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A European Initiative in
Electronic Commerce

Communication to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions

Executive Summary
I - The Electronic Commerce Revolution
II - Ensuring Access to the Global Marketplace
III - Creating a Favourable Regulatory Framework
IV - Promoting a Favourable Business Environment

Promoting a favourable business environment

A further challenge facing the European Union lies in achieving the widespread adoption of electronic commerce by consumers, businesses, and public administrations. The awareness and confidence of consumers and businesses needs to be enhanced, and support is needed for the development of relevant skills and widespread network literacy. SMEs, in particular, need to be encouraged to adopt new business methods, techniques and innovations. Public administrations have an important role to play by adopting a favourable attitude to electronic commerce.

Consumers: creating awareness and confidence

62. Consumers have much to gain from electronic commerce when they buy goods and services from their own homes: a wider choice, easier and more comprehensive pre-purchase information, and potentially lower prices. The Commission has already indicated in its three-year action plan on priorities for consumer policy (1996-1998) the potential benefits which the development of the Information Society will bring to consumers.

The Commission will prepare a Communication on the consumer dimension of the Information Society which will aim to promote consumer access to the Information Society, including new consumer skills which will require special education and training.

63. Consumers need to have confidence in the electronic commerce process itself. "Hard trust" in electronic commerce, through the use of secure technologies, needs to be complemented by "psychological trust". Industry, trade and consumer organisations need to work together to boost this by the use, for example, of quality labels; by issuing comparative reports (the European ConsumerNet project is an example of such a service); or by the endorsement of new services by trusted commercial brand names [37] such as banks, credit card companies, or network operators.

Trust can also be encouraged by increasing the transparency of transactions (for example, concerning the identity, origin and liability of the supplier), keeping to a minimum the personal data required from the consumer, and by making clear the legal status of any information provided. Industry can also increase the level of trust by adopting and abiding by codes of conduct. Ideally, labelling and codes of conduct would need to be applied at a European or global level to win mass acceptance amongst consumers and businesses and avoid the creation of new barriers. The Commission encourages the creation of widely accepted quality labels and codes of conduct to increase trust and confidence in electronic commerce.

64. For consumers, the use of the Euro and electronic commerce should simplify and lower the cost of transactions. The Commission will therefore encourage pilot work on quality labels for electronic payments in the future. This could guarantee that the electronic payment service meets a set of minimum quality criteria (e.g. dual display of prices plus automatic conversion between Euro and national currencies without surcharge). The financial industry, consumer representatives and public authorities would together define these criteria. Quality labels could also be applied to electronic purses and other existing payment instruments, such as debit and credit cards.

Business: creating awareness and encouraging best practice

65. Small businesses need to understand the potential benefits of electronic commerce in terms of cost savings, opening up of new markets and opportunities for new products and services. Awareness actions will build on the insights gained through the Commission's Commerce 2000 pilot programme, the consultation process on the Green Paper on Commerce and in the G7 context, and will take into account the limited resources available to SMEs for staff training. They will aim to encourage industrial organisations and associations to publicise case studies, disseminate training materials and use electronic commerce themselves. This could involve chambers of commerce, industry groupings at local, national and European level, technology promotion associations, and groups of SMEs, as well as partnership programmes (such as Europartenariat and Interprise).

The Euro-Info Centres network will undertake, in the context of the Multi-annual Programme for SMEs [38], specific initiatives to increase the exposure of companies, in particular SMEs, to electronic commerce techniques. Following the completion of the consultation on the Green Paper on Commerce and Distribution [39], a work-programme will be launched by the end of 1997, including electronic commerce actions for the retail and distribution sector to respond to user requirements. Awareness promotion will furthermore be pursued through the G7 project Global Marketplace for SMEs building amongst others upon the first annual conference of this project in April 1997 which addressed many of the issues that directly concern SMEs and policy-makers in global electronic commerce. The use and development of standards to facilitate international product sourcing will also be promoted.

66. Best-practice pilot projects play an important role in raising awareness. Pilot projects can be designed, for example, to test business innovations and examine their compatibility with existing legal and fiscal environments. They can also contribute to the analysis of structural changes in and across sectors and of the impact on employment. SMEs often lack the resources to try out new applications individually. Pilot projects typically develop business models that take full account of Europe's multilingual and multicultural character and the particular preferences of European consumers and businesses.

The Commission will increase support for best practice pilots and will extend large-scale awareness and take-up actions to promote business innovation across a wide range of market sectors, such as retail, food and agribusiness, electro-mechanical engineering, shoes, textiles, publishing, and tourism. Relevant programmes for these actions such as R&D programmes in information technologies and structural funds will be exploited to the full. Where appropriate, European coordination structures will be set up. The Commission encourages private sector initiatives to stimulate just-in-time business-to-business markets for accounting, invoicing, and settlement flows, to facilitate the adoption of integrated financial management software [40] and to reduce cross-border payment periods in commercial transactions.

