COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 04.02.1998 
COM(1998) 50 final 
COMMUNICATION FROM THE COMMISSION 
TO THE COUNCIL, THE EUROPEAN PAB&IAMENT, 
THE ECONOMIC AND SOCIAL COIVMTTEE 
AND THE COMMITTEE OF THE REGIONS 

TABLE OF CONTENTS 
Page 
1. INTRODUCTION: NEW POLICY CHALLENGES 1 
2. PROGRESSING TOWARDS THE GLOBAL ELECTRONIC MARKETPLACE 2 
2.1 The emergence of a global electronic marketplace 2 
2.2 The need for interoperable technical solutions 4 
2.3 Ensuring market access and competition 5 
2.4 The need for a consistent legal framework 6 
2.5 Conclusions: requirements for an international framework 9 
3. DEFINING THE WAY FORWARD FOR INTERNATIONAL COORDINATION 9 
3.1 Strengthening international coordination 9 
3.2 Identifying the most urgent issues and ways to tackle them 10 
3.3 Developing a method of coordination: An International Charter 11 
4. THE NEXT STEPS 12 
Glossary A3 
1. INTRODUCTION: 
The European Union has made substantial 
progress in putting in place the necessary 
framework conditions for the development 
of the lnformatfôp*$ociety1 wl% a %k to 
unleashing its growth and employment 
potential bringing benefits to all. The 
dynamism of the Information Society is 
putting pressure on both public and private 
sectors to be more flexible and to rapidly 
take up new challenges. 
For this reason, the Commission has 
recently launched a broad consultation to 
explore the nature and regulatory 
implications of convergence between the 
telecommunications, media and 
information technology sectors2. 
The present Communication responds to 
the need for strengthened international 
coordination in order to create an enabling 
framework for the global electronic 
marketplace ("on-line" economy) which is 
a fundamental element of the Information 
Society. 
The European Union has begun to 
formulate several policy lines on electronic 
commerce by stimulating the development 
of an internal market for those services 
whilst safeguarding public interests (cf. 
Communications on "A European Initiative 
in Electronic Commerce"3, "Harmful and 
Illegal Content on the Internet"4 and 
"Ensuring Security and Trust in Electronic 
Communication"5, and the Green Paper on 
"Protection of Minors and Human Dignity 
in Audiovisual and Information Services6). 
In parallel, the European Union is 
contributing to the development of 
favourable conditions at international level 
for electronic communications and 
commerce, for instance through the WTO7 
1 See Rolling Action Plan (COM(96)607): 
wwwJspo.cec.be/infosoc/legreg.html 
2 COM (97) 623: www.ispo.cec.be/convergencegp 
3 COM(97) 157: www.ispo.cec be/ecommerce 
.initiat.html 
* COM(96) 487: www2.echo.lu/legal/ 
en./intemet/.communic.html 
•' COM (97) 503: www.ispo.cec.be/eif 
15 COM(96) 483 finai 
' wwv/.wto.org agreement on basic telecommunication 
services, the ITA agreement on tariffs for 
information technology products, and the 
WIPO agreement on the protection of 
intellectual property. This policy is based 
on the conviction that the Information 
Society can only be a global one, with the 
wide participation of the international 
community, including developing 
countries8. 
Many of the Union's partners are actively 
involved in building a framework for the 
electronic marketplace. Worldwide there 
are now numerous initiatives and 
regulatory actions at national and regional 
levels. These activities are not always 
coordinated and sometimes reveal 
divergent approaches. Ill-adapted or 
fragmented regulation, however, will hinder 
the development of the "on-line" economy 
from which business and citizens have 
much to gain. Decision makers in the 
public and private sectors are becoming 
aware of the fact that greater consistency 
in these national and regional approaches 
is needed and that this need is becoming 
increasingly acute. 
Against this background, there is a need 
for the European Union and its Member 
States to examine their policies with a view 
to adapting or clarifying traditional 
regulation to the requirements of the "on­
line" economy. This does not mean 
delaying legislative activities at Member 
States or Union level until global rules are 
settled in the respective fields. Equally it 
does not mean surrendering national or 
regional traditions and cultures. What it 
does require, however, is to engage in an 
open debate and awareness-raising 
exercise about the implications of the 
global electronic marketplace and its 
particular characteristics on certain rules 
and their application. Progress should be 
made in parallel between technology 
changes, national and European 
regulatory actions, and cooperation at 
international level on regulatory principles. 
Provided it acts quickly and boldly, the 
European Union has all the potential to 
make a positive contribution to the shaping 
of the new environment, drawing on its rich 
See Communication on "the Information Society 
and Development: the role of the EU": (COM(97)3£1: 
«-ww.ispo.cec.be/isad/isad.htnil 
scientific, cultural and social assets. The 
Union should signal to the international 
community that it is determined to 
contribute its experience and vision to 
building a framework based on fair 
competition, private sector investments, 
open markets, and social inclusion, 
accompanied by appropriate safeguards 
covering both the wider public interest and 
the interests of the individual. 
