[Weekly Compilation of Presidential Documents Volume 33, Number 27 (Monday, July 7, 1997)]
[Pages 1006-1010]
[Online from the Government Publishing Office, www.gpo.gov]

Memorandum on Electronic Commerce

July 1, 1997

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

[[Page 1007]]

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 are changing the way we work, learn, and communicate with each 
    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 
    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 
    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 
    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 regulations 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:

[[Page 1008]]

--          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 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 
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 
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 
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

[[Page 1009]]

            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 approaches for authentication of electronic 
            transactions through technologies such as digital 
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.

[[Page 1010]]

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