Select Committee on European Union Minutes of Evidence

Examination of Witness (Questions 740 - 760)



Lord Skelmersdale

  740. The Commission has a history of somewhat liberal views. In various areas, for example, electricity and telecommunications to name but two, there are various countries that have had to be dragged kicking and screaming to get up to certainly the Commission's aspirations and to what in many cases we have managed to achieve without the Commission in this country. Would you agree?

  A. Yes, I would. Having been involved for a large part of my time in the Commission in the process of dragging them kicking and screaming, I am bound to agree with that. I am glad to have achieved what we have done and apologise for not having dragged them a bit further, most notably in the energy area. Telecommunications was a success.

  741. It was achieved slowly.

  A. What you have said brings to my mind the occasion when I was trying to persuade them to liberalise telecommunications and we had a meeting which as it happened was in Luxembourg, and I could not even get the ministers to attend, barely even the Director Generals of their Departments but only the heads of PTTs. I think three of them said yes and the rest said no. There the use of the competition policy mechanism (some would say threat) proved to be very helpful. We have got there, so it is absolutely right that the Commission has been all the time pushing in the direction of liberalisation. Without it we would be way behind where we are now and we have still some way to go.

  742. Which brings me on to the formulation of policy. By definition there are so many outside organisations in industry the Commission has to deal with that it tends to operate, does it not, through exchange of views with the federations in the various countries? The trouble with e-commerce is that it is growing at such an enormously fast rate that there are a whole lot of little firms which are not connected with the federations. How then did you get their views into your thinking?

  A. I think the key point is the one we have talked about already, that there is now a feeling that Europe has got to get its act together and that is reflected in the Lisbon Council very much. Everybody knows that, it has been widely publicised, and therefore, apart from the traditional channels of employers' organisations or trade associations or whatever I do think that anybody who has got anything to say probably will say it in one way or another. I think the Commission has been, although as this is a fast-moving area I may not be up to date, quite active in trying to find out through any kind of organisation that exists, and also, dare I say it, through the use of the Internet inviting people to put forward their views. Things have changed. This is not like the reorganisation of electricity or gas where what you have to do is to persuade huge organisations and governments to get them to move. It is a much more complex area but there is this impetus. One of the things that I myself derive much encouragement from, apart from the specific commitments on benchmarking and monitoring and time limits, is the fact that the heads of government in Lisbon have committed themselves to review progress in a year's time and that means that they have taken upon themselves the responsibility of having things delivered which they committed themselves to this time. Without wishing to be unduly cynical, one has seen occasions when there has been a great meeting of heads of government and it has been a one-off and they say, "Go away and do this and do that and do the other" and one hopes that it is done. It provides an impetus. But now, we have all this talk of benchmarking and monitoring and dated time limits for things to be done, plus a review mechanism in essence, by which the heads of government themselves hold others to account and are themselves held to account. All I can say is that that is a very powerful tool and procedure and a new one as far as the European Union is concerned. As it is, giving the dates and so on has been a traditional mechanism and in relation to a more controversial question, the single currency, it was the giving of dates that led to its creation.

  743. The opposite of dates for things to be done is obviously dates for things not to be done, and therefore sunset clauses. What would be your view of that?

  A. On some things I would say sunset clauses would be very useful. There may be some restrictive things which should have a sunset clause, but as this is all new I am not sure that the sunset clause has much to bite on here and where there are particular regulations or whatever in existence which are thought to impede the growth of e-commerce, you do not need a sunset clause. You just need to abolish them.

  Lord Skelmersdale: Fair comment.

Lord Woolmer of Leeds

  744. What is your perception of where there will be points of difference still between Europeans and the Americans in the development and regulation or non-regulation and so on of the e-commerce industries, the whole spectrum of issues?

