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 The EPC Members' Newsletter

 
Legislative update 74 Month - January 1999

In this issue:

1. Electronic commerce
1.1 Discussions on draft Directive begin in Council working group
1.2 European Parliament slow to initiate first reading
1.3 WIPO publishes interim report on intellectual property aspects of the internet domain name system
1.4 Global business dialogue - official launch meeting in New York
1.5 Globalisation and the information society - European Parliament adopts opinion
1.6 Electronic signatures - European Parliament votes through first reading
1.7 US Congress puts e-commerce and telecoms issues high on its new agenda

2. Convergence
2.1 Culture Council to act on convergence
2.2 Commission follow-up expected end-February

3. Internet content regulation
3.1 Council adopts multiannual action plan to promote the safe use of the internet
3.2 Draft Communication on the future of content industries due in January

4. Copyright
4.1 Barzanti report nears end of first reading committee stages
4.2 Council working group discussions slow to begin under German Presidency

5. Advertising
5.1 Commercial communications expert group close to position on discounts
5.2 European Parliament adopts opinion on Communication
5.3 Tobacco advertising - written procedure underway in German government's call for annulment
5.4 Protection of minors - DGX study on advertising and children awaiting launch and study on parental control expected in February
5.5 Results of DGXXIV study into marketing claims for food expected soon

6. Audiovisual
6.1 Culture Council - busy agenda for German Presidency's first working group
6.2 DGIV considers follow-up on public service broadcasting and pursues outstanding complaints
6.3 DGX holds preliminary talks on input into public service broadcasting debate
6.4 UK Ad Hoc Alliance holds second meeting

7. Taxation
7.1 Working groups discussions begin slowly on proposal for a revised standard rate of VAT
7.2 Progress slows on proposal to revise annex H
7.3 European Commission consultation with industry underway on VAT and e-commerce

8. General
8.1 German Presidency plans seminar on self-regulation and the media
8.2 Data protection - EU/US talks on 'safe harbour' principles continue
8.3 Green Paper on access to public information imminent
8.4 Environmental policy - latest developments in the forestry and paper sector
8.5 Commission launches market access study to examine barriers in the pulp, paper and board sector in NAFTA countries
8.6 Competitiveness of EU publishing industries - publishing federations meet with contractor
8.7 Information Society Forum formalises new structure and agenda

Dates for your diary

January
- 20th-21st - next EPC meeting, London

February
- 11th - European Parliament first reading vote on copyright
- 21st-23rd - FIPP 32nd World Congress, Hamburg

April
- 19th-21st - German Presidency seminar of self-regulation and the media, Saarbrucken

1 Electronic commerce

1.1 Discussions on draft Directive begin in Council working group
The Council's economic questions working group began its deliberations on the draft Directive shortly before Christmas. A second working on 15 January continued a question and answer session with the Commission. The proposal has been broadly welcomed by Member States. It is clear that a number of key areas will be problematic but no single issue has yet emerged as more contentious than others. Many Member States have only recently begun their national consultation process. The German Presidency plans two working group meetings per month and hopes to reach agreement on a common position at the Internal Market Council in June.

1.2 European Parliament slow to initiate first reading
Administrative and political problems have thwarted the start of the European Parliament's work on its first reading. The late transmission of the final version of the Commission's proposal in all official languages in early January and bargaining between committees have delayed Parliament procedure.

The Legal Affairs Committee has won its battle to be the lead committee and confirmed its controversial appointment of Christine Oddy (UK, PSE) as Rapporteur. The Committees on Economic and Monetary Affairs and Environment, Public Health and Consumer Protection are expected to deliver opinions.

1.3 WIPO publishes interim report on intellectual property aspects of the internet domain name system
WIPO has published an interim report setting out the conclusions of its consultation on possible means of tackling intellectual property aspects of the IDNS system. The report makes recommendations on key areas:

- registration practices for domain names;
- perceived short-comings of existing methods of dispute resolution mechanisms available to settle conflicts between domain name registrations and intellectual property rights;
- treatment of famous and well-known marks;
- intellectual property aspects of adding new generic top-level domains.

Publication is accompanied by a third call for comments. Interested parties are invited to submit their comments on the recommendations by 26 February. A second round of regional consultations will take place during January and February. The final report is expected end- March and will take the form of recommendations to the newly-established International Corporation for Assigned Names and Numbers (ICANN).

