October 16, 1998
Gloria Blue, Executive Secretary
Trade Policy Staff Committee
Office of the U.S. Trade Representative
Room 501, 600 17th
Street, NW, Washington, D.C., 20508
Re: FR Notice on WTO agenda
Dear Ms. Blue: Re: FR Notice on WTO agenda
Thank you for the opportunity to respond to the Trade Policy Staff Committee request for comments on the 1998 WTO Ministerial Meeting and the WTO work program. The Consumer Project on Technology is a non-profit advocacy organization created by Ralph Nader in 1995. Extensive information about CPT and our activities are on the Web at http://www.cptech.org.
Our concerns and suggestions for the WTO work program on electronic commerce are as follows.
First, apparently the United States and some officials from the European Commission (EC) have raised the issue of the WTO having broad jurisdiction over privacy matters. It is far from obvious that such jurisdiction would be appropriate. Given the WTO's generally poor reputation among consumer groups and its lack of expertise in this area we assume the WTO should not have jurisdiction. At a very minimum, the USG should request public comments from privacy and consumer groups on the issue of how the U.S. might proceed in terms of seeking international bodies to facilitate dispute resolutions or the coordination of public policies on privacy protection. There may be different approaches that need to be considered. For example, some privacy groups such as EPIC (http://www.epic.org) have suggested the USG should view privacy matters in the context of human rights. In general, however, the USG should be extremely cautious in expanding the WTO's jurisdiction on privacy matters at this time.
To see what one might expect from the WTO on privacy, one might push the WTO staff to examine the privacy aspects of matters currently under the WTO jurisdiction. Then privacy and consumer groups can better judge the WTO's expertise and sensitivity to privacy from a human rights perspective.
For example, we would like to see the WTO examine the issue of digital copyright enforcement and privacy protection, to see if this body can elevate current discussions regarding intellectual property protection for digital works, to discussions of how best to balance enforcement efforts with the public interest in protecting personal privacy. As you must know, most citizens of the United States consider personal privacy to be worth protecting, and it is your job to see that it is protected in electronic commerce. As you may also know, during the OECD meetings in Ottawa on October 8-9, 1998, the joint NGO statement encouraged governments to seek IP protection mechanisms that were least intrusive to personal privacy. As you should also acknowledge, privacy and political freedom are closely related issues, particularly on a global scale. If the WTO could do something productive and useful on this issue, one might be interested discussing further activity.
B. Parallel Imports
Electronic commerce is making a mockery of U.S. bilateral trade pressures against parallel imports of copyrighted or patented goods. During recent debates in New Zealand over legislation that legalized parallel trade for all copyrighted goods, the U.S. Ambassador admitted that he bought most of his books from http://www.amazon.com. With the economy becoming more global and electronic commerce crossing national borders, our opposition to parallel imports is becoming an intellectual joke. Also, how do you expect small economies like New Zealand or South Africa to voluntarily tell their own citizens they cannot obtain the best world prices on goods and services?
C. Consumer Protection
The biggest and most difficult problem in electronic commerce is the challenge to thousands of different consumer protection measures that face very difficult enforcement problems in electronic commerce. While some USG officials have been quoted as supporting an end to all government consumer protection efforts in cyberspace, these are people who are basically ignorant of the substance of these measures. They also apparently are not aware that the history of simplistic utopian promises of self-government by private industry cartels has repeatedly failed in the very areas where governments have ultimately been compelled to act.
We have taken an interest in several particular problems, most notably the registration and disclosure requirements for marketing securities, rules regarding unethical advertising and marketing of pharmacuticals and medical devices, truth in advertising for lending and credit practices, limits on the marketing of cigarettes, and unsolicited commercial announce ments by electronic mail (junk email). These are just a tiny fraction of the issues which are presented in cross-border electronic commerce.
At present it is difficult to conceive of a useful role for the WTO in these disputes, even though some kind of international cooperation and leadership seems badly needed. This is because the WTO has such low credibility outside of the business community. Part of this is probably due to the fact that the WTO is run by trade ministers, and all over the world these bureaucrats act as if their only mission is to promote the interests of businesses. They lack sensitivity and creditability on consumer protection issues.
