EU ministers yesterday gave their backing to a directive which should remove national barriers to the establishment of e-commerce service providers within the EU.

The Internal Market Council of Ministers endorsed proposals which should provide a "light hand" of regulation for providers in an EU market worth, according to Microsoft, $16.8 billion (€16.45 billion) this year and growing exponentially. In the US, where one in three consumers is connected to the Internet, the market is worth $71.4 billion.

Through harmonisation of standards already in place in some states, the aim is to lift the burden of multiple requirements on providers and give them the right to establish where they wish.

Ireland and Britain have supported such a "light touch" regulatory framework against others who wanted to extend the full gamut of national commercial regimes to e-commerce.

But with Internet providers of services able and willing to relocate with such ease, the Commission has accepted that the latter approach is likely to hamper the development of EU-based trade.

The proposals now return to the European Parliament before enactment.

Yesterday's decision was welcomed by the Tanaiste, Ms Harney, who said it would give consumers additional protection and would require website owners to give certain information about themselves.

Electronic contracts would have legal effect in Europe and Internet carriers and Internet service providers, which host websites, would have limited liability.

The basic principle is that services could be provided throughout the EU if they comply with the law in their state of origin. The directive would apply only to service providers established within the EU and not those established outside. The right of consumers to seek redress in their own national courts is provided for in a separate directive.

The e-commerce directive also provides for harmonisation of certain specific legal aspects related to such services. These include: commercial communications (advertising, direct marketing etc); the online conclusion of contracts; the liability of intermediaries; and the enforcement and implementation of the legal framework.

It builds upon and completes a number of other initiatives - regulatory transparency mechanism, protection of personal data, legal protection of conditional access services, electronic signatures - that together will eliminate the remaining legal obstacles to the online provision of services.