New transatlantic trade row looms over data rules

Date: 06/07/2000

By Peter Chapman

THE EU is on the brink of a fresh trade row with the US over data protection, just weeks after the two blocs clinched a deal ending a long-running dispute over the issue.

US industry claims planned EU legislation to govern "privacy in the electronic communications sector", due to be unveiled by Information Society Commissioner Erkki Liikanen next week, would unravel the hard-fought deal which narrowly averted a trade war over the Union's 1998 general data privacy rules.

European Commission and US Department of Commerce negotiators agreed the principles of a "safe harbour" agreement earlier this year which would allow US industry to import data on EU citizens provided they promised not to misuse the information. This was seen as vital because the 1998 rules allow member states to block exports of data to third countries such as the US which lack equivalent data protection legislation.

But US industry fears that the promised directive on e-communications could bring many firms into conflict with the EU as soon as they begin to use the data they have bought or collected themselves - even if they comply fully with the terms of the safe harbour agreement approved by Union member states last month.

Their concern stems from the fact that the draft directive would make it illegal to send commercial e-mails to potential consumers offering them goods and services without their prior permission, a process known as "opting in".

"Any conflict with the safe harbour arrangement would seriously hinder transatlantic commerce," said Thomas Niles, president of the US Council for International Business, whose members include 300 top US-based companies such as Citicorp and American Express.

In a letter to Liikanen's officials, US Internet giant America Online (AOL) has also warned that the planned directive is "inconsistent" with another EU law on e-commerce which has just been approved by member states and MEPs.

That legislation allows commercial e-mails provided that they are clearly labelled and customers have the right to choose not to be targeted in future.

Fears over the draft directive are shared by European industry, which claims it would do little to deter the "spammers" who clog up e-mails with hundreds of untargeted commercial messages. Alastair Tempest, director of the EU direct marketing lobby group FEDMA, says spammers - mainly US and far Eastern purveyors of get-rich-quick schemes and Internet sex sites - are already acting beyond the law by "harvesting" e-mail chat sites to get people's e-mail addresses.

He said the "opt in" clause would effectively stop legitimate firms, either in the EU or overseas, from using e-mail to offer highly targeted services to selected customers. He also claims the planned legislation would deter Internet service providers from finding ever-better technical ways to thwart the spammers.

"This is not a case of using a sledge hammer to break a nut. They are trying to break the wrong nut," said Tempest, who argues that the Commission should wait until it has reviewed the working of the general data privacy directive next year before contemplating yet more rules.

A spokesman for Liikanen said this week that the Commissioner had "heard the arguments" against the planned directive and was "looking at the issue carefully". But he added that it was too early to say whether he would bow to demands for changes before his proposals are voted on by the full Commission.

The EU is on the brink of a fresh trade row with the US over data protection, just weeks after the two blocs clinched a deal ending a long-running dispute over the issue.