Comments on Draft #9 - December 11, 1996

The following are our annotations on the U.S. President's Information Infrastructure Task Force's policy proposal (at http://www.iitf.nist.gov/electronic_commerce.htm), "A Framework for Global Electronic Commerce".

The Task Force posted some other citizen responses to the document.

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(annotated document begins here.
**annotations are marked in bold and preceded by two asterisks.)

A FRAMEWORK FOR
GLOBAL ELECTRONIC COMMERCE

BACKGROUND
PRINCIPLES
FINANCIAL ISSUES

1. Customs and taxation.
2. Electronic payment systems.
LEGAL ISSUES
3. 'Uniform Commercial Code' for commerce conducted over the Internet.
4. Intellectual property protection.
5. Privacy.
6. Security
MARKET ACCESS ISSUES
7. Telecommunications infrastructure and interoperability.
8. Content.
9. Technical standards.

BACKGROUND

The Global Information Infrastructure (GII), now less than a decade old, is already transforming our world. Over the next decade, whole populations once separated by distance and time, will find almost every aspect of their daily lives -- their education, health care, work, and leisure activities -- affected by advances on the GII.

No single force embodies this trend more than the evolving medium known as the Internet.1 Once simply a tool for a small number of researchers, the Internet has blossomed into an appliance of every day life, a medium accessible from almost every point on the planet, brimming with an inestimable range of data and information. In essence, the Internet has become the vehicle of a new, global digital economy which has enveloped the physical world, altering traditional concepts of economic, political and social relations.

For example, students across the world are benefiting from instantaneous access to far flung libraries, universities, and other troves of data via the World Wide Web. Doctors are reinventing their profession, utilizing **verb choice tele-medicine to administer off-site diagnoses to patients in need. Citizens from all nations are finding additional outlets for personal and political expression, **verb choiceutilizing interactive fora on the Internet to voice their opinion **agreement: should be plural to match citizensand to listen to the views of others.

As the Internet democratizes societies **somewhat vague: what does 'democratized' mean, and which parts of society are transformed?and empowers citizens with information, it also is yielding profound changes **specify? in the classic economic paradigm of buyer and seller. New models **specify?of commercial interaction are developing as businesses and consumers participate in the electronic marketplace and reap the resultant benefits. Nowhere is this more evident than in the global trade in services.

World trade involving computer software, entertainment products (motion pictures, videos, games, sound recordings), information services (databases, on-line newspapers), technical information, product licenses, and professional services (businesses and technical consulting, accounting, architectural design, legal advice, travel services, etc.) has been growing rapidly over the past decade, now accounting for well over $40 billion of U.S. exports alone.2

The GII has the potential to revolutionize commerce in these and other areas by accelerating the growth of trade and thereby enriching the lives of people around the world. Specifically, the Internet, intranets, and other computer networks can lower transaction costs dramatically, and facilitate new types of commercial transactions and new arrangements of buyers and sellers that would make commerce easier. **the previous sentence is a major point, but it's buried in the middle of the section

Commerce on the Internet could total several billions of dollars by the turn of the century. Such commercial activity already has begun, with sales estimated at $200 million in 1995.3 Many businesses and consumers, however, are still wary of conducting extensive business over the Internet because of the lack of a predictable legal environment governing transactions. This is particularly true for international commercial activity where concerns about enforcement of contracts, liability, intellectual property protection, privacy, security, taxation and other matters have caused businesses and consumers to be cautious.

As use of the Internet expands, many companies fear that governments will impose disparate and extensive regulations on the Internet and electronic commerce. Potential areas of problematic regulation include taxes and duties, restrictions on the type of information transmitted, control over standards development, and public utility forms of regulation **??reword for clarity on services offered. Indeed, signs of these types of commerce-inhibiting actions already are appearing in many nations. **predication: main agent and action in sentence are obscured. what are the signs? how are they appearing? who is acting on whom/what? Preempting these harmful actions before they take root is a strong motivation for the strategy outlined in this paper. **verb choice: replace 'is' with an action verb.

Governments can have a profound effect on the growth of commerce on the Internet. By their actions, they can facilitate trade on the Internet or inhibit it. Knowing when to act and, at least as important, when not to act will be crucial to the development of electronic commerce. **predication: subj "knowing" and verb "is" are very vague.