The interim report and the call for comments can be consulted on the internet at: http://wipo2.wipo.int/process/eng/rf3/interim.html

Meanwhile, Microsoft has brought charges of "cyber-squatting" against two companies which have registered domain names which Microsoft claims infringe its trademark (see: http://www.znet.com/zdnn/stories/news/0,4586.2180422.00.html)

1.4 Global business dialogue - official launch meeting in New York
The Global Business Dialogue (GBD) will hold its inaugural meeting of its Business Steering Committee (BSC) in New York on 14 January. Members are expected to approve subjects for discussion in the issue groups and to nominate Chairmen and Vice-Chairmen.

1.5 Globalisation and the information society - European Parliament adopts opinion
The European Parliament plenary session has adopted a final opinion on the Commission's communication, based on the report by Franco Malerba (It, UPE). Its resolution supports a non-binding international internet charter setting out agreed objectives and principles for its future development. Parliament stresses that a charter should be consistent with legislation (e.g.: on intellectual property and competition) and not hinder technical progress.

1.6 Electronic signatures - European Parliament votes through first reading
In its first reading position, Parliament remained close to the report adopted by the Legal Affairs Committee drafted by Wolfgang Ullmann (D, V), adopting 32 of its 35 amendments. MEPs supported concerns that the Directive remain technology-neutral and replaced "digital" signatures with "electronic" signatures throughout the text. Parliament also supported stronger provisions on privacy and a more regular review of technological progress in consultation with industry, consumer and user groups.

Responding to the Parliament's vote, Commissioner Bangemann indicated that only 17 of the amendments could be accepted by the Commission. He also confirmed that the Council hopes to reach a common position at the next Telecoms Council in April but that Member States were far from unanimous at this stage. Opinions in Council continue to diverge on the issue of security, with some Member States calling for a third annex setting out additional provisions for the creation of electronic signatures.

1.7 US Congress puts e-commerce and telecoms issues high on its new agenda
Following elections at the end of 1998, the new Congress has highlighted key areas of e-commerce and telecoms regulation which it plans to reform to further liberalise markets in the US.

The Federal Communications Commission is the focus of calls for radical reform to achieve platform-neutral telecoms regulation. House and Senate committee leaders maintain that its present structure acts as a break on competition.

The Senate Judiciary Committee has called for greater privacy for internet users through stronger civil-rights and criminal law. Other proposals for discussion include: guidelines on the authentication of electronic signatures, assessment of anti-trust laws and their impact on intellectual property rights and high-tech competition, and potential remedies to disputes resulting from the Year 2000 problem.

2 Convergence

2.1 Culture Council to act on convergence
The German Presidency has confirmed that the Culture Council as well as the Telecoms Council will pursue its intention to make a "concrete contribution" to the convergence debate after the expected publication of the Commission's follow-up end-February. Discussions will take place in parallel with the Telecoms Council which will continue to lead on this dossier. The Culture Council is expected to adopt Council conclusions on the Commission's text.

2.2 Commission follow-up expected end-February
The follow-up to the Commission second consultation on convergence is currently being jointly drafted by DGXIII and DGX and is expected end-February. Indications suggest that the text will mainly bring together the results of the second consultation, covering issues of a general nature and without making concrete recommendations for legislative action. The Commission is also understood to be undecided on the question of media ownership.

3 Internet content regulation
3.1 Council adopts multiannual action plan to promote the safe use of the internet
The Council of Ministers definitively adopted the proposed action plan in December after no objections were raised to the Parliament's second reading amendments. Preliminary actions are awaiting financial approval and are expected to begin in early-1999. These actions include the continuation of work in INCORE and a study into third party content rating (i.e.: survey of what is currently available in the EU and elsewhere and user tests). Co-operation with industry is understood to be a key proviso for contractors carrying out these actions.

3.2 Draft Communication on the future of content industries due in January
DGXIII is due to complete its first draft of this Communication shortly and engage in further consultations with interested parties in early February. The Communication is expected to propose the creation of a European Content Forum and a follow-up programme to INFO 2000 which expires end-1999. Consultations on the draft text are expected in early February, with final adoption scheduled for February/March.

4 Copyright

4.1 Barzanti report nears end of first reading committee stages
The European Parliament's Legal Affairs Committee is on schedule to vote through its report on the proposed copyright Directive on 20 January. The committee's secretariat has drawn up a new voting list along the lines of the earlier version, but removing inconsistencies revealed at the last meeting. The voting order favours the rightholders' position in general, although new concerns have been raised about Article 2 where amendments to remove "temporary and permanent" have been tabled to the Commission's original text.

