Law of E-commerce and its Regulations Around the World

The 21st century is the century of the digitalization, and the development of the Internet has a big impact on the global economy and regional policies of the countries (Ju, 2022). E-commerce is one of the most important aspects of this digital transformation, it affects both the traditional way of trade, opportunities in digital transformation and innovation. One of the most comprehensive definitions of e-commerce has been made by Law of Ukraine on Electronic Commerce. This legislation defines it as an economic activity of e-purchase and sale of goods by remote means to the buyer by an electronic transaction (Kwilinski et al., 2019). By years, it becomes an important aspect in daily life (Ju, 2022) and, in today’s world, large establishments are carried out via online systems. Moreover, developing electronic business systems is the main priority of local and international companies. In brief, the growth of e-commerce has a serious impact on national economies, for goods and services and for the integration of the economic system (Kwilinski et al., 2019).

E-commerce systems implement a technology to lower service costs, increase product efficiency and speed up delivery services (Jain, Malviya and Arya, 2021). It is not only an online platform to purchase and sell, it also plays a role in infusing artificial intelligence and providing intangible products (Jain, Malviya and Arya, 2021). For instance, algorithms that measure the behaviors of the customers can improve the quality of the services. At the same time, intangible products as NFT's, online video games or software can be bought from online markets. By these points, it can be understood that this type of commerce has huge benefits and importance. On the other hand, by the development of online platforms, several problems can be encountered. Integration of cyberspace and traditional law systems is an issue –related to contract law, commercial law, consumer law, banking law, etc. (Davidson, 2009). As a result, the growth of online purchases can cause serious problems such as trade security breaches, economic loss and reputation damages (Ju, 2022). In all conditions, the global market of e-commerce will keep rising, and online shopping is going to be more popular in the near future (Ju, 2022). Consequently, necessary legislations have to be enacted here. By this article, development process and benefits of e-commerce systems will be represented. Then, it will be analyzed which national and international regulations have been made until this time.

Figure 1: Ten Largest E-Commerce Companies Around The World

Development Process, Benefits and Problems of E-Commerce

Development Process of Online Shopping

The development of e-commerce systems has a strong link with the development of the Internet. During 1980s, the population of the Internet users was small and, until 1994, a constant increase has been observed. According to the International Telecommunication Union (ITU) of the United Nations, when year 2000 came, 400 million users around the world used online services. According to the statistics of 2015, the number of online users around the world has been 3.2 billions (Jain, Malviya and Arya, 2021). Of course, the usage of the e-commerce websites has a huge ratio on the usage of the Internet. By March 2020, online shopping’s popularity has jumped because of the pandemic of Covid-19, due to consumers’ avoided physical stores. In USA, data demonstrate that 74% of Internet users were unable to reach physical stores and used online websites for commercial activities. Also, 50% of Chinese people, 18% of English population and 31% of Italian citizens started to use e-commerce websites more frequently (Adel Al-Maaitah et al., 2021).

Main Components of E-Commerce Transactions

There are several components which facilitate supplying goods and services digitally, as well as to make electronic payments and paperless trade (Willemyns, 2020). The first of these elements is Internet. As we mentioned above, Internet users have been increasing every day, which makes e-commerce interactions both popular and easy. The second element is the payment transfers. This element is a gateway for e-commerce platforms to interact with online shops, traditional bricks and Internet transactions. Payment routes support credit cards, debit cards, and online banking purchases (Jain, Malviya and Arya, 2021). The third element which increases the yield of e-commerce systems is social media, which also includes blogs and computer interactions. By social networking, the creation and selling process of a product become more critical and beneficial. The last element is the autonomous vehicle: consumers have much time to surf the Internet, to shop anything they desire and to search for trends. By the actions of these autonomous customers, the term called 'big data' is built (Jain, Malviya and Arya, 2021). Characteristics of e-commerce can also be changed. As for now, there are six types of e-businesses (Jain, Malviya and Arya, 2021), as shown in the picture below.

Figure 2: Main Types of E-Commerce

To accept an electronic transaction, there are several criteria: this transaction has to be made in writing and it has to include both normal and electronic signature. For the production of the document, the consent of the parties is also necessary as in traditional law. In addition, the time and place of the dispatch and receipt of electronic communication has to be determined as well. The protection of the copyright, trademarks, patents and circuit layouts is also relevant for electronic commerce (Davidson, 2009). Ensuring regulatory framework around the world is vital for the security and efficiency of e-commerce.

