CI work on mobile banking standard ISO 12812

Robin Simpson and Sadie Homer, Senior Policy Advisors at Consumers International report on their work preparing the new international standard on mobile banking.

  

Back in January 2012, the International Organization for Standardization (ISO) asked for experts to join the working group preparing a new international standard on Mobile Banking/Payments, in particular asking CI if we could represent the consumer stakeholder group, providing expertise, particularly in the field of consumer protection.

Four years later our efforts have borne fruit in the form of  ISO 12812 Core banking – mobile financial services. It takes the form of an international standard on the general framework for these services (Part 1) and is supported by four technical specifications on specific sectors of the business (parts 2-5 see below).

Achieving an ISO standard was not a smooth passage, two rounds of voting by national standards bodies were needed to gain approval. The second only succeeding on the basis that papers 2-5 do not have full international standard status. Nevertheless, CI felt able to support the final standard but it was not an easy process. Consumer experts encountered resistance to some basic consumer protection issues being included at times, even when they were optional (and bearing in mind that international standards are voluntary).

Ably assisted by experts from our members we fought for limits on how much consumers would be liable for, in the case of unauthorised or fraudulent use of their payment systems. We secured greater transparency in remittances sent between countries and we gained important safeguards on logging transactions and receipts, with electronic logs being kept available. One specific issue that was not considered until our intervention was the treatment of dormant assets, in particular in the event of the death of an account holder.  This is a major issue where consumers do not have an individualised mobile phone contracts, such as in much of Africa.

How worth-while are such exercises? After all, standards are not legally binding, they are voluntarily adopted by companies and cannot be enforced in court. CI expended scarce resources travelling to Paris, Chicago, Boston, also taking part in many teleconferences, and drafting in great detail.  These factors are important considerations. But without our participation the consumer voice would not have been heard at all. The alternative, legislation and binding regulation, can only be applied at national level one country at a time, and legislation may be even slower to develop than standards, if at all. 

Even if it will require another review for our conditions to be fully met, the applicability of this standards is potentially global. And in many countries, the standards adopted today can form the basis of regulation tomorrow. Standards can also be used by consumer organisations as a sound basis to compare businesses and to support those that offer best practice terms to consumers. They can also be used to hold transnational companies to account to provide an equal level of service to all consumers, in all countries they are doing business.

Papers 2-5 will be reviewed in two years’ time and CI would also support a review of ISO 12812, given the speed of development in this sector. At that point we hope to be able to strengthen the standard further and make the case for all parts to be given full International Standard status. The mobile payment and banking sector is fast evolving, and so the standards that keep consumers safe must also move with it. 

You can read more about the Standards here. 

Spain leads the charge to limit bank card fees

Banks say banning card fees would increase costs for the consumer. David Ortega, of CI Member OCU, explains why Spain and the EU disagree.

The Spanish government, as part of a package of measures to boost the economy which should enter into force on 1 September, has decided to limit the fees for payments with credits or debit cards: to 0.3% for credit card payments and 0.2% for debit card payments.

As an additional constraint, a maximum fee of seven cents is foreseen for debit payments, to avoid cases where the new scenario could generate higher commissions than today.

For small payments, of up to 20 euros, these commissions are set at a lower level: 0.2% to 0.1% for credit and debit cards.

These regulations shall apply to all payments made at points of sale in Spain in which at least one Spanish provider of payment takes part. This also includes e-commerce transactions.

Business cards, corporate or cash withdrawals at ATMs are excluded.

Spain  is effectively  putting into practice the proposed regulation of the European Commission on interchange fees, which aims at regulating maximum fees as a measure to promote the internal market.

The current economic context, the gradual economic recovery and the need to invigorate consumption across all channels - including the electronic one - call for the availability of safe, efficient and competitive electronic payments.

But how does this work? A multilateral interchange fee (MIF) is a fee that a retailer's bank must pay to a consumer’s bank for each card payment.

MIFs typically involve four parties: two banks, a consumer (the cardholder) and a retailer (merchant accepting a card payment). For every individual card payment the retailer pays a charge to its bank called a Merchant Service Charge (MSC), most of which the retailer’s bank passes on to the consumer’s bank under the name of a MIF.

As a result, the final amount received by the retailer is less than the amount paid by the consumer. To compensate this loss of income, retailers usually add up these fees to the final price paid by consumers. Hence the consumer detriment.

Through the legislative process at EU level, there has been heavy lobbying by some card issuers and some banks to stop this initiative.

According to the evidence presented by these groups, the proposed limits would indefectibly lead to an increase of bank fees in general (e.g. in the form of card issuance fees).

Part of the evidence used by these companies would be based on Spanish figures.

According to them, since Spain adopted the first MIF limitation measures back in 2006, bank fees have not ceased to increase. Perhaps.

However, nobody has been able to substantiate that such increase is solely or mainly due to the MIF limitation measures.

In the meantime, the credit crunch and the burst of the real estate bubble in Spain have ravaged the Spanish banking system.

In this context, can anybody seriously argue that the reason why Spanish banks have consistently increased their fees is due to the MIFs limitations?

How can that be deducted from the banks’ accounts?

Moreover there are still commission free cards on the market, which proves that the alleged causal link is hard to prove.

OCU and BEUC reject these arguments and support the European proposal which should  boost the internal market for consumers.

Spain is the proof that such a ban or limitation is possible, without the catastrophic consequences for consumers that some lobbyists seem to find so inevitable.

Will consumer rights be at the heart of global sustainable development policy?

CI’s Head of Advocacy Justin Macmullan, outlines why the inclusion of consumer rights is fundamental for the future of sustainable development.

In 2015 the UN General Assembly has the task of agreeing a set of Sustainable Development Goals (SDGs) that will build on the momentum created by the Millennium Development Goals (MDGs).

Like the MDGs, the SDGs will represent a major international agreement and have the potential to influence development policy for years to come.

Good progress has already been made and a zero draft sets out seventeen goals with a number of targets under each.

But there is something missing. Consumer rights are not mentioned. CI believes this is a serious omission and we are campaigning for consumer rights to be put back into sustainable development.

The missing link

 

The zero draft does include a goal on Sustainable Consumption and Production (something CI has long campaigned for and strongly supports), however this is largely about supporting and promoting environmental and ethical consumption and, as important as this is, it doesn’t address the wide range of issues that consumers struggle with.

Apart from sustainable consumption and production, there are also many other goals and targets in the draft that consumer organisations would recognise and support – including poverty eradication, promoting an efficient and equitable economy, water, energy and health to name just a few.

Why consumer rights matter

The consumer perspective is important for two reasons.

Firstly consumer protection is fundamental to the implementation of many of the other goals that have been proposed and “implementation” is important. As we have seen with the Millennium Development Goals, it is one thing to develop a set of ambitious goals but it is another to deliver on them.

However consumer protection is also an important issue in its own right. Any full definition of sustainable development should include consumer protection.

After all, people’s ability to consume, the consumption choices they have available to them and whether they are treated fairly as consumers, fundamentally effects the quality of their lives and the lives of those around them.