  A. The main differences have been the American concept of self-regulation and the European concept that where anything needs to be controlled it should be done by legislation. That is the main difference. The nature of the control is really conceived of as being quite similar but they are different methods, although there are some policy differences in that the American interest in privacy, in people's data not falling into the hands of those who they do not want to have it seems less well developed, quite apart from the technique of achieving it. There is also this particular point on the international side namely, of there not being any kind of tax on the Internet, which needs a great deal more refinement and where the Americans have been pressing very hard. Those are the main differences.

  745. When we were in the States recently I formed the impression, which you may confirm or disagree with, that the Americans are very much driven by the views of industry and where industry and commerce want the agenda to go. Having discussions with the Europeans, they are in a sense driven by politicians and governments. Is that a feature you recognise?

  A. I think that has been true. I think it is much less true now. I am sorry to come back to the point we have touched on a couple of times but it is absolutely central to say that the wake-up call has been successful and Europe collectively has come to the conclusion that this matters, it matters as far as the creation of jobs and prosperity and everything else is concerned, and therefore they are going to do something about it. Because some of the problems relate to the diversity of different European countries I think it is pretty well inevitable that government should get involved but that does not necessarily mean that there should be a heavy regulatory hand laid upon it. The message that government needs to be a facilitator rather than just a regulator is very much there. If you read for example the Commission's document or the British Government's document, there is a tremendous overlap. A lot of the stuff is not about regulation but for example about the use of public procurement. There is something that probably is going to go ahead. It exists. The extent to which it can be used in a way which stimulates e-commerce is something which is not a regulator question but a facilitator question. Similarly, I think because those who are, to put it crudely, pro-European and those who are anti-European unite in focusing upon the direction of legislation because that is the sexy thing; you can be in favour of it or against it, I think in the whole of the European debate inadequate attention is paid because it is less sexy and less dramatic and less interesting to the role of peer group pressure and of looking to see what other countries do and comparing best practice. That has to be done in a systematic way, and if, for example, we in this country suddenly learn that somebody in Sweden is doing something which is relevant and which we might do, and does it, that is not a headline. It is not a story but it may have come about because of the organisation of the system which enables that information to be gathered and to be imparted and to be exchanged. In the areas of expenditure by the Commission, when it is deciding how to use the money that it spends on regional policy and on research, again if it has got e-commerce to the fore, that is not a hot property, the issue which is considered most urgent in the media. But it will affect what actually happens and what is done. It is not a question of regulation or allowing private enterprise to let it rip. It is a much more complex area in which governments can do things which even those who are most in favour of deregulation would be in favour of what they are doing if they do the right thing.

Lord Chadlington

  746. Lord Brittan, you paint a picture with which I would agree, that one the one hand there is a society in the United States which is self-regulatory, where there is a close relationship between government and industry. There is a culture in Europe which requires legislation and thinks about legislation as the first thing that it may do to put things in a more orderly fashion. Yet we have here a global activity. How can we begin to bridge the gaps internationally to make a society in which e-commerce can both on the one hand promote the interests of the consumer and on the other hand protect the interests of some of the maybe more vulnerable?

  A. First of all I think that one should not make the mistake of thinking that if the American approach and the European approach are slightly different or even significantly different, that is necessarily a bad thing and that one has got it right and the other has got it wrong. Circumstances may vary. The very fact that there are 15 European Member States and that you have a problem there may inevitably mean a slightly different approach in Europe than in the United States. One must not assume that differences mean that you have to decide who is right and who is wrong. But there are issues where there is a legitimate need for consideration and discussion and agreement and the main forum is this, that we have a close relationship between Europe and the United States and some of us have worked, to try and make it closer than it is now, and one of the things that we did set up was something called the Transatlantic Economic Partnership which is a systematised arrangement of governmental discussion of all issues between Europe and the United States and this is one of them and it has been used for that purpose. Whether it has been used to good or sufficient effect there is room for debate upon but it is there and we do not need to re-invent the wheel. In addition to that one of the things that I was involved in was the Transatlantic Business Dialogue which is a very effective means of bringing together the business communities on each side of the Atlantic and they meet and discuss things exactly of this kind and e-commerce has for several years been high on the agenda of things they discuss and they seem to reach agreement. If they reach agreement then the pressure on government to do what they say is quite strong although of course government reserves the right to say, "Never mind about the fact that our businessmen on both sides of the Atlantic have reached agreement. There may be reasons relating to the consumer, relating, as you say, to their disadvantage or whatever, which mean that we cannot accept their advice." It is none the less a very good starting point. The best gauge of the success of this and its importance is the people who get themselves involved in it. I was frankly quite sceptical about whether this could do any good or would do any good but all I can say is that the heads of the largest corporations on both sides of the Atlantic have thought it worthwhile to be personally involved in the handling of this Transatlantic Business Dialogue. When it comes to the wider international field, although of course Europe and the United States or the other way round are by far the leaders in this area, there is the rest of the world as well and, particularly when one is talking about any kind of agreements which have to be global in character, we are talking about the World Trade Organisation. The discussions on this question of taxation or no taxation in this area have been conducted up to now in that forum.

