Ladies and Gentlemen: it is a pleasure to speak after Mike, because what he said for business is true for politics as well so we could easily change our functions - so I am free now Mike, what about being a Commissioner and I am taking over your responsibilities?

(Mike - Can't handle the turnover!)

The process of globalisation of course is something very interesting not only for business but also for politics and we were, years ago, trying to catch up with the idea, with the consequences and with what we had to do as politicians in order to make Europe a competitive place because at the end of the day the principles which are the leading principles of politics these days are not far away from what you have to do as a manager. It is kind of trying to be as helpful as possible to the competitiveness of a place where people are living and working.

Now globalisation is not something totally new. We have had several different forms of opening up national and regional markets to more global activity but it is true with the technology available today it becomes a process which has depths and an influence on everything in daily that has never been available in the past. And of course technology is at the same time a driving force as it is a result of that process so you have an interwoven texture of very interesting developments. The emergence of the new telecommunications possibilities, including of course, the internet which is at the centre of this conference, extends scope of what is tradable. That is the first economic effect of it.

We do have new products and we have traditional products which become tradable in a new form. The new form is basically distance - that is very important, especially for small and medium sized companies which unfortunately have to be drawn to that development much more than the big companies, though they in fact are profiting economically from that new development much more than big companies. A big company also in the past was present in all the different national and regional markets, and a small company had specific difficulties as cost of entrance to the markets normally were too high - at least for the global market. This has totally changed. The distance is not any longer neither physically or economically a factor that is dividing the world or dividing markets and dividing market participants.

Another very interesting economic event is the death of the 'middle man'. This is something which will be dramatic, especially in Europe because in Europe the economic society is much more based on the idea of a middle man and we have not taken into account sufficiently already - at least not the people that are in danger of losing the basis of their economic existence - what that really does mean. The demeterolisation of the economy and the emergence of a true global electronic marketplace are not only the economic phenomena.

I don't have to speak a lot on the economic consequences after Mike's speech, and of course you could dwell a little longer on that especially since all what is going on nowadays is more or less characterised by that attempt to keep up with that global development but my task is more to speak to the political consequences and at the end of my speech I want to discuss a little bit the cultural consequences because these three aspects are the most important ones in that globalisation process - economic consequences, political consequences and the cultural ones.

The political consequences first of all are marked by the fact that there is a gap - politics is lagging behind. We are not in politics as developed as economics are and we have to try to catch up. One of the most important reasons for the European integration these days is not any longer the idea of keeping peace in Europe because everybody is taking that for granted among the members of the European Union so many people do believe that since that first and important part of the EU has been achieved they are looking for a raison d'être.

What's the reason for European integration especially when it is integrating more and more the daily life of citizens? Well there is a very simple justification for that. By European integration we are learning the process of globalisation by doing it on a smaller scale. The European Union is more or less the training field for all those who want to go beyond the borders of their known national market. They will experience the same difficulties, they will find the same chances, they will have to reorganise themselves in a way that may more or less be taken on board if they are going globally. Of course European economies cannot be competitive if we are not opening up the EU to global competition and that is defining the political tasks of political institutions.

First we have to see there is no room for national nation states to solve all of the political problems. It is true that some of the political tasks can be fulfilled by national institutions but more and more we are discovering the process of globalisation needs a political coverage which is not bound to national identities. That is even true to the European identity. Of course if you are looking at the internet and its necessity of being inserted into a political system you can easily see that even a European regulation or non regulation would not satisfy the needs because it is a global institution, it is a global activity so we need global rules. That is to say, what we are doing in a European context can only be a model for us to be transferred to global institutions or global activities and there we have discovered something which is very important since, if there is a loss in power and a loss in competence in politics, especially if you are looking at global needs because we don't have sufficient global institutions, we have to see to it that there is a better cooperation between the private business and the political authorities. That was the leading idea when we started our effort to invite the industry to start a global business dialogue.

To a certain extent, we had a good experience by the transatlantic business dialogue that was already working quite well between the US and the EU. But the idea was to have real global rules, global principles, not set in the first line by politics but industry should take the lead and work out what industry could really decide in terms of a global legal framework. So globalisation in terms of politics is a transfer of power to individual companies, citizens, civil organisations, whatever you have and that is important to be understood because it is not completely understood among politicians these days, and therefore the first conference of the business dialogue into which IBM is putting a lot of interest and a lot of its intellectual power, which is very good, started at the conference in Ottawa where your Chairman gave a very good speech indicating what the direction of what that initiative could be.

