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: A European initiative in electronic commerce` (98/C 19/22)

On 21 April 1997 the European 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 8 October 1997. The rapporteur was Mr Folias, and the co-rapporteur was Mr Skouby.

At its 349th plenary session of 29 and 30 October 1997 (meeting of 29 October 1997), the Economic and Social Committee adopted the following opinion by 99 votes to one with one abstention.

I. INTRODUCTION

The Commission Communication 'A European Initiative in Electronic Commerce`, responds to the challenges of the times by seeking to lend new impetus to the ongoing dialogue on the development of electronic commerce, both within the European Union and, given its international nature, at world level. The ESC particularly welcomes this communication, which has stimulated and motivated extensive discussion at every level. (For ease of reference, the chapter headings, or titles, in the text that follows have been kept exactly the same as those in the Commission communication, as have the paragraph numbers.)

II. A EUROPEAN INITIATIVE IN ELECTRONIC COMMERCE

1.1. (§ 4) One fundamental parameter of electronic commerce - the need for commerce, services and distribution networks, and most of all SMEs, to make greater use of it so that a critical mass of users is reached - is not sufficiently emphasized in the basic points of the communication. The introduction gives the - possibly unintentional - impression of underestimating the importance of the views of users (individuals and firms), who are best placed to comment.

1.2. (§ 4) The basic principle of globalization must underpin all thinking, views and efforts of those involved in the dialogue on the development of electronic commerce. This basic principle must be used as the benchmark against which EU planning can be measured, so that the Union can play a substantial part in future developments and enter into the worldwide dialogue on electronic commerce on an equal footing.

Chapter 1: The electronic commerce revolution

2. (§ 5) Once it is recognized that electronic commerce is about doing business electronically it becomes all too clear that the main role in developing this type of commerce is played by commercial undertakings and public services and those involved in commerce and the service sector at world level (employers - workers - consumers).

Electronic commerce: the Internet revolution

3.1. (§ 6) The astonishing advance of the Internet over recent years and the expected explosion in the number of users, together with the increase in the number of commercial operations (the value of on-line sales and services in the USA in 1995 rose to $ 518 million) represent the main feature of the 'information society`, in which all the defining characteristics of traditional commerce are disappearing, and new ones are appearing to replace them.

3.2. The major importance of the Internet lies in the fact that it has transformed electronic commerce from just a process of data transmission to a real business activity in two different forms: a) direct electronic commerce, where the entire transaction is electronic, e.g. on-line ordering, reception and payment of services, and b) indirect electronic commerce, where electronic ordering and payment result in goods being dispatched. The Internet has also made it possible to provide services (intangible commercial transactions) electronically.

3.3. Unfortunately, both EU and global statistical data are particularly deficient here, making it impossible to assess current conditions, or to map out a clear route for the future. However, there is a belief that the collection of statistical data, which is already underway, will provide a strategic tool for those responsible for developing electronic commerce.

The opportunities for Europe

4.1. (§ 12) Whatever forecasts may predict worldwide concerning future applications of all uses of the Internet, and of Intranets, there is a risk that they will prove to be too conservative, leading to totally erroneous planning of ideas and action. (Estimates to date from reliable analysts put the value of Internet sales, by the end of the century, at US $ 10 billion [Hambricht & Quist - highly conservative], or as high as US $ 98 billion [Killen & Ass. - very optimistic]. According to another estimate, the value of Internet business will reach ECU 200 billion by the year 2000. It is therefore essential that forecasts be evaluated with great care; planning should reflect an increase in requirements and possibilities and be based on reliable statistical and other data.

4.2. (§ 12) If retail and distribution, industry, tourism, and the service sector are to exploit the opportunities presented, they will need to identify the appropriate environment and locate the necessary information and essential technological and financial infrastructures.

4.3. (§ 12) Large-scale development of these technologies in Europe began in the mid-1980s, leaving a whole generation of employers and workers still active, but with a serious shortfall of knowledge and expertise. With radical changes in new technologies happening daily, this has led to a - frequently warranted - sense of panic, or created a feeling of inferiority vis-à-vis those who have, at an early stage, grasped the implications of these developments and prepared for the new circumstances to come. The solution to this very serious problem, which is above all a social problem, lies in providing the necessary information and training, which will check the ever faster rate at which employees' professional skills become obsolete.

4.4. Training, which is absolutely essential, must begin at the basic educational level and continue with specialized, life-long learning programmes involving both workers and employers.