This Communication advances views on 
how to define the key issues that require 
strengthened international coordination. It 
does not propose concrete solutions to 
these issues as such, in particular it is not 
suggesting thai there is a need for global 
regulation of the Internet or for the creation 
of new international organisations. The 
Communication essentially argues that the 
time is ripe to seek a better international 
understanding on how to proceed in the 
near future to achieve a "friction" free and 
borderless marketplace while meeting 
general public interest objectives. 
in this way, the global community can work 
together to maximise the potential of the 
Information Society to stimulate growth 
and innovation, to create new employment, 
and to promote social and economic 
cohesion. 
To this end, it is proposed to invite experts 
from industry and other involved parties to 
a round table meeting in 1998, to initiate a 
debate at Ministerial level, and to seek an 
understanding on a method of coordination 
in the form of an International Charter. 2. PROGRESSING TOWARDS THE 
GLOBAL ELECTRONIC 
MARKETPLACE 
2.1 Tha emergence of a global 
electronic marketplace 
Growth in trans-border traffic over the last 
two decades has been a striking feature of 
the communications landscape. 
International telephone calls have risen 
from under 4 billion minutes in 1975 to 
over 80 billion (estimated9) in 1997 - a 
growth rate of 15 per cent a year. At the 
same time, they have contributed over 
8 per cent of telecommunications service 
revenue worldwide. This growth is 
forecast to continue. 
International telephone 
traffic 
(billions of minutes) 
80 
60 
40 
20 — ^jllt 
1M M M il il M M M il M m M il il M l |W |1 \m \u |B (1 [• \m \m \m \m \m (I 
m oo *- •* r*-f— I*» oo oo oo 
O) Oi Oi O) O) 
Source: ITU 
More recently, digital mobile 
communications, in particular through 
GSM, are providing global mobility in 
personal communications. Today, more 
than 200 GSM networks are in live 
commercial operation in over 100 
countries worldwide serving 55 million 
users. 
In the future, new satellite systems will 
have a major impact on the development 
of global communications services. The 
total addressable market for broadband 
multimedia world-wide is expected to grow 
steadily from 100 million users up to 330 
millions in 2010 of which about 16 per cent 
(i.e. 50 million users) are forecast to be 
captured by satellite systems. The 
cumulative service revenues for satellite 
ITU 
systems over the period 2000-2010 is 
estimated to be around 110 billion ECU. 
This considerable growth over recent 
years has coincided with significant price 
reductions driven by falling costs snd 
increasing competition, and the expansion 
of data networks, in particular the Internet, 
which will account for a growing proportion 
of international traffic in coming years. 
Approximately 100 countries now enjoy 
Internet access. Recent surveys10 report 
that there are around 20 million Internet 
hosts worldwide, and the number of actual 
internet users is currently estimated to be 
in the region of 100 million11. It is forecast 
that this figure will increase to a quarter of 
a billion users by the year 200.012. 
Internet Hosts 
(Thousands) 
Source: Network Wizards of goods and services traded 
companies over m ïnhmeiWU approach 300 
billion ecu 
These developments are giving rise to the 
emerging electronic marketplace. Not only 
is communication itself emerging as a 
worldwide business, it is also underpinning 
the globalisation and networking of 
economic activities. 
New business configurations are 
appearing, particularly in information-
based sectors. Companies, including 
SMEs, are establishing worldwide 
networks linking research, production, 
assembly and distribution. Services, in 
particular information services (e.g. 
consultancy, banking, insurance, travel, 
publishing, marketing, sales, advertising, 
etc.), can now be produced in one country 
and exported to another via electronic 
networks. 
The wide range of activities now 
technically possible can only be fully 
exploited if an international enabling 
framework emerges. International 
agreements have always played an 
important role in the development of the 
communications industry. Figure 1 shows 
how the character of these international 
public and private sector arrangements is 
being progressively extended from mainly 
technical to commercial and increasingly 
legal issues as the communications 
environment evolves. 
Figure 1 below illustrates how the nature of 
the communications environment is 
changing. The scope of activities possible 
(e.g. medical, educational, recreational, 
commercial) and the number of different 
actors concerned has expanded through 
liberalisation and the development of new 
multimedia products and services. 
Example; Electronic Commerce 
Electronic commerce definitions may differ and 
estimates may vary, but nevertheless there are 
clear indications of strong growth. Estimates 
published in July 199T* Indicate that business-
to-business commerce over the Internet will 
reach 7 billion ECU in 1997 - a tenfold increase 
from 1996. In 2002, It is forecast that the value 
10 Network Wizards: www.nw.com 
" www.nua.ie/surveys 
12 Global Internet Project: www.gip.org 
'•' Forrester Research: www.forrester.com 
Increasing 
Demand 
Technical 
interconnection 
interoperability 
frequencies Commercial 
market-access 
competitive 
framework ' Legal 
jurisdiction 
liability 
taxation 
copyright 
authentication 
encryption 
data protection 
content 
consumer 
protection Increasing 
Scope of 
Services 
Interactive 
Services 
(online ' 
multimedia) 
Enhanced 
communications 
services 
(video-conf., e-mail, 
Internet) 
Basic 
Telephony 
(voice, tax) 
Telegraphy 
Past Present Future 
Figure 1 : Enabling Framework for the global electronic marketplace 
2.2 The need for Interoperable 
technical solutions 
Historically, in telecommunications, a 
number of international public bodies were 
set up to oversee agreements on technical 
issues, including the connection and 
interoperability of national networks, 
standards and frequencies (e.g. ITU14, 
ISO15, ETSI16, CEPT17, etc.). 
