From: believer@telepath.com Subject: IP: Privacy, Other Issues Post Difficulty for E-Commerce Meeting Date: Fri, 09 Oct 1998 09:38:25 -0500 To: believer@telepath.com Source: USIA http://www.usia.gov/current/news/latest/98100807.clt.html?/products/washfile /newsitem.shtml 08 October 1998 PRIVACY, OTHER ISSUES POSE DIFFICULTY FOR E-COMMERCE MEETING (U.S. position outlined at OECD conference in Ottawa) (840) By Bruce Odessey USIA Staff Correspondent Ottawa -- As ministers from industrialized countries met to work out ways for promoting electronic commerce, differences persisted on a number of issues, especially privacy. When the Organization for Economic Cooperation and Development (OECD) Ministerial Conference in Ottawa ends October 9, either the ministers will produce a communique demonstrating some sort of agreement or the Canadian minister presiding will produce a communique demonstrating continued disagreement. In an October 8 address to the conference, U.S. Secretary of Commerce William Daley called privacy "the make-or-break issue for all of electronic commerce." At issue are the potential for abuse of credit card numbers and confidential medical and other private information by unscrupulous businesses. Daley was confident that the privacy and other consumer protection issues would be resolved. In a panel session, President Clinton's adviser Ira Magaziner described the U.S. vision for protecting consumer privacy on the Internet, a vision reliant on industry self-regulation, not government regulation. In each country, he said, some independent private sector organization would develop a privacy code of conduct and authorize a graphic seal of approval for web sites that pledge to follow that code. The participating web site would have to notify potential buyers about what information it would collect about the buyer and how it would use it. The buyer would have the choice not to make a purchase under those conditions. In addition, Magaziner said, consumers would have the ability to settle complaints about privacy abuse through the organization, which would also conduct routine audits to assure compliance by its web site participants. Already 70 percent of relevant U.S. businesses conducting electronic commerce have agreed to participate in this program once it becomes established in the next few months, he said. Magaziner compared the U.S. approach with the European Union (EU) approach, which establishes government privacy regulation from the beginning. In fact, a EU privacy directive scheduled to enter into force in two weeks, prohibiting flows of electronic data about EU nationals to countries that have no similar regulation, threatens some disruption of data flows to U.S. companies. Secretary Daley said he remains hopeful the two sides will avert any disruption. "To be frank, we must succeed or millions of transactions between the United States and Europe may be blocked," he said. Magaziner argued that the U.S. vision of an alliance of independent organizations for protecting consumer privacy operating in different countries would achieve the flexibility required for the rapidly evolving business of electronic commerce in a way that governments could not. "None of us know where this is headed," he said. "We have to be very cautious before we act" to impose government regulation that could stifle the expansion of this new technology soon after its birth. The OECD secretariat draft proposal on privacy recognizes the different approaches to privacy and other consumer protection issues -- government regulation and industry self-regulation -- and suggests ways for both to exist. While some EU representatives grumbled that the OECD draft pays too little heed to consumers, Secretary Daley was pleased. "I welcome this commitment to work together to find common ground on this issue," Daley said. "We believe that our self-regulatory approach can co-exist with approaches taken by other governments. "To be honest, it won't be easy," he said. "But with careful thought and hard work, we can get the job done." Privacy is but one in a set of issues concerned about building consumer trust in electronic commerce. Conference participants acknowledged that the level of trust remains low for most consumers, who hesitate to commit their credit card numbers to cyberspace. One of those issues concerns authentication of information exchanged by parties to an e-commerce deal; another concerns enforcement of contracts; another concerns the use of encryption for authentication and privacy. No one expects final answers to emerge at Ottawa. Another area of controversy the ministers are tackling concerns taxation of e-commerce transactions. At an October 8 panel, U.S. Internal Revenue Service Commissioner Charles Rossotti said a discussion the day earlier among government and business participants pointed to some consensus emerging at least about broad principles. First, he said, there was consensus that definition was needed about where products delivered by the Internet are consumed, especially for intangible products like services. Second, he said, participants wanted to promote the availability of electronic taxpayer services, including electronic tax filing and provision of tax information and guidance on the Internet. Third, he said, taxes should be collected in a way that does not disadvantage those who comply and tax authorities should aim to prevent cheating by electronic means. Fourth, he said, existing international tax rules should be clarified for their application to electronic commerce, especially potential problems caused by the location of information servers. ---------------------- NOTE: In accordance with Title 17 U.S.C. section 107, this material is distributed without profit or payment to those who have expressed a prior interest in receiving this information for non-profit research and educational purposes only. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml ----------------------- ********************************************** To subscribe or unsubscribe, email: majordomo@majordomo.pobox.com with the message: (un)subscribe ignition-point email@address ********************************************** www.telepath.com/believer **********************************************