US and EU Regulatory Competition and Authentication Standards in Electronic Commerce

Abstract

This chapter examines the role of law reform in promoting the development of technical standards for the authentication of parties engaged in Internet commerce. Law reforms intended to improve the security of Internet commerce can only succeed if they address business, technical and legal issues simultaneously. The EU has used commercial law reform and formal standard development to coordinate work on authentication standards, while the US has allowed the market to determine what type of authentication technology is appropriate and has left the development of standards to private consortia. While the EU approach may solve collective action problems more effectively, the US approach may discover end user requirements and may allow business judgments about risk to inform the law more effectively. Neither approach has yet resolved the authentication problems facing businesses engaged in online commerce.

A “New Approach” to Standards and Consumer Protection

“…As a practical matter, market demand for e-signatures turned out to be considerably less than the drafters of the Directive anticipated, so a great deal of behind-the-scenes prodding from regulators was required before appropriate standards emerged. The European Electronic Signature Standardization Initiative (EESSI) developed standards that were later recognized as having formally met the technical and market requirements of the E-Signature Directive (Winn 2006). By 2008, the only significant adoptions of e-signature technologies in Europe were in response to public sector requirements to access e-government services.…”

PKI Interoperability: Still an Issue? A Solution in the X.509 Realm

“…SDOs in the US operate outside any form of public control and focus solely on market conditions, while the EU SDOs are under government surveillance and are guided by both the social and economic expectations of the market [14]. Winn, J. K. [14,20] demonstrates this difficulty by contrasting the standardization processes adopted in the US and the EU.…”

“…The EU directive on electronic signatures is a light version of the New Approach; unlike the directives based on the traditional New Approach, the electronic signature directive doesn't require the development of formal standards to support compliance to the directive of electronic signatures [20]. CEN, CENELEC and ETSI have introduced new types of products, such as CEN CWAs (Workshop Agreements), ETSI TS (Technical Specifications) and GS (Group Specifications), for accompanying the rapid evolution of the ICT market, and for facing the growing influence of international consortia working outside the EU.…”

Resources, Efficiency and Globalization

“…While the Internet is reducing certain traditional trade barriers (Hamill, 1997;Porter, 2001) and is regarded as an alternative/complement to physical market entry (e.g., Bennett, 1997;Berry and Brock, 2004;Stockdale and Standing, 2004) the intercountry regulatory competition inter alia to set ICT standards (Winn, 2007) may still lead to government measures affecting the undisturbed flow of products and/or information (Braga, 2005;Frynas, 2002;Kobrin, 2001). Furthermore, it appears that countries tend to regulate e-commerce in a similar fashion in which they regulate other domestic issues (Winn, 2007). Consequently, there is a probability that with growing online internationalization less democratic countries may take action of protectionist nature which might impair on foreign e-companies' business (Andonova, 2006;Braga, 2005).…”