Bid to end data protection row

Date: 30/10/1997

By Peter Chapman

TOP EU and US business executives are sending a joint message to Union governments urging them to end a simmering transatlantic trade dispute over data protection.

The move, to be unveiled during next Thursday's (6 November) Transatlantic Business Dialogue (TABD) meeting in Rome, will call on EU member states to recognise the efforts made by US industry to guarantee that it is not misusing personal data imported from the Union.

Without such recognition, some EU governments might block exports of personal data to the US because it does not have the same kind of safeguards as those laid down in the Union's new data protection directive, which enters into force next year, and instead relies on industry-led codes of conduct.

A statement due to be approved by the 35 American and more than 50 EU chief executives in Italy will insist that these codes of conduct and other industry undertakings will see personal data protected across the Atlantic.

“Industry commitments to, and mutual recognition of, culturally different regimes of privacy protection will enable and ensure privacy protection of personal data,” it declares, adding: “Privacy protection should not become a trade barrier.”

The transfer of data across borders is expected to be a major area for business growth. Databases of consumer behaviour are seen by companies as a vital marketing tool and can command high market values. Multinational firms which handle employee data could also be hindered by a data export ban.

The TABD executives will insist that EU member states “should accept that adequate protection in non-EU countries can be based on codes of practice, self-regulation and both general and sectoral rules of law in force”.

Franco Arzano, international affairs vice-president of Swedish telecoms supplier Ericsson, said the TABD appeal would be seen as the strongest message yet to the Union to avoid a costly clash with the US.

Arzano, one of the architects of the TABD agenda for discussions on electronic commerce at the Rome meeting, said experience had shown that governments were reluctant to ignore the views of their business leaders.

He pointed out that one key result of last year's TABD was a tariff-cutting plan for information technology equipment which won support from countries across the world and culminated, in less than 12 months, in the World Trade Organisation's information technology agreement.

Other key issues to be tackled at this annual gathering of top managers from industry on both sides of the Atlantic include a demand for greater openness between the two trade blocs in public procurement and a common approach to accounting methodology. “Accountancy standards are a major issue. Each EU group has to have two balance sheets if it operates in the US, because balance sheets in the EU and US are totally different. How can we make a common market between the EU and US if accounting systems are completely different?” asked one TABD source.

The meeting is also likely to call for progress on mutual recognition agreements (MRAs) for conformance testing in the biotechnology , medical, cosmetics, chemical and other industries.

“MRAs have been signed in principal, but they are not operational. So far, they only recognise the methodology of how a product is to be tested. There is no reciprocity on the actual testing,” explained one industry source.

The chemical industry will issue a call for greater transatlantic cooperation on the testing of new chemicals, including the 'risk and hazard assessment' which institutions carry out before products are approved for sale.

ICI EU government relations manager Dirk Hudig said small differences between the way these tests were conducted led to costly variations in the classification of new chemical products.

At the same time, he added, bureaucratic rules needed updating to allow firms to market new chemicals which are potentially safer and more environmentally friendly than existing products.

Hudig said the TABD would call for four-way talks between EU and US industry and administrations to work together on these issues “to make life easier”. “Our vision is to have an emerging world standard for risk and hazard assessment built on an accord between the EU and US,” he added.

Industry sees an EU-US agreement as a sound first step towards a wider World Trade Organisation or Organisation for Economic Cooperation and Development deal which would lead to developing markets adopting the same standards. “The main message is that we see EU-US cooperation as the best way to achieve a high level world-wide,” said Hudig.