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2011/SOM3/CTI/023

Agenda Item: 5.3

ECSG Convenor’s Summary Report

Purpose: Consideration

Submitted by: ECSG Convenor

/ Third Committee on Trade and Investment MeetingSan Francisco, United States
22-23 September 2011

OAA ISSUE AREA:

CONVENOR’S SUMMARY REPORT TO CTI

1.  INTRODUCTION

The Electronic Commerce Steering Group (ECSG), established in 1999, helps coordinate APEC’s e-commerce activities as set forth in the 1998 APEC Blueprint for Action on Electronic Commerce.The ECSG also explores how economies may best develop legal, regulatory and policy environments that are predictable, transparent and optimized to enable economies across all levels of development to utilize Information and Communication Technologies (ICTs) to drive economic growth and societal benefit. The role of ICTs to lower cost, increase efficiency and increase productivity is critical in helping economies meet the targeted savings set forth in the Bogor goals.

2.  IMPLEMENTING 2011 WORK PLANS, WITH PARTICULAR REFERENCE TO THE APEC Leaders/ Ministers decisions[1] and 2011 APEC PRIORITIES:

A)  SUPPORT THE MULTILATERAL TRADING SYSTEM

B)  STRENGTHENING REGIONAL ECONOMIC INTEGRATION AND EXPANDING TRADE

·  Next Generation Trade and Investment Issues

An element of the ECSG’s work is to support the Next Generation Trade and Investment Issues pursued in CTI. In particular, the work of Data Privacy Subgroup (DPS) helps promote effective, non-discriminatory, and market-driven innovation policy by enhancing trust and confidence in the Internet as well as facilitating the flow of personal information used by organizations in conducting domestic and international business.

The Sub-Group has completed the projects[2] comprising the Cross-Border Rules (CBPR) system under the APEC Data Privacy Pathfinder which was endorsed by APEC Ministers in September 2007. The Data Privacy Pathfinder focuses on the international implementation of the APEC Privacy Framework through the creation of a system to support business development of cross border privacy rules or practices. The Cross-Border Privacy Rules (CBPR) system will recognize the privacy rules developed by business organizations by providing minimum standards, compliance structures, and enforcement support that will work to hold organizations accountable for compliance with the rules they develop.

The documents developed for the CBPR System includes: (1) CBPR in-take questionnaire for use by an applicant organization; (2) CBPR program requirements for use by Accountability Agent; (3) Accountability Agent Recognition Criteria; (4) the Cross Border Privacy Enforcement Cooperation Arrangement; (5) Policies, Rules and Guidelines of the CBPR System, including the Charter of the CBPR Joint Oversight Panel, and (6) CBPR Directory of Participants (which will be in the form of a webpage providing documents, information about the CBPR system, and participant contact information for use by consumers). The first four sets of documents were endorsed at the previous ECSG meetings and the fifth and sixth documents were endorsed at the 24th ECSG meeting on 21st September 2011.

The CBPR system will provide effective mechanisms for enforcement activities and consumer protection to ensure a high level of data privacy protection. It will result in simpler procedures, and cost and time savings, for business, for government agencies responsible for data privacy matters, and for consumers. The ECSG endorsed the CBPR system (as set out in the attached documents) as satisfying the requirements of the APEC Data Privacy Pathfinder at the 24th ECSG meeting on 21st September 2011.

A workshop was also held in San Francisco on 17 September called APEC Cross Border Privacy Rules: The Value to Industry, Financing and Technology Compliance Aids. The Workshop provided an opportunity to consider issues related to the benefits and costs of participating in the CBPRs as well as how the associated administrative costs can be financed. Sessions discussed the CBPR value propositions for industry, consumers and governments, as well as the remaining challenges to participation (for example, effective education and capacity building) and how these challenges can be overcome.

·  Implementation of the Supply-Chain Connectivity Framework and Action Plan

The ECSG has been working cooperatively with other fora to support the CTI in implementing Supply-chain Connectivity Framework and Action Plan. More specifically, the ECSG’s work implements action plans for chokepoint 5 to simplify customs and other cross-border trade procedures, as well as action plans for chokepoint 6 to improve the efficiency of air, land and multi-modal connectivity.

The ECSG has been developing projects on the use of paperless trading in commercial processes. These projects aim at using “e-solutions” or electronic procedures and processes in cross-border trade in order to save time and costs for firms and government agencies seeking regulatory compliance information from traders. Areas covered by these projects include, for example: electronic certificates of origin, electronic invoicing, business requirements for data harmonization and single window, best practices in paperless trading, e-negotiations, archiving of e-documents and e-trade financing.

