Select Committee on European Union Written Evidence

Memorandum by the Trades Union Congress (TUC)


  Electronic forms of communication and commerce are rapidly increasing in importance in the lives of many. It is essential to ensure that the benefits these new forms of communication offer are fully exploited and that they are available to everyone. The social dimension of e-commerce needs to be addressed in order to ensure that the economic gains from e-commerce and globalisation are shared by all.

  Regulation is vital to ensure that e-commerce is compatible with democratic processes and to help to spread the gains. Trade unions must be involved in discussions relating to e-commerce as the effects on employment, job security, work organisation and industrial relations will be wide ranging.

  Whilst the use of e-commerce is growing quickly, particularly between businesses, the absolute level that it is growing from is small. Even in the US less than 1 per cent of retail sales are made using the Internet.


  Active labour market policies are required to bring the adaptability that is required to ensure social cohesion and inclusion. E-commerce has the potential to polarise the work force between the information haves and have-nots. The growth of e-commerce should be used to improve working lives and conditions.

  Employment and social policies will need to span across national boundaries and international commitment to core labour standards is vital to prevent the exploitation of labour in less developed countries.

  Companies are free to employ the cheapest labour available to them whether this is in a high unemployment area of their own country or whether it involves searching out countries with the lowest labour costs. Whilst this may be a useful source of jobs and income for these countries, international bodies must ensure that the migration of work (eg data inputting) does not lead to the exploitation of workers. It is therefore vital that the EU should work to promote core labour standards as set out in the ILO's Fundamental Declaration. The link between core labour standards and trade must be examined and the TUC believes that a Working Group should be set up at the WTO to examine this link with the full co-operation of the ILO.


  In order for the full potential of the Internet and other modern forms of communication technologies to be fully exploited it is necessary for employees to have the appropriate skills. Failure to rise to this challenge means that companies will under-perform. Countries may find themselves increasingly unable to compete in the global market as technology improves the knowledge of consumers so that they are better able to seek out the best purchase.

  Without the safety of customers who are driven to make their purchase at least partly because of location many uncompetitive companies will be unable to continue to operate. It is therefore essential that employers are encouraged to back up their investment in information technology with sufficient training for their employees.

  The increasing use by companies of the Internet as their location of operation means that they are free to choose where in the world to physically locate. It is vital for UK competitiveness that UK employees have the skills and training to ensure that the UK is the first choice for companies, which will help to guarantee jobs in the UK and the stability of the UK market.

  Skills for employees and for consumers will increase the demand for e-commerce and will help to create the environment in which European companies can thrive and compete globally. The success of e-commerce will depend on the people that choose to use it. This demand will rely on not just their purchasing power but also on their knowledge, skills and motivation as well as the opportunities available to them.


  In theory the legal systems that apply off-line should apply in the same way to on-line transactions. As the volume and value of e-commerce transactions increases there is a growing need to address the problem of taxing e-commerce to ensure that the use of the Internet does not lead to a huge erosion in the tax base. There is a potential huge loss of tax revenue through unregulated trade on the Internet.

  Public responsibilities mean that the tax base must be maintained. Taxing Internet shopping on a comparable footing to domestic shopping will not act as a barrier to innovation. Failing to tax e-commerce penalises traditional forms of commerce and exacerbates social divisions. The poorest in society are often those least likely to have the means to access the Internet to purchase goods and services. This means that they will continue to rely on traditional forms of shopping and will have to pay higher prices than those who have the skills and hardware to shop online.

  The OECD[92] reported that users of technology tend to be well educated and to have higher than average incomes. As household income increased by $10,000 the likelihood of owning a computer increased by 7 per cent. Canadian data quoted by the OECD report also showed the same distinct correlation between income and Internet access.

  Close international co-operation is needed to ensure that this and other matters are addressed. A system of taxation must apply and be agreed internationally to avoid loop holes or double counting. It is vital to ensure that the growth of trade is not hindered by unnecessary regulation but that the rights of consumers, suppliers and governments are protected.


  The social dimension of e-commerce requires a regulatory framework to be put in place. Good governance would help to ensure universal access which is vital to underpin the social dimensions of e-commerce. Good governance would also cover the promotion of privacy and help to ensure standards in content. Secure means of conducting transactions are vital to promote confidence in consumers. Regulation should cover security of transactions, the contractual basis of e-commerce as well as the regulation of electronic payments.

  The UK's Electronic Communications Bill will help to promote the use of e-commerce for example by implementing the EU Electronic Signatures Directive. Unless this is promoted, agreed and then regulated on an international basis, however, the impact that it can have is limited. The truly global nature of the Internet means that global regulations are required to provide the stability and certainty that is needed to encourage consumers to participate.

  As John Browning, co-founder of First Tuesday, said (and quoted by Lord Sainsbury of Turville in the House of Lords debate on the Electronic Communications Bill 22 February 2000):

    "Creating a regulatory environment that makes the electronic realm at least as consistent, predictable and trustworthy as the physical one is the most important thing Government can do to promote the new generation of Internet entrepreneurs transforming Britain's economy—and the world's".

  This strongly makes the case for regulation. Regulation alone can provide the stability that is needed to give confidence to consumers and businesses using the internet. Waiting to see if self-regulation will work will not provide consumers with the trust that they need to rapidly increase the use of the Internet and e-commerce.

  Consumers need to feel confident in the providers of cryptography services to allow them to verify who an e-mail has been sent by and to have confidence that their own e-mails are confidential from others. The EU should lead the way in pushing for global standards of services to be recognised and regulated.


  It is vital that there is equality of access to the Internet and other forms of electronic communication. The Internet provides a key source of information as well as direct access to goods and services which should benefit the many and not the few. Traditional intermediaries will be replaced with cheaper electronic forms of purchasing and it is therefore essential that it is not just the better off who are able to take advantage of this cheaper form of consumption.

  Government investment is needed to ensure that an adequate grid exists. In rural areas it will not be profitable for these commercial companies to lay down cable. Action is therefore needed by the Government to ensure that a split does not arise between the facilities available to those in rural areas and those elsewhere.


  Creators' rights in content industries are fundamental workers rights. The EU should commit to invest funds in research in anti-privacy measures and rights management systems. The EU should support and collaborate with the initiatives if other international institutions such as WIPO (World Intellectual Property Organisation) to develop international norms and regulatory measures to ensure that creators' rights are protected and remunerated.


  E-commerce and the Internet operate on a truly global basis. Global regulations are therefore required to give consumers and businesses the confidence needed to operate in this sphere. Codes of conduct and self regulation will not be sufficient to give this confidence and businesses operating over the Internet may find it difficult to compete with companies that do not choose to abide by self imposed codes of conduct.

  The Internet offers the potential for global access to world markets. However if sections of consumers are denied access to the internet then e-commerce could act to exacerbate the already growing inequalities in society. The rate of change that is stimulated by e-commerce should not be over exaggerated. Whilst the use of e-commerce is growing rapidly the base from which it is starting is currently very small. Ensuring equal access and reliability of service through regulation will help to increase the use of e-commerce and stimulate innovation.

February 2000

92   The Economic and Social Impact of Electronic Commerce, OECD, 1999. Back

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