On June 14, the World Information Technology and Services Alliance (WITSA) appointed George Newstrom as its new Chairman. Mr. Newstrom took over the leadership of the global industry alliance during at a special ceremony at the 2000 World Congress on Information Technology - the preeminent global IT executive conference hosted by WITSA since 1978. Newstrom is an EDS Corporate Senior Vice President and President, EDS Asia Pacific, headquartered in Hong Kong, and is on the Board of Directors and Executive Committee of the Information Technology Association of America (ITAA), the U.S. WITSA member association. Mr. Newstrom also served as Chairman of the 1998 World Congress on IT held in Fairfax, Virginia, USA.

Mr. Newstrom replaced Robert B. Laurence, who served as chairman of the global alliance for 8 years. Mr. Laurence welcomed Mr. Newstrom to the WITSA chairmanship: "It has been an honor to serve and to see WITSA grow from under 20 to more than 40 countries and regions today. I am pleased to be turning over the reins to a global IT leader such as George Newstrom, and I look forward to watching WITSA continue to grow," Laurence said.

“I am delighted to receive this opportunity to serve the global IT industry,” Mr. Newstrom said, adding, “I believe that when governments, business and consumers work together, we can create a better world through the use of information technology. It's our responsibility to bring industry together, to promote a trustworthy online business environment, and to play an active role in educating regulators and technology users on the great potential of IT to work for the betterment of life, preservation, the environment, society, and humanity.”

2. Global IT Industry Alliance Head Quarters to Remain in the U.S. until 2002

Members of the World Information Technology and Services Alliance (WITSA) at its June 11, 2000 General Assembly meeting in Taipei, unanimously elected to retain the Alliance’s head quarters in the United States for another two-year term, until March 1, 2002. The WITSA Secretariat will remain with the Information Technology Association of America (ITAA). It is currently seated in Fairfax, Virginia as per an agreement with Fairfax County Economic Development Authority. ITAA has committed to maintain and further develop WITSA's high-profile activity level and international stature, based upon the consent and input received from fellow WITSA member associations.

3. New Study Predicts Global Information Technology Spending To Reach US$3 Trillion in 2003

A major new study of the world’s information and communication technology (ICT) spending reveals that the global high tech industry surged to over $2.1 trillion in 1999, and is expected to surpass $3 trillion in 2003. On June 14, the World Information Technology and Services Alliance (WITSA) released top-level findings of Digital Planet 2000: The Global Information Economy at the World Congress on Information Technology in Taipei, Taiwan.

Produced by WITSA in cooperation with the International Data Corporation (IDC), Digital Planet 2000: The Global Information Economy provides the most recent, comprehensive data documenting the size and shape of the ICT marketplace around the globe. The study findings are based on data gathered in the 55 largest ICT buying countries and regions. In aggregate, this group represents 98 percent of worldwide ICT spending. Digital Planet2000 data encompasses spending on computer hardware, software and services, telecommunications hardware and services, office equipment and internal IT spending, which includes company expenditures on IT employees, capital depreciation and the internal portion of ICT spending budgets.

“Information and communications technology is a fast growing market in the global society,” said WITSA President Harris N. Miller. “With an annual growth rate of 9 percent - faster than the growth rate of global GDP – ICT continues to outpace most economic sectors and the potential for future growth is still extraordinary.” Miller added, “Digital Planet 2000 tells an important story about the digital opportunity presented by emerging markets in ICT because it encompasses eight years of spending data. Growth in ICT spending in Eastern Europe and Latin America both reached 42 percent between 1997 and 1999, far outpacing the mature markets of Western Europe and North America, which saw growth of 13 and 15 percent respectively during the same period. “

Published by WITSA, the full report, Digital Planet 2000: The Global Information Economy will be available in September, 2000. An executive summary is available free on the web at http://www.witsa.org. Digital Planet 2000: The Global Information Economy is made possible by sponsorship from NASDAQ AMEX, AIG, MERANT and Satyam Computer Services Ltd. For information on sponsorship opportunities, contact Brandi Vondenkamp at bvondenkamp@itaa.org.

4. Global High Tech Industry Alliance Awards Exceptional Users of IT

On June 13, the World Information Technology and Services Alliance (WITSA) announced ten winners of its inaugural Information Technology Excellence Awards 2000 at the World Congress on Information Technology 2000 in Taipei, Taiwan. The awards honored exceptional achievements in the application of information technology around the globe and were presented to winners in three broad categories: Public Sector Excellence, Private Sector Excellence, and Digital Opportunity. A special Chairman’s Award was also presented.

“Candidates for these Awards were hand-picked by IT experts from around the world who are part of our 41-country WITSA industry network,” said Harris N. Miller, President of WITSA and the Information Technology Association of America (ITAA). “Each of the winners have demonstrated world-class achievements in their use of the latest IT products and services, and it was a natural choice to hold the ceremony at the 2000 World Congress on IT in Taipei - the preeminent global IT executive conference.”

WITSA Chairman Robert B. Laurence noted, “With an industry network spanning more than 97 percent of trade in IT products and services, WITSA was able to select some of the very best applications of IT around the globe, based on a large pool of highly qualified candidates. It was a particular honor for me to select P&G 2000 as the winner of our special Chairman’s Award: P&G 2000 was a remarkable success story where companies from different industry sectors came together in an impressive effort to provide students and schools in Romania with computers, and a ticket to a new and brighter future for this maturing European country,” Laurence continued.

Candidates for Information Technology Excellence Awards 2000 were nominated by IT experts from WITSA’s network of 41 global IT associations, then voted on by the executives of WITSA member associations. The ten winners are:

q P&G 2000 “A computer, a better chance for the future”

q State Tax Administration Agency of the Spanish Ministry of Finance (A.E.A.T.)

q The Infocomm Development Authority of Singapore^* (IDA)

q Foster Parents Plan, a member of PLAN International

q Leonia WAP Bank

q Seven-Eleven Japan Co., Ltd.: Fifth-Generation Total Information System

q Banco Río de la Plata S.A.

q The National Information Infrastructure (NII) planning agency in Taiwan

q Open University of Catalonia (Barcelona, Spain)

q South African Post Office & Department of Communications

For more information on the WITSA Awards, please see the press release at http://www.witsa.org/press/pr061300a.htm or view pictures from the Award Ceremony and get more background information at http://www.witsa.org/Taipei%202000%20for%20web/AWARDS/Awards%20page.htm.

5. Global IT Industry Alliance Appoints First Vice-Chairman for Africa

As part of its strategy to broaden its global representation, the World Information Technology and Services Alliance (WITSA) at its June 11 General Assembly meeting appointed Adrian Schofield as its first Vice Chairman for Africa. Adrian Schofield is President of Information Industry South Africa (IISA) -the local WITSA member association-, and International Sales & Marketing Director at CompTIA. As a regional Vice Chairman, Mr. Schofield will be responsible for improving IT industry cooperation across Africa and for promoting WITSA initiatives and activities on the continent. Mr. Schofield and IISA will also host WITSA’s first ever Global Public Policy Conference in Africa, to be held in Cape Town in 2001.

6. Global InfoSec Summit to Draw Global Participation, Attention

WITSA and ITAA will host the Global InfoSec Summit, Building a Global Partnership, scheduled for October 16 and 17 in Washington, DC at the International Trade Center to gather industry and government leaders from around the globe to discuss the critical issues of information security and infrastructure assurance. Top sponsors for the event are SAIC/Global Integrity, EDS, Veridian, Nortel Networks, Computer Sciences Corporation, and Securify.

The Summit will raise awareness of the issues, promote cross-national and cross-sectoral collaboration, identify policy needs, and highlight InfoSec best practices and case studies. The event will launch a global partnership for addressing InfoSec issues on an on-going basis. The work of this partnership will lead to a follow-up Summit in the Spring/Summer of 2001 in Europe.

Visit http://www.itaa.org/infosec/summit.htm for more details about the Summit.

7. 2001 Global Public Policy Conference to be held in Cape Town, South Africa

WITSA is proud to announce its first ever conference in Africa, which it will host in cooperation with Information Industry South Africa (IISA). At its June 11 General Assembly meeting in Taipei, WITSA members enthusiastically endorsed the proposal and presentation by IISA President Adrian Schofield and Peter Aspinall, CEO of SBS Conferences.

As technology permeates every aspect of our lives in the modern world, it is increasing affecting the lives of those in developing countries even though it appears to be less apparent. It is clear that in most instances advances in information technology and communications are widening the wealth gap between first and third world countries and between the “haves” and the “have-nots” in populations. Themed, “THE DIGITAL DIVIDE – Bridging the Gap”, the WITSA Global Public Policy Conference 2001 will examine the developments in technology and in particular the growth in the Internet and Electronic Commerce. The aim of the conference being to bring a cross section of people together from government, business and organized labor to address the requirements necessary for establishing effective public policy. The conference will take place on either September 10-11 or October 22-23, 2001. For more information on the IT industry in South Africa, please see http://www.ita.org.za.

