Accord on ‘transparency’ rules

Date: 20/11/1997

By Peter Chapman

EU INTERNAL market ministers will next week support new rules designed to stop member states hampering the information society with a patchwork of different laws across the Union.

Diplomats say they will reach political agreement at a meeting next Thursday (27 November) on a 'transparency' directive which will force member states to let their EU partners and the European Commission scrutinise their draft laws in advance to check whether they will hinder Union trade in information society services. "We are heading for a political agreement on this. We are broadly content with what is on the table," said one northern member state diplomat.

The proposed directive will give the EU similar powers to vet draft laws on information society services as those it currently enjoys to scrutinise draft member state rules covering goods, including those which affect information society products.

This right was tested earlier this year when a draft French government law on encryption technology products was scrutinised by the Commission and member states. The Commission was able to exert pressure on Paris and seek assurances that the French rules would not conflict with future EU electronic commerce directives.

Under the proposal due to be approved next week, member states will have to notify draft national laws which target new information society services such as those governing providers of Internet access, electronic commerce and online banking.

Had the new directive already been in place, one of the laws which would have come under its scope is Germany's teleservices bill, which covers the legal obligations on online service providers to police the content of their networks. Officials are anxious to win approval for the EU-wide transparency law before other member states add to this German legislation.

Once it comes into force, draft national laws will be frozen for a three-month 'standstill' period while other member states and the Commission decide whether they are likely to have an adverse affect on the single market. A further one month standstill can then be imposed, to give the member state concerned the chance to amend the law in question.

In addition, if the Commission plans to launch its own EU-wide rules covering the same scope as an information society law notified by a member state, it can impose a 12-month standstill.

Sources say some EU governments, including Denmark and Belgium, which had been reluctant to see new online financial services included in the scope of the directive are now likely to be won over by a compromise that gives the sector wide-ranging exemptions.

These exemptions include online developments in services in regulated markets such as currency and asset trading and settlement - sectors already covered by a directive on financial markets.

Meanwhile, urgent laws to protect the 'security and integrity' of financial markets would also be excluded from the scope of the directive if the compromise is approved.

Another sticking-point is due to be solved by a compromise on draft rules on cultural issues. Some member states, including France, are calling for a procedure which would give them advance guidance on whether or not they need to notify such measures.

EU industry is signalling its support for the directive which, it says, will give the fledgling market the chance to develop smoothly across Europe. "This directive is vital to maintain an organised single market for information society services by preventing the development of a patchwork of national regulations," said Neil Gibbs of the European Public Telecom Network Operators' Association (ETNO).

However, some in the industry want companies to have a formal say in the standstill process if the current proposals are approved.

Commission officials insist the procedure will be 'deliberately transparent', with information made publicly available and companies given the chance to table informal comments on information society rules to member states.

Feature on a proposed directive to allow the EU to scrutinise draft national laws on information society services.