4.5. Use of the World Wide Web (WWW) - which makes things easier, especially for the uninitiated - represents the great leap forward towards the Internet and the information society. However, if this potential is to be harnessed in practice, access programmes must be popularized by simplifying procedures, so that all businesses (and particularly small businesses) can enter the world of new technologies and benefit from the comparative advantages of electronic commerce. The current upward trend would then attain critical mass, lending the necessary new impetus to the Internet.

4.6. The growth of electronic commerce will have far-reaching consequences for the structure of the economy, especially, but not only, in the retailing sector. If electronic commerce develops as forecast, the production system and value chain of the different economic sectors will undergo dramatic changes during the coming few years. Changes in the value chain are also likely to affect the geographical location of costs and profits in existing production and to create new opportunities. This is already happening, e.g. in financial services.

We urgently need information on the consequences of these developments for business and employment in the different regions and countries of Europe. This information is likely to take the form of different scenarios, depending on various assumptions. Research and surveys to support these scenarios must be initiated without delay.

Electronic commerce: International comparisons

5.1. (§ 17) The Commission Communication states quite categorically that the EU's competitors have already made the most of the opportunities afforded by electronic commerce to establish particularly strong positions on world markets, exploiting to the full the weaknesses still apparent in Europe owing to the absence of a common European policy.

5.2. The pioneering progress to date of the United States in the field of electronic commerce, its extremely methodical approach to planning, and, above all, the political will to respond immediately to the challenges of the times must be used as a model for the transformation of European policy in this field. The balance between large and small firms shows that there is room in the 'information society` for anyone who is in tune with the times; in particular it dispels fears of SMEs being wiped out and unemployment increasing unchecked. The exceptional performance shown by SMEs in the virtual environment of new technologies also proves that they have the necessary flexibility, which will enable them to influence market developments to a significant extent.

Marshalling Europe's strengths

6.1. The strong position of Finland and the Netherlands in new technologies demonstrates Europe's potential, which, however, has not yet been realized to its full extent.

6.2. (§ 19) Use of the euro will undoubtedly promote the development of electronic commerce, since this will enable the EU to carry out transactions on international markets using a single, strong currency unit.

6.3. (§ 20) The regulatory framework governing electronic transactions cannot be determined by the European Union alone, but must be the subject of a global dialogue (under the aegis of the UN or the WTO) if it is to be of any real use. Its main feature must be the complete liberalization of legitimate transactions and minimum state intervention in cases where this is required for reasons of public order and security.

The need for a global consensus

7.1. (§ 21) The EU must come to the dialogue on the information society with well-defined positions so that its role is a substantial one, and, above all, so that it does not have solutions imposed upon it which would be likely to conflict with its medium and long-term interests.

7.2. (§ 22) Cybercrime represents the greatest threat both to the credibility of transactions in the electronic commerce sector and to the evolution of the new information society.

Chapter 2: Ensuring access to the global marketplace: infrastructure, technology and services

Maximizing the effects of telecommunications liberalization

8.1. Access to efficient telecommunications networks is an essential requirement if the most is to be made of the information society. To achieve this, it will be necessary to eliminate the significant disparities that exist between the regions in the EU with regard to the level of basic infrastructure development, costs, reliability and availability of up-to-date services.

8.2. (§ 23) Liberalization of the telecommunications market at the beginning of 1998 in the vast majority of Member States, application of free market principles, and increased competition are certain to reduce the cost of access to services, so that a larger number of users (business and private) will become part of the information society, especially those who find the current connection costs prohibitive because of the small size of their firms.

8.3. Development of the Trans-European Telecommunications Networks will bring the infrastructure and services offered throughout the EU up to the same level, eliminating the disparities that exist between the different geographical regions and providing equal opportunities for all Europeans.

Ensuring interoperability in a competitive environment

9.1. (§ 29-32) The Commission Communication 'Standardization and the global information society: the European approach` () adequately covers questions of standards and norms. This is not simply a technical matter, as such standards and norms are the chief factors determining which technology will be used to implement the information society in practical terms and consequently the way in which industry, users, consumers, the banking sector and public administration will benefit from it ().

9.2. The ESC considers that technical specifications in the sphere of information and communications technologies should be open in nature and that there should be no restrictions on their use by European businesses and the banking sector.

9.3. In any event, the EU must participate on the international bodies which draw up specifications, presenting integrated proposals and solutions that protect the interests and future prospects of European businesses.

9.4. The ability to use products made by different manufacturers in combination (interoperability) is an important precondition for the further development of technologies and the use of similar products and services. In any case, standardization - which permits interoperability - is a voluntary process which reflects market forces.

