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PublicInterestComment

SubmittedtotheNationalTelecommunicationsInformationAdministrationintheMatterof:

TheBenefits,Challenges,andPotentialRolesfortheGovernmentinFosteringtheAdvancementoftheInternetofThings

RyanHagemann

TechnologyandCivilLibertiesPolicyAnalyst TheNiskanenCenter Submitted:May23,2016 DocketNo.160331306-6306-01

ExecutiveSummary

TheInternetofThings(IoT)isanemergingecosystemoftechnologiesanddigitalnetworksthatwillsoonbecomeadriverofeconomicgrowth.TheIoTwilllikelydisruptincumbentindustries,butthesechangesonthewholewillbenefitconsumersandproducersalike.Issuesrequiringtheattentionofregulators,policymakers,andindustrystakeholdersaresuretoarise.Thiscommentoffersanintellectualframeworkforaddressingthoseissues. Ahands-offregulatoryapproachtotheInternethelpedcatalyzethegrowthofthemoderndigitaleconomy.ThegovernmentshouldapproachtheIoTinthesameway.InordertofostertheadvancementoftheIoT,theNiskanenCenterrecommendsthatthefederalgovernment(1)embracearegulatoryframeworksimilartothatoftheonepromotedbytheClintonAdministrationfortheemergingInternet,and(2)abstainfromnon-Congressionalbureaucraticprocessesorstakeholderengagementsthatmightnegativelyimpactthepaceofinnovationinthisspace.

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Introduction

TheInternetofThings(IoT)isaburgeoningareaoftechnologicaldevelopment.Itsascentpromisessignificanteconomicbenefits,inpartthroughthe“disruption”ofexistingtechnologiesonascalesimilarto,andpossiblysuperseding,theemergenceofthecommercialInternetintheearly1990s.SomeindustryanalystsforecastthatthenumberofdevicesconnectedtotheInternet,andthereforepartoftheIoT,willnumberinthetensofbillions,andmayevenapproachonetrillion,withpotentialeconomicgainsprojectedtorangefrom$2.7to6.2trillionannuallyby2025.1Otheranalystshaveplacedthepotentialbenefitsashighas$19trillion.2Asthepriceofremotefrequencyidentification(RFID)chipsandmicro-electromechanicalsystems(MEMS)continuetofall,sensor-equippedcomponentsarelikelytobecomeembeddedineventhemostcommoneverydayobjects. TheimpendingproliferationofembeddedsensorsleavesputstheIoTinapositiontoreconfigurewholesectorsoftheeconomy.SamuelGreengard,authorofTheInternetofThings,writes:

TheInternetofThingswillintroducenewproductsandservicesandmakemanyexistingofferingscompletelyobsolete.Thetechnologywilleliminatejobsbutintroducenewlinesofwork.Connectedsystemswillripplethrougheducation,government,andbusinessandfundamentallyremapandrewireactions,behavior,andsocialnorms.Thetechnologywillaffecteverythingfromthewaypeoplevotetothewayweeatatrestaurantsandtakevacations.3

Rapid,potentiallyrevolutionarychangeinevitablycreatesanxiety.Somepeopleareskittishaboutamoreubiquitouslyinterconnectedworld,andmanyoftheirworriesareentirelyreasonable.4Inparticular,fearsthatthetheIoTmaythreatenprivacyandenablesurveillanceareworthtakingveryseriously.ButtheseconcernsshouldnotblindustothepotentialbenefitsoftheIoT.ManyofthesameconcernswereraisedduringthedevelopmentoftheInternet.Nevertheless,theInternethasbecomeanimmenselyvaluabletoolandresourceforpeopletheworldover.It’simportanttoaddressconcernsaboutandpotentialcostsoftheIoTwithoutsideliningitsdevelopment,lestweloseoutonitsmanypromisingbenefits. WearegratefulfortheopportunitytorespondtoNTIA’squestionsregardingtheIoT.GiventhemanyquestionstowhichNTIAhasrequestedanswers,wehaveattemptedtoansweronlythoseregardingmattersonwhichwhichtheNiskanenCenterhasexpertise.Ourcommentswillfocusspecificallyongeneralissues(questions1-3),economicissues(question13),policyissues(questions15-17),andadditionalissues(questions25-27).Foreaseofnavigation,theoriginal 1“DisruptiveTechnologies:Advancesthatwilltransformlife,business,andtheglobaleconomy,”McKinseyGlobalInstitute,May2013,p.51,http://www.mckinsey.com/business-functions/business-technology/our-insights/disruptive-technologies. 2 “TheInternetofEverything—A$19TrillionOpportunity,”CiscoConsultingServices,http://www.cisco.com/c/dam/en_us/services/portfolio/consulting-services/documents/consulting-services-capturing-ioe-value-aag.pdf. 3 SamuelGreengard,“TheInternetofThings,”TheMITPress(Cambridge,MA),2015,p.Xv. 4AndyMeek,“WhatRoleshouldthegovernmentplayindevelopingtheinternetofthings?,TheGuardian,October14,2015,https://www.theguardian.com/technology/2015/oct/14/government-regulation-internet-of-things.

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questionspromulgatedbyNTIAhavebeenincludedforreference.Inadditiontofootnotecitations,acopyoftheoriginaltextofthe“FrameworkforGlobalElectronicCommerce”thatiscitedthroughoutthesecommentshasbeenincludedafterthe“Conclusion”section.

GeneralQuestions

Question1:ArethechallengesandopportunitiesarisingfromioTsimilartothosethatgovernmentsandsocietieshavepreviouslyaddressedwithexistingtechnologies,oraretheydifferent,andifso,how?

a. WhatarethenoveltechnologicalchallengespresentedbyIoTrelativetoexistingtechnologicalinfrastructureanddevices,ifany?Whatmakesthemnovel?

b. WhatarethenovelpolicychallengespresentedbyIoTrelativetoexistingtechnologypolicyissues,ifany?Whyaretheynovel?Canexistingpoliciesandpolicyapproachesaddressthesenewchallenges,andifnot,why?

c. Whatarethemostsignificantnewopportunitiesand/orbenefitscreatedbyIoT,betheytechnological,policy,oreconomic?

Inthelate1980sandearly1990s,thereweremanyconcernsaboutthepossibleimplicationsoftheemergingInternet.ManyoftheconcernsabouttheIoTaresimilarto,ifnotthesameas,thoseabouttheearlyInternet.TheClintonAdministrationwiselyabstainedfromimposingexanteregulationsontheInternet.Asaresult,theInternetwasabletoevolveandmatureaccordingtotheneeds,demands,andconcernsofinnovatorsandentrepreneurs,consumers,andawidearrayofotherstakeholders.ThesameprinciplesthatinformedtheapproachtoregulatingtheInternetshouldalsoinformpolicymakers’andregulators’perspectivesontheemergingIoT.Thoseprinciplesarecontainedwithintheaccompanying“FrameworkforGlobalElectronicCommerce,”andwouldserveasanidealframeofreferenceforhowbesttoapproachregulationandstandard-settingfortheIoT.5 Question2:Theterm“InternetofThings”andrelatedconceptshavebeendefinedbymultipleorganizations,includingpartsoftheU.S.governmentsuchasNISTandtheFTC,throughpolicybriefsandreferencearchitectures.Whatdefinition(s)shouldweuseinexaminingtheIoTlandscapeandwhy?WhatisatstakeinthedifferencesbetweendefinitionsofIoT?Whatarethestrengthsandlimitations,ifany,associatedwiththesedefinitions? TheproblemwithattemptingtodefinetheIoTinanyspecific,narrowly-tailoredmanneristhatitislikelytofailtocapturethebreadthoftheemergingtechnologicalecosystem.Whetherwecallitthe“InternetofThings,”the“InternetofLivingThings,”orsomethingelse,theessenceoftheemergingphenomenonisbestcapturedbythe“InternetofEverything.”Definitionsthatprecedeafullerdevelopmentofthetechnologymaybeoflimiteduse. Still,it’simportanttolimitthescopeofthedomain.ThebestdefinitionoftheIoTsofarcomesfromtheInternetSociety:

ThetermInternetofThingsgenerallyreferstoscenarioswherenetworkconnectivityandcomputingcapabilityextendstoobjects,sensorsandeveryday

5“FrameworkforGlobalElectronicCommerce,”July1,1997,https://www.w3.org/TR/NOTE-framework-970706.(Alsoincludedafterthe“Conclusion”sectionofthesecommentsforreference)

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itemsnotnormallyconsideredcomputers,allowingthesedevicestogenerate,exchangeandconsumedatawithminimalhumanintervention.

However,theInternetSocietygoesontosaythatthereis“nosingle,universaldefinition”oftheIoT.6AlthoughtheFederalTradeCommission’s(FTC)definitionissimilar,itspecifiesthatthedevicesinquestionare“designedforbusinesses,”whichfailstocapturethetruebreadthoftheIoTlandscape.7 Question3:Withrespecttocurrentorplannedlaws,regulations,and/orpoliciesthatapplytoIoT:

a. Arethereexamplesthat,inyourview,fosterIoTdevelopmentanddeployment,whilealsoprovidinganappropriatelevelofprotectiontoworkers,consumers,patients,and/orotherusersofIoTtechnologies?

b. Arethereexamplesthat,inyourview,unnecessarilyinhibitIoTdevelopmentanddeployment?

CongressiscurrentlyconsideringtheDevelopingInnovationandGrowingtheInternetofThings(DIGIT)Act.Thislegislationwouldconveneaworkinggroup“ofFederalstakeholderstoproviderecommendationstoCongressonhowtoappropriatelyplanforandencouragetheproliferationoftheInternetofThingsintheUnitedStates.”8SuchaworkinggroupwouldlikelyfosterthedevelopmentoftheIoT,andaddressmanyofthepolicyquestionsinNTIA’srequestforcomments.TheNiskanenCentersupportstheDIGITActasanecessaryfirststeptowardsestablishinganationalstrategyonIoTthatwillensuretheUnitedStatesremainsthepreeminentleaderinitsdevelopment.InastatementofsupportfortheDIGITAct,DanielCastro,VicePresidentoftheInformationTechnologyandInnovationFoundation,noted:

ThesuccessoftheInternettodaycanbetracedbacktosmartpublicpoliciesthatproactivelysupportedthegrowthofthetechnology.ItisencouragingtoseepolicymakerstakingtheopportunitytorepeatthissuccessfulapproachfortheInternetofThings.TheDIGITActwillbringtogetherabroadcrosssectionofstakeholdersingovernmentandindustrytoshapepoliciesontheInternetofThings,ensuringthattheUnitedStatescansuccessfullycapturethewidevarietyofbenefitsithastoofferinboththepublicandprivatesectors.9

6“TheInternetofThings:AnOverview,”TheInternetSociety,October2015,pp.16-17,http://www.internetsociety.org/sites/default/files/ISOC-IoT-Overview-20151221-en.pdf. 7Inparticular,theFTCdefinestheIoTtoincludedevices,products,andservices“designedforbusinessestoenableautomatedcommunicationsbetweenmachines…thingssuchasdevicesorsensors—otherthancomputers,smartphones,ortablets—thatconnect,communicateortransmitinformationwithorbetweeneachotherthroughtheInternet.”WhiletheFTCiscertainlytailoringitsdefinitiontofocusonitsmandatevis-a-visconsumerprotectionfromegregiouslydeceptiveandunfairbusinesspractices,theimplicationsoftheIoTgowellbeyondcommercialapplications.Thus,theagency’sdefinitionislackingforthepurposesofNTIA’squestion.Internet 8 “Developing Innovation and Growing the Internet of Things Act,” Section 3(b)(1), http://www.fischer.senate.gov/public/_cache/files/03de7771-088b-45ac-8552-f82ddc0aa480/digit-2016---final-bill-for-filing.pdf. 9“BipartisanDIGITActCouldMakeUStheGlobalLeaderontheInternetofThings,”InformationTechnologyandInnovationFoundation,March1,2016,https://itif.org/publications/2016/03/01/bipartisan-digit-act-could-make-us-global-leader-internet-things.

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TheNiskanenCenterconcurs.WebelievethattheDIGITActwillbeusefulinrealizingthebenefitsoftheIoT.