Example: International interconnection 
The first telegraph linos did not cross national 
frontiers because each country used a different 
system and each had its own telegraph code. 
Messages had to be handed over at frontiers 
before being retransmitted over the telegraph 
network of the neighbouring country. Countries 
than decided to conclude agreements to 
interconnect national networks. 
The ability to offer users access to 
personal communications facilities 
wherever they travel in the world would not 
have been possible had it not been for the 
conclusion of international accords on 
standards, frequencies, and "roaming". 
14 www.itu.int 
,s www.iso.ch 
"* www.etsi.fr 
!7 wv/w,ink.fi/cept/englanti/ceptinfo.htm Example: Global System far Mobile 
Communication (GSM) 
The mobile phone scene in the eariySOs was 
akin to a car being driven freely around the 
motorways of Germany, but stopping dead on 
crossing the border into France. The 
introduction of GSM - the result of close 
collaboration between industry, governments 
and users at an international level (CEPT, 
ETSI, EU) - opened the way for trans-border 
mobility or "roaming" between different 
networks, irrespective of their geographical 
location. 
New technological developments are 
giving rise to new needs. These are linked 
to issues such as the development of 
Internet architecture, the frequency and 
technical requirements of the next 
generation of mobile wireless 
communications and new satellite and 
navigational systems, including 
reconciliation of requirements posed by 
commercial and public interest 
applications, as well as the legal protection 
of user interfaces for multimedia services. 
The speed of technological developments 
combined with the changing role of the 
actors concerned mean that 
standardisation is beginning to follow a 
different mechanism to that which has 
operated historically in 
télécommunications (public bodies) and in 
the IT sector (agreements between "big" 
players, proprietary systems leading 
sometimes to de facto monopolies): a 
more open and flexible consensus-building 
process. 
A particularly striking illustration is the 
"Internet community" (e.g. IETF, W3C, 
IANA). Unlike the international switched 
telephone network, which has largely been 
built up within a formal and institutionalised 
framework agreed by governments, the 
Internet has developed according to its 
own unique user-driven model into a loose 
federation of interconnected computer 
networks worldwide. It is made up of 
groups which are open and follow a more 
spontaneous organisational model, but are 
therefore more difficult to define. 
Example: the domain name system (DNS)18 
In an increasingly commercialised Internet, the 
most coveted domain is ".com", intended for 
commercial organisations. But ".com" is a non-
country-specific generic top level domain that 
can be used by anyone in the world. The 
availability of useful names is quickly running 
out and registering under the narrow confines 
of ". com" cannot work for much longer. In 1996 
there were around 40,000 registrations. 
Today, there are over 4 million. In the future, 
questions such as who should be responsible 
for managing the funding, administration, and 
assigning of domain names in generic Top 
Level Domains, and how to introduce more 
competition into the management of the DNS 
system, will have to be answered. 
The Internet community is trying to build 
on open standards that allow both 
interoperability and competition. Open 
standards are particularly important with 
regard to hardware and software tools for 
Internet use and access. Items such as 
browser software are in a way the "entry 
ramps" to the information superhighway, 
and it is important that they be based on 
open standards so that all users may have 
equal access to the Internet. Otherwise 
proprietary standards and their attendant 
licensing schemes will control access to 
content and electronic commerce 
transactions, and will adversely influence 
licensing and other market behaviour. 
18 As many as 9 different organisations are directly 
involved in decision-making for the Internet's Domain 
Name System (IETF, IESG, IAB, ISOC, IANA, FNC, 
NSF, InterNIC, NSI) and an international debate on 
its future governance is underway. Because of an open and flexible model, 
Internet standardisation up to now is quick 
and agile. Measures to facilitate the 
continued growth of the Internet as an 
important feature in global communications 
will need to take this open, user-led 
approach into account. 
2.3 Ensuring market access and 
competition 
The electronic marketplace will reinforce 
the ongoing trend towards globalisation, 
which, as trade figures show, is gathering 
speed. As a share of world output, trade 
has more than tripled since 1950 - from 7 
per cent to over 22 per cent. Investment, 
too, has become a powerful force for 
economic integration with cumulative 
assets of foreign investment trebled since 
1987 - to over 2.5 trillion ECU. A 
significant proportion of trade in money 
markets takes place on-line. The daily 
volume of foreign exchange deals 
worldwide exceeds 1,000 billion ECU19. 
