Resolution of the Council of Ministers no. 94/99, of 25 of August

Presidência do Conselho de Ministros (Council of Ministers' Presidency)

Resolution of the Council of Ministers

The new information technologies have contributed to an increasing growth of electronic commerce. It is to be expected that a substantial part of world commerce will be transacted electronically, in the near future. The opportunities created by electronic commerce, i.e. the reduction of the impact of physical distance gives peripheral economies, such as the Portuguese economy, new opportunities to intervene in a global economy.

The fact is that global information networks now afford access to markets with were hitherto beyond the reach of Portuguese business. The new possibilities created by information and communications technologies, furthermore, make it possible to increase productivity, to reduce costs, to increase the flexibility of the response to market changes and create the possibility of new forms of co-operation between enterprises, which are distant from each other and to create innovative production and distribution structures and new products and services.

It is therefore necessary to create conditions in which electronic commerce can develop in Portugal, so that the competitiveness of Portuguese business is safeguarded in this new world-wide competitive climate, which, in Europe, is increased by the existence of a single currency.

The awareness that the Portuguese economy has to meet and overcome the new challenges created by world-wide competition, led the Green Book on the Information Society, to indicate the need to create conditions for and to encourage electronic commerce and data transfer, including within the Civil Service. The Government accordingly took Council of Ministers Decision no. 115/98, of the 1st of September, which created the National Electronic Commerce Initiative and established the general principles by which it should be guided and gives the Ministers of the Economy and Science and Technology the task of co-ordinating the process of the implementation of the objectives included therein.

The said resolution also gives the Mission Team for the Information Society the mandate to prepare Guidelines for the National Electronic Commerce Initiative, to be submitted to the Government.

The elaboration of this document was the product of a broad public consultation procedure involving organisations active in the area of electronic commerce. The document identifies a key series of objectives, the attaining of which will be a very significant step towards the implementation of the underlying objectives of the creation of the National Electronic Commerce Initiative, which should therefore be promoted.

It is important, however, to state that State intervention in this area must act as a stimulant and be secondary. The expansion of electronic commerce should fundamentally be based on the efforts of the private sector, which is, on the one hand, responsible for investing in the development of new services and innovative applications, to strengthen and improve skills in the area of electronic commerce, for the development of excellence projects and, on the other hand, to create self-regulatory mechanisms with regard to the content and rules of conduct of electronic commerce.

The reformulation by Portuguese enterprises of their information systems, so as to enable them to be integrated within digital networks, will promote job creation in this sector, increase vocational qualifications, facilitate the modernisation of business structures, rejuvenate management, increase competitiveness and open up new markets.

The State's role is to create a legislative framework and regulations, which assist the development of electronic commerce. The current legislative environment is designed for traditional forms of commerce.

It is therefore necessary to adapt it to the market developments in the context of the information society, for example, the existence of a legislative framework, which includes the legal provisions applicable to electronic documents, digital signatures, electronic invoices, consumer protection in the context of electronic commerce, the protection of intellectual property rights in the use of electronic commerce and the security and confidentiality of data regarding commercial relations in databases or which circulate in telecommunications networks. The complete development of electronic commerce also requires that transactions effected electronically are not discriminated against in tax terms and should not be subject to additional charges to tax in relation to traditional commercial activity, in accordance with the international recommendations made regarding such matters. The Government must also promote and publicise electronic commerce, both in the business community and to the general public, and support and encourage the use thereof.

The Council of Ministers according decides the following, pursuant to the provisions of para. g) of article 199 of the Constitution:

1. The Guidelines of the National Electronic Commerce Initiative, which are an appendix hereto and an integral part hereof, are approved.

2. The Minister of Science and Technology shall monitor and take part in the procedure to implement the measures envisaged in the Guidelines of the National Electronic Commerce Initiative, in close collaboration with the other members of the Government, and shall, in this context, promote the production of statistical indicators regarding the development of electronic commerce in Portugal.

3. The Minister of the Economy shall, in collaboration with the other members of the Government, promote the adoption of measures, including legislation, with a view to the full development of electronic commerce within the business community, particularly among small and medium size enterprises.

4. The Assistant Minister to the Prime Minister shall conduct awareness and information campaigns regarding the potential and advantages of electronic commerce, targeted at consumers, and shall promote the adoption of measures, including legislation, which encourages the use of electronic commerce by consumers.

5. The Minister of Finance shall, in close collaboration with the other members of the Government, promote the adoption of measures with a view to the development of electronic commerce in relations between the State and its customers or suppliers.

6. Private organisations, i.e. organisations, which represent the business and financial sectors, shall be consulted during the process of the implementation of the objectives in the Guidelines of the National Electronic Commerce Initiative.

Guidelines of the National Electronic Commerce Initiative

1 - Introducion

Electronic commerce offers great opportunities for growth, with the development and consolidation of what has become known as the "information society". Global information networks play an increasingly important role in flows of commercial information. An increasing number of transactions between enterprises is effected by electronic document transfer. Personal computers connected to the Internet are used to place and process orders and an increasingly significant proportion of goods and services are transacted via digital networks. In these Guidelines, electronic commerce is deemed, in line with the recommendations of the OECD recommendations, to refer to all forms of commercial transactions, which involve either organisations or individuals and which are based on the processing and transfer of data electronically, including text, sound and image.