EconomicIssues

Question13:WhatimpactwilltheproliferationofIoThaveonindustrialpractices,forexample,advancedmanufacturing,supplychains,oragriculture?

a. Whatwillbethebenefits,ifany?b. Whatwillbethechallenges,ifany?c. WhatroleoractionsshouldtheDepartmentofCommerceand,moregenerally,the

federalgovernmenttakeinresponsetothesechallenges,ifany? TheMcKinseyGlobalInstituteestimatesthattheIoTwillhaveagreatereconomicimpactonmanufacturingthanonanyothersectoroftheeconomy.By2025,thisimpacthas“thepotentialtocreatevalueof$1.2trillionto$3.7trillion.”10Theseeconomicgainswillcomefromincreasedcollection,analysis,anduseofdatafromembeddedandnetworkedRFIDandMEMSsensors,whichwillcreatemanynewefficienciesinanumberofareasincluding:monitoringandcontrolofproductiontools;automationofqualitycontrol;maintenanceofcapitalmachinery;workfloorsafety,throughpreemptivelyalertingindividualstohazardoussituations;optimizationofproductionandsupply-chainflows;andautomatedself-adjustmentofequipmentinresponsetochangesinconditions(e.g.changeinthetypeofproductionoccurring).Productivitycouldbeincreasedbyasmuchas10to25percent,leadingtosavingsapproaching$1.8trillionannually.Additionally,theremaybeverylargegainsfromreductionsinthecostofproduction,predictivemaintenance,andincreasedhealthandsafety,tonamebutafewofthemanypossiblebenefits.11 Inshort,theimplicationsofIoTformanufacturersareimmense.AstheMcKinseyGlobalInstitutereportgoesontonote:

UseofIoTinthefactorysettinghasthepotentialtoaltertherelationshipsamongmanufacturers,distributors,consumers,andlenders.Formanufacturers,IoT-basedsystemshavethepotentialnotonlytoimprovetheperformanceatindividualplants,butalsotohelpprovidegreatervisibilityintoperformancethroughoutproductionfacilities,allowingmanufacturerstooptimizeproductionacrosslocationsandsituations.Theseproductivityimprovementcouldbeusedtobuildupscaleandimproveprofitability.12

Everystepofthemanufacturingprocess,fromproductiontodistribution,willmovetowardsgreateroptimizationasaresultoftheIoT.Producerswillseereducedcosts—andincreasedprofitability.Consumerswillenjoylowerprices.Optimizinglogisticalsupplylineswillallowsavingsoneverythingfromlaborcoststofuelconsumptioninthedistributionofgoods.Asproducersconvergeonthesecost-cuttingmeasures,theywill 10JamesManyika,et.al.,“TheInternetofThings:MappingtheValueBeyondtheHype,”McKinseyGlobalInstitute,June2015,p.66. 11Ibid.pp.66-74. 12Ibid.p.73.

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bedriventoseekcompetitiveadvantagesindataanalytics,spurringfurtherinnovationanddemandfortheservicesofsoftwareengineers,dataanalysts,andtechnicalrepairmen. Ofcourse,thebenefitsdon’tendatmanufacturingorindustrial-scaleefficiencies.Sectorssuchashealthcare,urbaninfrastructure,resourceextraction,retail,andothersstandtobenefitonascalerangingfromtenstohundredsofbillionsofdollarsineconomicgainsby2025.Industrialmanufacturingstandstogainthelion’sshareofthesebenefitsinthefirstwaveoftheIoTrevolution,butthatisjustthepeakoftheiceberg.

PolicyIssues

Question15:WhatarethemainpolicyissuesthataffectorareaffectedbyIoT?Howshouldthegovernmentaddressorrespondtotheseissues? TheprimarypolicyissuesraisedbytheIoTincludeprivacy,cybersecurity,lawenforcementissues,andconsumerprotectionmorebroadly. ThepolicylandscapeoftheIoTverycloselymirrorsthatoftheInternet.Issuessuchasprivacyandcybersecurityprimarilydominatetheheadlines,butthiscouldchangeastheIoTevolvesandmoreproductsandservicesenterthemarket.Regulatorsandpolicymakersshouldrecognizethelimitsoftheirknowledgeandactwithhumility,forbearingfromattemptingtoaddressproblemsusingtop-down,heavy-handedregulation.Thegovernmentcanbestaddresstheseconcernsbyrelyingonexistingrulesandagencyauthority.FTCCommissionerMaureenOhlhausenrightlymaintainsthattheFTCcanplayavaluablerole:

TheFTC’sapproachofdoingpolicyR&Dtogetagoodunderstandingofthe[IoT],educatingconsumersandbusinessesabouthowtomaximizeitsbenefitsandreduceitsrisks,andusingourtraditionalenforcementtoolstochallengeanyharmsthatdoariseoffers,inmyopinion,thebestapproach.Thistypeofinformedactionwillallowfreemarketsandtechnologicalinnovationtoservethegreatestgood,whilestillmaintainingafederalroleinprotectingconsumersandensuringalevelplayingfieldforcompetitors.13

Itisimportanttoensure“alevelplayingfield”withrespecttoIoTinnovation.However,asOhlhausennotes,“freemarketsandtechnologicalinnovation”aretheprimarymechanismsbywhichthebenefitsoftheIoTwillberealized.TheFTC,NTIA,andotherfederalagenciesmustrecognizethattheycannotpossiblypredictorplanforallthepitfallsthatmayariseasthistechnologymatures.Theycan,however,preventmanybenefitsoftheIoTfrommaterializingbyregulatingtooearlyorintooheavy-handedamanner.TheriskofprematureandexcessiveregulationisespeciallyacutegiventhesizeofthepotentialeconomicbenefitstoAmericanproducersandconsumers.

13“TheInternetofThings:WhenThingsTalkAmongThemselves,”RemarksofCommissionerMaureenK.OhlhausenFTC,InternetofThingsWorkshop,November19,2013,https://www.ftc.gov/sites/default/files/documents/public_statements/remarks-commissioner-maureen-k.ohlhausen-ftc-internet-things-workshop/131119iotspeech.pdf.

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Question16:HowshouldthegovernmentaddressorrespondtocybersecurityconcernsaboutIoT?

a. WhatarethecybersecurityconcernsraisedspecificallybyIoT?Howaretheydifferentfromothercybersecurityconcerns?

b. HowdotheseconcernschangebasedonthecategorizationofIoTapplications(e.g.,basedoncategoriesforQuestion4,orconsumervs.industrial)?

c. WhatroleoractionsshouldtheDepartmentofCommerceand,moregenerally,thefederalgovernmenttakeregardingpolicies,rules,and/orstandardswithregardstoIoTcybersecurity,ifany?

Thegovernmentcanplayapositiveroleinaddressingcybersecurity,butneedstogetitsownhouseinorder.Overthepastyear,severalgovernmentagencieshavebeenhacked.Thisshowshowimportantpropercybersecuritypracticesareinsecuringnetworks,andalsohowinadequatethegovernment’sstandardsandresponseshavebeen.Untilthegovernmentstepsupandshowsitselftobeacompetentcybersecuritypractitioner,itmaybedifficulttopromulgaterulesandregulationsthatachievethelevelofprivate-sectorbuy-inneededtomakethemtrulyeffective.Ifthegovernmentfindsitsownstandardstoodifficulttoimplementeffectively,itcan’texpectindustrytotakeitsrecommendationsoncybersecurityentirelyseriously.Fornow,thegovernmentshouldpermitindustrytoself-regulate,whichithaseveryincentivetodowell. Self-regulatingmechanisms,suchasindustry-basedstandards,canserveproducersandconsumerswellinthisspace,andbetterthanstandardsthatmightbeissuedbygovernment.TheOnlineTrustAlliance’s(OTA)TrustFrameworkservesasagoodexampleofhowindustryself-regulationcananticipatetheneedforaddressingpotentialproblemsbeforetheyarise.Itsemphasison“securityandprivacybydesign”illustratestheprioritiesofcompaniesoperatingintheIoTspace.14Thesetypesofindustry-ledstandardsshouldbepermittedtosettheagendaincybersecurityregulation.Whenmarketfailurescanbedemonstrated,anddemonstratedtorequiregovernmentintervention,thenandonlythenshouldthegovernmentaddresstheissuethroughlegislationorregulation. Themosteffectivetoolforaddressingcybersecurityconcernsisstrongencryption.Therefore,theDepartmentofCommerce(DOC),andNTIAinparticular,shouldpromotetheuseofencryptioninIoTservicesandproductsasacorepolicyprescriptionfordealingwithsecurityissuesraisedbyubiquitousinterconnectivityofnetworkeddevices.Cybersecurityisvitalforamoderndigitaleconomy.Strongencryptionhasmassiveeconomicbenefits,producedinlargemeasurebyencouragingandpromotingthetrustnecessaryforaflourishingecosystemofonlinecommerceandfinance.15TheeconomicbenefitsofthesecurityandtrustthatstrongencryptionprovidesshouldbeexpectedtotransferovertotheIoTecosystem. Question17:HowshouldthegovernmentaddressorrespondtoprivacyconcernsaboutIoT?

14“IoTTrustFramework,”OnlineTrustAlliance,https://otalliance.org/IoT. 15RyanHagemannandJoshuaHampson,“Encryption,Trust,andtheOnlineEconomy:AnAssessmentoftheEconomicBenefitsAssociatedwithEncryption,”NiskanenCenter,November9,2015,https://niskanencenter.org/wp-content/uploads/2015/11/RESEARCH-PAPER_EncryptionEconomicBenefits.pdf.

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a. WhataretheprivacyconcernsraisedspecificallybyIoT?Howaretheydifferentfromotherprivacyconcerns?

b. DotheseconcernschangebasedonthecategorizationofIoTapplications(e.g.,basedoncategoriesforQuestion4,orconsumervs.industrial)?

c. WhatroleoractionsshouldtheDepartmentofCommerceand,moregenerally,thefederalgovernmenttakeregardingpolicies,rules,and/orstandardswithregardstoprivacyandtheIoT?

Privacyisanamorphousconceptwithoutasingleuncontestedmeaning.16ThepossibilitythatgovernmentsmaytapintoIoTnetworksforsurveillancepurposesraisesonesetofimportantconcerns.Privatesectorcollectionofuserdatapresentsaseparatesetofconcerns,whichthegovernmentislesscapableofeffectivelyregulatingexante.TheFourthAmendmentandotherstatutesalreadylegallylimitthegovernment’spowertoinvadetheprivacyofcitizens.However,inthosecasesinwhichtheintelligencecommunityandlawenforcementareallowedbytheprevailinginterpretationoflawtoevadethoselimits,thegovernment—andCongressinparticular—oughttostepintoclarifythelawinordertomorethoroughlysecuretheprivacyofAmericansagainstunwarrantedand“incidental”collectionofinnocentAmericans’data. AsnotedbytheMcKinseyreport:

Policymakersfacedwiththeseissueswillneedtothinkcomprehensivelyandglobally.One-offregulationsandrulesthatareinconflictfromonejurisdictiontoanotherwillnotsuffice.Policymakerswillneedtobuildconsensusregardingwhatprotectiontoputinplaceandworkacrossbordersandlevelsofgovernmenttomakesuretheseprotectionscanandwillbeuniversallyenforced.17

ThedevelopmentofthenecessaryconsensusisalreadyunderwaywiththeintroductionoftheDIGITAct,previouslymentioned.Whilethereisnoassuranceofitspassage,policymakersneedtosendaclearmessageintohelpachievemarketcertaintyaboutthefutureoftheIoT.Themessageshouldbethis:thatCongress,andnotaconfusinghodgepodgeofcompetingregulatorybodies,willbetheprimaryregulatoroftheIoT.Congress,notexecutivebranchregulators,shouldleadontheIoT. TheprivacyconcernsraisedbytheIoTarefundamentallynodifferentfromthoseraisedbytheemergenceandproliferationoftheInternet.IftheInternetdidnotrequireastructuredregulatoryresponsetoprivacyconcerns,neitherdoestheIoT.Atthistime,afederalapproachtosettingprivacynormswouldbeprematureandcouldhaveunintendedconsequenceshamperinginnovationintheIoTspace.18 16LarryDownes,“ARationalResponsetothePrivacy‘Crisis’,”CatoInstitute,PolicyAnalysisNo.716,January7,2013,http://object.cato.org/sites/cato.org/files/pubs/pdf/pa716.pdf. 17 “DisruptiveTechnologies,”p.60. 18OneexampleofhowsuchinnovationmighthavebeenforestalledisthecaseofGoogle’sGmailservice.HadthegovernmentlimitedprivatesectordatacollectionintheinfantstagesoftheInternet’sevolvingecosystem,hundredsofmillionsofpeoplewouldneverhaveknownthebenefitofusinganostensibly“free”emailservice.(SusiePoppick,“10WaysGoogleHasChangedtheWorld,Time,August18,2014,http://time.com/money/3117377/google-10-ways-changed-world/.)Asanotherexample,theeconomicbenefitsof“BigData”couldhavebeensquelchedintheirinfancyifthegovernmenthadimposedonerous

