15 March 1999. Thanks to TK.
Source: http://www.nds.coi.gov.uk/coi/coipress.nsf/ec99f27fdec7ef20802564da002d9e0f/072c307192e814068025672b00580db6?OpenDocument

P/99/200 5 March 1999

BUILDING CONFIDENCE IN ELECTRONIC COMMERCE

Government consults on proposals to make UK best place to trade
electronically

With Electronic Commerce set to soar to #350 billion world-wide by
2002 and with six million Britons already on-line, the Government is
introducing proposals today to boost our economy's competitiveness by
giving the UK a head start in the new digital marketplace.

"Building Confidence in Electronic Commerce - A Consultation
Document", is published by Trade and Industry Secretary Stephen Byers
and Home Secretary Jack Straw. It aims to build people's trust in
trading on the internet and is a central part of the Government's
strategy to ensure that the UK becomes the world's best place to do
business electronically. The UK is already well-placed - with over 1
million internet users, and 15 per cent of the adult UK population
already having visited the World Wide Web.

Publishing the paper, Stephen Byers said:

"The way we do business in the future is set to change dramatically.
It is essential that Britain is at the forefront of these changes and
building trust is crucial.

"Our proposed legislation will do this. It will start removing the
legal barriers to using electronic means, instead of pen and paper,
in everyday dealings - for example between people and Government,
between businesses and customers or between companies and their
shareholders.

"It will also enhance confidence in the technologies which people can
use to ensure that others cannot read their credit card data when
they shop on line and businesses can use to ensure that sensitive
information is not being read by competitors. Encryption is vital to
this as a way of supporting electronic signatures as well as
protecting the confidentiality of documents.

"Taken together, the provisions in this paper, which will form the
basis of our Electronic Commerce Bill, will give the UK the most
attractive legal framework in the world for doing electronic
business".

Technology now allows messages to be signed electronically, so people
can check who has sent them messages, and also ensure that they have
not been tampered with. Similar technology can also now be used to
keep messages confidential.

The consultation paper seeks views on an number of issues:

establishing a voluntary licensing system for businesses who
provide such services (including electronic signatures and
confidentiality) to give the public a guarantee of high standards of
quality and service;

setting the criteria which applicants for these licences will have
to meet;

updating the law to reflect these technologies, so that users can
place greater reliance on electronic signatures, by allowing the
courts to recognise signatures meeting the required standards. Other
obstacles in existing laws which insist on the use of paper will be
swept away wherever it makes sense to do so;

establishing the liability of service providers towards their
customers and others;

maintaining the effectiveness of existing law enforcement powers,
in the face of increasing criminal and terrorist use of encryption
and proposals for lawful access to encryption keys. The powers will
only apply to material which itself has been, or is being obtained
under lawful authority and will not extend the range of material to
which agencies are allowed access; and

ways of meeting the needs of law enforcement agencies by existing
and forthcoming developments in encryption and communications
technologies.

Jack Straw said:

"Cryptography has an important contribution to make in the successful
development of electronic commerce.

"Alongside this, the Government also has a fundamental responsibility
to protect the public. Encryption is already being used by drug
traffickers, terrorists and paedophiles. We must ensure that vital
law enforcement powers keep pace with this new technology.

"We are therefore announcing today proposals for lawful access to
encryption keys.

"We need to maintain the effectiveness of existing interception and
search and seizure powers which are essential to the battle against
serious crime and terrorism".

NOTES FOR EDITORS

1. Mr Byers was responding to a Parliamentary Question from Vernon
Coaker MP for Gedling. A copy of the full Parliamentary answer is
attached.

2. Media copies of the consultation document are available from DTI
Press Office on 0171 215 6409 or from Home Office Press Office on
0171 273 4610.

3. Non-media copies are available on the DTI website:
www.dti.gov.uk/CII/elec/elec_com.html or from David Lee, Electronic
Commerce Bill Team, 0171 215 1435

4. Comments on the consultation paper are requested by Thursday
1 April.

5. Much of what the Government has proposed has already been broadly
welcomed. However, there has been much debate about key escrow and
third party key recovery, - essentially ways of storing
confidentiality keys or of recovering encrypted data. These allow
critical data to be recovered both for business and other users of
encryption, either for themselves or in response to authorised
requests from law enforcement agencies. Industry has argued that
making this a requirement under the licensing scheme could hinder the
development of electronic commerce in the UK.