The plenary vote is provisionally scheduled for 11 February, in Strasbourg. Intense lobbying is already underway by telecoms/internet interests to influence Commissioner Monti's response to Parliament's vote. In particular, the Commission is under pressure to reject the addition of "authorised" to Article 5(1) should this pro-rightholders' amendment be passed.

4.2 Council working group discussions slow to begin under German Presidency
The German Presidency devoted its first IP working group to other issues and will not begin discussion on the draft Directive on copyright until the meeting scheduled for 23-24 February. Rightholders' groups hope that the new Presidency will begin to tackle the more contentious issues arising from Articles 5 and 6. The Austrian Presidency only achieved a partial second read through of the Commission's proposal.

5 Advertising

5.1 Commercial communications expert group close to position on discounts
The expert group on commercial communications moved a step closer to reaching an opinion on discounts at its latest meeting on 18 December. The UK, Ireland, The Netherlands and Italy have come out in favour of mutual recognition with no restrictions. A majority of other Member States would support mutual recognition but with certain additional guarantees. Germany, Belgium and Portugal remain the only countries calling for harmonisation.

Member States are currently finalising their respective national opinions, after which drafting will begin on the final opinion of the expert group. This is expected before the expert group's next meeting in early February and will be published on the internet and in the next edition of the Commercial Communications newsletter.

At the next meeting, discussions will move on to premiums. If an opinion on this issue is agreed quickly, it may be included within the scope of the follow-up Communication which will be drafted by the Commission in response to the expert group's final opinion. This Communication will be forwarded to the Council and European Parliament for discussion.

5.2 European Parliament adopts opinion on Communication
The European Parliament has adopted without amendments the report drafted by Jessica Larive (ELDR, NL) on the Commission's follow-up Communication. The report supports the Commission's initiative but adds recommendations for further action, including a speeding up of article 169 infringement procedures and changes to the structure of the expert group to include representation form industry, consumer and user groups. Commissioner Monti has indicated that the Commission will be able to take Parliament's amendments on board.

5.3 Tobacco advertising - written procedure underway in German government's call for annulment
The legal services of both the European Parliament and the Council of Ministers have lodged their respective statements of defence with the European Court of Justice (ECJ) in the first stage of written procedures. The German government will now be given time to respond to the defence, after which the institutions will comment for a second time. Formal oral proceedings are not expected to begin before mid-1999.

Meanwhile, the grounds on which cases have been brought in the Court of First Instance have been published in the Official Journal of the EU and the UK Tobacco Manufacturers' Association has been granted leave to appeal to the ECJ after its judicial review end-November.

5.4 Protection of minors - DGX study on advertising and children awaiting launch and study on parental control expected in February
Terms of reference for the DGX-sponsored study on the effects of advertising on children are currently being drafted in DGX, with the tender expected to be published shortly. The results of another study on parental control devices is expected end-January/early-February, after recommendations will be made for further action. DGX plans to publish this report on the internet, pending approval of the contributors.

5.5 Results of DGXXIV study into marketing and advertising claims for food expected soon
The Directorate General for consumer protection expects the results of a study into the use of nutritional claims in the marketing and labelling of foodstuffs shortly. The final report will be used to assess the need to amend the Directive on misleading advertising to regulate claims used to advertise food. An earlier proposal was shelved by the Commission about 5 years ago following a successful lobby by the EPC against rules on advertising. A similar effort will need to be mounted again if the Commission attempts a new initiative particularly as the political climate is in favour of restricting advertising of certain "fast foods" to children.

6 Audiovisual

6.1 Culture Council - busy agenda for German Presidency's first working group
The first audiovisual working group of the German Presidency is expecting a full presentation from DGX of its 1999 work programme at its first meeting on 19 January. This will include:

- convergence - progress report on the follow-up to the Communication; expected end-February;
- MEDIA II - progress on evaluation report due end-January;
- film support scheme - progress report on formulation of an alternative to the failed guarantee fund;
- public service broadcasting complaints - progress report on DGIV investigations in to complaints of unfair competition.

6.2 DGIV considers follow-up on public service broadcasting and pursues outstanding complaints
The services of DGIV are now considering a follow-up to the consultations in December on state aid and public broadcasting. At the consultation with private broadcasters on 4 December, it became clear that the Commission would also have to look into the definition of public services and the regulation of PSBs, as well as their funding. It is understood that the services of DGIV plan to draft a Communication in early 1999 which may also include Internet publishing.