A number of agreements have given an 
added impetus to these trends, notably 
within the WTO, through the GATT, GATS 
and TRIPS agreements, which will 
continue to play an important role in 
promoting trade liberalisation, including the 
recent agreement on telecommunication 
services. 
One of the major obstacles for the 
development of advanced communication 
services which are at the basis of the "on­
line" economy are high 
telecommunications costs. Dramatic 
reductions in the cost of computing power 
together with competition are pushing 
tariffs and giving rise to a global 
infrastructure where distance becomes 
meaningless. 
The Irrelevance of Distance 
A transatlantic telephone call now costs just 
1.5 percent of what it cost 60 years ago. And 
the World Bank predicts that by 2010 the cost 
will have fallen by another two-thirds, making 
for instance trans-Atlantic telecommunications 
increasingly affordable to all. This will allow 
small businesses and individuals to establish 
remote presence, beyond the geo-political 
borders of their physical location. Doing global 
19 Financial Times - "The Banker", 27.11.97 
business is already no longer limited to big 
multi-national companies but within reach of 
everyone who, for instance by using the 
Internet, is able to set up a global business at 
low costs. 
Falling tariffs will create further dynamism 
in the electronic marketplace, notably 
when broadband communications become 
more affordable. The current limitations of 
Internet access and also mobile 
communications to relatively narrow 
bandwidth needs to be overcome as 
quickly as possible. In most cases, the 
necessary incentives will be provided by 
market demand and competition. 
Therefore effective implementation of 
agreed WTO rules are crucial. 
2.4 Tho need for a consistent legal 
framework 
As a principle, the legal frameworks of the 
off-line world will be applied to the on-line 
world and public interest will also need to 
be safeguarded in a proportionate manner. 
However the technical possibilities of open 
networks like the Internet are already 
beginning to put legal structures to the test 
in various fields of existing law. In some 
cases, the specific character of the 
borderless electronic marketplace and the 
transmissions which circulate within it may 
therefore require clarification or adaptation 
of existing legal frameworks and 
enforcement mechanisms. The following 
illustrative examples aim to demonstrate 
the diversity of these issues. 
The question of how taxes and tariffs 
should be applied and implemented to 
electronic commerce is a major issue in 
this area. For instance, the impact of 
electronic commerce in the area of indirect 
taxation needs to be examined. 
Example: Value-Added Tax 
The musical content of CDs Is delivered on-line 
from a country A to a Country B; i.e. no 
physical goods are sent, the "music" is simply 
downloaded by the customers. Unlike a hard-
copy, it passes from supplier to consumer 
without being subject to customs controls. 
Country 8 is unable to collect the VAT unless it 
is voluntarily declared by the resident 
consumer. Furthermore, a supplier in country 
3 wGuld be obliged to charge VAT on all sales, 
iewing him ai a disadvantage. To put both 
suppliers on an equal footing, the tax regime would require modifications which might 
involve charging VAT on the basis of the 
location of the customers. 
In some cases, the on-line world is 
beginning to expose differences in national 
laws, even though such differences may 
be entirely compatible with the markets 
and activities for which those rules were 
originally developed. A central legal issue 
for users of open networks, such as the 
Internet, is that of identifying which party 
should be liable for legal violations in the 
network environment. The current 
situation is characterised by considerable 
legal uncertainty to the detriment of some 
parties. 
Moreover, the increased use of open 
electronic networks has also resulted in an 
increasing number of jurisdictional conflicts 
between States. The explosive growth in 
networked communications means that 
such jurisdictional conflicts are likely to 
become more and more common. 
Example: Jurisdiction 
A company In Country A establishes a site on 
the Internet by which it sells products. The 
company's site can be accessed by Internet 
users in Country B, but it sells no products and 
otherwise transacts no business there. A 
consumer in Country B files suit against the 
company in Country B, claiming that the 
information on its web site is misleading under 
the laws of that country. The court in Country 
B asserts jurisdiction over the company based 
on its web site being accessible there, forcing 
the company to defend a costly suit in a foreign 
country wfth which H otherwise has no ties. 20 
The networking of activities is encouraging 
the "virtual" mobility of human resources 
and is giving rise to a more global labour 
market. Trans-national work in this 
context is likely to have implications with 
regard to the applicable law for labour-
related issues. Adequate mechanisms 
which can soive disputes regarding trans-
border work and which can serve as 
guidelines for the parties when trans­
national work is agreed upon may be 
needed. 
At the European level, jurisdiction in the field of 
civil and commercial matters is regulated by the 
Brussels and Lugano Conventions on Jurisdiction 
and the Enforcement of Judgements in Civil and 
Commercial matters (1968 and 1988. respectively) 
Example: labour law 
A teleworicer employee with residence in 
Country A, works (or a company established in 
Country B. What 'iito the legal implications? 
Technology allows intellectual property to 
be copied and transmitted worldwide with 
relative ease. As a result, different levels 
of legal protection in different countries 
become more relevant for rightholders and 
users. 
Example: copyright 
Country A provides for a exception to the right 
of communication to the public (on-line) for 
teaching and scientific research. Country B 
does not. A university in Country A includes, 
on the basis of the research/teaching 
exception, works protected by copyright in its 
site without the authorisation of imp right 
holder. The sip is accessible in Coynfry B. 