Viscount Brookeborough

  747. Lord Brittan, you have already said that the wake-up call was very successful. To what extent to you attribute that success to the EU's action plan eEurope: An Information Society for All?

  A. I think that is a reflection of the waking up rather than the wake-up call itself. The theory is what we have, they sometimes call in the jargon, a phrase I deeply dislike, an iterative process, which simply means what happens. It is like the chicken and egg in that people say, "We have really got to take this seriously and we are behind and if we want to be competitive we must do something about it", and so the Commission produces its plan, and that itself causes people to wake up and want the plan to be enacted or varied or accelerated or whatever. It is like that. The one stimulates the other.

  748. Do you feel that many of those targets are being met?

  A. It is too early to say because the thing was produced last December.

  749. But there are targets for the year 2000?

  A. Yes. All I can say is that I do not put myself out as an expert in this field but I think I would have heard if anybody had said that this is absolutely not happening. It is too early to say that it will but I have not heard anybody say either that the targets are ludicrously over-optimistic or, still less, that they will prove to be unattainable.

  750. Can I ask you for a second about Central European States, the states that are wishing to join the EU within the next five to 10 years? Have you any idea as to their progress in IT and e-commerce? We sometimes talk about having two levels of membership for so long in the EU because of the incompatibility. Is this going to be a problem?

  A. I do not have any detailed knowledge of it but I have visited the countries and this has come up. Clearly they are way behind the more advanced countries in this as in most other economic questions; there is no doubt about that. You will find in the Commission document and a whole lot of other things that there is a very real determination even ahead of membership of the European Union to extend to them any benefits of an open market but also assistance in this area as in other things as well. Let us put it this way. There are innumerable problems affecting the question of enlargement. I do not think this one is going to be an obstacle.


  751. It will not be an obstacle but it will probably be a problem for them because there will be targets set which presumably they will not be able to meet.

  A. Yes, but a target is a target. There is a difference between a target and a law. You can say, "We have agreed to this target", particularly things which say 2001 and 2002. They are not going to be members in 2001 and 2002, so it is sensible to have a target amongst the present lot of Member States which can be met by them but it is no discredit to either existing Member States or to the applicant countries if those targets are ones that cannot be met by the applicant countries.

  752. That brings us back again to some of our experiences in Washington where the Americans were arguing that self-regulation actually is better, it produces a high level of compliance because it is on the basis of people willingly entering into something and produces high enforceability, and they are arguing that you can have your directives in Europe where compliance is low and enforceability is very low as well.

  A. I think this is a sterile and pointless argument which is not worth getting drawn into for you, if I may say so, simply because the contrast is an absurd one. There are all sorts of regulations in the United States and if you look at the things being proposed the menu that I have rattled through is not one of regulation as far as Europe is concerned. The image that the United States have of a Europe that is tightly regulated is just nonsense. If you look at the kinds of things that the European Council, including our own government, ask for legislation to be introduced on, they are things about enforcement of judgments and copyright and EU money and things of this kind. As a lawyer I know that you have to have rules about these things and they have them in the United States. To caricature that as some kind of heavy-handed dirigiste European legislation is fantasy and it does not help us, it certainly does not help them except if you wish to dig deeper into your own fantasy and find a new forum for it. This is not a choice that we have to make. The reality of it is that there are certain things, because there are 15 countries in the European Union, which if you want to advance them you have to decide them in common. That does not mean that this is the heavy hand of regulation trying to stop industry. People know perfectly well that this has developed rapidly on the back of technological change, that you have got to facilitate that technological change and the process is about enabling that to happen, not stopping it.