One mission for the USG would be to begin the long overdue process of restructuring the WTO to more formally involve the appropriate government officials that have responsibility for various consumer protection issues. In this respect, we suggest the USG create a special task force of USG agencies and officials that have responsibilities for consumer protection, and ask this task force to offer concrete suggestions regarding changes in the WTO that would give the agency greater credibility in the area of consumer protection. This process should also involve opportunities for public comment.
D. Contracts of Adhesion
One of the difficult issues for electronic commerce is the status to be accorded to various contracts which consumers are asked to approve when they deal with various web pages. These "click on" contracts often involve many unreasonable provisions. This has been a huge problem in the United States in debates over the proposed Section 2B of the Uniform Commercial Code (see http://www.cptech.org/ucc).
In this respect, we urge the USG trade negotiators to be extremely cautious in creating the presumption that these contracts should be enforceable. Consider, for example, that these contracts include such terms as complete elimination of the right to seek legal redress for non-performance, non-compete clauses, and clauses prohibiting public criticisms or negative reviews or products, to mention just a few. (See http://www.badsoftware.com).
This week a committee of the World Health Assembly (WHA) is meeting in Geneva to discuss the context in which trade disputes with public health consequences will be addressed. These cover a lot of ground, from trademark issues involving cigarettes, breast milk substitutes and generic drugs to standards for the protection of investments in health registration data, to compulsory licensing of medical technologies. Many public health and consumer groups are seeking a formal statement by the WHA and other international bodies that clearly states that public health considerations are paramount in such disputes. We are also asking that the WTO create a system of consultation with the World Health Organization on matters concerning trade and health care.
Apparently there is resistance to these proposals from U.S. government officials. Indeed, U.S. FDA international affairs officials such as Dr. Stuart Nightingale and some U.S. State Department officials very aggressively opposed these measures during the May 1998 WHA meetings in Geneva, as did major pharmaceutical companies. We have subsequently met with FDA and State Department Officials to discuss these matters and we believe it is possible to establish a process for WHO consultations that recognize the levels of protections of intellectual property that have already been established in the GATT/TRIPS accords, while providing a context for evaluating implementation of these rights under widely accepted public interest criteria that is not dissimilar to constitutional basis for patent protection in the United States.
We are particularly concerned about disputes that will predictably occur when countries seek to use compulsory licensing to broaden access to AIDS drugs and other important medical therapies. With experts claiming that 13 percent or more of the entire population of some African countries suffer from HIV infection, this is an extremely important issue. Moreover, it is clear that U.S. officials who are involved in AIDS policy need to be briefed and included in policy making on these issues.
Please incorporate also our attached July 28, 1998 comments on health care and intellectual property for the FTAA negotiations. (On the web at: http://www.cptech.org/treaty/ftaa/ftaa-290798.html).
One area where there has been almost no sustained analysis is the rise of various business practices patents. These often involve patents covering routine business practices that use computers or telephones, such as the Franco Modigiliani and Francis Vitagliano patent on the use of a credit card to borrow money from a 401 K pension plan. (United States Patent No.5,206,803, for a "System for enhanced management of pension- backed credit). Certainly better known was the so called e- commerce patent which claimed a legal monopoly on all internet commerce. We are told that pharmacuetical companies are making certain claims regarding marketing practices for pharmacuticals in South Africa. We have asked in a variety of forums that such patents be banned as inappropriate, anticompetitive, and as failing to meet the U.S. public interest standards. We ask for a broader public dialogue on such patents.
The newly formed Trans Atlantic Consumer Dialogue (TACD) will be creating a working group on electronic commerce. We urge UGS officials to work closely with this working group. CPT is working with several public interest groups on trade and intellectual property issues, and would appreciate suggestions on which USG officials can brief these groups on the various IP related trade negotiations, including the TRIPS review at the WTO, the FTAA, APEC and Trans-Atlantic free trade negotiations and other relevant intitiatives.