There are many challenges to designing an adequate policy and regulatory environment for the digital economy, especially in the APEC region which is regarded as being the most dynamic in terms of economic growth.

It now accounts for roughly 57% of the world's GDP and 45.8% of global trade. The future of the region shows no signs of economic slowdown. With a population of more than 2.6 billion and some of its member economies growing at double-digit rates, the region's market is the most attractive one for a great number of goods and services.

The share of electronic commerce transactions in total trade within the region is still small, but the potential efficiency gains that can come from its growth are huge. Also, the dynamism of trade in services, especially from information and communications technology (ICT) services such as business process outsourcing and call centers, is showing significant economic benefits, particularly for developing economies. According to the OECD, the ICT services market (excluding telecommunications services) accounts for US$1.3 billion and is growing at a yearly rate of nearly 10%. Some APEC member economies are already taking advantage of the great opportunity that capturing a share of this market means, by establishing a sound policy and regulatory environment to favor the development of their IT services sector.

However, there is much to be done in terms of capacity building and public policy design to reap the benefits of an increasing adoption of information technologies in commercial processes. As a result, APEC Ministers have launched a number of initiatives targeted to provide an adequate policy and regulatory environment, as well as to develop the necessary skills for the development of the digital economy in the region.

The Electronic Commerce Steering Group (ECSG) promotes the development and use of electronic commerce by creating legal, regulatory, and policy environments in the APEC region that are transparent, predictable, and consistent. It provides a coordinating role for APEC e-commerce activities, based on the principles set out in the APEC Blueprint for Action on Electronic Commerce.

Divided in two subgroups, the ECSG addresses data privacy and paperless trading. The Data Privacy Subgroup (DPS) builds policy recommendations and implements capacity building projects based on the guidelines set by the APEC Privacy Framework. The Paperless Trading Subgroup (PTS) does the same based on APEC's Strategies and Actions Toward a Cross-Border Paperless Trading Environment. As the coordinating body, the ECSG cooperates with other APEC fora on the implementation of sector or theme specific initiatives.

Data Privacy
Work of the DPS on data privacy aims to promote a consistent approach to information privacy protection, and avoid the creation of unnecessary barriers to information flows and prevent impediments to trade across APEC member economies. The Privacy Framework addresses both domestic and international implementation and economies report progress through the Information Privacy Individual Action Plan (IAP). To date, 12 member economies have submitted their Information Privacy IAP.

The DPS has organized several workshops and seminars to help member economies on the design of regulatory and legislative frameworks on privacy inspired by the APEC Privacy Framework. Direct outcomes of these workshops include concrete implementation tools such as the Cross-Border Privacy Rules system and just recently, the APEC Data Privacy Pathfinder, which has been endorsed by the CTI and Senior Officials, and has been tabled for the consideration of APEC Ministers. The Pathfinder will be an extremely useful initiative for increasing consistency in information privacy protection in the APEC region and building confidence and trust in e-commerce.

So far, 12 member economies have confirmed their intention to participate in the implementation of the Pathfinder and it is expected that more economies will join once it is launched.

Paperless Trading

Helping member economies to attain a paperless trading environment is a paramount priority of APEC Ministers. The goal is to enable the electronic transmission of trade related information across the region by the year 2020 and contribute to the overall objective of reducing business transaction costs by 5%.

To that extent, the Paperless Trading Subgroup has undertaken work in the fields of capacity building, standards harmonization, and examination of best practices in electronic certificates of origin, sanitary, phytosanitary and electronic certificates, and electronic invoicing. The PTS is also contributing to the Single Window Initiative led by the Sub-Committee on Customs Procedures.

Currently, the PTS is undertaking a review of the APEC Strategies and Actions Toward a Cross-Border Paperless Trading Environment in order to enhance its implementation through the design of new initiatives. This exercise will be done in close collaboration with the private sector and expert organizations such as the Pan-Asian Alliance on e-Commerce, the Global Business Dialogue on Electronic Commerce, and the United Nations Commission on Electronic Business and Trade Facilitation. These international organizations have been active participants in the work of the PTS for a number of years.

ICT-Enabled Growth
By now, almost every economy in the world has recognized the potential contribution ICT could make to economic development. However, it is also well known that the use of ICT by itself does not yield productivity and competitiveness gains. It requires an adequate context in terms of regulation and public policy. Cognizant of that, the private sector has proposed an ICT-enabled growth initiative, which has been welcomed by APEC. This initiative will be implemented on the basis of the concept paper entitled "A Framework for ICT-Enabled Growth", and the ECSG will provide a coordinating role for that purpose.

The first deliverable that is being developed from the ICT-enabled growth initiative is the design of policy checklists that would help economies evaluate their regulatory frameworks and public policies oriented to facilitate the uptake of ICT. As a next step, recommendations based on best practices will be developed to assist member economies to enhance their digital business environment.

The growth of electronic commerce in the APEC region depends heavily on the creation of trust and confidence. It also depends on the capacity of member economies to increase ICT uptake, especially by SMEs. At the end of the day, the capacity of member economies to provide an environment of trust and confidence, as well as to increase ICT usage, depends on the quality of their policy and regulatory frameworks. The work of the ECSG aims to increase that capacity, and is aligned with the higher level objectives of improving trade and investment facilitation.

Originally established in 1999 as an APEC Senior Official's special task force, the ECSG is now aligned to the Committee on Trade and Investment (CTI) after undergoing a review undertaken by the Senior Officials' Committee on ECOTECH this year. This alignment will enhance the coordinating capacity of the ECSG with a stronger focus on trade and investment issues.

Written by Mr. Jesus Orta Martinez, Chair of the Electronic Commerce Steering Group and Deputy Director General of the Digital Economy in the Mexican Ministry of the Economy.