Clinton Advisor Says Current Decisions on Internet Policy Are Key.

ARLINGTON, Va.--(BUSINESS WIRE)--Jan. 24, 1997--Ira Magaziner, Senior Advisor to President Clinton for Policy Development, today told the Information Technology Association of America (ITAA) Internet Tax Policy Conference in San Jose, California that "Trade across the Internet could dwarf all other global trade in 5-10 years, if we make the right decisions. But if we make the wrong decisions, it could take 30-40 years to fix the mistakes."

Magaziner is the primary author of the Clinton Administration's draft "Framework for Global Electronic Commerce (http://www.iitf.nist.gov/eleccomm/exec_sum.htm), on which public comment is being sought. Today's speech was his first presentation on the West Coast since the Framework document was released in December. Magaziner expects the draft document to be final in March. Magaziner explained that President Clinton had directed him and the 18 federal agencies involved in developing the Administration's policy to promote the growth of the Internet. Magaziner characterized the Administration's approach to global Internet policy issues as focusing on a market-driven, contractual model, contrasting it with a telecommunications model, under which governments own and regulate the medium. Part of the purpose of the paper is to convince government leaders around the world to reject the telecommunications model when dealing with the Internet.

Magaziner praised the recently published ITAA White Paper on Internet taxation, Straight Talk: Internet, Tax & Interstate Commerce (available on the Internet at http:\\www.itaa.org) as a "sensible approach to Internet taxation, on which the Administration is in general agreement." He promised to continue to work with ITAA and the IT industry to continue to improve the policy document.

Calling the threat to overregulation of the Internet real, Magaziner referenced several specific instances in which governments in the U.S. and abroad have already made or are in the process of making decisions which would harm its growth. "At least 12 countries are seriously considering putting duties on Internet transactions," the former corporate strategist explained. "We need to be proactive on these types of issues, so they we are not simply responding to setbacks. Because the U.S. is the leader in the world in the Internet, other countries are looking to us for leadership on these issues."

ITAA President Harris Miller called Magaziner's presentation "a very positive step for the growth of the Internet. While the industry disagrees with the Administration on some issues such as encryption, the general approach Mr. Magaziner advocates-fostering the Internet as a non-regulatory, market driven medium-is definitely the right one."

Magaziner stated that development of the Framework is just a first step. "Getting international agreement on the principles in the document will be difficult, but is most important. We intend to use international organizations such as the World Trade Organization and the Organization for Economic Cooperation and Development to obtain agreement and see it implemented." He also indicated he was optimistic that developing countries would be supportive of these efforts because the Internet provides them the opportunity to leapfrog their economies into the information age.

While indicating discomfort with the idea of federal preemption of state's creating new Internet taxes, Magaziner indicated the logic of the Administration position is that states should not tax the Internet. He urged the states voluntarily to work together to prevent the development of new Internet taxes. Otherwise, he indicated, he expected the push for federal preemption would become very strong. Numerous states are now considering various schemes to create new Internet taxes.

The two-day Internet Tax Policy Conference which Magaziner addressed was cosponsored by Deloitte & Touche, LLP, CommercNet, Upside magazine, Silicon Valley Software Industry Coalition, and San Jose State University College of Business. Speakers from industry and state government also participated.

ITAA consists of 11,000 direct and affiliate members throughout the U.S. which produce products and services in the IT industry. The Association plays a leading role in public policy issues of concern to the IT industry, including taxes, intellectual property, telecommunications law, encryption, securities litigation reform, and human resources policy. ITAA members range from the smallest IT start ups to industry leaders in the software, services, systems integration, telecommunications, Internet, and computer consulting fields. Learn more about ITAA and its positions on the issues by connecting to its home page at http://www.itaa

CONTACT: ITAA

Bob Cohen, 703/284-5333

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