Public administrations: promoting a more pro-active public sector

67. The public sector has an important role to play in the promotion of electronic commerce. Administrative formalities and requirements, as well as the services provided by the public sector, form part of day-to-day business. 70% of the data handled by administrations originates in industry. Areas where electronic support could be applied include customs and taxes, social security, employment services, public registries and public procurement. Organisational (and possibly regulatory changes) may be required for the effective introduction of electronic commerce in business-public administration relationships. The Commission will launch benchmarking initiatives (studies, pilot projects) to learn from practical experience of public administrations and to identify specific European needs, including requirements for interoperability at European level.

68. Under the present IDA programme, trans-European networks for administrations are being introduced. They will involve commercially available technical solutions whilst interoperability issues will need to be considered by both public administrations and the private sector. The Commission will issue guidelines to identify projects of common interest and implement measures to ensure the interoperability of networks.

69. The Member States themselves should confirm their confidence in electronic commerce by using it themselves at the various levels of public administration. This would act as a catalyst on the market as a whole. The most exemplary action will be for public administrations to use electronic commerce for their own purchases. Public procurement represents a large part of the economy (some 12% of EU GDP). Administrations could not only realise considerable potential savings [41] for their tax-payers, but their actions would also speak louder than words.

Bringing together the experiences of the SIMAP public procurement project, the results of related projects funded under research and development programmes, and responses to the Green Paper on Public Procurement, the Commission will present a strategy paper later this year, together with an action plan to stimulate the development of electronic procurement. The paper will identify any measures that need to be taken to ensure that electronic commerce improves transparency, ensures non-discrimination and does not create new barriers to openness in public procurement markets. The Commission will examine to what extent existing public procurement directives need review in order to facilitate the use of electronic commerce and simplify or reduce any administrative requirement or procedure that is unnecessary in the new electronic environment.

70. The Commission will step up its own efforts to be a major user of electronic commerce. The Commission has already piloted the electronic submission of proposals in the ACTS and Esprit R&D programmes, and has made use of an Internet forum to encourage interactive response and comment to the Public Procurement Green Paper. The Commission will make more extensive use of "virtual" discussions to stimulate public debate on Community policy [42]. Links with its agencies and Member State administrations and the general public will also be developed further. The Commission will present an Action Plan for its use of electronic commerce by the end of 1997.

Putting electronic commerce at the service of the citizen

71. Electronic commerce is the Information Society in practice. However, as the Information Society Forum has pointed out in its first annual report, "neither our people nor our institutions nor most of our companies are really prepared for the new technologies". The Forum emphasised the need for better education in the use of the new technologies, next to other key issues such as awareness creation and readiness by governments and public authorities to assume their responsibilities. Electronic commerce requires new skills for network literacy. Consumers will need to become familiar with information technology for communicating and ordering goods and services electronically. The basis for such skills should already be laid in primary and secondary schools. Employees and managers, especially in SMEs, may have to get used to doing business internationally instead of in a national or regional market place and will require retraining to this end. As the Forum expressed clearly, the Information Society will be a Lifelong Learning Society.

The Commission will supplement policies at regional and national levels to improve skills. Regarding consumers, the above mentioned Communication on the consumer dimension of the Information Society will address this. Regarding employee skills vocational (re-)training to help adapt to industrial change is foreseen, e.g. in the context of the Socrates and Leonardo programmes, and the Action Plan "Learning in the Information Society", as well as pursued by the ADAPT-BIS programme and the activities of the European Social Fund's "Objective 4". Furthermore a Euromanagement Programme will be initiated to promote greater understanding of electronic commerce amongst management in SMEs.

72. Finally, the Information Society Forum as well as the High-Level Expert Group on Social Aspects in the Information Society have stressed the need for public and widespread participation in the evolving Information Society, to avoid the risk of creating classes of information 'have-nots' and 'want-nots'. While the Commission expects that electronic commerce will have a profound impact on businesses, institutions and upon our lives as consumers and employees, it is not self-evident how exactly electronic commerce will and should develop in Europe. A broad and continued societal dialogue about these questions is essential to overcome the hurdles and reap the benefits. In this context, the Commission particularly welcomes collaboration at European level between industry and consumer groupings and their members to stimulate the necessary private-public dialogue and to support the implementation of the actions of this Initiative. As part of this Initiative, the Commission will actively stimulate the public debate on electronic commerce in Europe.

[37] Trade associations and Better Business Bureaux already grant "labels" and "accreditations", which can be certified electronically, to new cyber-firms.

[38] COM(96)98 final

[39] COM(96)5 final

[40] The estimated cost savings achievable by introducing integrated 'just in time' financial management is estimated to be 2-3% of of a company's turnover. It should also be possible to reduce cross-border payment periods significantly from the current average of two weeks.

[41] The Swedish Association of Local Authorities has estimated that savings of 3% of the procurement budget could be achieved through the use of electronic commerce.

[42] Recently a successful public debate was held with Commissioner Oreja, via the Internet, on the Intergovernmental Conference.

Executive Summary
I - The Electronic Commerce Revolution
II - Ensuring Access to the Global Marketplace
III - Creating a Favourable Regulatory Framework
IV - Promoting a Favourable Business Environment

This document is located at http://www.cordis.lu/esprit/src/ecomcom4.htm
It was last updated on 16 April 1997 by esprit@dg3.cec.be