Examination of Witness (Questions 740
WEDNESDAY 3 MAY 2000
740. The Commission has a history of somewhat
liberal views. In various areas, for example, electricity and
telecommunications to name but two, there are various countries
that have had to be dragged kicking and screaming to get up to
certainly the Commission's aspirations and to what in many cases
we have managed to achieve without the Commission in this country.
Would you agree?
A. Yes, I would. Having been involved for a
large part of my time in the Commission in the process of dragging
them kicking and screaming, I am bound to agree with that. I am
glad to have achieved what we have done and apologise for not
having dragged them a bit further, most notably in the energy
area. Telecommunications was a success.
741. It was achieved slowly.
A. What you have said brings to my mind the
occasion when I was trying to persuade them to liberalise telecommunications
and we had a meeting which as it happened was in Luxembourg, and
I could not even get the ministers to attend, barely even the
Director Generals of their Departments but only the heads of PTTs.
I think three of them said yes and the rest said no. There the
use of the competition policy mechanism (some would say threat)
proved to be very helpful. We have got there, so it is absolutely
right that the Commission has been all the time pushing in the
direction of liberalisation. Without it we would be way behind
where we are now and we have still some way to go.
742. Which brings me on to the formulation of
policy. By definition there are so many outside organisations
in industry the Commission has to deal with that it tends to operate,
does it not, through exchange of views with the federations in
the various countries? The trouble with e-commerce is that it
is growing at such an enormously fast rate that there are a whole
lot of little firms which are not connected with the federations.
How then did you get their views into your thinking?
A. I think the key point is the one we have
talked about already, that there is now a feeling that Europe
has got to get its act together and that is reflected in the Lisbon
Council very much. Everybody knows that, it has been widely publicised,
and therefore, apart from the traditional channels of employers'
organisations or trade associations or whatever I do think that
anybody who has got anything to say probably will say it in one
way or another. I think the Commission has been, although as this
is a fast-moving area I may not be up to date, quite active in
trying to find out through any kind of organisation that exists,
and also, dare I say it, through the use of the Internet inviting
people to put forward their views. Things have changed. This is
not like the reorganisation of electricity or gas where what you
have to do is to persuade huge organisations and governments to
get them to move. It is a much more complex area but there is
this impetus. One of the things that I myself derive much encouragement
from, apart from the specific commitments on benchmarking and
monitoring and time limits, is the fact that the heads of government
in Lisbon have committed themselves to review progress in a year's
time and that means that they have taken upon themselves the responsibility
of having things delivered which they committed themselves to
this time. Without wishing to be unduly cynical, one has seen
occasions when there has been a great meeting of heads of government
and it has been a one-off and they say, "Go away and do this
and do that and do the other" and one hopes that it is done.
It provides an impetus. But now, we have all this talk of benchmarking
and monitoring and dated time limits for things to be done, plus
a review mechanism in essence, by which the heads of government
themselves hold others to account and are themselves held to account.
All I can say is that that is a very powerful tool and procedure
and a new one as far as the European Union is concerned. As it
is, giving the dates and so on has been a traditional mechanism
and in relation to a more controversial question, the single currency,
it was the giving of dates that led to its creation.
743. The opposite of dates for things to be
done is obviously dates for things not to be done, and therefore
sunset clauses. What would be your view of that?
A. On some things I would say sunset clauses
would be very useful. There may be some restrictive things which
should have a sunset clause, but as this is all new I am not sure
that the sunset clause has much to bite on here and where there
are particular regulations or whatever in existence which are
thought to impede the growth of e-commerce, you do not need a
sunset clause. You just need to abolish them.
Lord Skelmersdale: Fair comment.
Lord Woolmer of Leeds
744. What is your perception of where there
will be points of difference still between Europeans and the Americans
in the development and regulation or non-regulation and so on
of the e-commerce industries, the whole spectrum of issues?
A. The main differences have been the American
concept of self-regulation and the European concept that where
anything needs to be controlled it should be done by legislation.