Recognizing the important role that government can play, the Administration already has provided strong support for the development of the GII. The 1995 GII: Agenda for Cooperation extended the vision of the National Information Infrastructure (NII) to a global platform. The next step is to ensure the natural growth of the NII and GII as an interconnected global marketplace.

For this to occur, it is critical to ensure that governments adopt a non-regulatory, market-oriented approach to policy development around electronic commerce. There is a clear need **specify? why do we need this environment? remind us of the potential benefits of this env't. to provide a transparent and harmonized legal environment in which business and commerce can occur. However, official decision makers must respect the unique nature of the medium and recognize that widespread competition and increased consumer participation in marketplace choices should be the defining features of the new digital age.

This paper suggests a set of principles, articulates a series of policies, and establishes a road map for international discussions and agreements, to facilitate the growth of commerce on the Internet. **misplaced modifier: last clause belongs near 'this paper'.

PRINCIPLES

  1. The private sector should lead.

    Though government has played a role in financing the initial development of the Internet, the expansion of the Internet and GII has been driven primarily by the private sector. For electronic commerce to flourish, the private sector must continue to lead. Innovation, expansion of services and participants, and lower prices will depend upon the Internet remaining a market-driven arena, not one that operates as a regulated industry.

  2. Governments should avoid undue restrictions on electronic commerce.

    **combine this section with the next one in which the proper role of gov't with respect to elec. commerce is defined When two parties wish to enter into an agreement to legally buy and sell products and services across the Internet, they should be able to do so with minimal government involvement or intervention. Governments should refrain from imposing new and unnecessary **specify? regulations, bureaucratic procedures, or new taxes and tariffs on commercial activities that take place via the Internet. Impeding commercial activities in these ways will limit unnecessarily the availability of, and raise the prices of, products and services to consumers the world over, and distort development of the electronic marketplace.

  3. Where governmental involvement is needed, its aim should be to support and enforce a predictable, minimalist, consistent and simple legal environment for commerce.

    In some areas, **specify? government agreements will be necessary to facilitate electronic commerce. In these cases, governments should establish a predictable and simple legal environment based on a decentralized, contractual model of law rather than one based on top-down regulation. This harmonized legal framework should focus on protecting customers from fraudulent sales, protecting intellectual property from piracy, protecting privacy, ensuring competition, fostering disclosure and creating simple means for resolving disputes. **do more to emphasize these aims?

  4. Governments should recognize the unique qualities of the Internet.

    All governments should recognize that the genius and explosive success of the Internet can be attributed in part to its decentralized nature and bottom-up governance. Governments also should realize that the Internet's unique structure poses significant logistical and technological challenges to current regulatory models, and should tailor their policies accordingly. **specify? tailor=expand? minimize? translate? Governments also should encourage the evolving industry self-regulation and support the efforts of private sector organizations to develop mechanisms to facilitate the successful operation of the Internet. **what exactly does 'successful operation' mean?

  5. Electronic commerce over the Internet should be facilitated on an international basis.

    **passive voice. who's facilitating and how? While recognizing the differences in national legal systems, the legal framework supporting commercial transactions on the Internet should be governed by consistent principles regardless of the countries in which the buyer or seller reside.

This paper covers nine areas where international agreements and/or guidelines which follow these principles could facilitate the growth of commerce on the Internet by creating a predictable, market-oriented framework for commerce. Although there are significant areas of overlap, these can be divided into financial issues, legal issues, and market access issues.

Financial Issues

1. Customs and taxation.

2. Electronic payment systems.

Legal Issues

3. 'Uniform Commercial Code' for commerce conducted over the Internet.

4. Intellectual property protection.

5. Privacy.

6. Security

Market Access Issues

7. Telecommunications infrastructure and interoperability.

8. Content.

9. Technical standards.

I. Financial Issues

1. CUSTOMS AND TAXATION

For almost 50 years, nations have negotiated reductions in tariffs because they have recognized an economic advantage to citizens of all nations from freer trade. Because of this trend, and because the Internet is truly a global medium, it makes little sense to introduce tariffs on goods and services delivered over the Internet.

