Examination of Witnesses (Questions 1249
THURSDAY 8 JUNE 2000
1249. Good morning. Thank you very much for
giving us the opportunity to come and take evidence from you.
Rather than spend time on an introduction, because I suspect the
issues will emerge as we go through, we will go straight into
the questions. We note that OECD has done much to establish minimum
standards for codes of conduct. What plans do you have to facilitate
cross-border e-commerce globally? For example, what needs to be
done to encourage mutual recognition and awareness of trustmarque
schemes, and to put in place an effective and confidence-inducing
network of alternative arrangements for dispute resolution?
(Mr Dryden) The OECD is not an organisation
which is involved in the standard-setting business but rather
we try to facilitate a favourable environment for the development
of electronic commerce which we think is essentially going to
be private sector led. As a prelude to the answer to your question,
the issue these days is not so much whether it is regulation and
law, or self-regulation, codes of conduct and best practices but
how do you marry the two and what is the most efficient way of
an integrated approach of regulation and self-regulation? Regulation
is minimalist, transparent, stable and so forth but the key to
it is effectiveness. Does it work? The OECD's role in this, in
answering your first question on minimum standards, is a kind
of soft law approach by developing "guidelines". OECD
guidelines are recommendations of the OECD Council, that is, recommendations
with a capital "R". In other words, policy recommendations
which are effectively agreed to by the member countries of the
OECD. The secretariat also makes recommendations but the former
things like the 1980 OECD guidelines for privacy protection, the
1992 guidelines on security of information systems, the 1997 guidelines
on cryptography policy and, more recently, the 1999 guidelines
on consumer protection for electronic commerce. These set some
basic standards, bedrock principles for policy in those areas
but then it is up to governments to apply those principles, whether
enshrining those principles in law or whether encouraging self-regulation
by the private sector which respects those principles. An example
would be privacy where the OECD recommends certain privacy principles.
Various member countries have privacy laws and institutions that
enforce those laws while other countries, for instance the United
States, prefer a self-regulatory approach. The idea of soft law,
which is law at a more basic principle level, is to encourage
respect for some basic principles and to encourage international
coherence. When you come to things like privacy, for example,
it should enable trans-border data flow arrangements to come into
existence. Codes of conduct we believe are very important potential
tools for the encouragement of a favourable environment for electronic
commerce. There are a number of examples of attempts to set up
codes of conduct and promote thementirely in the private
sector developed by government or developed by some kind of ad
hoc committee which was a government/private sector NGO committee.
A very good example to study is the Netherlands code of conduct
where they have quite an interesting body called ECP.NL (Electronic
Commerce Platform Netherlands). They have set up a group to develop
codes of conduct with government people, with private sector people,
with NGOs. The idea is to favour the development of electronic
commerce. We are studying this and we have a project to collect
best practices on codes of conduct for electronic commerce in
various countries (international ones) and various sectors. We
have got to look at things like generic versus sector specific,
binding/not binding in order to find out what it is that makes
codes of conduct effective. We will publish a report and release
it to the member countries and let them adopt it or not as they
1250. Do you monitor the activities of each
of the member countries when you issue your documents, your declarations,
on the framework that you see as being the principles that ought
to be followed? You are looking at the Netherlands, but would
you go to the UK, would you go to Canada and follow through in
(Mr Dryden) Yes. In performing this study we would
collect data from every country. We do not monitor specifically
the application or impact or follow-up in the individual countries
unless our member countries ask us to do so. For instance, we
have just produced some principles for consumer protection. Our
member countries have asked us to monitor follow-up on that, but
for resource reasons we do not systematically monitor anything
unless member countries ask us to do it as part of our work programme.
Another example is authenticationsurveying and producing
inventories of authentication procedures or so-called form requirements
for authentication in the member countries. Very frequently we
compile inventories of practices and approaches as a prelude to
doing an analytical study. In other words, we get the data and
put it on the table in a coherent way, allow the member countries
to discuss it and then we do our analysis after that. In the fields
you mentioned this is our general methodology.
1251. Do you ever get any requests from the
UK to go in and follow through their implementation of particular
principles that you have recommended in the framework document?
(Mr Dryden) The UK is always a very active participant
but the UK has not generally asked us to follow up anything in
particular. I am now speaking just on a personal basis. I happen
to be a UK citizen even though I am an OECD civil servant and
I think sometimes the UK under-uses the OECD a little bit. Some
member countries, because they pay for the OECD, believe they
should get their money's worth. The UK actively participates in
the work but sometimes not proactively. There are some exceptions.
The UK asked us to do some work on Y2K a few years back. The UK
proposed developing policy guidelines on authentication just 12
months ago. That was not retained as some other member countries
were opposed. But it is exceptional for the UK to say proactively,
"This is a project we want you to follow".
1252. Do they have to get the agreement of other
countries though to see it through to Council?