The globalisation of the economy is now an undeniable reality. Large companies compete with each other in markets, which are increasingly broad, and define their strategies and alliances globally. Even small and medium size enterprises, which trade in market niches, are increasingly experiencing their markets as global markets.

Will this globalisation process, which is the consequence of the amazing progress in communications and information technologies, mean the disappearance of small and medium size enterprises from the business fabric?

At first sight, it may appear that this is the fate of all business organisations, which do note devote themselves to constant growth. Paradoxically, however, globalisation strengthens the importance of the local economy by reducing the importance of distance, a consequence of the new information technologies and particularly of electronic commerce. Small and medium size enterprises are therefore given the possibility of new forms of intervention in the global market. This overall situation increases the urgency of action to promote electronic commerce, as a way of protecting the competitiveness of Portuguese small and medium size enterprises.

For sectors, which are considered to be traditional and are historically older, such as the mould production, automotive part, footwear and clothing industries, access depends increasingly less on location and increasingly on the width of the communications band for the exchange of information between customers and suppliers.

To summarise, business activity supported by digital networks opens up a new range of opportunities to improve competitiveness, create new products and services and conquer new markets.

The reasons, which favour this new context, are various:

Global information networks now afford access to markets, which have hitherto been beyond the reach of most enterprises, thus creating an awareness of the global market on the part of the business community;

The new possibilities created by the information and communications technologies make it possible to increase productivity, reduce costs and to increase the flexibility of the response to market changes, to share the design process of complex products and adapt production in real time to consumer preferences;

New forms of co-operation between enterprises which are geographically distant from each other, i.e. the sharing of design and logistics, are now possible, thus giving rise to innovative production and distribution structures and to the appearance of hitherto unknown products and services. The Green Book for the Information Society in Portugal, which has already been published, identified the need to both promote and facilitate electronic commerce, to promote electronic data transfer, including the promotion of such transfers within the Civil Service. These are two aspects, which are part of electronic commerce in the broad sense. There are a series of steps to be taken, which have already been indicated, i.e. to create legal certification and recognition mechanisms for electronic commerce, to promote the harmonisation, interoperability and security of payment methods, to review the existing tax systems so as to safeguard the interests of the State vis-à-vis the growth in electronic commerce transactions, together with an active intervention to promote electronic commerce as a way to improve the competitiveness of traditional economic sectors in the global market, which have already been indicated. This requires concerted action so that the benefits of electronic commerce can be adopted by the general public, the business community and the State.

This matter has received a significant amount of attention internationally. On the 1st of July 1997, President Clinton, formulated a series of guidelines for the development of global electronic commerce, which were intended to influence the departments of his administration, business and the governments of the main trading partners of the United States, with a view to reducing the limitations on the Internet and preventing negative effects on global trade.

At the same time, the European Union held a ministerial meeting entitled "Global Information Networks: Realizing the Potential", in Bonn from the 6th to the 8th of July 1997, at which various recommendations regarding electronic commerce were formulated, to be effective at the State, European Union and international co-operation levels.

These two movements led to a joint statement on electronic commerce by the European Union and the United States of America, signed by President Santer and President Clinton on the 5th of December 1997. At the same time, on the 29th of October 1997, the German Federal Government created the German Federal Government Electronic Commerce Initiative. The report entitled "Commerce électronique: une nouvelle donné pour les consommateurs, les entreprises, les citoyens et les pouvoirs publics», was to provide a basis for the French Government s programme for the development of electronic commerce, Finally, the World Trade Organisation (WTO) presented its study "Electronic Commerce and the Role of WTO".

More recently, in April 1998, the American Secretariat for Electronic Commerce, which is part of the U.S. Department of Trade, published a report on the optimistic perspectives, which were opening up for this segment of commerce, within the context of what it termed the "emerging digital economy". It is a fact that electronic data interchange has developed considerably since the publication of the EDIFACT rules by the United Nations about a decade ago, although without giving rise to major transformations. The Internet phenomena has, however, considerably accelerated the flow of commercial transactions in digital form, given the low cost and relative simplicity of the use of the Internet, which thus opens up a new world to consumers and small and medium size enterprises. The rapid growth of the Internet and EDI gives rise to a forecast that electronic commerce may, in the year 2000, account for 20% of inter-organisational world trade. This rate of growth means that there can be no delay in the launching of national initiatives in this area, otherwise there is a risk that an opportunity to improve the global competitiveness of national enterprises and the contributions flowing therefrom in terms of employment, economic development and convergence with our partners in the European Union, will be lost. The peripheral location of Portugal in relation to its partners in the centre of Europe is reason to believe that added benefits will arise from the use of digital technology systems. In this context, membership of the Euro and the stimulus to modernisation given by the need to solve the Y2K bug problem can, if properly taken advantage of, provide a favourable environment for the development of the National Electronic Commerce Initiative.