To give just three examples of why consumer protection is important:

• The first of the proposed SDGs is to ‘End poverty everywhere'. To achieve this poor and vulnerable people need to be sure that they can spend and save their limited income safely, yet they are often amongst the most exploited in the marketplace.
• The third of the proposed SDGs calls for ‘Attaining healthy lives for all'. This means that consumers need access to healthcare but also protection against unsafe products and services that cause ill health, injury or death.
• The eighth of the proposed SDGs calls for 'Sustained, inclusive and sustainable economic growth'. It is hard to see how this can be achieved unless consumers are represented and empowered to play their part in the economy.

Similar points can be made in relation to almost every one of the proposed Goals.

Putting consumer rights back into sustainable development

 

For this reason Consumers International is campaigning for implementation of the UN Guidelines for Consumer Protection to be added as a target under the proposed goal relating to ‘inclusive societies and access to justice’ or ‘means of implementation’.

This is a practical and realistic proposal. The UN Guidelines are internationally agreed and they have proved their value over more than 30 years.

Through CI’s State of Consumer Protection report we have also demonstrated that it is possible to measure their implementation (though we look forward to seeing what more can be done in this area with the right resources).

The process of negotiating the SDGs is already well advanced, so please join CI’s call for consumer protection to be included in the SDGs by contacting your Minister for Foreign Affairs.

You can also watch my video message on these goals - feel free to share.

Diary: Experiencing the ISO Mobile Payments meeting in Boston

Celine Awuor, Project Officer at Consumer Information Network, Nairobi, Kenya relives her experience at the ISO Mobile Payments meeting in Boston. 

Mobile payment services have been in use in Kenya for a long time without a clear regulatory system.

Even though self-regulation in Kenya seems to have worked well, there still are several loopholes in the mobile payment and transactions sector that has left consumers vulnerable to unfair practices, cheating and losses.

Mobile payments are used by millions of consumers, not only in Kenya, but also across the world.

There needs to be an internationally recognised benchmark for guiding the industry and it must include consumer protection.

Without clear and trusted consumer protection features such as redress mechanisms and liability checks for consumers, there is a danger that consumers will pay dearly for poor services.      

But before Boston….

It was CIN’s experience of mobile payments in Kenya that got me involved in the development of the ISO standard on mobile payments around April 2013.

During this time, CI shared with its members, including CIN, a review of the drafting progress which had been ongoing for some time.

The drafts were out for consultation among the Working Group (WG) members. So in this way CIN, as well as other CI members, got to comment on the drafts through CI.

With guidance and coordination from CI’s Sadie Homer and Robin Simpson, we submitted a lot of comments and the CI team did a marvellous job compiling them.

Fundraising

The next step was a physical meeting scheduled in Boston. But there was the big issue of getting funding to attend and the whole process of fundraising that followed was just incredible.

First, there was no time to raise funds, not to mention the other travel preparations that I would need to complete.

Through my membership in the Financial Services Technical Committees (TC) at the Kenya Bureau of Standards (KEBS) I applied for ISO sponsorship to attend the meeting.

And I am very grateful to KEBS; particularly to the Acting Managing Director Mr. Charles Gachahi, David Kirui and David Nganyi for the support and guidance in making and sending the application.

The response from ISO was great. I got the sponsorship for my travel!  I however still needed money to cover the costs of my visa, accommodation and sustenance in Boston, money that was needed urgently given the short time left (this was now in September already).

CI saves the day…..and me!

When I told CI about the ISO part sponsorship, I also requested if CI could fund the remaining costs.

Well, at the beginning it looked like there were no funds at CI for such costs but it was encouraging knowing that Sadie and the entire team were working hard to get the funds from other partners.

This gave me hope. So when I received a mail from Justin Macmullan that I met the requirements for the Rhoda Karpatkin Fund that CI operates on behalf of their US member Consumer Reports and they would be able to cover the remaining cost, I was super excited!

The visa application process was -  well this is a story for another day! But thankfully, I got the visa in time to travel, just two days before departing for Boston - not bad.

The meeting

I arrived at the meeting venue with Robin, who picked me up at the hotel  armed with his map of Boston.

But I felt sort of afraid as to whether I was really up to the task  - especially when I realised that I was the youngest in the group.

But this deceptive feeling of inadequacy did not last long as we got down to business. The discussions throughout the three days went very well.

We had a successful meeting, with most of our proposals accepted and incorporated in the drafts.

This could be because we were clear on our position and expectations, having already identified the areas in the different papers that we wanted addressed.

For instance, we believed liability was an important aspect that was lacking in the entire ISO 12812 series.

Another important area we were looking at was the redress mechanism for consumer complaints arising from using mobile payments, expected to be evident particularly in the consumer to business transactions.

We were happy when this was also accepted to be included in Paper 5: person-to- business payments. I liked the fact that reaching consensus on the issues being discussed was not difficult.

The next steps include redrafting some parts of the standard. So the work continues.

On the fun side, Boston was great. I had some nice walks around the waterfront, visiting the historic sites such as the Faneuil Hall, Boston Common Park and of course I tried and really liked the seafood there!

Netflix, football rights and the future of media competition

Phil Evans, Coordinator of the International Network of Consumer Antitrust Advisers, reports from Day 2 of the 2013 OECD Global Forum on Competition.

Day one of the Global Forum on Competition focused on the relationship between competition policy and poverty.

While there were some standout examples from developing countries of the link and indeed some good presentations about how technology and regulation can help deal with some aspects of poverty, in the end it felt a bit like having watched a big Hollywood Blockbuster: you enjoyed it at the time, but afterwards it felt a bit like you had not really learned a lot and what you had learned had not really been that new.

So, on Day 2, we moved onto a review of two issues. The morning opened with a discussion of competition issues in media markets and a discussion of a review carried out between the OECD and the International Competition Network about competition agency cooperation experiences.

The discussion on media competition issues was quite detailed in terms of agency interventions and outlines, with many covering the same issues. It was enlivened by presentations from Netflix and Canal+, the big French broadcaster.

Their involvement was particularly useful as they currently sit on either side of a major dispute in media analysis. Canal+ as an incumbent broadcaster is being squeezed by Netflix, a company using broadband to deliver streaming content. Canal+ spent a fair bit of time pleading for a level playing field (code for: ‘please restrict Netflix’) while Netflix pleaded to be left alone (code for: ‘let us hog all the bandwidth for free’).

On balance, Netflix made the better case, in part because Canal+ were taking the long-established line of the incumbent under pressure: ‘please extend regulation so the new guy has to have the same costs as we do’; while Netflix could present themselves as the innovative new kid on the block.

Of course, it is more complex than that, but the debate was an interesting snippet of where discussions on media competition are likely to be heading. Interestingly, the presence of Netflix in the UK was used as a significant factor in the Competition Commission's report on the market for Pay-TV. (Caveat: I am a Member of the UK CC, but did not sit on the inquiry.)

One thing confirmed by the discussion on media competition was the global importance of football (the version that actually revolves around kicking a ball with your feet).

Agency after agency talked of the centrality of sports rights to media markets and the gradual downplaying of movie rights as a source of concern. 

