23 June 1998
Source: http://www.usia.gov/current/news/latest/98062301.clt.html?/products/washfile/newsitem.shtml

USIS Washington File

23 June 1998


(He takes issue with European proposals)  (2010)

Washington -- Secretary of Commerce William Daley has criticized a
European Union proposal for adoption of an international charter on
electronic commerce.

In June 22 remarks to a World Congress on Information Technologies
meeting in Virginia, Daley said that earlier that day he discussed the
proposal with EU Commissioner Martin Bangemann.

"It has a lot of problems," Daley said. "It introduces top-down
mandates for more government solutions -- rather than letting industry
and the market lead."

The place to address electronic commerce issues, he said, is an
"E-Commerce" ministerial-level meeting scheduled by the Organization
for Economic Cooperation and Development (OECD) in October in Ottawa.

Daley said also he has a concern about European proposals for detailed
laws on conducting electronic commerce, including authentication of

"My concern is we don't know enough about how this market will develop
to know what these laws should be," he said.

He said he hopes United Nations members will embrace instead a U.S.
proposal for an international convention that would remove paper-based
obstacles to transactions done electronically and empower parties to
enter into legally enforceable cross-border transactions.

Following is the text of Daley's remarks as prepared for delivery:

(begin text)

Remarks by Secretary of Commerce William M. Daley
World Congress on Information Technologies
Fairfax County, Virginia
June 22, 1998

(As prepared for delivery)

My assignment is to talk about the U.S. market. That is a pleasant
assignment because we have a very healthy economy. Since President
Clinton has been in office 16 million jobs have been created. We have
the lowest unemployment rate in 28 years and the smallest federal
government in 35 years.

I spoke to our summer interns recently, and the fact is the last time
our country had a budget surplus, I was a summer intern.

I know some of our international visitors are surprised by our
economy's strength. We made it stronger by taking the hard medicine of
downsizing and cutting programs, and the patient got better. We
followed the economic rules for once, and the market decided we were

But much of the credit goes to you. Pick up Business Week or Fortune
-- and all they write about is how the digital economy is on fire, how
the Internet will change every business and industry in America.
Graduates of this university will probably start their new businesses
with a web site rather than by leasing an office.

I brought some charts to illustrate this point.

In the last five years, information technologies have been responsible
for more than one-quarter of real economic growth. Let me repeat that:
During this economy, more than one-quarter of the growth has come from
information technologies. I thank you for that.

Next, as you can see, this industry now makes up more than 8 percent
of our economy. That is twice as much as it was 20 years ago.

Next, these investments in information technologies account for 45
percent of all business equipment investment -- up from 3 percent in
the 1960s. In industries like communications, insurance, and brokerage
houses, they constitute over three-quarters of all equipment bought.

Next, declining prices of information technology products have lowered
overall inflation by one full percentage point. Let me point out how
significant this is: The inflation rate is about as low as it's been
in 30 years.

Finally, on the last chart, notice how well these jobs pay: 64 percent
more than the average private sector job. The average information
technology worker earns close to $46,000 annually.

Now, almost a year ago, President Clinton and Vice President Gore
asked me to see how we should move forward on electronic commerce. The
President does not want government doing anything that would mess up
all of this success. So, in the last year, our approach has been: The
private sector should lead.

But, frankly, it also is government's duty to make sure companies
behave right. We have to protect the consumer. We have to protect
children. Companies that don't understand that are short sighted.

I owe the President a report next month on our progress.

Time is running out. And things could still happen that would affect
my decisions -- positive things, I hope. So, I don't want to prejudge
what I will tell the President. But let me review some areas we have
worked on.

First, privacy -- the make or break issue. If consumers feel when they
order a plane ticket or buy a stock that their transactions are being
shared with others, then I say it will be the last time they do
business on the Internet.

Tomorrow, we are holding a summit on this issue. We will take stock of
where we are. I will lay out some markers. Al Westin and the Harris
organization will release a poll demonstrating -- once again -- how
worried Americans are.

Frankly, I've expressed concerns recently that industry is moving too
slowly. The Summit is an opportunity for industry to show us their

Just this morning, I met with members of the Privacy Alliance. They
represent 50 companies and associations. We will be closely looking
over their proposal in the next few days.

But on first impressions, what I like is, the Alliance paid special
attention to children's privacy. They agreed no information may be
collected from a child under 13 without parental consent. And they
agreed consumers could opt out of any use of their personal data.

This morning, they informed me they need until September 15th to
develop an enforcement proposal. Frankly, I'm disappointed I have to
wait another day to hear how the industry plans to police itself. I
told them that articulating principles isn't adequate -- there has to
be a way to enforce this that the consumer can trust, or this won't
work. They agreed.

