Select Committee on European Union Minutes of Evidence


Examination of Witness (Questions 1040 - 1059)

WEDNESDAY 7 JUNE 2000

MR OLLI REHN

  1040. Sorry, compensate for what?

  A. Compensate for the lack of a single responsibility which in a way is a built-in factor, as I explained before, by the very cross-disciplinary nature of electronic commerce because it is very difficult to put into one corner or under one discipline.

  1041. Could you see an alternative structure?

  A. Yes. I can see two alternative structures, to take two extremes. One, let us say, the original structure which was very dispersed where each Commissioner would only cover his own field without any pre co-ordination at the level of the Commission. Mr Bolkestein would bring his proposals on VAT on e-commerce directly to the Commission without first consulting and working inside this informal working group or he could take his initiative on software patentability directly to the Commission without consulting the working groups beforehand. I think that would certainly be a worst alternative. The current "middle way" management is a form of soft co-ordination inside the Commission. The other extreme then could be that either the President's Cabinet or a certain Commissioner could be responsible in a way like in the preparation of the eEurope Action Plan for the whole co-ordination of policy making in the field of e-commerce. We made a mild effort when creating this informal inter-Cabinet group by us convening the first meeting. I chaired the first meeting, however afterwards we made an institutional innovation by inviting the President's Cabinet to chair the meetings in order to have a neutral broker because of having so many Commissioners responsible for so many areas. I think to some extent it has streamlined our work because there is no reason for unnecessary fear of turf battles among these five Commissioners and their Cabinets.

  1042. What about the other five?

  A. The other five?

  1043. They are out of it in the sense that they were in for the preparation of the document and for the follow through on the Action Plan but e-commerce is developing so quickly in so many areas one wonders whether the arrangements you have set up are temporary. I go back to my earlier questions: are they temporary, where are they going and what about those outside who, one way or another, will have to face the implications of the development of e-commerce increasingly into their areas?

  A. First of all, this group will certainly be open to other Commissioners if it is useful to the group or some individual Commissioner. There is no problem involving, for instance, Vice-President de Palacio at some point if we are dealing with especially transport related issues. In the same way we could say if postal services were not Bolkestein's special responsibility we should have a Commissioner responsible for postal services in the group because that is so important for electronic commerce. On the other hand, you have to work efficiently and avoid unnecessary burdens for Cabinets and Commissioners who are already over-burdened. It is simply rationalisation of work to have these five mainly responsible for e-commerce. That is the sole reason. I do not see it absolutely necessary in having Barnier, for instance, as a member of the group because the link to structural funds is not so important for e-commerce although, in fact, with structural funds in some Member States, at least in a certain Member State I know rather well, work is being done on increasing the awareness of small and medium sized enterprises to adopt e-business and e-commerce business models.

  1044. I think we will have to leave this otherwise we will not get to any of the other issues. It sounds to me as if it is still quite fluid. It is a bit like e-commerce, it is on the move.

  A. That is right. Certainly it is temporary or, as the French say, indéterminé for the time being. If at some point a better structure needs to be set up, why not? Of course, that is very much in the hands of the President's Cabinet and the Secretariat General to think through all of these co-ordinating issues because one single Commissioner usually could not mend a situation even if needed because of the immediate fear of empire building and turf battles which exists in every human organisation.

  1045. You probably know that in the United Kingdom we have created an e-Minister and we have created an E-Envoy with quite wide ranging powers to go into territories hitherto closed.

  A. That is true. That is the virtue of a prime ministerial government, you can act more quickly.

  1046. My final question, if my colleagues will tolerate me putting another one, is one of our witnesses suggested that the Industry and Internal Market Councils might be subsumed into a new Competition Council. Would you care to comment on that?

  A. Yes, or Competitiveness Council.

  1047. Competitiveness Council.

  A. My Commissioner has long reflected on this and has for a long time been of the opinion that we should indeed merge the Industry Council and the Internal Market Council and perhaps even the Telecom Council because of the strong linkages between telecoms and both the internal market and industry.

  1048. Where are the obstacles?

  A. Again, I speak more as a formal political scientist than a Commission officer. It seems to me that there is a will generally in the Member States and among the Ministers to guard / retain certain Councils to have their own policy making forum at the European level. There may be other reasons as well but this is at least one of the key reasons. Of course, the other one is that among the 15 the responsibilities of the national governments do not always coincide. For instance, during the Portuguese Presidency the policy making related to the Information Society and the eEurope Action Plan was run by the Research Minister whilst, for instance, in the Finnish Government it is the Minister for Telecommunications who is responsible for this field.