That is the main difference. The nature of the control is really
conceived of as being quite similar but they are different methods,
although there are some policy differences in that the American
interest in privacy, in people's data not falling into the hands
of those who they do not want to have it seems less well developed,
quite apart from the technique of achieving it. There is also
this particular point on the international side namely, of there
not being any kind of tax on the Internet, which needs a great
deal more refinement and where the Americans have been pressing
very hard. Those are the main differences.
745. When we were in the States recently I formed
the impression, which you may confirm or disagree with, that the
Americans are very much driven by the views of industry and where
industry and commerce want the agenda to go. Having discussions
with the Europeans, they are in a sense driven by politicians
and governments. Is that a feature you recognise?
A. I think that has been true. I think it is
much less true now. I am sorry to come back to the point we have
touched on a couple of times but it is absolutely central to say
that the wake-up call has been successful and Europe collectively
has come to the conclusion that this matters, it matters as far
as the creation of jobs and prosperity and everything else is
concerned, and therefore they are going to do something about
it. Because some of the problems relate to the diversity of different
European countries I think it is pretty well inevitable that government
should get involved but that does not necessarily mean that there
should be a heavy regulatory hand laid upon it. The message that
government needs to be a facilitator rather than just a regulator
is very much there. If you read for example the Commission's document
or the British Government's document, there is a tremendous overlap.
A lot of the stuff is not about regulation but for example about
the use of public procurement. There is something that probably
is going to go ahead. It exists. The extent to which it can be
used in a way which stimulates e-commerce is something which is
not a regulator question but a facilitator question. Similarly,
I think because those who are, to put it crudely, pro-European
and those who are anti-European unite in focusing upon the direction
of legislation because that is the sexy thing; you can be in favour
of it or against it, I think in the whole of the European debate
inadequate attention is paid because it is less sexy and less
dramatic and less interesting to the role of peer group pressure
and of looking to see what other countries do and comparing best
practice. That has to be done in a systematic way, and if, for
example, we in this country suddenly learn that somebody in Sweden
is doing something which is relevant and which we might do, and
does it, that is not a headline. It is not a story but it may
have come about because of the organisation of the system which
enables that information to be gathered and to be imparted and
to be exchanged. In the areas of expenditure by the Commission,
when it is deciding how to use the money that it spends on regional
policy and on research, again if it has got e-commerce to the
fore, that is not a hot property, the issue which is considered
most urgent in the media. But it will affect what actually happens
and what is done. It is not a question of regulation or allowing
private enterprise to let it rip. It is a much more complex area
in which governments can do things which even those who are most
in favour of deregulation would be in favour of what they are
doing if they do the right thing.
746. Lord Brittan, you paint a picture with
which I would agree, that one the one hand there is a society
in the United States which is self-regulatory, where there is
a close relationship between government and industry. There is
a culture in Europe which requires legislation and thinks about
legislation as the first thing that it may do to put things in
a more orderly fashion. Yet we have here a global activity. How
can we begin to bridge the gaps internationally to make a society
in which e-commerce can both on the one hand promote the interests
of the consumer and on the other hand protect the interests of
some of the maybe more vulnerable?
A. First of all I think that one should not
make the mistake of thinking that if the American approach and
the European approach are slightly different or even significantly
different, that is necessarily a bad thing and that one has got
it right and the other has got it wrong. Circumstances may vary.
The very fact that there are 15 European Member States and that
you have a problem there may inevitably mean a slightly different
approach in Europe than in the United States. One must not assume
that differences mean that you have to decide who is right and
who is wrong. But there are issues where there is a legitimate
need for consideration and discussion and agreement and the main
forum is this, that we have a close relationship between Europe
and the United States and some of us have worked, to try and make
it closer than it is now, and one of the things that we did set
up was something called the Transatlantic Economic Partnership
which is a systematised arrangement of governmental discussion
of all issues between Europe and the United States and this is
one of them and it has been used for that purpose. Whether it
has been used to good or sufficient effect there is room for debate
upon but it is there and we do not need to re-invent the wheel.
