Select Committee on European Union Fourteenth Report


347. We started this inquiry with the objective of investigating "in the context of EU policy" what the EU and United Kingdom were doing "to develop and co-ordinate policy on e-commerce".[203]

348. We are deeply indebted to the large number of witnesses who wrote to us, e-mailed us, or who appeared before us.. The subject of the inquiry stimulated a wide-ranging response, and it is to our regret that we have not been able to address all the issues raised by witnesses. But in trying to do justice to the evidence, we have inevitably expanded the scope of the inquiry. Even so, we are conscious that it represents a brief glance at a phenomenon which grows daily. We sought to concentrate our inquiry on the effect of e-commerce on business and the customer, to see what regulation was needed, if any, and to see how the national experience meshed with the regulatory framework being laid down in the EU.

349. We were struck by the enthusiasm which this new phenomenon has stimulated, and the willingness of people and organisations to try to adapt quickly to what may be seen as a new industrial revolution. We have also been impressed by the way in which Member States have tried both to attract e-commerce activity and at the same time to find the right balance for regulating it. And finally, we have tried to look, albeit briefly, at the way in which governments apply the new technologies for delivering services to their citizens and for adapting existing structures to the changes that these new technologies demand.

Policy Development and Co-ordination

United Kingdom

350. The [email protected] paper (see paragraph 171 et seq) was well received and continues to be so. It lists some 60 targets which are monitored on a monthly basis by the E-Envoy as an annex to his report to the Prime Minister. The great surge of activity recorded in paragraph 171 et seq marks some of the more important initiatives now beginning to issue in areas which affect e-commerce. They establish the broad framework. The question will be whether or not these initiatives will be capable of implementation. It is perhaps early to make a judgment on this, for example the work to collate the e­strategies of various Government Departments moves to a new stage in October, when they are submitted to the E-Envoy.

351. The Government has made a good start and we have no doubt about its intentions and commitment in this area. But we have yet to be persuaded that real change is happening and at the speed which the new technologies demand.

The EU

352. At the level of the EU, it was clear when we first began to take evidence that the eEurope Action Plan as originally drafted did not strike industry as being relevant to their concerns. The Finnish Committee for the Future, in its report to the Finnish Parliamentary Grand Committee was severe, and argued that the Action Plan did not focus sufficiently on industry.

353. Most of the Finnish Parliamentarians' criticisms were effectively answered in the Progress Report which was submitted to the Special European Council at Lisbon on 23 and 24 March 2000, which changed the nature and scope of the eEurope Action Plan to the extent that, and with the exception of the failure to emphasise the importance of industry, it can now be argued that the EU has taken the political initiative towards matching the United States and other global competitors in embracing new technologies. Above all, the speedy adoption of the Action Plan, its endorsement by the European Council, the setting of measurable targets, and the decision to benchmark progress, demonstrate political will and a sense of urgency at the highest levels. On the issue of the development of policy, therefore, the EU scores highly.

354. In the Commission, some aspects of co-ordination have gone reasonably well in the early stages. Under the Chairmanship of President Prodi's Cabinet, five Commissioners meet regularly, as do their Chefs de Cabinet.

355. Commissioner Liikanen has a divided responsibility but he is recognised as the driving figure in the Commission behind the promotion of e-commerce. He acted as sub-contractor to the President in co-ordinating the work associated with the eEurope Action Plan. According to his Chef de Cabinet, the Working Group of five Commissioners, and the supporting meetings of Chefs de Cabinet, has "compensate[d] to a significant extent for the lack of a single responsibility [for e-commerce]".[204]

356. The major Commissioners, whose responsibilities embrace aspects of e-commerce, are working effectively together. They are working towards more global solutions in the framework of the Global Business Dialogue. An example of this is the e-Confidence Forum which Commissioners Liikanen and Byrne have created, which includes public authorities, the Commission, industry, and consumer organisations. The aim of this forum is to advance the self-regulatory process by creating a standard certificate for trustmarks and by the self-regulation of dispute settlement.