Further, commerce over the Internet lacks the clear and fixed geographic lines of transit that historically have characterized physical trade of goods. Thus, while it remains possible **yes, it's possible, but does that mean it's desirable? to administer tariffs for products ordered over the Internet but delivered via mail or other similar means, the structure of the Internet makes it difficult to do so when the product or service is delivered electronically.

Nevertheless, many nations are looking for new sources of revenue, and may seek to levy duties on global electronic commerce.

Therefore, the United States will advocate that the World Trade Organization (WTO) and other appropriate international fora declare the Internet a duty-free environment whenever products or services are delivered across the Internet. **but not when orders are taken over the Internet for services delivered offline? won't this serve as a barrier to trade in real goods?This principle should be negotiated quickly so that it can be established before nations impose tariffs and before vested interests form to protect those tariffs.

In addition, the United States believes that only existing tax regimes should be applied to Internet commerce. **which ones? state sales tax? how? what are the privacy costs of this approach? No new taxes should be imposed on Internet commerce. The taxation of commerce conducted over the Internet should be consistent with the basic principles of international taxation, should avoid inconsistent national tax jurisdictions and double taxation, and should be simple for appropriate governmental authorities to administer.

Any taxation of Internet sales that occurs should follow these principles:

The best means to implement the preceding principles will be to follow, to the extent possible, existing taxation concepts and principles.

Any such taxation system will have to accomplish these goals in the context of the Internet's special characteristics -- the potential anonymity of buyer and seller, the capacity for multiple small transactions and the difficulty of associating online activities with physically defined locations. **these are major complications. how will the federal gov't address them without compromising citizen privacy?

To this end, the United States, through the Treasury Department, will be participating in discussions on the taxation of electronic commerce through the Organization for Economic Cooperation and Development (OECD), the primary forum for cooperation in international taxation.

2. ELECTRONIC PAYMENT SYSTEMS

Recent technological advancements have made possible new methods for making retail electronic payments across national borders. However, Internet commerce will not succeed until safe and reliable payment systems develop that are suitable to the special needs of the medium.

A number of different types of electronic payment systems (EPS) are developing that can support international commerce over the Internet.

In these early stages in the development of EPS, the commercial and technological environment is changing rapidly. It will be hard to develop policy that is both appropriate and relevant. For these reasons, inflexible and highly prescriptive regulations and rules are inappropriate and potentially harmful. **word 'appropriate' is overused and vague. can you restate this idea with a precise action verb?

The United States, through the Department of the Treasury and the Federal Reserve, is working with other governments in appropriate international fora to consider fully the global implications of emerging EPS.

In the near term, case-by-case supervision of the entities experimenting in electronic payments is preferred. **by whom? Several existing government-sponsored organizations already are working on **how? to what end? important aspects of electronic banking and payments, including the Committee on Payments and Settlement Systems of the G-10 Central Bank Governors, the Basle Committee on Banking Supervision, and the Financial Action Task Force. Their analyses will serve as important contributions to understanding the global implications of EPS on international commerce and banking.

From a longer **hyphen term perspective, however, some government guidance may be needed on issues that the marketplace alone may not be well equipped to address. The US **consistency: sometimes you use U.S., other times USGovernment must engage its major trading partners and other allies to ensure that US suppliers and users maintain relative freedom **what is 'relative freedom'? why relative?to engage in electronic commercial activities.

In a demonstration of one such effort, the G-7 heads of state have agreed to establish a technical study group that will bring the full range of government interests to examine the major international issues raised by the development of electronic money services. **??how will a group 'bring the full range of gov't interests to examine'?? reword for clarity. The Treasury Department is chairing this group.

The general objective of the G-7 study group will be to review policy approaches toward electronic money in different countries and provide an exchange of information and views among supervisors of financial institutions, central bankers, and law enforcement officials.

As these initiatives proceed, EPS will continue to develop **specify how, and the United States and other governments systematically should **modifier placement: move systematically next to seekseek private sector input to inform policy development. It will be critical **wordy and unfocused. move important words in the sentence to key opening and closing positions for public sector officials to collaborate with industry leaders to ensure that governmental efforts fully appreciate and understand the developments and trends unfolding in the marketplace. **why? which developments and trends?