2 - General Objectives

The competitiveness of Portuguese small and medium size enterprises depends on their capacity to participate in the global market. It is not possible to compete, in an environment, which is increasingly based on the digital economy, without using the tools, which characterise and give life to this economy. Electronic commerce is a fundamental means to increase competitiveness in the global market. For it leads to the adoption of new forms of work organisation and imposes requirements in terms of the reorganisation of information systems, so that the benefits of access to a wider market can be enjoyed. The reduced importance of physical distance and the redefinition of the concept of accessibility, which above all depends on the available band width and the quality of the telecommunications infrastructure, provides an effective means of combating the disadvantages of peripheral and interior locations, which is according particularly suited to countries, such as Portugal, which are peripheral in relation to their economic partners. On the other hand, the existence of a single currency within a wider European space foments the development of electronic commerce in this market, by eliminating the psychological barriers of currency conversions, thus facilitating the creation of a critical mass for success in other world markets. Failure to take advantage of these favourable circumstances for the development of electronic commerce, would be a historic error. The European Union is aware of the strategic importance of the development of electronic commerce for its competitiveness in a world, which is in a process of rapid globalisation. The Bonn ministerial conference and the USA/EU joint statement on electronic commerce, referred to above, are ample proofs of this. The adoption of the National Electronic Commerce Initiative also involves the creation of employment in this specific sector, an increase of vocational qualification, facilitation of the modernisation of business structures, the rejuvenation of management, increasing productivity and a widening of markets.

According to the White Book for Electronic Commerce in Portugal, written at the behest of the Portuguese EDI and Electronic Commerce Association, the number of Portuguese companies with some form of electronic commerce is approximately 1000, which is 2.6% of all Portuguese small and medium size enterprises. It is important, in this context, to increase the number of large and small and medium size enterprises linked to digital networks and which are internally prepared for access to electronic commerce.

3 - The underlying principles of the Initiative

The INCE National Electronic Commerce Initiative is based on the following series of principles, which will be of fundamental importance for the creation of an environment favourable to the development of electronic commerce in Portugal. The principles for the stimulation of electronic commerce are as follows:

Principle 1
The development of electronic commerce is based on private enterprise.

The implementation and expansion of electronic commerce should develop in accordance with the laws of the market. The Government should restrict its intervention as much as possible and encourage self-regulatory practices and leadership by the private sector. The challenge now facing Portuguese business involves the acceptance of electronic commerce as a new way of doing business. It is important that business has an approach, which is capable of competing successfully in the European and global space, by acquiring new skills and the development of co-operation with other partners via business networks, in order to create new jobs. It is for the private sector to invest in the development of new services and innovative applications, to strengthen and improve its skills in the area of electronic commerce, as well as to promote the development of projects of excellence.

Principle 2
The creation of a favourable legal and regulatory environment, which eliminates barriers to the development of electronic commerce

The legislative environment is designed for traditional forms of commerce and needs to be adapted to electronic commerce. Priority and urgency must be given to legislation, which involves:

Recognition of contracts made electronically and of the evidential value of electronic documents;

Legal recognition of the electronic invoice, electronic signatures and certification agencies;

Adaptation of consumer law, i.e. with regard to the protection of consumers in the context of electronic commerce;

The protection of intellectual property rights in the use of electronic commerce;

Security and confidentiality of the data inherent in commercial relations, in databases or which circulates in telecommunications networks;

The evaluation of the implications regarding the issue of "electronic currency".

Given the transnational nature of electronic commerce, it is important to emphasis international co-operation, i.e. at the level of the application of community legislation by member States.

Principle 3
Non-discriminatory taxation of transactions effected electronically

At the Bonn ministerial conference on information networks, the Portuguese Government supported the principle of the non-imposition of discriminatory rates on the use of global information networks. At the said conference, the Government also supported the position that questions linked to the taxation of electronic commerce should be the subject of international co-operation and, when appropriate, of co-ordination in order to avoid situations, which distort competition. The new forms of electronic commerce should neither be subject to additional rates in relation to traditional business activity nor should new taxes be introduced, such as on the bits transmitted. So far as customs rules are concerned, the principle is that no supplementary customs duty should be imposed on goods ordered electronically. Given the nature of electronic transactions, specific conditions are to be studied and created in order to prevent VAT evasion and double VAT taxation.

Principle 4
Free access to and circulation of encoding techniques

Free access to and circulation of encoding techniques shall be ensured. It shall be for the market to choose the techniques to be used, in accordance with its interests and requirements. Only in this way will it be possible to create an environment of confidence on the part of consumers and manufacturers, which is crucial for the development of electronic commerce. No regulatory framework, which restricts the distribution, sale, export, implementation and use of robust encoding techniques, will be adopted unilaterally by Portugal.

Principle 5
Rejection of any type of censorship of the content of the Internet

The principle of freedom of expression with regard to the Internet is recognised. Intermediaries (network operators, Internet service providers or others) cannot, without prejudice to the provisions of para. b) of nr. 3 of article 22 of Law 67/96, be liable for any illegal or prejudicial contents. Control of contents by intermediaries may only be effected in accordance with the provisions of criminal procedure law.

The implementation of self-regulatory mechanisms by those involved in the market should be stimulated.

Principle 6
To support the existence of fair management of domains names in the Internet

The management of Internet domain names is a factor of major importance for the development of electronic commerce. The principle of the need for the international recognition of the existence of a fair, neutral and world-wide management (definition and attribution) system termed the domain name system, in order to avoid the creation of situations of distortion, which favour major players. The development of the domain name system should not be defined unilaterally by a single company. It is of fundamental importance to ensure adequate European representation in the management of the domain name system, as was recognised at the Bonn inter-ministerial conference.