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Additionally,theFTCisalreadywell-positionedtodealwithpotentialviolationsofuserprivacyagreements,asdiscussedinresponsetoQuestion18. Question18:ArethereotherconsumerprotectionissuesthatareraisedspecificallybyIoT?Ifso,whataretheyandhowshouldthegovernmentrespondtotheconcerns? AstheIoTcontinuestogrow,therearelikelytobecomplicationsarisingfromviolationsofuserprivacyagreements,aswellassituationsinvolvingfraudanddeceptivepractices.Buttheseissuesarenotfundamentallydifferentfromthosefederalregulatorscurrentlyaddress. AmpleauthorityalreadyexistsunderFTC’spowertoprohibitandaddressunfairanddeceptivepractices.Inparticular,theFTCisauthorizedtopolice“Unfairmethodsofcompetitioninoraffectingcommerce,andunfairordeceptiveactsorpracticesinoraffectingcommerce.”19ThebroadstatutorypoweraffordedtheCommissionallowsittosufficientlyaddressconsumerharmsthatmayresultfrombreachesofcontractbetweenIoTserviceprovidersorproductmanufacturerandconsumers.OtherpolicyanalystsspecializingintheIoTandtechnologypolicyhavemadesimilarobservations.20

AdditionalIssues

Question25:ArethereIoTpolicyareasthatcouldbeappropriateformultistakeholderengagement,similartotheNTIA-runprocessesonprivacyandcybersecurity? Asanemergingtechnology,theIoTislikelytospawnmanyunseenandcurrentlyunknownissuesthatcouldrequiretheattentionofpolicymakersandindustryplayers.However,experiencehasshownthatmultistakeholderprocesses,thoughlaunchedwiththebestofintentions,areseldomthebestwaytoproducetimely,effectiverecommendations.Theretendtobetoomanypartiesinvolvedandtheinherentuncertaintyoftheprocesscanleadtowarinessinmarketactors.Ingeneral,NTIAmultistakeholderprocesseshaveatendencytobecomeconvolutedandprocedurallyoverbearingunlessstructuredtoachieveaveryspecificobjective.21 UnlessmandatedbyCongressortheAdministration,suchprocessesshouldbeavoidedwheneverpossible.Unlessaclearneedforamultistakeholderengagementemerges,NTIAshouldrefrainfrominitiatingsuchaprocess.

regulationssurroundingthecollectionofindividuals’data.Instead,pursuanttouserprivacyagreements,manyofthesebenefitsareonlybeginningtoberealizedandwilllikelycontinuecontributingtotheevolutionoftheIoT.(“BigData:SeizingOpportunities,PreservingValues,”ExecutiveOfficeofthePresident,May2014,https://www.whitehouse.gov/sites/default/files/docs/big_data_privacy_report_may_1_2014.pdf.) 1915U.S.Code§45 20AdamThierer,“TheInternetofThingsandWearableTechnology:AddressingPrivacyandSecurityConcernswithoutDerailingInnovation,”MercatusWorkingPaper,November2014,http://mercatus.org/sites/default/files/Thierer-Wearable-Tech.pdf. 21BerinSzoka,“TheMultistakeholderProcesstoDevelopConsumerDataPrivacyCodesofConduct,”submittedApril12,2012,http://docs.techfreedom.org/Comments_NTIA_Multistakeholder_4.12.12.pdf.

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Question26:WhatroleshouldtheDepartmentofCommerceplaywithinthefederalgovernmentinhelpingtoaddressthechallengesandopportunitiesofIoT?HowcantheDepartmentofCommercebestcollaboratewithstakeholdersonIoTmatters? SeeresponsetoQuestion25. Question27:Howshouldgovernmentandtheprivatesectorcollaboratetoensurethatinfrastructure,policy,technology,andinvestmentareworkingtogethertobestfuelIoTgrowthanddevelopment?Wouldanoverarchingstrategy,suchasthosedeployedinothercountries,beusefulinthisspace?Iftheanswerisyes,whatshouldthatstrategyentail? AclearandsettledgovernmentapproachtotheIoTwouldcreatemarketcertaintyand,iftailoredappropriatelytoindustryneeds,helpmaximizethepotentialsocialandeconomicbenefitsofthisemergingtechnology.However,theapproachwouldneedtoembodyregulatoryhumilityasaguidingpracticeforfederalagencies.Otherwise,onerousregulationscouldcurtailinnovationintheIoT.AstheInformationTechnologyandInnovationFoundation’sCenterforDataInnovationdiscussedinarecentpaperonthistopic:

Creatingrestrictiverulesforanemergingtechnologyatsuchanearlystageinitsdevelopmentwithoutclearevidenceofconcreteconsumerharmscanhavetheunintendedconsequenceoflimitinginnovationbyunnecessarilyhamperingcertainbusinessmodelsorraisingcosts.Moreover,theprivacyfearsassociatedwithnewtechnologiesareoftensubstantiallyinflated. AnationalstrategyfortheInternetofThingscanforestallsuchproblemsbysendingaclearmessagetolegislatorsandregulatorsthatthistechnologyisimportantandthatover-regulationorpoorly-designedregulationwouldlimititsgrowth.Moreover,anationalstrategycanencouragelegislatorsandregulatorstofocusonregulationsthatwouldexpand,ratherthanlimituseoftheInternetofThings.22

AsnotedintheresponsetoQuestion3,theDIGITActservesasagoodstartingpointforfleshingoutmanyoftheconcernsNTIA’scommentsseektoaddress.SinceCongresshasalreadybeguntakingalegislativeleadontheIoT,deferenceshouldbegiventotheconclusionsoftheworkinggroupestablishedbytheDIGITAct,whichwouldincludeDOCandNTIAasmajorstakeholdersintheworkinggroupstructure.

GeneralPolicyRecommendations

Alonglistofdetailedrecommendationscouldbeprovided.However,atthisearlystageinthedevelopmentoftheIoT,itismoreusefultosetoutgeneralprinciplestoguidepolicymakinggoingforward.Tothatend,thefollowingtworecommendationsshouldserveasguidancefortheDOC,NTIA,andotherfederalagenciesexaminingpossibleactionontheIoT.

22JoshuaNewandDanielCastro,“WhyCountriesNeedNationalStrategiesfortheInternetofThings,”ITIF,CenterforDataInnovation,December16,2015,P.9,http://www2.datainnovation.org/2015-national-iot-strategies.pdf.

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Recommendation#1:Thetenetsofthe“FrameworkforGlobalElectronicCommerce”shouldguidethefederalgovernment’sapproachtoregulatingtheIoT. TheClintonAdministration’s“FrameworkforGlobalElectronicCommerce,”whichprovidedaclearroadmapforhowandwhenthefederalgovernmentshouldinterveneinthedevelopmentoftheInternet,isasrelevanttodayasitwasinthemid-1990s. TheIoTissimplythenextstageintheevolutionoftheInternet.Thatfactshouldbereflectedinthegovernment’sacceptanceandcontinuedapplicationofthisframework,whichhelpedtransformtheInternetintotheglobalplatformforinnovation,creativity,andeconomicgrowththatitistoday.AsimilarlyrelaxedpolicytowardstheIoTcandowondersforitsongoingmaturation,whileprovidingthemarketcertaintynecessarytocontinuetopromoteinvestment,innovation,andresearchanddevelopment. Inparticular,thefirstfourprincipleslaidoutinthatframeworkcanjustaseasilyapplytotheemergenceoftheIoT.Substituting“IoT”forinstancesof“theInternet”throughoutthefirstfourprinciplesyieldssuggestionsthatarewhollyconsistentwithanapproachthatembracesthesameregulatoryforbearanceandrecognitionofthevalueofmarketforcesindrivinginnovation.Assuch,theframeworkcouldbeadaptedtotheIoTtoreadalongthefollowinglines:

1. “Theprivatesectorshouldlead.”Theframeworkspecifiesthat“governmentsshouldencourageindustryself-regulationwhereverappropriateandsupporttheeffortsofprivatesectororganizationstodevelopmechanismstofacilitatethesuccessfuloperationofthe”IoT.“Evenwherecollectiveagreementsorstandardsarenecessary,privateentitiesshould,wherepossible,taketheleadinorganizingthem.”

2. “Governmentsshouldavoidunduerestrictions”ontheIoT.“Unnecessaryregulationofcommercialactivitieswilldistortdevelopmentoftheelectronicmarketplacebydecreasingthesupplyandraisingthecostofproductsandservicesforconsumers.…[G]overnmentattemptstoregulatearelikelytobeoutmodedbythetimetheyarefinallyenacted,especiallytotheextentsuchregulationsaretechnology-specific.Accordingly,governmentsshouldrefrainfromimposingnewandunnecessaryregulations,bureaucraticprocedures,ortaxesandtariffsoncommercialactivitiesthattakeplaceviathe”IoT.

3. “Wheregovernmentalinvolvementisneeded,itsaimshouldbetosupportandenforceapredictable,minimalist,consistentandsimplelegalenvironmentforcommerce.”Theframeworkspecifiesthat“wheregovernmentinterventionisnecessarytofacilitate”thedevelopmentoftheIoT,“itsgoalshouldbetoensurecompetition,protectintellectualpropertyandprivacy,preventfraud,fostertransparency,supportcommercialtransactions,andfacilitatedisputeresolution.”

4. “Governmentsshouldrecognizetheuniquequalitiesofthe”IoT.“Regulationshouldbeimposedonlyasanecessarymeanstoachieveanimportantgoalonwhichthereisbroadconsensus.Existinglawsandregulationsthatmayhinderelectroniccommerce[andthecontinueddevelopmentoftheIoT]shouldbereviewedandrevisedoreliminatedtoreflecttheneedsofthenewelectronicage.”23

23“FrameworkforGlobalElectronicCommerce.”

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Byadheringtotheessentiallanguageofthesefourprinciples,thegovernmentcanmosteffectivelycontributetothecontinueddevelopmentandevolutionoftheIoT.DoingsowillalsounderscorethefactthattheprinciplesthatguidedthegrowthoftheInternetecosystemcan,andshould,beappliedwholesaletotheIoT,whichislittlemorethanthenextevolutionarystepintheInternet’sdevelopment. Recommendation#2:RefrainfromIoT-specificmandates,multistakeholderprocesses,orothereffortsthatwouldactasbureaucraticimpedimentstoinnovation. Thusfar,theprivatesectorhasdoneacommendablejobaddressingconsumerconcernsrelatedtotheIoT.UnlessaclearandpressingneedarisescallingforengagementfromtheDOC,andspecificallyNTIA,itshouldremainhands-off.NTIAshouldclearlycommunicatethatitrecognizesthelimitsofitsknowledgeaboutthedevelopmentoftheIoT,andthenatureandimportanceoftheconcernsthatmayarise.Furthermore,NTIAshouldbeclearthatitunderstandthelimitsofitspowertoeffectivelyaddresspotentialharms.TheFTC’sSection5Authorityisbetterequippedtodealwithconsumer-relatedabusesthantheDOC;assuch,NTIAshoulddefertotheFTC’sregulatoryauthorityonissuesrelatedtoconsumerharm. IfNTIAchooses,orismandatedbytheAdministrationorCongress,toconveneamultistakeholderprocesstoproducebestpractices,codesofconduct,orotherstandards,weurgeittotailorclear,transparentrulesforhowsuchaprocesswillunfold.24

Conclusion

Governmentcanoffervaluableassistancetotheprivate-sectorbylayingdowngeneralrulesofthegameregardingthedevelopmentanduseofnewtechnologies,suchastheIoT.However,aswithanyemergingtechnology,thefederalgovernmentshouldembracetheregulatoryequivalentoftheHippocraticOath:first,donoharm.Thespeedoftechnologicaldevelopmentlongagooutpacedtheabilityoftraditionalregulatoryagenciestodealwithproblemsinaneffectiveexantemanner.ThisisespeciallytrueintheIoTspace.JustastheClintonAdministrationembracedamorerelaxedregulatoryframeworkfortheInternet,sotooshouldcurrentregulatorsembraceahands-offapproachtotheIoT.TheNiskanenCenterisgratefulfortheopportunitytocommentonissuesrelatedtothisimportant,andstill-nascent,areaoftechnologicaldevelopment.

24ForamoredetailedperspectiveonhowNTIAcouldpotentiallystructuresuchproceedings,werefertheagencytocommentssubmittedbyTechFreedominthematterof“TheMultistakeholderProcesstoDevelopConsumerDataPrivacyCodesofConduct,”submittedApril12,2012,http://docs.techfreedom.org/Comments_NTIA_Multistakeholder_4.12.12.pdf,aswellasTechFreedom’scommentsinthematterof“Privacy,Transparency,andAccountabilityRegardingCommercialandPrivateUseofUnmannedAircraftSystems,”submittedApril20,2015https://www.ntia.doc.gov/files/ntia/techfreedom_4.20.15.pdf.