9.5. The ESC feels that closer cooperation in information provision and adjustment between European standardization bodies (CEN, Cenelec, ETSI) is required to achieve better results with respect to:

a) minimizing the emergence of new obstacles;

b) improving adaptation to the rules in effect on the global market.

Making user-friendly electronic commerce services available: European R & D

10.1. (§ 33) SMEs (which account for over 95 % of all European businesses) will only start to step up and develop their use of electronic commerce effectively when the major problems of standardization have been solved so that all transactions take place in a compatible and uniform electronic environment, thereby ensuring that information costs less to use.

10.2. The ESC considers the development of European R & D to be a basic asset of the EU in the global dialogue on the development of new technologies.

International industrial cooperation in infrastructure, technologies and services

11. (§ 34) Global technological cooperation is essential for the creation of standards and the exchange of technical know-how, and its basic aim must be to create a structure of open, wide-access systems through which information will be transmitted flexibly and at low cost.

Chapter 3: Creating a favourable regulatory framework

Building trust and confidence

12. (§ 35) As emphasized at the ministerial conference held in Bonn on 6-8 July 1997, developing a climate of confidence in all electronic transactions (tangible and intangible) is the basic precondition for developing and expanding electronic commerce. If transactions can be made completely secure through:

a) verification of digital signatures;

b) secure transmission of orders, information and documents between individuals, companies, public services and banking institutions;

c) secure transmission of personal data;

d) secure completion of intangible transactions;

e) protection of industrial secrets;

f) protection of intellectual rights,

current forecasts based on the expansion of electronic commerce to date will prove very conservative.

Ensuring full access to the single market

13. (§ 37) The ESC believes that the basic principles outlined in this chapter form a good basis for dialogue and that references to a specific regulatory framework within the EU must always presuppose that any such framework will be consistent with existing regulatory frameworks such as those resulting from global dialogue so that the EU does not enact provisions that conflict with those applied outside its borders.

The principles of an electronic commerce regulatory framework

14. (§ 39) The principles of an electronic commerce regulatory framework as described in the Commission communication provide a good basis for dialogue. The contributions and experience of the United Nations, OECD, WTO and WIPO may be a good starting point.

The essential features of a regulatory approach

15.1. (§ 40) In response to the evolution of electronic commerce, the ESC calls on the Council of Ministers and the Commission to define a new, up-to-date and flexible European business philosophy that would apply to both traditional and electronic commerce. This new operational philosophy for businesses must be broad-based so that it can also encompass the virtual environment of the new forms of business, and so that essential measures by the Commission serve primarily to promote the public interest and business activity.

15.2. (§ 45) The Member States of the EU are asked to cooperate with the Commission to harmonize their legislation governing electronic contracts, bookkeeping, accounting and audit rules, and indirect taxation systems so that national rules do not conflict with international rules or create obstacles to activities in the electronic commerce sector.

A regulatory approach that develops appropriate horizontal policies

Ensuring data security and privacy

16.1. (§ 51) Data security is a basic requirement, not just for banks and businesses, and it is an essential accompaniment to electronic commerce operations provided there is not a proliferation of restrictive security rules like those in force in certain Member States of the EU which hinder the development of electronic commerce.

16.2. The term 'data security` embraces the following main features:

a) integrity and reliability of electronic messages;

b) confidentiality/privacy of electronic messages;

c) admissibility in evidence of messages;

d) no possibility for the recipient to reject a message.

16.3. Data security requires that the following six conditions be met:

1) the priority of information must be maintained, based chiefly on transmission time;

2) the origin of messages from fraudulent sources must be verified;

3) transmission of messages by the other party must be verified;

4) it must not be possible for the recipient to deliberately refuse to confirm receipt of a message;

5) the content of messages must be preserved;

6) there must be legal recognition of trusted third parties (certification authorities, or CAs), which are bodies trusted by both parties that keep a record of all users requiring their services and their 'public keys` with which the messages of a given company can be decoded. These trusted third parties also issue the necessary electronic messages (certificates or digital signatures) which verify the identity of a registered company internationally.

16.4. The ESC considers that an intermediary third party (CA) should provide the following services:

A. Support services:

a) registration authorities;

b) legal data of users;

c) directories;

d) archiving and registration;

e) attestation and certification services.

B. Notarial services:

a) independent time-stamping of documents and digital signatures;

b) legal data of users;

c) access data;

d) archiving and registration;

e) attestation and certification services.