Principle 7
To create a commercial environment, which is favourable to the development of electronic commerce

The creation of a commercial code of conduct for electronic commerce, which facilitates the use thereof by all involved in the market, will be supported, not forgetting the principles which underlie the protection of confidentiality and security, to which data should be subject. Measures will also be taken in order to create a commercial environment favourable to electronic commerce, which create consumer awareness and promote consumer confidence and improved practises by enterprises, particularly small and medium size enterprises. The Civil Service should also set an example in this area.

Principle 8
Encouragement of international co-operation in the area of electronic commerce

As electronic commerce is a business with international implications, the legislative and regulatory measures to be taken in this area should give priority to Portuguese collaboration with other organisations, so as to create a consensus at community level or internationally.

4 - Intervention areas

The National Electronic Commerce Initiative comprises a series of principles, which, as stated above, provides the context for all the measures, which are taken within the ambit of the initiative. These measures are grouped together into the eight intervention areas mentioned hereunder. The main measures to be taken within each intervention area are indicated on the basis of this national initiative, which should, subsequently be replaced by a detailed plan of action.

Area 1
Promote, publicise and inform

The development of electronic commerce in Portugal and Europe is of fundamental importance for the Portuguese economy. One of the conditions, which can contribute to the success of this development, concerns a real awareness on the part of consumers and business of the benefits, advantages and opportunities, which electronic commerce can offer them. The creation of such an awareness, is of critical importance, in order to stimulate investment in electronic commerce solutions. The preparation and launching of awareness and information campaigns targeted as business, and particularly at small and medium size enterprises and the general public as the potential users and consumers of electronic commerce, will be supported. These awareness measures will also make it possible to encourage business and industrial organisations and associations to publicise the improved practises identified in pilot projects involving Portuguese enterprises in the area of electronic commerce. The results of measures to assess other examples and practises of electronic commerce in international markets will be presented. The Government will support measures leading to the creation of local and regional skill centres in the area of electronic commerce and the Internet, in order to give priority access to the various forms of electronic commerce to small and medium size enterprises. Efforts and skills will be combined in these centres, so as to ensure a rapid and effective transfer of information, knowledge and know-how at a low cost, to small and medium size enterprises in these areas. Access to the skill centres by enterprises should be readily available. These centres should offer consultancy services and training, such as the launching of info-literacy programmes for enterprises, together with the provision of telematic applications and services in the areas of electronic commerce and the Internet, to be used by enterprises on a shared basis. All centres will operate as part of a network and act in a distributed manner on the basis of the most modern information and communications technologies. The launching of pilot projects, for small and medium size enterprises, will be supported. The results of these pilot projects will make it possible to reach conclusions regarding the best practises for the use of the Internet as the platform for electronic commerce, i.e. in the global marketing of products and services. It is important so far as the promotion, publicity and information is concerned, that initiatives, such as conferences, seminars and workshops, which involve specialists, enterprises and national and international agencies, take place in Portugal. The aim of such activities is the discussion and exchange of ideas regarding the experience of the use of electronic commerce and the Internet by enterprises and consumers in general, and to stimulate an open dialogue regarding all the key aspects for the development of electronic commerce and the digital economy in Portugal. It is desirable, in the context of the production of indicators for the information society, that electronic commerce be identified as a relevant area. To do this, it will be necessary to construct observation tools, which make it possible to assess the behaviour of those involved in the digital economy in Portugal and their insertion in the European model.

Measures proposed

Measure 1.1 - Support for the preparation and launching of commercialisation and awareness campaigns regarding electronic commerce, targeted at enterprises and particularly at small and medium size enterprises and consumers.

Measure 1.2 - Promotion of the implementation of local and regional skill centres in the area of electronic commerce and the Internet.

Measure 1.3 - Creation of incentives for the launching of pilot projects for small and medium size enterprises, so that the best practises, i.e. with regard to the use of the Internet as a basic technology platform for electronic commerce, can be identified.

Measure 1.4 - Support and promote for the holding in Portugal of initiatives such as conferences, seminars and workshops, involving experts, enterprises and national and international agencies, with a view to the discussion of and an exchange of experience regarding the use of electronic commerce and the Internet.

Measure 1.5 - Promotion of the production of indicators of the development of electronic commerce and the digital economy in Portugal.

Area 2
To create a regulatory framework, which favours the development of electronic commerce

Electronic commerce implies a profound transformation of current practises concerning the exchange of goods and services between businesses, the public administration and consumers. It is accordingly no surprise that alterations of the legislative framework are necessary in order to facilitate the creation of an environment, which is favourable to this new form of activity in the digital economy, removes the barriers to its full development, ensures legal recognition of it and stimulates the confidence of those involved in it. It is accordingly important to create a new legislative framework, which favours the expansion of electronic commerce. There are various alterations to the legislation and regulations, which are necessary. We shall mention some of the most important of these.

Electronic invoice

Legal recognition of electronic invoices should be ensured. In a world in which transactions are processed by computer, it makes no sense to require invoices to be on paper and that they be kept in this form for the legally required period. This is a cost associated with the logistics of the transaction, which is exaggerated and lacking in apparent benefits, in the current stage of technological development. For nowadays, it is possible to ensure the genuineness and reliability of electronic documents by means, which are greatly superior to methods applicable to paper documents. The dematerialisation of invoices is an essential condition for the development of electronic commerce. Enterprises, which intend to adopt electronic invoicing, should be able to register with the tax authorities in order to obtain the necessary authorisation. The penalty to be imposed on enterprises, which prevaricate, will, other than in cases of total fraud, be no more than the revocation of the authorisation.

