Developing a framework for global electronic commerce - includes related article on the Global Information Infrastructure

The United States Government is preparing a strategy to help accelerate the growth of global commerce across the Internet. An interagency (including the Department of Commerce) task force has worked over the past eight months to prepare a draft framework paper. White House Senior Adviser Ira Magaziner led the effort to develop a paper which lays out the principles the Administration believes should govern the development of electronic commerce on the Internet and outlines the actions that the Administration will take to realize its objectives. The proposed strategy establishes a set of principles to guide policy development and provides a road map for international negotiations, where appropriate. It also identifies which government agencies will take the lead in implementing this work.

Global Information Infrastructure

The Global Information Infrastructure (GII--see box), now less than a decade old, is already transforming our world. Over the next decade, whole populations once separated by distance and time, will find almost every aspect of their daily lives--their education, healthcare, work, and leisure activities--affected by advances on the GII.

No single force embodies this trend more than the evolving medium known as the Internet. Once simply a tool for a small number of researchers, the Internet has blossomed into an appliance of everyday life, a medium accessible from almost every point on the planet brimming with an inestimable range of data and information. In essence, the Internet has become the vehicle of a new, global digital economy which has enveloped the physical world, altering traditional concepts of economic, political, and social relations.

For example, students across the world are benefiting from instantaneous access to far-flung libraries, universities, and other troves of data via the World Wide Web. Doctors are reinventing their profession, utilizing tale-medicine to administer off-site diagnoses to patients in need. Citizens from all nations are finding additional outlets for personal and political expression, utilizing interactive fore on the Internet to voice their opinion and to listen to the views of others.

As the Internet democratizes societies and empowers citizens with information, it also is yielding profound changes in the classic economic paradigm of buyer and seller. New models of commercial interaction are developing as businesses and consumers participate in the electronic marketplace and reap the resultant benefits. Nowhere is this more evident than in the global trade in services.

World trade involving computer software, entertainment products (motion pictures, videos, games, sound recordings), information services (databases on-line newspapers), technical information, product licenses, and professional services (businesses and technical consulting, accounting, architectural design, legal advice, travel services, etc.) has been growing rapidly over the past decade, now accounting for well over $40 billion of U.S. exports alone.

The GII has the potential to revolutionize commerce in these and other areas by accelerating the growth of trade and thereby enriching the lives of people around the world. Specifically, the Internet, intranets, and other computer networks can lower transaction costs dramatically, and facilitate new types of commercial transactions and new arrangements of buyers and sellers that would make commerce easier.

Commerce on the Internet could total several billions of dollars by the turn of the century. Such commercial activity already has begun, with sales estimated at $200 million in 1995. Many businesses and consumers, however, are still wary of conducting extensive business over the Internet because of the lack of a predictable legal environment governing transactions. This is particularly true for international commercial activity where concerns about enforcement of contracts, liability, intellectual property protection, privacy, security, taxation and other matters have caused businesses and consumers to be cautious.

As use of the Internet expands. many companies fear that governments will impose disparate and extensive regulations on the Internet and electronic commerce. Potential areas of problematic regulation include taxes and duties, restrictions on the type of information transmitted, control over standards development, and public utility forms of regulation on services offered. Indeed, signs of these types of commerce-inhibiting actions already are appearing in many nations.

Governments can have a profound effect on the growth of commerce on the Internet. By their actions, they can facilitate trade on the Internet or inhibit it. Knowing when to act and, at least as important, when not to act will be crucial to the development of electronic commerce.

Recognizing the important role that government can play, the Administration already has provided strong support for the development of the GII. The 1995 GII: Agenda for Cooperation extended the vision of the National Information Infrastructure (NII) to a global platform. The next step is to ensure the natural growth of the NII and GII as an interconnected global marketplace. For this to occur, it is critical to ensure that governments adopt a non-regulatory, market-oriented approach to policy development around electronic commerce. There is a clear need to provide a transparent and harmonized legal environment in which business and commerce can occur. However, official decision-makers must respect the unique nature of the medium and recognize that widespread competition and increased consumer participation in marketplace choices should be the defining features of the new digital age.

The White House paper, as forwarded by the interagency group, suggests a set of principles, articulates a series of policies, and establishes a road map for international discussions and agreements, to facilitate the growth of commerce on the Internet.

Principle of the White House Paper

1. The private sector should lead. Though government has played a role in financing the initial development of the Internet, the expansion of the Internet and GII has been driven primarily by the private sector. For electronic commerce to flourish, the private sector must continue to lead. Innovation, expansion of services and participants, and lower prices will depend upon the Internet remaining a market-driven arena, not one that operates as a regulated industry.

2. Governments should avoid undue restrictions on electronic commerce. When two parties wish to enter into an agreement to legally buy and sell products and services across the Internet, they should be able to do so with minimal government involvement or intervention. Governments should refrain from imposing new and unnecessary regulations, bureaucratic procedures, or new taxes and tariffs on commercial activities that take place via the Internet. Impeding commercial activities in these ways will limit unnecessarily the availability of, and raise the prices of, products and services to consumers the world over, and distort development of the electronic marketplace.

3. Where governmental involvement is needed, its aim should be to support and enforce a predictable, minimalist, consistent, and simple legal environment for commerce. In some areas, government agreements will be necessary to facilitate electronic commerce. In these cases, governments should establish a predictable and simple legal environment based on a decentralized, contractual model of law rather than one based on top-down regulation. This harmonized legal framework should focus on protecting customers from fraudulent sales, protecting intellectual property from piracy, protecting privacy, ensuring competition, fostering disclosure and creating simple means for resolving disputes.

4. Governments should recognize the unique qualities of the Internet. All governments should recognize that the genius and explosive success of the Internet can be attributed in part to its decentralized nature and bottom-up governance. Governments also should realize that the Internet's unique structure poses significant logistical and technological challenges to current regulatory models, and should tailor their policies accordingly. Governments also should encourage the evolving industry self-regulation and support the efforts of private sector organizations to develop mechanisms to facilitate the successful operation of the Internet.

5. Electronic commerce over the Internet should be facilitated on an international basis. While recognizing the differences in national legal systems, the legal framework supporting commercial transactions on the Internet should be governed by consistent principles regardless of the countries in which the buyer or seller reside.

A Coordinated Strategy

The variety of issues being raised, the interaction among them, and the disparate fora in which they are being addressed will necessitate a coordinated, targeted governmental approach to avoid inefficiencies and duplication in developing and reviewing policy. Already, over a dozen United States government agencies are working on issues related to commerce on the Internet.

An interagency team will continue to meet in order to monitor progress and update this strategy as events unfold. Sufficient resources will be committed to allow rapid and effective policy implementation. In some cases, a small increase in resources could accelerate the government's ability to carry out the negotiations and pilot projects described in the White House paper.

There is a great opportunity for commercial activity on the Internet. If governments act appropriately, this opportunity can be realized for the benefit of all people.

To access and provide comment to the full text of the White House paper visit the White House Home Page at www.whitehouse.gov.

The GII represents the worldwide infrastructure that supports the transmission and delivery of electronic content, including the goods and services involved in electronic commerce. The Internet is a global matrix of interconnected computer networks using the Internet Protocol to communicate with each other. For simplicity, the term "Internet" is used throughout the White House paper to encompass all such data networks, even though some electronic commerce activities may take place on proprietary networks that are not technically part of the Internet. The term "on-line service provider" is used to refer to both, companies that provide access to the Internet and other on-line services, and companies that create content that is delivered over those networks.

COPYRIGHT 1997 U.S. Government Printing Office
COPYRIGHT 2004 Gale Group