Opinion of the Economic and Social Committee on the 'Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions: Globalization and the Information Society - The need for strengthened international coordination` (98/C 284/03)

On 6 February 1998 the Commission decided to consult the Economic and Social Committee, under Article 198 of the Treaty establishing the European Community, on the above-mentioned communication.

The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 3 June 1998. The rapporteur was Mr Burani.

At its 356th plenary session (meeting of 1 July 1998), the Economic and Social Committee adopted the following opinion by 143 votes with 2 abstentions.

1. Introduction

1.1. Continuing its study of information society issues (), in the present document the Commission examines aspects of communication which, now that unlimited information has made it global, requires globally-harmonized technical and legal frameworks.

1.2. Even at European level, the problems are far from simple: the difficulties multiply once globalization comes into play. Aspects which are intrinsically complex, given the subject's highly technical nature, the range of disciplines to be covered and the varying experiences and requirements of those involved, are further complicated by the large number of international bodies which are - or believe they are - competent to deal with the issue.

1.3. The purpose of the communication is to set out ():

- the need to create an international framework to facilitate the development of global electronic commerce;

- a preliminary analysis of the technical, commercial and legal obstacles hampering the developing of this framework;

- a proposal for immediate action to coordinate initiatives designed to remove key obstacles;

- a proposal for an International Charter to reach agreement between the relevant parties.

2. New policy challenges

2.1. The communication sums up the present situation: the European Union is making an international contribution to the negotiation of agreements in a number of fora: WTO, ITA (agreement on tariffs for information technology products), etc.; several national regulatory initiatives and actions are under way in European countries and elsewhere in the world. Consistency and coordination of initiatives is becoming essential. The Member States should carry out a critical examination of their own policies for adjusting to new requirements, without thereby 'surrendering national or regional traditions and cultures`.

2.2. If the Union acts 'quickly and boldly`, it will make a contribution to the shaping of a new environment, and should signal this to the international community. The Commission, then, presents proposals on how to identify the areas in which strengthened international cooperation is necessary, and underlines that it is now time to seek an international agreement on the procedures to be followed in the future to create a genuinely world-wide, border-free market.

2.3. The Committee would point out that a multitude of earlier communications, recent or otherwise, have long highlighted the need for international cooperation and urgent European-level coordination. Repeating this message at this stage gives the impression, to an uninformed reader, that little progress has been made in this direction; in other words, precious time seems to have been lost between the moment at which the need became clear and the present. However, regardless of the terms used, this impression is confirmed, even for informed readers, by the subsequent comments. In the meantime, several Member States have taken individual, uncoordinated initiatives.

2.4. The Community authorities and the parties concerned are well aware of the legal problems, as well as the problems of standardization, cryptography, electronic signatures, competition and taxation. With the exception of the latter - taxation - the features of these aspects are well-known, in part because the parties concerned are constantly consulted. To speed matters up, the Commission should make its own point of view on a range of problems known at the earliest opportunity, thereby establishing the starting point for practical initiatives for urgent implementation.

3. The need for interoperable technical solutions

3.1. The communication emphasizes that in the past, cooperation between authorities, users and standards bodies has worked well in a number of spheres such as telecommunications, mobile phones, etc. In the technological field, a turning point has been reached today: rather than an official, institutional framework, spontaneous self-regulation is growing as in the case of Internet, which has given birth to its own community with its own rules and bodies.

3.2. The Commission makes no judgment of this phenomenon: it simply notes that the Internet community is adopting open standards (protocols) that satisfy the principles of interoperability and competition. It adds, however, that measures to facilitate the continued growth of Internet will need to take the present 'open` approach into account. For its part, the Committee notes that vigilance will be required to ensure that self-regulation is not accompanied by social discrimination or exclusion to the detriment of certain categories of user. To protect young people, it must be ensured that unsuitable or offensive material can be withdrawn through self-regulation.

3.3. The ESC feels that these comments give grounds for thought: Internet began with pre-established initial standards, and has subsequently developed without specific rules. Such rules are beyond the capacity of the authorities to lay down in time, given their cumbersome decision-making procedures. Fortunately for all, self-regulation has reflected the fundamental, general rules underpinning international coexistence: interoperability, non-discrimination, observance of the rules of competition.

3.4. A conclusion, or rather a lesson, can be drawn from the above: technical progress cannot be bound by detailed rules, which are necessarily based on the past: a small number of fixed points supported by general principles, together with effective control of diverging practices, is enough. International agreements to this end should not be too difficult to reach in terms of content and timing: they do, however, become difficult when the temptation to apply detailed regulations to a constantly and rapidly changing field is not resisted.