II. Legal Issues

3. 'UNIFORM COMMERCIAL CODE' FOR COMMERCE CONDUCTED ON THE INTERNET

To encourage electronic commerce, the US government should support the development of both a domestic and global uniform commercial legal framework that will validate, recognize, enforce, and facilitate electronic commercial transactions worldwide.

Participants in the marketplace -- including consumers, businesses, financial institutions, and on-line service providers -- should define and articulate most of the rules that will govern electronic commerce. To enable such private entities to perform this task and to fulfill their roles adequately, however, governments should foster the development of harmonized domestic and international rules and norms which will serve as the legal foundation for commercial activities in cyberspace.

Domestically, states have adopted the Uniform Commercial Code (UCC), a wide-ranging codification of significant areas of US commercial law. The National Conference of Commissioners of Uniform State Law (NCCUSL) and the American Law Institute, who sponsor the UCC domestically, already are working to adapt the UCC to cyberspace. **which UCC provisions will be extended into cyberspace? The Federal government should support the swift resolution of these efforts and the adoption of legislation at the Federal or state level as appropriate, taking into consideration ongoing international initiatives.

Internationally, the United Nations Commission on International Trade Law (UNCITRAL) has completed work on a model law that supports the commercial use of international contracts in electronic commerce. This model law establishes rules and norms that validate and recognize contracts formed through electronic means, sets standards governing electronic contract performance, defines what constitutes a valid electronic writing and original document, provides for the acceptability of electronic signatures for legal and commercial purposes, and supports the admission of computer evidence in courts and arbitration proceedings.

The United States Government supports the adoption of this model law by all nations as a start to defining an international 'uniform commercial code' for electronic commerce. We also urge UNCITRAL and other appropriate international bodies (e.g. International Chamber of Commerce, UNIDROIT, etc.) to continue their work, and to develop further model provisions which will eliminate administrative and regulatory barriers to electronic commerce by:

The U.S. Commerce and State Departments will continue to take the lead in organizing U.S. participation in these areas with a goal of achieving substantive international agreement on an expanded model law within the next two years.

In addition to benefitting from standard contractual provisions, global electronic commerce will grow most rapidly if the participants can achieve substantial certainty regarding their exposure to liability for any damage or injury that might result from their actions. Inconsistent local tort laws, coupled with uncertainties regarding jurisdiction, could substantially increase litigation and create unnecessary costs that ultimately will be paid by consumers worldwide. **define 'unnecessary costs'. do you mean costs in money only or costs to quality of life, biodiversity, etc.? should we gut tort law down to the lowest common denominator a la NAFTA/GATT ? The US should cooperate with other nations to clarify applicable jurisdictional rules and to favor and enforce contractual provisions that allow parties to select substantive rules governing liability.

4. INTELLECTUAL PROPERTY PROTECTION

Commerce on the Internet often will involve the sale and licensing of intellectual property. To promote an effective environment for commerce, sellers must know that their intellectual property will not be pirated and buyers must know that they are obtaining authentic products and not pirate copies.

For this reason, international agreements that establish clear and effective copyright, patent and trademark protection are necessary to protect against piracy and fraud. While technical means of protection, such as encryption, can help combat piracy, an adequate and effective legal framework also is necessary to deter piracy and fraud and to provide effective legal recourse when these crimes do occur.

Copyrights

Note: As of December 11, 1996, the Administration position on certain aspects of copyright protection in the digital environment remain under consideration. The text below may change to reflect the outcome of this review.

There are several treaties that establish international norms for the protection of copyrights, most notably the Berne Convention for the Protection of Literary and Artistic Works. These treaties link nearly all major trading nations and provide them with a means of protecting, under their own laws, each other's copyrighted works and sound recordings. Although these treaties do establish certain minimum levels of protection, they need to be updated to account for changes in technology, such as the technical challenges presented by the GII. **more details--which challenges? anonymity? digital reproduction?

The 157 member countries of the World Intellectual Property Organization (WIPO) are working to establish new international agreements. In December of 1996, delegates to WIPO's conference in Geneva adopted a protocol to the Berne Convention that would update long-standing laws safeguarding the integrity of literary works and a new agreement for the protection of sound recording producers and performers. Consideration of a proposed agreement for the sui generis protection of certain databases was deferred. **state in active voice!