In addition to that one of the things that I was involved in was
the Transatlantic Business Dialogue which is a very effective
means of bringing together the business communities on each side
of the Atlantic and they meet and discuss things exactly of this
kind and e-commerce has for several years been high on the agenda
of things they discuss and they seem to reach agreement. If they
reach agreement then the pressure on government to do what they
say is quite strong although of course government reserves the
right to say, "Never mind about the fact that our businessmen
on both sides of the Atlantic have reached agreement. There may
be reasons relating to the consumer, relating, as you say, to
their disadvantage or whatever, which mean that we cannot accept
their advice." It is none the less a very good starting point.
The best gauge of the success of this and its importance is the
people who get themselves involved in it. I was frankly quite
sceptical about whether this could do any good or would do any
good but all I can say is that the heads of the largest corporations
on both sides of the Atlantic have thought it worthwhile to be
personally involved in the handling of this Transatlantic Business
Dialogue. When it comes to the wider international field, although
of course Europe and the United States or the other way round
are by far the leaders in this area, there is the rest of the
world as well and, particularly when one is talking about any
kind of agreements which have to be global in character, we are
talking about the World Trade Organisation. The discussions on
this question of taxation or no taxation in this area have been
conducted up to now in that forum.
747. Lord Brittan, you have already said that
the wake-up call was very successful. To what extent to you attribute
that success to the EU's action plan eEurope: An Information
Society for All?
A. I think that is a reflection of the waking
up rather than the wake-up call itself. The theory is what we
have, they sometimes call in the jargon, a phrase I deeply dislike,
an iterative process, which simply means what happens. It is like
the chicken and egg in that people say, "We have really got
to take this seriously and we are behind and if we want to be
competitive we must do something about it", and so the Commission
produces its plan, and that itself causes people to wake up and
want the plan to be enacted or varied or accelerated or whatever.
It is like that. The one stimulates the other.
748. Do you feel that many of those targets
are being met?
A. It is too early to say because the thing
was produced last December.
749. But there are targets for the year 2000?
A. Yes. All I can say is that I do not put myself
out as an expert in this field but I think I would have heard
if anybody had said that this is absolutely not happening. It
is too early to say that it will but I have not heard anybody
say either that the targets are ludicrously over-optimistic or,
still less, that they will prove to be unattainable.
750. Can I ask you for a second about Central
European States, the states that are wishing to join the EU within
the next five to 10 years? Have you any idea as to their progress
in IT and e-commerce? We sometimes talk about having two levels
of membership for so long in the EU because of the incompatibility.
Is this going to be a problem?
A. I do not have any detailed knowledge of it
but I have visited the countries and this has come up. Clearly
they are way behind the more advanced countries in this as in
most other economic questions; there is no doubt about that. You
will find in the Commission document and a whole lot of other
things that there is a very real determination even ahead of membership
of the European Union to extend to them any benefits of an open
market but also assistance in this area as in other things as
well. Let us put it this way. There are innumerable problems affecting
the question of enlargement. I do not think this one is going
to be an obstacle.
751. It will not be an obstacle but it will
probably be a problem for them because there will be targets set
which presumably they will not be able to meet.
A. Yes, but a target is a target. There is a
difference between a target and a law. You can say, "We have
agreed to this target", particularly things which say 2001
and 2002. They are not going to be members in 2001 and 2002, so
it is sensible to have a target amongst the present lot of Member
States which can be met by them but it is no discredit to either
existing Member States or to the applicant countries if those
targets are ones that cannot be met by the applicant countries.
752. That brings us back again to some of our
experiences in Washington where the Americans were arguing that
self-regulation actually is better, it produces a high level of
compliance because it is on the basis of people willingly entering
into something and produces high enforceability, and they are
arguing that you can have your directives in Europe where compliance
is low and enforceability is very low as well.