Electronic signature and the evidential value of documents in an electronic format

The introduction of legal recognition of electronic signatures is a necessary step in the construction of the information society. Provision should also be made regarding the evidential value of electronic documents bearing a digital signature, which gives special value to them, when the signature is certified by an agency authorised by a public authority to be designated.

Certification agencies

The use of asymmetric encryption keys, one public and the other private, presupposes the existence of a certification authority, which guarantees the twin correspondence between the public key and the person who owns it, the identification of the said person and confirms the validity of the said key. The development of legislation, which recognises the activity of providers of certification services, is an essential step in the creation of a legal framework underlying the legal recognition of documents in a digital format. This legislation should enshrine the principle of free access to the market by providers of certification services and define the conditions to be observed by them, to enable them to apply for approval from a public authority, if they wish. This will enable electronic documents bearing a certified signature to have a special evidential value.

Consumer protection

The consumer must have the same degree of protection in the context of electronic commerce, as they now have in the context of traditional commerce. There is accordingly no need for additional protection. The aim will be to increase consumer confidence in the use of digital networks, via security of transactions, payments and the combating of the various forms of computer piracy. The European Union has been taking steps to harmonise the legislation, by way of the elaboration of community directives to protect consumers in the information society. An adequate degree of consumer protection within the European space will be attained to the extent that these community directives, and particularly the directive regarding remote sales, are introduced into the various national legal systems. The problem, however, is even so not completely dissipated, because of the global nature of electronic transactions and the disparity of degrees of consumer protection in the various national legal systems. One question, which arises immediately, is which national legal system is applicable, that of the seller s country or that of the purchaser s country. Dispute resolution centres should also be established internationally. The extent of consumer confidence will certainly depend on the prior and explicit acceptance by the vendors of recourse to the international dispute mediation centres.

Protection of intellectual property

Intellectual property rights should be duly protected in the use of digital networks. The Geneva conference of the WIPO - World Intellectual Property Organisation established a series of principles regarding the protection of intellectual property, which are being included in European Union directives, i.e. the directive on the protection of property and the protection of databases.

The process of the introduction of these community directives into domestic law should be accelerated, in order to support the development of electronic commerce. Illegal and prejudicial contents are a barrier to the complete acceptance of the Internet and are therefore an obstacle to the development of electronic commerce. The European Union has been monitoring this subject via the Pluriannual Community Action Plan to Promote the Secure Use of the Internet [document COM(97) 582], the publication of the Green Book on the Protection of Minors and Human Dignity in Audio-visual and Information Services [document COM(96) 483], the information to the European Parliament regarding illegal and prejudicial contents [document (96) 487] and the recommendation adopted by the Council of Ministers of Culture and the Audio-visual, in May 1998, regarding the development of the competitiveness of the European audio-visual and information service industry, via the promotion of national senior staff leading to a comparable level, and the effective protection of minors and human dignity. This problem should also be the subject of constant attention, together with the development of filtering and classification systems, so that the negative impacts of these contents can be minimised.

Internet Domains

The domain name system enables users to use sites by name instead of by an IP address. The name by which enterprises and other institutions are identified on the Internet is very important to them. The existence of a domain names structure, which is consistent and in line with the commercial and industrial rights of business organisations, i.e. those which refer to registered trade marks, is an essential condition for electronic commerce. It is accordingly important to ensure that the regulations governing the management of ".pt" domain names, which is the responsibility of the FCCN National Foundation for Scientific Computing, should be reviewed in order to ensure the greatest protection of the legitimate interests of enterprises and other public and private institutions.

Taxation and customs services

The principle, which underlies the processing of transactions effected by electronic commerce, is that such transactions should not be the subject of positive or negative discrimination in relation to traditional commerce. The international community has, for many years, been involved in the progressive reduction of customs tariffs on international trade via GATT (General Agreement on Tariffs and Trade) and more recently through the WTO (World Trade Organisation). Tariffs on international trade are viewed as an obstacle to the process of globalisation and the international division of labour. In the context of the European Union, consumption taxes (VAT and others), which are levied in the country where the consumer resides, are an important source of tax revenue for Member States. The global characteristics of electronic commerce creates a new difficulty, which no longer exists for traditional commerce, given the tax losses, to which this type of transaction can give rise. It is there for clear that the consumption tax rules are out of kilter. This problem needs to be solved within the ambit of international co-operation.

Measures proposed

Measure 2.1 - Draft and publish legislation, which introduces legal recognition of the electronic invoice.

Measure 2.2 - Create the legal framework for the electronic signature and suppliers of certification services.

Measure 2.3 - Grant recognition of the evidential value of documents in electronic format.

Measure 2.4 - Introduce the European Union directives, which provide consumer protection in the information society, i.e. Directive nr. 97/7/EC, of the 20th of May, regarding remote contracts and consumer protection, together with the directive currently being prepared regarding the legal protection of services, which are based on or consist of conditional access, into Portuguese domestic legislation.

