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by Patrick Thibodeau

WASHINGTON, D.C. (IDG) -- A U.S. Senate Commerce subcommittee was told Thursday that the marketplace and not government should determine e-commerce and Internet standards.

"We do not believe that regulations are needed in the e-commerce space to enable its growth," said Glenn Habern, senior vice president for new business development at Wal-Mart Stores Inc. He warned the subcommittee on Science, Technology and Space that regulations could "freeze" the progress private industry has made.

"Government should not try to force standards on industry artificially, but should continue to permit the marketplace to determine what standards should evolve and at what pace," Habern said.

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But while Habern and other industry representatives testified, negotiations continued in the U.S. House of Representatives to try to resolve differences over a bill that business supporters say is essential to e-commerce -- a national electronic-signatures standard.

The House is considering a bill proposed by Commerce Committee Chairman Tom Bliley (R-Va.) that would set a national standard for electronic signatures. The bill would put electronic signatures on par with written signatures, but is technology neutral (see "House committee passes digital-signature bill," link below).

States have been adopting electronic-signature measures (see "California signs up digital-signature provider," link below), but companies say they need a consistent national standard in order to conduct business across state lines. For instance, Ford Motor Credit Co. in Dearborn, Mich., said it had previously testified that although customers can complete a credit application and securely send it online via the Internet, the lack of electronic-signature standards has meant that customers must still go to the dealership to sign the credit application.

However, the bill has raised concerns of consumer groups and some legal experts, who sent a letter to House today urging members to vote against the bill. They said the legislation would allow businesses to replace paper records, such as warranties, with electronic records regardless of whether the consumer has a computer.

The Clinton administration has generally supported a hands-off policy regarding e-commerce issues. That position was reaffirmed Thursday by Andrew Pincus, the U.S. Department of Commerce general counsel, before the Senate Commerce subcommittee. He told the committee that the private sector should lead on e-commerce and Internet standards issued, and said government interference could hurt the market.

But where U.S. policy makers may have to play an active role is in international issues, Pincus said. Some governments are working more aggressively to set standards, he said. For instance, the European Union is considering electronic-signature legislation that may not be technologically neutral and may adopt standards "that will skew the international market in a way that will hurt U.S. companies," he said.

The lack of interference by the U.S. government in setting standards has helped the Internet to grow, said Sen. Conrad Burns (R-Mont.). "It continues to grow because government hasn't figured out how to tax it or how to regulate it," Burns said.