8. Industry Transformation Produces Changes to WITSA Membership

While mergers and acquisitions paint the landscape of the IT industry on a regular basis, WITSA member associations sometimes also face similar destinies. WITSA, at its June 11 General Assembly meeting recognized the following membership changes as a result of association mergers: (1) Information Industry South Africa (IISA) replaced the IT Association of South Africa, and (2) The Colombian Software Industry Federation (FEDESOFT) replaced Federación Colombiana de Empresas Productoras de Software (FEDECOLSOFT).

The Information Industry South Africa (IISA) is a new association created earlier this year, encompassing ITA and most other IT associations in South Africa. ITA President Adrian Schofield is the new President of IISA and ITA is a founding member of the new organization. IISA provides a coordinated forum for the industry to address issues of common interest and is an effective channel of communication with Government, particularly in relation to the issues of overlapping ICT related programs and projects in the country. Another important development is the government’s new understanding of the value that ICT can contribute to improving the quality of life of the South African population. See also the article in the March, 2000 issue of the WITSA Newsletter at http://www.witsa.org/news/.

In 1999, FEDECOLSOFT, Federación Colombiana de Empresas Productoras de Software, and INDUSOFT, Asociación de Industriales del Software, decided to merge and form a new association. FEDESOFT, Colombian Software Industry Federation is the resulting organization. FEDESOFT has 160 members. The merging process resulted in an stronger association, with a larger number of members and more resources. FEDESOFT is now the undisputed representative of the software industry in Colombia, with more representation power and better image vis-à-vis the Government and more than ever common interests with WITSA. More information can be found at www.fedesoft.org. See also: http://www.witsa.org/Taipei 2000 for web/GA2000/WITSA General Assembly 2000.htm

WITSA MEMBER ACTIVITIES:

9. New Industry Association Strengthens German IT Sector

The Germany IT market is the biggest in Europe and is only surpassed by the U.S. and Japan globally[1], but has long been riddled with a highly fragmented IT industry sector. In 1999, there were as many as 20 German information and communication technology (ICT) industry associations. On October 28, 1999, BITKOM -the German Association for Information Technology, Telecommunications and New Media- was established as an “association of associations” encompassing more than 1,000 IT companies in Germany. The current German WITSA member association, BVITeV, actively participated in the establishment of BITKOM and is part of the effort to synchronize policy and PR among industry in Germany, as well as conducting joint activities. The new organization is based both in Frankfurt and in Berlin. On January 1, 2001, BVITeV and the other participating associations will cease to exist, and IT companies will instead by direct members of BITKOM. It is expected that BITKOM will assume WITSA membership as well, on January 1 next year.

Aims for the new organization include:

· Putting an end to associations' fragmentation;

· Providing an extended platform for IT, TLC, new media, hardware, software, and services;

· Providing one common voice for the whole German ICT industry;

· Increase political power and leverage;

· Abolish redundant activities

· Providing more and better services for ICT companies

The road ahead for BITKOM includes:

· From 10/99: Merging and opening of working groups

· February 2000: Joint presence at the CeBIT trade fair

· July 2000: Opening of BITKOM headquarters in Berlin

· October 2000: Joint BITKOM office in Frankfurt

· January 2001: Merging of member associations & New quality as a companies' association

For more information, see:

Presentation of BITKOM and the German IT industry at http://www.bitkom.org/index.htm.

Information about WITSA member BVITeV at http://www.bvit.de/engpages/wir.htm.

10. Greece to Host September 16 EISA Industry Meeting and “e-Europe & East Europe” Conference

The Federation of Hellenic Information Technology & Communications Enterprises (SEPE) is scheduled to host the next meeting of the European IT Services Association (EISA) and a conference entitled “e-Europe & East Europe” on September 16. Both the EISA meeting and the conference will take place in Corfu, at the Divani Palace Hotel. The e-Europe & East Europe conference will address the development of Eastern Europe into the Digital Age and related policies specifically concerning Eastern European countries. Topics will include (1) cheaper Internet Access, (2) Accelerating e-Commerce, (3) Smart Card for secure electronic access, (4) Risk Capital for high-tech SMEs, and (5) Healthcare online. Speakers may include notables such as Erkki Likanen, European Commissioner for the Information Society, Patricia Hewitt, U.K. Minister of Small Business & e-Commerce, and Andrius Kubilius, Prime Minister of Lithuania. For more information, please contact Andreas Kitrilakis at SEPE at +301 924-9540/1.

11. ITAC appoints Bob Morine as new Chair for 2000

The Information Technology Association of Canada (ITAC) on June 15 appointed as its new Chairman Mr. Bob Morine, VP and General Manager, public sector for IBM Canada Ltd. He succeeds André Gauthier, Executive vice president, LGS Group Inc., in the ITAC Chair. For more information, see http://www.itac.ca/.

12. Argentinean IT Association Opens 2^nd Office in Miami

The Argentinean IT industry association, CESSI (Cámara de Empresas de Software y Servicios Informáticos), on May 1 opened a second branch office in Miami to better serve the needs of its member companies. The Miami office serves as a bridge between Argentinean IT software developers and the U.S. industry. The objective is to export "Argentine computer science intelligence" and is expected to have the benefit of reducing or avoiding the transfer of skilled labor. The May 1 opening ceremony was presided over by the Dr. Cassino, CESSI President, Ing. Leonardo Leibson, Secretary General of CESSI Argentina, CESSI-MIAMI branch President Sr. Roberto Torok, President and CEO of Lexmark Latin-America. For more information, see http://www.cessi.org.ar/.

13. ITAA Says E-Commerce Questions Remain Unanswered in Hague Convention Treaty Proposal

The Information Technology Association of America (ITAA) in a press release on June 29 cautioned that precipitous action by the Hague Conference could have far-reaching and very damaging consequences for global electronic commerce and asked the U.S. government to take a “go slow” approach to treaty formation. The Conference is developing a Convention - or international treaty agreement - intended to deal with foreign judicial enforcement of judgments.

Testifying before the House Judiciary Committee Subcommittee on Courts and Intellectual Property, ITAA Senior Vice President and General Counsel Marc Pearl said a current draft of the Convention appears to have been formed in a diplomatic vacuum and fails to recognize the technology changes that have transformed the commercial marketplace. “The document…inadequately addresses and in some cases, woefully ignores, the advent of e-commerce,” he said. Such a shortsighted approach, Pearl indicated, raises more questions than it answers and “puts the analogue cart before the digital horse.”

“By hasty action, we risk doing harm to our burgeoning digital economy. The U.S. government should not, therefore, encourage nor acquiesce in the convening of a Diplomatic Conference process that threatens to confuse rather than clarify the legal norms surrounding international electronic commerce,” Pearl said.

Numerous e-commerce questions remain unanswered in the Conference draft. These include the extent to which a digital signature is recognized and accepted; what constitutes an “offer” and an “acceptance” on the Internet; whether the “law of origin” or the “law of destination” should apply in Internet transactions; and what effect this proposed treaty would have on other conventions, treaties and existing bilateral agreements. Mr. Pearl’s testimony can be found at http://www.house.gov/judiciary/pear0629.htm.

14. NASSCOM Urges Indian Privacy Laws to Comply With EU Requirements

Mr. Dewang Mehta, President of the National Association of Software and Service Companies (NASSCOM), at the June 28 Indo-EU Summit in Lisbon warned that current Indian data privacy regulations may complicate business opportunities for Indian businesses in the European Union. The European Union requires that foreign companies doing business involving the transfer of personal data from the EU must comply with the data protection adequacy requirements contained in the 1995 Data Protection Directive. While India already has strong copyright and cyberlaws in place, Mr. Mehta declared that immediate action was needed to strengthen privacy laws in India. While an initial EU deadline for compliance expired on June 30, an extension has been granted until January 1, 2001 in part to accommodate the EU-US “safe harbor” data protection trade negotiations.

Mr. Mehta, in a June 29 interview with Business Line, an Indian financial daily, said the European market access was a top priority for Indian companies. As one of its goals, NASSCOM hoped Indian workers could fulfill at least 50 percent of the European high-tech labor shortage. NASSCOM estimated that Indian software exports to the EU would increase to US $7 billion and that total India-EU trade would surpass $12 billion by 2005. A copy of the Business Line article can be found at http://www.indiaserver.com/bline/2000/06/29/stories/152939t5.htm.

15. NASSCOM Study Demonstrates Indian Software Export of 57 Percent

The National Association of Software and Service Companies (NASSCOM) on July 3 released the results of s survey indicating that the Indian IT software and services industry in 1999 grossed US $5.7 billion during 1999-2000, and that Indian software exports grew an incredible 57 percent in the same time frame. For further details, please see the report at http://www.nasscom.org/template/pressrel.htm#11.

16. Industry Association Says Datacasting legislation will impede Australian industry

Mr. Rob Durie, Executive Director of the Australian Information Industry Association (AIIA), on June 21 warned that the definition of Datacasting outlined in the Digital Television legislation currently before the Senate in Australia, is far too proscriptive and will have the effect of impeding technological breakthroughs by small innovative Australian firms. Please see press release at http://www.aiia.com.au/media/MR000621.html.

