U.S.: E-Commerce is Key to Free Trade in Latin America

U.S. Commerce Secretary Don Evans told Latin American trade ministers Wednesday that e-commerce initiatives must play an integral part in the creation of any Western Hemisphere free trade agreements.

Evans told members of the Free Trade Areas of the Americas (FTAA), who are meeting over the next few days in Argentina to conduct trade talks, that in order to create a free and open marketplace, the benefits of e-commerce must be extended to smaller companies and economies in the hemisphere.

"President Bush recognizes, as do I, that e-commerce will continue to be one of the driving forces of economic growth in the 21st century," Evans said. "I'm here to support negotiations that will move us closer to finalizing a (trade) agreement and to see that all elements of trade and commerce, especially e-commerce, are given due consideration."

Bridging the Gap

Within the Western Hemisphere, a significant disparity currently exists among the countries of the region with respect to Internet use and e-commerce. According to a recent report by eMarketer, the Internet penetration rate for Latin America is only 2.7 percent, compared with nearly 40 percent in the United States.

However, deregulation and privatization of telecom industries in the region are leading to a rapid expansion of Internet availability and e-commerce penetration. E-commerce in Latin America, both business-to-consumer and business-to-business, is set to reach US$7 trillion by 2004, Evans said.

According to a recent study referred to by Evans, 2.5 million Argentineans surfed the Web at least once a month last December, compared to 1.9 million in March.

"Nations of the Americas have been very receptive to e-commerce and understand the importance of fair opportunities as the best way to grow economies," Evans said.

Barriers Ahead

Many challenges still remain for the widespread penetration of online sales, according to Evans. Barriers for Latin America include the low quality of telecommunications infrastructure, narrow bandwidths and high connection costs in some countries.

Shipping reliability and the costs associated with the delivery of goods also present additional problems.

"We're talking here about investments that need to be made in the transportation infrastructure and the related value chain, including the streamlining of customs operations," Evans said. "The commitment governments recently made to expedite express shipments is particularly important for the growth of e-commerce."

Virtual Signing

Evans also touted the use of e-signatures as a significant advance.

"Consumers need safe, reliable means of payment for products they purchase and access to prompt reliable and affordable dispute resolution if a transaction goes wrong," Evans said. "To this end, governments should recognize the legal validity of electronic signatures, but without rules and restrictions that would impose liability or licensing schemes."

Working Together

In 1998, the FTAA established a Joint Private-Public Sector Committee on Electronic Commerce to help increase and broaden the benefits of electronic commerce in the region.

Recommendations from the FTAA for the region have included greater privatization in the telecom industry, the creation of local Network Access Providers (NAPs), and the possible implementation of national strategies for electronic commerce.

Evans said the U.S. has already implemented several e-commerce initiatives in conjunction with Latin American countries, including the creation of orientation programs for government officials, information technology trade missions, small business seminars, and the recent launch of a Web site in Argentina matching local buyers with U.S. suppliers of goods and services.

In addition, a $1 billion "Digital Argentina" program has been launched by Argentina to underwrite the cost of computer purchases and Internet access for its citizens. The goal of the program is to increase the number of personal computers in Argentina by 1 million through 2002, Evans said.