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FrameworkforGlobalElectronicCommerce

1July1997 (Originallyaccessedathttps://www.w3.org/TR/NOTE-framework-970706)

Background TheGlobalInformationInfrastructure(GII),stillintheearlystagesofitsdevelopment,isalreadytransformingourworld.Overthenextdecade,advancesontheGIIwillaffectalmosteveryaspectofdailylife--education,healthcare,workandleisureactivities.Disparatepopulations,onceseparatedbydistanceandtime,willexperiencethesechangesaspartofaglobalcommunity. NosingleforceembodiesourelectronictransformationmorethantheevolvingmediumknownastheInternet.Onceatoolreservedforscientificandacademicexchange,theInternethasemergedasanapplianceofeverydaylife,accessiblefromalmosteverypointontheplanet.StudentsacrosstheworldarediscoveringvasttreasuretrovesofdataviatheWorldWideWeb.Doctorsareutilizingtele-medicinetoadministeroff-sitediagnosestopatientsinneed.Citizensofmanynationsarefindingadditionaloutletsforpersonalandpoliticalexpression.TheInternetisbeingusedtoreinventgovernmentandreshapeourlivesandourcommunitiesintheprocess.AstheInternetempowerscitizensanddemocratizessocieties,itisalsochangingclassicbusinessandeconomicparadigms.Newmodelsofcommercialinteractionaredevelopingasbusinessesandconsumersparticipateintheelectronicmarketplaceandreaptheresultantbenefits.Entrepreneursareabletostartnewbusinessesmoreeasily,withsmallerup-frontinvestmentrequirements,byaccessingtheInternet'sworldwidenetworkofcustomers. Internettechnologyishavingaprofoundeffectontheglobaltradeinservices.Worldtradeinvolvingcomputersoftware,entertainmentproducts(motionpictures,videos,games,soundrecordings),informationservices(databases,onlinenewspapers),technicalinformation,productlicenses,financialservices,andprofessionalservices(businessesandtechnicalconsulting,accounting,architecturaldesign,legaladvice,travelservices,etc.)hasgrownrapidlyinthepastdecade,nowaccountingforwellover$40billionofU.S.exportsalone. Anincreasingshareofthesetransactionsoccursonline.TheGIIhasthepotentialtorevolutionizecommerceintheseandotherareasbydramaticallyloweringtransactioncostsandfacilitatingnewtypesofcommercialtransactions. TheInternetwillalsorevolutionizeretailanddirectmarketing.Consumerswillbeabletoshopintheirhomesforawidevarietyofproductsfrommanufacturersandretailersallovertheworld.Theywillbeabletoviewtheseproductsontheircomputersortelevisions,accessinformationabouttheproducts,visualizethewaytheproductsmayfittogether(constructingaroomof

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furnitureontheirscreen,forexample),andorderandpayfortheirchoice,allfromtheirlivingrooms. CommerceontheInternetcouldtotaltensofbillionsofdollarsbytheturnofthecentury.Forthispotentialtoberealizedfully,governmentsmustadoptanon-regulatory,market-orientedapproachtoelectroniccommerce,onethatfacilitatestheemergenceofatransparentandpredictablelegalenvironmenttosupportglobalbusinessandcommerce.Officialdecisionmakersmustrespecttheuniquenatureofthemediumandrecognizethatwidespreadcompetitionandincreasedconsumerchoiceshouldbethedefiningfeaturesofthenewdigitalmarketplace. ManybusinessesandconsumersarestillwaryofconductingextensivebusinessovertheInternetbecauseofthelackofapredictablelegalenvironmentgoverningtransactions.Thisisparticularlytrueforinternationalcommercialactivitywhereconcernsaboutenforcementofcontracts,liability,intellectualpropertyprotection,privacy,securityandothermattershavecausedbusinessesandconsumerstobecautious. AsuseoftheInternetexpands,manycompaniesandInternetusersareconcernedthatsomegovernmentswillimposeextensiveregulationsontheInternetandelectroniccommerce.Potentialareasofproblematicregulationincludetaxesandduties,restrictionsonthetypeofinformationtransmitted,controloverstandardsdevelopment,licensingrequirementsandrateregulationofserviceproviders.Indeed,signsofthesetypesofcommerce-inhibitingactionsalreadyareappearinginmanynations.Preemptingtheseharmfulactionsbeforetheytakerootisastrongmotivationforthestrategyoutlinedinthispaper. GovernmentscanhaveaprofoundeffectonthegrowthofcommerceontheInternet.Bytheiractions,theycanfacilitateelectronictradeorinhibitit.Knowingwhentoactand--atleastasimportant--whennottoact,willbecrucialtothedevelopmentofelectroniccommerce.ThisreportarticulatestheAdministration'svisionfortheemergenceoftheGIIasavibrantglobalmarketplacebysuggestingasetofprinciples,presentingaseriesofpolicies,andestablishingaroadmapforinternationaldiscussionsandagreementstofacilitatethegrowthofcommerceontheInternet.

PRINCIPLES 1.Theprivatesectorshouldlead. ThoughgovernmentplayedaroleinfinancingtheinitialdevelopmentoftheInternet,itsexpansionhasbeendrivenprimarilybytheprivatesector.Forelectroniccommercetoflourish,theprivatesectormustcontinuetolead.Innovation,expandedservices,broaderparticipation,andlowerpriceswillariseinamarket-drivenarena,notinanenvironmentthatoperatesasaregulatedindustry.

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Accordingly,governmentsshouldencourageindustryself-regulationwhereverappropriateandsupporttheeffortsofprivatesectororganizationstodevelopmechanismstofacilitatethesuccessfuloperationoftheInternet.Evenwherecollectiveagreementsorstandardsarenecessary,privateentitiesshould,wherepossible,taketheleadinorganizingthem.Wheregovernmentactionorintergovernmentalagreementsarenecessary,ontaxationforexample,privatesectorparticipationshouldbeaformalpartofthepolicymakingprocess. 2.Governmentsshouldavoidunduerestrictionsonelectroniccommerce. PartiesshouldbeabletoenterintolegitimateagreementstobuyandsellproductsandservicesacrosstheInternetwithminimalgovernmentinvolvementorintervention.Unnecessaryregulationofcommercialactivitieswilldistortdevelopmentoftheelectronicmarketplacebydecreasingthesupplyandraisingthecostofproductsandservicesforconsumerstheworldover.Businessmodelsmustevolverapidlytokeeppacewiththebreak-neckspeedofchangeinthetechnology;governmentattemptstoregulatearelikelytobeoutmodedbythetimetheyarefinallyenacted,especiallytotheextentsuchregulationsaretechnology-specific. Accordingly,governmentsshouldrefrainfromimposingnewandunnecessaryregulations,bureaucraticprocedures,ortaxesandtariffsoncommercialactivitiesthattakeplaceviatheInternet. 3.Wheregovernmentalinvolvementisneeded,itsaimshouldbetosupportandenforceapredictable,minimalist,consistentandsimplelegalenvironmentforcommerce. Insomeareas,governmentagreementsmayprovenecessarytofacilitateelectroniccommerceandprotectconsumers.Inthesecases,governmentsshouldestablishapredictableandsimplelegalenvironmentbasedonadecentralized,contractualmodeloflawratherthanonebasedontop-downregulation.Thismayinvolvestatesaswellasnationalgovernments.Wheregovernmentinterventionisnecessarytofacilitateelectroniccommerce,itsgoalshouldbetoensurecompetition,protectintellectualpropertyandprivacy,preventfraud,fostertransparency,supportcommercialtransactions,andfacilitatedisputeresolution. 4.GovernmentsshouldrecognizetheuniquequalitiesoftheInternet. ThegeniusandexplosivesuccessoftheInternetcanbeattributedinparttoitsdecentralizednatureandtoitstraditionofbottom-upgovernance.Thesesamecharacteristicsposesignificantlogisticalandtechnologicalchallengestoexistingregulatorymodels,andgovernmentsshouldtailortheirpoliciesaccordingly. Electroniccommercefacessignificantchallengeswhereitintersectswithexistingregulatoryschemes.Weshouldnotassume,forexample,thattheregulatoryframeworksestablishedover

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thepastsixtyyearsfortelecommunications,radioandtelevisionfittheInternet.Regulationshouldbeimposedonlyasanecessarymeanstoachieveanimportantgoalonwhichthereisabroadconsensus.Existinglawsandregulationsthatmayhinderelectroniccommerceshouldbereviewedandrevisedoreliminatedtoreflecttheneedsofthenewelectronicage. 5.ElectronicCommerceovertheInternetshouldbefacilitatedonaglobalbasis. TheInternetisemergingasaglobalmarketplace.ThelegalframeworksupportingcommercialtransactionsontheInternetshouldbegovernedbyconsistentprinciplesacrossstate,national,andinternationalbordersthatleadtopredictableresultsregardlessofthejurisdictioninwhichaparticularbuyerorsellerresides.

ISSUES ThispapercoversnineareaswhereinternationalagreementsareneededtopreservetheInternetasanon-regulatorymedium,oneinwhichcompetitionandconsumerchoicewillshapethemarketplace.Althoughtherearesignificantareasofoverlap,theseitemscanbedividedintothreemainsubgroups:financialissues,legalissues,andmarketaccessissues.

FinancialIssues ● customsandtaxation● electronicpayments

LegalIssues ● 'UniformCommercialCode'forelectroniccommerce● intellectualpropertyprotection● privacy● security

MarketAccessIssues ● telecommunicationsinfrastructureandinformationtechnology● content● technicalstandards

I.FinancialIssues 1.CUSTOMSANDTAXATION Forover50years,nationshavenegotiatedtariffreductionsbecausetheyhaverecognizedthattheeconomiesandcitizensofallnationsbenefitfromfreertrade.Giventhisrecognition,and

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becausetheInternetistrulyaglobalmedium,itmakeslittlesensetointroducetariffsongoodsandservicesdeliveredovertheInternet. Further,theInternetlackstheclearandfixedgeographiclinesoftransitthathistoricallyhavecharacterizedthephysicaltradeofgoods.Thus,whileitremainspossibletoadministertariffsforproductsorderedovertheInternetbutultimatelydeliveredviasurfaceorairtransport,thestructureoftheInternetmakesitdifficulttodosowhentheproductorserviceisdeliveredelectronically. Nevertheless,manynationsarelookingfornewsourcesofrevenue,andmayseektolevytariffsonglobalelectroniccommerce. Therefore,theUnitedStateswilladvocateintheWorldTradeOrganization(WTO)andotherappropriateinternationalforathattheInternetbedeclaredatariff-freeenvironmentwheneveritisusedtodeliverproductsorservices.Thisprincipleshouldbeestablishedquicklybeforenationsimposetariffsandbeforevestedinterestsformtoprotectthosetariffs. Inaddition,theUnitedStatesbelievesthatnonewtaxesshouldbeimposedonInternetcommerce.ThetaxationofcommerceconductedovertheInternetshouldbeconsistentwiththeestablishedprinciplesofinternationaltaxation,shouldavoidinconsistentnationaltaxjurisdictionsanddoubletaxation,andshouldbesimpletoadministerandeasytounderstand. AnytaxationofInternetsalesshouldfollowtheseprinciples:

● Itshouldneitherdistortnorhindercommerce.Notaxsystemshoulddiscriminateamongtypesofcommerce,norshoulditcreateincentivesthatwillchangethenatureorlocationoftransactions.

● Thesystemshouldbesimpleandtransparent.Itshouldbecapableofcapturingtheoverwhelmingmajorityofappropriaterevenues,beeasytoimplement,andminimizeburdensomerecordkeepingandcostsforallparties.

● ThesystemshouldbeabletoaccommodatetaxsystemsusedbytheUnitedStatesandourinternationalpartnerstoday.

