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A European Initiative in
Electronic Commerce

Communication to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions
COM(97)157


Preface
Executive Summary
Introduction
I - The Electronic Commerce Revolution
II - Ensuring Access to the Global Marketplace
III - Creating a Favourable Regulatory Framework
IV - Promoting a Favourable Business Environment
CONCLUSIONS


II
Ensuring access to the global marketplace:
infrastructure, technology and services

The widespread adoption of electronic commerce requires efficient, affordable and widely available telecommunications infrastructures, technologies and services. Europe must match the cost, capacity, access, choice, security and user-friendliness of such facilities throughout the world.

Maximising the effects of telecommunications liberalisation

23. A fully competitive European telecommunications market, implemented through effective telecommunications liberalisation will lower telecommunications tariffs and act as a major incentive to the development of electronic commerce in Europe. Comprehensive legislation is now being implemented by Member States to ensure full competition in all business sectors from 1 January 1998. By fostering greater competition between established operators and new players alike, telecommunication liberalisation is already leading to lower telecommunication prices and to the introduction of more flexible tariff schemes for businesses and private online users. As a result, Internet use is already significantly higher in the most competitive markets, and so is the take-up of electronic commerce.

24. In the wider international context, the recently concluded WTO Agreement on Basic Telecommunications represents a major landmark. This Agreement contributes significantly to the emergence of a global marketplace, since it contains commitments from 69 countries on market access and national treatment. It covers all telecommunications services, regardless of the technological means used for delivery of those services. Most countries have also underpinned such commitments by regulatory measures. The Commission will work with the EU Member States, as well as with its trading partners, towards the full and timely implementation of this Agreement which will enter into force by 1 January 1998.

25. Regional disparities in the cost, quality and accessibility of electronic commerce infrastructure and services must be reduced to allow full access for remote areas to global markets and to overcome regional isolation. Electronic commerce provides an important impulse to revitalising regions and to renewing and sustaining local services. The widespread availability of electronic commerce infrastructure at an attractive price is required if SMEs are to fully exploit the opportunities. However, significant regional disparities may remain across Europe. Market forces alone may not close these gaps. This situation will have to be monitored closely in the evolving context of the Information Society. The Commission has addressed this issue in its Communication on Cohesion and the Information Society [11], and will continue to seek to ensure that the enterprise sector is consulted to find effective solutions.

Maximising the benefits of the liberalisation of IT markets

26. Recent international agreements to eliminate tariff and non-tariff barriers on products in the area of information and communication technologies should rapidly bring down costs in particular of the basic tools (computers, software, networking, CD-ROMs) and directly stimulate the take up of electronic commerce.

The Ministerial Declaration on Trade in Information Technology Products agreed in December 1996 provides for the expansion of world trade in information technology. As a result, the recently adopted Information Technology Agreement (ITA), which covers more than 90% of world trade in IT products, provides for the gradual elimination of tariffs on these key products for electronic commerce by the year 2000.

Similarly, the Mutual Recognition Agreements of conformity assessment (MRA) will contribute significantly to the elimination of non-tariff barriers on IT products. Extending the Single Market principle of mutual recognition into the global environment, the MRA guarantees the recognition of certification procedures carried out in the exporting country - which, in turn, should substantially reduce costs. Welcomed by European IT and ICT industries, both agreements will strengthen the entire electronic commerce sector, directly benefiting European businesses and consumers. The Commission will work towards the full implementation of these agreements, and ensure that respective commitments, concerning in particular tariff schedules, will be met.

Removing capacity bottlenecks

27. Europe must take steps to ensure that a high-bandwidth infrastructure is put in place in order to ensure that consumers and businesses take full benefit of the ongoing technological developments which, inevitably, lead to ever increasing needs for more transmission capacity. The private sector is already working at removing capacity bottlenecks in some Member States [12]. Telecommunication operators are heavily investing in Internet infrastructure and services.

The Commission will pursue a coordinated European approach to tackling capacity bottlenecks through the European Union R&D programmes in information and communications technologies, including actions in the Fifth Framework Programme and the Trans-European Networks. This will involve setting-up an operational high-speed network for researchers, complemented by facilities to test technologies and applications. The Commission will also facilitate the active involvement of Europe's industry and public bodies in global decision-making on the evolution of the Internet. In parallel, to promote the rapid use of the new broadband services, education and training initiatives will be developed for SMEs, schools and local authorities.

28. The future competitiveness of European industry depends on the sustained development of high-performance information and telecommunications infrastructures. Immediate action [13] for the early development and implementation of an advanced, high-capacity Internet infrastructure based on terrestrial and satellite networks [14] is essential.

Ensuring interoperability in a competitive environment

29. Should the present trend of developing incompatible standards [15] continue, both businesses and consumers will be severely disadvantaged [16]. There is a risk that users become "locked in" to specific solutions. Similarly, it may be difficult to carry transactions between mutually incompatible systems. Without interoperability, critical mass may be difficult to achieve. Furthermore secure technologies are also necessary to create trust in information security. These technologies are for the most part available, but important issues of commercial or technical interoperability remain to be solved, while ensuring full competition. To facilitate interoperability between various electronic commerce services, the Commission will launch a specific actions on standardisation projects for electronic commerce in June 1997.