Of course, this could simply boil down to the difference between a monopoly supplier of a sport (the league) with an oligopoly in the shape of the movie studios. Either way, football rights cropped up in country after country as a source of concern.

One refreshing view that cropped up throughout the conference was the interventions from Tunisia, who would regularly tie the issues under discussion with the effect of the Arab Spring on the country.

The discussion of a growth of media sources after liberalisation was refreshing to hear and the agency bought a bit of youthful dynamism to the discussions.

The final session focused on the knotty problem of cooperation between agencies. The topic is enormously important to agencies and indeed the companies they are reviewing, but is very much part of the regular dialogue between agencies and has taken on almost semi-religious tones and pleadings.

At root, the issue is the problem for agencies to exercise their legal powers within borders while dealing with requests for information from outside their borders that present huge legal problems to comply with. Despite progress, this issue will keep being a topic of discussion for years to come.

An end to online autonomy?

In Part 2 of her blog on digital data ownership, Liz Coll, senior policy advocate with CI member Consumer Focus, asks: Does being part of social and economic activity online mean giving up autonomy over our personal data, or withdrawing from the online world altogether?

In my last blog post I talked about the big contrast between the importance that external agencies attach to consumer data, and the significance consumers themselves assign.

Now I turn to look at if the digital economy runs on personal data, and consumers are the primary source of this new commodity, will consumers seek to exploit its potential, or continue to be exploited for it?

The challenge

The challenge for those working in the consumer interest is to find a way to transform the current scenario into a mutually beneficial one. This could involve helping consumers develop a stronger understanding of the potential value of their data, and getting them ready to engage with new opportunities.

If consumers are able to exert more control over how their data is used, there is much to gain. We are starting to see initiatives such as midata in the UK, or Green Button in the USA which offer consumers opportunities to have access to, and benefit from, the data that companies currently hold.

Despite attracting some controversy because of security and privacy concerns, they are an indication of how personal data is becoming a market in which consumers could take a bigger share.

Our research

As discussed previously, we commissioned ICM to survey 2,002 adults aged over 18 so we could develop a better appreciation of consumers’ understanding of the issue.

One of the things we wanted to test was how consumers felt about some of the new thinking around terms and conditions which effectively reverses the current provider-dominated relationship.

It works by getting providers to agree to terms and conditions that are set by an intermediary on behalf of the individual, prior to them taking up the service.

Only 8% of respondents were keen on this option, perhaps seeing it as impractical. The preferred option was shorter terms and conditions in plain English and equivalent to no more than two sides of paper (47%).

Forty per cent of respondents wanted to use a set of more consumer-friendly generic terms and conditions developed by an independent body. Perhaps personalised terms and conditions are only for the early adopters, but the support for conditions written in the consumer interest is strong.

Want control, but don’t use it

The vast majority of consumers think they should have more control over their data, but only a few use existing controls: Despite limited understanding of what is collected and why, 84 per cent of people want more control over what information organisations collect about them and how it is used.

This also came through strongly in Demos’ recent research on public attitudes  towards personal information and data sharing.

They found that people would welcome measures to give them more control over personal information, in terms of knowing what is held on them and having the ability to withdraw it.

Generally consumers wanted to have a more honest and open dialogue about how their data is used and on what terms.

However, only one in eight consumers say they currently use any form of control panel or dashboard (for example, http://adblockplus.org/en/features) to set their online privacy and personal information collection preferences; most do not know they exist.

This could reflect the visibility, accessibility and usability of the tools as well as people’s awareness of them. (The survey took place before regulations requiring cookie consent notices on websites were introduced in May 2012, it is likely that awareness is higher now.)

Mutually beneficial

Earlier I set a challenge to those working in the consumer interest to find a way to transform the current one-sided scenario into a more mutually beneficial one.

To start to do this, consumer groups could take a bigger role in enabling people to engage with new opportunities and tools in the personal data economy.

These have the potential to shift the relationship between providers and consumers onto a more balanced footing. Whilst data protection should always be at the heart of consumer advocacy and empowerment, the status of personal data as such a major new commodity also demands additional attention.

There are question marks over whether the usual routes to protection are still able to adequately regulate the actions of global companies. Think, for example of the threatened fine to Facebook chief Mark Zuckerberg of €20,000 over privacy concerns by the German data protection agency.

There are similar doubts as to how effectively regulation can keep up with the fast pace of change online, and how national law can be imposed on a global network.

Danger of stifling advantages

Too hard a clampdown may well stifle the advantages to be had from effective, consensual sharing of personal data and would almost certainly alienate the large numbers who are comfortable with, and feel they benefit from, sharing.

Not to mention very quickly infuriating almost all online users with the possibility of bringing free-to-use services to an end!

So, are we left with the alternative of accepting that being part of social and economic activity online means giving up autonomy over our personal data, or withdrawing from the online world altogether?

None of these seem particularly productive, and all fail to make possible the benefits of using personal data in a more mutually beneficial way.

Doing things differently has potential benefits for consumers. For example using personal data more intelligently could mean personalised, and more responsive, products and services.

There are advantages for business too, particularly if they can be part of a more balanced, permissions-based relationship with consumers.

New opportunities

Taking up opportunities, including but moving beyond data protection, will depend on consumers and consumer groups quickly building a more critical understanding of the:

•  current relationship that we are part of online with regards to our personal data, based on a much fuller understanding on what we give up in exchange for what. As part of streamlining consumer protection laws, BIS is considering (see page 21 point 62) whether consumers should have the right to remedies for ‘free’ digital content (eg download/streaming/games) which are supplied without payment of money, but in exchange for something of value other than money such as personal data or virtual currency.
• scale at which personal data is used, and to what end by providers. As well as concerns about an individuals’ personal data and its use, the large scale data and analysis available to providers and the potential for this to shape markets will be a major issue for consumers.
• growth of consumer empowerment and personal data as an emerging market, and how new services and developments via intermediary bodies may work. Helping individuals protect and manage their own data is fast becoming a market in its own right, leading to a growth of business which can help consumers negotiate services and products to their advantage, such as personal information management systems.

Such developments enable consumers to have access to their data and share it with parties that put it to work for them.

The increased influence that consumers have due to the potential of digital technology to cheaply and quickly facilitate collaboration and joint action. The web has made possible a more effective way for consumers to participate and achieve goals together.

This bypasses the need for traditional institutions and enables consumers to counter powerful interests and exert more control – see previous Consumer Focus research on things like collective switching, using mapping software to identify and fix problems, online feedback and the theory and practice of online collaboration and consumer co-operation.

Understanding these new dynamics will require digital literacy in the widest possible sense, what Rheingold would describe as knowing how to participate online for both individual advantage and collective influence.

Increased control

Certainly, our research and the Demos survey both point to consumers wanting to have more control over their personal information. Contrasts (such as wanting more control, despite not using existing controls) could be explained by the lack of tools, services and motivation to do things differently online.

