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European Parliament Pauses on EU-US Privacy Plan

The sudden hint of turbulence in gaining European Union support for the data protection arrangement throws into potential jeopardy the Safe Harbor plan that would allow data transfers to continue between the EU and US.

While the European Commission and the so-called Article 31 Committee of member states already have voiced their approval for the plan, the parliament's 626 members can throw the entire product into rather rough waters, but EU First Secretary for Trade Gerard de Graaf, speaking from the Washington Delegation in the US, said that the parliamentarians simply are not yet familiar with the arrangement.

Failure to reach an agreement between the two trading zones' differing policies of data protection could result in the EU shutting down the export of citizens' personal data, and put a massive dent in transatlantic e-commerce.

"We were looking for something much more positive," de Graaf said, noting that the initial parliamentary resistance was somewhat surprising.

The vote on whether to accept the plan will occur on July 5, de Graaf said, adding that a simple majority (314 votes) is necessary for passage.

In an European Parliament statement released last week, the Citizens' Rights Committee noted that, despite recommendation of the Safe Harbor agreement by Legal Affairs Commissioner Frits Bolkestein, the arrangement "contained several loopholes."

The Parliament noted Bolkestein's warning that a "yes, but" from the European Parliament "would probably have the same effect as saying 'no,' with the risk of sinking the entire Safe Harbor system."

But it seems the Parliament is opting to protect consumer data at any cost, despite the success of the privacy arrangement.

In a report drafted by the EU's Ornella Paciotti, "the (European) Commission was rapped on the knuckles because data relating to EU citizens now seem to be circulating in third countries without any effective control by the Commission or the EU member states."

"Under European law, companies which obtain personal data - e.g. on customers buying on the Internet or on visitors to a Web site - are not allowed to use these for other reasons than they were originally meant for without consent of the person concerned," the Parliament statement said. "The US lacks specific legislation on data protection and relies on a system of self-regulation in which private companies are supposed to uphold and adhere to certain standards - the so-called 'safe harbors.' "

De Graaf noted that "We respect their views... but this is not what we wanted."

Such a Safe Harbor, as the EU and US decided in a draft agreement, was intended to allow US companies to do business in EU members states without being subject to the EU's own Privacy Directive and its legislative consequences for violation. Under the arrangement, the US Federal Trade Commission would provide legal backup to uphold the agreement if industry self-regulatory efforts failed.

"The Citizens' Rights Committee agreed that for economic reasons it would be unwise to hold up the free movement of data to the US, all the more so since this transfer apparently already takes place without any guarantees whatsoever," the Parliament statement said.

"Yet it felt that - in spite of hopeful developments such as the numerous legislative proposals now pending before Congress - the present lack of legal data protection in the US and the very limited possibilities of legal redress warranted withholding authorization of the free movement of data until all the elements of the safe harbor system are in place and operational. After that, the Commission should closely monitor its functioning."

Reported by Newsbytes, www.newsbytes.com/.

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