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European Union Members Approve Data Privacy Agreement

The committee vote comes while President Clinton visits Portugal, which currently is taking the lead role in stewarding the European Union. A White House statement released in conjunction with Clinton's trip said that the safe harbor will help prevent the disruption of about $120 billion in trade.

EU Washington Delegation spokesperson Willy Helin confirmed that the Article 31 Committee, a group composed of representatives from the 15 EU member states, unanimously approved the agreement, which would allow US companies to maintain self-regulatory data privacy policies while conforming to the strict European Union Privacy Directive.

Though a stopgap agreement is in place, failure between the EU and US to reach an agreement on how to protect consumer data in electronic commerce and other areas eventually could have led to a halt in Internet-based commerce between the two trade zones.

Helin said that the Article 31 Committee made its decision after the US agreed Tuesday to make several changes to the safe harbor agreement.

Commerce Secretary William Daley praised the Article 31 decision, saying that the group had endorsed "a landmark accord."

"Once the accord is implemented, it will enhance consumer confidence by protecting European citizens' privacy, reduce business costs, and keep data flowing across the Atlantic. These are key to the continued expansion of our information economies and the thousands of jobs they generate," Daley said. "Today's approval by the EU member states begins the process which guarantees implementation of the accord."

The Commerce Department and EU representatives reached the initial rapprochement on the thorny data privacy issue in March, after more than two years of alternately cooperative and difficult discussions.

Now that the Article 31 Committee has given the approval of the 15 individual EU nations, the European Parliament has until July to consider the agreement. If the parliament approves the deal, Helin said, it likely would be formally adopted in October.

The safe harbor essentially allows US companies - which would participate on a voluntary basis - to conform to European Union standards, though it still backs up self-regulation with the threat of prosecution by the Federal Trade Commission (FTC) in the event that the US or EU can show that a deceptive trade practice has taken place.

One sticky issue remaining in the mix is that of financial services. Financial institutions by and large have complained that they already are subject to privacy rules set down by the Gramm-Leach-Bliley financial services modernization bill, and should not have to jump through any more hoops than they already have to satisfy a safe harbor agreement.

The EU and US have generally agreed to disagree for now on this issue, while the EU waits to see how the GLB law's privacy provisions function in the marketplace. It remains unclear whether this situation has changed because of the US alterations to the data privacy accord.

Reported by Newsbytes.com, www.newsbytes.com.

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