What is not yet clear is what the catalyst will be that prompts the majority of consumer to take an active interest in their data. Here are a few suggestions for what might spur on more collective and collaborative action to rebalance the personal data equation:

• Further high profile examples of forcing through changes to terms and conditions changes such as the new terms imposed by Facebook might be the start of the turning point. Instagram’s reversal of a decision to suddenly change its terms and conditions on privacy is also a good example of consumers showing their collectively powerful hand.
• The availability of alternatives such as midata, which is now starting to gain traction as the UK Government looks to put it on a statutory footing may be able to demonstrate what a more balanced personal data relationship looks like in practice. Companies such as Tesco in the UK are planning to release back their Clubcard data to customers to enable them to see and make plans on the basis of their shopping habits – just as Tesco have done behind the scenes.
• Greater awareness of the outcome for consumers of businesses applying personal data inferences to prices. In the UK, the Office of Fair Trading is investigating personalised pricing, where inferences about our personal habits and data affect what price we are charged.

 Forecasting the potential and impact of digital technology is common practice on the web, with new scenarios and ideas regularly emerging.

When considering predictions for personal data (central to so many future developments), we must remember that the way we use digital technology is still in a period of negotiation and development.

Certainly, powerful interests have consolidated some control, and are moving to take more, but users and consumers still have a stake in how things develop and an opportunity to influence ways in which they can exert more control over their fate.

There is much to play for if consumers want to make the most of the prized commodity that derives from them, and there is a critical role for consumer advocates to support them. Are you ready for the challenge?

Does competition help alleviate poverty?

CI’s Phil Evans, Coordinator of the International Network of Consumer Antitrust Advisers, reports from the 2013 OECD Global Forum on Competition. 

When the more than 400 delegates of the OECD Global Forum on Competition (GFC) arrived for the first day of their two-day meeting they were met by a banner for a meeting in the room opposite their own for the 2013 Annual Meeting of the Tractor Codes.

Many probably wondered what you could talk about for two days solely regarding tractors; but this is probably precisely the view of most of the rest of the world about the GFC!

The GFC is divided into a series of sessions first looking at the relationship between competition policy and poverty; and then focusing on the more ‘normal’ issues of sector-specific reviews of media and competition.

A criticism often levelled at these big fora is that they are great at producing hot air and poor at producing any useful insight or pointers. Thankfully, this criticism rang hollow with the GFC. Presentations combined strong analysis with specific case studies of how poverty can interact with competition policy and vice versa.

There were long discussions about the role of consumers and small producers in the alleviation of poverty.

Given many agencies have to contemplate competition issues from a consumer welfare perspective, it is difficult to carry out such an analysis of the market when there are a large number of non-consumers who may operate at irregular intervals at the margin of the market.

One of the definitions of poverty is the absence of an individual from a market because they simply can't afford to operate in it. How do we assess their welfare when we are looking at a competition case?

Do we simply ignore them as they are outside of the market or do we include them because they ‘might’ be in the market in the future IF competition can help drive down prices and drive up demand or a merger offers to widen access to products though an improved distribution network?

The wider discussion focused on whether competition policy could help lessen poverty, or indeed make it worse. There was also an involved debate about whether competition law was even capable of doing anything useful in poverty alleviation.

Thankfully, a number of countries, most notably South Africa and Senegal, produced some cogent examples of how new entry in market encouraged by competition policy can help widen access and bring more poor consumers into markets.

However, many more examples were produced of how the working of the market itself, rather than any specific actions of a government agency, could help drive down poverty.

Senegal outlined a very interesting series of examples about enterprising Senegalese citizens acting as micro retailers for mobile phone cards and how some were repackaging large packs of detergent into micro packs to be sold at low prices to those who could not afford to buy the full pack.

One theme that ran through the day, and was encapsulated most notably in a presentation by a representative of MPESA, a mobile phone-based money transfer system, was the role that information technology may play in alleviating poverty.

While much of this overall debate can smack of fashionable thinking, the discussion here at OECD was largely denuded of the misty-eyed optimism that many discussions of ICT can be encumbered with.

The OECD discussion, however, focused on specific cases of how ICT developments can help widen access and participation and how regulatory agencies can have an impact upon them.

While not directly competition-policy related, the examples used focused more on the role of incumbent banks and some central banks’ willingness to do their bidding by slowing the spread of mobile phone-based micro payments.

There was almost a plea to the assembled bodies to ensure that finance ministries and central banks did not act to restrict entry and competition and to help market entry.

The 2013 OECD GFC started well with a detailed focus on the competition policy/poverty with a decent balance between high-level analysis and detailed case studies.

CI made good connections with all the major bodies at the meeting and its presence was noted positively. There was also a clear desire to see greater connections with civil society bodies to promote competition and debate the benefits (or not) of competition policy in helping countries develop.

As with all such pleas, the challenge will be in finding ways to make this debate happen at the national level.

A blog report from Day 2 of this meeting will appear next week.

Right to education and information still a distant dream for consumers in India

CI’s members in the Asia Pacific and Middle East region are gathering for their regional meeting in Delhi this week. George Cheriyan, director and head of CI member CUTS International, looks at the state of consumer rights in India which reflect wider trends for the region.

Even 27 years after the United Nations Guidelines on Consumer Protection (UNGCP) was formulated, only 42 percent of people in India are aware of consumer rights, and 26 years after the enactment of the Consumer Protection Law in India, only 20 percent of people in India have heard about the law.

These are some of the key findings from the ‘State of the Indian Consumer 2012’ published by CUTS International.

Educated and informed consumers are essential for the emergence and sustenance of an efficient market.

An educated consumer can make rational choices about goods and services and protect their own rights and interests from the exploitation of fraudulent businessmen or service providers.

Where the literacy rate is high and social awareness is greater, consumers are less likely to be subjected to such exploitation. Thus, consumer education becomes a priority concern.

In a country like India, where many consumers live in rural areas and are illiterate, they are susceptible to being exploited by unscrupulous businessmen.

An intensive, broad-based multimedia campaign is slowly yielding fruit, as the percentage of consumers who are aware of their rights and interests is slowly increasing.

To a consumer, the right to be informed means the right to be given the facts needed to make an informed choice or decision. There are enough rules and regulations in place which make it mandatory for manufacturers to provide essential information to consumers.

What is lacking is strict enforcement and monitoring. Also, there is a need for a massive awareness campaign and information dissemination among consumers about the existing legal remedies available to an aggrieved consumer.

The UNGCP give great emphasis on consumer education. The Guidelines impose an obligation on governments to formulate or encourage the development of general consumer education and information programmes, bearing in mind the cultural traditions of the people concerned.

The Guidelines also call upon governments to develop, strengthen or maintain a strong consumer policy, and provide for enhanced protection of consumers by enunciating various steps and measures.

In order for these Guidelines to continue to provide an important policy framework, there is a need for further improvement, since there has not been any form of revision since 1999 and the content does not reflect the most contemporary consumer protection issues.

With this backdrop, the global conference on ‘Review of United Nations Guidelines on Consumer Protection’, organised in New Delhi by CI in partnership with CUTS International to gather input from consumer organisations across the world, is extremely important.

This event is an excellent opportunity for consumer organisations in India to work with the government for stronger enforcement of consumer rights and to make consumer education and protection law and redress mechanisms in the country workable for both urban and rural consumers.

What’s the value of your personal data?

Liz Coll, senior policy advocate with CI member Consumer Focus, explains that consumers, despite being the originators of their own digital data, are in the dark about its value.

