European Standing Committee C
Wednesday 27 October 1999
[Dr. Michael Clark in the Chair]
Harmonisation of Copyright and Electronic Commerce in the Single Market
10.30 am
The Chairman: Two Ministers are present in Committee today and I understand that both of them wish to make a statement. Such procedure is permitted by Standing Order. After the statements, questions will be taken as usual, and it will be for the Ministers to decide who will answer them. I call first the Minister for Competition and Consumer Affairs to make his opening statement.
The Minister for Competition and Consumer Affairs (Dr. Kim Howells): The Committee is fortunate to have your good self in the Chair, Dr. Clark. I know how passionately interested you are in business and commerce, and the issue that we shall be dealing with today is an important factor in ensuring that industry and commerce in this country continue to have every opportunity to exploit new markets.
The motion arises from the publication by the European Commission of a proposal to harmonise certain aspects of copyright and related rights with particular emphasis on the information society. I do not like the term "information society", because whether the product is matches or computer chips, we must be able to handle, receive and manage information. However, I shall use it as a shorthand expression.
The European Union document is the latest in a series of directives which, since a Commission green paper in 1988, have harmonised key aspects of the copyright regime in Europe. It is potentially the most far-reaching document in that it sets out to harmonise to a greater extent than previously basic rights and limitations to rights across the board. It also sets out provisions to deal specifically with information society issues, such as legal protection for technical systems that are used to protect rights and for rights management information.
Although copyright and related rights are traditionally territorial in nature, digital networks do not recognise national boundaries. The Government have consistently emphasised that the information society demands international harmonisation of copyright laws to provide legal certainty for all players, to ensure the success of the new services by providing the opportunity for satisfactory returns on investment and to assist the proper functioning of the internal market in goods and services based on those rights.
Current national legislation throughout the European Union is widely divergent, and the precise impact of some of the directive's provisions remains uncertain. The harmonisation arising from the proposals as a whole should be of considerable benefit to the United Kingdom's rights holders in the European sphere. Given our traditional strengths in copyright-based industries such as publishing and music, and our leading position in Europe in new technology areas such as video games and on-line services, we want to bring the protection system for copyright throughout Europe up to current United Kingdom levels. That is the main thrust of our proposals.
The Government have broadly welcomed the proposals and support the principle of harmonisation and concentration on key areas for the digital age. The Commission's emphasis in its explanatory memorandum on adjustment, rather than on seeking radical change of the existing legal framework, is, in our view, entirely correct. But we must ensure that that principle is carried through to all aspects of the adopted directive, including exceptions to rights--an area in which there are some difficulties.
Although United Kingdom copyright law is relatively well-placed for the digital age, some adjustment will be necessary to bring the law clearly into line with certain provisions in the directive. Importantly, the regime proposed for making exceptions to basic rights would seem to necessitate some modification of long- established exceptions in UK law, which are part of the fair dealing regime.
Although there is much in the Commission's proposals that we can support--we give the directive a broad welcome--we have serious reservations about certain aspects, which stem largely from our continuing support for a fair balance between rights holders and rights users. We also believe that the principle of subsidiarity should be respected.
Other key issues remain to be resolved, including how to deal with the need for technological protection measures, and protection for temporary copies in electronic environments, which is, of course, tied to the draft e-commerce directive and the liability of intermediaries, such as internet service providers.
As the Committee knows, the Government recommended that the debate on the directive be deferred until now, so that we could obtain clarification from the Commission on the intended scope of certain provisions, and have a clearer indication of the views on key issues of other countries on the Council working group. We also expected that the initial round of consultations with UK industry and other interest groups would have progressed, and that there would have been a clearer picture of views within the European Parliament to inform our debate.
That is broadly the case: it has happened. I have outlined progress within the Council and the European Parliament, and the results of our initial consultation exercise are given in the Department's explanatory memorandum and in the Commission's amended proposal, which was submitted in June. Since then, we have continued to consult and, in our negotiations in the Council, we have tried to make progress on key sticking points. More coalitions of like-minded interest groups are now presenting joint position papers on the proposal, and we are doing all that we can to encourage discussion between the various interest groups in an effort to reach solutions acceptable to all.
That is where things stand at the present. The directive is on the agenda for the internal market Council on 7 December as an item for a possible common position, but the aim of the Finnish presidency, although commendable, is rather optimistic.
In my brief account of the Commission's proposals and the Government's general attitude to them, and in my summary of the current state of play in the various forums that are considering the directive, I have touched upon the issues highlighted in the Scrutiny Committee's report. I hope that I have helped to set the scene for today's debate, and I shall be happy to deal with any questions.
The Chairman: Thank you, Dr. Howells. We shall, of course, take questions after the second statement. I now call Ms Hewitt.
The Minister for Small Business and E-Commerce (Ms Patricia Hewitt): Thank you, Dr. Clark. I second my hon. Friend's remarks on your chairing of the Committee. It is unusual if not unprecedented to have two Ministers make opening statements to a European Committee and to answer questions. I look forward to it. Between us, we shall try to field the Committee's questions appropriately.
The motion arises from the publication of the Commission's proposal to harmonise certain internal market rules for electronic commerce. I shall address my remarks to document 10644/99, which is the amended draft of a directive intended to ensure legal certainty within the internal market on key aspects of electronic commerce.
The Commission intends to cover only those areas where European legislation is really needed. It takes the view, which we share, that in this field, which is developing extraordinarily quickly, the real danger is of over-regulation not under-regulation. To balance that minimum-provisions approach, the directive provides for a regular review to assess whether amendments are required to reflect technological changes or the development of case law.
As my hon. Friend said, internet-based commerce is transforming the world, particularly the world in which we legislate. Because those network technologies recognise no national boundaries, we need a new, more harmonised approach, both in the internal market and internationally. That is why the recent Cabinet Office report on electronic commerce, which my right hon. Friend the Prime Minister published last month, recommends that the United Kingdom should promote a co-ordinated and joined-up approach to e-commerce throughout Europe and the world.
The Government are determined to attract e-commerce to the UK, and to keep it here by making the UK an attractive place in which to trade electronically. That requires a pragmatic, step-by-step approach to regulation and effective partnerships with business and consumers.
A major barrier to the development of e-commerce in the European Union is undoubtedly the existence of 15 different sets of national legislation, all of which must be observed by a trader who wants to provide services electronically throughout the EU. In addition, the application of existing laws to electronic commerce can produce results that discourage its growth. In Germany, for example, as many right hon. and hon. Members will be aware, the chief executive of CompuServe was held legally liable for information that was transmitted automatically by the CompuServe servers. Given the absence of physical barriers to electronic commerce, we need to achieve high mutual recognition in the internal market in order to encourage electronic business and the jobs that depend on it to remain in the European Union, and especially in the UK.
As my hon. Friend emphasised, it is not easy to establish an appropriate framework for electronic commerce. The Scrutiny Committee has identified particular issues that we need to keep in mind, including, notably, ensuring that we balance the respective interests of business and consumers, that the framework has a light touch and that the provisions will work. I commented on all those issues in my letter to the Committee of 18 October, and I look forward to having the opportunity to discuss them in more detail this morning.
The draft directive covers a wide range of horizontal European Union policies, including all the so-called "information society" services, whether between business and business or business and consumer. It is designed to provide a light touch and to be flexible, forward looking and technology neutral, and we entirely endorse all those aims. That is why we welcome its potential for providing legal clarity for businesses, protecting consumers and supporting and strengthening the internal market.
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