In particular, the ECO (electronic certificate of origin) project, which supports action plan for chokepoint 5, has been successfully implemented between two member economies since May 2010, moving beyond its pilot stage. Several other economies have been also preparing or considering their participation in the implementation of the ECO. Having more and more participating member economies, the ECO project is expected not only to realize the benefits of trade facilitation, but also to echo the objectives of APEC’s Supply-chain Connectivity Framework and Action Plans to address and overcome the obstacles when doing trade across the border.

The ECSG has been working closely with other relevant fora, such as the MAG and SCSC, to explore joint initiatives to promote SCI and to avoid any possible duplication in these areas. In this regard, the Chair and selected delegates of Paperless Trade Sub-Group (PTS) attended the MAG meeting on 6 March and 18 September, briefed the MAG members on ECO project focused on harnessing IT to ease documentation and procedures of APEC elements for simplifying customs documents and procedures (relating to ROO).

A workshop was also held in San Francisco on 17 September called Workshop on Supply Chain Connectivity: E-Commerce as a Main Driver and Integration Too. The Workshop provided an opportunity to consider issues related to the development of “soft infrastructure,” such as regulation, licensing, governance and safety, to facilitate the implementation of supply chain connectivity in APEC region. The representative of CTI and representative of SCSC also participated in the workshop and shared the information on the SCI initiatives in their fora.

Other projects implemented or planned in 2011 to promote e-trade and support SCI action plans are as follows: 1) Informal Meeting on Global Value Chains (March 2011); 2) APEC Forum on Digital Economy and E-Commerce Development (July 2011); and 3) Workshop on Readiness of ECO Implementation in Cross-Border Trade in APEC Region (February 2012).

·  Trade Facilitation – assessment of the implementation of TFAPII

Projects developed and implemented by the ECSG on the use of paperless trading in commercial processes aim at facilitating cross-border transactions by simplifying or reducing cross-border documentation and removing cross-border barriers to electronic commerce. Several other projects/initiatives of the ECSG also aim at facilitating trade by simplifying domestic regulations and procedures (‘behind the border’ issues) to help business operate in the various APEC economies. For instance, the work of the Data Privacy Sub-Group provides businesses with lower overhead and greater certainly of legal rules governing cross-border data exchange while providing a credible accountability framework and greater cooperation for cross-border enforcement of privacy issues.

With regards to the assessment of the implementation of TFAPII, the work of ECSG has been assessed by the two methods: (1) analysis of DPS work based on previous KPIs endorsed in 2008; and (2) a case study on ECO for the work of PTS.

First, the results of the study on DPS work highlighted the real progress that the DPS made in building capacity in the APEC region as well as developing guidelines and implementing projects that established a common approach to data privacy. By working to develop a simple and transparent system for the protection of personal information that moves across APEC economies, the activities of the DPS clearly improve trade facilitation in the APEC region. Additionally, building a foundation of trust and confidence in cross-border data privacy ensures the growth of electronic commerce in the region, thus allowing businesses and consumers to reap the benefits associated with electronic commerce, including reduced trade transaction costs.

Second, a case study of Electronic Certificate of Origin conducted by the PSU, in cooperation with the PTS, found that the cross-border exchange of e-CO service saved significant time and cost for both exporter and importers and contributed to trade facilitation. The projected reduction on trade transaction costs varied according to different scenarios, from 0.2% to 10.4%, and a medium rate of APEC wide e-CO adoption scenario projected a reduction of 6.8%.

The PSU undertook a study assessing the impact of the TFAP II on the DPS and PTS. The study recognised the success of the DPS and PTS in meeting the key requirements of TFAP II and made a number of recommendations for both Sub-Groups to consider. The ECSG has noted the recommendations, which will be implemented as part of the future work program of both the DPS and the PTS.

·  Digital Economy and IPR

Another important element of the ECSG’s work is to support the CTI in taking forward the work under the digital prosperity agenda to enable economies to utilize ICTs as catalysts for growth and development. In doing so, the ECSG is building on its current work streams and projects, including data privacy and paperless trading, which are key elements of ICT-enabled growth.

