White House Pitches E-Commerce To World Government Leaders

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White House Pitches E-Commerce To World Government Leaders

By Neil Munro
Staff Writer

White House and information technology officials are launching an aggressive international sales campaign to persuade foreign governments to drop their barriers to cyberspace commerce.

Administration officials are already declaring success, following completion of a July 8 meeting between Commerce Secretary William Daley and 40 ministers of the German government. "It's been a huge success because we seem to be in agreement on about 98 percent of the principles," he said at a press conference.

The sales campaign began July 1 with the release of a new report on electronic commerce at a White House ceremony hosted by President Bill Clinton and Vice President Al Gore, which drew scores of industry heavyweights including Louis Gerstner, chairman and chief executive of IBM Corp., Armonk, N.Y., and Steve Case, president of America Online, Dulles, Va.

IBM photo IBM CEO Louis Gerstner

The international market for government-related electronic commerce contracts is roughly triple the fast-growing U.S. federal market, said Norm Berthaut, vice president of government services at Input, a market research firm based in Vienna, Va. Foreign governments are following the United States' path toward greater reliance on networks, both to buy products and to provide services to their citizens, he said.

"We're getting a lot of inquiries from foreign governments ... because European governments are looking for solutions. If a U.S. company is in the forefront of state and local electronic commerce, it would probably position them well with European and other foreign governments," he said.

Industry officials hope to showcase their progress during next year's World Information Technology Conference, to be held in Fairfax, Va., said Harris Miller, president of the Information Technology Association of America, an Arlington, Va.-based alliance of high-tech companies.

Among industry's near-term goals are substantial progress toward the removal of tax and trade barriers to electronic commerce, and the drafting of a worldwide legal regime for the settlement of cyberspace deals that go sour, he said.

The White House's campaign kicks off this week with a whistle-stop tour of several European capitals and Japan by top administration officials. The delegation will include senior White House adviser Ira Magaziner, principal author of the July 1 report, "A Framework for Global Electronic Commerce."

During the trip, these officials will tout findings in the report, which calls on governments to let industry design and build a global marketplace based on the Internet.

Although industry officials welcomed the report's recommendations to develop rules to protect consumers and the privacy of their online transactions, they blasted the administration's continued defense of its encryption policy.

The White House, backed by the FBI, is restricting the easy export of impenetrable encryption software. The White House hopes to help pressure industry into deploying encryption that protects personal and company data, while allowing law-enforcement officials to gather information on criminals' activities.

Ending that policy is the best thing the administration can do to promote electronic commerce, said Bill Melton, president of CyberCash Inc., a firm based in Reston, Va., that is developing electronic money. With the aid of industry-developed encryption, as well as industry-developed standards for electronic transactions, consumers should use the networks to buy products from any country in the world by 2000, he said.

The international tour by White House officials will be paralleled by multinational industry lobbying of foreign government officials, said Miller. U.S. and foreign executives will try to persuade their national governments that barriers to electronic commerce should be dropped, he said.

For example, industry officials will try to defeat proposals for new taxes on online commerce and proposals that would force communications companies to police their networks for online theft of intellectual property, said Miller.

These industry efforts will be partly coordinated via the World Information Technology and Services Alliance, which includes the ITAA and similar industry groups based in Japan, India, the United Kingdom, Mexico, Spain, Canada and several other countries. For example, the London-based Computing Services and Software Association will try to persuade government officials in the United Kingdom to support the deregulatory goals of the Magaziner report. The CSSA includes a variety of British companies, as well as U.K.-based subsidiaries of U.S. companies such as IBM.

"The U.K. is extraordinarily sympathetic to the views in the U.S.," said Rob Wirszycz, director general of the CSSA. However, "the rest of Europe will have problems with it. ... They don't quite have the same libertarian traditions," he said. For example, many European governments are dependent on sales taxes, which are opposed by the Internet industry, he said. In response, industry may have to help European governments craft new revenue-raising rules, he said.

However, "the first priority is to change the [government-first] mindset" in European and Asian countries, said Miller. By shifting the leading role in the development of an electronic marketplace from government to industry, industry's opponents will be put on the defensive, he said.

Industry officials were heartened by recent reports on electronic commerce drafted by officials in Japan and the European Union, based in Brussels, Belgium. However, industry officials are seeking to promote further deregulation.

For example, the European Union has approved a government-designed plan to sharply restrict the flow of consumer-related data between European companies and foreign companies that do not have restrictive privacy rules.

Industry executives will try to change the plan before the various European countries enact it into law, because once enacted, "it takes on a life of its own and is a lot tougher to remove it," said Miller.

Another problem is protectionism, such as tariffs and import restrictions that may be used to shield local companies from fast-growing U.S. firms, said Miller. "We can't minimize protectionist views. ... That's why the program has to be sold aggressively," partly by using the lobbying clout of foreign firms that want to buy U.S. products to stay competitive in the world market, he said.