The European Commission will develop guidelines for the use of radio frequency identification, or RFID, in businesses and government.
RFID technology is used to identify assets wirelessly at short range, and is used in many industries to help make companies more efficient and to prevent theft.
Speaking at the CeBit technology trade show in Hannover, Germany, on Thursday, information society commissioner Viviane Reding said the Commission would draft rules later this year to amend EU e-privacy legislation that factors into the use of RFID.
A stakeholder group will be formed first to advise the Commission on the development of its RFID policy. The group 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 also said that the Commission would not tie up use of RFID in regulation.
The Commission also published a strategy report on Thursday that was produced after consulting with interested parties.
In the 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.
Richard Thurston reported for ZDNet UK from London