Australia - United States Free Trade

Australia-United States Free Trade Agreement - Guide to the Agreement

16. Electronic Commerce

1.    Purpose and structure

The e-commerce Chapter sets out a number of provisions designed to ensure that trade conducted electronically between Australia and the United States remains free.   The Chapter also establishes useful precedents for developing a liberal trading environment for electronic commerce in the region and globally.

The Chapter consists of nine articles dealing with the electronic supply of services, customs duties, non-discriminatory treatment of digital products, authentication and digital certificates, online consumer protection, paperless trading and definitions of terms.

2.    Key Provisions

2.1   General

The underlying rationale for the E-commerce Chapter is reflected in the text of Article 16.1: 'The Parties recognise the economic growth and opportunity that electronic commerce provides, the importance of avoiding barriers to its use and development, and the applicability of WTO rules to electronic commerce.'

2.2   Electronic Supply of services

As part of this generalized commitment, both Parties have affirmed in Article 16.2 that services delivered electronically remain just that - services.   The purpose is to emphasise that if a service - such as an architectural consultancy or a university degree by coursework - is delivered electronically (such as by email, or online), it should not be treated any differently than if it was delivered by post or in person.

2.3   Digital products

The core trade obligations for each of the Parties relate to customs duties (Article 16.3) and non-discriminatory treatment (Article 16.4) for digital products.

Digital products are defined (see Article 16.8) as "the digitised form, or encoding of, computer programs, text, video, images, sound recordings, and other products, regardless of whether they are fixed on a carrier medium or transmitted electronically".

A footnote to this definition clarifies that digital products can be a component of a good, be used in the supply of a service, or exist separately.   For example, the software embedded in a PC, or the online elements of an online educational course, are digital products, but the PC and the educational course are not.   Similarly, a digital version of a sound recording, whether it is available on a CD or online is a digital product, but the CD itself is not.

2.4   Customs Duties (Article 16.3)

Article 16.3 commits both Parties not to impose customs duties on digital products, delivered either online or on carrier medium (such as a CD).   In Australia's case, there are no duties levied on carrier medium, so the issue of separating customs treatment of carrier medium (such as CDs) from their content (the sound recording) does not arise.

2.5   Non-discriminatory treatment (Article 16.4)

The provisions on non-discriminatory treatment of digital products (Article 16.4) mean that both countries agree not to distinguish amongst or between "like" digital products, regardless of their origin.   In other words, Australia agrees that digital products from outside Australia will be treated the same as like digital products from Australia.   Likewise, the United States will treat digital products from outside the United States - including Australia - no differently from like US digital products.

The commitment means that Australia and the United States may not discriminate on the basis that a digital product is created, produced, published, stored, transmitted, contracted for, commissioned or first made available outside its territory.   This same protection extends to the author, performer, producer, developer and distributors of digital products.

A practical example is that of a digital sound track by a recording artist.   Neither Australia nor the United States may treat that sound track differently (such as a different tax, or the non-payment of a royalty) on the basis that the sound track, or its artist, is not Australian, or not American.

Importantly, Article 16.4 enables the Parties to implement public policies that would otherwise be in breach of the provisions.   Article 16.4.3 specifically states that the provisions do not apply to "non-conforming measures" set out elsewhere in the Agreement.

Article 16.4.3 clarifies that where there are inconsistencies with the intellectual property Chapter, that Chapter shall overrule the e-commerce Chapter, and also states further exceptions, such as subsidies and grants, and "services supplied in the exercise of governmental authority".

Article 16.4.3 clarifies that the reservation Australia has taken on audio-visual and broadcasting services prevails over the obligation for non-discriminatory treatment of digital products.   An example is the local content rules in Australia that guarantee a minimum level of Australian programming on our digital media.   A further example would be Australian or US grants, subsidies or tax offsets for digitised film production.

2.6   Authentication and digital certificates (Article 16.5)

Paragraph 1 of Article 16.5 obligates both Parties to domestic legislation governing electronic transactions that encourages competition, regulates industry only to the extent required, and gives parties to electronic transactions full standing before the courts.

Australia and the United States have agreed in paragraph 2 to negotiate an agreement whereby central government agencies will recognise the digital certificates issued by the other Party.   This will make it much easier, for example, for an Australian firm to deal electronically with US government agencies in bidding for, or fulfilling, procurement contracts.

2.7   Online Consumer Protection (Article 16.6)

In Article 16.6, Australia and the United States have recognised that consumers who participate in electronic commerce should be afforded transparent and effective consumer protection under their respective laws.

2.8   Paperless Trading (Article 16.7)

In Article 16.7, Australia and the United States have said they will endeavour to make publicly available, in electronic form, all trade administration documents.   Furthermore, both sides will endeavour to accept the same documents transmitted electronically.

An Australian firm wishing to export to, or import from, the United States should soon be able to download and send the appropriate forms to Australian or US Customs authorities online, rather than rely on postage, facsimile and other services to complete their paperwork.

2.9   Definitions (Article 16.8)

Article 16.8 defines four key terms in the e-commerce Chapter, namely carrier medium, digital products, electronic transmission or transmitted electronically, and trade administration documents.


March 6, 2004

Australia - US Free Trade Agreement home page