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'
Date: 1997-10-29
Institutions: European Economic and Social Committee
Subjects: EU initiative, electronics, information technology, telecommunications, trade policy

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regarding the management of fishing effort. Further-
more, this is also the view taken in the 1995 Commission
report on Monitoring the Common Fisheries Policy (1),
which states that:

‘the adoption of an effective monitoring system, at
all levels of responsibility, is a conditio sine qua non
for the successful implementation of the CFP.’

2.2.
The Committee thus supports the present Com-
mission proposal, which is pursuant to the provisions
of Regulation No 779/97.

2.3.
The Committee does, however, take the view
that the measures for monitoring the management of
fishing effort should be adopted in the EU in collabor-
ation with the International Baltic Sea Fishery Com-
mission, in order that they may be applied to all the
countries that fish there. This was pointed out in the
ESC opinion on the proposal for the introduction of
arrangements for the management of fishing effort in
the Baltic Sea (2).

(1) COM(97) 226 final.

(2) OJ C 296, 29. 9. 1997.

Brussels, 29 October 1997.

The President

of the Economic and Social Committee

Tom JENKINS

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

II. A EUROPEAN INITIATIVE IN ELECTRONIC

COMMERCE

The Commission Communication ‘A European Initiat-
ive 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 particu-
larly welcomes this communication, which has stimu-
lated 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.)

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.

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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 com-
merce. This basic principle must be used as the bench-
mark 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.

Unfortunately, both EU and global statistical
3.3.
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 possibili-
ties 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 tech-
nologies 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 circum-
stances 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

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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.

The growth of electronic commerce will have
4.6.
the
far-reaching consequences for the structure of
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

(§ 17) The Commission Communication states
5.1.
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.

Marshalling Europe’s strengths

6.1.
The strong position of Finland and the Nether-
lands in new technologies demonstrates Europe’s poten-
tial, 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 elec-
tronic transactions cannot be determined by the Euro-
pean 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.

(§ 22) Cybercrime represents the greatest threat
7.2.
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 liberal-
ization

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 transfor-
mation 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.

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
the
(business and private) will become part of

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information society, especially those who find the
current connection costs prohibitive because of the small
size of their firms.

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

8.3.
Development of the Trans-European Telecom-
munications 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.

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.

Ensuring interoperability in a competitive environment

(§ 29-32) The Commission Communication
9.1.
‘Standardization and the global information society: the
European approach’ (1) 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 conse-
quently the way in which industry, users, consumers,
the banking sector and public administration will benefit
from it (2).

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.

In any event, the EU must participate on the
9.3.
international bodies which draw up specifications,
presenting integrated proposals and solutions that pro-
tect 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 inter-
operability — is a voluntary process which reflects
market forces.

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

10.2.
The ESC considers the development of Euro-
pean 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 essen-
tial 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;

a) minimizing the emergence of new obstacles;

d) secure completion of intangible transactions;

b) improving adaptation to the rules in effect on the

global market.

e) protection of industrial secrets;

f) protection of intellectual rights,

(1) COM(96) 359, 24. 7. 1996.
(2) ESC Opinion: OJ C 89, 19. 3. 1997, p. 11.

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

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Ensuring full access to the single market

16.2.
main features:

The term ‘data security’ embraces the following

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.

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.

The principles of an electronic commerce regulatory
framework

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

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.

1) the priority of information must be maintained,

based chiefly on transmission time;

2) the origin of messages from fraudulent sources must

be verified;

The essential features of a regulatory approach

3) transmission of messages by the other party must be

verified;

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.

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.
party (CA) should provide the following services:

The ESC considers that an intermediary third

A regulatory approach that develops appropriate hori-
zontal policies

A. Support services:

E n s u r i n g d a t a s e c u r i t y a n d p r i v a c y

(§ 51) Data security is a basic requirement, not
16.1.
just for banks and businesses, and it is an essential
accompaniment to electronic commerce operations pro-
vided 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.

a) registration authorities;

b) legal data of users;

c) directories;

d) archiving and registration;

e) attestation and certification services.

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B. Notarial services:

E n s u r i n g
a
e n v i r o n m e n t

c l e a r

a n d

n e u t r a l

t a x

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.