(Mr Dryden) Yes, we are a consensus organisation,
so proposals for work, even if supported by a grant and specific
project related resources, are subject to the agreement of the
member countries to conduct that work. The governing body is the
Council, the ambassadors of the OECD working on instructions from
capitals. They decide the overall programme, in general terms
usually, but then the fine detail is done on a committee basis
whose members are experts from the civil services of the member
1253. Can I ask you what your view is of the
ADR, accepting that the Brussels regulation will not be easy enough,
quick enough, simple enough, cheap enough, for everyday problem
resolution at personal or SME level? Perhaps you would like to
talk about them both.
(Mr Dryden) Firstly we do not participate in detail
in the policy formulation in the European Commission but the European
Commission participates in our work. First, a general remark about
the digital economy information society and the European Union,
which is that very often not globally harmonised solutions but
rather globally compatible solutions are desirable in this digital
economy global information society because of the trans-border
nature of the technologies. It is very tempting to say, "Look;
this is a trans-border issue so let us just all sit round a table
and agree what to do". That kind of approach to some extent
will work within the European Union where you have 15 very special
member countries who have a commitment to a single market. They
have the Maastricht Treaty, they have a commission which churns
out directives, and provided they go through the Parliament and
the Council of Ministers they are eventually enshrined into national
law. Therefore a harmonisation approach is a possible solution
to a much greater extent within the European Union than it is
on a global basis. That approach will simply not fly on a global
basis. Therefore that is where the OECD comes in. Our value added
can be to facilitate globally compatible solutions and globally
inter-operable solutions. The problem underlying all of this is
the question of jurisdiction and applicable law and so on. The
complexity of the legal situation already exists and the global
digital economy and global digital transactions just make things
worse. Of course it is an enormous opportunity and we must seize
this, but we must expect that the number of transactions, which
are complex in some way: trans-border, distance, will increase
by an order of magnitude. Therefore more disputes are likely to
arise. Individuals and small and medium enterprises are going
to get involved in this in a way that they did not do before.
Naturally alternative dispute resolution mechanisms are the great
hope for electronic commerce and not just commercial transactions.
There are issues to do with privacy, issues to do with business-to-consumer
of course, even business-to-business, even non-commercial things.
There are alternative dispute resolution mechanisms that exist
in cases like divorce or whatever you like. For electronic commerce
this is extremely important. We are looking very closely at how
alternative dispute resolution mechanisms can be favoured. At
the moment it is one of the hottest topics around. It has been
examined in the United States. Just yesterday and the day before
I had staff members out there participating in a meeting in the
US. For dispute resolution issues in the European Union we have
the European electronic judicial network for settling consumer
disputes out of court and we favour this but again their approach
is tailored for within those special 15 countries of the European
1254. It is obviously a very important topic,
not only because the disputes need to be resolved but because
without the facility for it people will not have the confidence
to go into it in the first place.
(Mr Dryden) Yes.
1255. From what you say am I being unfair to
say that the OECD has actually done very little work on this at
the moment globally and what you are perhaps doing is gathering
(Mr Dryden) Yes.
1256. Have you had an OECD conference specifically
on this problem or are you gathering information in order to have
it and then maybe come up with something?
(Mr Dryden) We have organised a conference which will
take place in December in The Hague. We are doing this jointly
with the private sector, the International Chamber of Commerce
and The Hague Conference on Private International Law. The three
bodies, the private sector people, the international law people
and the OECD, will sit round the table in The Hague on 11/12 December.
We are preparing that conference, identifying the issues, doing
some background work on it and trying to pull together the discussions
that are taking place around the world at the moment in the US,
in the European Union and in a purely private sector context.
1257. Could your organisation to have been perhaps
more proactive in that this problem was arising and, rather than
waiting for the EU to bring out a Brussels convention and for
America to bring out something and for Japan to bring out something,
if they had had a forum to talk within such as your own, which
is so influential, it might have been able to help shape them
to be a little bit more harmoniousor maybe they will be
(Mr Dryden) We have had it on the table for over a
year, that we wanted to go ahead much faster with this. In fact,
our member countries were unable to agree on an agenda and actions
to be undertaken early enough in order to have a meeting in the
first half of this yearwhich is when we wanted to do it.
We ran into problems of agenda: would jurisdiction be on the agenda,
what would the role of the private sector be with respect to the
governments, and so on. We ran into a little bit of troublebut
have managed to satisfy everyone. Some of our member countries
are a little bit concerned about the OECD going too fast. Half
of our member countries look at the OECD as being the think-tank
which comes up with the ideas, being very proactive and putting
tomorrow's issues on the table today. The other half of our member
countries say, "Hang on, do not go so fast. We have not thought
about what we want to do yet. When we have thought about what
we want to do then we will bring it to the OECD and tell you what
it is that we have decided."
1258. So who is old Labour and who is new Labour?
(Mr Dryden) I will not answer that one.
1259. Are you a transparent organisation?
(Mr Dryden) Yes.