Examination of Witness (Questions 1040
- 1059)
WEDNESDAY 7 JUNE 2000
MR OLLI
REHN
1040. Sorry, compensate for what?
A. Compensate for the lack of a single responsibility
which in a way is a built-in factor, as I explained before, by
the very cross-disciplinary nature of electronic commerce because
it is very difficult to put into one corner or under one discipline.
1041. Could you see an alternative structure?
A. Yes. I can see two alternative structures,
to take two extremes. One, let us say, the original structure
which was very dispersed where each Commissioner would only cover
his own field without any pre co-ordination at the level of the
Commission. Mr Bolkestein would bring his proposals on VAT on
e-commerce directly to the Commission without first consulting
and working inside this informal working group or he could take
his initiative on software patentability directly to the Commission
without consulting the working groups beforehand. I think that
would certainly be a worst alternative. The current "middle
way" management is a form of soft co-ordination inside the
Commission. The other extreme then could be that either the President's
Cabinet or a certain Commissioner could be responsible
in a way like in the preparation of the eEurope Action Plan for
the whole co-ordination of policy making in the field of e-commerce.
We made a mild effort when creating this informal inter-Cabinet
group by us convening the first meeting. I chaired the first meeting,
however afterwards we made an institutional innovation by inviting
the President's Cabinet to chair the meetings in order
to have a neutral broker because of having so many Commissioners
responsible for so many areas. I think to some extent it has streamlined
our work because there is no reason for unnecessary fear of turf
battles among these five Commissioners and their Cabinets.
1042. What about the other five?
A. The other five?
1043. They are out of it in the sense that they
were in for the preparation of the document and for the follow
through on the Action Plan but e-commerce is developing so quickly
in so many areas one wonders whether the arrangements you have
set up are temporary. I go back to my earlier questions: are they
temporary, where are they going and what about those outside who,
one way or another, will have to face the implications of the
development of e-commerce increasingly into their areas?
A. First of all, this group will certainly be
open to other Commissioners if it is useful to the group or some
individual Commissioner. There is no problem involving, for instance,
Vice-President de Palacio at some point if we are dealing with
especially transport related issues. In the same way we could
say if postal services were not Bolkestein's special responsibility
we should have a Commissioner responsible for postal services
in the group because that is so important for electronic commerce.
On the other hand, you have to work efficiently and avoid unnecessary
burdens for Cabinets and Commissioners who are already
over-burdened. It is simply rationalisation of work to have these
five mainly responsible for e-commerce. That is the sole reason.
I do not see it absolutely necessary in having Barnier, for instance,
as a member of the group because the link to structural funds
is not so important for e-commerce although, in fact, with structural
funds in some Member States, at least in a certain Member State
I know rather well, work is being done on increasing the awareness
of small and medium sized enterprises to adopt e-business and
e-commerce business models.
1044. I think we will have to leave this otherwise
we will not get to any of the other issues. It sounds to me as
if it is still quite fluid. It is a bit like e-commerce, it is
on the move.
A. That is right. Certainly it is temporary
or, as the French say, indéterminé for the
time being. If at some point a better structure needs to be set
up, why not? Of course, that is very much in the hands of the
President's Cabinet and the Secretariat General to think
through all of these co-ordinating issues because one single Commissioner
usually could not mend a situation even if needed because of the
immediate fear of empire building and turf battles which exists
in every human organisation.
1045. You probably know that in the United Kingdom
we have created an e-Minister and we have created an E-Envoy with
quite wide ranging powers to go into territories hitherto closed.
A. That is true. That is the virtue of a prime
ministerial government, you can act more quickly.
1046. My final question, if my colleagues will
tolerate me putting another one, is one of our witnesses suggested
that the Industry and Internal Market Councils might be subsumed
into a new Competition Council. Would you care to comment on that?
A. Yes, or Competitiveness Council.
1047. Competitiveness Council.
A. My Commissioner has long reflected on this
and has for a long time been of the opinion that we should indeed
merge the Industry Council and the Internal Market Council and
perhaps even the Telecom Council because of the strong linkages
between telecoms and both the internal market and industry.
1048. Where are the obstacles?
A. Again, I speak more as a formal political
scientist than a Commission officer. It seems to me that there
is a will generally in the Member States and among the Ministers
to guard / retain certain Councils to have their own policy making
forum at the European level. There may be other reasons as well
but this is at least one of the key reasons. Of course, the other
one is that among the 15 the responsibilities of the national
governments do not always coincide. For instance, during the Portuguese
Presidency the policy making related to the Information Society
and the eEurope Action Plan was run by the Research Minister whilst,
for instance, in the Finnish Government it is the Minister for
Telecommunications who is responsible for this field.