The United States government should seek to ensure that these international agreements:

These agreements should be reached in ways that preserve the ability of the U.S. government to tailor protections in a manner that reflects the U.S. national interest, **very broad statement. what kinds of 'tailoring' are we talking about? national interest=? and that leave to domestic legislation issues including the liability of on-line service providers, and the fair uses of copyright material such as browsing, library, scientific, or educational purposes.

The U.S. Patent and Trademark Office will continue to lead the U.S. delegation in these negotiations along with representatives from the Copyright Office, the State Department, USTR and other appropriate agencies.

Patents

Development of the GII will depend upon and stimulate innovation in many fields of technology, especially computer software, computer hardware, and telecommunications. An effectively functioning patent system that encourages and protects truly novel and non-obvious innovations in these fields is important for the overall success of commerce over the Internet.

To create a reliable environment for electronic commerce, amendments to existing patent agreements or a new agreement should be developed that:

The United States will pursue these objectives in two fora. Officials of the European, Japanese and United States Patent Offices meet for trilateral conferences each year to foster cooperation on patent-related issues. The United States will recommend at the next meeting that a special committee be established to make recommendations on GII-related patent issues within the next year.

In a separate venue, one hundred countries and international intergovernmental organizations participate as members of WIPO's permanent committee on industrial property information (PCIPI). The United States will attempt to establish a working group of this organization to address GII-related patent issues as well.

Trademark

Because trademark rights are national in scope, conflicts may arise where the same or similar trademarks are owned by different parties in different countries, or when different countries apply different standards for determining infringement. Conflicts also may arise where terms are in general use in one country, but restricted as either trademarks or geographical indications in another country. **can trademarks be assigned per language rather than per nation?

With regard to access to the GII, conflicts have arisen and may continue to arise where trademark owners are aware that third parties have registered Internet domain names that are identical to their trademarks. An Internet domain name, which identifies an address on the Internet, is not, per se, intellectual property (i.e. a trademark). However, a domain name may be used as a trademark or in a manner that infringes trademark rights.

There is no authoritative forum available at this time for addressing policy issues regarding the use of GII identifiers, including domain names. It may well be possible to create a contractually based self-regulatory regime that deals with potential conflicts between domain name usage and trademark laws on a global basis, as well as with other issues regarding the terms and conditions on which GII identifiers are issued and revoked. Accordingly, the United States will support efforts already underway to create international fora for discussion of such issues and the development of mechanisms for responsible industry self regulation.

We will also address these issues in more detail domestically. Accordingly, **the same word was used two sentences ago.the U.S. Patent and Trademark Office will hold hearings in early 1997 to address the trademark and unfair competition issues relating to domain names.

The issues addressed in such a forum would include, but would not be limited to, conflicts that may arise where:

With regard to these potential problems, the Administration's goal will be to secure domestic and international agreement to establish uniform standards that address trademark infringement and priority of rights with respect to trademarks used in connection with the GII, and to establish uniform standards for registering Internet domain names.

5. PRIVACY

Commerce on the GII will thrive only if the privacy rights of individuals are balanced **replace with active verb???with the benefits associated with the free flow of information. **false dichotomy: privacy rights and free flow of information aren't necessarily opposed. Privacy concerns are being raised in many countries around the world, and some countries have enacted laws, implemented industry self-regulation **logical contradiction: how can a country implement industry self-reg?, and instituted administrative solutions designed to safeguard their citizens' privacy. **also contradictory: administrative (top-down) solution to safeguard citizens' (bottom-up) privacyIf national laws and regulations are not harmonized on an international basis, disparate policies could emerge that might serve as non-tariff trade barriers. For example, the European Union (EU) has taken measures that may disrupt the flow of information **specify: which info, and how is the flow disrupted? between Europe and other countries that, in its **pronoun referent?view, do not extend adequate privacy protection to its **pronoun referent: which 'it' ? citizens.