Now you have established a process that is leading to a conference in September in Paris, which is covering a whole range of different topics, which are important for internet. Covered by all the major companies in the world, the US, Latin America, Europe and Asia that are working in this field. Of course some of the topics need political decision. That is for sure. It is not possible, for instance, to have a decision by industry on taxation. If you are giving to industry the question 'How do you want to be taxed?' the answer is 'Not at all'! So there will be a division of competence and power but to take a decision of the very important principle of neutrality of taxation - that is to say no privilege on internet activity but also no disadvantage, no special tax or special cover or whatever on economic activities. That is a very valuable starting point. Since many Governments are in line with that idea, to fix it, as a principle is important even if the decision has be taken at the end of the day by politics alone.

There are other items like privacy, which can be a mixed responsibility. The European Union years ago have already taken an initiative to regulate that via a directive - that is to say by a legal measure. Maybe these days we would not do it again. We would also try to find out first what industry is able to deliver and that will be the case in that conference because the US industry and the Asian industry to a certain extent as well they will be able to deliver or offer their own solutions before you are getting into the necessity of having a regulation. We have foreseen that in our directive and we are ready to accept also other ways and means to identify the needs of protection of privacy and to guarantee that by private obligations. So the principle of self obligation is very important in this context and it is very important industry is taking the opportunity because, I don't want to warn you when I met as German Economics Minister my predecessor in the Commission, Lord Colefield. He looked at me because I wanted to have authorisation by him for some subsidies for the German film industry and I tried to convince him there is a need to present German culture and therefore we have to pay for it. Then he looked at me and said "Yes Commissioner, I can give you some script girls for sure, but I warn you..." Then I looked at him and said "Commissioner, do you really believe in speaking with a minister of a member state that this is right way of addressing him?" He was a little bit astonished but then he looked at me and said, "Yes you are right. I allured you Minister." So I don't want to warn you but I allured you that in case the industry is failing to establish a system that is meeting the need of many people you will have a double non success.

First of all there will be a lack of confidence by the users of the internet, which will restrict the market potential. And second you will create a situation where the classical politicians will tell you: look we have given you the opportunity, you have not taken it, now we have to do it again. So it is very important that you are trying to come down with solutions that are giving a real chance to people, and which at the same time are reliable and improving things. Of course there are many other things that can be mentioned there. We have about 15-16 items that will be discussed.

Let me explain one item again in a little more detail in order to show the importance to that division of competentness and powers. And that is an active role of industry in the field of standardisation. Mike mentioned it. Standardisation will be a key element in the development of a global economy and also a global political understanding. As you know we are trying in Europe to develop a system of standardisation which is giving the responsibility again to industry. Our institutions Sen, Senalig and especially Etse in the field of telecommunication technology are built by industry. They are industry led, industry is defining the needs, industry is financing it, industry is taking the decision. For instance the decision on the third generation of mobile telecommunications was taken by the industry even in the situation in which two different camps were fighting against each other and that was possible. At the end of the day the winning part took the opportunity to integrate the losing part and we have now a very good standard for the third generation of mobile telecommunications. Our ambition is to offer that as a world standard because in an integrated system it is of utmost importance that standardisation is not blocking the inter-operability. We have had the example in the second-generation mobile telephone standards where especially in the US you have different marketplaces... (end of side one)

(side two)... have to develop either at higher costs solution which is good for both standards, or it can only live with one marketplace which is smaller than I could and should be. So the consumer has to either pay the higher cost or he is restricted to the use only in one marketplace of one device. So that is not the ideal solution. Therefore our position if there is an inter-operable system and after a free decision of industry the political authorities should help the standard a little bit to become the inter-operable standard within the system provided the standard is technological neutral and open. The only condition we are making is that such a standard should be open and not create a closed shop and be hostile to competitors. But for the rest we have not hesitation to help such a standard to come about and this is an attitude that is not to be found in the US - at least not up to now because the US administration still defends a position that is not a real position saying "Be there 100 standards and let them compete on the market place and at the end of the day, the best and the fittest will survive". This is not true. It was even not true under Darwin's law. You can find this with many cats for instance - we have two cats at home and if they had to rely on survival of the fittest, they would be long dead! We are doing a lot to make them survive.

