European initiative on electronic commerce
The principal aim of this communication is to encourage the vigorous growth of electronic commerce in Europe.
Commission communication of 18 April 1997: A European Initiative in the sector of Electronic Commerce [COM(97) 157 final - Not published in the Official Journal].
Definition and background
Electronic commerce, based on the electronic processing and transmission of data, encompasses many diverse activities including electronic trading of goods and services, on-line delivery of digital content, electronic funds transfers, electronic share trading, public procurement, and so on.
These activities may be divided into two categories:
- indirect electronic commerce, i.e. the electronic ordering of tangible goods that must still be physically delivered and which therefore depends on a number of external factors, such as the efficiency of the transport system and postal services; and
- direct electronic commerce, i.e. the on-line ordering, payment and delivery of intangible goods and services such as computer software and entertainment content.
Electronic commerce is not limited to the Internet, but includes other applications such as videotex, tele-shopping and catalogue sales on CD-Rom.
The Commission's communication looks at electronic commerce in the international context. It compares Europe's strengths with American advances in the field and stresses that any action on electronic commerce has to be compatible with WTO commitments. It also raises the problem of cyber-crime, which must be tackled urgently in order to reinforce trust and confidence in transnational electronic commerce.
Ensuring access to the global marketplace: infrastructure, technology and services
Effective telecommunications liberalisation in the European Union from 1 January 1998 should lead to lower prices in general and the introduction of more flexible tariff schemes for businesses. As a result, Internet use should increase, as should the take-up of electronic commerce.
The WTO Agreement on Basic Telecommunications, which contains commitments from 69 countries on market access and national treatment, will contribute significantly to the emergence of a global marketplace when it comes into force on 1 January 1998.
The take-up of electronic commerce will also be stimulated by the gradual elimination (by the year 2000) of tariff and non-tariff barriers on information technology products (computers, software, etc.), which will also have the effect of bringing down the costs of these basic tools.
In order to deal with the bottlenecks caused by the growing use of infrastructure, the Commission recommends a coordinated approach through the R&D programmes in information and communications technologies. These programmes also support innovation, privacy-enhancing technologies and user-friendly access to information.
Interoperability between various electronic commerce services must be ensured, in particular by involving European industry and users in standardisation work within the European standards bodies (CEN, CENELEC et ETSI).
The Commission encourages international industrial cooperation in the field of technology, infrastructure and services.
Creating a favourable regulatory framework
Two things are needed for electronic commerce to develop successfully:
- building trust and confidence, the prerequisite to win over business and consumers to electronic commerce;
- ensuring full access to the single market, by making sure that Member States do not adopt divergent legislation and establishing a coherent regulatory framework at European level.
To achieve these objectives, a regulatory framework must be established based on the following principles:
- no regulation where the free movement of electronic commerce services can be effectively achieved by mutual recognition of national rules and of appropriate self-regulatory codes;
- any regulation must be based on all single market freedoms;
- any regulation must take account of business realities;
- any regulation must meet general interest objectives (privacy, consumer protection, wide accessibility to the networks) effectively and efficiently.
To ensure that electronic commerce freely flows across national frontiers, different legal issues still need to be addressed. Which Member State will be competent and which law applicable in disputed cases? Which laws are applicable in the field of commercial communications (advertising, direct marketing, etc.)? Legal recognition of electronic contracts, adapting of accounting and audit rules and the soundness of electronic payment systems are also unresolved matters which must be addressed.
The regulatory framework must:
- ensure data security and privacy through the use of encryption;
- establish appropriate protection for intellectual property rights and conditional access services;
- ensure a clear and neutral tax environment.
Promoting a favourable business environment
A favourable business environment will depend on:
- creating awareness and confidence among consumers by encouraging the use of quality labels and codes of conduct and by increasing the transparency of transactions;
- creating awareness among businesses and encouraging them to make use of electronic commerce themselves;
- encouraging public administrations to take a more pro-active line, particularly in the areas of customs and taxes, employment services and public procurement, in order to introduce electronic commerce in business-public administration relationships;
- putting electronic commerce at the service of the citizen, in particular by teaching new skills, to avoid the risk of creating a split society of users and non-users.
To implement this initiative, the Commission has drawn up a timetable of actions to be completed by the year 2000. These concern telecommunications, with a view to achieving effective liberalisation of the sector. They also seek to promote electronic commerce awareness among businesses, public bodies and the general public, which will be the main priority of the Fifth R&D Framework Programme. The Commission is also looking into standardisation projects and considering the legislation which will be necessary to remove legal uncertainties.