EC: U.S. privacy rules concerns are baseless

A European Commission official Tuesday termed as "unfounded" US government concerns over privacy rules being considered by the EC. The rules could affect American financial-services firms doing business in Europe, in particular their data gathering and transmission activities. "They expressed their concerns, but in our view these concerns are unfounded," said the Brussels-based EC official, who requested anonymity.

The official confirmed that the EC received a joint letter from the US Department of Commerce (DOC) and the US Department of the Treasury on Monday that says the Bush administration is worried that standard contractual clauses being drafted by the Commission will force US companies in the financial sector to abide by EU privacy rules, which are stricter than US privacy rules.

The financial services industry is one sector not covered by the US-EU safe harbor agreement, which allows companies to apply the laws of their own country when doing business abroad. The contractual clauses are being drafted to fill a gap left by the safe harbor agreement, the official said.

"All they will do is provide a means to transfer data securely to the US," he said.

The Commission official said the US concerns are general ones, and not specifically linked to financial services. But the contractual clauses being drafted by the Commission are specific to that industry.

The letter states that the proposed standard clauses "are not a workable alternative model" and that they "impose unduly burdensome requirements that are incompatible with real world operations." The letter also complains that the revision process for the clauses "has not been transparent to those seeking participation." It ends by encouraging the EC to "defer consideration" of the proposed clauses.

"In short, we share the concern of a number of multinational firms that the adoption of the proposed standard clauses will introduce uncertainty about the use of contracts," reads the letter, a copy of which was obtained by the IDG News Service.

The Commission will respond to the letter, but the official could not confirm when that would be. He would not say whether the Commission will agree to US requests to delay the introduction of the contractual clauses. He also declined to comment on the implications these clauses might have on trans-Atlantic e-commerce.

EC press officer Maeve O'Beirne in Washington, DC, also confirmed that the letter was received in Brussels via fax on Monday, and that it is being examined, though it hasn't been examined in detail yet.

"The letter appears to reiterate points and US concerns which have already been taken into account (and expressed) in earlier correspondence," she said.

The EC plans to reply to the letter as soon as possible, she added.

The standard clauses for contracts between American and European firms regarding customer-data exchange have been in preparation since the third quarter of 2000, she said.

The letter, in US Department of Treasury letterhead, is signed by Donald V. Hammond, Treasury's acting undersecretary for domestic finance, and by Bernard Carreau, acting undersecretary for international trade of the DOC. It was sent to John Mogg, the EC's director general of the Internal Market Directorate General.

The European Commission, in Brussels, can be reached at +-32-2-299-11-11 or at http://europa.eu.int/. The DOC, in Washington, D.C., is at +1-202-482-2000 or at http://www.commerce.gov/.

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