17. JISA Issues English-version industry report, The IT Services Industry in Japan 2000

Japan Information Service Industry Association (JISA) has published a new English-version industry report, The IT Services Industry in Japan 2000. It contains useful information that could help you understand the IT services industry in Japan. With many tables and figures, it explains not only the overview of Japan's IT services industry but also its market trends. A printed copy or a PDF formatted file (1.7MB) is available for a fee at http://www.jisa.or.jp/info-e/it2000-e.html.

World Congress on Information Technology 2000 (WCIT 2000)

18. “Best Ever” World Congress Draws 1,790 Participants from 86 Countries

The 2000 World Congress on IT was a resounding success in terms of content, speakers, attendance and media coverage. Termed by many as “the best World Congress ever”, the event was officially opened by Newly-elected R.O.C. President CHEN, Shui-bian, who emphasized Taiwan's wish to become a "Green Silicon Island," and wished that "future generations will enjoy not only highly developed technology, but also a clean, healthy environment." The event was attended by an incredible 1,790 high level private and public sector delegates from 86 countries. 195 were from the U.S. 157 from Japan, 71 from Malaysia, 57 from Australia, 44 from Singapore and many more from countries around the world. There were 110 international members of the media, spanning 13 countries, including many of the best-known networks – such as BBC, Bloomberg, CNBC, CNN, the Asian Wall Street Journal and others. 350 local media representatives further added to a world-class coverage of the event.

A total of 30 world-renowned speakers gathered in Taipei, including John Chambers, President and CEO of Cisco Systems, who informed the audience that, "[the Internet] is going to change every aspect of our lives." Carly Fiorina, President and CEO of Hewlett Packard reminded the audience, "We can fail to achieve the promise of this revolution if we fail to remember that this revolution is about people." And, Bill Gates, Chairman and Chief Software Architect of Microsoft said that what needs to be done, "is to change the Internet to be more of a platform, not simply a presentation network." In all, speakers at the WCIT2000 set forth the blueprint for the future of IT - making a better world.

At a special transition ceremony, the World Congress also saw the inauguration of George Newstrom as the new Chairman of the World Information Technology and Services Alliance (WITSA), replacing Robert Laurence after eight years of dedicated service for the IT industry (see separate article).

The conclusion of the event also saw the transition of the World Congress from Taiwan to Australia. Alan Baxter, Chairman of the next World Congress on IT, which will take place in Adelaide on February 27 to March 1, 2002, promised to continue the tradition of excellence demonstrated by the Taipei host organization in 2000 and Fairfax, Virginia in 1998 (please see selected pictures at http://www.WITSA.org and the official web site at http://www.worldcongress2002.org.

Alan Baxter, Chairman of the WCIT2002, was extremely impressed by the "active cooperation" among the government, IT industry, and individual attendees. George Newstrom, new Chairman of the World Information Technology and Services Alliance (WITSA), commented that the WCIT2000 was "one of the most successful" in the history of the event. Mike Evans, Chairman of the European IT Services Association (EISA), claimed that the "WCIT2000 was the best conference ever" in terms of quality and delivery services. ASOCIO President Neville Roach exclaimed that the WCIT2000 was one of "the most global events ever". For more information, please see detailed coverage at the official Taipei web site at http://www.worldcongress2000.org and http://www.WITSA.org.

PUBLIC POLICY NEWS

INTERNATIONAL

19. OECD Report Demonstrates “Digital Divide” Between Wealthy Economies

A new study by the Organization for Economic Cooperation and Development (OECD) on local Internet pricing and ecommerce put the popular concept of the “digital divide” in a new light. While the notion is commonly associated with the technology discrepancies that exist between rich and developing countries, the June 26, 2000 report entitled “Local Access Pricing and E-Commerce” found that pricing of Internet access had a significant impact on the growth of Internet usage and content. Internet access charges and pricing structures were found to be one of the greatest obstacles facing users and potential users. The report demonstrates significant variances between the 29 rich OECD member countries. Some of the findings from the report include facts such as:

“The penetration rate of Internet hosts for the United States is three times the average for the OECD area, seven times that of the EU area and just over eight times that of Japan. In March 2000, the United States added three times more secure servers than the rest of the OECD in total. This meant, on a per capita basis, that the United States added 10 times more secure servers, for that month, than the rest of the OECD. At the same time usage of the Internet in the United States and a small number of other countries with pricing structures favourable to Internet access, as reflected in average online times, is far longer than counterparts in other OECD countries. This is encouraging the development of new content and services, including multimedia services supporting electronic commerce, at a much faster rate than in countries where pricing is not favourable to electronic commerce”. A summary as well as the 86-page report can be found at http://www.oecd.org/dsti/sti/it/.

20. International Conference on Legal Rules for Cross-Border E-Business

On September 11 and 12, the Internet Law and Policy Forum (ILPF) will hold its second major international conference on the important jurisdiction issues related to cross-border electronic commerce. The event, which will take place in San Francisco, will provide an advanced overview of fundamentals, detailed expert analysis of particular topics –including on ADR mechanisms and the Draft Hague Convention-, and practical advice on the legal rules which govern a government’s authority to enforce its rules outside its borders. For more information on the detailed agenda, or to register, see http://www.ilpf.org/confer/program00.htm.

21. Internet Censorship on the Rise; More Serious than Previously Thought Possible

In what may be the most comprehensive study on Internet content and access censorship to date, the New York based human rights organization Freedom House earlier this year released a report indicating that the popular notion that the Internet transcends government censorship efforts may be far off the mark. In fact, the report, dubbed “Censor Dot Gov: The Internet and Press Freedom 2000” concludes that governments have been innovative and largely successful in efforts to curb Internet access and in regulating content. Covering 186 countries, the report found that about 80 percent of the world population is located in countries with less than free press. Moreover, Internet censorship may be growing and is becoming increasingly sophisticated. The most extreme case is Myanmar (formerly Burma), where people must report computers to the government and web access is completely prohibited (illegal use of modems is punishable by 7 to 15 year prison sentences). The last private e-mail provider in Myanmar was seized by the government in December 1999.

On a regional basis, Africa was the most restrictive, with only 6 countries categorized as “free”, while 17 were “partly free” and as many as 30 had severe restrictions on Internet access and content. In the Middle East, only Israel was considered truly “free”, Kuwait and Jordan were in the middle category while all the 11 remaining countries were listed in the “not free category”. In Asia, six countries ware also identified as “free” while four had some restrictions and another 14 imposed severe censorship. 18 of 27 countries in Eastern Europe had modest or severe Internet restrictions. However, in Western Europe, none were listed in the “not free” category and only one was “partly free”. The report listed 17 Latin-American countries as being censorship-free, while another 14 had modest restrictions and two (Cuba and Peru) imposed severe Internet restrictions.

According to the report, governments have several different approaches to imposing Internet censorship:

q HIGH-COST telecommunications infrastructure limits participation;

q LAWS AND LICENSING: More than 20 countries, including Myanmar, Cuba, North Korea and Iraq prohibit or severely restrict their people’s Internet access;

q FILTERING AND BLOCKING SCHEMES: Several countries force Internet service providers (ISPs), whether government run or influenced, to install such technology. The report identifies China as a case-in-point, severely limiting content – in particular as regards access to foreign news sites. Dissidents are imprisoned, web sites are shut down, and servers based abroad have been subject to government originated denial-of-service attacks. Other countries in this category are Iran and Saudi Arabia;

q ONLINE SURVEILLANCE: Governments, such as Russia, force ISPs to install surveillance equipment enabling authorities to access just about all online traffic, including web browsing, e-mail, Internet relay chat and instant messaging. Online surveillance also was said to have a significant tendency to promote self-censorship. In the case of Russia, the successor to the KGB does not need court orders to initiate surveillance. Technological progress also means more affordable and easier government access to sophisticated methods for controlling information. Even developing countries, such as Vietnam, were said to monitor closely e-mail and other Internet traffic.

For more information, please see Press Freedom Survey 2000 at http://www.freedomhouse.org/pfs2000/. A New York Times article on the report is at http://www.nytimes.com/library/tech/00/05/cyber/cyberlaw/05law.html. An article detailing Internet restrictions in Myanmar is at http://www.nytimes.com/library/tech/00/07/cyber/articles/14myanmar.html. Myanmars.net is at http://www.myanmars.net/ and the Myanmar government’s official site can be found at http://www.myanmar.com/.

22. New Internet Domain Names to Be Adopted by January 1, 2001

The Internet Corporation for Assigned Names and Numbers (ICANN) at its July 16 Board Meeting in Yokohama agreed to an action plan for adding several new domain names by the end of the year. The decision to expand the number of generic Top-Level Domain names (gTLDs) was necessary in part to broaden the domain name space in light of the rapidly growing number of web sites. Most of the country codes were established in the mid-1990s, but no new domain suffixes, such as .com, org., and .net, have been approved since the late 1980s.