So in standardisation we have to find that common philosophy. We have now given our UNTS standard to ITU (International Telecommunications Union) and we are quite satisfied with that because we have no hesitation to make it a choice as a world standard and we are quite certain it has a good chance to be the world standard. What does that say? Self regulation versus Governmental regulation is the key word and you will have to prove and I hope that my colleagues will also participate in that effort that self regulation is giving the proof of being much more valuable and more flexible, much more fit for the global system than any kind of regulation, because we will not have a global regulation and only a global regulation can be adequate to the chances and risks of the system.

To give you another example, all the marketing regulation which in Europe sometimes is protecting some professions, for instance, pharmacies are protected by regulations that certain drugs can only be handed out by a pharmacist, that will be gone with the possibility of selling these objects by internet. If it is legal in Texas to offer via internet a certain drug, which in Germany can only be handed out by a pharmacist, it is not illegal for a German consumer to make use of the offer on the internet. It may be illegal by a German pharmacist or a German trader not being a pharmacist to trade with it, but the consumer himself they are able to make use of that offer. That will change a lot. I have been visiting Switzerland - not normally known as the most modern country in the world but sometimes everything has an exception! They have a pharmacy, which is selling pharmaceuticals drugs via internet, and they have a better control of the patient than any pharmacy that is handling that in a classical way because they have files of any customer/patient. They can even tell him what you have ordered now seems to be extraordinary, what is the reason? And they are doing that. That is to say for the first time they are fulfilling what normally a pharmacist should fulfil - namely to give advice and take control of the consumption.

All the classical attitudes will be gone in a short time and this is true for many professions. For instance, if I owned a travel agency, I would hastily speed up to be part of the internet. By the way, some people are knowing it - I have a very small bookkeeper who of course will never compete with Amazon, but he is on the internet. The other day when I was ordering some books by fax and when I came to take them, he said to me quite proudly "You can do that via internet". This is very good. So if people are realising the new possibilities they can survive - they can even change their business. They can take up a different business. They can make money. There are many examples.

For instance, the other day I was in a conference when a small German firm name Brocade was presenting itself - they are producing encryption systems. They are to a certain extent profiting from the then position of the American administration position that you couldn't sell strong encryption systems to private customers because they took the lead in the world market. They are now 3 or 4 years old and they sold the business in order to get money from the Stock Exchange. They got half the capital of Rolls Royce - a 4-year-old company. It is difficult of course - it depends on the situations but everyone now has a new chance and that is vital and that is also politically important because, as you know from the field of information technology at large and bio-technology there are new jobs created.

Now we make a few comments towards the cultural aspect. The economic aspect is more or less known now - it gets even more known to people who were doubtful about its development. I will never forget 6 or 7 years ago, when I told European parliamentarians in a debate that because they were very much concerned about a new division in society - the haves and have nots - and I told that at the end of the day at least for reasons of money, no one will be excluded because the economic principle of the system is to reach everybody. There should be no concern about what the French are calling 'service universale'. There are only three things in France which are really holy and sacred 'service universale', agriculture and the film product. The last time when the French Government reduced the budget, they reduced military expenditure but not the expenditure for the postal service. This shows the aims and rankings to things in France.

Now, let me come back to that example. It is very important that we understand the economics of the system. To reach everybody means that there are now companies offering the hardware and the service of telecommunications to everybody without charge if they are accepting a certain amount of publicity. When I told that years ago, they were laughing at me because they didn't believe it and now they say "These capitalists, they will profit off the big cities and there they will offer their services. But on a far away island they will not be interested to offer an access to internet or whatever it is" and that is basically wrong. An infrastructure and a service offered by an infrastructure is more valuable if you are reaching everybody, so that is what we have to learn. Therefore the first thing is in cultural terms that we should try to look at it in a very relaxed way. By the way it is a principle for dealing with society information as such.

