Client Alert

EU E-Commerce Alert

5/1/1999

Electronic Commerce Directive 
Electronic Signatures Directive
Data Protection
World Trade Organization (WTO)
Distance Selling of Financial Services
Taxation
European Institution News

Electronic Commerce Directive

On April 22, the Legal Affairs Committee (LAC) of the European Parliament under Rapporteur Christine Oddy adopted various amendments to the "Proposal for a Directive on certain legal aspects of electronic commerce in the internal market" (the "e-commerce directive"). The vote was not well received by industry, although many companies were relieved that the "country of origin"-principle of Article 3 survived the vote intact and, with regard to the exclusions, was even improved. However, the telecommunications companies and Internet Service Providers were very unhappy with the LAC's amendments relating to liability. These amendments would increase the monitoring obligations on telcos and reduce the scope of applicability of the limitations on their liability contained in Articles 12 to 15 of the proposal.

Electronic Signatures Directive

As expected, the EU Telecommunications Ministers at their meeting on April 22 adopted a Common Position on the draft Directive aimed at facilitating the use of electronic signatures while guaranteeing their legal recognition throughout the European Union. The Common Position now will be forwarded to the Parliament for a second reading under the co-decision procedure, and it is unclear what, if any, further changes will be requested by the Parliament. Due to elections in June, voting on the Common Position text will most likely take place between September and November, and after it is adopted, probably in late 1999, the Member States will have 18 months to implement it into national law.

Data Protection

On April 19, the US Department of Commerce published the latest draft of "Safe Harbor Principles" that are designed to solve the continuing dispute between the US and the EU regarding the transfer of personal data to the US, and ensure that the US is found to have an "equivalent level" of data protection under the EU Data Protection Directive. (The draft can be found at http://www.ita.doc.gov/ecom/shprin.html.) The new draft reflects intensive ongoing discussions in Washington D.C. and Brussels over the last few months between the US and the EU. In private discussions the US government has recently stated that its intention is to reach an agreement in principle with the EU over the safe harbor principles by mid-May, and then to have a formal agreement signed at the G-8 summit in Berlin on June 21. At the same time, EU officials seem less optimistic that the US government's time goals can be reached.

World Trade Organization (WTO)

A High Level Symposium on Trade and Development was held at WTO headquarters in Geneva in mid-March, which included consideration of e-commerce topics, and was attended by a number of e-commerce policy organizations. A number of topics were discussed, including classification of electronic transactions as goods or services, and jurisdiction for the collection of tariff duties. There will be a meeting of the WTO in Seattle in the fall at which these issues will also be considered. On March 31 the Council for Trade in Services published an Interim Report on the Work Programme on Electronic Commerce, addressed to the General Council of the WTO. This report will be used by the General Council to draft recommendations on how the WTO should address the issue of electronic commerce.

Distance Selling of Financial Services

On April 13 the Parliament's Consumer Council held an initial policy debate on the draft Directive presented by the Commission in October 1998. The Directive is aimed at establishing a harmonized framework for banking, insurance and investment services marketed at a distance, whether by telephone, electronically or by post, in order to guarantee consumers a high level of protection and establish a genuine single market for financial services. The debate resulted in a majority position favoring minimum harmonization, so that Member States wishing to go further than Community legislation would have sufficient room to maneuver.

Taxation

The EU Committee of the American Chamber of Commerce in Belgium held a seminar on "Electronic Commerce Taxation" in Brussels on April 28, at which a number of European government officials gave an overview of regulatory developments regarding this topic. An official from Directorate General XXI (Taxation and Customs Union) of the European Commission reiterated that the EU has no plans to impose "new taxes" on electronic commerce, but noted at the same time that this did not mean that existing taxes did not apply. He also suggested that tax administrators should use regulation of electronic signatures as a way potentially to distinguish between consumers and business customers of electronic commerce.

European Institution News

The resignation of the European Commission in March raised many interesting questions about the effect on pending e-commerce legislative initiatives, such as the proposed Copyright and E-commerce Directives. It is as yet too soon to predict what the precise effect of the Commission's resignation will be in terms of slowing down the legislative process. The Commission has acted swiftly to replace former president Jacques Santer with the former Italian prime minister, Romano Prodi, and similar speed is expected with regard to the appointment of the other new commissioners. The consensus appears to be that the delays caused by the replacement of the Commission on pending initiatives will be minor.

On May 1, the Amsterdam Treaty entered into force. The treaty does not impact significantly the way in which intellectual property matters are dealt with at EU level. For example, the adoption of EU directives and regulations in the field of intellectual property law (and electronic commerce) will continue to follow the "co-decision"-procedure.

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