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US and EU at odds on data protection

Internet: US and EU at odds on data protection
                   THURSDAY JULY 10 1997
                   By Neil Buckley
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Differences between US and European Union laws on personal data
protection have emerged as a potentially serious barrier to creation of a
global free market for commerce on the internet.
The European Commission yesterday urged the US to strengthen its laws
on data privacy to bring them into line with European equivalents, or risk
seeing curbs on exchange of information.
The latest hurdle to development of a worldwide internet marketplace
emerged at a meeting between Mr Ira Magaziner, senior adviser to
President Bill Clinton and architect of last week's US report on electronic
commerce, and Mr Hans Beseler, Commission director-general for trade
It came a day after differences emerged between EU ministers and the US
at a conference in Bonn over the unrestricted use of encryption technology
on the global computer network.
A recently adopted EU directive on data protection makes it illegal after
October 1998 for EU businesses to "export" personal data for commercial
purposes to countries which lack comparable privacy laws.
Such a ban could prevent the sale of customer information, or even
exchanges of marketing databases between subsidiaries of international
The clause has already been cited by financial services groups as a
potential barrier to trade.
Commission officials said they were concerned that consumers would
refuse to buy products or services on the internet if they were not confident
that personal data they provided would be secure, and that they would not
be bombarded by unsolicited marketing.
Brussels wants the US to introduce European-style privacy laws. "The
creation of a federal privacy body with powers to hear and investigate
complaints, and act as interlocutor for European data protection
authorities, would be a big step in the right direction," a Commission official
But the US fears heavy-handed privacy rules could stifle trade, and prefers
industry self-regulation.
Mr Magaziner suggested internet traders should develop a voluntary code
of conduct, with "seals of approval" for companies pledging to respect
privacy and security of personal information. "Industry and consumer
groups have the same incentive as we have to protect privacy, because
they won't do business unless people feel their privacy is protected," he
said. "Ultimately the power rests with consumers. They can buy or not buy,
go to one web site or not go."
Mr Magaziner suggested it would be a mistake for the EU to isolate itself
by applying the clause in its data protection directive next year.
 Copyright the Financial Times Limited 1997
"FT" and "Financial Times" are trademarks of The Financial Times Limited.
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We are not amused
Theodor Schlickmann