Benefits of E-Commerce

Benefits of online platforms are countless. Firstly, shopping on the Internet enable customers to compare prices and become aware of the substitutions. With a single click, customers can access the criterion of the rivals and are able to choose them (Jain, Malviya and Arya, 2021). It increases the efficiency of markets and also their competition. Secondly, by e-commerce systems, there is a reduction in transaction costs produced by the Internet, and it will cause wide-ranging shifts within the global economy. It expands the sales and decreases the sustaining costs on the Internet (Jain, Malviya and Arya, 2021). It also allocates production factors and gives an advantage to the companies to promote their international division of labor. In other words, electronic platforms rise the productivity of companies (Ju, 2022). Moreover, digital markets make supply chains slender and intelligent, as well as decreasing its pollution, which benefits green businesses (Jain, Malviya and Arya, 2021).

The Main Problem Caused by E-Commerce Platforms

There are several benefits of electronic commerce as we mentioned above. However, it doesn’t mean that it is a perfect system with zero flaws. It causes several problems and gaps in the trade policies of the countries and creates new risks too. Thus, the most problematic part of e-commerce is its obligation to the law systems and being linked with legislations. Digital signature and documents, online consumer protection and data privacy can be counted as important aspects to ensure the efficiency used by businesses (Adel Al-Maaitah et al., 2021). At the beginning of the website business development, any country had an acceptable legislation about it. It brought new infringements about electronic signature, hyperlinks or domain name rights (Ju, 2022). Simultaneously, financial institutions and banks missed expanding their scope about e-commerce and it caused huge losses related to fraudulent activities by online payments (Jain, Malviya and Arya, 2021).

Figure 3: The Steps of The Development of An E-Commerce Website

International E-Commerce Regulations

It is certain that there is a problem with existing regulations about e-commerce in today’s world. However, it doesn’t mean that it is a totally unlegislated area or there are no studies. Several institutions have studies about the regulations of online markets and systems: World Intellectual Property Organization (WIPO), World Trade Organization (WTO), UN Commission on International Trade Law (UNICITRAL), International Chamber of Commerce (ICC), Organization of Economic Cooperation and Development (OECD) and others have activities about the creation of an effective legal system in the field of international commerce (Kwilinski et al., 2019). For instance, during the 1990s, WTO has increased its attention to the e-commerce platforms and defines them as a production, distribution, marketing, and sale process. The increasing number of cyber attackers makes the registration of an identifier easier to the WIPO systems (Davidson, 2009). In addition, in 1992, UNICITRAL established a model law on electronic commerce and made national legislators integrate with these universally acceptable rules. UNICTRAL’s model law is internationally popular and it is accepted as the model by the legislature of most of the countries, such as Australia and New Zealand (Davidson, 2009).

In relation to the legislations of these institutions, there are also several Regional Trade Agreements (RTA) and whole e-commerce chapters on these agreements have been progressing over time. It has been observed that USA, Australia, Canada, EU, Japan, Korea, and Singapore added e-commerce chapters to RTA among each other. Also, developing countries as Chile, Colombia, Russia, Costa Rica, Mexico, Panama, and Peru have concluded some e-commerce related provisions. These provisions include the elimination of custom duties, consumer protection, electronic signature, and paperless trading. The number of these RTA is expected to grow in the near future (Willemyns, 2020).

Figure 4: Number of RTA Included in E-Commerce Regulations Between 1990 and 2018

National E-Commerce Regulations

RTA and model regulations of international organizations are important to unify global e-commerce systems. However, their importance is not as much as countries’ own law. To make online shopping more secure and efficient, states must have strong rules and there are some states that can be a model for these types of e-commerce legislations. There are several countries which are extremely powerful about e-commerce legislations: USA, China and European Union (Willemyns, 2020).

USA

USA has a liberalized approach about digital platforms' legislation. Therefore, the country is the home of many global digital companies and there is a preferred classification in the country about digital products as goods, a classification of digital content services (Willemyns, 2020). USA uses the model of UNICITRAL E-Commerce Law, and the legislation called Uniform Electronic Transaction Act 1999 has been established. This act is applied to the transactions between two agreed parties by electronic means (Davidson, 2009). Furthermore, protection of the personal data is extremely important and, instead of the general policy about free data flow, USA has strict policies about the protection of personal data. According to the US Privacy Act, all government agencies are required to maintain the relevant measures to review and copy the records of individuals (Davidson, 2009). There are also other legislations as the US Computer Matching and Privacy Protection Act, and US Patriot Act.