16.5. The ESC feels that the increased security of electronic commerce, resulting from the development and application of symmetrical and asymmetrical encryption systems, like the Secure Electronic Transactions (SET) system (which is already in use in the banking sector, although it is constantly upgraded as research continues, and which uses asymmetrical algorithms), will boost network use, bringing the number of users considerably closer to the necessary critical mass.

16.6. Rapid expansion in the use of digital signatures using asymmetrical encryption to ensure the legitimacy of the origin of messages and integrity of their contents is yet a further advance in the securing of electronic transactions, especially in operations between businesses (inter-business electronic commerce). To this end the authorities responsible will have to organize authentication systems as soon as possible.

16.7. Speaking on behalf of all citizens, the ESC emphasizes its particular sensitivity with regard to the protection of individual and company rights, including protection of personal and business data and of the principles laid down at the ministerial conference in Bonn (July 1997).

The ESC believes that all the hard-won individual rights that are protected by international agreements must be adequately safeguarded in the information society, and that, where international agreements require updating in response to the new circumstances, the EU must take the necessary initiative at global level.

Establishing appropriate protection for intellectual property rights and conditional access services

17. (§ 53) Protection of intellectual property and related rights is a crucial issue today - and will be even more so in the information society. It is an issue upon which the development of electronic commerce will depend, since, in many cases, it is the content of the intellectual property itself which accounts for most of the value of an electronic service.

Ensuring a clear and neutral tax environment

18.1. (§ 56) Taxation in the electronic commerce sector is expected to be a key issue, especially the avoidance of double taxation and the establishment of flexible and straightforward fiscal legislation that will establish clear, transparent and predictable tax obligations.

18.2. There is always a risk that people will take advantage of the nature of electronic transactions (absence of fixed business base, easy transfer of goods, both tangible and intangible, no easy means of fiscal control, etc.) to evade taxes, and this must be averted to prevent distortion of healthy competition. On no account, however, should the Member States attempt to acquire fresh sources of revenue by imposing new taxes and duties on electronic transactions (fiscal neutrality). The US government's position on applying the tax rules currently governing traditional international trade to electronic commerce, while taking account of the new circumstances, must be examined with due consideration for the specifics of the EU once careful thought has been given to the problems posed by the different categories of VAT currently in effect in the EU.

18.3. The principle that taxes should be collected in the country of consumption must also be applied in electronic commerce, exactly as it is currently applied in traditional trade.

18.4. (§ 57) If the necessary adaptations to the new tax arrangements prove too much of a burden for small businesses, there is a danger that they will be excluded from electronic commerce and prevented from modernizing their activities.

Working towards a consistent global regulatory framework

19.1. The ministerial conference in Bonn stated most categorically the need to establish a transparent, effective and flexible legal framework based on mutual recognition (of national rules and self-regulating codes of practice) so as to avoid fragmentation of the European market as a result of regulatory disparities.

19.2. (§ 60-61) The international and supranational nature of electronic commerce is what fundamentally distinguishes it from traditional ways of doing business. This means that all those involved in electronic commerce (e.g. users, providers, software firms, computer manufacturers, telecommunications companies, international organizations such as the UN and WTO, governments, labour and consumer associations) must work together to find credible solutions to the problems emerging at a global level (achieving global confidence).

19.3. The ESC calls upon the European Council, European governments, the Commission, the European Parliament, the Committee of the Regions and organizations representing the interests of business, workers, consumers, manufacturers and banks to formulate European policy on electronic commerce as soon as possible, along the lines of the USA's national policy, so that the European Union can present a united front and clear positions in the global dialogue.

Chapter 4: Promoting a favourable business environment

20.1. Specific measures will encourage SMEs to become part of the information society and to adopt new business methods by dispelling existing fears, pointing up examples of SMEs that have already been successful in the new electronic environment and demonstrating the benefits of electronic commerce.

20.2. Wide use of EDI (electronic data interchange) systems will promote the development of electronic commerce, which in turn will further encourage the use of EDI. Current EDI applications are particularly complex for SMEs, and it will be helpful if they can use easier EDI systems via the Internet.

20.3. Use of EDI will have the following practical results:

a) reduction of operating costs;

b) reduction of the time needed to complete transactions;

c) complete elimination of the cost of creating, recording and storing written documents;

d) reduction of stocks required;

e) improvement of customer service;

f) improvement in payment procedures;

g) reduction in the length of the supply chain/direct coverage of needs.

20.4. However, for EDI to be used between businesses, the parties involved must be absolutely certain that they are operating in a secure environment which lends credibility to the transactors and the transactions themselves.