4. Measures to ensure market access and competition

4.1. The Commission mentions a major obstacle to market access: high telecommunications costs, although in point 2.1 of the communication it acknowledges that there have already been 'significant price reductions` as a result of falling costs and increased competition.

4.2. The question is not unimportant: is the cost of telecommunications 'too` high, and therefore liable to hinder progress and penalize Europe from the angle of competing with the United States, or 'reasonably` high, and not such as to deter the less advantaged from entering or to have serious repercussions on European competitiveness?

4.3. The communication raises the problem discussed in the previous point in the second part of the section, where it deals indirectly with competition: transatlantic telecommunications are said now to cost 1,5 % of their price 60 years ago, and should fall by a further two-thirds by 2010, thereby allowing SMEs and consumers to enter a market no longer limited to large companies.

4.4. The ESC has warned against facile enthusiasm in earlier opinions: firstly, SMEs could benefit from the information society, but might also lose ground to more skilled and experienced competitors; secondly, consumers must be aware of the risks they run in an integrated world market where they no longer enjoy uniform protection.

4.5. Unarguably, however, the advantages of a reduction in telecommunications prices will vastly outweigh any disadvantages or dangers. In any case, as far as the current situation is concerned, the ESC believes that it must draw the authorities' attention to a glaringly obvious fact: telecommunications prices vary by sometimes significant amounts from one country to another, and even between different operators in a single country. This situation, resulting from competition with is good for consumers, should be welcomed; nevertheless, the Committee notes that charges for the different means (fixed-location and mobile telephony, Internet connection, etc.) are often structured on a highly detailed and complex case-by-case basis, making comparison difficult. It thus becomes difficult for consumers and SMEs to make informed choices.

4.6. The Committee is well aware that it is not the authorities' function to regulate prices, which must be open to free competition; one of their tasks is however to ensure compliance with the principles of transparency (which, among other things, entails the possibility of comparing costs and services provided) and standards for competition and dominant positions.

5. Creating a consistent legal framework: the basic elements

5.1. The need to establish an international legal framework has already been discussed in a number of other Commission communications, the most recent of which, 'Ensuring security and trust in electronic communication` (), stressed the urgent need to find solutions in the areas of certification and authentication of signatures.

5.2. The legal framework for electronic communication as a whole is very broad, covering a variety of aspects of which the Commission sets out to draw up a non-exhaustive list: application of VAT, jurisdictional conflicts, labour law, copyright, data and trade mark protection, consumers' rights, validity of contracts, safeguards against fraud and organized crime, etc. No less important, although unmentioned, is the question of the content of communications, particularly where the protection of minors is concerned (). The Commission considers that, in general, the legal framework must not replace self-regulation, but should establish the limits within which the parties' free will may be expressed.

5.3. The Committee cannot but agree with the need to tackle these problems and resolve them as soon as possible. However, it would express its surprise at the claim that a list of priority obstacles to the development of the information society needs to be drawn up: firstly, because legislators and operators are by now well aware of these obstacles - views on the solutions may differ, but there is unanimous agreement on their nature; and secondly, because of the method involved - prioritizing urgency (and probably importance) would mean splitting a global problem into a multitude of separate solutions.

5.4. From both the theoretical and practical points of view the 'priority`-based approach might at first appear justifiable: after all, the problems are of different types and concern different areas. However, this overlooks the fundamental point that a legal 'framework`, on account of its very nature, cannot consist of separate elements added at different times. The subject is by nature multidisciplinary, but with close links between the various aspects.

5.5. In the ESC's view, therefore, there must be the political will to construct a coordinated European legal framework, based on universal general principles which reflect the steps already taken by individual Member States, without being dependent upon them, and this must be done relatively quickly. There is, in principle, no reason why different aspects should not be discussed separately and simultaneously by a range of bodies and experts, subject to central coordination. The ESC realizes that a solution of this kind is easy to describe but harder to achieve: one stumbling block is the variety of interests at stake; another, even greater (cf. point 6.1 below), is the widely differing international bodies and customary negotiating procedures which have become established with time, but which must be revised and streamlined.

5.6. The desirability of Europe-wide regulation arises from the fact that 90 % of trade takes place within the Community. Bearing in mind that the information society is, by its nature, a global one, the European legal framework must be prepared on a realistic basis: the more detailed it is, the less it is likely to be recognized outside the Community. In other words, these rules should be restricted to establishing universally acceptable fundamental principles. This does not, of course, preclude more detailed rules being drawn up applying only to the relations between European suppliers, users and managers.

6. Strengthening international coordination

6.1. The Commission highlights the need for coordination, but the description it gives of current and planned initiatives is not reassuring. To quote only one aspect of the information society, electronic commerce, the document lists no less than twelve agreements and conferences between 1995 and early 1998 at the initiative of a host of bodies, governmental or otherwise. If it is true that 'much work has already been achieved within the WTO, notably the GATT, GATS and TRIPS Agreement`, then the completion of a universal legal framework cannot be far off.

