Electronic Commerce covers a broad range of global activities, but at its core, is the buying and selling of goods and services electronically and over electronic networks, including the Internet and the thousands of related Intranets and private networksElectronic Commerce is the delivery of products, services, payments and information electronically over electronic networks including the Internet and other public and private networks. Many different forms of electronic commerce are already found on the Internet or related information services, such as on-line home shopping, interactive mail-order through catalogues, trading of securities, consultancy services, health services, educational offerings and electronic delivery of government services.

To develop, electronic commerce requires a globally harmonized legal framework. Industry and governments need to work closely together to identify which policies require change, addition or elimination to facilitate the Information Age. It is critical that any minimal regulatory approach be minimal, globally harmonized and independent of specific technologies. New regulations should not be imposed merely because commerce is being conducted in an electronic format rather than traditionally.

Moreover, it is critical to world-wide industry that electronic commerce is handled by interoperable technologies and through harmonized business practices that can be used throughout the global chain from small and medium-sized enterprises (SME’s) to major contractors and customers, including public procurement. Market-driven interoperability, and regulatory simplicity and harmonization are important to prevent industry from being faced with supporting multiple ways of doing business electronically, which will drive up costs and impede productivity. Industry-led, voluntary standards and best practices should be developed and agreed upon on a global level to maximize the potential for global electronic commerce.

The International Information Industry Congress (IIIC) hopes that the new electronic commerce infrastructure made possible by the Internet will grow and make a strong contribution to worldwide economic growth, social well-being and employment for people in many countries. In order to do so, a legal framework will be needed which should adhere to the following five principles:

• The private sector should lead, and the expansion of electronic commerce should be market-driven.
• Any regulation must be based on the free movement of goods, persons, services and capital, as well as the freedom to establish a business anywhere.
• Regulation of the Internet should be minimal, and limited only to that which is necessary and indispensable.
• Governments should support and enforce a predictable, minimalist, consistent and simple legal environment for commerce that relies on private contracts, with internationally harmonized default rules.
• Regulation of electronic commerce must meet broad publicgeneral interest objectives effectively and efficiently, taking business realities into account.

As the flow of information and commerce via electronic means continues to grow exponentially, so does its attractiveness as a potential source of tax revenue. Ironically, however, assessing special taxes on electronic transactions could produce just the opposite effect, stifling business expansion and job growth, and thus the tax revenue dollars they generate. Furthermore, governments should not tax transactions in the digital world which cannot be effectively taxed in the physical world -- in other words, tax policy should be neutral.

Where goods or services are ordered via the Internet and delivered through mail or similar means, traditional rules of taxation should apply. Where cross-border electronic transactions occur, or where goods or services are delivered electronically, there is a risk that tax regimes will conflict and taxpayers will be subjected to double taxation. Issues of tax jurisdiction need to be resolved on an international basis, adhering to existing principles, and in consultation with industry.

In the past, a new taxation scheme has been proposed in some countries, which attempts to tax the flow of information bits, the BIT tax. However, IIIC considers a BIT tax not to be a viable solution.

In the past, a new taxation scheme has been proposed in some countries, which attempts to tax the flow of information bits, the BIT-tax. However, IIIC considers a BIT-tax not a viable solution for the following reasons:

• it is expensive and almost impossibly difficult to administer; comprehensive schemes of bit monitoring and accounting for all transmission levels would have to be developed;
• resulting taxation would not correspond to the values of the carried transactions;
• its application is ambiguous, e.g. how would private and non-profit organizations be treated;
• it would require harmonized taxation schemes in all countries.

The IIIC believes taxation should be revenue neutral, consistent with established, internationally accepted practices, and administered in a non-intrusive manner. Governments, in order to realize the full economic potential of electronic commerce, must resist pressure to adopt tax policies that, in effect, discriminate against electronic transactions. Accordingly, we are strongly encouraged by the recent position papers published by the European Union ("A European Initiative in Electronic Commerce") and the United States government ("Selected Tax Policy Implications of Global Electronic Commerce"), which embrace certain key principles that are crucial to the creation of a rational, efficient international tax framework that will enable electronic commerce to expand and thrive. Specifically we support the following principles:

• Neutrality. Similar income should be treated equally, regardless of whether it is earned through electronic means or through traditional channels of commerce.
• Legal Certainty and Uniformity. Tax obligations must be clear, transparent and predictable, enabling the parties to focus on the transaction itself, rather than on the environment within which it is being conducted. Further, governments must clarify how existing taxation concepts apply to persons engaged in electronic commerce, e.g., the excise taxes on communications services, and the European VAT.
• Avoidance of Double Taxation. Tax rules must be based on agreements that clarify sourcing issues as they affect "permanent establishment" determinations and transfer pricing issues.
• Simple and Transparent Tax Authorities. Finally, the formation and existence of competent governmental tax authorities should be simple and transparent so that the obligations of taxpayers (e.g., the storage and submission of documents for tax payments) do not become unduly burdensome.