20.5. DG XXIII, which is responsible for SMEs, is asked to play a more active role in informing them about issues relating to electronic commerce, and, to this end, the necessary structures should be created and the necessary funding released.

Consumers: creating awareness and confidence

21.1. The term user is understood to include legal entities (i.e. businesses) as well as natural persons (i.e. individuals and business people). The main practical application of electronic commerce will be in business (inter-business electronic commerce), which will determine the direction of the world market and impose international standards in electronic commerce.

21.2. The requirements of business users must be assessed, with particular care given to the particularities of the business environment.

21.3. (§ 62-64) Consumers will benefit in many different ways provided they acquire the necessary information, knowledge and experience to be able to exploit the truly exceptional advantages of electronic commerce, in particular the unlimited potential for product choice and specialized and customized services.

21.4. There must be further development of the opportunities that are opening up for serving - and in particular protecting - consumer interests and the need for safeguards (as set out, for example, in Council Directive 85/577/EEC of 20/12/1985 to protect the consumer in respect of contracts negotiated away from business premises).

The benefits that will ensue, provided certain conditions are met, will be more than just economic: people will save time and their needs will be better met owing to the wider choice available.

21.5. In the legislative framework that will apply globally particular attention must be paid to consumer protection, given that, in the new business environment, there is often no personal contact - and thus no personal verification - either of the quality of the goods sold or of the vendor's reliability. What is specifically at issue is identification of the vendor, and also of the buyer, (who they are and whether they are trustworthy), compensation (how to successfully lodge a complaint about the quality of a product when the vendor is on the other side of the world), payment (whether electronic payments are secure and who is responsible for any problems that may arise) and the legal procedure for settling disputes between vendor and consumer (e.g. on-line arbitration). These questions are important not only for consumers but also for traders. Failure to resolve them and to create a climate of confidence in the new products and services will mean lost opportunities.

21.6. Commercial bodies will have to establish reliable codes of conduct and guarantee formal settlement of any disputes concerning the quality of services provided by access providers, or, indeed, the quality of information made available by content providers. At the same time, universally accepted codes of conduct must be established at European level to provide adequate protection for the consumer.

21.7. Consumer associations will play a major role in providing accurate information to consumers and in promoting the concept of electronic commerce.

Business: creating awareness and encouraging best practice

22. (§ 65) The delay in implementing the Commerce 2000 pilot programme is a particular setback to promoting new technologies in SMEs. On the other hand, implementing an action programme for SMEs which sets particularly ambitious goals will certainly help them to prepare adequately for the new circumstances pertaining before the end of the 20th century.

Public administrations: promoting a more pro-active public sector

23. (§ 67) The title of this chapter constitutes a particularly ambitious goal, but one which must be achieved urgently if the EU wants to play a significant role in the global market. The public sector (state-owned companies) is the biggest provider of electronic information and services, and use of new technologies will provide a strong basis for supporting and strengthening businesses and the banking sector. Companies are waiting for the public sector to modernize so that they have easier, cheaper and more reliable access to its services, information and infrastructure, through the simplification and automation of all procedures required for commercial transactions.

The main areas in which electronic commerce is used in the public sector are:

a) customs (export-import cycle);

b) taxation;

c) public procurement;

d) local self-government and public services;

e) health and social security.

Putting electronic commerce at the service of the citizen

24.1. The EU must draw up a list of concepts and principles that are transparent and consistent in order to gain the necessary trust of citizens.

24.2. (§ 71) The general public will use electronic commerce and make it part of their lives provided its usefulness in practical terms is proven in everyday life.

24.3. People must receive training at the earliest stages of their education (primary and secondary school) which will help them to adapt more quickly to the new demands of the electronic age; but lifelong training programmes will also become the rule rather than the exception provided the Information Society is above all a learning society.

24.4. (§ 72) Using new technologies in primary and secondary education will avoid creating first- and second-class citizens in Europe, since the knowledge on which producers of goods and services will increasingly rely will be provided for all regardless of nationality, race, colour, etc. The use of information, which is the cornerstone of the new era, must be available to all and be of benefit to all, without any discrimination (on the basis of colour, race, religion, origin, etc.). The peripheral regions must also be strengthened in relation to the already developed core regions. The Member States must take every possible measure to make it easier for the least well-off to use new technologies, e.g. setting up electronic libraries, supporting free training programmes.

24.5. The ESC agrees with the view of the Information Society Forum that new technologies could have extremely positive implications for our democracies and for individual rights, by strengthening pluralism, providing access to public information and enabling ordinary citizens to be more involved in the decision-making process.