In the digital economy personal data is a growth business. The volume of personal data gathered by smart devices, searches, site visits, purchases, recommendations, likes, tweets and status updates is on the rise.

Growing too is the value of this data to companies who capture, store, analyse and sell it on.

They use the data to predict consumer behaviour, target advertising and increase profits. While trading personal data may not have been the original core mission of digital giants such as Google and Facebook, they now get significant revenue from the personal data trails left by service users.

The services are free to use but, as the social media phrase goes, ‘if the service is free, then you’re the product.’

The major commodity of the age

Such is the potential for personal data to transform business models and underpin new services that some people now talk about personal data as the ‘new oil’ in the connected digital economy.

Commentators claim it is set to become the major commodity of the age, a critical resource from which new innovations and value will flow.

Markets such as banking are rapidly rethinking how to better mine the data they hold, or obtain additional information in order to increase the value they can derive from customers.

Yet consumer understanding of what happens to this valuable data does not appear to be growing at the same pace, even though the commodity originates with them.

We are far from naïve – our intuition tells us that a lot is being collected but we are somewhat vague about why and what the long term implications of this might be.

Despite our concerns, we still don’t engage with the existing opportunities to take control over our information. We sign our data over by agreeing to (but rarely comprehending) terms and conditions of sometimes epic length.

Open to exploitation

There’s a big contrast here between the importance that external agencies now attach to consumer data, and the significance consumers themselves assign.

The response from consumers is mixed; they are concerned and aware but are not making moves to protect themselves. This suggests a scenario where consumers, by not exerting control over their digital footprint, could be left open to exploitation.

Consumer understanding

Consumer Focus wanted to develop a better appreciation of the extent to which consumers know their data is being collected and controlled, and understand the ways in which it is being exploited.

We also wanted to find out what controls consumers put in place to protect themselves, and what value they put on the data that they impart, knowingly or unknowingly, about themselves.

We commissioned ICM to survey 2,002 adults aged over 18, with results weighted to provide a representative sample. Respondents included online service users and loyalty card holders. Full details of the research findings (PDF 582KB) are available.

Headline research findings

The findings show a conflict and contrast in consumer behaviour and sentiment regarding personal data:

Suprisingly high levels of trust

Some consumers are pretty trusting of online providers’ data collection motives, despite a general impression that they were not to be trusted: one in 10 consumers had not realised any data was collected on them via online services.

And a further fifth thought that the provider only collected the minimum amount required to make the service work better.

That means almost two fifths of respondents (39 per cent) have a benign interpretation of online organisations’ intentions.

This is surprisingly high given that online providers were ranked lower in trust terms than any other type of organisation, including banks (for managing current accounts), the police and supermarkets.

Similarly, four out of five loyalty card holders acknowledge that the card provider gathers data about them, but just under a third recognise that the card provider then packages this up and sells it on as anonymised data, or uses it to segment its customer base and target offers, etc.

Tick, click and hope for the best

Despite concerns about the implications of terms and conditions, people generally tend to tick, click and hope for the best: attitudes and behaviour around terms and conditions and license agreements throw up some interesting insights.

We were surprised to find that almost a third of consumers claim they always read terms and conditions online.

Over half told us they rarely do and one in seven never do so. For this group, the length of terms and conditions are off putting, and the desire to access the product or service would appear to override any concerns about data exchange.

A few also believed that nothing bad could come from not reading them.

Having said that, three out of five consumers who do not read the small print still have concerns about assenting without reading the details.

Unknown financial implications were the top concern for a third of people, with just over half (52 per cent) mentioning personal data concerns as a top issue.

Of the third that do claim to read terms and conditions, only one in five feel they fully understand the implications when they tick the ‘I agree’ box. That makes a mere 16th of the total sample who claim to fully comprehend the implications of terms and conditions.

Declining services

When it comes to using online services, only 18 per cent of those who always read terms and conditions mentioned how information is gathered and used as the main reason for checking on provider’s terms and conditions.

Of those who end up declining online services and products, it is a small number – 13 per cent – who pull out because of privacy concerns, and 7 per cent say that it was because too much personal information was demanded.

Low understanding of value

In an age where our personal data is conceived of as the commodity which will drive the digital economy, we as originators of the data are in the dark about its value.

When asked to guess the value of the personal data collected about them via their most frequently used service, 61 per cent of people did not attempt to volunteer a figure.

Of those who did try to value it, 15 per cent thought it had no value at all – the largest proportion of the respondents who attempted to give an estimate of the value.

For consumers that suggested a value above zero, there was no consensus, with some suggesting it is worth only up to £50 or £100 a year and others opting for many hundreds of pounds. It’s not only consumers who can’t agree – many digital and business experts differ greatly on what the value of data actually is.

Nevertheless, when asked to rate whether their data has a commercial value that organisations should pay a fee to use – three-fifths of consumers agree and only one in six disagree.

Consumers do not yet have a well-developed sense of what a fair exchange between a service provider and consumer looks like: when asked what they would be prepared to pay to use their favourite, free-to-use online service, fewer than one in 10 suggested a figure, and two-thirds said they were not prepared to pay at all.

What does it all mean?

The research results show some conflicting attitudes and behaviours that can be explained in part by differences of opinion between people – with age being a major factor.

The Demos Data Dialogue survey puts the public into five categories, of which 27 per cent recognise the value of sharing data, see key benefits and are comfortable with sharing. That’s just under a third of people who are not overly concerned about the risks of sharing personal info and who see the benefits of the value exchange.

Attitudes towards terms and conditions suggest an acceptance of exchanges weighted heavily towards the provider which consumers feel compelled to go along with in order to access services.

But surely if more consumers knew the value of their personal data they wouldn’t be so happy to stick to the status quo?

Africa’s consumers need urgent protection

CI’s new Head of Africa Onica Makwakwa stresses the importance of a strong consumer rights movement in Africa as its economy is predicted to grow.

Thoughts of my first 100 days as CI’s new Head of Africa have been dominated by the incredible support, dedication and commitment of CI members, not just in Africa but globally.

In true African style, CI members have called, written and visited to extend a warm welcome; wasting no time to express their readiness to work with the office and alongside their peers through the creation of regional hubs.

The success of the regional hubs initiative is important to the consumer movement as is the sustainability of consumer organisations in Africa. While the world is buzzing about Africa being the next “gold mine,”  a strong consumer movement is critical now more than ever in ensuring that interest in the African market is not borne at the expense of consumers.

The urgency of our movement has been further confirmed in many small group and individual meetings with CI members. For example, there has been a convening in Pretoria of select members who participated in the consultative workgroup on the creation of regional hubs.

There has also been the training on Consumer Protection Law and Standardisation hosted in conjunction with UNIDO with members from West Africa in Abidjan.

And there has been a workshop, Credit Reporting Financial Literacy Project, with members in Tanzania hosted by the Tanzania Consumer Association Consumer Advocacy Society and funded by the World Bank’s International Finance Corporation. 

For the new year, we have aspirations to strengthen and grow the consumer movement in Africa by focusing on building the capacity and sustainability of our consumer organisations while simultaneously advancing an agenda that is relevant to the African consumer in an innovative, effective and timely manner.