The university therefore Infringes rights which 
exist in country 8 end in any other country 
where it is accessible. The university must 
ensure that it has authorisation, if necessary, in 
all countries where the site is accessible. 
Similarly, significant differences in data 
protection regulation, or the absence of 
data protection provided at regional and 
national levels are likely to hinder cross-
border electronic trade and deter citizens' 
use of communications services. 
Example: date protection22 
An individual hi ûout^ryA visits the !.. 
a company based in Country B. the 
before allowing entry, requires all users to 
complete an oh-Une questionnaire,^ftftfafi 
requests the user's personal details ahdviher 
21 An improved international commercial and legal 
framework for intellectual property is emerging 
through the TRIPS agreement, and the WIPO 
treaties of December 1996 on Copyright, and on 
Performances and Phonograms. The Commission 
has recently adopted a proposal for adirective on 
copyright and related rights in the Information Society 
(COM(97)628fin). This directive will complement the 
existing Community framework on copyright and 
related rights, which addresses already certain 
copyright issues related to the Information Society. 
22 In the field of data protection, the EU has adopted 
a directive on the protection of Individuals with 
regard to the processing of personal data and on the 
free movement of such data (Directive 95/46/EC) and 
a Directive concerning the processing of personal 
data and the protection of privacy in the 
telecommunications sector (Directive 97/66/EC). 
Data protection is also being tackled by the Council 
of Europe (1981 Convention on Data Protection) and 
the OECD. daté pà th0 user's We style preferences. No 
lnfc^^0^$.^j^^4e^4rdkg |fte likely uses of 
the^:^^>W0:'éànpany $en sells on the 
//$$pi§ife ^#;ï--ceÈ|6fe-. *>" many other 
cWipt$êè. The individual receives unsolicited 
e-màtl messages and telephone calls from 
companies wishing to sell their products. The 
individual knows that under legislation in 
Country A, they have legal right to object to the 
use of personal data for such purposes and 
that there is a national scheme to do so easily 
and without charge. No such legal right exist in 
Country B and the individual therefore has no 
remedy to this problem. 
Trademark laws are also affected. Oniine 
advertising with national or supranational 
trademarks in the absence of agreed 
principles may also not be without its risks. 
For example, the limitations of the Internet 
domain name system are giving rise to 
legal battles involving national rightholders 
sharing the same trade mark. Companies 
are rapidly becoming aware of the great 
value of easily memorable Internet domain 
names. Trade marks are territorial, yet 
names registered under the domain name 
system are both unique and international. 
Example: trade marks** 
Two francophone companies In two different 
countries have a national Trademark for two 
different products which includes the name 
Vitfi&nf. Which company should be able to 
trade internationally on the internet under the 
donSatnnattfa Vumont.com"? 
As well as challenging existing laws, the 
technical characteristics of networks and 
on-line commerce require new 
agreements, for example in the field of 
security and authentication. Measures will 
need to provide legal security and trust in 
the medium and prevent the appearance 
of "weak links in the chain" in countries 
where security guarantees are 
insufficient24. 
Example: authentication 
23 WIPO prepared in 1997 new dispute settlement 
mechanisms and specific guidelines to solve 
potential conflicts between, domain names and 
trademarks. 
24 The Telecommunications Council of 1/12/97 asked 
the European Commission to propose a Directive on 
"digital signatures". The OECD agreed on "Guidelines 
for Cryptography Policy" in 1997. 
The absence of a harmonised approach to 
Certification Authorities (CA) which can verify 
the identity and authenticity of correspondents 
could seriously undermine the development of 
cross-border trust. Certificates issued by a CA 
in one country might not be recognised by a 
CA in another country, especially if one country 
has foreseen a licensing scheme for CAs and 
the certificate has been issued by a foreign 
unlicensed CA. 
Existing laws and mechanisms providing 
consumer protection will also need to be 
clarified. A major inhibitor to consumers is 
the difficulty in locating the origin of 
products, establishing liabilities where 
these products fali short of the advertised 
quality standards or prove to be unfit for 
the intended use. 
Example: consumer protection 
In th8 electronic market place, a customer 
could be misled into thinking that he or she 
was purchasing a product from a firm 
registered in his or her own country (thereby 
subject to its laws or regulations) and using the 
corresponding country code in its domain 
name, only to find that the product emanated 
frcm another country, where In fact the 
company is subject to a different regime of 
controls. 
There is also uncertainty concerning the 
validity of contracts entered into over the 
network, and the means of redress 
available when undertaking transactions 
via the Internet. 
