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October 11, 1998

OECD CONFERENCE AGREES ON PRIVACY, TAXES

By CBR Staff Writer

Ministers attending the OECD conference on e-commerce, hosted in Ottawa, have reached a predictably fuzzy set of agreements on questions of online privacy and internet taxation – with the emphasis on the fuzzy. The ministers say they will work together, and in partnership with business and social organizations to build trust in the digital marketplace, clarify rules, enhance infrastructure access by implementing a liberalized and competitive telecommunications marketplace, and maximize benefits for all citizens. It will be far from easy to meet all those expectations, particularly the last two – a liberalized market and maximum benefits for all – which on the face of it appear contradictory. It’s safe to expect US muscle and faith in the free market to prevail, and benefits for non- Western citizens to be the first to go by the board. For example, a Declaration on Protection of Privacy on Global Networks tabled at the meeting reaffirms members’ commitment to effective protection of privacy. How this is interpreted in practice depends on who and where you are. European Union member states have fairly strict laws on data protection and an EU directive requiring the same standards of its trading partners kicks in on October 25. But the internet industry in the US is fiercely opposed to the imposition of laws to protect consumer privacy, claiming it is quite capable of protecting its customers’ privacy without government intervention. Hence the TrustE vendor love-in at Fall Internet World last Wednesday (CI No 3,512). The sad truth is that no one – not the US Federal Trade Commission, not the Electronic Privacy Information Center and certainly not American consumers – really believes that the industry has the will to enforce and police adequate privacy protection measures without the force of law to make it do so. A similar situation prevails with respect to taxes levied on electronic commerce. The United States believes such taxes will fetter the growth of the market, and is at the point of passing legislation banning its own states from exacting such taxes (CI No 3,415). On the other hand, developing countries, which have long enjoyed excellent revenue from telecommunications interconnect charges, are less than thrilled about forsaking similar money pots on the internet. The most vocal opponents to net tax moratoria, such as Pakistan, are not OECD members, but at the same time the OECD cannot ignore their arguments with impunity. Two days in Ottawa does not offer vast scope for papering over differences as deep as these, and there are no particular surprises in the conference’s glib conclusions. The OECD ministers noted the intention of business leaders and the various industry groups to develop self-regulatory frameworks for electronic commerce, but they underline that where self- regulatory mechanisms were used, they should be transparent, non- discriminatory and open to all market players. They also encouraged business to move rapidly to meet public expectations in those areas. Whether it is even possible for business interests to meet even the lowest of the public’s expectations remains an open question.

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