Select Committee on European Union Written Evidence

Memorandum by the Confederation of British Industry (CBI)


We have taken the liberty of reading these questions as referring to "e-business"—the use of electronic networks to exchange information of all kinds—business-to-business, business-to-consumer and consumer-to-consumer. We believe that it is the broader concept of e-business that is of primary importance in these questions.

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

  For many in the business and public policy worlds it is clear that the potential for e-business is growing and diversifying daily and for many of us the difficulty is keeping up with developments and possibilities. What needs to be stimulated is the uptake of e-business in certain fields. Those businesses and consumers who have not embarked on e-business may lack awareness—which is forgivable for an individual but not for a business—or they may lack affordable access, confidence or understanding of the benefits. Businesses acting commercially, businesses acting in association and Government and other public bodies all have their parts to play in each of these areas.

  As regards confidence and trust, the broad roles are these:

    —  Government needs to provide assurance that e-business is not above the law, though the law must not make it harder to transact e-business than in the "real" world nor be so restrictive as to negate its benefits;

    —  Government can play a valuable role by publicly underlining how e-business can improve all our lives, and by being itself an exemplary user;

    —  businesses acting commercially are the providers of many technological aids to trust. Acting together they can develop business-wide solutions, protocols and business ventures to reinforce trust in both business and consumers as users. There are two good examples that we are developing in the Alliance for Electronic Business[8]. One is TrustUK, an accreditation scheme for online consumer protection hallmarks, and the second is tScheme, a business-led scheme for the governance of Trust Service Providers. Government has publicly welcomed both of these initiatives, and in the case of tScheme has recognised it as more promising than the proposed statutory powers for the same purpose set out in the Electronic Communications Bill. We attach more information about both of these schemes to promote trust among consumers and among businesses;

    —  a next step is to extend TrustUK by developing with our partners in Europe a system that will work across national borders. Such self-regulatory protection for consumers will be a valuable adjunct to seeking redress through the courts. Discussion of the EU Directive on legal frameworks has shown just how unwieldy traditional legal procedures can be for consumers, but the current form of the Directive, by providing for the law of "country of destination" to govern consumer contracts, fails to help. It is important that self-regulatory provisions are open and clear as to what they offer and as to the Alternative Dispute Resolution procedures (ADRs) available to the consumer.

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?

  We attach to this response the paper[9] to the EU Lisbon Summit by the CBI, one of the members of the Alliance. This shows that the CBI welcomes the Action Plan and rates the 10 action areas listed in it as important. A key issue is how far these worthwhile programmes will benefit from being included together in this Action Plan, when the Commission is already under way with them. In addition to these actions the major priority must be the completion of certain key Directives such as Copyright and Distance Selling of Financial Services, and reaching realistic solutions on applicable law and jurisdiction. We would like to have the Commission publish its timetable, which should be a brisk one, for completing those Directives.

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

  Self-regulation, supported by public authorities, is key to ensuring appropriate levels of customer protection. In fast-moving markets, legislation is likely to be too late and too rigid—inhibiting innovation without improving protection.

  But effective self-regulation places a significant responsibility on business and business organisations to make sure that the schemes that they initiate do work. Key to this is ensuring that individual businesses appreciate that "self-regulation" does not mean "if you feel like it". It demands clarity of rules and effective means of enforcement. The Alliance for Electronic Business has grasped this challenge through its leadership on tScheme and TrustUK.

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?

  It is difficult to imagine how any supra-national legal system could function with enough speed and flexibility to avoid creating legal uncertainty in the e-business legislative environment, given the rapid pace of innovation and change taking place, and the very slow rate at which EU legislative proposals proceed. Under the widely required co-decision procedure a Directive, even where uncontroversial, may take around 18 months to be agreed. Such uncertainty is damaging to the realisation of the full business potential of the Internet—to the detriment of business and consumer confidence alike.

  Furthermore, e-business is a policy area which transcends national policy—and Directorate-General divisions, therefore requiring a high degree of efficient and transparent co-operation, co-ordination and consultation between officials and Directorates—eg Single Market, Consumer, Legal Services, Home and Justice, Taxation etc—of which there is little experience.

  This reinforces the argument for the EU to intervene only where essential, and to do so using more flexible mechanisms than the traditional legal routes, such as (online) dispute settlement mechanisms, codes of conduct etc.

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

  There needs to be a greater commitment from all the EU institutions at the beginning of the process as to the specific aims of a particular piece of legislation. A clear steer from the EU Council of Ministers to the Commission might facilitate this. This would avoid different parts of the Commission or Parliament working towards conflicting results. The CBI sees Commissioner Liikanen's eEurope initiative and the discussion that will take place at the EU Lisbon Summit as a useful vehicle for such commitments at Member State and EU level, and in terms of raising the profile and the recognition of the importance of e-business.

  There have been some calls for greater use of the urgency procedure for EU legislative proposals. This is to be welcomed, provided that it does not work to the detriment of transparency and full consultation with affected parties. The very fact that a proposal for a Regulation on the Brussels Convention was being dealt with very quickly and without proper consultation meant that the full implications of what was being proposed for the development of e-commerce were almost missed.

  We also question whether urgency procedures would be acceptable in practice to the European Parliament, given that co-decision would apply in many e-business areas.

  First reading in the European Parliament and common positions in the Council of Ministers have no associated time limits. There may be a value therefore in setting time limits or at least getting a commitment on a voluntary basis from those involved to a more rapid timetable at first reading.

  The challenge is to combine urgency with necessary transparency. This again points to the need to avoid unnecessary legislative procedures, where flexible, non-legislative approaches could be put in place more rapidly and just as effectively—if not more so.

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

  We understand that the term "structural" is used to denote the structures within the Commission. We welcome the commitment from President Prodi to greater co-ordination at Commissioner level between the various DGs of the Commission. Similar co-ordination between political parties and policy committees could be useful in the European Parliament context—perhaps at the level of the Conference of Committee Chairmen.

  We suggest that the EU consider appointing an e-business Czar, to oversee co-ordination among European institutions on all matters affecting e-business.

10 March 2000

8   The Alliance for Electronic Business is widely recognised as a powerful, all-sector voice for UK business on policy and regulatory matters in the e-business field. The Alliance members are the Confederation of British Industry, Computing Services and Software Association, Direct Marketing Association, e centre uk and the Federation of Electronics Industry. Back

9   Not printed here. Back

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