Electronic commerce can flourish only if there is a well-known and predictable legal framework for electronic transactions. Private enterprise is generally strongest where the legal environment is well developed, risk is minimized and adequate protection is provided for all parties -- businesses and consumers, buyers and sellers.

For example, electronic shopping mall owners should not be held liable for a tenant’s wrong doing solely due to the fact that they enable tenants to open virtual shops, unless they are directly involved in the tenant’s transactions. Currently, however, questions such as this remain unresolved.

At the most fundamental level, parties who wish to enter into business transactions in an electronic environment should be free to do so and to make agreements and write contracts voluntarily. However, in order to do so, they will need simple norms and laws, as well as international rules that create a single and well-understood playing field.

While this framework for electronic commerce should basically be the same as the legal framework that has governed commerce in the physical world, some efforts will be needed to ensure that there is neutrality non-discrimination between between electronic and physical transactions. For example, the law should be technologically neutral and not favor one form of technology over another, and robust in the sense that it does not prevent new innovations from occurring.

Rules will also need to be harmonized and mutually recognized, across jurisdictional boundaries, whether these involve states and cities within a country, or across international borders. Among the areas that need to be addressed are:

• Contract Formation. When an electronic "meeting of the minds" takes place, both parties must feel that their obligations and duties are clearly spelled out; that all disclosures have been made; that issues such as warranties and liabilities have been clearly addressed; and that questions of jurisdiction and dispute resolution are resolved.
• Authentication. When parties transact on the Webelectronically over networks, they must bothall believe that their electronic signatures are valid for legal purposes; that their identities and related attributes have been clearly established and accepted,; and that third parties such as certificate authorities are trusted and reliable, and subject to the minimal amount necessary of legislation or approval by a technical standards organization.

• Consumer Protection. Parties involved in electronic commerce must be assured that rules in areas such as advertising and disclosure meet national and state requirements either directly or through international agreements.
• Broader Implications. The legal framework must be clearly understood in relation to other electronic commerce issues, such as taxation, privacy, cryptography, access, and intellectual property.

Currently, legislative activities are underway both in the United States and around the world to address the legal issues:

• Worldwide, Germany, Korea, and Spain have already passed digital authentication laws, and many countries are considering them, including Argentina, Chile, Denmark, Italy, and Malaysia. The European Commissions and APEC are both studying broader systems, regional harmonization or mutual recognition. In the United States, more than 30 states have either passed or are considering digital signature laws. To date, the California law, which is market based and technologically neutral, appears to be the most progressive. In addition, state and legal officials are working to adapt the Uniform Commercial Code to the needs of electronic commerce. Finally, Congress is beginning to consider a national law to establish a floor under the states in the areas of digital signature and certificate authorities.
• Internationally, the United Nations Commission on International Trade Law (UNCITRAL) has completed a model law on electronic commerce and is working on one on authentication. IIIC supports UNCITRAL’s efforts, and believes its model law should be adopted in each country with as few reservations as possible.

The Internet and other computer networks are giving an ever-increasing number of people and enterprises access to the widest range of information, and including educational and cultural materials. For electronic commerce to flourish, the creators and owners of such materials will need to be reasonably confident that their intellectual property will be adequately protected and that they will be able to obtain equitable reward for their creations or returns on their investments. However, an appropriate balance must be achieved between the rights, interests and responsibilities of intellectual property owners, the providers of products and services, and users. We cannot simply transfer liability for infringement of intellectual property rights to on-line service providers and manufacturers or distributors of information technology devices. This would stifle innovation and retard the evolution of the technologies, including copy protection and copyright management technologies that are necessary to bring content to the digital environment.

IIIC supports efforts to clarify and harmonize the present copyright regimes so that fair boundaries for copyright liability are established and the legal protection rightholders enjoy today for their works will continue to apply in the world of digital transmission over networks. A clear and stable global framework is needed would appropriately assigns balanced responsibility for intellectual property protection. Such a framework should:

• FFocus on regulating behavior, not technology. Users who infringe should be held liable, rather than the businesses that provide the products and services. that may be used by others to facilitate infringement.
• RRely on and enforce existing copyright laws. Piracy is illegal and global enforcement of copyright laws is essential.
• RRelate the degree of liability to the degree of control that each party has in determining the content of a message or communication. For example, service providers who merely relay information without knowledge of the content should not be held responsible for the content they transmit. if they do not know, and have no reasonable grounds for knowing, that the copy or copies so created are infringing.
• PPromote the creative use of technology to manage access to and use of intellectual property.
• SSupport the continued evolution of harmonized copyright laws based on the principles embodied in the WIPO Treaty on Copyright, leading to the establishment of a global framework for protecting intellectual property that appropriately balances rights, interests and responsibilities. 