Measure 2.5 - Introduce European Union Directive nr. 96/9/EC, of the 11th of March, regarding the protection of databases and associated intellectual property rights.

Measure 2.6 - Adoption of all the measures in the European Electronic Commerce Initiative COM (97) 157, of the 15th of April.

Measure 2.7 - Ratification and adaptation to domestic law of the treaties and conventions, particularly the OMPI treaties. To formally subscribe to the OMPI treaties on copyright (TODA) and performances, interpretations and phonograms (TOIEP).

Measure 2.8 - To promote the review of the regulations regarding Portuguese domain names on the Internet.

Measure 2.9 - To participate in the international co-operation to define the tax rules applicable to electronic commerce, in accordance with the principle of non-discrimination against it in relation to other forms of commerce.

Area 3
Create an electronic commerce security policy

Electronic commerce must, as has already been stated, be promoted and fomented by the private sector. The State s role in, the creation of an electronic commerce environment, should be oriented to the creation of a regulatory regime which stimulates it both nationally and internationally. Transaction security is of fundamental importance in the context of electronic commerce. To achieve this, it is necessary to create a security policy, which concentrates on the following areas: guaranteed privacy for those involved in transactions, the security of the transactions effected, the capacity to use digital signatures in transactions and the existence of means to ensure that transactions are not repudiated.

Encryption technology is fundamental, in order to implement the requirements mentioned above. The State s role should therefore be to ensure complete freedom of choice in relation to the cryptographic solutions, which the business community considers to be necessary, in accordance with the relevant international directives, i.e. the OECD directives. The success of a national electronic transaction security policy depends on the existence of Portuguese enterprises with skills in the relevant areas of business and technology. The State should accordingly promote and encourage Portuguese technology based enterprises to master these technologies. Communications networks are frequently associated with security problems, i.e. loss of confidentiality and the risk of forgery. It is possible, by using current encryption technology, to achieve much higher levels of confidentiality, security and authentication than with traditional paper or microfilm methods It is important to launch campaigns to publicise the significant contributions to electronic transactions, which can be made by security technologies, as the general public and the business community are unaware of this. It is essential to encourage and motivate the general public with regard to the advantages of electronic commerce. The existing mass media should be used to publicise the new possibilities and advantages of electronic commerce. It is also important to produce leaflets and documentation, which promotes and supports the use of the new information and communications technologies in dealings between the State, enterprises and the business community.

Measure proposed

Measure 3.1 - The creation of a national encryption policy via the introduction of legal provisions, which liberalise the use of cryptography and regulates the aspects thereof, which are important to electronic commerce.

Area 4
The promotion of a favourable commercial environment

The sustained development of electronic commerce will be impossible without a favourable commercial environment. The security of information and payment systems, vis-à-vis computer system faults, the alteration of the security of data stored and unlawful acts, must be ensured before the use of digital systems in commercial transactions can be accepted. It is therefore necessary to promote the creation of a code of conduct for electronic commerce on the Internet, in collaboration with business and consumers associations. The dissemination of secure payment methods is another fundamental step in the creation of confidence among consumers and enterprises. There has been a very significant growth of electronic payments in recent years, i.e. in Portugal via the Multibanco [ATM] networks and POS sales terminals. The increasing use of pre-paid cards of the electronic wallet type has also made a contribution to the spread of electronic payment methods. The international development of the SET (secure electronic transactions) protocol, in which the world-wide credit card networks are involved (Visa, Mastercard and American Express), in which the Portuguese banking system has participated actively, particularly via SIBS and UNICRE, has created the expectation of secure payment methods in digital networks. The creation of mediation and arbitration centres in relation to disputes or claims arising from the use of electronic commerce is essential in order to create consumer confidence. These centres should exist in each country and at a transnational level, as a consequence of international co-operation. The assurance of secure conditions by the enterprises, which use electronic commerce and agreement by them to use the dispute mediation and arbitration centres is a relevant component of the image of confidence to be transmitted to consumers, by the certification of the organisations, which meet these requirements. It is therefore of fundamental importance to promote conditions in which organisations, which provide electronic commerce in a secure environment, can be certified. Investment in a national telecommunications infrastructure, which is able to offer high quality innovative services and solutions and a digital networks access band width and prices, which are attractive in the context of the world market, is an essential condition for improved competitiveness on the part of Portuguese enterprises. The introduction of competition rules, which lead to the development of a national telecommunications infrastructure, is therefore a matter of national interest, which should be the permanent back-drop to the regulation of the telecommunications sector. In particular, access by new enterprises to the market should be facilitated, conditions should be created for the development of the market based on the convergence of different technologies and all forms of abuse of dominant positions should be combated.

Measures proposed

Measure 4.1 - The promotion of the creation of a code of conduct foe electronic commerce on the Internet, in conjunction with business and consumers associations.

Measure 4.2 - Collaboration with international organisations in the creation of international electronic commerce mediation and arbitration centres and promotion of the creation of a dispute mediation and arbitration centre of the same type, in Portugal, in conjunction with business and consumers associations.

Measure 4.3 - Promotion of the creation of an Internet page where duly grounded complaints can be made against unlawful acts effected by electronic commerce, within the ambit of consumer protection organisations.

Measure 4.4 - Encouragement of the creation of an agency, which certifies organisations, which offer secure electronic commerce, in collaboration with business and consumers associations.