Whereverfeasible,weshouldlooktoexistingtaxationconceptsandprinciplestoachievethesegoals. AnysuchtaxationsystemwillhavetoaccomplishthesegoalsinthecontextoftheInternet'sspecialcharacteristics--thepotentialanonymityofbuyerandseller,thecapacityformultiplesmalltransactions,andthedifficultyofassociatingonlineactivitieswithphysicallydefinedlocations. Toachieveglobalconsensusonthisapproach,theUnitedStates,throughtheTreasuryDepartment,isparticipatingindiscussionsonthetaxationofelectroniccommercethroughthe

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OrganizationforEconomicCooperationandDevelopment(OECD),theprimaryforumforcooperationininternationaltaxation. TheAdministrationisalsoconcernedaboutpossiblemovesbystateandlocaltaxauthoritiestotargetelectroniccommerceandInternetaccess.TheuncertaintiesassociatedwithsuchtaxesandtheinconsistenciesamongthemcouldstiflethedevelopmentofInternetcommerce. TheAdministrationbelievesthatthesamebroadprinciplesapplicabletointernationaltaxation,suchasnothinderingthegrowthofelectroniccommerceandneutralitybetweenconventionalandelectroniccommerce,shouldbeappliedtosubfederaltaxation.Nonewtaxesshouldbeappliedtoelectroniccommerce,andstatesshouldcoordinatetheirallocationofincomederivedfromelectroniccommerce.Ofcourse,implementationoftheseprinciplesmaydifferatthesubfederallevelwhereindirecttaxationplaysalargerrole. Beforeanyfurtheractionistaken,statesandlocalgovernmentsshouldcooperatetodevelopauniform,simpleapproachtothetaxationofelectroniccommerce,basedonexistingprinciplesoftaxationwherefeasible. 2.ELECTRONICPAYMENTSYSTEMS NewtechnologyhasmadeitpossibletopayforgoodsandservicesovertheInternet.Someofthemethodswouldlinkexistingelectronicbankingandpaymentsystems,includingcreditanddebitcardnetworks,withnewretailinterfacesviatheInternet.Electronicmoney,basedonstored-value,smartcard,orothertechnologies,isalsounderdevelopment.Substantialprivatesectorinvestmentandcompetitionisspurringanintenseperiodofinnovationthatshouldbenefitconsumersandbusinesseswishingtoengageinglobalelectroniccommerce. Atthisearlystageinthedevelopmentofelectronicpaymentsystems,thecommercialandtechnologicalenvironmentischangingrapidly.Itwouldbehardtodeveloppolicythatisbothtimelyandappropriate.Forthesereasons,inflexibleandhighlyprescriptiveregulationsandrulesareinappropriateandpotentiallyharmful.Rather,inthenearterm,case-by-casemonitoringofelectronicpaymentexperimentsispreferred. Fromalongertermperspective,however,themarketplaceandindustryself-regulationalonemaynotfullyaddressallissues.Forexample,governmentactionmaybenecessarytoensurethesafetyandsoundnessofelectronicpaymentsystems,toprotectconsumers,ortorespondtoimportantlawenforcementobjectives. TheUnitedStates,throughtheDepartmentoftheTreasury,isworkingwithothergovernmentsininternationalforatostudytheglobalimplicationsofemergingelectronicpaymentsystems.Anumberoforganizationsarealreadyworkingonimportantaspectsofelectronicbankingandpayments.Theiranalyseswillcontributetoabetterunderstandingofhowelectronicpaymentsystemswillaffectglobalcommerceandbanking.

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TheEconomicCommuniqueissuedattheLyonSummitbytheG-7HeadsofStatecalledforacooperativestudyoftheimplicationsofnew,sophisticatedretailelectronicpaymentsystems.Inresponse,theG-10deputiesformedaWorkingParty,withrepresentationfromfinanceministriesandcentralbanks(inconsultationwithlawenforcementauthorities).TheWorkingPartyischairedbyarepresentativefromtheU.S.TreasuryDepartment,andtaskedtoproduceareportthatidentifiescommonpolicyobjectivesamongtheG-10countriesandanalyzesthenationalapproachestoelectroniccommercetakentodate. Aselectronicpaymentsystemsdevelop,governmentsshouldworkcloselywiththeprivatesectortoinformpolicydevelopment,andensurethatgovernmentalactivitiesflexiblyaccommodatetheneedsoftheemergingmarketplace.

II.LegalIssues 3.'UNIFORMCOMMERCIALCODE'FORELECTRONICCOMMERCE Ingeneral,partiesshouldbeabletodobusinesswitheachotherontheInternetunderwhatevertermsandconditionstheyagreeupon. Privateenterpriseandfreemarketshavetypicallyflourished,however,wheretherearepredictableandwidelyacceptedlegalenvironmentssupportingcommercialtransactions.Toencourageelectroniccommerce,theU.S.governmentshouldsupportthedevelopmentofbothadomesticandglobaluniformcommerciallegalframeworkthatrecognizes,facilitates,andenforceselectronictransactionsworldwide.Fullyinformedbuyersandsellerscouldvoluntarilyagreetoformacontractsubjecttothisuniformlegalframework,justaspartiescurrentlychoosethebodyoflawthatwillbeusedtointerprettheircontract. Participantsinthemarketplaceshoulddefineandarticulatemostoftherulesthatwillgovernelectroniccommerce.Toenableprivateentitiestoperformthistaskandtofulfilltheirrolesadequately,governmentsshouldencouragethedevelopmentofsimpleandpredictabledomesticandinternationalrulesandnormsthatwillserveasthelegalfoundationforcommercialactivitiesincyberspace. IntheUnitedStates,everystategovernmenthasadoptedtheUniformCommercialCode(UCC),acodificationofsubstantialportionsofcommerciallaw.TheNationalConferenceofCommissionersofUniformStateLaw(NCCUSL)andtheAmericanLawInstitute,domesticsponsorsoftheUCC,alreadyareworkingtoadapttheUCCtocyberspace.Privatesectororganizations,includingtheAmericanBarAssociation(ABA)alongwithotherinterestgroups,areparticipantsinthisprocess.WorkisalsoongoingonaproposedelectroniccontractingandrecordsactfortransactionsnotcoveredbytheUCC.TheAdministrationsupportsthepromptconsiderationoftheseproposals,andtheadoptionofuniformlegislationbyallstates.Of

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course,anysuchlegislationwillbedesignedtoaccommodateongoingandpossiblefutureglobalinitiatives. Internationally,theUnitedNationsCommissiononInternationalTradeLaw(UNCITRAL)hascompletedworkonamodellawthatsupportsthecommercialuseofinternationalcontractsinelectroniccommerce.Thismodellawestablishesrulesandnormsthatvalidateandrecognizecontractsformedthroughelectronicmeans,setsdefaultrulesforcontractformationandgovernanceofelectroniccontractperformance,definesthecharacteristicsofavalidelectronicwritingandanoriginaldocument,providesfortheacceptabilityofelectronicsignaturesforlegalandcommercialpurposes,andsupportstheadmissionofcomputerevidenceincourtsandarbitrationproceedings. TheUnitedStatesGovernmentsupportstheadoptionofprinciplesalongtheselinesbyallnationsasastarttodefininganinternationalsetofuniformcommercialprinciplesforelectroniccommerce.WeurgeUNCITRAL,otherappropriateinternationalbodies,barassociations,andotherprivatesectorgroupstocontinuetheirworkinthisarea. Thefollowingprinciplesshould,totheextentpossible,guidethedraftingofrulesgoverningglobalelectroniccommerce:

● partiesshouldbefreetoorderthecontractualrelationshipbetweenthemselvesastheyseefit;

● rulesshouldbetechnology-neutral(i.e.,therulesshouldneitherrequirenorassumeaparticulartechnology)andforwardlooking(i.e.,therulesshouldnothindertheuseordevelopmentoftechnologiesinthefuture);

● existingrulesshouldbemodifiedandnewrulesshouldbeadoptedonlyasnecessaryorsubstantiallydesirabletosupporttheuseofelectronictechnologies;and

● theprocessshouldinvolvethehigh-techcommercialsectoraswellasbusinessesthathavenotyetmovedonline.

Withtheseprinciplesinmind,UNCITRAL,UNIDROIT,andtheInternationalChamberofCommerce(ICC),andothersshoulddevelopadditionalmodelprovisionsanduniformfundamentalprinciplesdesignedtoeliminateadministrativeandregulatorybarriersandtofacilitateelectroniccommerceby:

● encouraginggovernmentalrecognition,acceptanceandfacilitationofelectroniccommunications(i.e.,contracts,notarizeddocuments,etc.);

● encouragingconsistentinternationalrulestosupporttheacceptanceofelectronicsignaturesandotherauthenticationprocedures;and

● promotingthedevelopmentofadequate,efficient,andeffectivealternatedisputeresolutionmechanismsforglobalcommercialtransactions.

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Theexpansionofglobalelectroniccommercealsodependsupontheparticipants,abilitytoachieveareasonabledegreeofcertaintyregardingtheirexposuretoliabilityforanydamageorinjurythatmightresultfromtheiractions.Inconsistentlocaltortlaws,coupledwithuncertaintiesregardingjurisdiction,couldsubstantiallyincreaselitigationandcreateunnecessarycoststhatultimatelywillbebornbyconsumers.TheU.S.shouldworkcloselywithothernationstoclarifyapplicablejurisdictionalrulesandtogenerallyfavorandenforcecontractprovisionsthatallowpartiestoselectsubstantiverulesgoverningliability. Finally,thedevelopmentofglobalelectroniccommerceprovidesanopportunitytocreatelegalrulesthatallowbusinessandconsumerstotakeadvantageofnewtechnologytostreamlineandautomatefunctionsnowaccomplishedmanually.Forexample,considerationshouldbegiventoestablishingelectronicregistries. TheDepartmentsofCommerceandStatewillcontinuetoorganizeU.S.participationintheseareaswithagoalofachievingsubstantiveinternationalagreementonmodellawwithinthenexttwoyears.NCCUSLandtheAmericanLawInstitute,workingwiththeAmericanBarAssociationandotherinterestedgroups,areurgedtocontinuetheirworktodevelopcomplementarydomesticandinternationalefforts. 4.INTELLECTUALPROPERTYPROTECTION CommerceontheInternetoftenwillinvolvethesaleandlicensingofintellectualproperty.Topromotethiscommerce,sellersmustknowthattheirintellectualpropertywillnotbestolenandbuyersmustknowthattheyareobtainingauthenticproducts. Internationalagreementsthatestablishclearandeffectivecopyright,patent,andtrademarkprotectionarethereforenecessarytopreventpiracyandfraud.Whiletechnology,suchasencryption,canhelpcombatpiracy,anadequateandeffectivelegalframeworkalsoisnecessarytodeterfraudandthetheftofintellectualproperty,andtoprovideeffectivelegalrecoursewhenthesecrimesoccur.IncreasedpubliceducationaboutintellectualpropertyintheinformationagewillalsocontributetothesuccessfulimplementationandgrowthoftheGII. Copyrights Thereareseveraltreatiesthatestablishinternationalnormsfortheprotectionofcopyrights,mostnotablytheBerneConventionfortheProtectionofLiteraryandArtisticWorks.Thesetreatieslinknearlyallmajortradingnationsandprovidethemwithameansofprotecting,undertheirownlaws,eachother'scopyrightedworksandsoundrecordings. InDecember1996,theWorldIntellectualPropertyOrganization(WIPO)updatedtheBerneConventionandprovidednewprotectionforperformersandproducersofsoundrecordingsbyadoptingtwonewtreaties.Thetwotreaties--theWIPOCopyrightTreatyandtheWIPO

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PerformancesandPhonogramsTreaty--willgreatlyfacilitatethecommercialapplicationsofonlinedigitalcommunicationsovertheGII. Bothtreatiesincludeprovisionsrelatingtotechnologicalprotection,copyrightmanagementinformation,andtherightofcommunicationtothepublic,allofwhichareindispensableforanefficientexerciseofrightsinthedigitalenvironment.TheU.S.Governmentrecognizesprivatesectoreffortstodevelopinternationalanddomesticstandardsintheseareas.TheAdministrationunderstandsthesensitivitiesassociatedwithcopyrightmanagementinformationandtechnologicalprotectionmeasures,andisworkingtotailorimplementinglegislationaccordingly. Bothtreatiesalsocontainprovisionsthatpermitnationstoprovideforexceptionstorightsincertaincasesthatdonotconflictwithanormalexploitationoftheworkanddonotunreasonablyprejudicethelegitimateinterestsoftheauthor(e.g.,"fairuse").TheseprovisionspermitmemberstocarryforwardandappropriatelyextendintothedigitalenvironmentlimitationsandexceptionsintheirnationallawswhichhavebeenconsideredacceptableundertheBerneConvention.Theseprovisionspermitmemberstodevisenewexceptionsandlimitationsthatareappropriateinthedigitalnetworkenvironment,butneitherreducenorextendthescopeofapplicabilityofthelimitationsandexceptionspermittedbytheBerneConvention. TheAdministrationisdraftinglegislationtoimplementthenewWIPOtreaties,andlooksforwardtoworkingwiththeSenateontheirratification. ThetwonewWIPOtreatiesdonotaddressissuesofonlineserviceproviderliability,leavingthemtobedeterminedbydomesticlegislation.TheAdministrationlooksforwardtoworkingwithCongressastheseissuesareaddressedandsupportseffortstoachieveanequitableandbalancedsolutionthatisagreeabletointerestedpartiesandconsistentwithinternationalcopyrightobligations. TheadoptionofthetwonewWIPOtreatiesrepresentstheattainmentofoneoftheAdministration'ssignificantintellectualpropertyobjectives.TheU.S.Governmentwillcontinuetoworkforappropriatecopyrightprotectionforworksdisseminatedelectronically.TheAdministration'scopyright-relatedobjectiveswillinclude:

● encouragingcountriestofullyandimmediatelyimplementtheobligationscontainedintheAgreementonTrade-RelatedAspectsofIntellectualProperty(TRIPS);

● seekingimmediateU.S.ratificationanddepositoftheinstrumentsofaccessiontothetwonewWIPOtreatiesandimplementationoftheobligationsinthesetreatiesinabalancedandappropriatewayassoonaspossible;

● encouragingothercountriestojointhetwonewWIPOtreatiesandtoimplementfullythetreatyobligationsassoonaspossible;and

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● ensuringthatU.S.tradingpartnersestablishlawsandregulationsthatprovideadequateandeffectiveprotectionforcopyrightedworks,includingmotionpictures,computersoftware,andsoundrecordings,disseminatedviatheGII,andthattheselawsandregulationsarefullyimplementedandactivelyenforced.