6.2. The real picture is very different: the freedom to supply and access information services has not yet been consolidated: the rules of competition, discussed by a WTO working group, should 'eventually` be strengthened: but the amount of time it takes, and the number of reservations which must be overcome, for a WTO agreement to be transposed into law are notorious. The Commission itself acknowledges that '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 ... there is a growing number of urgent issues awaiting solutions`. It might be added, in reply to this statement, that if the number of 'urgent` issues is growing with time, the available machinery for dealing with them has proved itself inadequate to the task.

6.3. On the basis of the Commission's own statements, the ESC notes that if this is the outcome of years of discussion in dozens of different fora, involving hundreds of government and other experts, of such a well mapped-out issue whose problems were brought to light years ago, then serious questions must be asked as to the efficiency of international consultation and decision-making machinery. The market, and in particular SMEs and consumers, views this situation with concern and frustration.

6.4. Taken individually, each body justifies its existence by displaying the results of its work: the defence of particular interests, coordination of different interests, or provision of a discussion forum for different parties. Taken together, however, the excessive number of bodies slows down and complicates the decision-making process. In more general terms, the collective cost of each individual decision needs to be considered.

6.5. The ESC is fully aware that it is fruitless to propose a reduction in the number of international bodies which exist according to well-established procedures which cannot be undone. The aim is simply to draw the attention of national, European and international authorities to the need to review procedures with a view to greater efficiency, speedy decision-making and lower costs for taxpayers. The authorities must, of course, also direct their attention to their own internal procedures.

6.6. The comments made in points 6.4 and 6.5 above are of a general nature and do not relate specifically to the subject under discussion in the present opinion. On this matter, it is noted that during the course of 1998 the Commission plans to organize a round table of experts, providing them with the opportunity to voice the views of all the parties concerned, together - possibly - with an international ministerial conference to define the priorities mentioned in point 5.3 above. The ESC hopes that the methodological suggestions made in points 5.4 and 5.5 above will be taken into consideration, and that the general comments of the present opinion will be reflected in the progress of work.

7. Towards a new method of coordination: an 'International Charter`

7.1. The comments made by the ESC in point 6.5 above - which might be seen as provocative - are implicitly shared by the Commission () which, in view of the 'growing constellation of actors and bodies involved`, wonders how they could 'work together in future`. It is then proposed to reach an agreement between the parties on 'how best to develop common approaches` and on the development of procedures for the coordination of public and private interests. Such an agreement, or 'charter`, would be non-binding, would recognize the value of present work, and would contribute to greater regulatory 'transparency`.

7.2. Here again, the Committee is puzzled. In itself, the proposal certainly makes sense, but the complexity of the procedures for achieving a 'charter` once again raises the problems discussed above: excessive plurality of the parties involved, conflicts of competence, lengthy deadlines. After all this, the final result would be a [non-binding] 'understanding on how a process of strengthened international coordination should be organized`. Coordination is already needed simply to reach agreement on the 'charter`: how much time and effort will be required to get that far, which is only preliminary to all the rest? The Committee expresses uncertainty not about the proposal itself, but its chances of success in the short term.

8. The next steps

8.1. The last part of the communication sets out the Commission's programme for the immediate future:

- to seek an understanding with the Member States on the procedure to be followed;

- to pursue discussion with international partners;

- to organize a round table of experts to obtain a more comprehensive view of the issues;

- to seek an 'active contribution` by Europe to an agreement between the private and public sectors;

- to invite all interested parties to send their comments by 31 March 1998.

8.2. The ESC appreciates these initiatives, and urges the Commission to continue its efforts to get to grips with this complex subject reasonably soon. Such efforts are made all the more arduous by lengthy and costly procedures, which can only be modified if there is an understanding of the basic problem: technologies and their applications change much faster than regulations. Procedural streamlining must be included in the review which international and EU bodies should take on as their primary duty to the community as a whole.

Brussels, 1 July 1998.

The President of the Economic and Social Committee

Tom JENKINS

() Cf. in particular the following communications on 'A European initiative on electronic commerce` (COM(97) 157 final); 'Illegal and harmful content on the Internet` (COM(96) 487 final); 'Ensuring security and trust in electronic communication` (COM(97) 503 final); and the Green Paper on 'The protection of minors and human dignity in audiovisual and information services` (COM(96) 483).

() Cf. point 4 of the communication, 'The Next Steps`.

() OJ C 157, 25.5.1998.

() OJ C 287, 22.9.1997 and OJ C 214, 10.7.1998.

() Cf. point 3.3 of the communication.