357. The current Inter-Governmental Conference (IGC) is dealing with a number of structural issues. One of these is the size and composition of the Commission. The current expectation is that all Member States, old and new, will want to retain or to acquire the right to nominate a national Commissioner to the European Commission. On the face of it, this might make the College of Commissioners unwieldy. It has been suggested that there might be more Vice-Presidents and, if the IGC determines this to be the way forward, then the role of the Vice-Presidents could be that of ensuring co-ordination across all the "vertical" Directorates-General. Subjects such as e-commerce, or indeed all aspects of the Information Society addressed in the eEurope Action Plan, could thus fall to a Steering Committee at a high level in the Commission. This would make for coherent policy.

358. But co-ordination in the Commission is only one part of a very complex equation. There has to be similar co-ordination in the Councils and the European Parliament and in the relationship between three institutions.

359. The Internet drives at a very fast pace and inevitably it will produce circumstances which call for regulation.

360. It is therefore essential that the processes of legislation be speeded up. There should be a faster track. The way in which the Commission and the Parliament worked to adopt the e-Commerce framework Directive is a model of how these institutions can react rapidly. (It is important, too, that Member States revise their own systems of transposition into national law so that the impetus gained by fast action in the institutions of the EU is not dissipated at national level.) However, it would be unwise to regard the process which produced the e-Commerce Directive as one which will necessarily apply to subsequent Directives. The European Parliament was unhappy at the way in which the Parliamentary process was applied in this instance. MEPs argued that it was the role of Parliament to examine and, if necessary, revise Directives, and that speed of enactment, however desirable, was not the main criterion for Parliamentary action.

361. The Parliamentary process is an essential part of legislative action at EU level. Nevertheless, it is also evident that the improvised procedures which achieved success in the case of the e-Commerce Directive will have to give way to a more formal system. We would argue that this requires a serious look at the way in which legislation is processed in and between the institutions of the European Union to see whether or not a fast-track system can be established.

The Future?

362. Those who have tried to predict the way in which technologies develop, and the effects they have, have usually been proved wrong. Governments will have to position themselves to react to the unpredictable in the growth of e-commerce. The role of Government should be to ensure that the necessary infrastructure exists to provide the means of connecting the market and the customer, and to ensure that existing laws are not used to hamper the growth of e-commerce. Self-regulation only works in the context of a realistic threat of government interference if self-regulation fails. But the problem with laws and regulations is how to enforce them, and where. The Internet has turned the concept of jurisdiction upside down, and we see a serious need for international conventions to deal with this new phenomenon.[206]

363. The new technologies increase social divisions if the poor or disadvantaged are denied access, but they narrow the difference if there is equality of access. In a world where information is power, systems that reduce the cost of information empower the poor. We have not dealt with employment in this inquiry, but e-commerce will inevitably make certain jobs obsolete, if at the same time it improves the efficiency of workers. The employees who will suffer most are the ones who are unable to re-train for the new jobs. Education will therefore clearly play an increasingly important role in how our societies adapt to these new technologies.[207]

364. The emergence, development and exploitation of e-commerce would not have happened without the operation of enterprise, innovation and vigorous competition. These characteristics seem to us to be essential for the further development of these technologies, which will bring considerable benefits to society. In framing policies with respect to e-commerce, these are concepts which the Government should bear in mind. In our view, governments should provide the framework for open, competitive and transparent markets, and adhere to the policy of regulating only where essential.

365. The Committee considers that policy development and co-ordination of e-commerce in the EU raise important questions to which the attention of the House should be drawn, and makes this Report to the House for debate.

203   See the Call for Evidence, Appendix 3. Back

204   Mr Olli Rehn, Q 1036. Back

205   Adhocracy Consulting Ltd (UK & AUS) and DIT Solutions (UK) Ltd, p 389. Back

206   Dr Michael I Shamos, p 182. Back

207   Dr Michael I Shamos, p 182. Back

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