Yes IATA are involved (I thought that this was stated on some of the KLM promotional material.)

IATA have a working group who's sole aim is to ratify a standard for a permanent bag tag.

There are problems with the current paper tag system, that may not be immediately apparent to a passenger. Yes it appears to work very well, but it was never designed for the number of passenger flights that now take place and some airlines have to fudge the standard due to the passenger volumes.

There is industry pressure for a permanent or home print bag tag because it saves them money. It is why many airlines are introducing automated bag drop machines and self-service check-in kiosks. It is why budget airlines now insist on internet check-in and charge so much if you fail to do so.

They charge extra for hold luggage because they have to pay for the baggage handling as well as the member of staff to put a paper tag on your bag.

The eTracker will allow them to locate lost luggage faster and more reliably. A bonus for passenger and airline alike - you get your bag returned sooner, maybe even before you know that its missing, and the airline doesn't have to pay you compensation.

Security for DCS is a good point, but ultimately its no different sending data to a permanent bag tag than to a printer for a paper tag. There's just a different communications medium in between.

As it stands few airlines now control their own DCS, they purchase the service from elsewhere e.g. SITA and Amadeus to name but two.