The Information Age is making large amounts of personal information more easily accessible. Consumer confidence in the ability of information technology companies to protect and manage personal information is critical to the continued growth of electronic commerce.

Industry, government and consumers share responsibility for the fair and secure use of individually identifiable information. That responsibility should continue to be met by a combination of private sector, consumer and government initiatives. Many nations, including the United States, Canada and those in the European Union, already have sophisticated legal systems to protect individual privacy, and the Canadian government has promised to introduce additional privacy legislation. More specifically, iIndustry should also take the lead by establishing effective self-regulation programs that are sector-specific, marketplace driven, and responsive to the needs of consumers. The Canadian Standards Association, for example, has developed a model code for the protection of personal information, which has been proposed as an ISO standard.

Suppliers and providers of information technology products and services who gather personally identifiable information have a responsibility to apply technologies consistent with existing laws and the privacy concerns of consumers. Companies that collect privately identifiable information They should:

• Provide customers with accessible and easy to understand information about their collection, use and disclosure policies.
• Furnish customers with a mechanism permitting the exercise of choice about disclosure.
• Safeguard customers’ information from unauthorized access and disclosure.
• Strive to keep customer records current and accurate.

Consumers should use their powers of choice in the marketplace and under existing laws to safeguard their personal information and the safety of children. They should seek information to educate themselves about privacy policies and empower themselves by using technologies that can help protect their privacy. Industry can support consumers with the widest possible availability of products and services that provide individual choice and control.

Governments, which have the authority to compel provision of personal data, must make special efforts in their own activities to ensure that such data is collected, maintained, and managed with appropriate regard to the protection of personal privacy.

Governments and industry should also work together to support and participate in consumer education efforts about the importance of fair information practices and privacy protection. Government and industry should together establish reasonable global harmonization of national privacy practices to foster the growth of global electronic commerce.

Internationally, the free flow of data must be ensured., and not possibly hindered by regulation on the protection of individuals with regard to the processing of personal data, Regulations should not act as new trade bariers that which oblige countries to prohibit the transfer of personal data to third countries that cannot assure and "adequate" level of protection. This could prevent companies, for example, from shipping data from one country to another, thus building new trade barriers, which would impede the development of electronic commerce and increase, rather than lower, regional disparities. This would run counter to the very nature of the Internet, which fosters and promotes the viability of remote locations.

The free flow of data should be ensured internationally and not be unnecessarily hindered by regulation on the protection of individuals with regard to the processing of personal data and on the free movement of such data. Personal data protections shouldahould not be used to create unjustified obstacles to international trade. This would be against the very nature of the Internet, which fosters and promotes also remote locations.

Industry is committed to working with government to enhance the security of networked information systems against both cyberthreats and physical threats. These efforts should be based on commercial, business-related criteria.

Appropriate technical measures for protecting information system security, such as product standards and testing services, have been and continue to be developed by the private sector. The technical tools for enhancing security (e.g., user authentication, encryption, cryptographic key management, and firewalls) are being developed in response to market demands.

Private and public sector organizations are actively engaged in a variety of voluntary standards development and testing activities, which are capable of meeting current and future requirements for interoperable networks, digital signature standards, and other technical standards and testing protocols. They provide an adequate basis for users to assess the security capability and reliability of products to be incorporated in information systems, and for insurers and others to assess security risks presented by these systems.

However, in contrast to the general availability of technical solutions and standards, education of users of information systems (including the international public) about security is inadequate. Education on security is the single most important function necessary to enhance information security today and in the future. Increased effort in education is necessary in twothree respects: (i) to provide the public with reliable information about information security risks and vulnerabilities, as well as the commercial availability of technologies and services to enhance security; and (ii) to educate users of information systems (including firms and other organizations, as well as individuals) about how to operate and manage information systems securely and (iii) to build trust in the effectiveness and security of electronic commerce systems and technologies..

No system in the Global Information Infrastructure is secure if the people using and managing it do not exercise responsibility through procedures they have determined are appropriate for their particular context and application. We believe, therefore, that substantial benefits to private-sector information system security would accrue from new educational and outreach initiatives, including improved cross-industry coordination of the educational activities of existing public and private sector organizations.