Africa’s consumer movement stands on the shoulders of incredibly dedicated leaders who are champions for consumers within their own countries and beyond.

For African consumers the future is NOW; and with it comes the challenge to seed growth and prosperity in the movement TODAY.

Consumer organisations in Africa are ready, but we continue to welcome the support of our brothers and sisters in the international community. We invite you to walk the journey with us and to share your own best practices. Follow us on Twitter @ci_africa.

Consumers spend less with unit pricing

Ian Jarratt from Queensland Consumers Association, a member of CI member Consumers Federation of Australia, explains why consumer organisations need to get behind unit pricing. 

Consumers can gain major benefits when unit prices are provided and are easy to notice, read and use.

When shown in conjunction with an item’s selling price, they increase price transparency and competition.

But without pressure from consumers, retailers and governments rarely do anything to provide, or improve, unit pricing. This is why more consumer organisations should campaign for grocery retailers to provide best practice grocery unit pricing - price per standard unit of measure (per kg/litre/each, etc.) - for pre-packaged food and other grocery items.

Consumer benefits

The main benefit for consumers is that unit prices greatly facilitate many types of value comparisons including those between package sizes, brands, product types, package types, packaged/unpackaged products, and between “special offers” and regular prices.

The unit prices of the same product and of similar and substitute products often vary enormously. So, consumers can use unit prices to get much better value for money and this can result in substantially reduced total expenditure on groceries. 

For most consumers, especially the poor, food and grocery products account for a high proportion of total expenditure. Therefore, the benefits resulting from using unit price information can be significant for these and many other consumers.

Unit pricing also removes the need for shoppers to spend time calculating unit prices themselves and helps them to spot hidden price increases when, as is common, the amount in the package is reduced but the selling price is not.

Successful consumer campaigns

Here are some examples of successful consumer campaigns for the provision of, or for better, unit pricing from several parts of the world.

Provision

• In the US more than 50 years ago, consumer organisations played a vital role in persuading many supermarkets to provide unit prices voluntarily. This was a world first and a response to a massive increase in the proportion of grocery items being sold in fixed measure packages, rather than loose from bulk, and an explosion in the number of package sizes used by manufacturers. (This retailing revolution has also occurred, or is occurring, in many other countries, including developing countries.)
• In Europe during the last decades of the 20th Century, pressure from consumer groups resulted in the compulsory provision of unit prices, initially only in several Scandinavian countries, and then in each of the 27 member nations of the European Union.
• In 2009, the provision of grocery unit pricing became compulsory in Australia after a long and hard-fought consumer campaign. 

Improvement

In the 1970s, consumers campaigned for, and achieved, compulsory unit pricing in several US states. 

In the UK, where provision is compulsory, a campaign for improvements, started in 2011 by the consumer watchdog Which?, has already resulted in some supermarkets voluntarily deciding to improve their systems.

The campaign also seeks changes to the content, interpretation and enforcement of the legislation.

In the US, largely due to consumer pressure, a national working group set up in 2012 is developing best practice guidelines for the voluntary provision of unit pricing by retailers.

Future needs

There is still enormous scope and a great need for more consumer organisations in all parts of the world to campaign for the provision of best practice grocery unit pricing. 

Obviously, campaigns are needed wherever unit prices are not being provided but consumers are buying significant amounts of pre-packaged grocery products.

But, campaigns are also often needed for better unit pricing even if it is being provided now. 

This is because the unit prices are not fully used by consumers due to some big problems with the system including: unit prices that are difficult for consumers to notice and/or read; unit prices not being provided for special offers, some products/brands, internet sales and in advertisements; and the use of non uniform/inconsistent units of measure.

To facilitate price transparency, it is widely accepted and adopted public policy that grocery items loose from bulk should be unit priced using standardised/uniform units of measure, such as per kg or per litre. 

This policy should also be applied to pre-packaged grocery items, the demand for which is increasing everywhere.

To do so, the unit price of these products should be provided, in addition to the selling price. This would allow consumers to easily compare prices and values between packaged products – and, importantly, to also compare products sold pre-packaged and loose from bulk.

The challenge for consumer organisations everywhere is to first recognise the need for best practice unit pricing of pre-packed grocery items, and to then start campaigning for their  provision by retailers.

Best practice unit prices:

• Are accurate, very prominent and very legible, and located very close to the selling price;
• Are provided: for products sold in stores and on-line, for regular and special selling prices, even if the unit price is the same as the selling price, and in advertisements showing selling prices;
• Use the same unit of measure for a product type, whether sold in a constant or random measure pre-pack or loose from bulk, and for similar product types; and
• Are presented uniformly/consistently between retailers.

Consumer organisations should also help increase consumer awareness of unit pricing and the many ways it can be used to get better value. This is required where retailers provide unit prices and where consumers still have to calculate unit prices themselves.

Consumer organisations wanting more information about, or with views on, grocery unit pricing can contact me at unitpricing@australiamail.com.

Consumer awareness is on the rise in India, but it still needs serious attention

George Cheriyan from CI member CUTS International discusses the results of a recent survey showing the poor state of consumer awareness in India.

Even after 25 years of the Consumer Protection Act (CoPRA) in India, only 20 percent of consumers know about it and only 42 percent have heard about consumer rights. Fifty-three percent of consumers are unaware of the country’s redress system, the objective of which is to give consumers access to simple, speedy and inexpensive redress of their grievances.

These are some of the key findings of a national survey conducted by CUTS International as part of a project entitled ‘Indian Consumers in the New Age: A Forward Looking Agenda to Address the Concerns of the Common People’ (ConsumersUp).

The purpose of the study is to get a closer look at the consumer’s level of awareness of their basic rights and to present a forward-looking outline to the Indian government to help guide ongoing action based on the recommendations.

The study has been conducted in the backdrop of the establishment of a working group to give input into the United Nations Guidelines on Consumer Protection (UNGCP) . The UNGCP are an international reference point for the consumer movement and Consumers International will be working with its members over the coming months to feed in proposals on how the guidelines can better address the concerns of today's consumers.

The CUTS study also shows that, of the 47 percent of consumers who do know about India’s external redress mechanisms, only 28 percent believe that it is easily accessible to common people. Sixty-seven percent of the complaints are redressed beyond the stipulated time frame of 90 days or 150 days, whichever is applicable.

Ninety-three percent of consumers have never made a formal complaint. And of the seven percent who have filed a complaint, only 0.3% have achieved redress. If this is an indication of consumers losing faith in an existing system, then the matter needs serious attention.

Still, these percentages are encouraging because compared with the situation five years back, the trend is upward. For example, a survey by CoPRA commissioned by the Comptroller & Auditor General of India from May 2006 revealed that only 18 percent of consumers were aware of CoPRA and 34 percent of consumer rights.

The key findings of the CUTS survey, along with eight chapters on each of the consumer rights and a synthesis chapter, are part of the ‘State of the Indian Consumer 2012’ report released in New Delhi on 11 October 2012 by the Minister of State for Consumer Affairs, Food and Public Distribution Prof. K.V. Thomas.