Chairman: That is very helpful. We have some
questions about Finland from Viscount Brookeborough.
Viscount Brookeborough
1049. I think in a way you have answered the
criticisms of the Finnish Parliament's Committee for the Future
because you have pointed out that you have addressed the digital
economy and e-commerce. First of all, are you quite happy that
you have? Secondly, you seem fairly relaxed about the fact that
the targets for e-commerce will be met by 2002 and yet quite clearly
we will still be behind the US. Are these targets ambitious enough?
Should we be relaxed about it, as you seem to be, in the light
of the fact that in America people are incredibly energetic about
pushing their targets further and further and not stopping? Do
these targets go far enough?
A. As regards the creation of a regulatory framework,
a European policy framework for electronic commerce, these are
both relevant and ambitious targets in the sense that if we were
to achieve these in time by the end of this year we should have
in place a single on line market for electronic commerce instead
of having, for instance, 15 fragmented regulatory frameworks,
which would be the other alternative and would certainly be an
obstacle for cross-border electronic commerce. European enterprises
and consumers have to move on if we are to see a flourishing electronic
commerce in Europe. The other question then is in relation to
the civil society, the consumers and enterprises, how do they
move on? There is no panacea, no magic trick, for that. Our task
is mainly to focus on the creation of the legal framework and
to increase awareness of especially small enterprises to adapt
to new business models. At the end of the day we have to rely
on private initiatives of private enterprises and private citizens
to see the possibilities of electronic commerce.
1050. And the individual Member States to promote
it?
A. Indeed. The legal framework is only one point,
the legal framework of e-commerce. Take another relevant area,
that is, the regulatory framework of telecommunications because
that is related to the price of the Internet. If you look at the
economics of the Internet, some old rules of basic economics are
still valid: in those countries where you have the cheapest price
for Internet use, like the US, Canada, Finland and Sweden, you
have the heaviest use and highest Internet penetration. The United
Kingdom is actually moving very fast and maybe, in fact, ahead
of other European countries already now after the events of the
recent weeks in that field. There Europe and the Member States
can make a difference in the sense that if we are able to pursue
the unbundling of the local loop, increase competition in the
local telecom market, that is the way to reduce prices, to receive
cheaper and faster Internet access and, again, that is a way to
speed up the take up of e-commerce in Europe.
1051. Do you feel that Committee's report was
slightly unjustified in the light of the present state of events?
A. To be honest, I know most of the people both
from the MP side and from the secretariat side, I am not sure
if they are mere innocent bystanders, because they have clearly
not been aware of what is going on in the sense that both in the
field of the legal framework of e-commerce and telecommunications
we are moving very fast. Not to forget, I may add, we are working
currently on the new telecom regulatory framework and we intend,
or we shall present, that for the Commission to be adopted on
27 June. That process started in November. We have had public
consultation, report, etc., and I do not think we could have worked
too much faster than this.
1052. If you are happy that the Commission has
done everything that it should be doing for the progress of e-commerce
and so on, which are the countries in Europe that you think are
lagging in their efforts to promote it, especially to SMEs? There
has to be a slow and a fast, there is Finland.
A. I would be willing to answer but, however,
am not able because my database does not include a relevant answer
to that. My recollections are too random to give any relevant
answer.
Lord Paul
1053. At the November 1999 Telecommunications
Council, we understand that you promised to push forward EC guidelines
for self-regulatory solutions for e-commerce. To what extent is
the Commission putting money and resources behind this?
A. We have, in fact, two streams of working.
We have one related to working together with the enterprises and
business sector and the other one is our own work where we invest
some funds to develop Alternative Dispute Resolutions. Concerning
the first one, Mr Liikanen and Mr Byrne together—Mr Byrne
I think bearing the main responsibility—have created a forum
called e-Confidence Forum, which includes both public authorities,
the Commission, chief executives of some enterprises and the consumer
organisations, of course. Its aim is to advance the self-regulatory
process in terms of creating standards, certificates, trustmarks
and self-regulation of dispute settlement. That work is on its
way and we hope that in the course of this year we can have concrete
results from this e-Confidence Forum. Concerning to what extent
the Commission itself is investing, I do not recall the exact
figure but it is in terms of millions of euros to work together
with industry under the Information Society Research Programme.
We are doing concrete work on how to develop credible trustmarks
and ADRs. I can try to get you the exact figure[2].
We have some work going on under the IST programme.
— If there is advanced technology
development and experimentation involved, for example to resolve
disputes online, an R&D project proposal can be submitted
to the Information Society Technologies Programme, in particular
in the Key Action II, where there is room for mediation systems.