The ESC feels that the increased security of
16.5.
electronic commerce, resulting from the development
and application of symmetrical and asymmetrical
encryption systems, like the Secure Electronic Trans-
actions (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 authenti-
cation 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.

a p p r o p r i a t e
i n t e l l e c t u a l p r o p e r t y

E s t a b l i s h i n g
f o r
c o n d i t i o n a l a c c e s s s e r v i c e s

p r o t e c t i o n
a n d
r i g h t s

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 obli-
gations.

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.

The principle that taxes should be collected in
18.3.
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 mod-
ernizing their activities.

Working towards a consistent global regulatory frame-
work

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

(§ 53) Protection of intellectual property and
17.
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.

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 com-
merce (e.g. users, providers, software firms, computer
manufacturers, telecommunications companies, inter-
national organizations such as the UN and WTO,
governments, labour and consumer associations) must

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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 organ-
izations 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 environ-
ment

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.
results:

Use of EDI will have the following practical

a) reduction of operating costs;

b) reduction of the time needed to complete trans-

actions;

c) complete elimination of the cost of creating, rec-

ording 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 busi-
nesses, 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 deter-
mine 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 differ-
ent ways provided they acquire the necessary infor-
mation, 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

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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.

c) public procurement;

d) local self-government and public services;

e) health and social security.

21.6.
Commercial bodies will have to establish
reliable codes of conduct and guarantee formal settle-
ment 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.

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.

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

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.

Business: creating awareness and encouraging best
practice

22.
(§ 65) The delay in implementing the Commerce
2000 pilot programme is a particular setback to promot-
ing 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 infor-
mation 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;

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

The ESC feels that the Commission communi-
25.1.
cation, a strictly technocratic document, while setting

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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 com-
merce systems;

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’ (1). 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.

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

A. P o s i t i o n s a n d p r o p o s a l s

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.

The ESC will support the Commission’s efforts
26.
to formulate a set of Community principles for
developing the European Information Society and pro-
moting electronic commerce in the EU so that Europe
can live up to both its international role and its
responsibilities towards European citizens. The regulat-
ory 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:

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 com-
merce and the information society.

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 over-
laps, 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;

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 communi-
cation does not consider in detail the new conditions

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

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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;

ix)

ii)

iii)

iv)

v)

vi)

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;

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;

the Commission must bring pressure to bear on
producers of electronic goods to adopt joint
technical standards which will promote inter-
operability;

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 back-
tracking 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;

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 infor-
mation 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 insti-
tutions, 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 Mem-
ber States;

xv)

rapid development of the Trans-European Tele-
communications Networks is the basic precon-
dition for the development of electronic commerce
in core and peripheral regions;

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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;

that support European trade (e.g. airports, ports) so that
the EU soon becomes one of the great electronic centres
of the world;

xvii) local infrastructure for incorporating new tech-
nologies 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 com-
panies);

xix) special training programmes will have to be
implemented at every level of education, but
especially in tertiary education (notably in univer-
sities 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. P r o p o s a l s

27.

The ESC proposes to the Commission:

that the UN proposals to governments issued
1)
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 coun-
try’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;

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;

that the EU must obtain software for filtering
5)
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(1)
must be directly implemented.

C.

I n t e r n a t i o n a l c o o p e r a t i o n

The ESC considers that the following issues must
28.
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 (cyber-
crime) and clearly identifying the perpetrators of illegal
and criminal acts by introducing the necessary punitive
and policing mechanisms at both national and supra-
national
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;

creating a legal framework that will prevent the
3)
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

that progress should be made on gradually estab-
3)
lishing electronic links between all the major services

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

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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;

laying down a minimum regulatory framework
5)
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, trade-
marks 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 prin-
ciples 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;

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;

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;

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;

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;

instituting an extensive public awareness cam-
paign 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);

iii)

iv)

v)

vi)

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

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

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

i)

ii)

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

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

before their personal data are processed for the
first time, users of Global Information Networks
must be informed of the purpose of processing,

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

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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;

establishing international interoperability norms

15)
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,

Brussels, 29 October 1997.

industry, crafts, banking, etc.) and for all users and
consumers.

The public sector is called upon to play a key role

2.
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.

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

training programmes

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 tech-
nologies.

The President

of the Economic and Social Committee

Tom JENKINS