A country in dire need of consumer rights protection

Ahmad Masoud from CI member Consumers Rights and Services Organization calls for urgent consumer protection policy and fair competition in Afghanistan. 

Consumer rights protection and fair trade competition are among the most forgotten issues in Afghanistan.

The majority of consumers in the country are not satisfied with the quality of many products, including medicines, food products, washing powders and liquids, edible oils and ghee, and diesels and patrols.

“Afghanistan has been changed into a dumping center for some of the poorest quality Chinese, Pakistani and Indian goods and products,” says Mohammad Abrar, a capacity building specialist with the World Bank in Afghanistan.

Afghan citizens fall victim to deceptive trade practices and adulterated commodities on a regular basis. And they have little access to redress. Cartels are another problem, often resulting in collusive pricing, division of markets and joint decisions to hold and reduce supply.

Creating a pro-consumer environment

Afghanistan needs to enact consumer rights protection legislation as quickly as possible to help create a pro-consumer environment where the delivery of goods and services leads to consumer satisfaction.

It is generally believed that successful implementation of consumer protection policy and fair competition promotes good governance and strengthens democracy.   

“Business plays a vitally important role in the economic growth of a country by creating more job opportunities, taking the country towards self reliance and alleviating poverty, but the success of a business depends on the consumer’s trust in the quality and safety of the domestic products,” says Abrar.

“Therefore, the domestic products should be of high quality to attract the interest and build the trust of consumers, and the government should enact certain standards for the quality assurance of not only the domestic but also the imported products.” 

Help is on the way

The Afghani government has recently established the Competition Promotion and Consumer Protection General Directorate within the Ministry of Commerce and Industry. 

The directorate has drafted consumer protection legislation and sent it to the Ministry of Justice for revision. After revision by the Justice Ministry, the legislation will be sent to the parliament for ratification.

Jawidullah Azizi, an optical technician in Kabul, says that both businesspeople and consumers need to know their rights and responsibilities in order to create a healthy business environment in the country.

The Consumers Rights and Services Organization (CRSO) has tried to do just that by publishing a series of documents in one of the national Afghan languages on consumers’ rights and responsibilities.

The documents include a booklet on the rights and responsibilities of the consumers; a leaflet on lead poisoning, its causes and preventions; and a flyer marked with eight internationally recognised consumer rights messages. This is the first time such documents have been available in Afghanistan.

Sitting at his small optic shop in one of the busiest parts of Kabul city, Azizi gazes out of his shop’s window and says, “When I look at the current status of some businesses in the market, I strongly believe that Afghanistan is in dire need of consumers’ rights protection.”

How consumer groups can flourish in our digital future

CI director general Helen McCallum writes on the challenges facing the consumer movement.  

Our rapidly changing world continues to throw up challenges to, and opportunities for, the consumer movement.

Our latest global newsletter takes a fascinating look at several ways in which this is happening.

First up is the challenge that all civil society organisations face today – how do we remain relevant  in a digital world where many citizens (and consumers) no longer feel reliant on our expertise to act, react, and protest? 
Well, there are many ways in which this challenge presents opportunities.

The launch of our broadband advocacy toolkit shows how the consumer rights movement can still help the public navigate new markets and challenge corporate behaviour.

CI and its members have a significant role in providing sound, reliable advice in this relatively new area for many consumers.

We also have updates from our Citizenship, collaborative technologies and regulation project, demonstrating how consumer groups in Latin America are helping communities use text messaging to influence utility service regulation.


And we feature a new report from UK member Consumer Focus that looks at how crowd-mapping technologies  can be used by consumers to get better services and fairer deals.

All of these demonstrate how the consumer rights movement is stepping up to new challenges in these changing times.

Alongside more traditional consumer issues (see our newsletter’s other stories on food prices, supermarket competition, and iPhone chargers, for example), we must advocate for digital consumer rights, while using the technology itself to promote and improve consumer protection.

If you would like to receive CI’s global newsletter and other email alert services, you can subscribe here.

Find out more about what CI is doing on Consumer Rights in the Digital Age in our strategy document: Your Rights, Our Mission | Strategy 2015.

Marking a milestone

Indrani Thuraisingham, Head of CI’s Office for Asia Pacific and the Middle East, reflects on CI’s new hub office in Oman; the ongoing process of revising the UN Guidelines on Consumer Protection; and CI’s Consumer Organisations’ Sustainability Survey.

I am very excited to report that CI is set to open a hub office in the Middle East, to be hosted by The Public Authority for Consumer Protection (PACP), Sultanate of Oman, for an initial two years.

The establishment of this hub office marks a new milestone for CI towards creating a stronger voice for Middle Eastern consumers.

The office will enable CI to seek and explore further partnerships, funding opportunities and the increase in membership from the region. It will provide the consumer movement with the opportunity for closer relations and dialogues with relevant organisations within the region and across the world. 

I must express my heartfelt appreciation to both CI members of Oman and Jordan, HE Said bin Nasser Al-Khusaibi, Chairman of the Oman Association for Consumer Protection, as well as the President of the Jordan Consumer Protection Society, Dr. Mohammad Obeidat, who is Special Advisor to PACP. They were all instrumental in facilitating the cooperation programme between CI and the PACP. 

As next steps, we will work towards recruiting staff for the Oman hub office and developing programmes in line with CI’s priority work.

I am also pleased to report that as part of our Consumer Justice and Protection (CJP) global programme, led by CI’s Office for Asia Pacific and the Middle East, we have various activities ongoing. First is the ongoing work of revising the UN Guidelines on Consumer Protection.

We are in the midst of drafting a policy paper that will identify areas CI wants to potentially make changes to and CI members will have the opportunity to comment and contribute their experience through a very transparent and consultative process.  We will keep you posted on the process.

In addition, under the CJP programme, a Consumer Organisations’ Sustainability Survey has been developed for members. It is one of the tools we are using to help CI’s full and affiliate members to develop as financially sustainable organisations. The results will form a tailored organisational empowerment programme. So help us to help you by completing the survey by 14 October 2012.

You can join our CJP network by emailing: cjp@lists.consumersinternational.org to keep pace with all of the CI activities I’ve mentioned as well as those of your fellow members and the consumer movement all over the world. I look forward to having you join the conversation.

India debates influx of big supermarkets

Feelings are polarized in India about foreign direct investment (FDI) in multi-brand retail trading. Alok Gupta from CI member Consumers Forum in India gives five reasons why FDI in the retail sector is good for India and its consumers.

1. Expansion of the market is good for consumers 

Our experience from the entry of Indian companies such as Reliance, Airtel and Big Bazaar or of multi-national companies such as PepsiCo, Adidas, etc. into the retail market has been excellent. These players have increased customer’s choice and competition.

Availability and choice under one roof and discounts on MRP were unheard of prior to their entry some eight years back.

With foreign direct investment (FDI), globally-prominent and popular single-brand retailers like IKEA, Apple, Nike and multi-brand retailers such as Walmart (USA), Tesco (UK), Metro (Germany) and Carrefour (France) will be able to open up shops here and, as a result, introduce world-class products to Indian consumer. Also it will give Indian products the opportunity to reach global retailers (and buyers) for their marketing.

