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Latin E-Commerce Potential Draws Attention
Electronic commerce in the United States has been growing at a rate that outstripped the world. In turn, the nation is working to help the rest of the globe create opportunities for online expansion, and its favorite region of unrealized potential is Latin America.
Latin American businesses, especially in the larger economies of Brazil, Argentina and Mexico, have grasped the usefulness of the Internet, and North American governments have seen the benefits in helping those businesses grow in order to provide demand for equipment and expertise. Latin America is one of the fastest-growing regions for new Internet connections, with some projections stating that it will represent 10 percent of the world's users by 2003.
Commerce Undersecretary for International Trade Bob LaRussa is leading the Commerce Department's worldwide campaign to promote e-commerce as a way to create opportunities for U.S. businesses. The biggest emphasis is Latin America, with a special focus on governments that have shown a strong desire in entering the digital economy, such as Chile, Brazil and Argentina. LaRussa sees the region as one of great opportunity because the number of Internet users there is expected to triple from 1999 to 2003.
E-commerce is a key topic for the United States in free-trade negotiations in the hemisphere. The United States has been reluctant to enter bilateral negotiations until recently, when it started talks with Chile last week. It is still unclear how it will address e-commerce in those negotiations, but Chile is viewed as a model country, actively working to enact legislation that is favorable to e-business.
U.S. trade policy since enactment of the North American Free Trade Agreement in 1994 has been on the broader effort to negotiate a Free Trade Area of the Americas (FTAA). That effort would create a free-trade area from Canada to Argentina, involving all 34 democratic countries in the Western hemisphere, with a target date of 2005.
By that time, Latin America could be doing $100 million in e-commerce trade a year, mostly business-to-business, according to a Commerce Department official. "Clearly this is going to be a key mechanism for how trade takes place," the official said.
Is FTAA The Way?
In the free trade area deal, the United States has been the leading force on e-commerce issues, focused on getting countries to leave such trade unimpeded.
"I think that Latin America is most important in certain areas," said Regina Vargo, deputy assistant secretary for the Western Hemisphere and leader of the U.S. effort. "This is our neighborhood. We're in the process of building the FTAA, and Latin America has become so important in our trade. You can't do e-commerce by yourself."
As host of the Third Summit of the Americas in Quebec City in April, Canada is leading an effort to increase connectivity in the Americas. Canadian officials raised the plan at a late November meeting of the intergovernmental Summit Implementation Review Group.
"Connectivity is one of the issues we see as a hallmark for the summit," Peter Boehm, Canadian ambassador to the Organization of American States, said after a meeting at the Inter-American Dialogue in Washington, DC, last week. He noted that connectivity could help in several ways important to the region, such as health and education.
Furthermore, the hemisphere's telecommunications ministers are looking at increased bandwidth, governments are moving toward e-government, and Internet access is a focus everywhere, he said. There also could be a Web site for restricted documents, with access only for FTAA negotiators in order to help expedite the negotiations, Boehm said.
E-commerce was the subject of unique FTAA consultative experts groups that include government and industry representatives together. The other FTAA groups — nine negotiating groups and two other consultative groups — are restricted to government negotiators only. A consultative group has no negotiating authority but makes recommendations and informs governments.
Private Sector Steps In
U.S. private-sector experts on the committee have included officials from Microsoft, America Online, Motorola, Hewlett Packard, the National Consumers League, the Commercial Internet Exchange Association and consultants for small business, customs and services industries.
The private sector presence has been "of extraordinary value," Vargo said, establishing a network throughout the hemisphere. Initially, some Latin governments were uneasy about private-sector participation, but the group's non-negotiating status sped its acceptance.
The e-commerce group completed its 18-month mandate Nov. 22 but in its recommendation proposed that its mandate be renewed. Its recommendations are confidential until reviewed by trade ministers in their next meeting April 7-8, just before the Quebec City leaders' summit.
The experts group covered a range of issues, including access, infrastructure, consumer protection and privacy, crime and taxation. The United States has tabled numerous papers on diverse subjects, such as small businesses and a study of developing countries that showed a correlation between low customs duties, low telephone charges and a rise in the number of Internet users.
Taxes Threaten Global Growth
Developing countries have been wary of being goaded into dropping tariffs on high-tech goods or relinquishing their right to tax electronic business transactions, and their concerns have slowed progress on e-commerce in the hemisphere. The United States has worked diligently to alleviate those concerns, but there is still resistance.
So far, no Latin American country has imposed taxes on e-commerce. A related topic of intense discussion in the FTAA is harmonizing standards for small package express delivery, an essential component of electronic trade.
Peru is held up as a model on legislation because it first passed a bill that discriminated against foreign service providers, only to come back a week later and change the legislation.
A Commerce Department official, meanwhile, said recent developments in Argentina have been "troubling." The government there adopted a privacy approach similar to that of the European Union, which had led to complex negotiations for the United States to obtain a safe harbor to effectively deal with it.
In Argentina, even some of the exceptions included by the European Union are missing, making it even harder for companies to meet privacy protections. Argentina has said it will try to address U.S. concerns in the implementation of the legislation, the U.S. official said.
 | - by William New |
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