Measure 4.5 - Introduction of the community provisions, which promote conditions to ensure that competitive electronic commerce support infrastructures are available to Portuguese enterprises, in relation to their foreign competitors.

Measure 4.6 - Creation of regulatory conditions in the telecommunications sector, which favour the offer of innovative services with a price/quality ratio, which is competitive in world terms.

Area 5
Application of the principles enunciated for the electronic commerce initiative to the Civil Service

The State accounts for an important part of the business of enterprises. The adoption of policies, which encourage the use of electronic commerce by the Civil Service, will therefore provide a major impulse to the rapid introduction thereof. The mere use of the resources of electronic commerce by the Civil Service gives rise, per se, to a market of sufficient size to ensure the critical mass necessary to ensure the success of electronic commerce.

Furthermore, the need to exchange information within the Civil Service, whether vertically, within each ministry, or between ministries, will make it possible to optimise means and resources significantly. The use of some of the paradigms of electronic commerce, such as EDI, as vehicles to increase the effectiveness of inter-ministerial information exchange, may make it possible to reanalyse the information flows and to implement them in accordance with more efficient and effective models. The dematerialisation of information exchange procedures within Government and with the business community should be strongly encouraged. The classification of public information and the provision of information to citizens and enterprises via the Internet, may be the best means to promote the appearance of the various activities, which add value to this information. It is necessary, in order to ensure a widespread and rapid introduction of the paradigms afforded by electronic means of communication, that civil servants and members of the State administration are able and qualified to use these means. It is therefore a matter of urgency that training programmes for civil servants are promoted to encourage adaptation to and familiarisation with the new electronic commerce technologies. Manuals of the correct practises and procedures for the use of the new technologies should be produced, as the main way to promote a more open and effective State.

Measures proposed

Measure 5.1 - To promote the use of electronic document transfer in the Civil Service, by identifying the areas in which this will have a greater impact on increasing the efficiency of the Civil Service.

Measure 5.2 - Adaptation of the Civil Service s acquisitions procedures to electronic commerce, i.e. by using electronic data transfer.

Measure 5.3 - Creation of conditions so that most acquisitions by the Civil Service will, as from 2001, be effected by electronic commerce.

Measure 5.4 - Promotion of the training of civil servants in programmes and measures, which qualify them to use electronic communications and commerce.

Area 6
Creation of a programme to develop electronic commerce in small and medium size enterprises

Small and medium size enterprises should become aware of the potential benefits of electronic commerce in terms of savings, opening up of new markets and opportunities for the creation of new products and services. Measures should therefore be taken to encourage organisations and industrial, commercial and business associations to publish case studies and training material and stimulate the use of electronic commerce. This process may involve industrial, commercial and business groups at local, national and European level, chambers of commerce, technology promotion associations and groups of small and medium size enterprises, as well as partnership programmes. It is also necessary to encourage small and medium size enterprises to undertake benchmarking with other enterprises, internationally. Pilot projects play an important role in the creation of awareness. These projects can, for example, be used to test business innovations and to check the compatibility thereof with existing legal and tax environments. They can also make a contribution to the analysis of structural changes within and across various sectors and of the employment impact thereof. In many cases, small and medium size enterprises lack the resources to try out new applications, which is why the creation of support mechanisms for this purpose is justified.

Measures proposed

Measure 6.1 - Creation of a programme to support the development of electronic commerce applications and solutions for small and medium size enterprises, i.e. via pilot projects, the results of which can be assessed and publicised.

Measure 6.2 - Encouragement of the appearance of instruments, which facilitate access by venture capital companies to implement innovation projects in the electronic commerce sector.

Measure 6.3 - Promotion of initiatives, which provide Portuguese families and citizens with the opportunity to acquire computer equipment, and access to the digital information networks on economically favourable terms.

Area 7
To educate for the digital economy and electronic commerce in the context of the globalisation of markets

The rapid implementation of electronic commerce involves the existence of a significant critical mass of users of these new technologies and an awareness of the improvements they can bring. It is therefore necessary to motivate citizens and the business community with regard to the advantages and increased of efficiency, which flow from the adoption electronic commerce. The dematerialisation of information support resources and the priority use of telematic document communication sometimes meets psychological barriers, which must be overcome. It is necessary that citizens and enterprises have new skills in order to process and handle multimedia information easily and cope with information technologies. It is necessary to promote digital communications technology training programmes and promotions. Courses must be created at all levels of education, to teach the new paradigms of this changing society. The programmes of existing courses, which cover topics such as economics, finance and management, inter alia, should be adapted so as to include the digital economy and the paradigms and mechanisms, which support it. Initiation programmes in the potentials of information and communication technologies and the Internet in particular, targeted at young people, should be held. The Internet in School Programme should be widened to include more schools and the use of the Internet, as an educational support, should also be promoted. Portuguese enterprises need to have a permanent innovative capacity and the skills to enable them to constantly adapt to the digital economy. R&D plays a key role in order to encourage them to innovate and to promote the training of the senior staff, necessary to ensure the rapid assimilation of the new paradigms of the digital economy. Research programmes in consortium should be launched, which make it possible to develop products and innovative solutions adapted to the development of an increasingly global economy.