2. A growing Indian economy needs a growing retail sector   

The retail sector of India is vast, and has huge potential for growth and development, as the majority of its constituents are unorganised.

The retail sector of India handles about $250 billion every year, and is expected to reach $660 billion by the year 2015. The organised retail sector of India is set to grow  at the rate of 15-20% every year, and will reach the level of $100 billion by the year 2015.

It is noteworthy that the retail sector of India contributes about 15% to the national GDP, and employs a massive workforce, second only to the agriculture sector. India's growing economy with a rate of approximately 8% per year needs a matching expansion of the retail sector.

3. A strong retail sector will strengthen the Indian economy   

FDI in multi-brand retail notification states that foreign investors should make a minimum investment of $100 million, 50% of which should be invested in back-end infrastructure. 

It states that investments made towards processing, manufacturing, distribution, design improvement, quality-control, cold chain, warehouses and packaging constitute ‘back-end’.

Best practice of the multinationals in processing, cold chains, transportation and the like can be emulated by other players. This investment would strengthen the Indian economy and provide opportunities for consumers.

4. Promote acceptability of Indian products and services abroad and further investment in other sectors       

India’s opening up of its retail and other sectors will be matched by a similar response from other nations to Indian products and services.

Besides, it will boost India as a safe and  progressive economy. We need a revival in investor confidence domestically and globally.

This will integrate the Indian economy with the global economy and India’s success will be of interest to the rest the world.

5. The Government’s right to intervene   

Multi-brand retail trading is classified as a service and, therefore, covered by the General Agreement on Trade in Services (GATS). India has not undertaken any commitments in this area under GATS.

The Bilateral Investment Promotion & Protection Agreement (BIPA) was a post-establishment investment agreement. This implied that once an investor entered the country, that investor must be treated the same as a domestic investor unless the limitations to national treatment were clearly spelt out at the pre-establishment stage.

The FDI policy is a pre-establishment instrument and, therefore, not covered by BIPA. However, the Indian Government retains the right to impose necessary conditions in case certain malpractices occur in the future.

The Trans-Pacific Partnership threatens hard-won consumer rights in Asia and the Americas

CI’s Jeremy Malcolm looks at how the Trans-Pacific Partnership is dismantling a slew of consumer rights from intellectual property laws to food labelling to labour standards.

 

As a global organisation, much of the work that Consumers International (CI) does for and through its members is done at the international level. By setting consumer policies that apply to many countries, we ensure that no country is left behind when best practices are being set. (A good example of this is our work on the ISO 26000 standard on social responsibility.) 

But rather than being a race to the top, sometimes globalisation can be a race to the bottom, in which national laws to protect the public interest are sacrificed on the altar of free trade.

An example of this is found in the Trans-Pacific Partnership (TPP), an intergovernmental agreement currently under negotiation that threatens to reduce hard-won health, privacy, consumer protection, environmental and labour standards in 11 negotiating countries around the Asia Pacific region.

Here are just some of the areas of the TPP text that are of concern to consumers:

Food and labelling

The existing trade disciplines of the World Trade Organisation (WTO) already limit national and consumer sovereignty when it comes to food. For example, under WTO rules, the European communities were punished for prohibiting imports of beef from cows laced with hormones, because the health risks of the use of artificial hormones on cattle had not been scientifically established.

As a result, Europe was ordered to compensate the United States for the lost imports of hormone-laced beef that European consumers didn't want! Under the TPP, American industry is asking for even tougher powers to limit other countries from regulating products such as genetically-modified food, pesticides and additives.

Intellectual property

Perhaps the most controversial chapter of the TPP, the intellectual property chapter, would also elevate intellectual property protection and enforcement standards above the already-high levels set by the WTO, to the detriment of consumers.

For example, many countries will be required to extend their length of copyright protection by 20 or more years, resulting in works from early last century being locked out of the public domain for decades. Parallel importation will also be restricted, allowing global firms to profiteer.

An Australian parliamentary study shows that such restrictions increase the cost of music downloads in that country by more than 50% compared to the USA.

The right to bypass digital locks in order to exercise fair dealings with copyright works will also be curtailed, and both civil and criminal penalties for copyright infringements will almost certainly balloon.

Investor-state dispute settlement

Under investor-state dispute settlement rules proposed for the TPP, big business can sue governments in an international commercial tribunal, for introducing new laws - such as consumer protection laws - that damage their businesses.

For example, the tobacco giant Philip Morris is currently suing Australia under a similar free trade agreement between Australia and Hong Kong, over Australia's introduction of a law requiring plain packaging of cigarettes.

Even though Australia's High Court already rejected the Philip Morris claim, the company is still pursuing its case in the international tribunal. Unsurprisingly, Australia has rejected an ‘investor-state disputes settlement provision’ for the TPP - but the USA is still insisting upon it.

E-Commerce

The TPP is proposing to adopt and strengthen the problematic APEC cross-border privacy rules, which were developed without adequate input from consumer or privacy groups. These rules provide a streamlined process for the exchange of consumers' private information across borders, possibly into countries where privacy protection is significantly more lax. 

As part of this, TPP is proposing to outlaw government policies that require consumers' information to be physically hosted on local servers. The intent is to allow web companies from the United States to host such private data, even though US law notoriously allows warrantless wiretapping and surveillance of its citizens.

This unnerving practice will now extend across the region if this TPP proposal makes it through.

Consumer groups shut out

There are probably many other areas of the text that are of concern to consumers too. But we can only say "probably", because the text has not been released. We only know what we do about the agreement because two of its 20 chapters have been leaked, and from public statements by negotiators and lobbyists. 

In particular, the US government has claimed that the "Competition" and "E-Commerce" chapters both include text on consumer protection, and there also exists a chapter on "Financial services" that is doubtless of relevance to consumers. Yet CI, and all other consumer organisations, have been denied access to these texts, whilst cleared corporate lobbyists have been allowed to see them.

CI’s involvement

CI attended the most recent meeting of the TPP negotiators in Virginia, USA, earlier this month with our member ODECU from Chile, where we were allowed a token 10-minute presentation slot, and a table from which to distribute publications.

Whilst this is a pitiful excuse for public engagement, the meetings have provided a useful mobilisation point for civil society, and are an occasion for well-connected NGOs to arrange informal private meetings with negotiators. (CI attended such a meeting in Virginia.)

The next TPP negotiation meeting will be taking place in New Zealand from 3 to 12 December 2012, and we are again inviting interested CI members to participate, with coaching and support from CI.

If you are interested in hearing more, and are from Australia, Brunei Darussalam, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States or Vietnam, contact me or Farooq Ahmed Jam from CI's Office for Asia Pacific and the Middle East. 

We will provide you with a detailed briefing document that we have prepared, and put you in touch with your country's negotiators. 

Even if you can't attend the next negotiating session, there are still many ways in which you can have an impact, such as talking with your negotiators, and linking up with other NGOs in your country who are already engaged in TPP advocacy.

With the agreement slated for completion in 2013, now is the time for CI members from the Asia-Pacific region to defend themselves against the TPP's many threats to consumers.