An Industry Framework
to Align Legal and Contractual Practices
in e-Business
Geneva, 14 March 2003
- The UN Centre for Trade Facilitation
and Electronic Business (UN/CEFACT) will
consider at its next Plenary on 12 and 13
May 2003 a Trading Partner Agreement (TPA)1
for general trading relationships, which
was jointly prepared by the industry consortia
RosettaNet,
EDIFICE
and ESIA/EECA,
a high-tech industry community of more than
500 of the world's leading companies, representing
more than US $1 trillion in yearly revenue.
The Agreement is primarily intended to address
the growing need for a global contractual
framework, which would cover general e-Business
exchanges, and will prepare companies for
the legal aspects of using advanced technology
for electronic transactions. The TPA is
a contractual framework that regulates and
standardizes the electronic exchange of
information between each pair of trading
partners. The primary objective of this
Agreement is to provide legal provisions
for regulating general e-business services
in both the Human-to-Systems and the Systems-to-Systems
exchanges.
In addition to the initial
work carried out by RosettaNet, the UN/CEFACT
Legal Group contributed to the project by
providing expertise and linking it to the
existing recommendations of UN/CEFACT. The
first practical results are increasingly
being felt in the semiconductor industry.
Recently, EDIFICE conducted an industry
benchmark study of its member companies
on implementation of the Agreement. The
results showed that approximately 70% of
the respondents were familiar with the Agreement,
and that nearly 45% of the companies they
represented were actually using it. Meanwhile,
other results indicated that there was strong
interest in adopting the Agreement, especially
if many industries accept it.
Today, a large number of
high-tech companies are committed to implementing
e-Business strategies as a way of improving
the efficiency of their supply chain processes.
In addition, the interactive nature of Internet-based
e-solutions allows for the innovative design
of new processes and business models that
help trading partners speed up and add more
value to the exchange of information. This
can be done by using either Systems-to-Systems
processes (EDI, XML) or Portal services.
Moreover, a standard model for TPA is required,
in order to allow for new technology solutions
to integrate a TPA in machine-processable
messages. This will enable automated exchanges
and negotiations in a Systems-to-Systems
approach. However, these paradigms involve
profound changes in the structural and cultural
environment of each company, and have an
impact on its traditional best practices.
New tools are therefore required to support
the evolution towards innovative, Internet-based
business models. One of these tools is related
to the legal environment that fixes the
contractual rules in order to establish
trusted relationships or to protect trading
partner privacy when exchanging proprietary
and/or confidential business information
using electronic means.
The TPA also contains a
Non-Disclosure Agreement (NDA) and appendices
to specify the technical requirements for
secure operation of electronic transactions.
"There are several drivers to adopt a standard
TPA, said Dr. Luca Palermo, former RosettaNet
TPA Program Director, on loan from STMicroelectronics.
".the main objective is to establish reciprocal
trust in e-business exchanges by means of
a sound contractual certainty. In addition,
once a standard TPA is fully established
and adopted by a trading community, it is
likely to accelerate contractual procedures,
saving time and legal resources for negotiations,
and ultimately reinforcing the intimacy
of the relationships between Trading Partners."
"The interactive nature
of new electronic commercial transactions
over the Internet suggests that legal issues
of liability, in connection with potential
risks related to Internet technology, must
be addressed more carefully than in the
past," said David Marsh, Chairman of the
UN/CEFACT Legal Group. "In fact, today's
advanced e-solutions for business process
integration have a much stronger ability
to penetrate trading partner systems and
related company information repositories."
Along with the rewards
of electronic data exchange transactions,
Internet-related risks need to be controlled
and minimized, such as the issues of information
security, legal and privacy policies of
trading partners who operate electronic
exchanges. The Trading Partner Agreement
is considered as part of information security.
In general, company information systems
and e-business services should not be disclosed
to a trading partner without legal protection.
When receiving quotations, placing orders
or tracking the progress of parts through
the various stages of design, manufacturing,
testing and shipment processes, a company
needs to be completely confident that the
same information is not available to the
competitors.
The adoption of the Agreement
is a vital requirement for building trust
in e-business. Within a global network with
expanded trading capability, this is particularly
important in the electronics industry, where
it is common for products to be designed
in one country, manufactured in another,
and sold in yet a third. Every company should
understand and operate within the regulatory
frameworks and legal structures of the countries
in which they do e-business. A framework
of standards is a possible solution, when
aligned with the diversified legal capabilities
and best practices existing in the industry
today. This framework will complement the
local and regional legislation, as well
as support cross-border regulations. A standard
TPA can help avoid lengthy negotiations
and barriers encountered when connecting
with new trading partners. Nevertheless,
as in all changes of culture and transformations
of business paradigms, also in the TPA case
a joint industry adoption is not a simple
step. Dealing with a non-exact science,
the many legal practices already established
inside major companies are making the deployment
of the TPA, for both legal and business
executives, a significant challenge that
requires some time until its importance
and benefit is thoroughly understood and
global deployment mechanisms fully exercised.
For more information and for feedback on
the TPA, please visit the Web sites of EDIFICE
(www.edifice.org/document.htm),
RosettaNet (www.rosettanet.org
> Programs > Foundational Programs
> Trading Partner Agreements), EECA (www.eeca.org)
or UN/CEFACT (www.unece.org/cefact).
For more information, please contact:
Dr. Luca Palermo
TPA Program Director (RosettaNet)
c/o STMicroelectronics
CH - Geneva
+41 22 929 69 77
[email protected]
|
Ms. Dora Cresens
EDIFICE secretariat
Tiensestraat 2
B - 3320 Hoegaarden
+32 16 76 54 40
[email protected]
|
Mr. Mario Apostolov
Trade Division, UNECE
Palais des Nations
CH - 1211 Geneva 10
+41 22 917 11 34
[email protected]
|
1See Press Release
by ESIA/EECA, RosettaNet, and EDIFICE "Global
Industry Organizations Release High Tech
Industry's First Standardized Trading Partner
Agreement", Brussels, Belgium and Santa
Ana, California, 22 October 2001, available
online at http://www.rosettanet.org
under: News/Events > 2003 RosettaNet
Press Releases > Archive 2001.
Ref: ECE/TRADE/03/N02