Monday, July 7, 1997
Vol. 33, No. 27, ISSN: 0511-4187
Memorandum on electronic commerce.
� July 1,1997
� Heads of Executive Departments and Agencies
� Subject: Electronic Commerce
� The invention of the steam engine two centuries ago and the
subsequent harnessing of electricity for communications ushered in an
brought the world's people closer together in time and space, changed
the way we organize our economies, and brought us greater prosperity.
� Today, we are on the verge of another revolution. Inventions like the
integrated circuit, the computer, fiber optic cable, and the Internet
are changing the way we work, learn, and communicate with each other.
� Students and teachers can have immediate access to the world's
informationfrom their classrooms; doctors can administer diagnoses to
patients in remote parts of the globe from their offices; and citizens
of many nations are finding additional outlets for personal and
� As the Internet empowers citizens and democratizes societies, it is
also changing the way business is conducted: entrepreneurs are able to
start new businesses more easily by accessing the Internet's worldwide
network of customers; world trade involving computer software,
entertainment-products, information services, professional consulting,
financial services, education businesses, medical diagnostics,
advertising, and technical services is increasing rapidly as the
commercial transactions; engineers, product developers, and managers
thousands of miles apart can collaborate to design and manufacture new
products more efficiently; businesses can work more efficiently with
their suppliers and customers; consumers have greater choice and can
shop in their homes for a wide variety of products from manufacturers
and retailers all over the world, and they will be able to view these
products on their computers or televisions, access information about
the products, and order and pay for their choices, all from their
� According to several estimates, commerce on the Internet will total
tens of billions of dollars by the turn of the century and could expand
rapidly after that, helping fuel economic growth well into the 21st
� For this potential to be realized, governments must adopt a
market-oriented approach to electronic commerce, one that facilitates
the emergence of a global, transparent, and predictable environment to
support business and commerce.
recognize that widespread competition and increased consumer choice
should be the defining features of the new digital marketplace.
� Many businesses and consumers are still wary of conducting extensive
business over the Internet because of the lack of a predictable legal
environment governing transactions. This is particularly true for
international commercial activity where concerns about enforcement of
contracts, liability, intellectual property protection, privacy,
security, and other matters have caused businesses and consumers to be
� Many companies and Internet users are also concerned that domestic or
foreign governments will impose extensive regulations on the Internet
and electronic commerce including taxes and tariffs, restrictions on
the type of information transmitted, control over standards
development, licensing requirements, and extensive regulations of
Internet service providers. Indeed, signs of these types of
commerce-inhibiting actions already are appearing in many nations.
� Governments can have a profound effect on the growth of electronic
inhibit it. Knowing when to act and - at least as important - when not
to act, will be crucial to the development of electronic commerce.
� Today I have approved and released a report - "A Framework For Global
Electronic Commerce" - outlining the principles that will guide my
Administration's actions as we move forward into the new electronic age
of commerce. This report articulates my Administration's vision for the
emerging digital marketplace by declaring a set of principles,
presenting a series of policies, and establishing an agenda for
international discussions and agreements to facilitate the growth of
electronic commerce. I expect all executive departments and agencies to
review carefully the principles in this framework and implement
� Accordingly, I am hereby directing that executive department and
agency heads should be guided in any future actions they take related
to electronic commerce by the following principles:
� * For electronic commerce to flourish, the private sector must lead.
Therefore, the Federal Government should encourage industry
to develop technology and practices that facilitate the growth and
success of the Internet.
� * Parties should be able to enter into legitimate agreements to buy
and sell products and services across the Internet with minimal
government involvement or intervention. Therefore, the Federal
Government should refrain from imposing new and unnecessary
regulations, bureaucratic procedures, or taxes and tariffs on
commercial activities that take place on the Internet.
� * In some areas, government involvement may prove necessary to
facilitate electronic commerce and protect consumers. Where
governmental involvement is necessary, its aim should be to support and
enforce a predictable, consistent, and simple legal environment for
� * The Federal Government should recognize the unique qualities of the
Internet including its decentralized nature and its tradition of
bottom-up governance. Existing laws and regulations that may hinder
electronic commerce should be revised or eliminated consistent with the
unique nature of the Internet.
� * The Internet is emerging as a global marketplace. The legal
framework supporting commercial transactions on the Internet should be
governed by consistent principles across State, national, and
international borders that lead to predictable results regardless of
the jurisdiction in which a particular buyer or seller resides.