Meanwhile, DGIV is rigorously pursuing existing complaints of unfair competition from private broadcasters. Early indications are that the German, French and Spanish authorities will receive negative opinions from the Commission, stating that they are acting unlawfully.

6.3 DGX holds preliminary talks on input into public service broadcasting debate
Staff from Commissioner Oreja's Cabinet and DGX officials have met for initial talks on how to contribute to the state aid debate. Both are agreed that there should be an input from the culture/audiovisual services, but at this stage it remains uncertain whether the focus will be on PSB only or if this issue will be dealt with as part of a broader initiative. Any action within DGX should be watched closely. Although the high level group's final report supported greater regulation of public service broadcasters, there are fears that these views may not be reflected in an internal paper.

6.5 British Internet Publishers Alliance (BIPA) holds second meeting
British Internet publishers and radio broadcasters have formed an alliance to tackle the BBC's growing presence on the Internet. The group is asking for more rigorous accounting methods to produce financial transparency in the BBC's commercial activities. It will challenge the use of cross-subsidy and cross-promotion and commercial exploitation of BBC brands.

7 Taxation

7.1 Working group discussions begin slowly on proposal for a revised standard rate of VAT
The German Presidency has yet to allocate working group time for discussions on the Commission's proposal on a new standard rate of 15-25% for VAT. The timetable is also expected to be delayed beyond the Commission's target date for adoption of February/March. The European Parliament's opinion, which must be delivered before the Council can adopt the Decision, is not expected before April 1999.

7.2 Progress slows on proposal to revise annex H
New doubts are emerging within the Commission on plans for a proposal to revise annex H of the 6th VAT Directive during the first half of this year. Doubts stem from the political sensitivity of the proposal and whether Commissioner Monti will table such a proposal before the current Commission's mandate finishes in end-1999. An initial draft was returned to the services of DGXXI by Commissioner Monti.

7.3 European Commission consultation with industry underway on VAT and e-commerce
DGXXI of the Commission has held an industry round table meeting this month to develop an EU position on the taxation of goods and services traded on the internet. The basis of discussions is a non-paper setting out three options for comment by interested parties. These are:

- an import/export-scheme, where all services that are imported for consumption in the EU would be taxed, and exported services would be exempt;
- to extend the application of the reverse charge mechanism for inter-business taxation; this would involve an extension of the current VAT-identification number system in order to attribute a VAT number to each taxable person;
- to oblige third country operators to account for VAT in the EU when supplying an EU-based client.

A steering committee of 5 European companies - Bertelsmann (Chair), BT, IBM (Europe) and ICL - has been established. A timetable for future actions/consultations will become clearer after the committees next meeting in February.

8 General

8.1 German Presidency plans seminar on self-regulation and the media
The German Presidency will hold a seminar in Saarbrucken, 19-21 April, on the subject of self-regulation and the media focusing on:

- self-regulation within the framework of national media systems - differences and common elements;
- national self-regulation in the media sector from the EU perspective; - requirements and prospects of self-regulation in the media sector in the EU;
- scope of self-regulation in the media sector.

The Presidency hopes that conclusions will be adopted on the basis of the seminar, possibly in the form of Council conclusions ("Saarbrucken Declaration"). The EPC has expressed an interest in participating.

8.2 Data protection - EU/US talks on 'safe harbour' principles continue
After EU and US officials failed to reach agreement before the deadline of end-1998, bilateral talks will continue on the application of provisions of the EU data protection Directive covering the export of data to third countries. US Under-Secretary of State, David Aaron, will meet again with John Mogg at the end of January for further talks. The 'safe harbour' principles drawn up by the US Department of Commerce have been accepted as a basis for negotiation but the EU is calling for stronger provisions on certification, access, infringement and review procedures. The EU also calls for a structured complaints procedure.

The 'safe harbour' principles can be found on the internet at: http://www.ita.doc.gov/ecom/menu.htm

8.3 Green Paper on access to public information imminent
Following the completion of inter-service consultation, the European Commission is scheduled to adopt its Green Paper on 20 January.