Example: terms and conditions of contract 
A consumer in Country A desires to purchase a 
product from s company in Country 8 over the 
Internet As part of the on-line offer, the 
consumer is supposed to accept the 
company's general terms and conditions, 
which are quite lengthy, by clicking "OK". The 
consumer does click OK", but did not read the 
terms end conditions as he would have had to 
stay on-line too long. When the product 
develops a defect, the company defends itself 
based on the disclaimer of liability in the on­
line terms and conditions, which the consumer 
claims should not apply since the law of 
Country A requires terms and conditions to be 
of reasonable length and complexity. 25 26 Networks can also be misused for criminal 
purposes. Examples of such high-tech 
crime include various forms of computer 
manipulations, computer sabotage and 
extortion, computer hacking, computer 
espionage and software piracy. Fighting 
hi-tech crime calls for more cooperation.27 
The wide accessibility of content of all 
kinds also raises issues of public interest 
with numerous social and cultural, as well 
as economic implications. Differences in 
national or regional cultures and moral and 
ethical codes also give rise to divergent 
national laws. In the on-line economy, this 
may lead to situations where a site may 
contain what one nation regards as 
indecent or unethical, whilst the same 
content may be considered legal 
elsewhere. 
Example: harmful and Illegal content 
In an effort to prevent the spread of what it 
regards as "unsuitable" or "offensive" material 
in its jurisdiction, Country A decides to make all 
content of this kind illegal. Country B's content 
standards are incompatible with Country A's. 
Should content, for example contained in 
advertising on certain Internet sites emanating 
from Country B, be considered "indecent" by 
authorities in Country A, it may decide to take 
legal action against information service 
providers originating in Country B. Authorities 
in Country 8 might dispute such a charge on 
the grounds that. H is an infringement of their 
citizens' fundamental rights to freedom of 
expression. 
2.5 Conclusions: Requirements for an 
international framework 
The global electronic marketplace requires 
an appropriate framework covering 
technical, commercial, and legal aspects. 
This should foster interoperable technical 
solutions, competitive business practices 
and consistent rules. It does not need to 
consist of detailed and harmonised rules 
on all relevant aspects. 
25 At the European level, applicable law to contractual 
obligations is determined by the Rome Convention 
on the Law applicable to Contractual obligations of 
1980. 26 At the European level, such disclaimers of liability 
are prohibited by the product liability directive 
(85/374/EEC) 
27 High tech crime was discussed at the G8 Summit 
in Denver (1997) and at the ministerial meeting in 
Boston in December 1997. 
A number of obstacles needing to be 
addressed by this framework have been 
identified above. As to their priority, views 
may differ, but some of the issues can 
already be recognised today as requiring 
the urgent and coordinated attention of the 
international community. Among these 
priorities there are issues such as 
consensus on the Domain Name System, 
agreement on binding data protection 
rules, reducing communication costs, 
providing certainty in taxation, and 
agreeing on the legal implications of 
electronic authentication. 
Because of the fast-moving environment 
which characterises electronic 
communications and commerce, some of 
the issues may be resolved relatively 
soon, others may prove to be significant 
bottlenecks, whilst others are yet to 
emerge. The development of an 
international framework must therefore be 
based on a forward-looking and flexible 
approach. 
The above analysis makes it clear that 
increasingly issues touch upon legal 
frameworks. It is increasingly necessary 
to examine them at a global level as 
uncertainty surrounding different national 
and regional responses to these 
challenges will hamper the further 
development of the electronic marketplace. 
Therefore, a broad dialogue on the key 
issues amongst public authorities, 
industry, consumers and international 
organisations should be envisaged. DEFINING THE WAY FORWARD 
FOR INTERNATIONAL 
COORDINATION 
3.1 Strengthening international 
coordination 
Already, organisations at inter­
governmental and private sector levels 
have been mobilised into working towards 
solutions within a variety of formal and 
cooperative frameworks. A host of 
conferences and events involving 
governments, private sector and 
international organisations have been held. 
For example, electronic commerce-related 
issues were discussed during the G7 
ministerial conference in Brussels28 
(February 1995), the Midrand conference 
(May 1996), UNCITRAL adopted a "Model 
Law" on electronic commerce in 1996, the 
Bonn Ministerial conference (July 1997)29, 
the ITU "Telecom Interactive" event in 
Geneva (September 1997), the ISO Global 
Standards Conference in Brussels 
(October 1997), the OECD30 conference in 
Turku (November 1997), the TABD in 
Rome (November 1997), the Council of 
Europe Ministerial conference on Mass 
Media Policy (Thessaloniki, December 
1997) and at the APEC (Vancouver 
November 1997), EU-US (Washington, 
December 1997), and EU-Japan (Tokyo, 
January 1998) summits. 
Much work has already been achieved 
within the WTO, notably the GATT, GATS 
and TRIPS Agreement, which will remain 
an important motor of trade liberalisation. 
The successful conclusion of the Uruguay 
Round of multi-lateral trade negotiations 
and the recent agreements achieved in 
information technology products, 
telecommunications and financial services, 
have given a new impetus to global trade. 
They have also demonstrated that many 
countries share a strong mutual interest in 
improving trade conditions. 