� I also direct the relevant agencies as identified in "A Framework For
Global Electronic Commerce" to pursue the following policies:
� 1. I direct the U.S. Trade Representative to work with foreign
governments to secure agreement within the next 12 months that all
products and services delivered across the Internet will not be subject
to tariffs and that all equipment from which the Internet is built will
also not be subject to tariffs.
� 2. I direct the U.S. Trade Representative to work with foreign
governments to enforce existing agreements and secure new agreements to
make electronic commerce a seamless global marketplace. This will
include enforcing provisions of the recently concluded World Trade
product testing, certification, and approval processes do not
unnecessarily restrict trade; ensuring that service providers have
nondiscriminatory access to customers worldwide; and other measures
that ensure a free flow of commerce.
� 3. I direct the Secretary of Commerce to seek the protection of
copyright in the digital environment by working to achieve ratification
in the United States and overseas within the next 12 months of the
World Intellectual Property Organization (WIPO) Copyright Treaty and
the WIPO Performances and Phonograms Treaty.
� 4. I direct the Secretary of Commerce to update and make more
efficient our system for protecting patentable innovations to meet the
needs of the fast-moving electronic age and to seek agreements with
other governments to protect patentable innovations worldwide.
� 5. I direct the Secretary of Commerce to support efforts to make the
governance of the domain name system private and competitive and to
create a contractually based self-regulatory regime that deals with
potential conflicts between domain name usage and trademark laws on a
� 6. I direct the Secretary of the Treasury to work with State and
local governments and with foreign governments to achieve agreements
that will ensure that no new taxes are imposed that discriminate
against Internet commerce; that existing taxes should be applied in
ways that avoid inconsistent national tax jurisdictions and double
taxation; and that tax systems treat economically similar transactions
equally, regardless of whether such transactions occur through
electronic means or through more conventional channels of commerce.
� 7. I direct the Secretary of Commerce to work with the private
sector, State and local governments, and foreign governments to support
the development, both domestically and internationally, of a uniform
commercial legal framework that recognizes, facilitates, and enforces
electronic transactions worldwide. I further direct the Secretary of
Commerce within the next 12 months to seek to gain agreement with the
private sector, State and local governments, and foreign governments,
both domestically and internationally, on common approaches for
authentication of electronic transactions through technologies such as
of Management and Budget to encourage private industry and privacy
advocacy groups to develop and adopt within the next 12 months
effective codes of conduct, industry developed rules, and technological
solutions to protect privacy on the Internet consistent with the
Privacy Principles issued by the Information Infrastructure Task Force
(IITF) Privacy Working Group. I further direct the Director of the OMB
to develop recommendations on the appropriate role of government
consistent with "A Framework for Global Electronic Commerce." I further
direct the Secretary and the Director to ensure that means are
developed to protect the privacy of children.
� 9. I direct the Secretary of Commerce to encourage the development
and adoption within the next 12 months by industry of easy to use and
effective rating systems and filtering technologies that empower
parents, teachers, and other Internet users to block content that is
inappropriate for children.
� 10. I direct the Secretary of Commerce to support private sector
development of technical standards for the Internet and the U.S. Trade
standards or to use standards for electronic commerce as non-tariff
� 11. I direct the Secretary of the Treasury to cooperate with foreign
governments to monitor newly developing experiments in electronic
payment systems; to oppose attempts by governments to establish
inflexible and highly prescriptive regulations and rules that might
inhibit the development of new systems for electronic payment; and as
electronic payment systems develop, to work closely with the private
sector in order to keep apprised about policy development and ensure
that governmental activities flexibly accommodate the needs of the
� 12. I direct all executive departments and agencies to promote
efforts domestically and internationally to make the Internet a secure
environment for commerce. This includes ensuring secure and reliable
telecommunications networks; ensuring an effective means for protecting
the information systems attached to those networks; ensuring an
effective means for authenticating and guaranteeing confidentiality of
electronic information to protect data from unauthorized use; and
understand how to protect their systems and their data.
� 13. I direct the Administrator of General Services to move the
Federal Government into the age of electronic commerce by expanding
"GSA Advantage," its online shopping service for the Federal community
to cover four million items by 12 months from now.
� I am asking the Vice President to lead an interagency group
coordinating the U.S. Government's electronic commerce strategy.
Further, I am directing that executive department and agency heads
report back to the Vice President and me through this interagency group
every 6 months on their progress in meeting the terms of this
� 1 White House correction.
� William J. Clinton