A German professor, they are the most conservative of people - more so than pharmacists or farmers or journalists - was defending the thesis we have come to the end of the Guttenberg Galaxies. He said there will be no book anymore written or read everybody will rely on the new infrastructures. He wrote a book to defend the thesis. What does that show? I believe that shows a very relaxed and pragmatic approach to the new possibilities. Of course the old ways of communicating won't be given up immediately and without sense. Of course there will be books written and read. Of course there is also a need to make use of the new possibilities. There may be some people who don't need them - I don't know. I personally believe and my colleague, Nick Punter, I was given a report on his latest speech that he gave and apparently he is taking up some of my ideas. That's good because I am taking up some of his ideas as well. And I believe that one of his ideas is quite relevant for the spread of the new possibilities when he is hinting to the fact that younger people and the elderly people are making much more use of it than people in the middle of their professional activities. That is true. Therefore we have to see to it that this middle group makes more use of the new possibilities but if somebody - for instance, I was asked at each conference if I had an e mail address and in the first days, I had no e mail address then I said to myself preaching that and not having an e mail address may not be the right way, so I had an e mail address. But I have to say to you, as a Commissioner, with 25 people working for me in a cabinet in order to keep away from me the daily business, and let me reflect that was not good enough. I was handing my e mail over to my secretary immediately because it is waste of time for me, in the position that I am, with the activities I have to do to have that personally. You have to have it institutionally but not personally so everybody can make use of it or leave it and lets be a little bit relaxed. I am always against people who are always telling you if you are missing that you are missing everything, or against people who tell you it is against culture.

But what is culture? First of all, I do believe that there are several misunderstandings. Culture is not an elitist conception of a very narrowly to be defined special field of human activity - literature, the arts and so on. Culture is a little bit what nowadays is defined by lifestyle. Maybe that's a little bit too broad but in fact if you are working in the EU and that again is a good example, you will see there is a different culture in daily activities and it is totally wrong to believe that this daily culture should be left untouched in European integration or global integration. It should be leaving more leeway to a more common understanding. That is to say we will have to develop a global lifestyle which is not embracing all of the culture. A great part of the culture will remain as a national identification. For instance, languages are an example of that.

But it is essential that these national ingredients are not building a closed shop. They have to open themselves. So the main task in the cultural development is that we are trying in all the different cultures to exercise openness, which is much more than tolerance. Tolerance is to a certain extent, passive. You are accepting that others differ from you but openness means an active participation not only to understanding but also to developing the inter-cultural relationships. That is so important for a development of such a political and economic system, because at the end of the day, the decisive element will be whether culturally we are able to use to the utmost the possibilities of that technological infrastructure.

That has also been the subject of a book by Professor Huntingdon called 'A Clash of Civilisations' that whatever politicians or businessmen want to reach, at the end of the day they will have nothing because there will be a clash of civilisations and he sees this in a very simple form that civilisations are based on religion, religions are intolerant and by that we won't be able to cooperate and live together. Even if that thesis is true - I believe it is wrong because we are developing our culture in connection also with religious values but we are far beyond for instance Christianity. I always test the Christian Europe is telling people what do you believe is the most important of the 12 Commandments. It takes about two minutes before they realise there are only 10 Commandments. It is not true that we are bound to these values exclusively. If it were true we would have to fight against it. I don't believe in the clash of civilisations.

I do believe that for the first time in the history of mankind with modern technologies we have an instrument enabling us to lift that global world which always has been the dream of philosophers and politicians years ago who dreamt of that eternal peace of a world system. Now we are able to bring that about. And it depends on us. It will not happen by chance and it is not impossible. What we are doing will be decisive for the success of that.

Thank you very much.

QUESTION AND ANSWER SESSION

You were talking about standards and I am wondering what is your position when they are raising standards from the private industry like Microsoft Windows System. What should be done to have standards, which will help industry, and be accepted? Is there any solution in your mind?

Yes. First of all I have nothing against the standard that is developed by industry. As I said, to my mind this is one of the major tasks of the industry itself. It would be much better of course if it is developed by a standardisation organisation because you then have a kind of guarantee that it is accepted by at least a majority of the participants in the system. If it is developed by a single company there are of course limits to it. First of all by the means of the technology it has to be an open standard. We have had a case like that in TV in Spain where a company wanted to offer device with a standard that the Spanish Government didn't like to authorise and we forced the Spanish Government to accept that because our argument was maybe there are two or three standards at the end of the day, but as long as they are open and inter-operable you don't have an argument against that. So that's that.

Technology should be guarantee fee access, also to competitors. And then of course there is the bunch of questions which always arise if somebody has a market dominant position. The question for instance whether by that standard other offers are transported and nearly being forced upon clients, that is not a technological standardisation question, that is a question of normal competition policy. There we are looking at what our American partners are doing. It's not our problem, but of course we are following that quite closely. It's the ideal European position - others do the work and we are profiting from the results.

You have demonstrated that using internet for companies can be a competitive advantage. For company also the tax that they pay sometimes is very heavy so as a political person what can the Government do to reduce the charge using internet?

