This is the second article on the Regional Comprehensive Economic Partnership Agreement (RCEP), part of a series of articles covering its economic, trade and investment impacts on Cambodia published in Khmer Times. This article covers the interesting topic of e-commerce international regulations. It is interesting to note that since the dot-com boom of the 1990s, lax domestic and global regulation has allowed technology companies to enjoy unfettered freedom to exploit e-commerce and digital services. The exponential rise of digital services led to an increasing concentration of power in the hands of a few major platforms. Unfortunately, digital transformation in developing countries lags dramatically behind, and Cambodia is no exception. They remain largely excluded from technological breakthroughs such as artificial intelligence, the Internet of Things (IoT), advanced robotics, big data analytics, and cloud computing.

When Cambodia takes on its ASEAN chairmanship in January of next year and the RCEP enters into force, e-commerce will be governed by a new set of rules. This article will attempt to highlight its most important features, which will become a solid building block for advancing further e-commerce trade liberalisation in the Asia-Pacific.

Chapter 12 of the RCEP calls for a framework for future liberalisation in e-commerce. It introduces specific rules on e-commerce that will modernise the trading relationship among the Member States. It covers various topics that are usually standard e-commerce provisions similarly found in other ASEAN Plus One FTAs. To help facilitate cross-border trade, RCEP contains a soft ‘endeavour’ obligation to promote the use of, and accept, paperless trading. A legal signature cannot be rejected, for lack of legal validity, solely because it is in electronic form. RCEP requires Cambodia to have consumer protection laws for e-commerce consumers against fraudulent and misleading commercial activities and outlines how remedies may be pursued and how businesses may comply with these regulations. Such legal framework must ensure the protection of online personal information of e-commerce users while measures to tackle the issue of unsolicited commercial electronic messages (UCE) or ‘spam’ messages, i.e. direct marketing, promotional emails sent to consumer without their prior request, are also envisaged in the agreement. The ability to regulate UCE messages will provide consumers with options to enable opt-outs and other consent-based requirements, as well as measures to enable recourse against non-complying suppliers.

The RCEP commits Cambodia to maintain a domestic regulatory framework governing electronic transactions to ‘takes into account’ of, or that are consistent with, the UNCITRAL Model Law on Electronic Commerce 1996, the United Nations Convention on the Use of Electronic Communications in International Contracts, or other applicable international conventions and model laws relating to electronic commerce. For that matter, Cambodia e-commerce law is already fully compliant. RCEP allows Cambodia to impose whatever national regulatory restrictions it wishes, i.e. inconsistent measures, to achieve a ‘legitimate public policy objective’ as long as they are applied in a non-discriminatory way, equally applied to domestic and foreign businesses.

For customs duties, RCEP commits to maintain its current practise of not imposing customs duties on electronic transmissions, subject to any further WTO Ministerial decisions on customs duties on electronic transmissions.

Currently, as part of the WTO Ministerial Decision, digital products such as e-books or films are not charged with customs duties. The moratorium on customs duties on electronic transmissions is not made permanent and is expressly maintained in accordance with the WTO Ministerial Conference decisions related to the WTO Work Programme on Electronic Commerce. Adjustments to this RCEP provision are tied expressly to further ministerial decisions on the Work Programme. However, it does not preclude a Member State from imposing taxes, fees, or other charges on electronic transmissions, provided that they are imposed in a manner consistent with the RCEP Agreement.

On the location of computing facilities, RCEP includes provisions that constrain Member States from imposing data localisation requirements on businesses so as to provide for a more conducive digital trade environment with the free flow of data across borders. By limiting the scope for government to impose these restrictions, i.e. not forcing businesses to build data storage centres or use local facilities as servers within each country that they seek to trade with, RCEP can reduce the cost and complexity of doing business in Cambodia.

On cross-border transfer of information by electronic means, RCEP includes commitments to ensure that parties do not prevent business data and information from being transferred across borders where such activity is for the conduct of their business. These commitments, which do not apply to the financial services sector, include exceptions for measures implemented for national security or other public policy reasons. Cross-border transfer should only be prevented in case where it is “necessary to achieve a public policy objective” or “necessary, in the country’s opinion, for the protection of its essential security interests or national interests”.

What can Cambodia expect from this regional development?

Quite certainly, the RCEP is set to be a major catalyst for a post-pandemic recovery across Asia. The significance of digital marketplace is expected to spur continued economic growth following the pandemic as increasing numbers of people go online. Many digital providers have expanded their footprint in the region, including many of the world’s largest super apps, online or mobile platforms like Russia’s Telegram, the US’ WhatsApp, China’s WeChat and Alipay, Japan’s Line, and Singapore’s Grab. To that effect, e-commerce in Cambodia is also growing rapidly, along with the growth of its ICT infrastructure. Obviously, the global digital trade agenda is complex and encompasses far-reaching provisions on the cross-border delivery of services affecting data protection and consumer privacy, cybersecurity, and new Internet-related IP rights. If well managed, digital industrialisation and innovation have the potential in expanding the reach of businesses. But for such potentials to be fully materialized, Cambodia needs to tackle sensitive issues like data governance, cross-border data flows, data collection and storage, privacy and cyber security.

Contact Dr. Sok Siphana if you have any inquiries.