6. The Government has therefore decided to consult on the basis that
this will not be a requirement for licensing.

7. Government and industry have a common interest in fighting crime.
The Prime Minister is therefore establishing a partnership with
industry to identify ways of meeting law enforcement requirements
while promoting the growth of electronic commerce. The Government is
seeking ideas on how these dual objectives might be promoted via the
licensing scheme or otherwise.

PQ

Vernon Coaker (Gedling) : To ask the Secretary of State for Trade and
Industry, what progress he has made in preparing legislation to
promote electronic commerce. 75548

Stephen Byers

The way we do business in the future is set to change dramatically.
It is essential that Britain is at the forefront of these changes and
building trust is crucial. The Government has set the ambitious goal
of developing the UK as the world's best environment for electronic
trading by 2002. I will shortly be appointing an e-envoy to push
forward our strategy for achieving this. An important part of our
strategy is the proposed legislation on Electronic Commerce, which I
intend to present to Parliament later this session. I am publishing a
consultation paper on the Bill today, and have placed copies in the
Vote Office. I am determined to get this legislation right by
developing it in consultation with industry and other interested
parties, to provide a clear, consistent and predictable legal
environment for business.

Developing trust on-line, building public confidence in "electronic
signatures" and clarifying their legal status are essential if we are
to promote electronic commerce. Our proposed legislation will do
this. It will start removing the legal barriers to using electronic
means, instead of pen and paper, in everyday dealings - for example
between people and Government, between businesses and customers, or
between companies and their shareholders.

It will also enhance confidence in the technologies which people can
use to ensure that others cannot read their credit card data when
they shop on line and businesses can use to ensure that sensitive
information is not being read by competitors. Encryption is vital to
this as a way of supporting electronic signatures as well as
protecting the confidentiality of documents.

However encryption poses a serious threat to the effectiveness of the
agencies tasked with combating crime and threats to national
security, who rely on legal access to both stored and communicated
data. As, increasingly, such data becomes encrypted they need access
to the keys to unlock any material they lawfully obtain. We therefore
intend to give those agencies legal powers to obtain encryption keys,
under properly authorised procedures and on a case by case basis,
wherever they are held. The powers will only apply to material which
itself has been, or is being, obtained under lawful authority and
will not extend the range of material to which agencies are allowed
access. The procedures will contain strong safeguards.

Much of what the Government has proposed has been broadly welcomed.
However, there has been much debate about key escrow and third party
key recovery - essentially ways of storing confidentiality keys or of
recovering encrypted data. They allow critical data to be recovered
both for business and other users of encryption for themselves or in
response to authorised requests from law enforcement agencies.
However, industry has argued that making this a requirement under the
licensing scheme could hinder the development of electronic commerce
in the UK.

The Government has therefore decided to consult on the basis that
this will not be a requirement for licensing. But law enforcement
faces a serious problem. Government and industry have a common
interest in fighting crime. The Prime Minister is therefore
establishing a partnership with industry to identify ways of meeting
law enforcement requirements while promoting the growth of electronic
commerce. The Government is seeking ideas on how these dual
objectives might be promoted via the licensing scheme or otherwise.

Topics on which we are seeking views also include: legal recognition
of electronic communications, exactly how the voluntary licensing
scheme run by OFTEL for providers of cryptographic services licensing
will work, the liability of service providers towards their customers
and others, other possible changes to legislation to promote
electronic commerce and the way the law enforcement provisions will
affect licensed providers, unlicensed providers and other people.

Taken together, the proposals in this paper, which will form the
basis of our Electronic Commerce Bill, will give the UK the most
attractive legal framework in the world for doing electronic
business. The paper is available at

http://www.dti.gov.uk/CII/elec/elec_com.html



# = pounds sterling