A. I think this is a sterile and pointless argument
which is not worth getting drawn into for you, if I may say so,
simply because the contrast is an absurd one. There are all sorts
of regulations in the United States and if you look at the things
being proposed the menu that I have rattled through is not one
of regulation as far as Europe is concerned. The image that the
United States have of a Europe that is tightly regulated is just
nonsense. If you look at the kinds of things that the European
Council, including our own government, ask for legislation to
be introduced on, they are things about enforcement of judgments
and copyright and EU money and things of this kind. As a lawyer
I know that you have to have rules about these things and they
have them in the United States. To caricature that as some kind
of heavy-handed dirigiste European legislation is fantasy
and it does not help us, it certainly does not help them except
if you wish to dig deeper into your own fantasy and find a new
forum for it. This is not a choice that we have to make. The reality
of it is that there are certain things, because there are 15 countries
in the European Union, which if you want to advance them you have
to decide them in common. That does not mean that this is the
heavy hand of regulation trying to stop industry. People know
perfectly well that this has developed rapidly on the back of
technological change, that you have got to facilitate that technological
change and the process is about enabling that to happen, not stopping
753. It makes the case for international co-operation.
A. It does. It makes the case also for the Americans
overstating their own position.
Lord Cavendish of Furness
754. Back to the success of the wake-up call
and the meeting in Lisbon to which you referred. Would you enlarge
a little on what you felt the Lisbon meeting, which was essentially
meant to be on IT issues, achieved and if you anticipate anything
in the forthcoming meeting in June at Feira?
A. Yes. First of all it set out the strategic
goal and it accepted responsibilitythis is the Lisbon Councilfor
monitoring it at the highest level. As I have said in answer to
a previous question, that is important because heads of government
do not like being caught with their trousers down and being found
a year later to have achieved nothing. Then the Council and the
Commission were invited to draw up a comprehensive Europe action
plan for June so presumably at the next Council meeting which
you referred to at Feira they will have to decide whether they
like this plan and approve of it. They have called for legislation
to be adopted in the areas that I have mentioned, so that is a
call to their own ministers to get on with it. They have asked
for new legislation to complete for example the liberalisation
of telecommunications and then there are all these various targets,
like ensuring that schools have access to the Internet and multimedia
resources by the end of 2001 and generalised electronic access
to the main basic public services by 2003 and asking the European
Investment Bank to facilitate networks and a suggested European
diploma for basic IT skills and decentralised certification procedures
and setting up a whole series of methods of guidelines, timetables,
benchmarks, monitoring and evaluation. Most independent observers
and people who are better qualified than I am to judge think that
that is a pretty formidable achievement to have agreed all that.
Inevitably it is a provisional step in that you cannot make it
happen at a meeting at Lisbon but the fact that you can set in
train things which if done will make a significant difference.
I cannot promise you that all this will be done but they have
given themselves a noose if they are not done. On past experience
it is this kind of commitment at the highest level which in the
history of European developments are good, bad or whatever, has
led to action being taken. The reason for all this is because
the wake-up call was heeded and the heads of government thought
this was something that was necessary and popular, there was a
fair wind behind it and a fair chance of success. Like all of
these things, it is extremely unlikely that everything that everybody
wants to do will be done, but if most of it is I think Europe
will benefit enormously.
755. The signals from Brussels certainly are
that e-commerce should be a light regulatory regime. I am not
as sanguine as you about the enthusiasm of Europe and regulation.
What worries me and has done throughout is, even if I believe
in the sincerity of this light regulatory regime, what happens
when the political pressure is put up? What happens when the Inland
Revenue surfaces saying, "We cannot raise taxes"? What
happens when the consumer groups say, "We need more protection"?
Do you think Europe is more or less exposed than nation states
to these campaigns which the tabloids run?
A. No. I would say rather less so. This is nothing
to do with one's general approach to Europe. I will tell you why:
because here where we have a very centralised and powerful media,
as we have seen on issues ranging from dog licensing to I do not
know what, it is possible within a couple of weeks for a campaign
to build up of a kind that governments of any political complexion,
wisely or foolishly, just find irresistible and say, "Okay,
we surrender. We will introduce legislation tomorrow. Whip it
through both Houses of Parliament." That cannot happen in
Europe, not because people are more virtuous or less susceptible
to pressures of this kind, but because fortunately our media are
not centralised in Europe and if that did happen in one country,
Mr So-and-So from country X turns up at the Council of Ministers
with a kick up his pants from the media and says, "We must
do something", somebody from the other countries says, "What
on earth are you talking about? Why? Hadn't we better look at
this thing more carefully?" It is inherently impossible,
just because of the fact that there are so many more countries,
for mass hysteria to lead to legislative folly in the way that
is not unknown in this country.