In adopting the framework for adding new domain names, as presented by ICANN’s Names Council (NC) on April 18/19, 2000, Internet users and organizations submitting applications will need to demonstrate that the new domains maintains the Internet’s stability, in particular as regards their ability to prevent registry or registration-system failures that will negatively impact domain name holders. Applications will also need to demonstrate how the introduction on new names will add to the diversity on the name space, whether they are fully open top level domains, restricted or chartered with a limited scope, noncommercial, or personal domains. New domain names must enhance competition for registration services at the registry and registrar levels, must add to the utility of the domain name system (DNS), and must meet previously unmet types of needs. ICANN also requires that applicants demonstrate adequate intellectual property rights protection, and asks for a U.S. $50,000 application fee to cover the evaluation and approval process.

The schedule adopted at the July 16 Board Meeting is as follows:

· August 1, 2000 - ICANN to issue a formal call for proposals by those seeking to sponsor or operate

a new TLD;

· October 1, 2000 - Deadline for receipt of proposals;

· October 15, 2000 - Deadline for public comments on proposals;

· November 20, 2000 - ICANN to announce selections;

· December 31, 2000 - Target date for completion of contract negotiations with those selected.

WITSA participated actively in the process of establishing the Internet Corporation for Assigned Names and Numbers (ICANN) as well as the Domain Names Supporting Organization (DNSO) and its Business Constituency group (BC). Both WITSA and twelve of its member associations are members of the BC, and in fact, helped nominate three business representatives to the Names Council (NC) -DNSO’s executive body- in 1998. A new round of elections for the NC representatives will take place in November, 2000.

ICANN was formed in September 1998 to oversee certain Internet technical management functions that were previously managed by the U.S. government or by its contractors and volunteers. Specifically, ICANN is in the process of assuming responsibility for coordinating the management of the Internet Domain Name System, the allocation of Internet protocol address space, the assignment of protocol parameters, and the management of the root server system. For more information, see the Preliminary Report from the July 16 Meeting of the ICANN Board in Yokohama at http://www.icann.org/minutes/prelim-report-16jul00.htm. A copy of the proposal for introducing new generic Top-Level Domains (gTLDs) can be found at http://www.icann.org/yokohama/new-tld-topic.htm.

23. July 31^st Deadline for Participation in Internet Governance Election

At Large Members of the Internet Corporation for Assigned Names and Numbers (ICANN) will elect five Directors for its ICANN Board in a worldwide online election from October 1 to October 10, 2000. All individuals at least 16 years of age with a valid e-mail address may become At Large Members. ICANN encourages all interested parties to register online at http://www.members.icann.org/join_now.htm. However, only people who register by July 31, 2000 will be able to participate in the online election of the five Directors.

ICANN’s At Large Members are any individuals who have an interest in Internet governance issues, and who have completed the membership registration. They will vote to select five Directors for the ICANN Board, one from each of five defined geographic regions (Africa, Asia/Pacific, Europe, Latin America/ Caribbean, and North America). Nearly 15,000 applications were received by May, 2000. Members will also receive regular news, updates, and announcements about ICANN activities and policy initiatives. The At Large election process will take place in three phases:

· (a) Determination of the ballot (now - August 31)

o (i) Nominations by the Nominating Committee (now - July 31)

o (ii) Self-nomination process (August 1 - August 31)

· (b) Campaign phase (September 1 - September 30)

· (c) Online vote (October 1 - October 10)

The five new Directors should be seated in time for the November 13-14, 2000 ICANN meetings in Los Angeles. For more information, see the Preliminary Report from the July 16 Meeting of the ICANN Board in Yokohama at http://www.icann.org/minutes/prelim-report-16jul00.htm.

24. Internet Governance Body Overcomes Important Obstacles

The Internet Corporation for Assigned Names and Numbers (ICANN) on July 7, 2000 announced that it had cleared two important obstacles which had threatened its future as the designated technical coordination body dedicated to preserving the operational stability of the Internet: Its legal underpinnings were confirmed by the investigative arm of the U.S. Congress and what is believed to be the first lawsuit against it was dropped.

The General Accounting Office on July 7 released a much anticipated report (ref. http://www.icann.org/general/gao-report-07jul00.pdf) which confirms the legality of ICANN’s formation as well as the U.S. Department of Commerce’s process for transferring the domain name system controls to ICANN. In addition, the report found that ICANN’s attempts to collect fees to cover its costs were not unlawful. On July 7, ICANN also released its second status report to the U.S. Department of Commerce, available on the ICANN website at http://www.icann.org/general/statusreport-30jun00.htm.

ICANN also announced on July 7 that Afternic.com, a New York based domain name site for auctioning of previously registered domain names, had dropped its lawsuit against ICANN. Afternic.com had been denied a request for registrar accreditation by ICANN due to a perceived conflict of interests and a fear of resulting cybersquatting problems. As part of the agreement reached, ICANN on July 7 accredited eXtrActive, a separate company set up by Afternic.com. eXtrActive was among 11 new registrars accredited on July 7 (ref. press release at http://www.icann.org/announcements/icann-pr10jul00.htm).

25. New International Effort Launched to Widen ‘Anti-Cybersquatting’ Program

The World Intellectual Property Organization (WIPO) on July 10 announced that it would accept a request to enter into a new round of study and consultations to address bad faith registration of Internet domain names in order to protect the owner of rights that are not necessarily based on registered trademarks. In April 1999, WIPO issued a set of recommendations on how best to protect the rights of holders of registered trademarks, which resulted -in part- in the implementation of the Uniform Dispute Resolution Policy (UDRP) by the Internet Corporation for Assigned Names and Numbers (ICANN). UDRP, which has been operational since December 1, 1999, provides an efficient, quick and cost-effective way to resolve domain name disputes: More than 750 cases have been filed with the WIPO Arbitration and Mediation Center and more than 345 of these have been resolved since January, 2000.

Protecting rights that are not based on trademarks, e.g. trade names, geographical indications and other rights (e.g. “Bordeaux” wines), may prove to be a complicated task. WIPO announced it would launch a series of consultations over the Internet with intellectual property owners and other members of the Internet community. More information about the second WIPO process, and on how to participate will be posted at WIPO’s e-commerce web site at http://ecommerce.wipo.int. WIPO expects to issue the findings and recommendations in the first half of 2001. The July 10 Press Release (PR/2000/235) can be found at http://www.wipo.org/eng/main.htm.

26. Biggest Cybersquatting Suit Ever Filed in the U.S.

On June 20, the International Olympic Committee, the U.S. Olympic Committee (USOC) and the Salt Lake Organizing Committee (SLOC) for the Olympic Winter Games of 2002 filed what is likely the single biggest crackdown on cybersquatters ever. The three Olympic organizations requested the shut-down of more than 1,800 web sites allegedly profiting illegally from official Olympic trademarks.

the case was filed in the U.S. District Court in Alexandria, Va., to take advantage of a new law named “the Anti-Cyber-Squatting Consumer Protection Act”. Under the law, the holder of a copyright or trademark can sue to shut down a domain name that is in violation of U.S. trademark laws regardless of what country the owner lives in. The domain name owners being sued in this case originate from 56 countries. For more information, see Computerworld article at http://www.computerworld.com/cwi/story/0%2C1199%2CNAV47_STO46990%2C00.html?am or visit Olympics.com, SaltLake2002.com, USOC.org and Olympic.org.

27. World Trade Body Poised to Resume Ecommerce Work

Member countries of the World Trade Organization (WTO) may agree to resume their ecommerce related work program. The program had previously been disrupted by preparations for the failed 1999 Seattle Ministerial conference and the subsequent confidence building measures. General Council Chairman Kåre Bryn at a July 17 formal meeting asked member governments to agree to continue discussion among its subsidiary bodies on trade related issues related to electronic commerce. Bryn asked the Goods Council, Services Council, Trade-Related Aspects of Intellectual Property (TRIPS) Council and the Committee on Trade and Development to issue updates to the reports released in light of the Seattle Ministerial last year. The four subsidiary bodies were asked to present progress reports by December.

However, Bryn withdrew his earlier proposal to also set up an ad hoc task force on ecommerce, which would have addressed certain horizontal issues not covered by the four subsidiary bodies, such as the controversial issue of classifying digitally delivered products as “goods” or “services”. The decision not to go ahead with the proposal was made after the EU, Brazil and other countries objected. The Chairman may reintroduce the proposed initiative again in the next few months, if sufficient consensus is achieved.

The re-launch of the ecommerce program will also not include a discussion on whether the moratorium on imposing duties on electronic transmissions is still valid. That moratorium had been agreed at the second WTO Ministerial in May 1998 and was due to expire with the conclusion of the third Ministerial in Seattle. Countries such as the U.S. believes that the moratorium is still in force because the Seattle Ministerial was suspended rather than adjourned and because the delegates did not decide to terminate the moratorium at that time. Other countries, including Pakistan, Mexico and several others argue that the moratorium has technically expired because the Seattle Ministerial for all practical purposes was concluded, however unsuccessfully. For more information on WTO’s ecommerce work program, see http://www.wto.org/english/tratop_e/ecom_e/ecom_e.htm.

