President Clinton in the East Room of the White House speaking about the new digital marketplace.

President Clinton showed his administration is squarely behind the idea of unfettered Internet commerce this week by endorsing a "hands-off" policy to government regulation.

Clinton's position is outlined in the newly released working paper, "A Framework for Global Electronic Commerce," drafted by his chief policy advisor, Ira Magaziner. The paper supports the idea of private sector development of the Internet, a uniform legal code in cyberspace and the Internet as "a global free-trade zone."

Listen to comments on the framework by: President Clinton Ira Magaziner, presidential advisor, on the future of e-commerce Magaziner on developing the framework Smita Deshpande of Sun Microsystems Vint Cerf of MCI

"If we establish an environment in which electronic commerce can grow and flourish, then every computer will be a window open to every business, large and small, everywhere in the world," Clinton said at a July 1, ceremony in the East Room of the White House.

"In many ways, electronic commerce is like the Wild West of the global economy," Clinton said. "Our task is to make sure that it's a safe and stable terrain for those who wish to trade on it, and we must do so by working with other nations now while electronic commerce is still in its infancy."

The broadly based report touches on areas such as telecommunications policy, online privacy, encryption and Internet taxation, and lays down "five guiding principles" for government policy towards Internet commerce.

Clinton has directed his cabinet secretaries to revise any of their own Internet policies and regulations if they are found not to be consistent with the Magaziner framework.

Principles supported in the Magaziner framework include:

• The private sector should lead the development of the Internet and electronic commerce.
• Government should avoid undue restrictions on electronic commerce.
• Where government is needed, it's aim should be to support and enforce a predictable, minimalist, consistent and simple legal environment for commerce.
• Governments should recognize the unique qualities of the Internet.
• Electronic commerce over the Internet should be facilitated on a global basis.

At the White House ceremony, Clinton also asked Treasury Secretary Robert Rubin to create agreements preventing "discriminatory taxes on electronic commerce" and Charlene Barshefsky, U.S. Trade Representative, to petition the World Trade Organization to make the Internet a free-trade zone within 12 months.

The framework's "hands-off" approach has been heralded by companies looking to expand their online business.

"It's an excellent policy framework," said Mark Murray, a Microsoft spokesman. But he added that the industry was waiting to see if deed actually follows word.

Industry officials are also criticizing the framework's position on encryption. The administration is calling for a key-recovery system. This would require Internet users to submit a code to a third party that would in turn give the code to law enforcement officials who want to decrypt scrabbled messages. Business would be required to develop software that creates "keys" for third parties if they want to export highly secure encryption software. Senators John McCain (R-AZ), Robert Kerrey (D-NE), Ernest Hollings (D-SC) and John Kerry (D-MA) have already introduced legislation to create such a system. However, Smita Deshpande, director of Electronic commerce for Sun Microsystems, and others in the computer industry say the key recovery system would hinder their ability to compete overseas.

"We are concerned how the global customers will perceive this system," Desphande, whose company attributes 52 percent of its revenue to overseas sales, said. "In some cases massive rework would be required for the systems we are currently shipping. What would the impact be on our current business?"

All in all the framework has been praised as being on target. Part of that may be due to the process Magaziner went through to draft the report. He applied lessons he learned from his previous efforts to develop President Clinton's health care proposal in 1993, Magaziner said in an Online NewsHour interview.

"In this electronic commerce initiative, we've taken more time than the health care initiative to forge consensus and to try and work with groups in a very on-going fashion to develop that consensus," Magaziner said. "We also had a completely open process where we met with any group that wanted to met with us."

Drafts of the report were also posted on the World Wide Web, and comments were e-mailed in from across the country to help shape the final version of the framework, Magaziner said. The e-mailed comments were critical, he said, because they were sent by Internet users outside the Washington Beltway who usually do not attend government hearings.

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