Clinton sets course for Internet

The Clinton administration unveils its long-awaited electronic commerce policy, which seeks to simplify buying and selling on the Internet.

5 min read
The Clinton administration released its long-awaited electronic commerce policy today, outlining recommendations that rely largely on the private sector, not the government, to take the lead in creating a stable environment for business on the Internet.

The final version of the "Framework for Global Commerce" is designed to make buying and selling easier and more popular online. As a result, it warns governments against regulation and taxation of the new medium.

"Government officials should respect the unique nature of the medium and recognize that widespread competition and increased consumer choice should be the defining features of the new digital marketplace," President Clinton said in a statement today, predicting that the rapid growth of Internet commerce will generate hundreds of billions of dollars in sales "in just a few years." "They should adopt a market-oriented approach to electronic commerce that facilitates the emergence of a global, transparent, and predictable legal environment to support business and commerce."

Clinton directed three Cabinet officials to move within the next 12 months to implement elements of the e-commerce framework. He also ordered all federal agencies and departments to make sure that their policies reflect the framework's market-oriented principles.

"helvetica"=""> Policy in brief  
"helvetica"="" size="-1">Security: Back current encryption export policy
"helvetica"="" size="-1"> Privacy: Guard privacy via self-regulation, disclosure
"helvetica"="" size="-1"> Customs and taxation: No new taxes, tariffs on Net commerce
"helvetica"="" size="-1"> Content: Self-regulation, parental control, not censorship
"helvetica"="" size="-1"> National content quotas: Curb limits on ads, content origin, language
"helvetica"="" size="-1"> Internet domain names: Allocate in more market-based way
"helvetica"="" size="-1"> Online contracts, laws: Adapt existing commercial law to Net
"helvetica"="" size="-1"> Technical standards: Let market, not government, set standards
"helvetica"="" size="-1"> Intellectual property protection: Ratify World Intellectual Property Organization treaties.
"helvetica"="" size="-1"> Telecom reform: Limits access fees for online, Internet firms
"helvetica"="" size="-1"> Electronic payment systems: Monitor, not regulate, experiments
The president urged Treasury Secretary Robert Rubin, Commerce Secretary William Daley, and U.S. Trade Representative Charlene Barshefsky to oppose new taxes on electronic commerce, turn the Net into a free-trade zone, establish consumer and copyright protections for Internet commerce, and establish a predictable legal environment for electronic commerce.

The wide-ranging document lays the foundation for a set of predictable, consistent rules in nine areas, including encryption, taxation, censorship, and protection of children's personal data. The first attempt to create policy for the global Internet as a whole, the guidelines require international cooperation that may be difficult to achieve.

In addition, the president called on the private sector to create means to protect the privacy of children and other online users and to keep children from viewing inappropriate material. That follows the U.S. Supreme Court's rejection of the Communications Decency Act last week.

While there are few major surprises in the policy, it outlines for the first time a clear, comprehensive vision of how governments should approach the Internet as a global marketplace. The paper, which casts the United States in the leading role on international e-commerce, may also serve as a platform from which Vice President Al Gore will launch his presidential campaign for the 2000 elections.

Both the United States and the European Union have dealt with individual policy issues, such as encryption, regulation, and electronic payments, with little recognition of how each issue affects others on the borderless Internet. Even different branches of the U.S. government have held widely varying policies and views toward the Internet.

White House officials said this policy was drafted, in part, to head off clashes and regulatory turf wars between federal agencies. Drafted under the direction of senior White House adviser Ira Magaziner, the policy involved 18 federal agencies over a period of 15 months and incorporates extensive public comment. Yet it barely breaks new ground on certain aspects of Internet policy. In the controversial area of encryption exports, for example, it simply reiterates the administration's current policies.

Its most surprising element discourages governments from passing laws that needlessly restrict the type of information that can flow over the global networks, either because governments consider it pornographic, seditious, or contrary to their countries' cultural norms.

"[L]aws to restrict access to certain types of content through the Internet...can impede electronic commerce in the global environment. The administration...will develop an informal dialogue...to ensure that differences in national regulation, especially those undertaken to foster cultural identity, do not serve as disguised trade barriers," the paper states.

The administration recently lost its Supreme Court bid to defend the Communications Decency Act, a law that penalized the display of "indecent" materials to minors with fines and prison. In an about-face for the White House, the commerce policy opposes further CDA-like laws and calls for industry regulation, filtering software, and other means to let parents control what their children view.

In an afternoon White House ceremony today, Clinton is expected to announce that Gore will step into the limelight to head a blue-ribbon commission to oversee implementation of the policy by January 1, 2000. Among the attendees will be IBM chairman Louis Gerstner, ISP EarthLink Networks chairman Sky Dayton, and e-commerce software firm Open Market chairman Shikhar Ghosh. Also present were Internet pioneer Vinton Cerf of MCI Communications and Tim Berners-Lee of the World Wide Web Consortium, who is credited with creating the Web.

The paper makes recommendations in nine areas:

The Internet should be declared a "tariff-free environment" for transactions that cross national borders, and no new taxes should be imposed on Internet commerce. But it does not support a "federal preemption," which would bar states and local governments from levying taxes on the Internet, for now.

Electronic payments should not be regulated now; instead, regulators should monitor e-payment experiments case by case.

A global Uniform Commercial Code should be enacted to recognize electronic contracts and notarized documents, accept electronic signatures and other types of authentication, resolve disputes, set ground rules for exposure to liability, and streamline use of electronic registries for signatures.

Clear, effective protection of copyright, patent, and trademarks should be established. The World Intellectual Property Organization treaties should be ratified, but further study is needed on whether an international treaty to protect databases is necessary. Internet domain names should be allocated on a more competitive and market-based basis.

Privacy, particularly that of children, should be protected. As reported earlier by CNET's NEWS.COM, the document endorses private efforts now under way to create self-regulatory privacy protection systems, stating that consumers should be informed of what is being collected and how it will be used so they can bar or limit reuse of personal data.

Limits on excessive fees, based on national telecom monopolies, for online service providers and Internet companies should be removed. The administration will seek to enforce recent international agreements to limit non-tariff barriers.

Domestic regulations imposed on radio and television to shield viewers from objectionable content should not be extended to the Internet. Instead, rating systems, content filtering, and industry self-regulation should help parents control their children's access.

Content quotas, excessive regulation of advertising, and other methods of content control should be limited. The government will pursue global agreements to curb such practices.

Technical standards and other mechanisms for interoperability should be created by the private market, not governments. Government efforts risk inhibiting innovation.

The document also recognizes the need to coordinate policies among various agencies and states that the interagency group that created the guidelines will work both to implement and update the strategy.

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