November 19, 1998
by Margret Johnston
(IDG) -- WASHINGTON - President Clinton's senior adviser on Internet policy said Wednesday that the U.S. is likely to render the European Union's data privacy directive moot by establishing a self-regulating industry system before all 15 European Union countries formally adopt the directive.
Ira Magaziner, speaking Wednesday at a conference sponsored by the Progress & Freedom Forum, said the European directive, which calls for strict protections over the transport of private data, creates an unpredictable environment for business by requiring companies to go individually to the privacy boards of each country and negotiate the handling of private information.
"We're not going to have them impose an inefficient, nonworkable system on us," Magaziner said.
If the U.S. can demonstrate that a system of self-regulation is efficient, Magaziner said he was confident such a system would be preferred by businesses everywhere over the more top-down approach advocated by the Europeans.
The directive, which Magaziner said has been translated into national law by only four EU countries, went into effect Oct. 25. It calls for adequate privacy standards involving such things as giving users the right to review personal data, correct it and limit its use. It also requires the EU member states to block outbound transmission of data to countries that don't have laws providing a level of protection similar to that in the country where the data originated.
Companies that collect data in Europe and store it on servers in the U.S. were concerned that implementation of the directive would cause data flow disruptions. However, when it went into effect the U.S. and EU countries avoided any disruption by agreeing to continue consultations. A final agreement is expected by mid-December.
EU members have complained that self-regulation does not go far enough to give individuals the right to seek compensation when their rights are violated. Magaziner, who plans to step down by the end of this year after six years as an adviser to Clinton, has long pushed the idea of industry self-regulation. It would be much more tenable in a world where 10,000 new Web sites go online every week and a much more enforceable solution that borrows from principles already used in non-Internet commerce, he said.
Under the U.S. model being discussed, international nonprofit organizations would create symbols that appear at Web sites indicating the degree of data privacy observed. The symbols would be internationally recognized such as most road signs are now, and would be enforced by any number of nonprofit organizations, Magaziner said.
"This creates a market incentive to want to get a symbol," he said.
The nonprofit organization would police the Web to make sure fake symbols aren't used and it would be able to revoke the symbol if a Web site violates data privacy standards. If that threat proves to be insufficient, the Federal Trade Commission regulations would apply, Magaziner said.
The model also envisions a means of redress and audits to check how the system is working, said Magaziner, who firmly stated his support for the scheme.
"We believe self-regulation is the best approach," he said. "We are not going to let the Europeans drive our policy. "
Margret Johnston writes for the IDG News Service in Washington, D.C.
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