28. Key Trade Official Warns Against “Hybrid” Ecommerce Agreement

In a July 14 interview with Total Telecom, David Hartridge, Director of the World Trade Organization’s services division, warned strongly against recent suggestions made by government trade negotiators at informal meetings in Geneva, that a separate “hybrid” agreement on ecommerce replace commitments already made in existing trade agreements, such as the General Agreement on Trade in Services (GATS) and its 1997 Annex on Negotiations on Basic Telecommunications. While some governments appear to believe the current agreements do not adequately address the particular issues arising from the rapidly changing online trading environment, Mr. Hartridge cautioned that a hybrid ecommerce agreement would call into questions the hard-won liberalization commitments already made by WTO members regarding telecommunications; e.g. guaranteed market access around the world.

Rather than negotiating a separate agreement on ecommerce, Hartridge called on governments include ecommerce issues in a broad context at the next WTO summit –which may take place in 2001. At the summit, governments should “clarify” how existing agreements specifically apply to ecommerce. ecommerce related provisions, to the extent they are needed, should be sector specific. Hartridge indicated that some new requirements may be considered, including on privacy protection standards and jurisdiction rules, but warned that WTO was ill equipped to address detailed standards setting, such as electronic signatures and harmonization of encryption. To the extent that WTO consider new areas of involvement related to ecommerce, the main objective should be that any new requirements facilitate ecommerce rather than hamper it. In the event that a new general round of services negotiations is not agreed, Hartridge suggested that the dispute panel establish that the GATS commitments apply to all modes of trade, including ecommerce.

Mr. Hartridge’s views have been applauded by many representatives of the IT industry. In February, 2000, members of the World Information Technology and Services Alliance (WITSA) met with U.S. Ambassador Rita Hayes, Japanese Ambassador Koichi Haraguchi and European Commission Ambassador Roderick Abbott and outlined the IT industries priorities for the ongoing services negotiations as well as the WTO’s e-commerce work program. WITSA members also met with negotiators from Argentina, Australia, India, and Venezuela. Some of the key recommendations presented to the negotiators included making permanent and binding the 1998 Moratorium on Customs Duties on Electronic Transmissions, making sure that existing WTO obligations are technology neutral, that governments refrain from enacting new measures that impede the growth of e-commerce, and reaffirming the importance of liberalizing the basic telecommunications infrastructure. WITSA also issued two policy papers ahead of the 1999 Seattle WTO Ministerial, outlining industry views and priorities for the next round of multilateral trade negotiations. A copy of the article in Total Telecom can be found at http://www.totaltele.com/secure/view.asp?ArticleID=29000&pub=283&categoryid=0. See also The Uruguay Round Final Act: full texts.

29. “Digital Divide” Becomes a Top Priority at the U.N.

In what was called the most ambitious effort by the United Nations to take the lead in discussing information technology, the High-Level Segment of the UN Economic and Social Council (ECOSOC) on June 5-7 launched the ECOSOC 2000 conference as part of its new ”Information Technology for the World” campaign. The conference was attended by government leaders from around the world as well as top representatives from the World Bank, the International Monetary Fund (IMF), and the World Trade Organization (WTO). Ministers examined several issues related to the “digital divide”, including Internet access, training, local language content, information security, privacy, and copyright issues. Notably, World Bank President James Wolfensohn announced the launch of a Global Development Gateway, a common information base that would join international organizations, governments and grass root groups, allowing anyone easy access to information on the initiatives undertaken in the various fields (see separate report below). The intention of the conference was to approach the theme of “digital divide” from a broad developmental perspective, and to highlight the contribution that Information Technology can make to meet the challenges of globalization for the benefit of all.

Separately, the U.N. launched a seminar on information and communications technology on July 10-12 in New York. As part of UN’s efforts to develop partnerships with the private sector, the seminar was intended to mobilize investment toward developing countries – targeting telecom companies, Internet companies, satellite companies, broadcasters, potential investors, fund managers, etc. Coined “Seminar on Mobilization of the Private Sector in order to Encourage Foreign Investment in IT Towards Developing Countries”, the seminar was also organized in conjunction with several other international organizati0ons and agencies, including: The World Bank, the Overseas Private Investment Corporation, The Inter-American Development Bank, and the US Department of Commerce. The seminar was timed to coincide with the high-level segment (meeting) of ECOSOC 2000.

Thee meetings come in the wake of a June panel report ordered by the UN General Assembly, recommending that governments, international organizations, voluntary groups and foundations provide U.S. $500 million and the private sector another $500 million to improve Internet access and other new technologies in developing countries. The “International ICT Action Plan” aims to provide Internet access within “a half day’s walk” to the entire world population by 2005. The report, which will be reviewed at the July 22-23 G-8 meeting in Okinawa, also recommended that world creditors write off one percent of debt of developing countries that spend at least 1 percent of their budgets on information infrastructure improvements. The report (document E/2000/55) will be considered at the United Nations Millennium Assembly, opening in September. Please also see the Press Release DEV/2252 PI/1259.

For more detailed information, please see:

· ECOSOC 2000 High-Level segment: http://www.un.org/esa/coordination/ecosoc/itforum/index.html

· UN Secretary-General report on the theme of the high-level segment: http://www.un.org/esa/coordination/ecosoc/advdoc01.pdf

· Seminar on Mobilization of the Private Sector in order to Encourage Foreign Investment in IT Towards Developing Countries: http://www.ict2000.net

Separately, Heads and representatives of the six core international agencies (ITC, IMF, UNCTAD, UNDP, World Bank and WTO) of the Integrated Framework for trade-related technical assistance to Least-Developed Countries (IF) agreed at a meeting in New York on 6 July an approach to improve the delivery of trade-related technical assistance to the world's poorest countries — the 48 UN-designated least-developed countries (LDCs). More information can be found at the WTO site at http://www.wto.org/english/news_e/pres00_e/pr185_e.htm.

30. World Bank Announces Global Development Gateway

At a June 5 conference on the “digital divide”, World Bank President James Wolfensohn announced the launch of a Global Development Gateway, a common information base that would join international organizations, governments and grass root groups, allowing anyone easy access to information on the initiatives undertaken in the various fields. In accordance with a June 19 concept note (ref. http://www.worldbank.org/gateway/conceptnotejune19.pdf), the Gateway is intended to serve the needs of a broad array of stakeholders, including developing countries, the donor community, civil society in a broad sense of the term, the private sector and other key partners. While still in a development stage, services could include online training modules, research findings, best practices and ideas, case studies, procurements services, information and development projects, funding, commercial opportunities, product reviews, news, jobs, and directories. Pilot Country Gateways are already operational in Georgia, the Kyrgyz republic, and Romania). Gateway features will include:

· Aid Effectiveness Exchange;

· Civil Society Forum;

· Marketplace;

· Government Forum; and

· Country Gateways

A start-up phase will take place between April 2000 and June 2001. According to the plan, all major technical components, related services and the support organization are scheduled to be fully operational during a phase 2, to take place from July 2002 to June 2003. For further information on the Global Gateway, see: http://www.worldbank.org/gateway/

31. New study Demonstrates that Trade Liberalization Reduces Poverty

On June 19, the Secretariat of the World Trade Organization (WTO) released a new study which concludes that trade liberalization has a very positive impact on poor countries’ efforts to catch up with well-to-do countries. The report, dubbed “Trade, Income Disparity and Poverty” found that trade liberalization, while not itself sufficient to eradicate poverty, is a must for any developing country aiming at improving its economic standing and long-term prosperity. The report mentions “success-stories” such as South Korea, which as achieved a very solid economic standing following decades of nurturing trade and industry: While, 30 years ago, South Korea was as poor as Ghana, now it is as rich as Portugal. Some of the key findings of the study, which can be found in its entirety at http://www.wto.org/english/news_e/pres00_e/pr181_e.htm#fntext2, are included below:

- Poverty is a tremendous problem, as demonstrated by the fact that as many as 2.8 billion people subsist at less than U.S. $2 per day;

- Trade helps the poor: The poor tend to benefit from overall economic growth while trade tends to boost economic growth;

- While living standards in developing countries on average do not catch up to rich countries, there is a big difference in economic performance between developing countries that are relatively open to trade and more protectionist and closed markets. Developing countries that perform well tend to be open to trade ;

- Trade liberalization is generally a strong positive contributor to poverty alleviation, and helps raise living standards even for the poorer population segments within a country. Trade liberalization “allows people to exploit their productive potential, assists economic growth, curtails arbitrary policy interventions and helps to insulate against shocks.”

- While trade liberalization hurts some people in the short run, their problems can be managed through social safety nets and job retraining. The fact remains that trade reforms benefit many more people.

A separate speech on the same topic by WTO Director General Mike More, entitled “Trade, Poverty and The Human Face of Globalization”, was delivered at London School of Economics in June 16 and can be found at http://www.wto.org/english/news_e/spmm_e/spmm32_e.htm.

32. G-7 Ministers Agree on Principles to Promote IT; Taxing Ecommerce

In a meeting running up to the July 22-23, 2000 G-8 Heads of State and Government Summit, G-7 finance ministers on July 8 agreed on a set of principles to promote IT. In a report from the meeting in Fukuoka in Japan, the Ministers emphasized IT’s huge potential for increasing economic growth and for reducing unemployment. Strong encryption and a secure infrastructure for e-commerce were named top priorities, as well as consumer protection measures pertaining to the Internet. The ministers recognized that the bridging of the technology gap was crucially important for the developing economies, and that this could best be achieved by removing regulatory barriers to enable competition in key IT sectors, by retraining workers, implementing competition policies to ensure the spread of IT and fair competition and the need for an open international trade system.

