SPEECH BY PRESIDENT MARTTI AHTISAARI AT THE OECD CONFERENCE "DISMANTLING THE BARRIERS TO GLOBAL ELECTRONIC COMMERCE"

IN TURKU ON 20.11.1997

Ladies and Gentlemen,

I bid you welcome to this OECD conference on the important theme of electronic commerce here in Turku. I congratulate the organisers on their choice of a very topical subject and ideal venue.

Turku is Finland's oldest city and is considered the cradle of our education system. It was here that our country's first university was founded in 1640. Today, there are two universities and several other third-level institutions and research institutes in the city. Their own research and training programmes and active collaboration with the wider society give companies and the people of the region splendid opportunities to advance in the vanguard of development.

The media nowadays discuss matters connected with electronic commerce on a daily basis. The subject is the focus of national and international discussion. It is seen as a great opportunity, but also one with which many problems are associated. I hope that this conference will contribute to finding a range of concrete solutions to the problems connected with electronic commerce.

Relative to population, our country has more Internet connections and mobile phones than any other. Hi-tech industry accounts for a constantly growing share of our gross domestic product and is becoming a new pillar of our economy alongside the sectors of industry that have traditionally supported it. Our public administration has been quick to avail of the potential of information networks by offering citizens a growing range of information services and opportunities to participate through the Internet. Education and research continue to strengthen our position in the front line of development.

These factors combined with our deregulated telecoms sector and sophisticated basic technical infrastructure provide us Finns with excellent opportunities to participate in and develop electronic commerce.

New inventions and a constantly accelerating pace of change are typical features of our time. The life span of new products seems to be constantly shortening. That applies in particular to information technology products, which can have become "ancient relics" by the afternoon of the same day that they are put on the store shelf.

Parallel to this, our world is shrinking at a dizzying pace. Technological development is lessening the importance of distance, and in some ways even eliminating it. Whether one's location is central or remote depends less and less on geography and more and more on the level of the technology one uses.

We talk of an information revolution, in which information has replaced labour, capital and raw materials as the most important factor of production.

The inventions that made the information revolution and the earlier industrial revolution possible were developed in the course of a period that was extremely short in the overall context of human history. The pace of technological development in our own lifetime has been bewildering. Who among us can not remember, for example, what an enormous boost to efficiency the electric typewriter brought only a couple of decades ago. Now we find those proud golf-ball and daisy-wheel machines in museums.

Technology has been developing at a giddy pace, and there is nothing to indicate that it is slowing down. On the contrary, the wheels of development will turn faster and faster.

Electronic commerce is part of the information revolution. However, the business world's interest in adopting it springs from traditional motives: reducing costs, securing new markets and increasing customer satisfaction. Companies pursue the goal of improving their competitiveness, as they have always done. What electronic commerce gives the consumer better information about what vendors are offering and lower prices.

Great opportunities are inherent in electronic commerce. Markets are global and both small and large companies and consumers can participate irrespective of domicile. Today, the market area of a small company just starting up can be the whole world.

Electronic impulses take offers, bids, information on payments or even the product itself to the other side of the globe in seconds. These impulses can not be stopped at national frontiers, nor is there any need to erect new borders. Electronic commerce must be developed as a genuinely global phenomenon, in which participation is as comprehensive as it can possibly be.

The title of this conference, "Dismantling the Barriers to Global Electronic Commerce", is challenging. We know only too well how difficult and time-consuming it has been, and still is, to eliminate obstacles to world trade.

Before barriers to electronic commerce can be eliminated, of course, they must first be identified. I do not wish to pre-empt the conclusions of this conference, but I shall call to your attention, by way of example, five totalities of matters that affect the development of electronic commerce. It is not an exhaustive list; indeed, quite a number of other matters that are equally important impinge on this category of commerce.

(i) Recent agreements removing barriers to trade in information technology and telecommunication products will promote the provision of the infrastructure that is needed to facilitate this commerce. It is now of primary importance to ensure that these agreements are implemented without delay. In addition to that, the aim in the ITA Agreement review process must be to redress the shortcomings that remain in the Agreement since the last round of negotiations.

(ii) The nature of products that can be delivered electronically makes protection of intellectual property rights a matter of front-rank importance. The holders of these rights must be able to feel confident that their property will not be used without compensation. From the perspective of the consumer, it is important to be able to trust that the products they buy are genuine. The treaties concluded at the World Intellectual Property Organisation (WIPO) in December 1996 are a step towards protecting copyright on products that are delivered electronically. The treaties should be brought into force as soon and as comprehensively as possible. The next step could be to include the WIPO provisions in the World Trade Organisation (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

(iii) The partners in electronic commerce can be on opposite sides of the globe. Recognising commercial partners and authenticating messages requires the use of encryption techniques. Access to these encryption products should be as easy as possible for all engaged in legitimate commerce. For that reason, restrictions on their use and on trade in them should be avoided. On the other hand, criminals can try to use encryption to keep their nefarious activities secret. Combatting and preventing this calls for international cooperation between national authorities.

(iv) Guaranteeing the user's privacy is of primary importance in building trust in electronic commerce. Privacy rules differ from country to country and from region to region. To prevent this becoming an obstacle, it would be advisable to reach international agreement on privacy protection. Voluntary measures taken by business to introduce "best practice" standards are highly recommendable.

(v) Securing the trust of consumers is a central prerequisite for getting commerce flowing through information networks. Thus companies have a natural interest in winning that trust. However, self-regulation will not necessarily be enough and the creation of international ground rules that will give consumers the requisite confidence must be considered.

As its name indicates, electronic commerce is a commercial activity the development of which is mainly a task for the market to perform. Companies engage in electronic commerce, because it increases their competitiveness. The use of information networks is a natural step in a process, which has earlier taken trade flows from narrow paths and camel trails to air and sea routes, railways and roads.

One can justifiably ask whether regulation is needed in electronic commerce, and if so in what form. It is the task of governments to create an efficient, transparent and predictable legal framework to facilitate this commerce. Governments should avoid unilateral national or regional actions that would hamper its development.

National authorities and international organisations can spur the development of electronic commerce by using information networks in their own work. A good example is the use of open information networks to invite tenders and facilitate their submission.

For those of us who live in developed countries, computers, information networks, the Internet and other new-technology products are everyday things that we take for granted. We must, however, remember that the vast majority of people in the world do not have a telephone within walking distance of their home.

We must prevent the present technology gap from becoming a permanent additional divider between the wealthy North and the poor South. We must also help the developing countries to partake of the benefits of new technology.

Although the acceleration of development is not without its problems, both the falling relative price of new technology and its shrinking physical size improve the prospects of success in this. Let us take as an example the telecommunications sector, which developing countries can base, at least in part, on more efficient and lower-cost mobile phone networks. That would render it unnecessary to build extremely expensive cable networks everywhere, and developing countries would be able to "leap" several generations of technology forward.

To be able to talk of frontierless world-wide electronic commerce, we must make sure that also customers and citizens in developing countries are able to participate in it, both as vendors and as purchasers. Putting this into practice is an enormous challenge for all of us.

We shall be celebrating the 50^th anniversary of the multilateral trade system next year. Those decades have seen the achievement of enormous results in efforts to eliminate barriers to trade. Electronic commerce is a new step on the road of liberalising trade. We must, true to the title of this conference, strive to dismantle barriers to global electronic commerce and agree that they will not be erected in the future, either.

I wish you good fortune and success in your work at this conference and in other fora^.