Conclusions

25.1. The ESC feels that the Commission communication, a strictly technocratic document, while setting out the basic features of electronic commerce, should give the European perspective on electronic commerce more imaginatively and with a very wide agenda for action. Nevertheless, given the constant expansion of electronic commerce, the communication is an important effort by the Commission, and one which has stimulated general and serious dialogue.

25.2. The table at the end of the document which gives deadlines for measures to promote a favourable business environment does not include measures for user-SMEs, in particular:

a) new training programmes in electronic commerce;

b) the programmes to introduce electronic commerce in SMEs with the following proposed measures:

1) funding for European businesses (from selected economic sectors) to adopt pilot electronic commerce systems;

2) funding for European businesses to further expand and/or adapt electronic commerce systems in use;

3) study of the requirements of European users;

4) a regular report on the impact of the above-mentioned measures.

25.3. The importance of consumers is not sufficiently emphasized in the Communication, and the table at the end does not include the necessary public information programmes. The user is the critical factor determining the successful development of electronic commerce.

25.4. The term user includes both natural persons and legal entities (i.e. companies), which are expected to be the driving force in the development of electronic commerce. For this reason, business entities must be consistently and effectively represented on the bodies which determine European policy on electronic commerce and the information society.

25.5. The position of employees, in both the private and public sectors, is an extremely important issue in the development of electronic commerce. The communication does not consider in detail the new conditions that employees will face and the substantial problems (of adjustment, education, training, etc.) that they will have to overcome to enter or remain in the active workforce and avoid unemployment. (These problems were outlined in the Green Paper 'Living and Working in the Information Society: People First` (). The anxiety felt by workers, which is completely justified given the total breakdown of traditional certainties (hours and place of work, flexible working arrangements such as teleworking, changes in the basic skills needed in the production process, etc.) must be allayed by taking a serious approach to the new situation.

It will also be necessary to exploit opportunities for creating new jobs in remote regions of the EU by developing teleworking, so that these less developed areas can catch up with the core in development terms.

25.6. Europe needs a fundamental restructuring of its educational and vocational training system to prepare its citizens for electronic commerce in the information society and to meet changing needs in the sphere of work and living conditions.

A. Positions and proposals

26. The ESC will support the Commission's efforts to formulate a set of Community principles for developing the European Information Society and promoting electronic commerce in the EU so that Europe can live up to both its international role and its responsibilities towards European citizens. The regulatory framework must not simply be an instrument for promoting electronic commerce; it must also be a means of preventing mass unemployment.

26.1. For this to be achieved, the ESC feels that:

i) The Commission must present a flexible and ambitious programme of action in which proper account is taken of users, consumers, employees, the banking sector, the public sector, IT companies and providers of electronic services, without overlaps, exclusion or pointless rivalries which might undermine the joint effort. This will be achieved when the function of each element of the evolving policy has been precisely defined;

ii) a standing committee of experts on electronic commerce must be set up with representatives of the 15 Member States and of the competent Directorates-General of the Commission that were involved in producing the communication;

iii) the Member States must show more willingness to cooperate, both on legal issues and on other practical matters: a) to pre-empt the emergence of new national rules that are incompatible with the principles of free movement of services and freedom of establishment, b) to avoid further fragmentation of the internal market, and c) to better protect the interests of all as well as allowing the Commission to act with greater flexibility and real powers;

iv) the Commission must continue its efforts to safeguard and improve the efficient functioning of the internal market by removing the remaining obstacles to the free movement of goods, free provision of services and freedom of establishment;

v) the Commission must bring pressure to bear on producers of electronic goods to adopt joint technical standards which will promote interoperability;

vi) there must be a serious effort to make up as soon as possible for the time that has been lost, as all concerned would admit. On no account must we forget that things move at a faster pace in the information society and that we can no longer afford to engage in the endless negotiations, wrangling, inconclusive compromises and backtracking that the EU has been used to in the past. The decisiveness of the United States, which was strongly stressed in the paper entitled 'A framework for Global Electronic Commerce`, will have to be matched by determination on the part of the EU to take forward the development of electronic commerce without delay;

vii) in the 'information society` the Commission must protect common European characteristics and the national characteristics of its members (religion, language, culture, etc.), but it must also defend its own particular characteristics that distinguish it as a continent and the principles of 'enlightened` democracy, whose defining feature today is the ability to access accurate sources of information;

viii) the Commission must make a serious effort to find ways of acquiring reliable statistical data on electronic commerce;