However, the Finance Ministers also agreed to the principle that e-commerce ultimately should be taxed in the same way as other trade – inasmuch as such taxation does not present an unnecessary burden that may inhibit the spread of ecommerce and IT. The Ministers also conceded e-commerce is difficult to police, especially as regards digital products and services (e.g. downloadable music and information services). Paragraph 25(b) of the report, dubbed “Impact of the IT Revolution on the Economy and Finance” (see http://www.g8kyushu-okinawa.go.jp/e/documents/it.pdf), stated that conventional taxation principles, such as neutrality, equity, and simplicity, should underlie the taxation of e-commerce. The report emphasized that taxation should not be discriminatory against any forms of commerce and that existing tax rules, for the most part, sufficiently could implement these principles for e-commerce. Finally, the G-7 finance ministers agreed to the principle that consumption taxes applied to the Internet should be based on where the consumption takes place (without providing any definitional clarifications). The Ministers supported the OECD Committee on Fiscal Affairs’ (CFA) ongoing work on taxation and its applicability to ecommerce.

The July 8 meeting included Japan's Kiichi Miyazawa, France's Laurent Fabius, the U.S.'s Lawrence Summers, the U.K.'s Gordon Brown, Germany's Hans Eichel, Italy's Vincenzo Visco, Canada's Paul Martin Jr. and Pedro Solbes Mira, a member of the European Commission for Economic & Monetary Affairs. A separate report named “Strengthening the International Financial Infrastructure”, was also issued at the one-day meeting in Fukuoka and can be found at http://www.g8kyushu-okinawa.go.jp/e/documents/arc.pdf. For more information, see G8 Summit Meeting 2000 site at http://www.g8kyushu-okinawa.go.jp/e/index.html and http://www.summit.pref.miyazaki.jp/english/index.html.

33. Interpol Considering First Anti-Cybercrime Initiative with Private Company

In a joint June 29 press release, Interpol and AtomicTangerine, an independent U.S. venture consulting firm, announced what may become an “early warning system” for information security. If an accord is reached, Interpol, the organization that groups 178 national police forces, will provide intelligence on hacking, stolen goods, fraud and other dangers to corporate health to a private Web site to help businesses defend themselves against global cybercrime. In the partnership, AtomicTangerine would make available to Interpol relevant information it gathers from extensive monitoring of the Internet by computers and its team of researchers. The partnership, if implemented, would mark the first time Interpol’s enters into an agreement with the private sector to fight cybercrime.

The proposed partnership comes in light of the increasingly complex and fluid world of the Internet on its implications for information security. The idea of the intergovernmental-private sector partnership originated from an Internet Defence Summit in Silicon Valley in May, where Interpol Secretary-General Raymond Kendall called on the private sector to defend itself because “government agencies do not have the technology to do the job”. Both Interpol and AtomicTangerine has announced that any information released to legitimate users through a partnership would be free of charge and would not intrude upon individual privacy. In an interview with the Associated Press, Kendall would consider various legal implications and hoped to make a decision on the proposed pact by mid-October. For more information, see June 29 press release at http://www.atomictangerine.com/cgi-bin/parser.pl/content/what_s_the_buzz/press_releases/index?vers=chtml.

34. Survey Find Computer Hacking Will Cost U.S. $1.6 Trillion in 2000

According to a new survey conducted for PricewaterhouseCoopers, computer hacking will result U.S. $1.6 trillion this year; probably the highest number ever estimated. The survey, conducted by Information Week Research covered almost 5,000 IT professionals in 30 countries. The survey adds further evidence that information security has become a top priority in the world of Internet and ecommerce. Earlier this year, the Federal Bureau of Investigation (FBI) announced that 9 of 10 companies have reported computer security breaches since March 1999. According to the FBI, most damage is caused by computer viruses, stolen computers, and employees misusing Internet privileges at work. However, more serious crimes, such as outside computer penetration, fraud, sabotage, and denial-of-service attacks, are on the rise. For more information see E-Commerce Times article at http://www.ecommercetimes.com/news/articles2000/000711-6.shtml. See also FBI testimony at http://www.fbi.gov/pressrm/congress/congress00/gonza042100.htm.

EUROPE

35. Concerns About EU Proposal to Tax Ecommerce

On June 7, the European Commission proposed changes to an existing draft directive which would oblige foreign companies to pay value added taxes (VAT) on products and services delivered digitally over the Internet to end-users in the EU; e.g. downloading of compact disks, software, videos or computer games supplied in digital form. The amended draft legislation was said to be necessary as a means to create a level playing field since EU companies already are subject to VAT for the same services under existing legislation. While the draft directive only applies to the sale of “services” –not “goods”, all items delivered over the Internet are classified by the EU as “services” and are thus covered by the proposed legislation. Under the proposed rules, foreign companies with digital sales exceeding 1000,000 euros inside the EU would be required to register in an EU member state of choice. Depending on which member state is chosen, the VAT to be paid currently ranges between 15 and 20 percent.

The draft legislation is still far from being finalized and is facing strong opposition from several EU member states which dislike the idea that companies can freely register with the EU country applying the lowest tax rate, constituting a de facto discrimination against and undue burden on other member countries. Foreign companies, including in the U.S. have protested the draft measure, insisting that such taxes would inhibit the growth of ecommerce. Opponents have also pointed out that the measure, if ultimately approved, cannot be implemented due to the absence of technologies allowing authorities to determine when a customer is located in the EU or elsewhere. The European Commission has announced that it is exploring technical solutions, including the use of customer credit card billing address information. However, credit card companies have not yet agreed to disclose information of this sort.

Opponents are also concerned that the draft EU legislation may instigate a host of disparate national efforts to implement incompatible Internet tax measures. Instead, opponents argue that the EU should await the final results of the OECD Committee on Fiscal Affairs’ (CFA) ongoing work on taxation and its applicability to ecommerce. The CFA is expected to finalize its work by early 2001. The European Commission, however, insists that it is not introducing any new rules on Internet taxation, but is merely extending existing VAT requirements to the Internet, in accordance with the OECD guidelines agreed at the October 1998 second ecommerce ministerial conference (“Taxation Framework Conditions”).

Most significantly, the Commission argues, the 1998 OECD rules concluded that (a) the supply of digitized products should be treated as services, not goods, and (b) consumption taxes (such as VAT) should result in taxes at the place of consumption rather than at the rate of the supplier’s base. Both elements are at the heart of the proposed legislation. As an exception to this rule, the proposal requirement that foreign companies register and pay VAT in accordance with only one EU country’s regime of choice. The Commission has defended this seemingly contradictory approach by insisting that the EU internal market should be seen as a single market not 15 different ones.

Opponents accuse the draft EU measure of breaching two 1998 OECD tax guideline principles pertaining to tax neutrality and that no new taxes on the Internet are needed. The European Commission, however, insists that extending VAT to the Internet does not constitute a “new” tax, and that the principle of neutrality is closely observed. However, opponents point to the fact that, while the current proposal does grant any exemptions from the VAT requirements, online sales of electronic books and newspapers will be taxable while “offline” sales of books, magazines and newspapers often are not.

The draft legislation is only applicable on digital sales to end-customers, not to the business-to-business market. Only about 20 percent of services supplied digitally are thus affected. Physical goods sold to customers in the EU are not covered by the draft legislation, but is already subject to VAT through existing legislation, even when ordered over the Internet.

The draft EU legislation does not specify methods for collecting VAT from online sales. The responsibility for collecting VAT remains with the 15 EU Member States. However, the European Commission has stated that it will work closely with the OECD and non-EU stakeholders in developing workable solutions. EU also has indicated it remains committed to work with OECD on finalizing discussions on issues that were not resolved at the 1998 Ottawa ecommerce ministerial, including on defining “place of consumption”, and internationally compatible definitions of services and tangible property. For more information on OECD progress on developing new ecommerce taxation guidelines, see article at http://www.oecd.org/subject/e_commerce/wiredworld.pdf.

The U.S. and some other countries are disputing the EUs method of classifying all items delivered digitally over the Internet as services. Opponents point to the fact that, under the EU regime, any products that can be delivered digitally are classified as “services” rather than “products”. For example, a music CD would be considered a product when mailed through a post office, but the music would be taxed as services when downloaded over the Internet. Since products fall under different international trade rules (GATT) than services (GATS), there have been voiced some concerns that what is essentially the same product will be subject to different legislation and market access rules (e.g. there are different national treatment requirements for services; goods may be subjects to tariffs). The World Trade Organization (WTO) is currently considering a proposal to restart its analysis on the issue of classification of products and services (see separate article on WTO’s ecommerce program).