As regards the provision of, and access to 
new information services, however, the 
trade community faces the challenge of 
ensuring free access to the global 
28 www.i8po.cee.be/g7/g7main.html 
26 www2.ectio.lu/bonn/conference.html 
30 www.oecd.org 
electronic marketplace through the 
effective implementation of competition 
rules. The WTO provides a basis to 
address this challenge, in particular 
through the GATS, in this respect, a 
debate is currently emerging as to whether 
there is a need to adjust those provisions 
when they apply to services provided 
electronically. The new round of services 
negotiations scheduled to start before the 
year 2000 could have implications for 
further liberalisation. In addition, the WTO 
working group on "trade and competition" 
should eventually lead to the strengthening 
of competition rules at world-wide level, 
which would apply across sectors, 
including electronic communication and 
commerce. 
Besides the work undertaken in the WTO, 
ongoing discussions in other fora, such as 
the OECD, WiPO, ITU, UNCTAD, etc., as 
well as bilateral discussions with the 
Community's major trading partners, such 
as the United States and Japan, are widely 
contributing to building consensus on 
electronic commerce issues. 
Although good progress has been 
achieved, the understandings and 
agreements arrived at within these fora 
consist either of principles, which are not 
necessarily compatible, or do not cover all 
elements of a comprehensive framework. 
Also, the process will now need to 
continue with as wide a participation of the 
international community as possible, 
including the developing countries. As 
chapter 2 shows, there are a growing 
number of urgent issues awaiting 
solutions. 
Since electronic commerce is adding 
rapidly a new dimension to the global 
economy, the international community 
should define an appropriate mechanism, 
which can help the different actors to 
respond more quickly to new requirements 
as they arise in a coordinated manner. In 
this context, they need to answer two 
questions: 
Two questions 
• What are the most urgent obstacles 
and what are the most effective means 
to remove them? » What method of coordination is best 
suited to respond rapidly and effectively 
to new challenges? 
3.2 Identifying the most urgent issues 
and ways to tackle them 
What is required is an urgent and detailed 
examination of the problems and the 
priorities, in order to allow the international 
community to address them in a 
substantive and coordinated manner. 
There is growing experience amongst 
industry, consumer groups, governments. 
and international organisations, of the key 
problems needing solutions in order to 
foster the development of the global 
electronic marketplace. 
The difficulty lies in obtaining a consistent 
approach in view of the number of different 
groups engaged in parallel activities, which 
are not always coordinated. One can 
however observe in many areas an 
emerging convergence of views on the 
definition of problems. These include, for 
instance, requirements from industry for 
proportionate and technology neutral 
regulations, from consumer groups 
seeking adequate data protection, as weli 
as consistent implementation of 
competition rules. 
Opportunities to exchange information can 
help to identify and solve problems which 
arise from a lack of sufficient knowledge 
on applicable frameworks and help to 
distinguish them from those problems 
which will require the clarification or 
adaptation of binding or non-binding 
regulations. 
The Commission will support such 
activities where necessary and possible. 
In particular, it will use its own fora and 
planned events as opportunities to 
contribute to the debate (e.g. expert group 
meeting in Copenhagen on cryptography 
in April 1998, Information Society Forum31 
- in which major business and social group 
interests are represented -, the 
consultation launched by the Green Paper 
on convergence). Initiatives may also be 
inspired by activities such as the 
Memorandum of Understanding "Open 
31 www.ispo.cec.be/infoforum/isf.html 
10 
Access to Electronic Commerce for 
European SMEs", signed by over 100 
organisations32 and open for membership. 
Furthermore, it will seek to promote an 
active EU contribution to the consensus 
building process, both in the private and 
public sectors. 
Among the various groups, industry is 
currently particularly active as it develops 
new global business structures and 
services. They are at this stage probably 
most advanced in confronting the 
drawbacks of existing rules. 
For this reason, in the course of 1998, the 
Commission will invite industry to 
participate in a round table at expert level 
(to which experts from Member States, 
international partners and consumer 
groups will also be invited), to provide an 
opportunity for all to present their views in 
a more coordinated manner and 
encourage an exchange of information. 
It is however also important that these 
views are presented to public policy 
makers at a global level. For this purpose, 
it is proposed, in the course of 1998 or 
early 1999 at the latest, to: 
(i) either organise a specific International 
Ministerial Conference; 
(ii) take advantage of one of the already 
planned international events at 
Ministerial level. 
The outcome of such a meeting could be 
an understanding on priority issues and 
how to tackle them. set of binding rules. They should, 
however, reach a forward-looking 
understanding on how best to develop 
common approaches to problems and their 
solutions, i.e. to develop a sustained 
method of coordination in which public and 
private sector interests are adequately 
represented. This could be agreed multi-
laterally in an International Charter. 
An International Charter would: 
be a multi-lateral understanding on a 
method of coordination to remove 
obstacles for the global electronic 
marketplace; 
be legally non-binding 
recognise the work of 
international organisations existing 
promote the participation of private 
sector and relevant social groups 
contribute to 
transparency33. more regulatory 
An International Charter would not 
therefore define the key issues to be 
solved as such, but contain an 
understanding on how a process of 
strengthened international coordination 
should be organised, with as wide as 
possible a participation of the international 
community. The Charter could be agreed 
by or in the course of 1999. 
