Regulation
and cooperation for the digital age
by Maria Livanos Cattaui, Paris,
10 September 1998
The Internet is no respecter of frontiers and therefore
cannot be regulated effectively within the confines of national jurisdictions.
What is by its nature seamless must not be torn and divided. The logic is inescapable,
underlined by the very title of the OECD's Ottawa ministerial conference: "A
Borderless World".
It will be difficult, if not impossible, for the
Internet to fulfill its promise if every country tries to impose its own laws
unilaterally, say on privacy protection or digital signatures, without regard
for the laws of its trading partners or those countries over whose territory
data flows.
Such a setback would stifle the greatest commercial breakthrough since the Industrial
Revolution. Human beings would have proved themselves incapable of taking full
advantage of the product of man's technological genius, and nations would lose
the economic and trading advantages offered by the information revolution.
Surely this will not happen. The rewards of success
are too great for failure to be contemplated. The number of Internet users continues
to double every year. According to some estimates, by 2005 one fifth of the
world population - one billion people - will have access. Ira Magaziner, Senior
Adviser to President Bill Clinton on Internet issues, has estimated that in
the USA alone, business-to-business purchases via the Internet will reach over
$300 billion by the year 2002, compared with a mere $2 billion in 1995. Many
feel that his projection is much too conservative.
A web site is accessible to anybody in any corner
of the globe whose computer can go on-line, opening the markets equally to the
multinational with huge marketing resources and to the artist living and working
in a remote Peruvian village. This fact alone offers whole new business vistas
to every commercial enterprise. It makes the Internet the great hope for ambitious
entrepreneurs in the developing and emerging economies. Everybody is in with
a chance.
But there has to be trust across the whole spectrum
of users and providers of services and goods, long accustomed to regulation
and protection in a paper-based environment with a different set of parameters.
This trust can be fostered and developed in a number of ways. For traditional
commercial reasons, business has a strong incentive to safeguard consumer interests.
One way we are doing this is by pressing ahead with consumer empowerment, for
example by perfecting the technologies that allow a parent to install an electronic
filter to keep harmful material away from the children.
Business-to-business transactions are already where
the main commercial action is on the Internet, but more needs to be done to
create confidence in dealings over open networks. An electronic contract must
be as valid and enforceable as a paper one. Confidentiality of messages must
be preserved. There have to be means of identification and authentication for
business messages and transactions. Copyright and trademarks must be protected.
Provided that governments and business together
can set the right conditions, electronic commerce has the potential to become
the driving force for world economic growth well into the coming century. That
is why the OECD is to be commended for calling the Ottawa conference and why
business is determined to play its full part in making it a success.
Business organizations whose members account for
the bulk of electronic commerce in almost every country have joined together
to provide private sector input both in the run-up to Ottawa and at the conference
itself. Besides the International Chamber of Commerce (ICC), they are the Business
and Industry Advisory Committee to the OECD, the International Telecommunications
User Group, the World Information Technology Services Alliance and the Global
Information Infrastructure Commission. Many other business groups join them
in presenting a common action plan for electronic commerce to governments on
the occasion of the Ottawa conference.
These bodies believe that governments need to coordinate
their approach with the greatest care and regulate with a light touch. Business
wants the development of electronic commerce to be led primarily by the private
sector, responding to market forces. Business, not governments, should set the
standards. Information technology, and with it commercial practice, is evolving
too fast for it to be otherwise.
As
a general rule, business urges governments to
leave untouched all those areas – and this should be most of them –
where there is no clear evidence that business conduct will have a negative
effect on society or the fundamental rights of individuals.
This is no revolutionary demand. ICC has almost
80 years' experience in making the rules for paper-based trade. Governments
have been content to see this happen, having learned to appreciate the beneficial
effects on trade flows of voluntary rules that are applied universally every
day.
ICC derives its authority as a rule maker from
its unique position as the only business organization whose membership covers
every business sector and is drawn from the entire world. Few international
transactions are completed without ICC rules being invoked, whether they be
the trade definitions known as Incoterms, model contracts or the rules governing
letters of credit.
While ICC rules are voluntary, that does not mean
that they lack teeth. It is sometimes forgotten that once ICC rules are freely
incorporated into a contract, the clauses become fully enforceable for the contracting
parties. Courts often refer to ICC rules as though they are part of international
law when handing down judgments.
Business would like to see governments concentrate
on providing consistent basic legal guarantees for effective global enforcement
of essential rights in e-commerce, for instance the protection of intellectual
property. To use the Wild West analogy so often cited in the context of the
Internet, the saloon in a cowboy town could not stay in business without local
law and order. Robbers, thieves and cheats have to be kept out or be deterred
by sanctions.
Where government regulation is unavoidable, it
should be internationally harmonized and coordinated. National or regional laws
that are internationally incompatible create a fragmented global market, weakened
by the inevitable uncertainty about which rules apply. Worse still, conflicting
legislation can lead to trade disputes when applied extra-territorially. The
recent tensions between the United States and the European Union over the EU
Directive on data protection have been a timely reminder of the need for international
harmonization of regulation.
The dividing line between government and business
responsibilities for Internet governance also needs clarification. Furthermore,
international organizations must ensure that their initiatives do not duplicate
or contradict each other. As in so many other aspects of economic globalization,
the UN and other intergovernmental organizations have a crucial coordinating
task in creating a global framework of rules within which e-commerce can flourish.
To use a colloquialism, governments have to get their act together. Business
has already done so, as the action plan for Ottawa demonstrates.
An annex to the common business action plan contains
summaries of various business initiatives, including those of ICC. They are
evidence that comprehensive business self-regulation of electronic commerce
is well on its way.
The various rules and business best practices ICC
has issued provide a common framework of self-regulation for all players in
electronic commerce. These rules are the joint work of individual business experts
from many different countries and industries. They represent a broad consensus
and can be built on by more specialized business organizati
ons for specific
regional, sectoral or professional needs.
Each of our 14 commissions,
dealing with every aspect of international business from advertising to taxation,
is concerned with the implications of e-commerce. ICC, like the other business
organizations that will be represented in Ottawa, is conscious of a sense of
urgency. We are all convinced that it is up to business to demonstrate that
it can control commercial misuse of the Internet before governments step in
to over-regulate, over-tax and over-censor.
The common action plan aims to achieve a consensus
between business and government on the issues that governments must deal with
and those where market-driven industry-led solutions are most likely to be found.
If business and governments are able to agree on
clear lines of responsibility, the Internet's commercial future will be assured.
It may be too much to expect a full answer to come out of Ottawa, but the OECD
conference could be a big step in that direction. It needs to happen soon. The
Internet waits for no one.
ICC has its own development programme of rules
and standards for the Internet that is well on its way to completion. Highlights
of the programme are:
- guidelines – known
as "GUIDEC" – for ensuring
trustworthy digital transactions over the Internet
- new model contract clauses
to protect personal information when transmitted across borders
- an
Internet marketing and advertising code suited to the varied sensitivities
of a global audience
- principles for a domain
name system that encourages electronic commerce
- E-terms: a repository
of electronic commerce legal terms enabling users to compose their contracts
on-line
- a framework
of rules for conducting transactions electronically.
Commission
on Telecommunications and Information Technologies
Other
ICC business policy texts