In particular, the ECSG has been tasked to complete the remaining elements of CBPR by 2011, under the APEC Leaders’/Ministers’ Taskings for APEC 2011. As mentioned above under “Next Generation Trade and Investment Issues,” the ECSG has completed all the projects comprising the Cross-Border Rules (CBPR) system, including the two documents that were just endorsed at the ECSG meeting on 21st September 2011, and also endorsed the complete CBPR system as satisfying the requirements of the APEC Data Privacy Pathfinder. This will help ensure the continued free flow of personal information among APEC economies while establishing meaningful protection for the privacy and security of personal information.

C)  CONTRIBUTIONS TO APEC’s LEADERS’ GROWTH STRATEGY INCLUDING PROMOTING GREEN GROWTH and implementing the 2009 APEC environmental GOODS and Services (EGS) work program

The area of this work program that is most pertinent to the ECSG is the pillar on knowledge-based or innovative growth. ECSG work on the Digital economy agenda naturally supports the innovative growth pillar.

The work of the DPS on privacy recognises that privacy is an essential element of the policy and regulatory framework. Effective privacy protection both enhances trust in emerging technologies through responsible information management and facilitates global data flows that are the currency of the digital economy. The APEC Privacy Framework is based on the concept of accountability, as organisations will be held accountable for meeting their obligations in relation to personal information that moves across borders. This maps well to today’s new and ever more global and interconnected markets and the need to appropriately protect personal data to assure continued participation in existing services and adoption of new technologies.

The work of the PTS encourages new ICT tools and business process reengineering in simplifying international trade procedures. New and friendly applications, simplified procedures, deregulated policies, less costly and easy-to-use system infrastructure, and the latest cloud computing services, are all being considered and developed by the PTS to help the trading community in doing international trade.

D)  EXPANDING REGULATORY COOPERATION AND ADVANCING REGULATORY CONVERGENCE

The Data Privacy Sub-Group’s work, including the APEC Privacy Framework and the APEC Data Privacy Pathfinder, provide basic principles and rules for use by economies in order to support accountable cross-border data flows. In particular, its work on the CBPR - a system to support business development of cross border privacy rules or practices - will provide sets of rule with which participating economies, businesses and accountability agents in the APEC region should comply to ensure regulatory convergence in the area of cross-border data privacy.

The APEC Cross-Border Privacy Enforcement Arrangement (the CPEA), which commenced operation in July 2010, also contributes to expanding regulatory cooperation. The CPEA provides a mechanism for the Privacy Enforcement Authorities to share information and provide assistance for cross-border data privacy enforcement and this mechanism is being actively used by participants.

E)  OTHER AREAS, INCLUDING APEC-WIDE INITIATIVES ON HUMAN SECURITY, APEC New Strategy for Structural Reform, APEC REFORM and GENDER

3.  Activities UNDERTAKEN WITH ABAC aND/OR OTHER EXTERNAL STAKEHOLDERS

ECSG and its Sub-Groups are fortunate to count on the active participation of a number of guests, most notably the International Chamber of Commerce (ICC), the Global Business Dialogue on e-Society (GBDe), the Pan-Asian E-Commerce Alliance (PAA), the OECD, the UN/CEFACT and the Internet Society (ISOC). Several projects are undertaken jointly with these organizations and on-going dialogue ensures that APEC benefits from the valued input of these guests into our work program.

The Data Privacy Sub-Group encourages member economies to support the participation of civil society in their economies in the development and implementation of privacy policies, consistent with the APEC privacy framework, both domestically and at the APEC level.

The Data Privacy Sub-Group continues to hold discussions and exchange information with the OECD and other international organizations involved in data privacy protection, such as the International Conference for Data Protection and Privacy Commissioners (which attended the meeting as an invited guest). The purpose of this information sharing process is to cooperate in the development of common approaches globally and facilitate the adoption by member economies of consistent domestic and international approaches to data privacy protection.

4.  NEW COLLECTIVE ACTIONS AGREED/PLANNED

ECSG and its two Sub-Groups will continue to implement a strong program of work in 2011, focusing on paperless Trading and Data Privacy. The Data Privacy Sub-Group has completed the projects for the CBPR system and will work on its successful implementation from next year. Responding to the high demand, the ECSG has developed and endorsed a multi-year project proposal to focus on capacity building to support the domestic and international implementation of APEC Privacy Framework, consistent with broader APEC priorities. In addition, economies are working to develop their own capacity building initiatives (in the form of APEC endorsed projects) with the active participation and support of the Data Privacy Sub-Group. The Paperless Trading Sub-Group will integrate further elements of its work plan into a comprehensive initiative on paperless trade solutions, such as e-certificates of origin.