Member states to accept ‘country of origin’ rule for e-commerce

Date: 20/05/1999

By Peter Chapman

EU MEMBER states are set to endorse the European Commission's approach to regulating the fledgling electronic commerce market.

Diplomats predict that governments will leave intact the 'country of origin' principle - one of the linchpins of the Commission's strategy for regulating the Internet.

This means that companies doing business online would only be bound by the rules in force in the member state in which they were based, rather than those where their products were delivered to the customer.

This approach is opposed by groups such as EU consumer lobby BEUC, which claims that it will hinder member states' attempts to introduce tougher rules than neighbouring countries because firms would be able to move to member states with laxer regimes.

But companies claim it would allow them to offer new electronic commerce services without having to employ an army of lawyers to ensure they complied with differing rules in each country.

Signs that governments will approve the Commission's approach, despite misgivings in some member states, come as national officials begin to scrutinise the proposals, which are designed to extend single market principles to the online business world.

" Some member states are starting to put their heads above the parapet and picking up on points against country of origin," said one diplomat from a northern member state which supports the country of origin approach. "Austria is at the head of that, but I do not think it will finally oppose it."

Only a handful of exemptions to the country of origin rule are envisaged in the Commission's proposals, including consumer contracts. But diplomats say that those member states which have concerns about the approach are likely to seek further opt-outs.

" The Italians, for example, are looking for financial services to be exempted from the electronic commerce directive," said one, adding that Rome wanted the sector to be covered instead by the proposed new rules on the distance selling of financial services currently making their way through the EU's decision-making process.

Scandinavian member states are likely to press for the right to introduce tough controls on electronic commerce involving children.

The rest of the debate is set to focus on fringe issues such as how to control unsolicited e-mail shots which jam people's computer systems: known as 'spam' in computer jargon.

Member states will have to decide whether to support the approach taken by the European Parliament, which has called for e-mail users to be given the option of joining an 'opt-out register' which would protect them from unsolicited adverts and marketing messages. They will also debate the extent to which the directive should apply to regulated professions such as the law.

The issue is on the agenda for a meeting of internal market ministers next month, but most do not expect a decision until later in the year.

Keyword: Electronic commerce.