April 9, 1999 Web posted at: 5:26 p.m. EDT (2126 GMT) by Elizabeth de Bony

From...

(IDG) -- European Commission and U.S. government officials are edging toward an agreement on data privacy, senior officials said on Wednesday.

"I waver between having confidence and absolute confidence that we will succeed" in time for the next transatlantic summit in Washington, on June 21, John Mogg, director general of the Commission's internal market division, said during a news conference following day-long talks with David Aaron, U.S. undersecretary of commerce for international trade.

Although the two officials declined to provide details about the shape of the emerging agreement, they said today's talks focused on defining safe harbor principles that a U.S. company would respect in order to be guaranteed European Union (EU) recognition that its data privacy policy respected EU standards.

"We are quite close to a common definition of safe harbor principles," Aaron said.

Much of the day was spent looking at specific sectors in the U.S. such as telecommunications, financial services and cable, which are already subject to rules and regulatory supervision in this field, to explore how those practices could fit under the EU regulatory framework.

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If an agreement is not reached, there is the risk that transatlantic data flows could be blocked.

At issue is an EU directive on data privacy that took effect on Oct. 25, 1998. The directive introduces high standards of data privacy to ensure the free flow of data throughout the 15 EU member states, and gives the individual the right to review the personal data, correct it, and limit its use.

The transatlantic tension stems from the directive's provisions that require member states to block transmission of data to third countries, such as the United States, if their domestic legislation does not provide an adequate level of protection, as interpreted by experts from member states and the Commission in a so-called Article 31 committee set up by the directive.

To date, only Belgium, Greece, Italy, Portugal, Sweden, the United Kingdom, and Finland have in fact implemented the directive, which has helped to defuse transatlantic friction.

On April 19, Mogg will review progress to date with the member states, and he will meet Aaron again probably at the end of the month.

The EU is holding similar talks with all its major trading partners including Switzerland, Japan, Australia, and New Zealand, but no agreements have yet been reached.

"In a way we are cutting our teeth on the United States," Mogg said.

Elizabeth de Bony is a correspondent in the Brussels bureau of the IDG News Service, an InfoWorld affiliate.