China

Besides the existence of largest global e-commerce platforms in the county as Alibaba or Odoo.com, China has strict rules regarding data flows, data storage, and treatment of digital products. (Willemyns, 2020). The country forces enterprises to invest in electronic businesses and to reach the talents in the university to be active in these platforms by several legislations. Additionally, the country takes relevant legal measures in order to reduce economic loss of companies because of the e-commerce. Compared to European Union countries and USA, China still have problems to secure its foundations on the e-commerce structure, as well as insufficient investment (Ju, 2022).

European Union

Unlike USA and China, only two European companies are recognized as among the largest in digital services. Therefore, the main aim of the EU regulations about e-commerce platforms is to protect the interests of its consumers first. They generally take a defensive approach but, at the same time, they try to improve market access and predictability (Willemyns, 2020). An important document adopted by the European Union (EU) was the directive of e-commerce 2000/31/EC. In 2000, the EU has published a regulation that legislates society services and security of citizens on these services (Kwilinski et al., 2019).

Figure 5: Ten Largest E-Commerce Markets Around The World

Conclusion

E-commerce is a developing platform that becomes extremely popular among people and merchants. It brings various benefits for trade as reducing transaction costs and adaptation to the digitalization. Especially after the pandemic of Covid-19, the market value of the sector has jumped, and e-commerce economy has evolved as one of the main economies around the world. Besides its advantages, we cannot clearly say that the e-commerce is an unproblematic sector. The number of legal gaps is extremely high, and both people and establishments can suffer its consequences. Fortunately, international and national regulations have started to be enacted. Countries and international institutions work hard to fill the legal gap about this huge market. If these regulations become efficient around the world, it is certain that e-commerce will turn into the most powerful global industry, crating new merchants and a new bourgeois class.

Bibliographical References

Al-maaitah, T. A., Tha’er Majali, M. A., & Almaaitah, D. A. (2021). The impact of COVID-19 on the electronic commerce users behavior. Journal of Contemporary Issues in Business and Government Vol, 27(1).

Davidson, A. (2009). The Law of E-Commerce (1st ed.). Cambridge Press.

Kwilinski, A., Volynets, R., Berdnik, I., Holovko, M., & Berzin, P. (2019). E-Commerce: Concept and legal regulation in modern economic conditions. J. Legal Ethical & Regul. Isses, 22, 1.

JAIN, V., MALVIYA, B., & ARYA, S. (2021). An Overview of Electronic Commerce (e-Commerce). Journal of Contemporary Issues in Business and Government, 27. https://doi.org/10.47750

Ju, K. (2022). The Influence of Electronic Commerce on International Trade and Development Strategy. Asian Business Research, 7(3), 33.

Willemyns, I. (2020). Agreement forthcoming? A comparison of EU, US, and Chinese RTAs in times of plurilateral E-Commerce negotiations. Journal of International Economic Law, 23(1), 221-244.

Visual References

Cover Image: Yue, W. (2019). Expert considers the objective of new e-commerce law to be 'realizable' [Photograph]. CGTN News. https://news.cgtn.com/news/3d3d514e35557a4e31457a6333566d54/index.html

Figure 1: (2023). Top 10 eCommerce Companies in the World [Photograph]. Clickpost.com. https://www.clickpost.ai/blog/top-ecommerce-companies

Figure 2: Jain, V., Malviya, B. and Arya, S. (2021). An Overview of Electronic Commerce (e-Commerce). Journal of Contemporary Issues in Business and Government, 27. https://doi.org/10.47750

Figure 3: How to Build an E-Commerce Website [Photograph]. YoAir Blog. https://www.yoair.com/blog/how-to-build-an-e-commerce-website/

Figure 4: Willemyns, I. (2020). Agreement forthcoming? A comparison of EU, US, and Chinese RTAs in times of plurilateral E-Commerce negotiations. Journal of International Economic Law, 23(1), 221-244.

Figure 5: Keenan, M. (2023). Top 10 eCommerce Companies in the World [Photograph]. Shopify.com. https://www.shopify.com/enterprise/global-ecommerce-marketplace