  Chairman: That is very helpful. We have some questions about Finland from Viscount Brookeborough.

Viscount Brookeborough

  1049. I think in a way you have answered the criticisms of the Finnish Parliament's Committee for the Future because you have pointed out that you have addressed the digital economy and e-commerce. First of all, are you quite happy that you have? Secondly, you seem fairly relaxed about the fact that the targets for e-commerce will be met by 2002 and yet quite clearly we will still be behind the US. Are these targets ambitious enough? Should we be relaxed about it, as you seem to be, in the light of the fact that in America people are incredibly energetic about pushing their targets further and further and not stopping? Do these targets go far enough?

  A. As regards the creation of a regulatory framework, a European policy framework for electronic commerce, these are both relevant and ambitious targets in the sense that if we were to achieve these in time by the end of this year we should have in place a single on line market for electronic commerce instead of having, for instance, 15 fragmented regulatory frameworks, which would be the other alternative and would certainly be an obstacle for cross-border electronic commerce. European enterprises and consumers have to move on if we are to see a flourishing electronic commerce in Europe. The other question then is in relation to the civil society, the consumers and enterprises, how do they move on? There is no panacea, no magic trick, for that. Our task is mainly to focus on the creation of the legal framework and to increase awareness of especially small enterprises to adapt to new business models. At the end of the day we have to rely on private initiatives of private enterprises and private citizens to see the possibilities of electronic commerce.

  1050. And the individual Member States to promote it?

  A. Indeed. The legal framework is only one point, the legal framework of e-commerce. Take another relevant area, that is, the regulatory framework of telecommunications because that is related to the price of the Internet. If you look at the economics of the Internet, some old rules of basic economics are still valid: in those countries where you have the cheapest price for Internet use, like the US, Canada, Finland and Sweden, you have the heaviest use and highest Internet penetration. The United Kingdom is actually moving very fast and maybe, in fact, ahead of other European countries already now after the events of the recent weeks in that field. There Europe and the Member States can make a difference in the sense that if we are able to pursue the unbundling of the local loop, increase competition in the local telecom market, that is the way to reduce prices, to receive cheaper and faster Internet access and, again, that is a way to speed up the take up of e-commerce in Europe.

  1051. Do you feel that Committee's report was slightly unjustified in the light of the present state of events?

  A. To be honest, I know most of the people both from the MP side and from the secretariat side, I am not sure if they are mere innocent bystanders, because they have clearly not been aware of what is going on in the sense that both in the field of the legal framework of e-commerce and telecommunications we are moving very fast. Not to forget, I may add, we are working currently on the new telecom regulatory framework and we intend, or we shall present, that for the Commission to be adopted on 27 June. That process started in November. We have had public consultation, report, etc., and I do not think we could have worked too much faster than this.

  1052. If you are happy that the Commission has done everything that it should be doing for the progress of e-commerce and so on, which are the countries in Europe that you think are lagging in their efforts to promote it, especially to SMEs? There has to be a slow and a fast, there is Finland.

  A. I would be willing to answer but, however, am not able because my database does not include a relevant answer to that. My recollections are too random to give any relevant answer.

Lord Paul

  1053. At the November 1999 Telecommunications Council, we understand that you promised to push forward EC guidelines for self-regulatory solutions for e-commerce. To what extent is the Commission putting money and resources behind this?

  A. We have, in fact, two streams of working. We have one related to working together with the enterprises and business sector and the other one is our own work where we invest some funds to develop Alternative Dispute Resolutions. Concerning the first one, Mr Liikanen and Mr Byrne together—Mr Byrne I think bearing the main responsibility—have created a forum called e-Confidence Forum, which includes both public authorities, the Commission, chief executives of some enterprises and the consumer organisations, of course. Its aim is to advance the self-regulatory process in terms of creating standards, certificates, trustmarks and self-regulation of dispute settlement. That work is on its way and we hope that in the course of this year we can have concrete results from this e-Confidence Forum. Concerning to what extent the Commission itself is investing, I do not recall the exact figure but it is in terms of millions of euros to work together with industry under the Information Society Research Programme. We are doing concrete work on how to develop credible trustmarks and ADRs. I can try to get you the exact figure[2]. We have some work going on under the IST programme.

