EU Privacy Negotiations Cast Shadow Over International DM

A stalemate in negotiations between the United States and theEuropean Union over international personal privacy protections has injected some doubt into the immediate future of international direct marketing and electronic commerce.

With less than three weeks to go before U.S. President Bill Clinton meets with EU leaders in Bonn, negotiators for both sides optimistically hope they can reach a agreement that will keep trans-Atlantic commerce from slowing to a trickle, if not a complete halt.

President Clinton is scheduled to meet with seven of Europe’s top leaders in Cologne, Germany June 18-20, and with EU officials on June 21.

At issue is a U.S. proposal that the EU add a safe harbor provision to its Data Protection Directive. The provision would honor the American practice of industry self-regulation enforced by the Federal Trade Commission to protect U.S. companies from stiff sanctions from EU-member countries.

Under the EU’s privacy directive which went into effect late last year, European consumers have absolute control over the use and transfer of their personal information, including data collected over the Internet, to third parties. Violators face stiff government sanctions.

Although a vast majority of U.S. businesses, industries and their associations, including the Direct Marketing Association, Associated Credit Bureaus and the Coalition of Service Industries, support the safe harbor proposal, nearly all want a number of clarifications.

For example, the DMA wants to know if its Committee on Ethical Business Practice or the ethics boards of similar organizations would satisfy a requirement of the EU that a “third party” investigate consumer complaints about the misuse of personal information.

The ACB, the trade association for the credit reporting industry, is asking U.S. negotiators to insist that the EU recognize the Fair Credit Reporting Act as “a robust” privacy law that “provides adequate [personal and financial] data protection.”

While the Coalition of Service Industries wants a clarification on the issue of contracts relating to the supplying of information, the Federation of European Direct Marketing is urging negotiators to clarify the section relating to internal data processing. Fedma said the way that section of the directive is worded, a direct marketing service bureau would have to get an individual’s permission before processing a mailing list for a marketer.