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E-commerce Wednesday, 16 December, 1998, 18:04 GMT
Future visions: Leading the new revolution
Within the next few weeks, the government will take its first concrete step towards making Britain the "best environment worldwide to trade online" by issuing a Consultation Paper on e-commerce. While recent speeches and publications give every indication that the government will take an active role in fostering electronic commerce, details of exactly how it will achieve this remain vague. A guide to the main points of the government's e-commerce strategy:


Government plans to help by:

  • removing unnecessary barriers
  • ensuring wherever possible neutrality of treatment between electronic and conventional business
  • establishing a safe and reliable environment for consumers
  • promoting international co-operation to ensure free access between consumers and suppliers across national boundaries
  • leading by example both as a consumer of goods and as a supplier of services
  • ensuring continued protection for the wider interests of society as a whole - through tax administration to provide adequate funding for public services or preventing criminal activities
Building trust

Electronic commerce offers consumers the convenience of home shopping, a wider range of goods and services and lower prices, as well as improved access for disabled people, the elderly and those living in remote areas. However, consumers will not take advantage of these if they are not assured a proper level of protection. They must be confident that the online world is a safe place to shop.

Electronic transactions will be subject to the same rules as traditional shopping although the DTI admits that self-regulation will have an important role to play.


Privacy is a key concern for users. The same technological advances that can bring benefits (profiling to create tailor-made products and services) can also be misused to infringe individual privacy.

The government will follow the 1998 Data Protection Act that ensures, among other things, that information is processed fairly and lawfully, kept no longer than necessary, processed in accordance with the rights of the information giver. The UK also complies with European privacy laws.

That could cause problems for electronic commerce. The United States, which advocates self-regulation, does not meet European standards of data protection. In theory, this could block the transfer of data between the United States and Europe.

In practice though, this seems unlikely to happen in the short term. Talks continue between the US Commerce Department and the European Commission. Many EU countries still not in line with the directive.

Encryption and electronic signatures

The government says that deployment of public-key cryptography (electronic signatures) can help both to guarantee the integrity of information and link the information to the sender.

To achieve this, the government proposes to introduce legislation to license organisations providing cryptography keys. It will also set standards for certification and guarantee legal recognition to electronic transactions facilitated by electronic signatures.

The need to safeguard confidentiality can be best achieved by the use of strong encryption and Trusted Third Parties. A TTP system requires users of encryption keys to deposit their private encryption keys with licensed organisations which would provide legal access by law enforcement agencies.

This is the most contentious part of the government 's plan. The DTI argues that TTPs are the only way to prevent criminals and terrorists from circumventing law and order. Civil liberty organisations and many scientists counter that allowing government access to private communication violates individual's privacy and will stem the growth of electronic commerce and communication.


The government believes the following broad principles should apply to the taxation of electronic commerce:

  • Neutrality - taxation should seek to be technology-neutral so that no particular form of commerce is advantaged or disadvantaged.
  • Certainty and Transparency - rules should be clear and simple so that businesses can anticipate, so far as possible, the tax consequences of the transactions they enter into.
  • Effectiveness - The overriding aim should be to ensure the right amount of tax is paid at the right time and in the right country. Rules need to be sufficiently flexible to continue to achieve this as technology develops.
  • Efficiency - the compliance costs of business and the administration costs of government should be kept to the minimum compatible with effective tax administration.

Illegal Content

The law should apply online as it does offline.

In the UK, primary responsibility for illegal material on the Internet would clearly lie with the individual or entity posting it. Under UK law, however, an Internet Service Provider which has been made aware of the illegal material (or activity) and has failed to take reasonable steps to remove the material could also be liable to prosecution as an accessory to a crime.

The greatest potential problem in this area is that of international co-operation. Co-ordination will be essential in tackling issues of illegal content when material held to be illegal in one country is located on a server in another.

More difficult is the situation where material or actions deemed illegal in one country are legal in another. This can only be overcome by reaching international agreement in key areas on what constitutes illegal material or actions. Copyright and related rights is one area where international agreement has already been reached on what constitutes an illegal action (the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty).

Telecoms Infrastructure

The UK already has one of the most liberalised markets for telecommunications in the world and the development of competition in the UK market is reflected in the real benefits that have flowed through to consumers. These benefits include choice of service and supplier, quality of service and lower prices.

That said, the government admits that prices for leased lines - a key input for some firms offering online access and services - are still far too high in Europe in comparison with the US.

The effects of the liberalisation of most EU markets at the beginning of 1998 are still feeding through, but the UK Government is concerned that prices are not moving as quickly as might have been expected. In the UK , OFTEL, the independent telecoms regulator, is carrying out a competition investigation into the market for national private circuits.

Note: Government positions were taken from Net Benefit: The electronic commerce agenda for the UK, which was published in October by the Department of Trade and Industry.

See also:

24 Oct 98 | Science/Nature
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