It is not known how soon the proposed legislation, in current or amended form, can be ratified and implemented. Commission officials have indicated that if the relative simplicity of the proposed rules contained in the current draft is left largely intact, approval may be within reach in the foreseeable future. However, if a series of amendments are introduced and complicating the measure, the process of adoption could take far longer – perhaps years. According to the European Commission, the current draft legislation as well as other ecommerce legislation to be introduced later this year could serve as a model for international adoption and use. In September, the Commission intends to issue a proposal for electronic invoicing standards. Documents and further information can be found at http://www.europa.eu.int/comm/taxation_customs/whatsnew.htm:

COM(2000) 348 final Communication from the Commission to the Council and the European Parliament.
A Strategy to improve the operation of the VAT System within the context of the Internal Market

COM(2000) 349 final Proposal for a regulation of the European Parliament and of the Council amending Regulation (EEC) No 218/92 on administrative cooperation in the field of indirect taxation (VAT). Proposal for a Council Directive amending Directive 77/388/EEC as regards the value added tax arrangements applicable to certain services supplied by electronic means.

36. U.K. Torn on Legislation Affecting the Internet

While having been largely at the forefront on ecommerce promotion in Europe, the U.K. government has recently faced opposition by some industry, trade unions and consumer groups for its implementation of two tax measures and draft legislation on Internet traffic surveillance. According to opponents, the legislation threatens to send ecommerce businesses and Internet service providers out of the U.K., and three major ISPs declared in July that they may move their servers elsewhere.

The surveillance bill, known as Regulation of Investigatory Powers (RIP), would force U.K. based ISPs to install equipment and software that would connect to the internal secret service (M15) and would grant government authorities the ability not only to track unlimited Internet traffic, but also to unscramble data through a key escrow provision. Opponents claim that the bill would make the U.K. the only country besides Russia to have a full range of Internet monitoring laws – e.g. the U.S. and some other countries have imposed certain requirements enabling Internet surveillance, but do not impose key escrow schemes. Besides privacy concerns, industry is concerned about implementation costs, which the British Chambers of Commerce at one point claimed could be reach 73 billion euros. In recent weeks, however, a series of amendments to the bill have satisfied some opponents and have reduced the potential economic burden on the ISPs. Additionally, the U.K. Home Office has recently indicated that they are considering reimbursing some of costs associated with the implementation of the bill. The Computer Software and Services Association (CSSA) favors a two month moratorium on the Bill to give the parties on both sides of the debate a chance to cool off.

Two tax measures have also caused a great deal of concern among industry in the U.K.: The IR35 tax measure has caused many legitimate IT consultants to believe they have to pay taxes as if they were permanent employees. While apparently misguided, the law that took effect in April has caused a significant number of highflying consultants to flee the country. Similarly, legislation to force either employers or employees to pay a 12.2 percent social-security tax on profits made by employees exercising their stock options has been strongly opposed by many businesses, including market leaders such as Cisco Systems.

Criticism of the U.K. government comes in the midst of Labor’s otherwise aggressive ecommerce strategy. In 1999, U.K. was one of the first countries to implement digital signatures legislation. The Blair Government has also acknowledged the importance of ecommerce by appointing Patricia Hewitt as the minister for small business and e-commerce (Ms. Hewitt also spoke at the 2000 World Congress on IT; ref. http://www.worldcongress2000.org/en/speakers/speakers.html?speakerid=patriciah). The U.K. also faces other obstacles such as its exclusion from Europe’s single currency, the Euro.

37. France to Set Up Internet Advisory Body Including Government, Industry and Users

The French government is currently considering a plan to set up a forum consisting of 15 committee members as well as industry representatives and Internet users. Dubbed the “FDI”, the body would have a budget of FFr 10 million and would be responsible for looking at various legal issues related to the growth of the Internet and ecommerce. While analyzing problems and making recommendations, the new body would have no sanctioning powers.

38. EU-US Accord on Data Protection May Proceed Despite Rejection by European Parliament

Disregarding the European Parliament’s July 5 rejection of the “Safe Harbor” accord that will allow participating U.S. businesses continued access to personal data from Europe, the EU Internal Market Commissioner Frits Bolkestein on July 13 announced that the European Commission would formally adopt the transatlantic agreement in a matter of days. However, EUs Ambassador to the U.S., Guenter Burghardt, on July 14 indicated that it might be necessary to consider re-opening negotiations with the U.S. on certain provisions of the agreement referred to by the European Parliament. A formal letter in this regard will be sent to the U.S. Department of Commerce by end July.

The European Parliament (EP) in a 279 to 259 vote on July 5 rejected the draft agreement as “inadequate” in light of the stringent requirements contained in the 1995 EU Data Protection Directive, and accused the Commission of overstepping its powers with the conclusion of the agreement with the U.S. - requesting that the draft accord be sent back to the negotiation table. However, the EP was only consulted on procedures, making its resolution on substance non-binding. Nevertheless, the EP’s rejection of the trade accord was a first of its kind and put EUs executive body in a political dilemma. In addressing the EP on July 13, Commissioner Bolkestein “took note” of Parliament’s concerns and promised to “monitor carefully” the implementation of the accord. That move may result in further confrontations between the Parliament and the Commission before the European Court of Justice.

The Safe Harbor agreement was reached following nearly two years of negotiations between the U.S. Department of Commerce and the European Commission, and was agreed by EU Member States at a May 30 meeting of the Article 31 Committee on data privacy. The safe harbor accord will not constitute a treaty, but is a de facto set of agreed privacy guidelines for U.S. businesses that want to conduct business with EU counterparts. U.S. companies will need to self-certify that they abide by the principles contained in the safe harbor accord. In accordance with the accord, they must self-certify their compliance with the safe harbor principles annually, or no longer be part of the safe harbor system. However, companies also need to register with an independent third party enforcement authority, such as TrustE or the Better Business Bureau (BBB Online).

The EP’s requests included:

· that the Commission draft contracts for use by EU citizens in filing suits in the U.S. over alleged privacy violations (requiring a significant change in U.S. jurisprudence);

· that Europeans be granted an automatic right to have safe harbor complaints investigated by an “independent public body” similar to the data-protection commissioners operating in accordance with the Directive in EU countries;

· that the free movement of data cannot be authorized until all the components of the safe harbor system are “up and running” (requiring U.S. companies to make millions of dollars in investments to implement the safe harbor provisions with no degree of certainty whether will actually be approved).

Acting Under Secretary Robert S. LaRussa of the U.S. Department of Commerce at a June 21 industry briefing indicated that the earliest target for implementation of Safe Harbor is October 2000. When European Commission formally adopts the agreement, EU Member States will have a 90-day period to incorporate the principals contained in the agreement before it can enter into force.

· European Parliament Committee on Citizens' Freedoms and Rights, Justice and Home Affairs: http://www.europarl.eu.int/committees/libe/meetdocs/20000621/libe20000621.htm

· EP Report on Safe Harbor: http://www.europarl.eu.int/committees/libe/meetdocs/20000621/414520en.doc

· EP Amendments to Safe Harbor: http://www.europarl.eu.int/committees/libe/meetdocs/20000621/415612EN.doc

· EP July 5 press release: http://www.europarl.eu.int/dg3/sdp/journ/en/nj000705_en2.htm#9

· U.S. Department of Commerce information on Safe Harbor: http://www.ita.doc.gov/td/ecom/menu.html

39. EU and Canada to Consider Data Exchange Agreement

Following the recent adoption in Canada of a Personal Information Protection and Electronic Documents Act, European Commission officials have said an EU-Canadian data exchange agreement may be reached by the December 19 EU-Canada Summit. The Canadian legislation has been sent to the European Commission for detailed study to examine whether its data protection provisions are “adequate”, as required by the 1995 EU data protection directive. In the absence of an agreement, the transmission of personal data may be blocked between the two countries. Similar agreements are sought between the EU and its major trading partners.

The Canadian legislation has adopted a regulatory approach to Internet privacy protections and is, by most standards, much more similar to EU laws than the hands-off approach favored by the United States. However, before a data exchange agreement can be reached, a decision on the adequacy of the Canadian legislation must be approved by a weighted majority of EU’s national data protection commissioners. Next, agreement must be reached by EU’s Member States on the adequacy requirements before official approval is possible by the European Commission.

The move follows a recent Joint Statement on 'E-Commerce in the Global Information Society', affirming a joint commitment to develop a consistent international framework and co-operation in the areas of privacy, consumer protection, and security. For more information, see the joint ecommerce agreement at http://www.e-com.ic.gc.ca/english/documents/euwrkpln.pdf. See also article at http://www.totaltele.com/view.asp?ArticleID=29084&pub=tt&categoryid=0.

40. Ireland Adopts Digital Signatures Law

Less than two weeks after U.S. President Clinton signed the Electronic Signatures in Global and National Commerce Act into law, a similar bill was signed by Irish President Mary McAleese. Ireland’s Electronic Commerce Bill comes in the face of slow growth in domestic e-commerce. According to Amarach Consulting, only 10 percent of Irish Internet users made online purchases in 1999, which was the same as for 1998. According to a new Amarach study entitled “Eir-Commerce 2000”, two key reasons for the lack of growth are a scarcity of local ecommerce web sites and the fact that only a third of Irish Internet users have credit cards. It is hoped that the new digital signatures will have a very positive impact on future growth. The same study estimated that business-to-consumer (B2C) ecommerce will grow from $U.S. $38 million in 1999 to U.S. $736 million by 2002. The report also estimated that business-to-business (B2B) ecommerce would grow to U.S. 2.6 billion by 2002 and that as many as 27 percent of Irish businesses will be engaged in B2B ecommerce by 2001.

