By Mark Ward
Technology correspondent, BBC News website, Hanover
European citizens are getting the chance to shape policy on smart tags.
The European Commission is setting up a group made up of citizens, scientists, data protection experts and businesses to discuss how the tags should be used.
Radio Frequency Identification (RFID) tags store data about the objects they are attached to, and are already used by some firms and supermarkets.
The new group is a result of a year-long consultation to assess European feeling towards radio tags.
The stakeholders may eventually draft new regulations to police the tags, but, for now, the commission proposes no new laws to govern their use.
"We must not over-regulate RFID (Radio Frequency Identification)," said Viviane Reding, information society and media commissioner, during a news conference at the Cebit show, where the results of the 12-month consultation were unveiled.
Ms Reding said the market for the radio tags had to be given the chance to grow without interference from the European Commission.
"Europe is very strong in this domain," said Ms Reding. "I think we are in the driving seat."
Smart radio tags typically unite a small chunk of computer memory with a radio transmitter. Businesses see huge advantages to labelling goods with these tags as they will streamline delivery networks and help manage stocks on shelves.
Supermarkets see potential in smart tags for monitoring stock
Ms Reding said that smart tags had already generated about 500m euros (£340m) in revenues across Europe, and this was expected to grow to more than 7bn euros (£4.7bn) within 10 years.
Ms Reding warned that heavy-handed regulation could stunt this growth.
Instead, she said, industry had to get the chance to "go for it".
"It's the whole application of these chips to solve problems in our society that will be of the utmost importance," she said.
"But, we must also make the industry be aware of the fact that the 'internet of things' has to become an 'internet for people'."
The RFID Stakeholder Group will help to oversee the growing use of smart radio tags and look into ways for consumers to protect themselves from the potential casual surveillance that they make possible.
Good or bad?
Ms Reding said the group would aim to produce recommendations by the end of 2008. These could include amendments to existing e-privacy directives or guidelines for businesses on how RFID tags can be used when they affect consumers.
While businesses using RFID tags to mark such things as shipping containers may not have to think about consumers, others will have to take this into account, said Ms Reding. She cited the example of German retail giant Metro, which had run trials in which shoppers deactivated any tags on the goods they had bought at the checkout.
Ms Reding said the stakeholder group would also drive European Commission efforts to educate people about smart tags and their potential uses.
One of the most striking results from the year-long consultation, she said, was the 60% of respondents who said they simply did not know enough about the technology to know whether it would be good or bad.
Despite this, 55% of the respondents to the consultation said regulations would be needed to police the use of the tags.