COOPERATION NEEDED

William Daley
Secretary of Commerce

Excerpts of remarks made July 8, 1997, at the European Ministerial Conference on Global Information Networks held in Bonn.

As we consider how the day-to-day affairs of business -- negotiating, comparing, contracting, selling, bidding, bargaining, buying -- are to be done via the Internet and the Global Information Infrastructure, we have one option: to move forward as partners. To do less is to risk turning this next great economic stage into another dividing line among nations, where language, culture, geography, currency, history, and technology still keep us from working together.

We are in a very fortunate position. The technology needed for electronic commerce already exists and is in place, right now connecting some 60 million people around the world in a seamless network.

Any transaction that is done from a distance, be it by telephone, fax, or mail, can be done cheaper, faster, and easier on the Internet. And given that in less than 15 years an estimated 1,000 million people around the world, nearly 20 percent of the global population, will be linked by the Internet, it is almost inescapable that the most efficient way to reach the most consumers in the global economy will be via electronic commerce. With the technology and the infrastructure in hand, the challenge before us is to deliver on this promise.

Again, we are in a very fortunate position. Because the principles most important to the Clinton administration for the Internet marketplace are shared by our allies in Europe.

We agree that electronic commerce will rely upon private sector-led solutions and market-driven possibilities. It will not be, and should not be, a government run marketplace. In fact, the government's role should be minimal: over-regulation should be avoided; those rules now on the books that are out-of-date or hinder electronic commerce should be revised or eliminated; and contractual agreements where buyers and sellers come together freely should rule the day.

When regulations are a must, they should be technology neutral, because emerging technology will outstrip regulations as fast as they are put in place, and should simply foster competition, protect intellectual property and privacy, and prevent fraud.

The pace of change in technology and in the applications of electronic commerce demand a new way of solving problems, driven by leaders in business and industry. One instructive example: Microsoft and Netscape put their combined talents and resources together to make sure using the Internet doesn't invite privacy abuses such as creating unintended access to files or networks.

This is how electronic commerce must evolve and be managed -- because it is business that has most vested in the success of electronic commerce, and that can only happen if business gives consumers around the world the confidence and the trust to transact on the Internet.

With the shared goal of a thriving, growing, and prosperous marketplace on the Internet, the issue is how to get there. President Clinton in July 1997 unveiled nine recommendations to guide American efforts with our partners to spur electronic commerce, and to ensure it evolves in the most useful, efficient way for all participants. They are:

• The Internet should be declared a free trade zone -- a tariff-free environment whenever it is used to deliver products or services.

• Because electronic payment systems are still emerging, it would be hard to develop a policy that is both timely and effective. Inflexible rules and regulations for electronic payments should be avoided in favor of case-by-case monitoring as payment systems evolve.

• Parties should be able to do business with each other on the Internet under whatever terms they agree upon. But predictable and widely accepted legal principles to support electronic commerce are essential for private enterprise and free markets. We will work for an international uniform commercial code to simplify and encourage electronic commerce under consistent rules and rights.

• We must protect intellectual property rights, so that music, movies, and art are available but that the piracy that already robs them of nearly $11,000 million in earnings does not explode in a global electronic marketplace. Sellers must know their intellectual property will not be stolen, and buyers must know they are getting authentic products. International agreements that establish clear copyright and patent and trademark protection to protect against piracy and fraud are a must.

• It is essential to ensure privacy in the networked environment if people are to feel comfortable doing business in this electronic marketplace. We must work to protect children while respecting the rights of business. And we must protect the privacy rights of consumers, so that privileged information that is useful for one transaction does not place them at the mercy of others.

• We must guarantee security by allowing sophisticated encryption to protect data like credit card numbers or detailed contracts from being read during transactions; but we must also make sure national security is safeguarded by applying those rules sensibly, so that potential terrorists or other sophisticated criminals can not hide their work behind encryption technology.

• We must work with partners around the world to insure uniform rules and uniform rights, otherwise electronic commerce threatens to become little more than high tech isolationism; and we must work together to build a modern global telecommunications network that is accessible, affordable, and supports electronic commerce.

• The Internet carries more information and content than traditional TV or radio ever could, but also offers users greater opportunities to control content and access. Regulations that are now routinely applied to objectionable content in broadcasts do not, and should not, apply to the Internet. Instead, industry self-regulation, technical solutions like filters and age verification, and rating systems should be adopted internationally to protect people from objectionable material rather than content quotas or burdensome regulations.

• And the marketplace should determine technical standards -- technology is moving more rapidly than lawmakers can respond, and attempts by government to manage the Internet will only inhibit technological innovation.