In order to meet these goals, we support on-going work in the private sector to create new organizations, such as the Information Security Foundation under discussion by industry in the U.S. Such an organization would provide for a credible, independent, private-sector platform for educating the public; a clearinghouse for disseminating and sharing information among system producers and large-scale system users; a home for international policy research; and a coordinated voice for private industry to engage in policy discussions with the government.

Businesses involved in providing commercial services over electronic networks have a substantial self-interest in adopting and promoting data protection. Hence, we believe that the availability and application of high quality encryption technologies will be an essential prerequisite for public acceptance and growth of electronic commerce. Stated otherwise, we believe that there will be no market for electronic commerce without a market for cryptography.

Governments need to establish policies that provide user access to high-quality encryption. encryption technologies necessary to assure confidentiality, integrity and authenticity of data. Cooperation among countries is essential to ensure that the regulation of cryptography is cryptography measures are consistent, technology-neutral and non-discriminatory internationally. Cooperation among countries, based on the "OECD Guidelines on Cryptography Policy", is essential to ensure that cryptography policies do not cause obstacles to international trade.

For all states, except those under UN-embargo, governments should not limit use, export and import of strong cryptographic products. They should not mandate that corporations place their keys in the hands of government agencies or government-approved entities. Government controls on encryption create competitive inequities and undercut the international premise of the Internet. Furthermore, there is the danger that overly-detailed laws promoting specific approaches to cryptography will enshrine current technology and restrict innovative computing schemes.

It is important that regulations regarding the use of cryptographic technology and on the role of Trusted Third Parties (TTP) be market driven, and in particular mandatory aspects be fully justified and kept to a minimum. Licensing conditions for TTP’s should be limited to their relationship with the law enforcement authorities, having in mind the view of operating in a global market.

The criteria applicable to the TTP-Client relationship (e.g. quality, liability, type of service) should be manifested in an international standard. The development of such criteria must be market-driven and industry-led. Where legally required, it is preferable that proof of compliance be based on a self-declaration regime or on third party certification.

Electronic commerce services will be based on the Internet and related private networks, which in turn depend on an open, competitive communications infrastructure and access affordable data communications services. Progress made by the World Trade Organization’s General Agreement on Tariffs and Trade and, in particular, the agreement reached in February, 1997, for the full liberalization of telecom services will provide a good foundation for further progress. Multilateral agreements are an important mechanism for promoting market access and should be expanded.

With this agreement, digital networks are directly fostering a new and fast-growing on-line economy, creating new categories of businesses and jobs (e.g., Internet infrastructure and software, Internet access providers, consumer and business content creation and distribution, on-line retail, financial and other services). The successful Internet economy will have a significant multiplier effect on economic development, job creation and competitiveness. It will spawn new ideas, new markets and new businesses. A successful GII/GIS will help determine the competitive advantage of nations and geographic regions for future decades.

Competition in the provision of communications services is the best way to ensure the availability of services needed for the advancement of electronic commerce. This will require renewed commitments by national governments to implement policies promoting deregulation and competition and the rapid implementation of the World Trade Organization (WTO) Agreement on Basic Telecommunications Services.

Especially important are policies that will foster a competitive environment in which affordable high-speed broadband networks, such as ISDN, xADSL technologies, cable, wireless and satellite, can flourish. These policies must have two goals: encouraging incumbent local providers to deploy new, advanced services at affordable rates, and enabling competitive providers to enter the markets, using the incumbent providers’ facilities and networks if necessary. This includes interconnection regimes that allow equal access and interconnection rights for data service providers, full collocation for competing providers, and access to unbundled network elements.

National governments must also commit to full implementation of the provisions of the WTO Agreement on Basic Telecommunications Services. This landmark agreement will liberalize trade in world telecommunications services -- a US$600 billion industry. It will, if implemented successfully, open nearly 100% of global telecommunications service markets to competition.

The Telecommunications Agreement promises major benefits for consumers and industry. This includes important opportunities for stimulating economic expansion in the emerging and developing economies of Asia and the Western Hemisphere. Basic telecommunications barriers -- estimated at a tariff equivalent of 150% in most members of the WTO -- will be removed when the Agreement is fully implemented. This translates into an approximately US$1 trillion gain in telecommunications service quality and cost reductions for consumers and industry, as well as enhanced telecommunications services quality. Benefits of the Agreement for signatories include expanded market opportunities for content providers, computer and software firms and companies involved in electronic commerce and data delivery. The Agreement will also serve to stimulate investment in the application of these technologies in rapidly expanding nations in Asia, Latin America, and Africa to meet the 21st century needs of education, training, and industrial development in the digital age.