ix) a pan-European dialogue must be initiated within the framework of the Information Society forum, a dialogue that will establish the new European positions on how businesses should operate and in particular on the rights and obligations of workers in the information society (new European labour code), both at pan-European and at national level;

x) an integrated public education campaign must be launched dealing with all aspects of the information society and aimed specifically at SMEs, where there is a serious lack of information;

xi) measures must be taken to raise awareness among SMEs so that there is prompt mobilization and adjustment;

xii) integrated programmes will have to be set up to introduce electronic commerce in SMEs;

xiii) the Commission must support the setting up of interconnected local research centres which would cooperate with governments, educational institutions, technology manufacturers and business operators to follow and enhance efforts to promote and develop electronic commerce;

xiv) the ESC calls upon the Commission:

- to step up its efforts to use electronic commerce within its own agencies;

- to promote an action plan to modernize all public bodies and institutions in the Member States;

- to promote a legal framework which would facilitate the practices involved in providing information to businesses in all countries of the EU and which would establish: the right to fast and reliable access to public sector information; the extent of restrictions on and exceptions to the right of access; and the rules on marketing, including billing policies and the safeguarding of state copyrights;

- to propose an electronic link-up programme between equivalent public bodies in the Member States;

xv) rapid development of the Trans-European Telecommunications Networks is the basic precondition for the development of electronic commerce in core and peripheral regions;

xvi) the EU Structural Funds can and must play a key role in the development of the requisite electronic infrastructure and training of human resources;

xvii) local infrastructure for incorporating new technologies must be enhanced so that businesses have easy access;

xviii) the Council of Ministers and the Commission must support the efforts of the United Nations to develop Electronic Trade Points (ETPs) in the EU, which are used to centralize and manage all electronic transactions moving to and from the area covered in cooperation with all the operators involved in commercial transactions (e.g. customs, transport companies, banks, insurance companies);

xix) special training programmes will have to be implemented at every level of education, but especially in tertiary education (notably in universities that teach both IT and business studies), to ensure full training of tomorrow's managers as well as training for the unemployed;

xx) it is particularly important to strengthen European research institutes so that the EU does not fall behind in pioneering new technologies.

B. Proposals

27. The ESC proposes to the Commission:

1) that the UN proposals to governments issued under the Electronic Trade Points initiative should be adopted at a pan-European level. These proposals contain a package of measures that must be adopted in various spheres of business activity in order to facilitate the introduction of electronic commerce in each country's public institutions. These are for the most part measures that must be undertaken by governments through appropriate legislative or other action. The areas covered by the measures are banking, insurance, customs, trade, transport and telecommunications;

2) that the UN guidelines on international trade, which are a set of guidelines on how electronic commerce should be conducted using Electronic Trade Points, should be enacted at a pan-European level;

3) that progress should be made on gradually establishing electronic links between all the major services that support European trade (e.g. airports, ports) so that the EU soon becomes one of the great electronic centres of the world;

4) that support should be provided to countries which bear the burden of electronic transactions with the less developed regions of Europe (the Balkans and eastern Europe) and with the countries of the Mediterranean basin, so that electronic commerce is also promoted in neighbouring countries;

5) that the EU must obtain software for filtering Internet content, like that which has already been developed under the name PICS (Platform for Internet Content Selection) by the World Wide Web Consortium, and a European system for classifying Internet content;

6) that the 'Action plan to combat organized crime` adopted by the Council of Ministers on 28 April 1997 () must be directly implemented.

C. International cooperation

28. The ESC considers that the following issues must be addressed and that solutions that have already been agreed must be implemented without delay at a global level:

1) establishing a framework of joint minimum legal standards for identifying (describing) and combating new forms of crime in electronic transactions (cybercrime) and clearly identifying the perpetrators of illegal and criminal acts by introducing the necessary punitive and policing mechanisms at both national and supranational level (judicial and police cooperation), as achieved at European level with the decision adopted by the Council of Ministers on 28 April 1997;

2) deciding on joint approaches to questions of:

a) national security

b) protection of minors

c) protection of human dignity

d) economic security;

3) creating a legal framework that will prevent the laundering of money acquired through criminal acts and setting up the necessary international machinery for controlling and punishing such acts;

4) taxation (direct and indirect) and keeping taxes on electronic equipment as low as possible, as set out in the WTO ministerial declaration on trade in information technology products which was adopted in Singapore in December 1996, so that high-technology products become accessible to the widest possible range of citizens;

