European Commission Upheaval Will Not Affect Privacy Talks

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BRUSSELS/WASHINGTON - The United States expects to wrap up privacy negotiations with the crippled European Commission in time for the EU-US summit in Berlin on June 21.

American officials said discussions between Undersecretary of Commerce David Aaron and John Mogg, director general of DG XV, the relevant EC department, were making progress.

The two met in Brussels on April 7 and are to meet in Washington again at the end of this month to discuss new drafts of a possible agreement that would allow the free flow of data from Europe to the United States.

The EU and U.S. have been at odds for many months over the EU's data protection directive that went into effect last Oct. 24 and banned data transfer to countries without adequate data protection laws.

Since the US does not have such laws, the threat of a cutoff persists. But the EU agreed last year to do nothing so long as meaningful negotiations on adequate data protection continued.

When the entire European Commission resigned in mid-March in the wake of a corruption and nepotism scandal, experts thought the process would be stymied and the summit deadline not met. However, the lame duck commission will remain in office until a new one is approved by the European parliament either in May or after parliamentary elections in June. It will continue to handle unfinished business such as data protection.

Ross Brown, a spokesperson for Aaron, said the US would have a new draft of its "safe harbor" proposal to meet European objections ready for the next Aaron-Mogg meeting.

"This document will be much more extensive and should be the basis for whatever agreement the two sides would come to in time for the US-EU summit," Brown said.

Mogg will take the draft back to Brussels and the EC will pass it on to member states for comment, while the Commerce Department once again sounds out US business and industry.

American executives had objected to many of the provisions involving consumer access to files and procedures to rectify information deemed as false. Cost has been a major factor.

"The report I got back from Brussels," the spokesperson said, "suggested that there is a real sense of progress being made and will continue to be made. Our sense is that the deadline will be met."

Observers in Brussels agree. "I have heard it from so many sources now that I suspect it is quite serious," Alastair Tempest, director general of public affairs for the Federation of European Direct Marketing (FEDMA) said.

"They can come to an agreement simply by ignoring some of the more contentious issues. Take access. Even in Europe there are limits on how often a consumer can demand to see his file."

Americans worry that extensive perusal of files could lead to costly litigation if consumers found something derogatory in them. One proposal would limit consumers to an overview of the file without details.

"You could say, for example, that you don't have to deliver a 5,000-page file or agree to ignore some of the other more contentious details in the directive," Tempest said.

"I would think they could get around some of the problems by going back to the OECD privacy guidelines issued in the eighties to which the Americans agreed.

"I do feel convinced that the two sides will come up with some sort of agreement in June that in one way or another will allow data to be transferred."

Charles Prescott, International VP for the DMA, conceded that "privacy remains a great big open question and we do have to come up with some mechanism that assures Europeans that their data will receive the same kind of protection here as it does over there."

He said the protection afforded in the US is a good as is in Europe, if not better. But Prescott also noted that American irritation with the whole privacy issue is rising. For many the issue is trivial on the face of it, but he argues that laws could have far reaching effects that go beyond protecting marketing data.

"The US government is the biggest violator of personal privacy and it is supposed to pass a law making the federal government responsible for your privacy?" he said.

Still, the EC crisis could have an impact on American direct marketers in the future. Clearly the commission has lost power and influence through the scandal. That will boost the power of the European parliament, which is more politically motivated than the EC and could run amok in terms of other types of restrictive legislation without commission controls.

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