    [Public Papers of the Presidents of the United States: William J. Clinton (1997, Book II)]
    [July 1, 1997]
    [Pages 898-901]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Memorandum on Electronic Commerce
    July 1, 1997

    Memorandum for the Heads of Executive Departments and Agencies

    Subject: Electronic Commerce

        The invention of the steam engine two centuries ago and the
    subsequent harnessing of electricity for communications ushered in an
    industrial revolution that fundamentally altered the way we work,
    brought the world's people closer together in time and space, changed
    the way we organize our economies, and brought us greater prosperity.
        Today, we are on the verge of another revolution. Inventions like
    the integrated circuit, the computer, fiber optic cable, and the
    Internet

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    are changing the way we work, learn, and communicate with each other.
        Students and teachers can have immediate access to the world's
    information from their classrooms; doctors can administer diagnoses to
    patients in remote parts of the globe from their offices; and citizens
    of many nations are finding additional outlets for personal and
    political expression.
        As the Internet empowers citizens and democratizes societies, it is
    also changing the way business is conducted: entrepreneurs are able to
    start new businesses more easily by accessing the Internet's worldwide
    network of customers; world trade involving computer software,
    entertainment products, information services, professional consulting,
    financial services, education businesses, medical diagnostics,
    advertising, and technical services is increasing rapidly as the
    Internet dramatically lower costs and facilitates new types of
    commercial transactions; engineers, product developers, and managers
    thousands of miles apart can collaborate to design and manufacture new
    products more efficiently; businesses can work more efficiently with
    their suppliers and customers; consumers have greater choice and can
    shop in their homes for a wide variety of products from manufacturers
    and retailers all over the world, and they will be able to view these
    products on their computers or televisions, access information about the
    products, and order and pay for their choices, all from their living
    rooms.
        According to several estimates, commerce on the Internet will total
    tens of billions of dollars by the turn of the century and could expand
    rapidly after that, helping fuel economic growth well into the 21st
    century.
        For this potential to be realized, governments must adopt a market-
    oriented approach to electronic commerce, one that facilitates the
    emergence of a global, transparent, and predictable environment to
    support business and commerce.
        Government officials must respect the unique nature of the medium
    and recognize that widespread competition and increased consumer choice
    should be the defining features of the new digital marketplace.
        Many businesses and consumers are still wary of conducting extensive
    business over the Internet because of the lack of a predictable legal
    environment governing transactions. This is particularly true for
    international commercial activity where concerns about enforcement of
    contracts, liability, intellectual property protection, privacy,
    security, and other matters have caused businesses and consumers to be
    cautious.
        Many companies and Internet users are also concerned that domestic
    or foreign governments will impose extensive regulations on the Internet
    and electronic commerce including taxes and tariffs, restrictions on the
    type of information transmitted, control over standards development,
    licensing requirements, and extensive regulation of Internet service
    providers. Indeed, signs of these types of commerce-inhibiting actions
    already are appearing in many nations.
        Governments can have a profound effect on the growth of electronic
    commerce. By their actions, they can facilitate electronic trade or
    inhibit it. Knowing when to act and--at least as important--when not to
    act, will be crucial to the development of electronic commerce.
        Today I have approved and released a report--``A Framework For
    Global Electronic Commerce''--outlining the principles that will guide
    my Administration's actions as we move forward into the new electronic
    age of commerce. This report articulates my Administration's vision for
    the emerging digital marketplace by declaring a set of principles,
    presenting a series of policies, and establishing an agenda for
    international discussions and agreements to facilitate the growth of
    electronic commerce. I expect all executive departments and agencies to
    review carefully the principles in this framework and implement
    appropriate policies.
        Accordingly, I am hereby directing that executive department and
    agency heads should be guided in any future actions they take related to
    electronic commerce by the following principles:
            --  For electronic commerce to flourish, the private sector must
                lead. Therefore, the Federal Government should encourage
                industry self-regulation wherever appropriate and support
                private sector efforts to develop technology and practices
                that facilitate the growth and success of the Internet.
            --  Parties should be able to enter into legitimate agreements
                to buy and sell products and services across the Internet
                with minimal government involvement or intervention.
                Therefore, the Federal Government

