Select Committee on European Union Minutes of Evidence

Examination of Witnesses (Questions 1249 - 1259)




  1249. Good morning. Thank you very much for giving us the opportunity to come and take evidence from you. Rather than spend time on an introduction, because I suspect the issues will emerge as we go through, we will go straight into the questions. We note that OECD has done much to establish minimum standards for codes of conduct. What plans do you have to facilitate cross-border e-commerce globally? For example, what needs to be done to encourage mutual recognition and awareness of trustmarque schemes, and to put in place an effective and confidence-inducing network of alternative arrangements for dispute resolution?

  (Mr Dryden) The OECD is not an organisation which is involved in the standard-setting business but rather we try to facilitate a favourable environment for the development of electronic commerce which we think is essentially going to be private sector led. As a prelude to the answer to your question, the issue these days is not so much whether it is regulation and law, or self-regulation, codes of conduct and best practices but how do you marry the two and what is the most efficient way of an integrated approach of regulation and self-regulation? Regulation is minimalist, transparent, stable and so forth but the key to it is effectiveness. Does it work? The OECD's role in this, in answering your first question on minimum standards, is a kind of soft law approach by developing "guidelines". OECD guidelines are recommendations of the OECD Council, that is, recommendations with a capital "R". In other words, policy recommendations which are effectively agreed to by the member countries of the OECD. The secretariat also makes recommendations but the former things like the 1980 OECD guidelines for privacy protection, the 1992 guidelines on security of information systems, the 1997 guidelines on cryptography policy and, more recently, the 1999 guidelines on consumer protection for electronic commerce. These set some basic standards, bedrock principles for policy in those areas but then it is up to governments to apply those principles, whether enshrining those principles in law or whether encouraging self-regulation by the private sector which respects those principles. An example would be privacy where the OECD recommends certain privacy principles. Various member countries have privacy laws and institutions that enforce those laws while other countries, for instance the United States, prefer a self-regulatory approach. The idea of soft law, which is law at a more basic principle level, is to encourage respect for some basic principles and to encourage international coherence. When you come to things like privacy, for example, it should enable trans-border data flow arrangements to come into existence. Codes of conduct we believe are very important potential tools for the encouragement of a favourable environment for electronic commerce. There are a number of examples of attempts to set up codes of conduct and promote them—entirely in the private sector developed by government or developed by some kind of ad hoc committee which was a government/private sector NGO committee. A very good example to study is the Netherlands code of conduct where they have quite an interesting body called ECP.NL (Electronic Commerce Platform Netherlands). They have set up a group to develop codes of conduct with government people, with private sector people, with NGOs. The idea is to favour the development of electronic commerce. We are studying this and we have a project to collect best practices on codes of conduct for electronic commerce in various countries (international ones) and various sectors. We have got to look at things like generic versus sector specific, binding/not binding in order to find out what it is that makes codes of conduct effective. We will publish a report and release it to the member countries and let them adopt it or not as they see fit.

  1250. Do you monitor the activities of each of the member countries when you issue your documents, your declarations, on the framework that you see as being the principles that ought to be followed? You are looking at the Netherlands, but would you go to the UK, would you go to Canada and follow through in each one?
  (Mr Dryden) Yes. In performing this study we would collect data from every country. We do not monitor specifically the application or impact or follow-up in the individual countries unless our member countries ask us to do so. For instance, we have just produced some principles for consumer protection. Our member countries have asked us to monitor follow-up on that, but for resource reasons we do not systematically monitor anything unless member countries ask us to do it as part of our work programme. Another example is authentication—surveying and producing inventories of authentication procedures or so-called form requirements for authentication in the member countries. Very frequently we compile inventories of practices and approaches as a prelude to doing an analytical study. In other words, we get the data and put it on the table in a coherent way, allow the member countries to discuss it and then we do our analysis after that. In the fields you mentioned this is our general methodology.

  1251. Do you ever get any requests from the UK to go in and follow through their implementation of particular principles that you have recommended in the framework document?
  (Mr Dryden) The UK is always a very active participant but the UK has not generally asked us to follow up anything in particular. I am now speaking just on a personal basis. I happen to be a UK citizen even though I am an OECD civil servant and I think sometimes the UK under-uses the OECD a little bit. Some member countries, because they pay for the OECD, believe they should get their money's worth. The UK actively participates in the work but sometimes not proactively. There are some exceptions. The UK asked us to do some work on Y2K a few years back. The UK proposed developing policy guidelines on authentication just 12 months ago. That was not retained as some other member countries were opposed. But it is exceptional for the UK to say proactively, "This is a project we want you to follow".

