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Last Updated: Monday, 22 January 2007, 07:37 GMT
EU laws 'will hit online trade'
EU flag and others
The EU wants trading nations to comply with each others laws.
European Union laws on cross-border trade will hurt online sales and may cause legal chaos, UK business leaders have warned.

Some smaller firms, especially those relying on internet sales, may have to end non-UK business, the CBI said.

Under EU proposals, a UK company selling abroad may have to comply with the laws of all 27 member countries rather than just domestic rules.

Financial and legal service providers would also suffer, the CBI said.

'Legal quagmire'

Under current rules, companies selling goods or services to other EU nations are generally subject to their domestic law.

[The proposals] will produce substantive new law and turn accepted cross-border trade principles on their head
John Cridland, CBI deputy director-general

However, if the European Commission's changes went through, the seller would have to comply with rules in the buyer's country.

The consumer contract legislation needs to be re-examined before a "legal quagmire" ensued, CBI deputy director-general John Cridland said.

"The proposed legislation was sold as a simple legal tidying-up exercise when the Commission embarked on the process but has turned into a major operation.

"It will produce substantive new law and turn accepted cross-border trade principles on their head."

Mr Cridland added that businesses would have three choices if the legislation went unchanged.

"They can spend time and money getting to grips with the varied and conflicting legal regimes of each member state they trade with; chance their arm that their processes will meet the required standards; or, most worrying, stop trading with some countries altogether."

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