  753. It makes the case for international co-operation.

  A. It does. It makes the case also for the Americans overstating their own position.

Lord Cavendish of Furness

  754. Back to the success of the wake-up call and the meeting in Lisbon to which you referred. Would you enlarge a little on what you felt the Lisbon meeting, which was essentially meant to be on IT issues, achieved and if you anticipate anything in the forthcoming meeting in June at Feira?

  A. Yes. First of all it set out the strategic goal and it accepted responsibility—this is the Lisbon Council—for monitoring it at the highest level. As I have said in answer to a previous question, that is important because heads of government do not like being caught with their trousers down and being found a year later to have achieved nothing. Then the Council and the Commission were invited to draw up a comprehensive Europe action plan for June so presumably at the next Council meeting which you referred to at Feira they will have to decide whether they like this plan and approve of it. They have called for legislation to be adopted in the areas that I have mentioned, so that is a call to their own ministers to get on with it. They have asked for new legislation to complete for example the liberalisation of telecommunications and then there are all these various targets, like ensuring that schools have access to the Internet and multimedia resources by the end of 2001 and generalised electronic access to the main basic public services by 2003 and asking the European Investment Bank to facilitate networks and a suggested European diploma for basic IT skills and decentralised certification procedures and setting up a whole series of methods of guidelines, timetables, benchmarks, monitoring and evaluation. Most independent observers and people who are better qualified than I am to judge think that that is a pretty formidable achievement to have agreed all that. Inevitably it is a provisional step in that you cannot make it happen at a meeting at Lisbon but the fact that you can set in train things which if done will make a significant difference. I cannot promise you that all this will be done but they have given themselves a noose if they are not done. On past experience it is this kind of commitment at the highest level which in the history of European developments are good, bad or whatever, has led to action being taken. The reason for all this is because the wake-up call was heeded and the heads of government thought this was something that was necessary and popular, there was a fair wind behind it and a fair chance of success. Like all of these things, it is extremely unlikely that everything that everybody wants to do will be done, but if most of it is I think Europe will benefit enormously.

  755. The signals from Brussels certainly are that e-commerce should be a light regulatory regime. I am not as sanguine as you about the enthusiasm of Europe and regulation. What worries me and has done throughout is, even if I believe in the sincerity of this light regulatory regime, what happens when the political pressure is put up? What happens when the Inland Revenue surfaces saying, "We cannot raise taxes"? What happens when the consumer groups say, "We need more protection"? Do you think Europe is more or less exposed than nation states to these campaigns which the tabloids run?

  A. No. I would say rather less so. This is nothing to do with one's general approach to Europe. I will tell you why: because here where we have a very centralised and powerful media, as we have seen on issues ranging from dog licensing to I do not know what, it is possible within a couple of weeks for a campaign to build up of a kind that governments of any political complexion, wisely or foolishly, just find irresistible and say, "Okay, we surrender. We will introduce legislation tomorrow. Whip it through both Houses of Parliament." That cannot happen in Europe, not because people are more virtuous or less susceptible to pressures of this kind, but because fortunately our media are not centralised in Europe and if that did happen in one country, Mr So-and-So from country X turns up at the Council of Ministers with a kick up his pants from the media and says, "We must do something", somebody from the other countries says, "What on earth are you talking about? Why? Hadn't we better look at this thing more carefully?" It is inherently impossible, just because of the fact that there are so many more countries, for mass hysteria to lead to legislative folly in the way that is not unknown in this country.