We expect mid June a call for proposals to be opened (that is,
at that moment in time the exact information about the type of
projects that can be submitted and about the procedures and critical
dates to submit a proposal is made available at www.cordis.lu/ist).
That call will close mid Sept, that is, proposals need to be in
before the closing date.
— If the intention is rather to bring
together parties to build consensus about specifications and guidelines
a supporting measure type of proposal can be submitted at any
moment in time. Details are also at www.cordis.lu/ist.
Typically R&D projects are co-funded on
a 50 per cent basis, whereas for supporting measures funding may
go up to 100 per cent for certain categories of work."
1054. If you kindly can. My next question—quite
a bit of which you have already answered—are these guidelines
likely to impact on the initiative being carried forward by Commissioner
Byrne's Department on Alternative Dispute Resolution?
A. They are connected.
1055. Yes.
A. They are fully co-ordinated so that both
my Commissioner and Commissioner Byrne, together with their Cabinets
and services, have several times discussed and reflected on who
does what. Roughly the division of labour is that Commissioner
Byrne is responsible for the e-Confidence Forum while Commissioner
Liikanen and his services are responsible for all the research
work done under the IST programme. I should add that my Commissioner
is active in the Global Business Dialogue for e-commerce together
with Commissioner Lamy, which is another forum where we try to
advance methods of Alternative Dispute Resolutions.
Lord Faulkner of Worcester
1056. If I could ask about whether you feel
the EU and Member States are doing enough to respond, particularly
to consumer pressure? We were, for example, getting suggestions
that maybe there should be an EU ombudsman for e-commerce who
would have a link with national ombudsmen in each of the Member
States or even possibly the appointment of a CEO who has overall
responsibility, who deals with the governments and consumer industry
and so on. Do you think there is more that ought to be done than
is being done?
A. That is a question which we have only reflected
on so far. I think also in the future our policy is to rely very
much on the self-regulatory arbitration between the business enterprises
and consumer organisations. We see that the Commission can at
best be a stimulator and proactive broker in that context. We
trust and we seriously expect that the enterprise organisations
and enterprises themselves on the one hand and consumer organisations
on the other hand will be able to agree on certain European certificate
standards and methods to create ways to conduct on-line Alternative
Dispute Resolutions. We have a network already of consumer ombudsmen
in, if not all, most of the Member States.
1057. What about an overarching one who has
central responsibility and who deals with individuals? Have you
thought about that?
A. At least at the outset we consider that the
more effective way is to rely on the national ombudsman and their
network. If there is demand from the Member States to create a
European ombudsman then we will rethink it but the basic instinct
of the Commission nowadays is to be very careful in demanding
new competencies. Also, this reliance on the network of 15 consumer
ombudsmen is in line with new fields of creating new methods of
policy co-ordination in Europe which have come out of Lisbon.
The eEurope Action Plan will be an excellent testing plan to see
how the benchmarking, setting up targets and target dates and
effective monitoring, will work. There is some idea and I am quite
excited to see how it will work but, of course, "soft"
law is always something different from "hard" law.
Chairman
1058. One of the ideas that you came up with
is the .eu top level domain being attached to your European e-commerce
domain names. Where are you in the negotiations with ICANN? Is
that the appropriate forum for taking these kinds of issues forward
now or does that need to change? Should the governmental advisory
committee have a stronger voice in ICANN rather than it being
run as this independent private enterprise operation as it presently
is?
A. I must say that I have been very surprised
how complicated it can be both externally and internally to get
this .eu top level domain name registered. Externally because
the ICANN seems to be an organisation where, for instance, the
EU does not have a very strong role. Recently we have been able
to get more of a say and a voice inside ICANN so the situation
is not hopeless. Although I am by no means an interventionist
by nature, my instinct is that more clearly defined governmental
involvement in the work of ICANN would be advisable. Without going
into any details, I must say that I have been quite surprised
by the US reaction to our request because they are trying to wash
their hands of this. I have some suspicion whether it is only
their willingness to rely on the ICANN private structure or whether
there is some—
1059. Hidden agenda?
A. Hidden agenda, yes. I am not saying anything
more but that suspicion could be in some people's minds.
2 The witness subsequently added the following two
points:
(1) "We do not allocate funding specifically
to individual topics. There are several tens of millions available
for this year's proposals, but that is in the area of e-commerce
and e-work overall, which of course contains many topics and in
which there are a few hundred proposals coming in. There tends
to be a severe selection following the evaluation by experts.
Typically proposals receive between 0.5 and 2 MEURO of funding,
but less and more is also possible."
(2) "It is indeed possible to submit
requests for co-funding of work in the area of alternative dispute
resolution, under certain conditions: Back
| 
