U.S., EU Miss Directive Deadline

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Today's self-imposed deadline for the United States and the European Union to come to terms on safe harbor principles passed without an agreement. Instead, the parties said last week that they will have it done by fall.

For the past 19 months, Commerce Undersecretary David L. Aaron and John Mogg, the European Commission's director general of international market and financial services, have been negotiating safe harbor provisions that are designed to allow the continued free flow of data from Europe to the United States. The safe harbors were introduced after the EU instituted a data protection directive in October that theoretically prohibits data transfer from Europe to outside countries without adequate data protection laws.

The two groups wanted to reach an agreement in time for today's U.S.-EU summit in Berlin. At a press conference in Washington last month, Aaron said he was hopeful that they could make the deadline. Commerce spokesman Daniel Cruise said the two sides have practically reached an agreement on the substantive issues and all that's left are what he called "procedural issues" -- for example, how both parties will implement safe harbors and how long U.S. companies will have to transition into safe harbors.

"The EU wants U.S. companies to transition into safe harbors in six months," Cruise said. "We, on the other hand, want to have at least two years for U.S. companies to transition into adhering into the safe harbors."

Aaron spoke before the Software and Information Industry Association in the Netherlands on June 11, saying the United States "agrees with the European Commission on the principles and practices a company must follow to assure personal privacy for its customers. The big remaining issues have to do with fairness, due process, transition … and the role of the European data commissioners." He also said a language agreement has been reached that both sides said is fair and provides a high level of data protections.

Despite the impasse, Cruise said conversations between the EU and United States are positive. "Both parties are committed to reaching an agreement," he said.

At today's summit, Aaron is expected to announce that the negotiations are continuing in good faith and that both sides have made considerable progress. Other issues to be discussed include the setting up of an early warning system for U.S. and EU trade disputes, enhancing the Trans-Atlantic Economic Partnerships and the upcoming WTO Ministerial at the end of November in Seattle.

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