TheUnitedStateswillpursuetheseinternationalobjectivesthroughbilateraldiscussionsandmultilateraldiscussionsatWIPOandotherappropriateforaandwillencourageprivatesectorparticipationinthesediscussions. SuiGenerisProtectionofDatabases TheDecember1996WIPOConferenceinGenevadidnottakeupaproposedtreatytoprotectthenon-originalelementsofdatabases.Instead,theConferencecalledforameeting,subsequentlyheld,todiscusspreliminarystepstostudyproposalstoestablishsuigenerisdatabaseprotection. BasedonthebriefdiscussionofsuigenerisdatabaseprotectionthattookplacebeforeandduringtheDiplomaticConference,itisclearthatmorediscussionoftheneedforandthenatureofsuchprotectionisnecessarydomesticallyandinternationally. TheAdministrationwillseekadditionalinputfrom,amongothers,thescientific,library,andacademiccommunitiesandthecommercialsector,inordertodevelopU.S.policywithrespecttosuigenerisdatabaseprotection.

Patents DevelopmentoftheGIIwillbothdependuponandstimulateinnovationinmanyfieldsoftechnology,includingcomputersoftware,computerhardware,andtelecommunications.AneffectivelyfunctioningpatentsystemthatencouragesandprotectspatentableinnovationsinthesefieldsisimportantfortheoverallsuccessofcommerceovertheInternet.Consistentwiththisobjective,theU.S.PatentandTrademarkOffice(PTO)will(1)significantlyenhanceitscollaborationwiththeprivatesectortoassemblealarger,morecompletecollectionofpriorart(bothpatentandnon-patentpublications),andprovideitspatentexaminersbetteraccesstopriorartinGII-relatedtechnologies;(2)trainitspatentexaminersinGII-relatedtechnologiestoraiseandmaintaintheirleveloftechnicalexpertise;and(3)supportlegislativeproposalsforearlypublicationofpendingpatentapplications,particularlyinareasinvolvingfastmovingtechnology. Tocreateareliableenvironmentforelectroniccommerce,patentagreementsshould:

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● prohibitmembercountriesfromauthorizingpartiestoexploitpatentedinventionsrelatedtotheGIIwithoutthepatentowner'sauthority(i.e.,disapprovalofcompulsorylicensingofGII-relatedtechnologyexcepttoremedyapracticedeterminedafterjudicialoradministrativeprocesstobeanti-competitive);

● requiremembercountriestoprovideadequateandeffectiveprotectionforpatentablesubjectmatterimportanttothedevelopmentandsuccessoftheGII;and

● establishinternationalstandardsfordeterminingthevalidityofapatentclaim. TheUnitedStateswillpursuetheseobjectivesinternationally.OfficialsoftheEuropean,Japanese,andUnitedStatesPatentOfficesmeet,forexample,eachyeartofostercooperationonpatent-relatedissues.TheUnitedStateswillrecommendatthenextmeetingthataspecialcommitteebeestablishedwithinthenextyeartomakerecommendationsonGII-relatedpatentissues. Inaseparatevenue,onehundredcountriesandinternationalintergovernmentalorganizationsparticipateasmembersofWIPO'spermanentcommitteeonindustrialpropertyinformation(PCIPI).TheUnitedStateswillattempttoestablishaworkinggroupofthisorganizationtoaddressGII-relatedpatentissues.

TrademarkandDomainNames Trademarkrightsarenationalinscopeandconflictsmayarisewherethesameorsimilartrademarksforsimilargoodsorservicesareownedbydifferentpartiesindifferentcountries.Countriesmayalsoapplydifferentstandardsfordetermininginfringement. ConflictshavearisenontheGIIwherethirdpartieshaveregisteredInternetdomainnamesthatarethesameas,orsimilarto,registeredorcommonlawtrademarks.AnInternetdomainnamefunctionsasasourceidentifierontheInternet.Ordinarily,sourceidentifiers,likeaddresses,arenotprotectedintellectualproperty(i.e.,atrademark)perse.Theuseofdomainnamesassourceidentifiershasburgeoned,however,andcourtshavebeguntoattributeintellectualpropertyrightstothem,whilerecognizingthatmisuseofadomainnamecouldsignificantlyinfringe,dilute,andweakenvaluabletrademarkrights. Todate,conflictsbetweentrademarkrightsanddomainnameshavebeenresolvedthroughnegotiationsand/orlitigation.Itmaybepossibletocreateacontractuallybasedself-regulatoryregimethatdealswithpotentialconflictsbetweendomainnameusageandtrademarklawsonaglobalbasiswithouttheneedtolitigate.ThiscouldcreateamorestablebusinessenvironmentontheInternet.Accordingly,theUnitedStateswillsupporteffortsalreadyunderwaytocreatedomesticandinternationalforafordiscussionofInternet-relatedtrademarkissues.TheAdministrationalsoplanstoseekpublicinputontheresolutionoftrademarkdisputesinthecontextofdomainnames.

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Governanceofthedomainnamesystem(DNS)raisesotherimportantissuesunrelatedtointellectualproperty.TheAdministrationsupportsprivateeffortstoaddressInternetgovernanceissuesincludingthoserelatedtodomainnamesandhasformedaninteragencyworkinggroupundertheleadershipoftheDepartmentofCommercetostudyDNSissues.TheworkinggroupwillreviewvariousDNSproposals,consultingwithinterestedprivatesector,consumer,professional,congressionalandstategovernmentandinternationalgroups.Thegroupwillconsider,inlightofpublicinput,(1)whatcontributiongovernmentmightmake,ifany,tothedevelopmentofaglobalcompetitive,market-basedsystemtoregisterInternetdomainnames,and(2)howbesttofosterbottom-upgovernanceoftheInternet. 5.PRIVACY Americanstreasureprivacy,linkingittoourconceptofpersonalfreedomandwell-being.Unfortunately,theGII,sgreatpromise--thatitfacilitatesthecollection,re-use,andinstantaneoustransmissionofinformation--can,ifnotmanagedcarefully,diminishpersonalprivacy.Itisessential,therefore,toassurepersonalprivacyinthenetworkedenvironmentifpeoplearetofeelcomfortabledoingbusiness. Atthesametime,fundamentalandcherishedprinciplesliketheFirstAmendment,whichisanimportanthallmarkofAmericandemocracy,protectthefreeflowofinformation.CommerceontheGIIwillthriveonlyiftheprivacyrightsofindividualsarebalancedwiththebenefitsassociatedwiththefreeflowofinformation. InJuneof1995,thePrivacyWorkingGroupoftheUnitedStatesgovernmentInformationInfrastructureTaskForce(IITF)issuedareportentitled,PRIVACYANDTHENATIONALINFORMATIONINFRASTRUCTURE:PrinciplesforProvidingandUsingPersonalInformation.Thereportrecommendsasetofprinciples(the"PrivacyPrinciples")togovernthecollection,processing,storage,andre-useofpersonaldataintheinformationage. ThesePrivacyPrinciples,whichbuildontheOrganizationforEconomicCooperationandDevelopment'sGUIDELINESGOVERNINGTHEPROTECTIONOFPRIVACYANDTRANSBORDERDATAFLOWOFPERSONALDATAandincorporateprinciplesoffairinformationpractices,restonthefundamentalpreceptsofawarenessandchoice:

● Data-gatherersshouldinformconsumerswhatinformationtheyarecollecting,andhowtheyintendtousesuchdata;and

● Data-gatherersshouldprovideconsumerswithameaningfulwaytolimituseandre-useofpersonalinformation.

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Disclosurebydata-gatherersisdesignedtostimulatemarketresolutionofprivacyconcernsbyempoweringindividualstoobtainrelevantknowledgeaboutwhyinformationisbeingcollected,whattheinformationwillbeusedfor,whatstepswillbetakentoprotectthatinformation,theconsequencesofprovidingorwithholdinginformation,andanyrightsofredressthattheymayhave.Suchdisclosurewillenableconsumerstomakebetterjudgmentsaboutthelevelsofprivacyavailableandtheirwillingnesstoparticipate. Inaddition,thePrivacyPrinciplesidentifythreevaluestogovernthewayinwhichpersonalinformationisacquired,disclosedandusedonline--informationprivacy,informationintegrity,andinformationquality.First,anindividual'sreasonableexpectationofprivacyregardingaccesstoanduseof,hisorherpersonalinformationshouldbeassured.Second,personalinformationshouldnotbeimproperlyalteredordestroyed.And,third,personalinformationshouldbeaccurate,timely,complete,andrelevantforthepurposesforwhichitisprovidedandused. Undertheseprinciples,consumersareentitledtoredressiftheyareharmedbyimproperuseordisclosureofpersonalinformationorifdecisionsarebasedoninaccurate,outdated,incomplete,orirrelevantpersonalinformation. InApril,1997,theInformationPolicyCommitteeoftheIITFissuedadraftpaperentitledOptionsForPromotingPrivacyontheNationalInformationInfrastructure.ThepapersurveysinformationpracticesintheUnitedStatesandsolicitspubliccommentonthebestwaytoimplementthePrivacyPrinciples.TheIITFgoalistofindawaytobalancethecompetingvaluesofpersonalprivacyandthefreeflowofinformationinadigitaldemocraticsociety. Meanwhile,otherfederalagencieshavestudiedprivacyissuesinthecontextofspecificindustrysectors.InOctober1995,forexample,theNationalTelecommunicationsandInformationAdministration(NTIA)issuedareportentitledPrivacyandtheNII:SafeguardingTelecommunications-RelatedPersonalInformation.ItexplorestheapplicationofthePrivacyPrinciplesinthecontextoftelecommunicationsandonlineservicesandadvocatesavoluntaryframeworkbasedonnoticeandconsent.OnJanuary6,1997,theFTCissuedastaffreportentitledPublicWorkshoponConsumerPrivacyontheGlobalInformationInfrastructure.Thereport,whichfocusesonthedirectmarketingandadvertisingindustries,concludesthatnotice,choice,security,andaccessarerecognizedasnecessaryelementsoffairinformationpracticesonline.InJuneof1997,theFTCheldfourdaysofhearingsontechnologytoolsandindustryself-regulationregimesdesignedtoenhancepersonalprivacyontheInternet. TheAdministrationsupportsprivatesectoreffortsnowunderwaytoimplementmeaningful,consumer-friendly,self-regulatoryprivacyregimes.Theseincludemechanismsforfacilitatingawarenessandtheexerciseofchoiceonline,evaluatingprivatesectoradoptionofandadherencetofairinformationpractices,anddisputeresolution.