The market access provisions in the Agreement ensure that information technology firms can provide goods and services through any network technologies. The Agreement also ensures that companies can invest in any telecommunications firm across the world. Most importantly perhaps, it includes enforceable commitments to pro-competitive regulatory principles. These principles are the center of successful outcomes for future liberalization efforts.

The Internet and other networks serve as important sources of information and offer a wide variety of services to users around the world. However, judgments about legality and appropriateness of content with respect to obscenity, violence, and hate speech, as well as cultural and linguistic diversity, vary from country to country, and depend deeply on the customs and values of each country. As such, governments should refrain, to the extent possible, from regulating the content made available over the Internet and should focus on promoting the use of the Internet. Heavy-handed regulation will disrupt the free and cross-border flow of information and stunt the growth of on-line services. Instead, governments should promote self-regulation by the private sector and the use of voluntary technical solutions developed by industry, such as the Platform for Internet Content Selection (PICS).

Effective implementation of electronic commerce requires the development and use of a significant number of critical standards. This massive standardization effort must be private sector driven, involving usersall parties concerned and avoiding special regional standards that would distort or lock out developments in other areas and create technical barriers to trade. This standardization effort must be achieved through reliance on internationally accepted standards, which should always be the objective.

Governments and users should make known their standards needs in order to meet their requirements while relying on voluntary consensus processes for their fulfillment. Such standards activities are adequately provided for in the private sector. It is most important that the development of critical interfaces for interoperability should remain the responsibility of voluntary standards organizations.

Because electronic commerce requires new technology to a significant extent, IIIC supports reliance on the most flexible mechanisms to achieve the required technical standards. The progress to date, e.g., in filtering mechanisms and payment systems, has been achieved through reliance on internationally accepted standards.

To the extent that users desire affirmation that products or services comply with applicable standards, IIIC supports use of Supplier's Declaration of Conformity since it is ultimately the supplier's brand name and legal responsibility that supports such affirmations and provides efficienteffecient protection of consumer’s interests.

It should also be noted that many of the technical barriers are not due to standards, but originate from shortcomings in the regulatory framework. We therefore suggest concentrating on the regulatory framework in order to facilitate fast development of the electronic commerce environment.

Active involvement of governments at all levels in developing and using electronic commerce will be instrumental in increasing consumer confidence and awareness of the benefits and opportunities of doing business over networks.

Governments should commit to selecting and developing pilot applications so that projects might complement each other internationally, permit them to share their experiences, avoid duplication, and ensure interoperability. Most importantly, any such projects should work closely with the private sector for input on technologies, standards, and consumer preferences.

In particular, issues that may emerge from the developments of electronic settlements should be resolved in the course of research and testing projects. We encourage the governments of respective countries to exchange information freely with private entities which are engaged in such projects.

In summary, the key requirements to foster the growth of electronic commerce include:

• Taxation methods that are neutral regardless of whether the transaction takes place through electronic means or through traditional channels of commerce, that are clear, transparent and predictable, and that avoid double taxation.
• An internationally harmonized legal framework that addresses the needs of electronic commerce with respect to authenticity, jurisdiction, and dispute resolution; and that relies on private contracts with default rules that supplement the intent of the parties.
• A clear global framework for intellectual property protection that appropriately protects the rights of content owners, but balances rights, responsibilities, and interests among content owners, users, and product and service providers.
• Privacy policies that balance personal informational privacy with the free, cross-border flow of data.
• Enhanced information security systems that are developed by the private sector in response to market demand, with emphasis on increased public awareness about information security risks and solutions.
• Data protection policies that permit the market driven availability and application of high quality encryption technologies and services, without government interference or regulation, except with respect to UN-embargoed countries.
• Competitive and open international telecommunications infrastructures and affordable data communications services, which are an essential prerequisite to robust electronic commerce.
• Control over content that is limited to self regulation by the private sector and the use of voluntary technical solutions such as the Platform for Internet Content Selection (PICS).
• Reliance on voluntary, consensus based, industry driven technical standards.
• Active involvement by governments in using electronic commerce, building consumer confidence, and selecting and developing pilot projects that are internationally complementary.

IIIC calls upon governments, and international organizations and business to actively promote electronic commerce as an opportunity for future investment growth, job creation and, hence, creating additional national wealth. Governments should set the scene today, and in cooperation with industry, determine and implement the necessary measureson a liberal basis to enable electronic commerce.

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