The European Commission is to develop guidelines for the use of radio frequency identification, or RFID, in businesses and government.
RFID technology is used to identify assets at short range, and is used in many industries to help make companies more efficient and to prevent theft.
Speaking at the CeBIT trade event in Hanover, Germany, on Thursday, information society commissioner Viviane Reding said the Commission would draft rules later this year to amend EU e-privacy legislation to take account of RFID.
A stakeholder group will be formed first to advise the Commission on the development of its RFID policy. It will report back to the Commission by the end of 2008 on any reform to European laws that it thinks is needed. Major issues, according to Reding, include privacy, trust and governance.
"We should stimulate the use of RFID technology in Europe while safeguarding personal data and privacy," Reding told reporters at CeBIT.
Reding also said that the Commission would not tie users of RFID into regulation. "When I come to CeBIT people ask, 'What regulation are you proposing today'? I have no regulation, we must not over-regulate RFID. But we must provide the industry with legal certainty," she said.
In the strategy report, the Commission said RFID tags — the hardware attached to the assets in question — needed to be more secure, particularly in terms of encryption and authentication.