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TheAdministrationalsoanticipatesthattechnologywilloffersolutionstomanyprivacyconcernsintheonlineenvironment,includingtheappropriateuseofanonymity.Ifprivacyconcernsarenotaddressedbyindustrythroughself-regulationandtechnology,theAdministrationwillfaceincreasingpressuretoplayamoredirectroleinsafeguardingconsumerchoiceregardingprivacyonline. TheAdministrationisparticularlyconcernedabouttheuseofinformationgatheredfromchildren,whomaylackthecognitiveabilitytorecognizeandappreciateprivacyconcerns.Parentsshouldbeabletochoosewhetherornotpersonallyidentifiableinformationiscollectedfromorabouttheirchildren.Weurgeindustry,consumer,andchild-advocacygroupsworkingtogethertouseamixoftechnology,self-regulation,andeducationtoprovidesolutionstotheparticulardangersarisinginthisareaandtofacilitateparentalchoice.Thisproblemwarrantspromptattention.Otherwise,governmentactionmayberequired. Privacyconcernsarebeingraisedinmanycountriesaroundtheworld,andsomecountrieshaveenactedlaws,implementedindustryself-regulation,orinstitutedadministrativesolutionsdesignedtosafeguardtheircitizens'privacy.Disparatepoliciescouldemergethatmightdisrupttransborderdataflows.Forexample,theEuropeanUnion(EU)hasadoptedaDirectivethatprohibitsthetransferofpersonaldatatocountriesthat,initsview,donotextendadequateprivacyprotectiontoEUcitizens. ToensurethatdifferingprivacypoliciesaroundtheworlddonotimpedetheflowofdataontheInternet,theUnitedStateswillengageitskeytradingpartnersindiscussionstobuildsupportforindustry-developedsolutionstoprivacyproblemsandformarketdrivenmechanismstoassurecustomersatisfactionabouthowprivatedataishandled. TheUnitedStateswillcontinuepolicydiscussionswiththeEUnationsandtheEuropeanCommissiontoincreaseunderstandingabouttheU.S.approachtoprivacyandtoassurethatthecriteriatheyuseforevaluatingadequacyaresufficientlyflexibletoaccommodateourapproach.ThesediscussionsareledbytheDepartmentofCommerce,throughNTIA,andtheStateDepartment,andincludetheExecutiveOfficeofthePresident,theTreasuryDepartment,theFederalTradeCommission(FTC)andotherrelevantfederalagencies.NTIAisalsoworkingwiththeprivatesectortoassesstheimpactthattheimplementationoftheEUDirectivecouldhaveontheUnitedStates. TheUnitedStatesalsowillenterintoadialoguewithtradingpartnersontheseissuesthroughexistingbilateralforaaswellasthroughregionalforasuchastheAsiaPacificEconomicCooperation(APEC)forum,theSummitoftheAmericas,theNorthAmericanFreeTradeAgreement(NAFTA),andtheInter-AmericanTelecommunicationsCommission(CITEL)oftheOrganizationofAmericanStates,andbroadermultilateralorganizations.

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TheAdministrationconsidersdataprotectioncriticallyimportant.Webelievethatprivateeffortsofindustryworkingincooperationwithconsumergroupsarepreferabletogovernmentregulation,butifeffectiveprivacyprotectioncannotbeprovidedinthisway,wewillreevaluatethispolicy. 6.SECURITY TheGIImustbesecureandreliable.IfInternetusersdonothaveconfidencethattheircommunicationsanddataaresafefromunauthorizedaccessormodification,theywillbeunlikelytousetheInternetonaroutinebasisforcommerce.AsecureGIIrequires:

● (1)secureandreliabletelecommunicationsnetworks;● (2)effectivemeansforprotectingtheinformationsystemsattachedtothosenetworks;

(3)effectivemeansforauthenticatingandensuringconfidentialityofelectronicinformationtoprotectdatafromunauthorizeduse;and

● (4)welltrainedGIIuserswhounderstandhowtoprotecttheirsystemsandtheirdata. Thereisnosingle"magic"technologyortechniquethatcanensurethattheGIIwillbesecureandreliable.Accomplishingthatgoalrequiresarangeoftechnologies(encryption,authentication,passwordcontrols,firewalls,etc.)andeffective,consistentuseofthosetechnologies,allsupportedgloballybytrustworthykeyandsecuritymanagementinfrastructures. OfparticularimportanceisthedevelopmentoftrustedcertificationservicesthatsupportthedigitalsignaturesthatwillpermituserstoknowwhomtheyarecommunicatingwithontheInternet.Bothsignaturesandconfidentialityrelyontheuseofcryptographickeys.Topromotethegrowthofatrustedelectroniccommerceenvironment,theAdministrationisencouragingthedevelopmentofavoluntary,market-drivenkeymanagementinfrastructurethatwillsupportauthentication,integrity,andconfidentiality. Encryptionproductsprotecttheconfidentialityofstoreddataandelectroniccommunicationsbymakingthemunreadablewithoutadecryptionkey.Butstrongencryptionisadouble-edgedsword.Lawabidingcitizenscanusestrongencryptiontoprotecttheirtradesecretsandpersonalrecords.Butthosetradesecretsandpersonalrecordscouldbelostforeverifthedecryptkeyislost.Dependinguponthevalueoftheinformation,thelosscouldbequitesubstantial.Encryptioncanalsobeusedbycriminalsandterroriststoreducelawenforcementcapabilitiestoreadtheircommunications.Keyrecoverybasedencryptioncanhelpaddresssomeoftheseissues. Inpromotingrobustsecurityneededforelectroniccommerce,theAdministrationhasalreadytakenstepsthatwillenabletrustinencryptionandprovidethesafeguardsthatusersandsocietywillneed.TheAdministration,inpartnershipwithindustry,istakingstepstopromotethedevelopmentofmarket-drivenstandards,public-keymanagementinfrastructureservices

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andkeyrecoverableencryptionproducts.Additionally,theAdministrationhasliberalizedexportcontrolsforcommercialencryptionproductswhileprotectingpublicsafetyandnationalsecurityinterests. TheAdministrationisalsoworkingwithCongresstoensurelegislationisenactedthatwouldfacilitatedevelopmentofvoluntarykeymanagementinfrastructuresandwouldgovernthereleaseofrecoveryinformationtolawenforcementofficialspursuanttolawfulauthority. TheU.S.governmentwillworkinternationallytopromotedevelopmentofmarket-drivenkeymanagementinfrastructurewithkeyrecovery.Specifically,theU.S.hasworkedcloselywithintheOECDtodevelopinternationalguidelinesforencryptionpoliciesandwillcontinuetopromotethedevelopmentofpoliciestoprovideapredictableandsecureenvironmentforglobalelectroniccommerce.

III.MarketAccessIssues 7.TELECOMMUNICATIONSINFRASTRUCTUREANDINFORMATIONTECHNOLOGY Globalelectroniccommercedependsuponamodern,seamless,globaltelecommunicationsnetworkanduponthecomputersandinformationappliancesthatconnecttoit.Unfortunately,intoomanycountries,telecommunicationspoliciesarehinderingthedevelopmentofadvanceddigitalnetworks.Customersfindthattelecommunicationsservicesoftenaretooexpensive,bandwidthistoolimited,andservicesareunavailableorunreliable.Likewise,manycountriesmaintaintradebarrierstoimportedinformationtechnology,makingithardforbothmerchantsandcustomerstopurchasethecomputersandinformationsystemstheyneedtoparticipateinelectroniccommerce. Inordertospurtheremovalofbarriers,inMarch1994,VicePresidentGorespoketotheWorldTelecommunicationsDevelopmentConferenceinBuenosAires.HearticulatedseveralprinciplesthattheU.S.believesshouldbethefoundationforgovernmentpolicy,including:

● (1)encouragingprivatesectorinvestmentbyprivatizinggovernment-controlledtelecommunicationscompanies;

● (2)promotingandpreservingcompetitionbyintroducingcompetitiontomonopolyphonemarkets,ensuringinterconnectionatfairprices,openingmarketstoforeigninvestment,andenforcinganti-trustsafeguards;

● (3)guaranteeingopenaccesstonetworksonanon-discriminatorybasis,sothatGIIusershaveaccesstothebroadestrangeofinformationandservices;and

● (4)implementing,byanindependentregulator,pro-competitiveandflexibleregulationthatkeepspacewithtechnologicaldevelopment.

Domestically,theAdministrationrecognizesthattherearevariousconstraintsinthepresentnetworkthatmayimpedetheevolutionofservicesrequiringhigherbandwidth.Administration

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initiativesincludeInternetII,orNextGenerationInternet.Inaddition,theFCChasundertakenseveralinitiativesdesignedtostimulatebandwidthexpansion,especiallytoresidentialandsmall/homeofficecustomers. ThegoaloftheUnitedStateswillbetoensurethatonlineserviceproviderscanreachend-usersonreasonableandnondiscriminatorytermsandconditions.Genuinemarketopeningwillleadtoincreasedcompetition,improvedtelecommunicationsinfrastructures,morecustomerchoice,lowerpricesandincreasedandimprovedservices. Areasofconcerninclude:

● Leasedlines:Datanetworksofmostonlineserviceprovidersareconstructedwithleasedlinesthatmustbeobtainedfromnationaltelephonecompanies,oftenmonopoliesorgovernmentalentities.Intheabsenceofeffectivecompetition,telephonecompaniesmayimposeartificiallyinflatedleasedlinepricesandusagerestrictionsthatimpedetheprovisionofservicebyonlineserviceproviders.

● Localloopspricing:Toreachtheirsubscribers,onlineserviceprovidersoftenhavenochoicebuttopurchaselocalexchangeservicesfrommonopolyorgovernment-ownedtelephonecompanies.Theseservicesalsoareoftenpricedatexcessiverates,inflatingthecostofdataservicestocustomers.

● Interconnectionandunbundling:Onlineserviceprovidersmustbeabletointerconnectwiththenetworksofincumbenttelecommunicationcompaniessothatinformationcanpassseamlesslybetweenallusersofthenetwork.Monopoliesordominanttelephonecompaniesoftenpriceinterconnectionwellabovecost,andrefusetointerconnectbecauseofallegedconcernsaboutnetworkcompatibilityorabsenceofneedforotherproviders.

● Attachingequipmenttothenetwork:Overtheyears,sometelecommunicationprovidershaveusedtheirmonopolypowertorestricttheconnectionofcommunicationortechnologydevicestothenetwork.Evenwhenthemonopolyhasbeenbroken,ahostofunnecessaryburdensome"typeacceptance"practiceshavebeenusedtoretardcompetitionandmakeitdifficultforconsumerstoconnect.

● Internetvoiceandmultimedia:Officialsofsomenationsclaimthat"realtime"servicesprovidedovertheInternetare"likeservices"totraditionallyregulatedvoicetelephonyandbroadcasting,andthereforeshouldbesubjecttothesameregulatoryrestrictionsthatapplytothosetraditionalservices.Insomecountries,theseprovidersmustbelicensed,asawaytocontrolboththecarriageandcontentoffered.Suchanapproachcouldhinderthedevelopmentofnewtechnologiesandnewservices.

Inaddition,countrieshavedifferentlevelsoftelecommunicationsinfrastructuredevelopment,whichmayhindertheglobalprovisionanduseofsomeInternet-basedservices.TheAdministrationbelievesthattheintroductionofpoliciespromotingforeigninvestment,

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competition,regulatoryflexibilityandopenaccesswillsupportinfrastructuredevelopmentandthecreationofmoredata-friendlynetworks. Toaddresstheseissues,theAdministrationsuccessfullyconcludedtheWTOBasicTelecommunicationsnegotiations,whichwillensureglobalcompetitionintheprovisionofbasictelecommunicationservicesandwilladdressthemanyunderlyingissuesaffectingonlineserviceproviders.Duringthosenegotiations,theU.S.succeededinensuringthatnewregulatoryburdenswouldnotbeimposedupononlineserviceprovidersthatwouldstiflethedeploymentofnewtechnologiesandservices. AstheWTOAgreementisimplemented,theAdministrationwillseektoensurethatnewrulesofcompetitionintheglobalcommunicationsmarketplacewillbetechnologyneutralandwillnothinderthedevelopmentofelectroniccommerce.Inparticular,rulesforlicensingnewtechnologiesandnewservicesmustbesufficientlyflexibletoaccommodatethechangingneedsofconsumerswhileallowinggovernmentstoprotectimportantpublicinterestobjectiveslikeuniversalservice.Inthiscontext,rulestopromotesuchpublicinterestobjectivesshouldnotfalldisproportionatelyonanyonesegmentofthetelecommunicationsindustryoronnewentrants. TheAdministrationwillalsoseekeffectiveimplementationoftheInformationTechnologyAgreementconcludedbythemembersoftheWTOinMarch1997,whichisdesignedtoremovetariffsonalmostalltypesofinformationtechnology.Buildingonthissuccess,andwiththeencouragementofU.S.companies,theadministrationisdevelopingplansforITAII,inwhichitwilltoseektoremoveremainingtariffson,andexistingnon-tariffbarriersto,informationtechnologygoodsandservices.Inaddition,theAdministrationiscommittedtofindingotherwaystostreamlinerequirementstodemonstrateproductconformity,includingthroughMutualRecognitionAgreements(MRAS)thatcaneliminatetheneedforasingleproducttobecertifiedbydifferentstandardslaboratoriesacrossnationalborders. Bilateralexchangeswithindividualforeigngovernments,regionalforasuchasAPECandCITEL,andmultilateralforasuchastheOECDandITU,andvariousotherfora(i.e.internationalalliancesofprivatebusinesses,theInternationalOrganizationofStandardization[ISO],theInternationalElectrotechnicalCommission[IEC]),alsowillbeusedforinternationaldiscussionsontelecommunication-relatedInternetissuesandremovingtradebarriersthatinhibittheexportofinformationtechnology.Theseissuesincludethetermsandconditionsgoverningtheexchangeofonlinetraffic,addressing,andreliability.Inallfora,U.S.GovernmentpositionsthatmightinfluenceInternetpricing,servicedeliveryoptionsortechnicalstandardswillreflecttheprinciplesestablishedinthispaperandU.S.Governmentrepresentativeswillsurveytheworkoftheirstudygroupstoensurethatthisisthecase. Inaddition,manyInternetgovernanceissueswillbestbedealtwithbymeansofprivate,openstandardsprocessesandcontractsinvolvingparticipantsfrombothgovernmentandtheprivatesector.TheU.S.governmentwillsupportindustryinitiativesaimedatachievingtheimportantgoalsoutlinedinthispaper.