30. New forms of industry collaboration in standardisation in electronic commerce have emerged. Efforts are already underway at industry level (e.g. Financial Services Technology Consortium; World-Wide Web Consortium [17, 18]) to secure de facto interoperability in the global environment for a wide range of key electronic commerce technologies such as electronic payment systems. Similarly, the Commission has been encouraging consensus through the Memorandum of Understanding on Open Access to Electronic Commerce for European SMEs. The involvement of European industry and users in standardisation and specification work will be facilitated through a system of flexible, ad hoc, open workshops at European level, preferably within or in collaboration with the European standards bodies CEN, CENELEC and ETSI. This will enable participants to anticipate and react quickly to fast-moving global developments. Furthermore steps will be taken to better address user needs, in particular of SMEs, in standardisation.

31. The Commission will present a Communication on a European standardisation initiative for electronic commerce. This Communication will identify technical barriers for the take-up of electronic commerce and propose concrete steps to remove these with the active involvement of European companies. Furthermore, the Commission is examining regulatory proposals in order to establish a procedure to identify and select publicly available specifications for the support of Community policies.

32. The benefits of electronic commerce will only be achieved if interoperability is ensured at global level. The European Community and its Member States have consistently been committed to international standards, and expect its major trading partners to act likewise.

In order to further promote international standardisation, the Commission will host the global standardisation conference "Building the Global Information Society for the 21st Century", to be held in October 1997, which will focus on interoperability and standardisation for the Information Society. Particular emphasis will be put on electronic commerce.

Making user-friendly electronic commerce services available: European R&D

33. To improve user-friendliness and create opportunities for business innovation, further work is required based on strong user involvement. The aim is to offer simple, user-friendly solutions to handling each stage in the transaction chain electronically. This will facilitate the widespread take-up of electronic commerce, especially by SMEs and allow them to get started, using and staying up-to-date with electronic commerce technologies. The Commission contributes to overcoming technological barriers by giving special importance in its relevant R&D programmes to electronic commerce and bringing related work together. The first steps have already been taken through the launch of an electronic commerce call for proposals in the Esprit (Information Technologies) programme. The approach is to pursue a complementary mix of research, technology development and take-up measures so that the business innovation process is comprehensively supported. The opportunities offered by R&D in socio-economic issues need to be exploited too.

Electronic commerce appears as a key action in the "Creating a User-Friendly Information Society" programme, proposed as part of the forthcoming Fifth Framework Programme. Technological developments and take-up promotion projects in European Union R&D programmes should concentrate on providing a wide range of interoperable, compatible electronic commerce building-blocks. These could be for services such as payments, IPR management etc., to support the steps in the transaction chain. They could equally address integrated solutions - for example, to integrate better smart-card technology, mobile communications and information appliances. They should favour technologies which minimise the need for personal data and thus enhance the protection of the right to privacy of consumers (privacy-enhancing technologies). User-friendly access to information must also be ensured (in particular to deal with information overload). Multilingualism, including online translation, must be supported. Full use must also be made of multimedia and knowledge-based systems to simplify the interface to the user and better support users with different characteristics. As indicated in the Innovation Action Plan [19], other factors besides R&D will also have to be addressed to create an environment which fully favours the exploitation of innovation.

International industrial cooperation in infrastructure, technologies and services

34. The global infrastructure needs to be harnessed by international industrial and technological cooperation, in particular in areas such as secure electronic commerce, international electronic payments, multilingual support, etc. The European Commission has already undertaken several international industrial cooperation actions. Projects will be launched during 1997 as part of the Prague Action Plan involving Central and Eastern European countries, and in cooperation with non-Union Mediterranean countries. Particularly, such projects help Central and Eastern European countries in their preparation for accession to the EU. International industrial cooperation in electronic commerce with major trading partners such as the USA, Canada, Australia, the European Economic Area, Israel and Japan is part of bilateral dialogue and Science and Technology Agreements. The Commission will also strengthen its ongoing international cooperation in the field of electronic commerce by promoting global pilot projects in the G7 Global Marketplace for SMEs collaboration.


[11] COM (97) 7 of of 22 January 1997.

[12] An example is Finland, where massive investments in Internet infrastructure by telecom operators (in particular a dense network of ATM networks) have virtually eliminated bottlenecks.

[13] COM (97) ... EU Action Plan on Satellite Communications in the Information Society.

[14] The US government has allocated $100 million to the Next-Generation Internet Initiative designed for high-bandwidth applications.

[15] The term 'standard' is used as meaning any formally or informally accepted technical specification and not necessarily only documents adopted by a recognised standards body.

[16] For example, in Europe there are more than 20 mutually incompatible standards for 'stored value' cards (cards storing money similar in concept to telephone cards)

[17] The World Wide Web (WWW) was invented at CERN, the European Laboratory for Particle Physics.

[18] A consortium of 160 computer, telecommunications and content companies, half of them European, the WWW Consortium is currently working on a series of initiatives to ensure de facto interoperability between existing technologies in the field of electronic payment systems (Joint Electronic Payment Initiative), digital signatures (Digital Signature Project). It is also working on innovative solutions in the field of content filtering (Platform for Internet Content Selection, or PICS), and of personal data protection (Privacy and Demographics Project). See http://www.w3.org

[19] Innovation Action Plan, COM (96) 589 of 20 November 1996.


Preface
Executive Summary
Introduction
I - The Electronic Commerce Revolution
II - Ensuring Access to the Global Marketplace
III - Creating a Favourable Regulatory Framework
IV - Promoting a Favourable Business Environment
CONCLUSIONS


This document is located at http://www.cordis.lu/esprit/src/ecomcom2.htm
It was last updated on 16 April 1997 by esprit@dg3.cec.be