In June of 1995, the Privacy Working Group of the United States government Information Infrastructure Task Force (IITF) issued a report entitled, **no comma necessary "Privacy and the National Information Infrastructure: Principles for Providing and Using Personal Information." The report recommends a set of principles (the "Privacy Principles") to govern the collection, processing, storage, and re-use of personal data in the information age. A report built upon these principles entitled "Privacy and the NII: Safeguarding Telecommunications-Related Personal Information" was issued by the National Telecommunications and Infrastructure Administration (NTIA) in October, 1995, exploring the application of the principles in the context of telecommunications.

The Privacy Principles rest on two precepts: notice and consent:

**both principles address the needs of info-gatherers over the needs of info-providers ('customers').

Disclosure by data-gatherers is designed to stimulate market resolution of privacy concerns by empowering individuals to obtain relevant knowledge about why information is being collected, what the information will be used for, what steps will be taken to protect that information, the consequences of providing or withholding information, and any rights of redress that they may have. **what about empowering individuals not to provide private info unless they specifically want to?? Such disclosure will enable consumers to make better judgements about the levels of privacy available and their willingness to participate. Under the Privacy Principles, consumers also would be entitled to redress if they are harmed by improper use or disclosure of personal information, if it is based on inaccurate, outdated, incomplete, or irrelevant personal information.

To ensure that disparate privacy policies around the world provide adequate privacy protection and do not impede the flow of data on the Internet, the United States should adopt a two-tiered **what are the tiers? national/international? privacy strategy. The United States will engage its key trading partners in discussions to build support for a market **hyphenbased approach to privacy, along the lines of the framework established by the privacy principles.

At the same time, the United States will continue policy discussions with European Union nations to resolve any problems that could threaten data flows. The Executive Office of the President, the Commerce Department, through NTIA, the State Department, the Treasury Department, the Federal Trade Commission (FTC) and other relevant federal agencies all have been, and will continue to be, involved in these discussions.

The United States also will enter into dialogue with trading partners on these issues through existing bilateral discussions as well as through efforts in regional fora such as the Asia Pacific Economic Cooperation (APEC) forum, the Summit of the Americas, the North American Free Trade Agreement (NAFTA), and the Inter-American Telecommunications Commission (CITEL) of the Organization of American States, and broader multilateral organizations.

6. SECURITY

Concerns about the security of the networks and computers that form the GII have slowed the growth of electronic commerce both in the United States and abroad. If Internet users do not believe that their communications and data are secure and protected against interception or modification, they will be unlikely to use the Internet on a routine basis for commerce. Efforts to protect the privacy of personal data and to protect intellectual property on-line are futile unless there are technologies and policies in place that ensure the security and integrity of on-line information. **and vice versa?

Significant concern also exists **VERB CHOICE! avoid verbs of mental action or forms of 'to be'; replace with action verbsregarding the vulnerability of the current information infrastructure. Businesses and consumers must feel comfortable that the Internet can function as a secure and reliable commercial medium, and that safeguards are in place to ensure the reliability of the Internet.

The United States is not alone in considering security concerns in the developing GII. In 1992, the OECD adopted Guidelines for Security of Information Systems. The Guidelines encompass nine Security Principles, which articulate high-level needs, such as the need for explicit accountability for security, the need for awareness of security practices and procedures, and the need to respect the rights and legitimate interests of other users. The United States, the then-23 other member nations of the OECD, and dozens of nations outside of the OECD have endorsed these Guidelines.

Because cryptography is an important tool for providing computer security, the Administration has devoted a great deal of attention and effort to developing policies to promote the development and use of effective encryption products which encode both stored data and electronic messages. Unfortunately, strong encryption not only enables law-abiding citizens to protect better their trade secrets and personal records, it also can be used by criminals and terrorists to hide their activities and thwart legally-authorized investigations. Because of the potential threat that encryption poses to public safety and national security, the United States and most developed countries maintain export controls on the strongest forms of encryption.

Since these export controls have limited the worldwide use of strong encryption for electronic commerce and other purposes, the Administration consistently has worked to liberalize export controls for commercial encryption products while protecting our legitimate law enforcement and national security interests. **which 'legitimate law enforcement and national security interests'? and why is it necessary to stunt the growth of encryption technology, which will proliferate with or without gov't permission??