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                should refrain from imposing new and unnecessary
                regulations, bureaucratic procedures, or taxes and tariffs
                on commercial activities that take place on the Internet.
            --  In some areas, government involvement may prove necessary to
                facilitate electronic commerce and protect consumers. Where
                governmental involvement is necessary, its aim should be to
                support and enforce a predictable, consistent, and simple
                legal environment for commerce.
            --  The Federal Government should recognize the unique qualities
                of the Internet including its decentralized nature and its
                tradition of bottom-up governance. Existing laws and
                regulations that may hinder electronic commerce should be
                revised or eliminated consistent with the unique nature of
                the Internet.
            --  The Internet is emerging as a global marketplace. The legal
                framework supporting commercial transactions on the Internet
                should be governed by consistent principles across State,
                national, and international borders that lead to predictable
                results regardless of the jurisdiction in which a particular
                buyer or seller resides.
        I also direct the relevant agencies as identified in ``A Framework
    For Global Electronic Commerce'' to pursue the following policies:
            1.  I direct the U.S. Trade Representative to work with foreign
                governments to secure agreement within the next 12 months
                that all products and services delivered across the Internet
                will not be subject to tariffs and that all equipment from
                which the Internet is built will also not be subject to
                tariffs.
            2.  I direct the U.S. Trade Representative to work with foreign
                governments to enforce existing agreements and secure new
                agreements to make electronic commerce a seamless global
                marketplace. This will include enforcing provisions of the
                recently concluded World Trade Organization (WTO)
                Telecommunications Services Agreement; ensuring that product
                testing, certification, and approval processes do not
                unnecessarily restrict trade; ensuring that service
                providers have nondiscriminatory access to customers
                worldwide; and other measures that ensure a free flow of
                commerce.
            3.  I direct the Secretary of Commerce to seek the protection of
                copyright in the digital environment by working to achieve
                ratification in the United States and overseas within the
                next 12 months of the World Intellectual Property
                Organization (WIPO) Copyright Treaty and the WIPO
                Performances and Phonograms Treaty.
            4.  I direct the Secretary of Commerce to update and make more
                efficient our system for protecting patentable innovations
                to meet the needs of the fast-moving electronic age and to
                seek agreements with other governments to protect patentable
                innovations worldwide.
            5.  I direct the Secretary of Commerce to support efforts to
                make the governance of the domain name system private and
                competitive and to create a contractually based self-
                regulatory regime that deals with potential conflicts
                between domain name usage and trademark laws on a global
                basis.
            6.  I direct the Secretary of the Treasury to work with State
                and local governments and with foreign governments to
                achieve agreements that will ensure that no new taxes are
                imposed that discriminate against Internet commerce; that
                existing taxes should be applied in ways that avoid
                inconsistent national tax jurisdictions and double taxation;
                and that tax systems treat economically similar transactions
                equally, regardless of whether such transactions occur
                through electronic means or through more conventional
                channels of commerce.
            7.  I direct the Secretary of Commerce to work with the private
                sector, State and local governments, and foreign governments
                to support the development, both domestically and
                internationally, of a uniform commercial legal framework
                that recognizes, facilitates, and enforces electronic
                transactions worldwide. I further direct the Secretary of
                Commerce within the next 12 months to seek to gain agreement
                with the private sector, State and local governments, and
                foreign governments, both domestically and internationally,
                on common

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                approaches for authentication of electronic transactions
                through technologies such as digital signatures.
            8.  I direct the Secretary of Commerce and the Director of the
                Office of Management and Budget to encourage private
                industry and privacy advocacy groups to develop and adopt
                within the next 12 months effective codes of conduct,
                industry developed rules, and technological solutions to
                protect privacy on the Internet consistent with the Privacy
                Principles issued by the Information Infrastructure Task
                Force (IITF) Privacy Working Group. I further direct the
                Director of the OMB to develop recommendations on the
                appropriate role of government consistent with ``A Framework
                for Global Electronic Commerce.'' I further direct the
                Secretary and the Director to ensure that means are
                developed to protect the privacy of children.
            9.  I direct the Secretary of Commerce to encourage the
                development and adoption within the next 12 months by
                industry of easy to use and effective rating systems and
                filtering technologies that empower parents, teachers, and
                other Internet users to block content that is inappropriate
                for children.
           10.  I direct the Secretary of Commerce to support private sector
                development of technical standards for the Internet and the
                U.S. Trade Representative to oppose efforts by foreign
                governments to impose standards or to use standards for
                electronic commerce as non-tariff trade barriers.
           11.  I direct the Secretary of the Treasury to cooperate with
                foreign governments to monitor newly developing experiments
                in electronic payment systems; to oppose attempts by
                governments to establish inflexible and highly prescriptive
                regulations and rules that might inhibit the development of
                new systems for electronic payment; and as electronic
                payment systems develop, to work closely with the private
                sector in order to keep apprised about policy development
                and ensure that governmental activities flexibly accommodate
                the needs of the emerging marketplace.
           12.  I direct all executive departments and agencies to promote
                efforts domestically and internationally to make the
                Internet a secure environment for commerce. This includes
                ensuring secure and reliable telecommunications networks;
                ensuring an effective means for protecting the information
                systems attached to those networks; ensuring an effective
                means for authenticating and guaranteeing confidentiality of
                electronic information to protect data from unauthorized
                use; and providing information so that Internet users become
                well-trained and understand how to protect their systems and
                their data.
           13.  I direct the Administrator of General Services to move the
                Federal Government into the age of electronic commerce by
                expanding ``GSA Advantage,'' its online shopping service for
                the Federal community to cover four million items by 12
                months from now.
        I am asking the Vice President to lead an interagency group
    coordinating the U.S. Government's electronic commerce strategy.
    Further, I am directing that executive department and agency heads
    report back to the Vice President and me through this interagency group
    every 6 months on their progress in meeting the terms of this directive.

                                                          William J. Clinton