Measures proposed

Measure 7.1 - To disseminate knowledge regarding the digital economy and the information society. The subjects, which teach the basic concepts of economics, management and finance, should be identified and the adaptation thereof should be promoted so that they include the new possibilities of the digital economy and electronic commerce.

Measure 7.2 - To launch training programmes in information and communications technologies targeted at all age and social levels, in order to motivate the general public to use electronic commerce as part of daily life.

Measure 7.3 - To design and create an R&D programme in consortium, which enables Portuguese enterprises and research institutions to create innovative solutions, which contribute to the promotion of the use of electronic commerce in our economic fabric.

Area 8
Co-operation with international partners in order to implement global electronic commerce

Nowadays, electronic commerce is the subject of intense attention internationally. The debates in the various international fora are characterised by a superposition of international, community and national work and also by the great complexity of the matters considered. This is a consequence of the multifaceted character of electronic commerce, which involves: commercial law, data protection, protection of privacy, consumer protection, contents policy, data security and transmission, taxation, protection of intellectual property rights, encryption, technical standards, etc.

There are two types of work in this context:

General work, which is limited to the topic of electronic commerce, does not introduce restrictions, but is, rather, a contribution to the creation of a consensus. The work done within the ambit of the OECD, the major international conferences and the transatlantic EU/USA dialogues, falls within this category;

More specialised work, which generally concerns "horizontal" questions, which extend beyond the strict limits of electronic commerce but have a significant impact on it, e.g. the protection of intellectual property. In most cases, this work is carried out within specialist organisations.

At an international level, the questions raised by electronic commerce demand a multilateral approach, in addition to bilateral discussions. Two organisations are active in this area, the WTO (World Trade Organisation) and the OECD. In the case of the WTO, it is important to mention that the agreements already made within the ambit of the General Agreements on Trade in Services) (GATS) provide a legal basis for the development of electronic commerce world-wide. In addition to this, there is also a new round of negotiations regarding services, which will commence no later than January 2000, in which electronic commerce will certainly be one of the most important topics. The ICCP (Industrial Computer and Communication Policy) Committee of the OECD has produced a continuous amount of work over several years, in technical areas, which was made public at the Turku conference, in Finland, from the 18 to the 20th of November 1997, devoted to the topic of the Removal the Barriers to World Electronic Commerce. This work of this conference continued at the conference in Ottawa, in Canada from the 7th to the 9th of October 1998, entitled A World without Borders. It is essential, from a national perspective, that Portugal accompanies and takes part in the various on-going activities at community and international level, i.e. in the above mentioned organisations.

Measures proposed

Measure 8.1 - To create inter-ministerial co-ordination, between all the departments involved in the various aspects of electronic commerce.

Measure 8.2 - To strengthen co-operation with other international partners in order to harmonise procedures in relation to electronic commerce, i.e. within the OECD and the European Union.

Measure 8.3 - To support international initiatives to develop and apply global support standards to electronic commerce.


There are currently no indicators available with which to evaluate the extent to which electronic commerce is disseminated in the Portuguese economy.

The available indicators only relate to what can be termed the support infrastructure (number of hosts, servers, secure web servers, estimates of Internet users, etc.) and are not specifically designed to measure activity per se.

The National Statistics System is not yet able to measure this type of phenomena, which closely connected to the "new economy" and the information society.

The Science and Technology Observatory, in close collaboration and co-ordination with the National Statistics Institute, the Portuguese Communications Institute, the Ministry of Science s Computing Institute and the Statistical Department of the Ministry of Employment and Social Security, has worked to create a new area in the official statistics dedicated to the information society in the information within the National Statistics System, in order to overcome this shortcoming.

The creation of this new area of official statistics was completed on the 8th of July 1999, at the time of the last meeting of the plenary session of the Higher Council of Statistics, when the Science and Technology Observatory was appointed to the chairmanship of the working group, which will direct the collection, processing and dissemination of statistical information regarding the information society.

This new area of official statistics includes an integrated programme to observe and analyse the extent of the dissemination of the strategic dimensions of the information society in Portugal (one of these is the spread of electronic commerce in the national economy), not forgetting, however, the basic concern, which is the production of information, which is in an internationally comparable record, in both European and OECD terms.

However, methodologies and procedures must be harmonised with the statistical work being produced in this area by international organisations and particularly by Eurostat and the OECD, before this concern can be reflected in the work produced. This process has been accompanied by the Science and Technology Observatory, as well as by the other organisations, which are part of the working group, via the presence of delegations at the meetings to discuss the definitions of concepts and the categories of the economic activities and product classifications to be introduced within the ambit of the information society.

It is within these international institutions that the work to define the concept of electronic commerce has been carried out - although no perfectly consolidated definition of electronic commerce ready to be implemented to produce statistical indicator, and particularly to ascertain the activities/processes, which differentiates this aspect of commerce from traditional commerce in goods and services, has, as yet, been produced. What relevant aspects should be considered to be determinant in the elaboration of the definition (should we concentrate our attention on the electronically mediated presentation of goods and services, or on the precise aspect of a transaction effected electronically)?

This range of concerns is first of all closely connected with the essential need to include electronic commerce within the overall ambit of the information society, in order to analyse this problem in its overall context, by placing it in the area, which gives it expression and potential.

The Presidency of the Council of Ministers,of 29th July 1999. The Acting Prime Minister, Jaime José Matos da Gama.