The most recent initiative permits companies to export encryption products using 56-bit Data Encryption Standard (DES) or equivalent algorithms for the next two years, provided such companies commit to build and market products that protect public safety and national security. **examples? No key lengths or algorithm restrictions will apply to exported key recovery products. Such key-recovery products would enable government access to encrypted data **which governments? and why would a nation trading with the US allow this type of product? collected during legally-authorized criminal investigations. Domestic use of key recovery will be voluntary: any American will remain free to use any encryption system domestically.

The Administration also has transferred jurisdiction for commercial encryption controls from the State Department to the Commerce Department. Both these steps support an overall cryptography policy that promotes electronic information security and public safety, and encourages the growth **how does prevention of strong encryption encourage growth of commerce?of electronic commerce and secure communications worldwide.

The United States will work within the OECD to develop international guidelines that can guide OECD member governments as they develop national encryption policies. The challenge is to harmonize the various approaches being developed so that member states can promulgate consistent, compatible policies that promote the use of cryptographic products without jeopardizing public safety and national security. OECD encryption guidelines are scheduled to be completed in early 1997.

These guidelines will support the ideas of key recovery, under which the keys for encryption products would be stored with trusted entities, either in government or the private sector, which would provide the keys needed to decrypt encrypted information encountered during a law enforcement investigation. **what kind of entity? electronic notaries? Both the US and the EU are promoting this kind of approach within their jurisdictions.

The United States government, specifically, the Departments of Commerce, Defense, Justice, State, and Treasury as well as the Executive Office of the President, will work with the EU and the OECD over the next few years to develop common policies for security and encryption which will provide a more predictable and secure environment for electronic commerce.

III. Market Access Issues

7. TELECOMMUNICATIONS INFRASTRUCTURE AND INTEROPERABILITY

The United States will pursue international agreements to eliminate regulations which restrict on-line service providers from reaching end-users on reasonable and nondiscriminatory terms and conditions. Genuine market opening will lead to increased competition and improved telecommunications infrastructure, and to lower prices and increased and improved services.

Areas of concern include:

In addition, countries have different levels of telecommunications infrastructure development, which may hinder the international provision and use of some Internet-based services. **major issue which deserves more space than this.

To address these issues, the Office of the United States Trade Representative is pursuing WTO negotiations to ensure global competition in provision of basic telecommunication services and to address the many underlying issues affecting Internet service providers.

The United States also will ensure that no actions taken by the WTO's Group on Basic Telecommunications (GBT) will adversely affect the provision of Internet services. The existing structure of telecommunications regulation reflects a history of monopoly and government control which does not exist in the open, competitive Internet market. Applying regulations designed for basic telecommunications to the Internet could stifle the deployment of new technologies and services.

Other venues, including bilateral exchanges with individual foreign governments, regional fora such as APEC and CITEL, and multilateral fora such as the OECD and the International Telecommunication Union (ITU), also will be used **verb choice. can you think of something more vivid than 'use'?for international discussions of telecommunications-related Internet issues. These issues include Internet governance, terms and conditions governing the exchange of traffic, and reliability. US government positions at these organizations that might influence Internet pricing, service delivery options or technical standards will reflect the principles established in this paper and US government representatives should survey the work of their study groups to ensure that this is the case.

In addition, many Internet governance issues may best be dealt with by means of private, open standards process and contracts involving participants from both governmental bodies and from private sector participants from around the globe. The US government will support the further development of such self-regulation that reduce **agreement: regulation is singular so reduce*s*.the burden on governmental resources while achieving important goals outlined in this paper.

8. CONTENT

The U.S. government has long supported the broadest possible free flow of information across international boarders. **typo. 'borders' "Content" is defined broadly to include most material now accessible and transmitted through the Internet, including World Wide Web pages, news and other information services, virtual shopping malls, software, and entertainment features, such as audio and video products.

