EU seeks to avert data trade war

Date: 25/06/1998

By Mark Turner

THE American-funded Radio Free Europe introduces its online service with a small excerpt from the United Nations Universal Declaration of Human Rights.

“Everyone has the right to seek, receive and input information and ideas through any media and regardless of frontiers,” it proclaims, before going on to report political developments in eastern and central Europe.

The quotation is pertinent. The fundamental malaise of Communism was a lack of objective and publicly available information which eventually proved economically unworkable and politically unacceptable.

It does not, however, address Communism's other great failing: an excess of state-held personal data, restricting the fundamental liberty of individuals to act without fear of surveillance.

The inherent conflict between the right to know and the right to privacy cuts to the heart of the information age. How can both be maintained without impinging on the other?

Whether discussing media coverage of public figures, secrecy of industrial information or personal privacy, societies and governments the world over are having to take some serious decisions about what they value most highly.

The chances are, they will come to radically differing conclusions.

This October, ground-breaking EU rules on data privacy will come into effect, setting up a Europe-wide system of national information registries to check that personal privacy is being respected in commercial operations.

European industry, which is used to a relatively high level of state intervention, is proving relatively amenable to the idea, although it is still somewhat unclear how it will work in practice.

But the rules also insist that any data transfers to third countries require guarantees of 'adequate protection' from the recipients. If they cannot provide them, EU governments could simply block the flow of information abroad.

The implications, according to the US mission to the EU, could be “so severe as to affect trade flows and perhaps even internal economies”.

In a paper contesting the move, Washington complains that “a multinational company could be prohibited from transmitting any data from its European operation to US and other overseas locations. Cross-border pharmaceutical research could also be limited because the data often include personal information.

“European firms would suffer as badly or even worse than US firms if they were suddenly unable to process and send across the Atlantic financial information, personnel records, and many other forms of information vital to business.”

In sharp contrast to Europe, the US has decided that commercial information control should be left in the hands of the private sector, as much for reasons of practicality as morality.

“There are arguments for top-down privacy protection,” admits one Washington official. “But how would we enforce it? It is still unclear how the Europeans intend to do so. We believe that technology should be left in the hands of the individuals who run it.”

In lieu of state-ordained rules, the US is instead pushing industry to adopt a code of conduct matching American rules on 'effective protection' of publicly held information.

Industry, consumers and government experts held a so-called privacy summit this week to discuss possible measures, with EU observers present.

However, for the time being, few Americans appear to have taken their government's advice to heart. A recent study by the Federal Trade Commission revealed that only 14&percent; of around 1,400 web companies had any privacy policies at all.

Although the concept of 'adequate protection' is still poorly defined, according to US officials, it seems unlikely that under present circumstances many American companies would be allowed to receive sensitive information, making a classic EU-US spat almost inevitable.

In a last bid to avoid a transatlantic trade war, the Commission's Director-General for the single market John Mogg is meeting US Under-Secretary of State David Aaron today (25 June).

If they fail to find a way out, it would be a surprising victory for metaphysics over trade.