NPCSC Defers Vote on E-Commerce Law, Grants Law Enforcement Powers to Military-Controlled Coast Guard

The 13th NPC Standing Committee (NPCSC) concluded its third bimonthly session on Friday (June 22) without adopting any legislative bills, including the draft E-Commerce Law that it had already reviewed three times (this session included). Several new provisions in the latest draft have sparked heated discussion during the session and could potentially further delay passage of the law. The session did adopt a decision granting law enforcement powers to the now-militarized China Coast Guard, the details of which will be discussed below.

According to Caixin, disagreements arose in part from two new provisions in the third draft of the E-Commerce Law that was reviewed by the NPCSC this week.

First, the third draft added to the list of entities exempted from the general business registration requirement “individuals who, by making use of personal skills, engage in . . . sporadic, small transactions [零星小额交易]” for which no license is required. A member on the NPC Financial and Economic Affairs Committee worried that it would be hard for market entities to find “clear guidance” in the undefined terms of “sporadic” and “small.” An NPCSC vice chair concurred, saying that the lack of clear standard would lead to the abuse of discretion or inaction by law enforcement agencies. Another NPCSC member would do away with the exemptions entirely, requiring instead that “all online shops register, regardless of size.” But he would also ask the government to “simplify the business registration process.”

Second, the third draft includes a new provision that reads: “When promoting merchandise or services to consumers based on their interests, hobbies, consumption habits, or other characteristics, e-commerce operators shall at the same time provide the same consumers with options that do not target their personal characteristics.” One NPCSC member criticized this provision for “essentially recognizing the existence of widespread telecommunication harassment [电讯骚扰] and providing a legal basis for it.” Another member argued, however, that targeted ads “in fact have reduced the total amount of advertisement and improved the efficiency of advertising.” But he would still require the advertisers to obtain the consumers’ prior consent before deploying targeted ads and allow the consumers to opt out at any time.

NPCSC members also suggested further revisions to the draft’s personal information protection provisions. When the next (and most likely final) round of deliberation takes place depends on how fast a consensus is built. But we nonetheless expect the next review to occur by the end of 2018.

This week’s NPCSC did pass a decision authorizing the China Coast Guard (中国海警局) to carry out maritime rights protection and law enforcement. The Explanation of the decision contained more details than the decision itself; it stated that the formerly civilian coast guard (or maritime police, 海警)—alter ego of the now-defunct State Oceanic Administration—has been transferred to the People’s Armed Police (PAP) to form the Maritime Police Corps of the People’s Armed Police Force (中国人民武装警察部队海警总队), also known as the China Coast Guard. Because the Coast Guard (as part of the PAP) is now under sole military control, laws that prescribe the functions of its predecessor—which was an administrative agency—no longer apply to it. A gap-filling NPCSC decision is thus necessary, pending amendments to those laws.

The decision first authorizes the Coast Guard to exercise the police’s law enforcement powers under the Criminal Procedure Law and the Public Security Administrative Punishment Law when “combatting illegal and criminal activities, keeping peace, and safeguarding security at sea.” It also authorizes the Coast Guard to exercise “the relevant administrative organs’ law enforcement powers” under the Fisheries Law, Customs Law, Sea Area Use Administration Law, Maritime Environmental Protection Law, Offshore Islands Protection Law, and Wild Animals Protection Law, when performing tasks relating to “the exploitation and use of marine resources, protection of marine environment and ecology, regulation of marine fisheries, and maritime anti-smuggling.”

The NPCSC also adopted a decision on the functions of the new NPC Constitution and Law Committee. The decision makes clear that the new Committee will perform the duties of the original Law Committee as prescribed in five laws and that it will take on five additional functions as provided in the Plan on Deepening Reform of Party and State Institutions—it did not elaborate on these new functions beyond repeating the Plan’s language. For more information please see our preview of this week’s NPCSC session.

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We expect the NPCSC to release the four bills it considered at this past session for public comments next week: draft revisions to the People’s Courts Organic Law and the People’s Procuratorates Organic Law, draft amendment to the Individual Income Tax Law, and of course the draft E-Commerce Law.

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