3.3 Developing a method of 
coordination: 
An International Charter 
As shown in chapter 2, a number of 
problems are already visible but, as the 
global electronic marketplace develops, 
one can expect many new issues to 
appear, whilst others may change or even 
vanish. In addition, there is a growing 
constellation of actors and bodies 
involved. Therefore, all actors should 
examine how they could work together in 
future. What is not required is to establish 
an international supervisory authority or a 
12 www.eto.org.uk/ttrade/mou/ •" The G7 Ministerial Conference in Brussels of 
February 1995 established the Global Inventory 
Project. This could develop into a suitable 
international forum for the exchange of information 
on legal issues and frameworks relating to the 
Information Society: www.gip.int 
II 
4.';.fHii:iiiiiiiSï 
This Communication sets out: 
» the need for an international enabling 
framework for the emerging global 
electronic marketplace; 
» a preliminary analysis of emerging 
obstacles to this framework covering 
technical, commercial and legal areas; 
® a proposal for immediate action to 
coordinate views on the key obstacles 
and the most effective means to 
remove them - building on stronger 
private sector (including consumer 
groups) involvement; 
• a proposai for an international Charter 
through which parties would agree on a 
method of coordination between all 
relevant parties. 
As indicated, this Communication does not 
attempt to propose solutions to the specific 
issues identified nor does it set out to 
define the respective roles of the relevant 
international fora. It outlines how improved 
multi-lateral coordination could be 
developed. The next steps will therefore 
depend upon the responses the European 
Commission will receive to its proposals. The European Commission will: 
(i) Discuss with Member States and seek 
an understanding on the procedure. 
Such opportunities will arise in the 
forthcoming Telecom and Gênerai 
Affairs Councils; 
(ii) Take advantage of the Commission's 
mgufar ' contacts with international 
partners to pursue an open discussion 
of the concept; 
(III) foyfte experts from industry and others 
including international partners to a 
round table meeting in 1998 to obtain a 
more comprehensive picture; 
(iv)seefc to promote an active, EU-wide 
contribution to the consensus-building 
process, by both private and public 
sectors. 
(v) Invite all interested parties to send by 
31 March 1998 their comments to the 
following e-mail address: 
eif@bxl.dg13.cec.be. 
\2 
APEC (Asia-Pacific Economie Cooperation) 
ÂFWÊC (Asia Pacific Network Information Center) 
APT (Asia-Pacific Tefecommunity) 
ARM (American Registry for Internet Numbers) 
ASEAN (Association of Southeast Asian Nations) 
BfAC (Business and industry Advisory Committee) 
ChTEL (Comisiôn Interamericana de Telecommunicaciones) 
DVB (Digital Video Broadcasting Group) 
EFF (Electronic Frontier Foundation) 
ETSI (European Telecommunications Standardisation Institute) 
FNC (Federal Networking Council) 
GIP (Global Internet Project) 
gTLD-MoU ( Generic Top Level Domain Memorandum of Understanding) 
IAE (Internet Architecture Board) 
IANA (Internet Assigned Numbers Authority) 
ICC (International Chamber of Commerce) 
IESG (The Internet Engineering Steering Group) 
IETF (Internet Engineering Task Force) 
INTA (International Trademark Association) 
InterNIC (Internet Network Information Center> 
ISO (International Organisation for Standardisation) 
ISOC (Internet Society) 
ITU (International Telecommunications Union) 
MERCOSUR (Mercado Comun del Sur) 
NAFTA (North American Free Trade Agreement) 
NCC-RIPE (RIPE Network Coordination Center) 
NSF (National Science Foundation) 
NSI (Network Solutions Incorporated) 
OAS (Organisation of American States) 
OECD (Organisation for Economic Cooperation and Development) 
PANAFTEL (PanAfrican Telecommunications Network) 
PATU (Pan-African Telecommunications Union) 
POC (Policy Oversight Committee) 
RASCOM (Regional African Satellite Communications Organisation) 
RIPE (Réseaux IP Européens) 
TABD (Trans-Atlantic Business Dialogue) 
13 
UMTS - Forum (Univeral Mobile Telecommunications System - Forum) 
UN (United Nations) 
UN/ECA (United Nations Economic Commission for Africa)) 
UN/ECE (United Nations Economic Commission for Europe) 
UNCITRAL (United Nations Commission on International Trade Law) 
UNCTAD (United Nations Conference on Trade and Development) 
UNDP (United Nations Development Program) 
UNESCO (United Nations Educational, Scientific and Cultural Organisation) 
WSC (World Wide Web Consortium) 
WIPO (World Intellectual Property Organisation) 
WRC (World Radiocommunications Conference) 
WTO (World Trade Organisation) 
14 
ISSN 0254-1475 
COM(98) 50 final 
DOCUMENTS 
EN 16 11 15 
Catalogue number : CB-CO-98-067-HN C 
ISBN 92-78-30888-9 
Office for Official Publications of the European Communities 
L-2985 Luxembourg