  1252. Do they have to get the agreement of other countries though to see it through to Council?
  (Mr Dryden) Yes, we are a consensus organisation, so proposals for work, even if supported by a grant and specific project related resources, are subject to the agreement of the member countries to conduct that work. The governing body is the Council, the ambassadors of the OECD working on instructions from capitals. They decide the overall programme, in general terms usually, but then the fine detail is done on a committee basis whose members are experts from the civil services of the member countries.

Viscount Brookeborough

  1253. Can I ask you what your view is of the ADR, accepting that the Brussels regulation will not be easy enough, quick enough, simple enough, cheap enough, for everyday problem resolution at personal or SME level? Perhaps you would like to talk about them both.
  (Mr Dryden) Firstly we do not participate in detail in the policy formulation in the European Commission but the European Commission participates in our work. First, a general remark about the digital economy information society and the European Union, which is that very often not globally harmonised solutions but rather globally compatible solutions are desirable in this digital economy global information society because of the trans-border nature of the technologies. It is very tempting to say, "Look; this is a trans-border issue so let us just all sit round a table and agree what to do". That kind of approach to some extent will work within the European Union where you have 15 very special member countries who have a commitment to a single market. They have the Maastricht Treaty, they have a commission which churns out directives, and provided they go through the Parliament and the Council of Ministers they are eventually enshrined into national law. Therefore a harmonisation approach is a possible solution to a much greater extent within the European Union than it is on a global basis. That approach will simply not fly on a global basis. Therefore that is where the OECD comes in. Our value added can be to facilitate globally compatible solutions and globally inter-operable solutions. The problem underlying all of this is the question of jurisdiction and applicable law and so on. The complexity of the legal situation already exists and the global digital economy and global digital transactions just make things worse. Of course it is an enormous opportunity and we must seize this, but we must expect that the number of transactions, which are complex in some way: trans-border, distance, will increase by an order of magnitude. Therefore more disputes are likely to arise. Individuals and small and medium enterprises are going to get involved in this in a way that they did not do before. Naturally alternative dispute resolution mechanisms are the great hope for electronic commerce and not just commercial transactions. There are issues to do with privacy, issues to do with business-to-consumer of course, even business-to-business, even non-commercial things. There are alternative dispute resolution mechanisms that exist in cases like divorce or whatever you like. For electronic commerce this is extremely important. We are looking very closely at how alternative dispute resolution mechanisms can be favoured. At the moment it is one of the hottest topics around. It has been examined in the United States. Just yesterday and the day before I had staff members out there participating in a meeting in the US. For dispute resolution issues in the European Union we have the European electronic judicial network for settling consumer disputes out of court and we favour this but again their approach is tailored for within those special 15 countries of the European Union.

  1254. It is obviously a very important topic, not only because the disputes need to be resolved but because without the facility for it people will not have the confidence to go into it in the first place.
  (Mr Dryden) Yes.

  1255. From what you say am I being unfair to say that the OECD has actually done very little work on this at the moment globally and what you are perhaps doing is gathering information?
  (Mr Dryden) Yes.

  1256. Have you had an OECD conference specifically on this problem or are you gathering information in order to have it and then maybe come up with something?
  (Mr Dryden) We have organised a conference which will take place in December in The Hague. We are doing this jointly with the private sector, the International Chamber of Commerce and The Hague Conference on Private International Law. The three bodies, the private sector people, the international law people and the OECD, will sit round the table in The Hague on 11/12 December. We are preparing that conference, identifying the issues, doing some background work on it and trying to pull together the discussions that are taking place around the world at the moment in the US, in the European Union and in a purely private sector context.

  1257. Could your organisation to have been perhaps more proactive in that this problem was arising and, rather than waiting for the EU to bring out a Brussels convention and for America to bring out something and for Japan to bring out something, if they had had a forum to talk within such as your own, which is so influential, it might have been able to help shape them to be a little bit more harmonious—or maybe they will be anyway?
  (Mr Dryden) We have had it on the table for over a year, that we wanted to go ahead much faster with this. In fact, our member countries were unable to agree on an agenda and actions to be undertaken early enough in order to have a meeting in the first half of this year—which is when we wanted to do it. We ran into problems of agenda: would jurisdiction be on the agenda, what would the role of the private sector be with respect to the governments, and so on. We ran into a little bit of trouble—but have managed to satisfy everyone. Some of our member countries are a little bit concerned about the OECD going too fast. Half of our member countries look at the OECD as being the think-tank which comes up with the ideas, being very proactive and putting tomorrow's issues on the table today. The other half of our member countries say, "Hang on, do not go so fast. We have not thought about what we want to do yet. When we have thought about what we want to do then we will bring it to the OECD and tell you what it is that we have decided."


  1258. So who is old Labour and who is new Labour?
  (Mr Dryden) I will not answer that one.

  1259. Are you a transparent organisation?
  (Mr Dryden) Yes.

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