5) laying down a minimum regulatory framework for electronic commerce through the channels of the UN (the findings of the UN Commission on International Trade Law, UNCITRAL, which were approved by the UN General Assembly on 30 January 1997, would be a good basis for dialogue), the WTO and the OECD, thereby giving electronic transactions the necessary legitimacy and security;

6) the need to prevent any restrictions on access to international networks being imposed by national governments or any providers of electronic commerce services for political or other reasons;

7) protection of intellectual rights (patents, trademarks and tradenames) through the channels of the World Intellectual Property Organization (WIPO), by applying: a) the WIPO copyright treaty, which affirms the application to new technologies of the basic principles of the Berne Convention for the Protection of Literary and Artistic Works; and b) the WIPO performances and phonograms treaty, which is an important step towards protecting artists/performers and sound recordings;

8) establishing international encryption standards, as set out in the OECD Draft Guidelines for Cryptography Policy (27/3/97) and with wider use of asymmetric algorithms for message encoding such as SET (Secure Electronic Transactions) to ensure complete security in transactions and in the transmission of personal data, but also in order to bring about a rapid increase in the acceptance of digital signatures in legislation and by companies;

9) promoting international agreement to consolidate the fundamental principles of protecting personal data as set out in the declaration of the ministerial conference in Bonn:

i) personal data should be processed only if such processing is permitted by law or if the user has given informed consent;

ii) before their personal data are processed for the first time, users of Global Information Networks must be informed of the purpose of processing, the type of data to be processed, the name of the person responsible for processing and any third parties to which the information is likely to be divulged. Users must be able to break a connection once they have received this information without their personal data being collected;

iii) personal data may not be used for any other purpose than that for which it was collected, unless such use is permitted by law or the user has given informed consent;

iv) access to Global Information Networks must be conditional on the user agreeing to his or her personal data being processed in any way that goes beyond the processing required to provide access to networks and related services, e.g. billing;

v) the technical infrastructure must be developed so as to allow anonymous access (e.g. anonymous reading and browsing capabilities) and to prevent personal data from being processed in any way other than that necessary to provide access to networks and related services;

vi) instituting an extensive public awareness campaign to inform users of their rights, so that the handling of data becomes a positive factor used to promote businesses in the market-place (so that companies and public bodies with a satisfactory record of protecting data have a comparative advantage);

vii) promoting effective sectoral self-regulation initiatives so that industry - even in countries that do not have relevant legislation - implements the principles of personal data protection;

viii) promoting the use of model contract clauses as defined by the Council of Europe in cooperation with the European Commission and the International Chamber of Commerce.

10) EDIRA - EDIFACT for implementing international EDI norms established by the United Nations (UN/EDIFACT) to facilitate transactions;

11) reducing connection costs where telecommunications companies still hold a monopolistic or oligopolistic position, so as to re-establish the conditions for healthy competition among European users;

12) implementing international conventions on the protection of human rights (United Nations Charter, European Convention for the Protection of Human Rights, etc.) in the information society, especially with respect to electronic commerce applications;

13) doing everything that is necessary to establish global confidence in the instruments, processes and networks of electronic commerce;

14) future management of the Domain Name System (DNS) which encompasses all Internet addresses so that access to them is easy and clear. Work done by the OECD is already beginning to establish the conditions for international agreement;

15) establishing international interoperability norms for the benefit of business, users and consumers.

III. CONCLUSIONS

The following basic conclusions have been drawn from working on the text:

1. Electronic commerce presents a challenge both for the productive sectors of the economy (commerce, industry, crafts, banking, etc.) and for all users and consumers.

2. The public sector is called upon to play a key role in promoting electronic commerce.

3. Security problems must be solved as soon as possible so that transactions are reliable and justifiable concerns about the protection of personal data can be allayed.

4. SMEs should be able to benefit from electronic commerce on an equal basis by taking advantage of the opportunities that it now offers and modernizing their operations.

5. The Commission must set up without delay the necessary lifelong training programmes so that employers and workers can cope with the new working conditions.

6. The European Union should take part in the global dialogue with uniform, integrated positions which safeguard European interests.

7. The European Union must directly promote research and development programmes for new technologies.

Brussels, 29 October 1997.

The President of the Economic and Social Committee

Tom JENKINS

() COM(96) 359, 24. 7. 1996.

() ESC Opinion: OJ C 89, 19. 3. 1997, p. 11.

() ESC Opinion: OJ C 206, 7. 7. 1997, p. 10.

() OJ C 251, 15. 8. 1997, p. 1.