Communique fails to lift tax ban fog

The Irish and US governments' joint communique on electronic commerce, digitally signed by the Taoiseach and President Clinton last Friday at Gateway Computer's Dublin plant, is an interesting read if you find subtleties and semantics appealing.

The signing itself was the central focus of the ceremony last week, of course, since sealing an agreement with electronic signatures was an historic event. But it is worth having a closer look at the document itself. You can access it on the Web, along with background about the signing and an image of the signed document, from the site of Baltimore Technologies, the Dublin company which created the software used for the signatures.

The communique says who will gain from e-commerce: "Small and medium-sized enterprises, in particular, will benefit from new opportunities to sell their products to a world-wide market." So, some food for thought if you have an SME; it's an indication that both governments will be keeping those users in mind as they draft policy.

The document then goes - very briefly and generally - into nine "fundamental principles" which the governments believe should guide e-commerce.

The document essentially follows the points laid down in the EUUS Joint Statement on Electronic Commerce, which the communique acknowledges, while expanding on those points.

According to President Clinton's senior trade adviser, Mr Ira Magaziner, the communique has two particularly significant features. The first, a commitment to making the recent World Trade Organisation vote to ban customs duties on electronic transactions a permanent arrangement. The WTO countries had agreed in June to a oneyear prohibition, although the US had lobbied hard for a permanent ban.

At the time, the Minister of State, Mr Tom Kitt, expressed reservations about the agreement at EU level. This seemed a surprising move for Ireland - to be one of only two countries objecting to the tax ban. The Government claimed it was partly for administrative reasons - it believes the WTO may have no proper jurisdiction in this area and thus, the Organisation for Economic Co-operation and Development (OECD) would have been the correct forum for such a vote.

Yet according to sources who worked on the document, the communique, which should have been drafted and signed at the time of Mr Magaziner's visit in June, was delayed partly because the Government still objected to a tax ban.

The Minister for Public Enterprise, Ms O'Rourke confirms this, and insists, "that has all been resolved now". Yet surely there are some crossed wires in Government if, on the one hand, it is trying to strongly push Ireland as a future centre for e-commerce, yet remained furtive for weeks after the WTO vote about its right to implement taxes on the Net - when additional taxes would clearly slow e-commerce growth.

Although Ms O'Rourke and Mr Magaziner say the topic is settled, the communique seems deliberately ambiguous on the point. The relevant phrase notes "the strong desirability of continuing the current practice of not imposing customs duties on electronic transactions" - not exactly a resounding cry of "no new taxes". There's a commitment to having taxation remain "neutral" as well, but again, that's hardly a definitive statement.

The second significant principle in the document, according to Mr Magaziner, is support for an international agreement to accept authentication and digital signatures, taking a "market-oriented approach". Of course, if only some countries recognise signatures, that makes for a legal nightmare (some say the Net already presents a legal nightmare, but one can assume lucre will win out and many of the confusions and uncertainties will be ironed out in due course).

Other points are interesting for what they do not say. For example, on privacy, the communique states that "ensuring effective protection of privacy with regard to the processing of personal data on global information networks is necessary". That both nods in the direction of the upcoming EU directive on privacy but does not compromise the US's stated intent to protect privacy. The US wants industry to self-regulate and the EU wants legal protections. That difference will be one of the hottest issues for the October OECD meeting in Canada.

Ireland can be proud that the signing took place here. But if the State wants to lead in e-commerce, the Government will need to clarify its thinking on some of the communique's points, and businesses and individuals should be following and contributing to the debate.

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Karlin Lillington is at klillington@irish- times.ie