8.4 Environmental policy - latest developments in the forestry and paper sector

Consultation continues on the draft proposal on shared responsibility drawn up by the Confederation of European Paper Industries (CEPI); CEPI and FAEP have agreed it as a basis for further talks (FAEP with certain reservations); parties invited to participate in the initiative have been urged by CEPI to respond quickly following approaches from the Commission for details on progress to date;

The Recycling Forum proposed by the Commission's Communication on the Competitiveness of the Recycling Industries will hold it first plenary session on 26 January; a website will also be created for interested parties to contribute.; final recommendations are expected end-1999;

DGIII will hold an industry round table meeting on 2-3 March to discuss the first draft of its Communication on the Competitiveness of Forest-based Industries; a deadline of 22 January has been set for comments on the draft outline.

8.5 Commission launches market access study to examine barriers in the pulp, paper and board sector in NAFTA countries
DGI has published a call for tender to carry out a study into punitive barriers to NAFTA markets for pulp, paper and board manufacturing and paper converting, printing and related industries. The analysis will cover end products including paper products, as well as publishing and printing services and raw materials pertaining to the sector. The study aims to identify trade and investment barriers in the USA, Canada and Mexico against exporters from the EU, and to evaluate their economic impact and legality under bilateral and international agreements.

The EPC is included in the list of publishing federations which will be forwarded to the chosen contractor. The final version of the study is expected mid-1999.

8.6 Competitiveness of EU publishing industries - publishing federations meet with contractor
European publishing federations, including the EPC, held their first meeting with representatives of the Media Group (part of the University of Turku, Finland), which has been awarded the tender by DGIII to carry out a study on the competitiveness of EU publishing. The Media Group gave its initial thoughts on the study and agreed a series of meetings with the federations for consultations during the drafting process. Staff working on the study have indicated that they will be approaching the EPC for information to assist their research. The final report is expected end-May.
A draft outline is available on request.

8.7 Information Society Forum formalises new structure and agenda
Meeting on 12 January, the steering committee of the ISF approved radical changes proposed by its Chairman, Claudio Cassini. The structure will now consist of five working groups and two task forces, which will be mandated directly by the steering committee and approve their own opinions! The ISF also wants to fulfil a "societal" role in the development of the Global Business Dialogue. However, the ISF has yet to receive a formal response from the GBD Chairman, Dr. Middelhoff, to its letter requesting a dialogue! The ISF will pursue its plans to produce a report on the "European way" on the future of e-commerce by November. This report is expected to strongly reflect the Forum's opposition to the purely business-led development of e-commerce, and the hitherto dominance of the US model.

Documents available on request

European Commission
- Non-paper on taxation of electronic commerce: options for the EU VAT system

European Parliament
Draft Directive on copyright (first reading - codecision)
- Legal Affairs Committee (lead) - draft report & amendments (Barzanti)
- Economic & Monetary Affairs Committee - adopted opinion (Cassidy)
- Culture Committee - adopted opinion (Gunther)
- Environment Committee - adopted opinion (Whitehead)

WIPO Treaties (consultation)
- Legal Affairs Committee - draft report (Habsburg-Lothrigen)
- Culture Committee - adopted opinion (Kerr)

Communication "Globalisation and the Information Society" (consultation)
- adopted resolution (based on Malerba report)

Commission Communication on commercial communications in the single market (consultation)
- adopted resolution (based on Larive report)

Draft Directive on a European framework for electronic signatures (first reading)
- first reading resolution (based on Ullmann report)

Draft Commission Directive to ensure that telecommunications networks and cable TV networks owned by a single operator are separate legal entities
- Economic & Monetary Affairs Committee - draft report and amendments (Watson)

Others
European Parliament and Council Decision adopting a multiannual community action plan on promoting the safe use of the Internet, and on the legal protection of services based on, or consisting of, conditional access
- definitive text of adopted Directive

EPC Documents
- latest statements from the Ad Hoc Alliance against unfair competition in the broadcasting and new services markets

Others
WIPO - draft database Treaty
- Consultation documents

WIPO - audiovisual performers Treaty
- consultation documents

CEPI - Towards a European Agreement on the Recovery of Paper and Board Products
- draft paper on producer responsibility

Bonn University study on advertising and children
- results of academic survey and statistical data

Council of Europe Recommendation on measures to promote media pluralism
- text endorsed by the Steering Committee on Mass Media, forwarded to the Committee of Ministers for final adoption




For further information please contact:
General Enquiries: Angela Mills
Telephone: +44 (0)1865 310 732 
Facsimile: +44 (0)1865 310 739 
Press Enquiries: Heidi Lambert 
Telephone/facsimile +32 2 735 3603