July 8, 1997 7:00 PM PDT

EU calls for market-driven Internet

European ministers issued a declaration supporting a market-driven Internet today, agreeing in principle with U.S. policies but leaving key issues such as encryption and content regulation open to further debate.

The nonbinding declaration, which came at the end of a two-day conference on global information networks in Bonn, Germany, serves more as a reference point for future negotiations than a definitive set of guidelines.

But the conference received government attention on both sides of the Atlantic, in part because it was held one week after President Clinton issued his administration's blueprint for global electronic commerce and just four days after the German parliament passed a law to define controls on online content and personal privacy.

Signed by ministers of the European Union and other European countries, the so-called Bonn Declaration leans toward the market-driven approach that the United States has advocated through the World Trade Organization. The ministers also acknowledged that legal frameworks governing cyberspace should not extend beyond existing laws and should avoid "unnecessary regulation."

"We have agreed there should be no discriminatory taxes and laws placed on the Internet," German economics minister Guenter Rexrodt told Reuters. "The ministers have agreed that there should only be state regulation where absolutely necessary and private initiative and market forces should have as much room as possible."

Representing the United States at the conference, Commerce Secretary William Daley framed the declaration as generally in step with the administration's e-commerce proposal: "The Bonn Declaration has laid out an impressive set of issues, and it is a solid foundation upon which we can build thriving electronic commerce. We agree that electronic commerce will rely upon private-sector-led solutions and market-driven possibilities."

Larger issues continue to loom, however, and it could be years before America, Europe, and the rest of the world agree upon a global system for Internet-based communication and transaction. All technologically advanced countries are entangled in layers of alliances, trade blocs, and international fora, which have their own declarations, treaties, and hierarchies.

For example, the declaration acknowledged treaties passed last December by the World Intellectual Property Organization, a branch of the United Nations. They also agreed to base future encryption-related policy on the guidelines recently adopted by the Organization of Economic Cooperation and Development, guidelines that stopped short of endorsing the U.S. position on encryption regulation.

The German law passed last week, which holds Internet service providers responsible for illegal content if they produce it or if they knowingly transmit it from a third party, was drawn up partly to comply with European Union rules that require member countries to protect private data as well as intellectual property contained in databases.

Daley acknowledged that the United States and its European counterparts differ on various issues: "We know that on some details we have different ideas. Discussions on non-tariff barriers to content, balancing encryption for privacy needs with national security concerns, varied technical standards, and digital signatures should be on-going."

On perhaps the most controversial front, the European declaration affirmed the need for strong cryptography but shied away from confronting the U.S. directly.

"Ministers...recognize the importance of the availability of strong encryption for electronic commerce," the declaration reads. "They will work to achieve international availability and free choice of cryptography products and interoperable services, subject to applicable law...If countries take measures to protect legitimate needs of lawful access, they should be proportionate and effective and respect applicable provisions relating to privacy."

Current U.S. export laws restrict strong cryptography unless it has a built-in access system for security officials, who argue that unbreakable cryptography would give criminals free reign on the Internet.

U.S. software companies argue that the export rules prevent them from competing in foreign markets. And the resulting lack of U.S. competitiveness presents a dilemma for European software makers, according to one conference observer.

"On one hand, U.S. export controls help the European companies compete," said Chris Kuner, a Frankfurt-based attorney specializing in technology. Kuner attended the conference as a representative of Netscape Communications. "On the other hand, the controls also keep European software companies from getting the encryption tools they need to build products."

The Bonn declaration also called for the following:

  • International management of domain names. It is "imperative to ensure adequate European representation in this system."

  • An international framework for the use of digital signatures.

  • More access to venture capital "seed money" for technology start-up companies.

  • Greater focus on technology in education: "Special efforts should be made to enable [teachers] to integrate multimedia content into their teaching programmes from primary school onwards."

  • The cultivation of cultural diversity: "Cultural and linguistic diversity, which is at the heart of Europe's common heritage, also constitutes a definite commercial advantage in the new environment."

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