Wednesday, July 30, 1997, page 8 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Keep the Net Free for Business to Bring Us Wealth and Jobs ---------------------------------------------------------------------- By Robert D. Hormats The Washington Post ---------------------------------------------------------------------- NEW YORK - With his call for a minimally regulated, secure and duty-free environment for Internet information flows and electronic commerce, Bill Clinton will have a profound impact on governance, the openness of societies andthe integration of economies around the world. His ''Framework for Global Electronic Commerce,'' unveiled on July 1, can be one of his fundamental foreign policy legacies. The administration's initiative can accelerate a process that will enable hundreds of millions of people to harness the power of the technologies of the emerging global information network - the Internet and the World Wide Web. By pursuing greater openness of economies to flows of information and commerce, it will further integrate national markets. And it will lead to the creation of countless new jobs in an explosion of new techno-logies and the commerce that they will facilitate. The very nature of global production, distribution, sales, advertising and finance will be permanently changed. The framework confirms the enormous economic and social promise of the Internet, while recognizing that government's greatest contribution is to let private individuals and businesses lead the way. The era of big government is over. In the case of the Internet, it is deemed by the president to be downright counterproductive. Government's role should be to ensure competition, protect intellectual property and privacy, prevent fraud, foster transparency and facilitate dispute resolution - not to regulate. But the Internet can reach its full potential only if it can become truly global. The challenge for the United States is to convince other governments of the wisdom of its approach and to persuade them to implement policies consistent with it. The time to do that is now - before regulators who do not understand the unique attributes of the Internet impose excessive regulations, and before revenue-hungry governments seek to extract new taxes. Before too long, these could become embedded in national laws and policies, stifling the Internet and its promise. The commerce, information and entertainment that flow over the Internet, and the international rules needed to protect intellectual property, ensure privacy and facilitate competition, could form the warp and woof of the fabric that binds societies together in the next century. But this is far from an inevitability. First, these societies must see an interest in weaving that fabric. One of the greatest obstacles to creating an open global information environment is not so much that governments resist the economic competition it triggers but that they are concerned about the social and political implications of free flows of information and ideas across their borders. How the clash of values created by the Internet is resolved will determine its long-term economic prospects. For most Americans, living as we do in an open society, it is axiomatic that citizens of all nations, like ourselves, will be better off economically, socially and politically if they have access to the international information, commercial contacts and diversified cultures that the Internet provides. To many countries it is not. The Internet's greatest enemies are government censorship, regulation and taxation. For any number of reasons, governments might see fit to abuse their powers in each. The Internet erodes government control over information. It joins the printing press, radio, television and the fax in the pantheon of technologies of freedom. Of these, it is the most dispersed globally and the least controllable. It promotes freedom from government as the most influential source and arbiter of information. It gives citizens access to entertainment or ma-terial that governments or private citizens might find offensive, a concern shared by those in the United States who supported the Communications Decency Act (just struck down by the Supreme Court). Persuading governments of the virtues of permitting their citizens to be on-line and connected with millions of people outside their borders through the Internet and the Web cannot be done by diplomatic pressure or lofty rhetoric about the virtues of globalization. Moreover, the natural leader in selling the Internet and the virtues of electronic commerce, the United States, is hampered because its dominant position in software and hardware, the deregulated telecommunications sector and world-class entertainment and content makes it suspect in some quarters abroad. To overcome resistance, the United States will need to work with advocates of economic growth and reform in other major countries - particularly businesses, scientists, entrepreneurs and students. Its strongest argument will be that popular support for governments depends heavily on their ability to create jobs and growth. Restrictions on flows of information and electronic commerce are incompatible with that objective. Businesses need real-time, on-line information on changes in tastes, cost of materials, consumers' needs, competitors' prices and financing opportunities abroad. They will need to be connected to the international information infrastructure to participate in the tens of billions of dollars' worth of electronic commerce that will take place at the turn of the century. And the foreign investors whom all nations seek to attract will require connections to global information, the world market and their headquarters. America has taken the initiative in global institutions such as the World Trade Organization and the OECD to set high standards for openness of the Internet, to reach agreements to protect copyrights, patents, trademarks and electronic contracts, to set limits on regulation and to obtain pledges to eschew taxation of electronic commerce. It seeks to develop a ''uniform commercial code'' for electronic commerce. If the major nations accept these standards, more and more governments now reluctant to do so will feel compelled to adhere to them, or risk falling behind in this economically powerful technology. By hardening international political, ideological and economic barriers, the Berlin Wall became the most prominent symbol of the Cold War Era. By promoting freer global flows of information, ideas and business, the Internet can become the most prominent symbol of the post-Cold War era.

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