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8.CONTENT TheU.S.governmentsupportsthebroadestpossiblefreeflowofinformationacrossinternationalborders.ThisincludesmostinformationalmaterialnowaccessibleandtransmittedthroughtheInternet,includingthroughWorldWideWebpages,newsandotherinformationservices,virtualshoppingmalls,andentertainmentfeatures,suchasaudioandvideoproducts,andthearts.Thisprincipleextendstoinformationcreatedbycommercialenterprisesaswellasbyschools,libraries,governmentsandothernonprofitentities. Incontrasttotraditionalbroadcastmedia,theInternetpromisesusersgreateropportunitytoshieldthemselvesandtheirchildrenfromcontenttheydeemoffensiveorinappropriate.Newtechnology,forexample,mayenableparentstoblocktheirchildren'saccesstosensitiveinformationorconfinetheirchildrentopre-approvedwebsites. Totheextent,then,thateffectivefilteringtechnologybecomesavailable,contentregulationstraditionallyimposedonradioandtelevisionwouldnotneedtobeappliedtotheInternet.Infact,unnecessaryregulationcouldcripplethegrowthanddiversityoftheInternet. TheAdministrationthereforesupportsindustryself-regulation,adoptionofcompetingratingssystems,anddevelopmentofeasy-to-usetechnicalsolutions(e.g.,filteringtechnologiesandageverificationsystems)toassistinscreeninginformationonline. Therearefourpriorityareasofconcern:

● Regulationofcontent.CompanieswishingtodobusinessovertheInternet,andtoprovideaccesstotheInternet(includingU.S.onlineserviceproviderswithforeignaffiliatesorjointventures)areconcernedaboutliabilitybasedonthedifferentpoliciesofeverycountrythroughwhichtheirinformationmaytravel.

● CountriesthatareconsideringorhaveadoptedlawstorestrictaccesstocertaintypesofcontentthroughtheInternetemphasizedifferentconcernsasaresultofcultural,social,andpoliticaldifference.Thesedifferentlawscanimpedeelectroniccommerceintheglobalenvironment.

● TheAdministrationisconcernedaboutInternetregulationofthissort,andwilldevelopaninformaldialoguewithkeytradingpartnersonpublicpolicyissuessuchashatespeech,violence,sedition,pornographyandothercontenttoensurethatdifferencesinnationalregulation,especiallythoseundertakentofosterculturalidentity,donotserveasdisguisedtradebarriers.

● Foreigncontentquotas.Somecountriescurrentlyrequirethataspecificproportionoftraditionalbroadcasttransmissiontimebedevotedto"domesticallyproduced"content.ProblemscouldariseontheInternetifthedefinitionof"broadcasting"ischangedtoextendthesecurrentregulationsto"newservices."Countriesalsomightdecideto

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regulateInternetcontentandestablishrestrictionsunderadministrativeauthority,ratherthanunderbroadcastregulatorystructures.

● TheAdministrationwillpursueadialoguewithothernationsonhowtopromotecontentdiversity,includingculturalandlinguisticdiversity,withoutlimitingcontent.Thesediscussionscouldconsiderpromotionofculturalidentitythroughsubsidyprogramsthatrelysolelyongeneraltaxrevenuesandthatareimplementedinanondiscriminatorymanner.

● Regulationofadvertising.Advertisingwillallowthenewinteractivemediatooffermoreaffordableproductsandservicestoawider,globalaudience.Somecountriesstringentlyrestrictthelanguage,amount,frequency,duration,andtypeoftele-shoppingandadvertisingspotsusedbyadvertisers.Inprinciple,theUnitedStatesdoesnotfavorsuchregulations.Whilerecognizinglegitimateculturalandsocialconcerns,theseconcernsshouldnotbeinvokedtojustifyunnecessarilyburdensomeregulationoftheInternet.

● Therearelawsinmanycountriesaroundtheworldthatrequiresupportforadvertisingclaims.Advertisingindustryself-regulationalsoexistsinmanycountriesaroundtheglobe.Truthfulandaccurateadvertisingshouldbethecornerstoneofadvertisingonallmedia,includingtheInternet.

● Astrongbodyofcognitiveandbehavioralresearchdemonstratesthatchildrenareparticularlyvulnerabletoadvertising.Asaresult,theU.S.haswellestablishedrules(self-regulatoryandotherwise)forprotectingchildrenfromcertainharmfuladvertisingpractices.TheAdministrationwillworkwithindustryandchildrensadvocatestoensurethattheseprotectionsaretranslatedtoandimplementedappropriatelyintheonlinemediaenvironment.

● Therulesofthe"country-of-origin"shouldserveasthebasisforcontrollingInternetadvertisingtoalleviatenationallegislativeroadblocksandtradebarriers.

● Regulationtopreventfraud.Recently,therehavebeenanumberofcaseswherefraudulentinformationoncompaniesandtheirstocks,andphonyinvestmentschemeshavebeenbroadcastontheInternet.Theappropriatefederalagencies(i.e.,FederalTradeCommissionandtheSecuritiesandExchangeCommission)aredeterminingwhethernewregulationsareneededtopreventfraudovertheInternet.

● InordertorealizethecommercialandculturalpotentialoftheInternet,consumersmusthaveconfidencethatthegoodsandservicesofferedarefairlyrepresented,thattheywillgetwhattheypayfor,andthatrecourseorredresswillbeavailableiftheydonot.Thisisanareawheregovernmentactionisappropriate.

TheAdministrationwillexploreopportunitiesforinternationalcooperationtoprotectconsumersandtoprosecutefalse,deceptive,andfraudulentcommercialpracticesincyberspace. FederalagenciessuchastheDepartmentofState,U.S.TradeRepresentative(USTR),theCommerceDepartment(NTIA),theFTC,theOfficeofConsumerAffairsandothershavealreadyengagedineffortstopromotesuchpositions,throughbothbilateralandmultilateralchannels,

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includingthroughtheOECD,theG-7InformationSocietyandDevelopmentConference,theLatinAmericanTelecommunicationsSummits,andtheSummitoftheAmericasprocess,aswellasAPECTelecommunicationsMinisterials.Allagenciesparticipatinginsuchforawillfocusonpragmaticsolutionsbasedupontheprinciplesinthispapertoissuesrelatedtocontentcontrol. 9.TECHNICALSTANDARDS StandardsarecriticaltothelongtermcommercialsuccessoftheInternetastheycanallowproductsandservicesfromdifferentvendorstoworktogether.Theyalsoencouragecompetitionandreduceuncertaintyintheglobalmarketplace.Prematurestandardization,however,can"lockin"outdatedtechnology.Standardsalsocanbeemployedasdefactonon-tarifftradebarriers,to"lockout"non-indigenousbusinessesfromaparticularnationalmarket. TheUnitedStatesbelievesthatthemarketplace,notgovernments,shoulddeterminetechnicalstandardsandothermechanismsforinteroperability.TechnologyismovingrapidlyandgovernmentattemptstoestablishtechnicalstandardstogoverntheInternetwouldonlyriskinhibitingtechnologicalinnovation.TheUnitedStatesconsidersitunwiseandunnecessaryforgovernmentstomandatestandardsforelectroniccommerce.Rather,weurgeindustrydrivenmultilateralforatoconsidertechnicalstandardsinthisarea. ToensurethegrowthofglobalelectroniccommerceovertheInternet,standardswillbeneededtoassurereliability,interoperability,easeofuseandscalabilityinareassuchas:

● electronicpayments;● security(confidentiality,authentication,dataintegrity,accesscontrol,non-repudiation);● securityservicesinfrastructure(e.g.,publickeycertificateauthorities);● electroniccopyrightmanagementsystems;● videoanddata-conferencing;● high-speednetworktechnologies(e.g.,AsynchronousTransferMode,Synchronous

DigitalHierarchy);and● digitalobjectanddatainterchange.

ThereneednotbeonestandardforeveryproductorserviceassociatedwiththeGII,andtechnicalstandardsneednotbemandated.Insomecases,multiplestandardswillcompeteformarketplaceacceptance.Inothercases,differentstandardswillbeusedindifferentcircumstances. TheprevalenceofvoluntarystandardsontheInternet,andthemedium'sconsensus-basedprocessofstandardsdevelopmentandacceptancearestimulatingitsrapidgrowth.Thesestandardsflourishbecauseofanon-bureaucraticsystemofdevelopmentmanagedbytechnicalpractitionersworkingthroughvariousorganizations.Theseorganizationsrequiredemonstrateddeploymentofsystemsincorporatingagivenstandardpriortoformalacceptance,buttheprocessfacilitatesrapiddeploymentofstandardsandcanaccommodateevolvingstandardsas

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well.Onlyahandfulofcountriesallowprivatesectorstandardsdevelopment;mostrelyongovernment-mandatedsolutions,causingthesenationstofallbehindthetechnologicalcuttingedgeandcreatingnon-tarifftradebarriers. Numerousprivatesectorbodieshavecontributedtotheprocessofdevelopingvoluntarystandardsthatpromoteinteroperability.TheUnitedStateshasencouragedthedevelopmentofvoluntarystandardsthroughprivatestandardsorganizations,consortia,testbedsandR&Dactivities.TheU.S.governmentalsohasadoptedasetofprinciplestopromoteacceptanceofdomesticandinternationalvoluntarystandards. Whilenoformalgovernment-sponsorednegotiationsarecalledforatthistime,theUnitedStateswillusevariousfora(i.e.,internationalalliancesofprivatebusinesses,theInternationalOrganizationforStandardization[ISO],theInternationalElectrotechnicalCommission[IEC],InternationalTelecommunicationsUnion[ITU],etc.)todiscouragetheuseofstandardstoerectbarrierstofreetradeonthedevelopingGII.Theprivatesectorshouldassertgloballeadershiptoaddressstandardssettingneeds.TheUnitedStateswillworkthroughintergovernmentalorganizationsasneededtomonitorandsupportprivatesectorleadership.

ACOORDINATEDSTRATEGY Thesuccessofelectroniccommercewillrequireaneffectivepartnershipbetweentheprivateandpublicsectors,withtheprivatesectorinthelead.Governmentparticipationmustbecoherentandcautious,avoidingthecontradictionsandconfusionsthatcansometimesarisewhendifferentgovernmentalagenciesindividuallyassertauthoritytoovigorouslyandoperatewithoutcoordination. Thevarietyofissuesbeingraised,theinteractionamongthem,andthedisparateforainwhichtheyarebeingaddressedwillnecessitateacoordinated,targetedgovernmentalapproachtoavoidinefficienciesandduplicationindevelopingandreviewingpolicy. Aninteragencyteamwillcontinuetomeetinordertomonitorprogressandupdatethisstrategyaseventsunfold.Sufficientresourceswillbecommittedtoallowrapidandeffectivepolicyimplementation. Theprocessoffurtherdevelopingandimplementingthestrategysetforthinthispaperisasimportantasthecontentofthepaperitself.TheU.S.Governmentwillconsultopenlyandoften,withgroupsrepresentingindustry,consumersandInternetusers,Congress,stateandlocalgovernments,foreigngovernments,andinternationalorganizationsasweseektoupdateandimplementthispaperinthecomingyears. PrivatesectorleadershipaccountsfortheexplosivegrowthoftheInternettoday,andthesuccessofelectroniccommercewilldependoncontinuedprivatesectorleadership.Accordingly,

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theAdministrationalsowillencouragethecreationofprivateforatotaketheleadinareasrequiringself-regulationsuchasprivacy,contentratings,andconsumerprotectionandinareassuchasstandardsdevelopment,commercialcode,andfosteringinteroperability. Thestrategyoutlinedinthispaperwillbeupdatedandnewreleaseswillbeissuedaschangesintechnologyandthemarketplaceteachusmoreabouthowtosettheoptimalenvironmentinwhichelectroniccommerceandcommunitycanflourish. ThereisagreatopportunityforcommercialactivityontheInternet.Iftheprivatesectorandgovernmentsactappropriately,thisopportunitycanberealizedforthebenefitofallpeople. AFrameworkForGlobalElectronicCommerce PresidentWilliamJ.Clinton VicePresidentAlbertGore,Jr. Washington,D.C.