We have not introduced special taxes for the use of internet so what you have to pay is the normal tax. The same as what you have to pay if you are selling a book in a bookshop. This is what I believe is acceptable by all political systems which is called the Principle of Neutrality, which means no new taxes on the use of internet but also not the privilege of the internet because if selling a book via the internet would not cost you VAT that would kill in addition to the advantage of internet any other bookshop around the corner. So you would introduce an element of discrimination against somebody who is doing business in the classical way and that of course cannot be accepted. So we will have to decide, for instance, who is collecting the VAT the country of origin or the country of destination. We have had the same problem in the EU. This is still to be decided but there should be no decision on additional taxes.

One of the interesting questions that people worry about in globalisation as a result of the internet is whether businesses from one country will take over colonising businesses in other countries and that's a concern. Also there is the concern businesses in that other country can do the same the other way. It's interesting to see how it will evolve and to see whether Governments need to do anything to stop this or whether they simply foster their own businesses to compete and go global. I want to hear your opinions on that.

For the time being some European institutions, let me put it that way, are trying to do their best to drive business out of Europe. You may remember a decision by a Bavarian judge who found a service provider responsible for contempt. So our business now is to see to it if necessary regulations, that is making business easier in Europe rather than making business more difficult. That will require some political courage. As I told you, if you want to do business in pharmaceutical products we have to get rid of our very restrictive and too rigid regulations which are existing on a national basis. That is for sure and the competition within the EU will help us because in the beginning it is not so much competition with American companies but within European Union companies, so that is helping us to establish a system that is enabling business and not hampering business. At the end of the day I truly believe that as this is the first example of true global competition it is more likely that there is less regulations than there is more regulation, because people are getting aware of the fact that if they are getting a regulation it is hurting their business and it is not helping their company.

The best example is the encryption one. We had some Governments in Europe who had more or less the same position but they were convinced by reality, and the fact that an American company could not sell encryption systems without depositing a key has stopped their business totally. Who wants to by an encryption system and deposit a key in America. CIA or FBI are the two institutions which come to your mind but of course that is not attractive so business went away from America. I have been in politics now for 40 years or so and I find the most enthusing thing that technology is that it is forcing politicians to be reasonable and accept reality. The most dangerous politician is one not able to accept reality. They are all living in these visions and dreams and they are ending up in gulags and whatever. Accepting realities is something very human, because realities are created by human beings - they are something that are human artefacts. Of course you can now consider I'm not against that discussion in Europe. It is absolutely necessary that you are discussing what do we do for the socially weak people.

But again this is a wonderful example how we can help them much better than with the classical social system, because with the classical social system we would have to define persons that were able to get 20 telephone calls free a month. You would have to define their income, maybe where they are living and so on. Then you would have to create an administration that was taking stock of that, and so on. Of course you would have cases of corruption in the system. Somebody is giving 20 free calls to his dentist and so on, so instead to have a system where it is free of charge so you don't have to define. You are just telling people you get that free of charge if you are accepting a minute of publicity and this then becomes not a social question in the old way, it becomes a question whether you want to take it or not. I'm was saying for instance that during lunch, I was living in an area round Stuttgart where people are living that have been expelled from Scotland for being too thrifty, I am convinced that a millionaire in Slavia is making use of that he is listening and nodding and then getting everything free of charge. It is a quite new way of developing society. Society is not based on the ideal that somebody is defining what your place is and so on, the basic principle of that new society is free choice and if somebody if giving you free choice then you cannot complain that this and that is inhuman. You have the choice. If you consider it inhuman you can make another choice.

It's going on in TV. We have the public TV, which is boring, and you have to pay for it. They are always telling people that it is free TV that of course is nonsense you have to pay for it even if you are not watching it but that is better because I would prefer to pay for it and not see it. So this is their choice. Then you have private TV that is financing itself with publicity. Of course it is not very nice sometimes and you can say when the publicity comes in when the murderer is taking his pistol and then cut to the publicity. And if you don't like that you can have pay TV and then you are paying for it. To my mind this situation of free choice is doing away with a lot of political problems because there are political parties or systems who want to tell people what they should do and this is the end of it. Nobody has to tell me what I have to do - only I want to have a free choice and therefore this invention is sometimes - it is a political revolution as well, if we make a right use of it democracy, marketplace, market mechanisms and cultural values will be transported to the rest of the world.