A copy of the “Eir-Commerce 2000” report can be downloaded at http://www.amarach.com/news/press3.htm. An article in E-Commerce Times can be found at http://www.ecommercetimes.com/news/articles2000/000711-3.shtml.

AMERICAS

41. U.S. Electronic Surveillance System Causes Concern

The Federal Bureau of Investigation (FBI) has been criticized by some Internet Service Providers and privacy advocates for requiring ISPs that cannot wiretap themselves to install its new electronic surveillance system. The Carnivore system must be connected directly to the ISP networks and is thought to have the potential to single out all electronic traffic originating from a targeted person; including e-mail, instant messaging, web surfing and Internet relay chat. While the FBI has vowed to respect basic privacy standards and only to investigate a court order seeking the contents of a suspect's e-mail messages. See article at specific individuals with valid court orders, the industry is concerned that the government in fact will obtain unlimited access and may be conducting excessive surveillance. Some Internet industry representatives favor the development of more open solutions developed by business, reducing suspicions and being more adaptable to Internet protocol changes. U.S.

U.S. Attorney General Janet Reno on July 14 announced that the surveillance system would be investigated to make sure its privacy standards were adequate. See article at http://www.thestandard.com/article/display/0,1151,16830,00.html. Until now, U.S. law enforcement agencies have been able to monitor electronic communication with only modest court supervision. In an effort to harmonize the different rules applying to telephone wire-tapping, Internet surveillance and e-mail interception, new legislation proposed by the Clinton Administration would require that the same standards that apply to the interception of the content of telephone calls apply to the interception of e-mail messages. In particular, the proposal would require law enforcement agents to demonstrate that they have probable cause of a crime to obtain http://www.nytimes.com/library/tech/00/07/biztech/articles/18secure.html.

42. Digital Signatures Becomes Law in the U.S.

On June 30 in Philadelphia, President Clinton signed the Electronic Signatures in Global and National Commerce Act into law. Enjoying extremely broad bi-partisan support, the House and Senate passed the bill by near unanimous margins earlier in June. The bill is a tremendous victory for the U.S. industry, granting an electronic signature entered over the Internet the same legal force and effect as a traditional signature. The Information Technology Association of America (ITAA) was a leader in the coalition comprised primarily of the technology and finance industries supporting passage of the law. A management alert memo is posted at http://www.itaa.org/software/EsignMemo.pdf.

43. U.S. to Allow Unrestricted Export of Encryption Products to Key Trade Partners

In an effort to try to improve security in cyberspace and promote e-commerce, the United States on July 17 eased its trade rules so that U.S. companies no longer need a license to export encryption products to any end user in the 15 nations of the European Union as well as Australia, Norway, Czech Republic, Hungary, Poland, Japan, New Zealand and Switzerland. The decision follows a similar initiative by the EU in early Spring 2000. The new policy removes previous distinctions between government and non-government end users and allows U.S. exporters to sell and deliver their products without the previously necessary technical review and 30-day delay. See July 17 White House press release at http://www.whitehouse.gov/library/hot_releases/July_17_2000_1.html. See also ITAA press release at http://www.itaa.org/news/pr/chron.cfm.

ASIA

44. Concerns Over Australian Privacy Amendment (Private Sector) Bill

Australia’s new Privacy Amendment (Private Sector) Bill have been criticized by some privacy advocates as containing dangerous “loopholes”, exempting small businesses from the legislation as well as direct marketing (spamming). The exemptions, however, would be coupled with a set of industry privacy codes, and are intended to reduce the burden of smaller businesses in their fight to succeed in the ecommerce world. Opponents, however, challenge the effectiveness of the self-regulatory initiatives on their basis of their perceived lack of legal recourse. It is argued that as many as 90 percent of Australian e-commerce businesses have an annual turnover of less that AU $3 million and will be exempted from the legislation. Moreover, there are concerns that, if the Bill is approved and implemented, Australian data protection may not meet the adequacy standards stipulated in the 1995 EU Data Protection Directive. If the European Commission determines that adequacy is not guaranteed, Australia might be forced to negotiate remedies with the EU, as has recently been concluded between the EU and the U.S. (see separate article). For more information, see Advisory Report on the Privacy Amendment (Private Sector) Bill 2000 at http://www.aph.gov.au/house/committee/laca/Privacybill/contents.htm. See also Australian IT article at http://www.australianit.com.au/common/storyPage/0,3811,859698%255E501,00.html.

45. Thailand Approves Accelerated IT Liberalization Plan

The Thai cabinet has approved a plan produced by the Ministry of Commerce to accelerate the liberalization of trade in information technology products. In accordance with the World Trade Organization’s (WTO) Ministerial Declaration on Trade in Information Technology Products (ITA), Thailand should abolish tariffs on a wide range of IT products by 2006. However, in accordance with a Thai cabinet resolution, liberalization will now take place two years earlier, by 2004, For more details, see Bangkok Post report at http://www.bangkokpost.net/040700/040700_Business03.html.

46. Singapore Emphasizes Intellectual Property Protection

A July 13 press release by the Singapore Trade Development Board, Police Force & Intellectual Property Office of Singapore summarizes strong intellectual property right (IPR) -related legislation, Police’s clampdown on piracy and greater emphasis on IP education. A review by members of the World Trade Organization (WTO) on June 29 concluded that Singapore’s IPR related legislation is compliant with WTO’s Agreement on Trade-Related Aspects of Intellectual Property (TRIPS). Moreover, on June 26, Ambassador See Chak Mun, Singapore’s Permanent Representative in Geneva, was appointed Chairman of the TRIPS Council. In the first half of 2000, anti-piracy efforts by the authorities have led to seizure of more than 1 million infringing articles in over 1,140 raids and inspections. Over 800 persons were apprehended by the Police in the course of these anti-piracy actions. See http://www.tdb.gov.sg/prel/pr_02400.html.

47. King of Jordan Makes IT Top Priority

King Abdullah of Jordan has issued a new framework for promoting IT in Jordan, making it an “online hub” for the Arab world. King Abdullah aims at making the IT sector the third largest, to be surpassed only by tourism and the phosphates industry. According to the plan, IT will produce 30,000 new jobs in Jordan and software exports at U.S. $550 million per annum. According to the plan, foreign investment should boom to about $150 million. France Telecom has agreed to invest U.S. $400 million by 2003 to modernize the telecommunications infrastructure and is scheduled to launch a new GSM cellular telephony network in September 2000.

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Anders Halvorsen, program manager

World Information Technology and Services Alliance, 8300 Boone Boulevard, Suite 450

Vienna, VA 22182-2633; (tel) +1 703-288-1425 / (fax) +1 617 697-6590

ahalvorsen@itaa.org; http://www.witsa.org

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The World Information Technology and Services Alliance (WITSA) consists of 41 national information industry representative bodies from around the world. Its role is to develop public policy positions on issues of concern to the information industry and present these positions to governments and international organizations. For more information on WITSA and its members, please go to http://www.witsa.org

[1] In 1999, the German ICT market reached US $136 billion in 1999 (6.4 percent of world market).

2. Global IT Industry Alliance Head Quarters to Remain in the U.S. until 2002

3. New Study Predicts Global Information Technology Spending To Reach US$3 Trillion in 2003

4. Global High Tech Industry Alliance Awards Exceptional Users of IT

q Seven-Eleven Japan Co., Ltd.: Fifth-Generation Total Information System

5. Global IT Industry Alliance Appoints First Vice-Chairman for Africa

7. 2001 Global Public Policy Conference to be held in Cape Town, South Africa

8. Industry Transformation Produces Changes to WITSA Membership

9. New Industry Association Strengthens German IT Sector

11. ITAC appoints Bob Morine as new Chair for 2000

12. Argentinean IT Association Opens 2nd Office in Miami

16. Industry Association Says Datacasting legislation will impede Australian industry

18. “Best Ever” World Congress Draws 1,790 Participants from 86 Countries

19. OECD Report Demonstrates “Digital Divide” Between Wealthy Economies

20. International Conference on Legal Rules for Cross-Border E-Business

22. New Internet Domain Names to Be Adopted by January 1, 2001

24. Internet Governance Body Overcomes Important Obstacles

25. New International Effort Launched to Widen ‘Anti-Cybersquatting’ Program

27. World Trade Body Poised to Resume Ecommerce Work

28. Key Trade Official Warns Against “Hybrid” Ecommerce Agreement

30. World Bank Announces Global Development Gateway

35. Concerns About EU Proposal to Tax Ecommerce

36. U.K. Torn on Legislation Affecting the Internet

37. France to Set Up Internet Advisory Body Including Government, Industry and Users

38. EU-US Accord on Data Protection May Proceed Despite Rejection by European Parliament

39. EU and Canada to Consider Data Exchange Agreement

41. U.S. Electronic Surveillance System Causes Concern

12. Argentinean IT Association Opens 2^nd Office in Miami