756. We have talked about regulation and the
perception still remains that there is far more regulation in
Europe and that the Europeans love to have regulation, and the
European Commission only adds to it instead of subtracting anything.
Now we have an internal market in this country it provides a wonderful
platform for e-commerce. Do you think the accretion of derogations
by Member States might encumber the progress of e-commerce?
A. Again I find it very difficult to generalise
on these things. As I have always been on the deregulatory side
of things I do not object to a modest degree of prejudice against
the Commission and a modest degree of feeling that they are likely
to want to overdo it because that encourages those who want to
do it in a sensible way. If you start with that prejudice that
is okay and probably a healthy prejudice. The only thing I would
say is, do not be overwhelmed by that prejudice to the extent
that it is preventing you from supporting the few things which
really are necessary. I think it is perfectly possible to say
that we want to move generally into the area of deregulation for
example and opening up markets in energy, electricity and gas
which are proceeding at too slow a pace in my opinion, and I am
not saying what I did not say when I was there. At the same time
to say okay, that is the general approach that we want but we
have to recognise that in order to provide the opportunities to
fully utilise this hugely important e-commerce we have to provide
certain things which can only be done at governmental level and
people are asking for it, businesses and industry are asking for
it. The whole idea of doing something in the crudest sense about
e-commerce is not that government have suddenly said it is necessary
but that it is something they have been asked to do by industry.
Then I go back to Lord Cavendish's question about when the pressures
come might they not want to develop it, one can only say, "You
have to look at it one by one". Yes, you cannot say that
somebody will not want to go further than they should. We have
just got to be alert to that and not agree to it.
757. How can you get that bias away? What can
be done so that it does not hold up things, especially in this
A. If I may say so, the last thing I want to
do is to flatter anybody or even an institution of which I am
a member but informed discussion is important, so, for example,
and I have said this before I got anywhere near this place, reports
of this House are respected and read in continental Europe so
that if for example you were to produce a report which is balanced
which says, "We recognise the need for all sorts of things
to be done and we must do them and we welcome the kind of approach
reflected in the Lisbon Council, but take care not to allow yourselves
to be pressurised by consumers or the Inland Revenue or whoever
into overdoing it", that would be an important and significant
contribution. I am not saying that will do the trick alone. Would
that there were 15 House of Lords Committees across Europe doing
it. That is a contribution one can make and all of us in our different
capacities can only do what we can do.
758. I think that is a suitable point for us
to come to an end with a very supportive and interesting message
for us to take forward to consider. We are very grateful indeed
to you for giving us the time, as I said at the beginning. I am
wondering if I can put one final point. We have heard a good deal
of evidence so far from industry which is not entirely happy about
its voice being heard within Europe and you talked about the arrangements
that you have put in place for the transatlantic industry dialogue.
I was wondering if there was anything that perhaps you might care
to suggest that we could consider that would help to improve the
nature of the relationship between industry, particularly in this
area, and the Commission and the Council. Are there any changes
A. We have really got beyond the exploratory
phase of the inquiry but in principle I know what the Commission
would say. They would say, "We have various bodies and we
have extended an open invitation to anyone else who is not organised
or a member of the body. What more can we do?" I would scrutinise
that. The transatlantic question is a different one because where
the two industries differ across the board and have to come together
there is a well established mechanism for doing so and e-commerce
is one of the items that it considers. More generally I would
question quite hard the voices of industry who say they do not
have a mechanism, and ask what do they want and what use have
they made of the mechanisms that exist?
759. I think it is primarily a criticism of
the traditional approach and that there is a feeling of exclusion,
that this is a new industry in many respects and they feel out
of it, that there is a traditional path established for consultation.
A. You mean that people listen to the old industries
and not to the new industries?
A. It sounds like the exact opposite of the
Stock Market. To be quite honest I do not know to what extent
that is true. You are going to Brussels. I would talk to the Commission
people and explore what mechanisms they have for consultation.
I am pretty certain they will give you an answer that looks okay
but you may wish to probe it. To cut a long story short, I do
not have a specific suggestion this afternoon.
Chairman: Thank you very much, Lord Brittan.