[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]
<R04>
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
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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
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 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:
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-- 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
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
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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
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.
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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