Select Committee on European Union Written Evidence

Memorandum by the Chartered Institute of Purchasing Supply (CIPS)

1.  What needs to be done to create confidence and to stimulate e-commerce?

Comments received include:

  Certainty is required. Business needs to be certain of the legal position when procuring goods and services. For effective business and for the success of Internet business, clarity and certainty are essential. Clarifying issues such as jurisdiction (Rome Convention) and VAT treatment are therefore urgent.

  Security is required. Business needs the best available means of keeping transactions secure and confidential and being able to rely on other party's identities (ie electronic signature). Conversely business must not be at risk of any but the most limited and controlled eavesdropping by, or forced disclosure to, Government agencies. There is no good reason why those agencies' rights in this connection should be any wider than for other communication media.

  Flexibility is required. Business-to-business Internet commerce is developing far faster than any regulator could possibly keep up with. It is a fundamental tenet of good government and always has been, that regulation should be kept to the minimum necessary. That is absolutely paramount in present circumstances with e-commerce. This is particularly the case since, although there are some horrendous abuses of the Internet going on, there is little reason to suppose that any legal regulation currently on offer is going to stop it. Eventually fraud, hacking and eavesdropping will be prevented (if at all) by sophisticated user software. Pornography and e crime will be prevented (if at all) by sophisticated detection software. None of these abuses will in practice be prevented by law.

  An adequate level of encryption needs to be in place to ensure full transaction security. There is concern within the market place by both buyers and sellers that networks are not secure.

  From purchasing/user perspective a lack of standards from suppliers deploying e procurement systems could hamper e-commerce developments.

  The main thing that will drive confidence for industry to take up e-commerce is successful real implementations with proven deliverables. At present very few, if any, companies are operating comprehensive business applications for e-commerce in the UK. Also it is suggested that there is still much development required from some service providers' e-commerce offerings.

  One of the key areas that needs addressing is the payment side—to what extent and when are Customs and Excise going to approve invoicing/payment over the Internet. This would deliver huge benefits. Current approval is for Procurement Cards and EDI only although some companies seem to be approaching Customs and Excise to approve payment systems and processes.

  Another main factor is awareness and understanding of what e-commerce is and the real practical applications which it offers.

  The EU's legislative timetable is too ambitious.

  The format of general info/advice on EU websites is poor, ie there is usually just a heading and a couple of lines and then a hypertext link to a draft directive or report which is difficult to understand for most lay readers.

  The EU should publish more user friendly booklets, videos eg What EU businesses have to comply with in EU E Commerce Laws—A Practical Guide.

  The EU should provide videos, TV programmes on what the EU is doing for businesses and citizens. Press releases in the FT and keynote speeches are not sufficient particularly when a commissioner says "this will happen by the end of the year" as this alarms businesses.


  Fact, removal of hype

  Trusted lead bodies taking initiative for new developments

  Proof of security

  Line access charges

2.  Does the European Commission's draft Action Plan "eEurope: An Information Society for All" offer a realistic means of promoting e-commerce in the EU?

  Comments received include:

  It would if the message was reaching businesses and citizens but there is doubt that it is or that it will.

  It is suggested that the EU organises and funds seminars/workshops in every major EU City. Government and private sector gurus should run these. They should be filmed and the videos available free or for a low charge to all with notes on CD ROM.

  Any such initiative/forum would be good news. However, it needs to offer real benefits to countries/industry as opposed to being merely a talking debating shop.

3.  Will codes of conduct and co-regulation provide sufficient protection? Is there a case for intervention by national governments and the EU?

  Comments received include:

  Each EU State seems to be writing its own e-commerce law to suit their environment. Most are based on the UN Law: Uncitral. The EU laws should be based on Uncitral too so that the EU does not lag behind or lack protection.

  There is certainly a need for codes of conduct. If governments regulate they might constrain the flexibility and potential offered by e-commerce.

  There is probably a need for legislation around the areas of fraud and an effective mechanism for maintaining security.

  There must be a positive message by governments that those who abuse the Internet for fraudulent purposes will be prosecuted. There must also be commitments by governments to police the network.

  Codes of conduct unlikely—Internet providers should provide regulatory framework.

4.  Do the institutions of national governments, on the one hand, and the European Commission, the Council of Ministers and the European Parliament, on the other, function with sufficient flexibility and coherence to promote the EU's objectives in the field of e-commerce?

  Comments received include:

  They should let the Information DG work alone with a check by Council to meet deadlines.

  The slow speed of bureaucracies is not adequate to keep pace with changes in technologies. There must be much more pragmatic commercial approach to the implementation of changing network systems.

  It will be difficult for a slow, bureaucratic and inflexible system to keep up with the rate of change and advances in e-commerce.

  No—this should grow organically.

5.  Should existing EU institutional structures be changed, or new ones created, to improve policy development and co-ordination?

  Comments received include:

  There should be a special allowance for urgency, change ie a speed up procedure.

6.  How can structural change be bought about fast enough to accommodate to the growth of e-commerce?

  Comments received include:

  A mandatory standard for the whole EU on telecomms eg ISDN lines bandwith.

  An effective way that changes can be brought about quickly is to have small groups with accountability/responsibility for setting policy with simple hierarchies and structures.

  Allow professional bodies and practitioners to work it out.

29 February 2000

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