  —  If there is advanced technology development and experimentation involved, for example to resolve disputes online, an R&D project proposal can be submitted to the Information Society Technologies Programme, in particular in the Key Action II, where there is room for mediation systems. We expect mid June a call for proposals to be opened (that is, at that moment in time the exact information about the type of projects that can be submitted and about the procedures and critical dates to submit a proposal is made available at www.cordis.lu/ist). That call will close mid Sept, that is, proposals need to be in before the closing date.

  —  If the intention is rather to bring together parties to build consensus about specifications and guidelines a supporting measure type of proposal can be submitted at any moment in time. Details are also at www.cordis.lu/ist.

  Typically R&D projects are co-funded on a 50 per cent basis, whereas for supporting measures funding may go up to 100 per cent for certain categories of work."

  1054. If you kindly can. My next question—quite a bit of which you have already answered—are these guidelines likely to impact on the initiative being carried forward by Commissioner Byrne's Department on Alternative Dispute Resolution?

  A. They are connected.

  1055. Yes.

  A. They are fully co-ordinated so that both my Commissioner and Commissioner Byrne, together with their Cabinets and services, have several times discussed and reflected on who does what. Roughly the division of labour is that Commissioner Byrne is responsible for the e-Confidence Forum while Commissioner Liikanen and his services are responsible for all the research work done under the IST programme. I should add that my Commissioner is active in the Global Business Dialogue for e-commerce together with Commissioner Lamy, which is another forum where we try to advance methods of Alternative Dispute Resolutions.

Lord Faulkner of Worcester

  1056. If I could ask about whether you feel the EU and Member States are doing enough to respond, particularly to consumer pressure? We were, for example, getting suggestions that maybe there should be an EU ombudsman for e-commerce who would have a link with national ombudsmen in each of the Member States or even possibly the appointment of a CEO who has overall responsibility, who deals with the governments and consumer industry and so on. Do you think there is more that ought to be done than is being done?

  A. That is a question which we have only reflected on so far. I think also in the future our policy is to rely very much on the self-regulatory arbitration between the business enterprises and consumer organisations. We see that the Commission can at best be a stimulator and proactive broker in that context. We trust and we seriously expect that the enterprise organisations and enterprises themselves on the one hand and consumer organisations on the other hand will be able to agree on certain European certificate standards and methods to create ways to conduct on-line Alternative Dispute Resolutions. We have a network already of consumer ombudsmen in, if not all, most of the Member States.

  1057. What about an overarching one who has central responsibility and who deals with individuals? Have you thought about that?

  A. At least at the outset we consider that the more effective way is to rely on the national ombudsman and their network. If there is demand from the Member States to create a European ombudsman then we will rethink it but the basic instinct of the Commission nowadays is to be very careful in demanding new competencies. Also, this reliance on the network of 15 consumer ombudsmen is in line with new fields of creating new methods of policy co-ordination in Europe which have come out of Lisbon. The eEurope Action Plan will be an excellent testing plan to see how the benchmarking, setting up targets and target dates and effective monitoring, will work. There is some idea and I am quite excited to see how it will work but, of course, "soft" law is always something different from "hard" law.

Chairman

  1058. One of the ideas that you came up with is the .eu top level domain being attached to your European e-commerce domain names. Where are you in the negotiations with ICANN? Is that the appropriate forum for taking these kinds of issues forward now or does that need to change? Should the governmental advisory committee have a stronger voice in ICANN rather than it being run as this independent private enterprise operation as it presently is?

  A. I must say that I have been very surprised how complicated it can be both externally and internally to get this .eu top level domain name registered. Externally because the ICANN seems to be an organisation where, for instance, the EU does not have a very strong role. Recently we have been able to get more of a say and a voice inside ICANN so the situation is not hopeless. Although I am by no means an interventionist by nature, my instinct is that more clearly defined governmental involvement in the work of ICANN would be advisable. Without going into any details, I must say that I have been quite surprised by the US reaction to our request because they are trying to wash their hands of this. I have some suspicion whether it is only their willingness to rely on the ICANN private structure or whether there is some—

  1059. Hidden agenda?

  A. Hidden agenda, yes. I am not saying anything more but that suspicion could be in some people's minds.


2   The witness subsequently added the following two points:
  (1)  "We do not allocate funding specifically to individual topics. There are several tens of millions available for this year's proposals, but that is in the area of e-commerce and e-work overall, which of course contains many topics and in which there are a few hundred proposals coming in. There tends to be a severe selection following the evaluation by experts. Typically proposals receive between 0.5 and 2 MEURO of funding, but less and more is also possible."
  (2)  "It is indeed possible to submit requests for co-funding of work in the area of alternative dispute resolution, under certain conditions: 
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