitments in service areas that can foster e-commerce. We therefore support the recommendation of the Trans-Atlantic Business Dialogue that "governments pursue both a cross-sectoral services liberalization effort and an e-commerce work program." I hope we can agree on reforms and break down barriers in the near term, and that this will help lay the groundwork for an eventual WTO services agreement on such issues. We clearly need to work on this across the Atlantic, between the EU and the US multilaterally, and with third markets. In addition, there is much work to do with the developing world to help them plug into the digital economy. Business has to be an active partner in all of this, including in the efforts to bridge the digital divide.

(end text)

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