Lord Paul

  756. We have talked about regulation and the perception still remains that there is far more regulation in Europe and that the Europeans love to have regulation, and the European Commission only adds to it instead of subtracting anything. Now we have an internal market in this country it provides a wonderful platform for e-commerce. Do you think the accretion of derogations by Member States might encumber the progress of e-commerce?

  A. Again I find it very difficult to generalise on these things. As I have always been on the deregulatory side of things I do not object to a modest degree of prejudice against the Commission and a modest degree of feeling that they are likely to want to overdo it because that encourages those who want to do it in a sensible way. If you start with that prejudice that is okay and probably a healthy prejudice. The only thing I would say is, do not be overwhelmed by that prejudice to the extent that it is preventing you from supporting the few things which really are necessary. I think it is perfectly possible to say that we want to move generally into the area of deregulation for example and opening up markets in energy, electricity and gas which are proceeding at too slow a pace in my opinion, and I am not saying what I did not say when I was there. At the same time to say okay, that is the general approach that we want but we have to recognise that in order to provide the opportunities to fully utilise this hugely important e-commerce we have to provide certain things which can only be done at governmental level and people are asking for it, businesses and industry are asking for it. The whole idea of doing something in the crudest sense about e-commerce is not that government have suddenly said it is necessary but that it is something they have been asked to do by industry. Then I go back to Lord Cavendish's question about when the pressures come might they not want to develop it, one can only say, "You have to look at it one by one". Yes, you cannot say that somebody will not want to go further than they should. We have just got to be alert to that and not agree to it.

  757. How can you get that bias away? What can be done so that it does not hold up things, especially in this country?

  A. If I may say so, the last thing I want to do is to flatter anybody or even an institution of which I am a member but informed discussion is important, so, for example, and I have said this before I got anywhere near this place, reports of this House are respected and read in continental Europe so that if for example you were to produce a report which is balanced which says, "We recognise the need for all sorts of things to be done and we must do them and we welcome the kind of approach reflected in the Lisbon Council, but take care not to allow yourselves to be pressurised by consumers or the Inland Revenue or whoever into overdoing it", that would be an important and significant contribution. I am not saying that will do the trick alone. Would that there were 15 House of Lords Committees across Europe doing it. That is a contribution one can make and all of us in our different capacities can only do what we can do.


  758. I think that is a suitable point for us to come to an end with a very supportive and interesting message for us to take forward to consider. We are very grateful indeed to you for giving us the time, as I said at the beginning. I am wondering if I can put one final point. We have heard a good deal of evidence so far from industry which is not entirely happy about its voice being heard within Europe and you talked about the arrangements that you have put in place for the transatlantic industry dialogue. I was wondering if there was anything that perhaps you might care to suggest that we could consider that would help to improve the nature of the relationship between industry, particularly in this area, and the Commission and the Council. Are there any changes there?

  A. We have really got beyond the exploratory phase of the inquiry but in principle I know what the Commission would say. They would say, "We have various bodies and we have extended an open invitation to anyone else who is not organised or a member of the body. What more can we do?" I would scrutinise that. The transatlantic question is a different one because where the two industries differ across the board and have to come together there is a well established mechanism for doing so and e-commerce is one of the items that it considers. More generally I would question quite hard the voices of industry who say they do not have a mechanism, and ask what do they want and what use have they made of the mechanisms that exist?

  759. I think it is primarily a criticism of the traditional approach and that there is a feeling of exclusion, that this is a new industry in many respects and they feel out of it, that there is a traditional path established for consultation.

  A. You mean that people listen to the old industries and not to the new industries?

  760. Yes.

  A. It sounds like the exact opposite of the Stock Market. To be quite honest I do not know to what extent that is true. You are going to Brussels. I would talk to the Commission people and explore what mechanisms they have for consultation. I am pretty certain they will give you an answer that looks okay but you may wish to probe it. To cut a long story short, I do not have a specific suggestion this afternoon.

  Chairman: Thank you very much, Lord Brittan.

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