So, all in all, it was a good step forward. Many more steps will need
to be taken. At the Summit tomorrow, we'll hear what others are doing.
For example, I understand that the Better Business Bureau is
announcing a privacy program today. And I understand that TRUSTe,
which has very good enforcement, is adopting strong privacy principles
as well.

Second, I am obviously concerned about adequate protection of
intellectual property on-line. It is incredible to think one day
people with a computer may download every song ever sung, every movie
ever made, every creative work ever created. And they can do it
without owing a penny to the talent behind the works.

We negotiated two treaties that set international standards for
protecting copyrighted works, musical performances, and sound
recordings. They lay down the rules of the road.

The Senate recently passed the implementing legislation -- by a 99 to
[text missing in original]

Third, I am concerned we need standards for authenticating
transactions done over the Internet. How can you be sure who the
sender of the e-mail message really is? Or how can you be sure some
third party didn't change the message? Companies need to know the
person doing the buying is really that person.

The technologies for solving this problem are available -- and
multiplying. What people need is a predictable legal framework. Some,
particularly our friends in Europe, want detailed laws. My concern is
we don't know enough about how this market will develop to know what
these laws should be.

So, we proposed an international convention that would remove
paper-based obstacles to transactions done electronically. And it
would empower parties to enter into legally enforceable cross-border
transactions. We hope other countries will agree to pursue this effort
in the United Nations later this month.

Fourth, I have another concern with my European colleagues.

In February, the European Commission proposed governments adopt an
International Charter to set a framework for coordinating global
communications, particularly electronic commerce.

The proposal was thought provoking. This morning I am pleased to have
discussed it with Commissioner Bangemann. But to be frank, it has a
lot of problems. It introduces top-down mandates for more government
solutions -- rather than letting industry and the market lead.

I think we already have enough places to coordinate international
activities. We have the international standards bodies, the OECD, the
United Nations. What we need is industry more actively supporting
these organizations, not a new one.

In October, the OECD will convene the Ottawa E-Commerce Ministerial.
Here is the place to address issues on taxation, privacy, and the
impact of e-commerce on the global economy.

Fifth, recently I have spoken out about our government's encryption
policy. I clearly support President Clinton's goal. He wants to
balance law enforcement, national security, privacy, and commercial
interests. But for too long, we were unable to agree on how to reach
that balance.

Over the last two months, we have been working constructively with
industry, privacy, and law enforcement leaders to find a balanced

I was very pleased Attorney General Reno and FBI Director Freeh
recently met with the industry leaders to try to move this forward.
Industry and law enforcement need to work hard together to find
solutions that meet the needs of law enforcement and national
security. I hope we can achieve an agreement by this fall.

Sixth, earlier this month, we announced we will end federal
involvement in Internet addressing. We are putting it where it should
be: in private hands. We hope by October a new corporation, formed by
the private sector,will be up and running. And by 2000, they'll assume
full responsibility and we'll be retired.

Seventh, as a side-effect of our strong economy, we have an
interesting opportunity: There are more computer jobs than people with
the skills to fill them. We will require 1.3 million new information
technology workers over 10 years.

My view is government can shine a spotlight on the problem. But, once
again, I think businesses have to take this on. They need to help
people make the shift into changing jobs. They need to work together
to retrain workers. They need to work more closely with leading
universities,like George Mason.

When CEOs are faced with turning away business because they cannot
find the right people, I find they are serious about changing.

Eighth, and finally, the President wants to better protect our
computers against cyber attackers -- whether they are organized
criminals, insiders, or hackers. Last month, the President created a
Critical Infrastructure Assurance Office.

This is not like a battle, where soldiers control the field. Ninety
percent of our computer infrastructure is in private sector hands. So,
once again, I hope you will take an active role. And the Commerce
Department -- and I personally -- will play a leading role in working
with you.

I have talked about many initiatives today. And there are more. We are
working to eliminate tariffs and to keep the Internet duty free. We
are supporting private-sector development of technical standards.

Our researchers are helping industry improve the compatibility of
technologies and helping develop the next generation Internet.

And let me say, at Commerce, I believe we have carried the industry's
case on privacy, on worker shortage, on Internet addresses, on issue
after issue. To be honest, I have taken some hits for that.

There are people who think industry has been dancing around, avoiding
the real issues, buying time -- and government should step up to the

But bad laws slow innovation. Anybody who knows Washington knows if
there's a problem, it is better fixed by entrepreneurs, rather than
legislators. So, I say one last time, if you want me to keep our heavy
hand out, industry must be a leader, and a real leader.

The clock is ticking. Real soon, I report to the President, who
reports to the American people. I sincerely hope industry steps up to
the plate.

(end text)