The United States will pursue negotiations to ensure that measures, policies, and regulations that limit the ability of content providers to transmit their products through the Internet are promulgated only when necessary **when are they necessary? and implemented in a manner that minimizes trade distortions. This approach is consistent with our ongoing position in trade negotiations in the WTO. There are five priority areas of concern:

To address these concerns, the United States will:

Federal agencies such as the U.S. Trade Representative, the Commerce Department (NTIA) and others have already engaged in such efforts to promote such positions, through both bilateral and multilateral channels, including through the Information Society and Development Conference, the Latin American Telecommunications Summits, and the Summit of the Americas process, as well as APEC Telecommunications Ministerials. All agencies participating in such fora will focus on pragmatic solutions based upon the principles in this paper to issues related to content control. **overly complex syntax could be streamlined

9. TECHNICAL STANDARDS

The United States believes that the marketplace, rather than governments, should determine technical standards and other mechanisms for interoperability. Technology is moving too rapidly for governments to try to establish technical standards to govern the Internet: any attempt to do so would only risk inhibiting technological innovation. **why make an exception for encryption?

Standards are critical to the long term commercial success of the Internet as they can allow products and services from multiple vendors to work together, or interoperate. They also encourage competition and reduce uncertainty in the global marketplace.

Premature standardization, however, can "lock in" users to outdated technology. Standards also can be used as a non-tariff barrier to trade, in essence to "lock out" non-indigenous businesses from a particular national market.

To ensure the growth of global electronic commerce over the Internet, standards will be needed in areas such as:

There will not be one standard for every product or service associated with the GII and technical standards will not necessarily be mandated. In some cases, multiple standards will compete for marketplace acceptance. In other cases, different standards will be used in different circumstances. For example, a "micro-payments" system needs to have low transaction costs and does not need to be as secure as an electronic payment system used to transfer millions of dollars.

One of the reasons the Internet has grown so rapidly has been the prevalence of voluntary standards developed and promoted by industry, not by governments, and an expeditious process of standards development and acceptance. These standards flourished because of a non-bureaucratic system of development managed by technical practitioners who require demonstrated deployment of systems incorporating a given standard prior to formal acceptance. **long, unfocused sentence. However, only a handful of countries allow their private sector to develop their own standards; most rely on government-mandated solutions, causing these nations to fall behind on the technological cutting edge. **aren't there other reasons they're falling behind?

Numerous private sector bodies have contributed to the process of developing voluntary standards which promote interoperability. Within the federal government, through National Institute of Standards and Technology (NIST) and other technical agencies, the United States **redundant 'Within the federal government...the United Stateshas encouraged the development of voluntary standards through consortia, testbeds and R&D activities. The US government also has adopted a set of principles to promote domestic and international voluntary standards.

The United States will continue the current approach and urge other governments to do the same. While no formal government **hyphen sponsored negotiations are called for at this time, the United States should use **verb choicevarious fora (i.e., G-7, OECD, the International Standards Organization [ISO], ITU) to monitor and advocate against attempts by other governments to use standards as a barrier to free trade on the Internet as it develops.

A COORDINATED STRATEGY

The variety of issues being raised, the interaction among them, and the disparate fora in which they are being addressed will necessitate **predication vagueness: variety (agent) will necessitate (action) combination doesn't make sense. a coordinated, targeted governmental approach to avoid inefficiencies and duplication in developing and reviewing policy. Already, over a dozen United States government agencies are working on issues related to commerce on the Internet.

An interagency team will continue to meet in order to monitor progress and update this strategy as events unfold.

Sufficient resources will be committed to allow rapid and effective policy implementation. In some cases, a small increase in resources could accelerate the government's ability to carry out the negotiations and pilot projects described in this paper. A more detailed accounting of these resources will be forthcoming.

There is a great opportunity for commercial activity on the Internet. If governments act appropriately, this opportunity can be realized for the benefit of all people.


1 The GII represents the worldwide infrastructure that supports the transmission and delivery of electronic content, including the goods and services involved in electronic commerce. The Internet is a global matrix of interconnected computer networks using the Internet Protocol (IP) to communicate with each other. For simplicity, the term "Internet" is used throughout this paper to encompass all such data networks, even though some electronic commerce activities may take place on proprietary networks that are not technically part of the Internet. The term "on-line service provider" is used to refer to both companies that provide access to the Internet and othoer on-line services, and companies that create content that is delivered over those networks.

2 Survey of Private Services Transactions, Bureau of Economic Analysis, US Department of Commerce, November, 1996. The estimate covers 1995 and does not include transactions between affiliated companies which could add as much as $47 billion in additional exports.

3 Internet Commerce, American Electronics Association/American University, September 1996.


(end of the annotated document)

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