Internet: US and EU at odds on data protection THURSDAY JULY 10 1997 By Neil Buckley -- Begin Differences between US and European Union laws on personal data protection have emerged as a potentially serious barrier to creation of a global free market for commerce on the internet. The European Commission yesterday urged the US to strengthen its laws on data privacy to bring them into line with European equivalents, or risk seeing curbs on exchange of information. The latest hurdle to development of a worldwide internet marketplace emerged at a meeting between Mr Ira Magaziner, senior adviser to President Bill Clinton and architect of last week's US report on electronic commerce, and Mr Hans Beseler, Commission director-general for trade policy. It came a day after differences emerged between EU ministers and the US at a conference in Bonn over the unrestricted use of encryption technology on the global computer network. A recently adopted EU directive on data protection makes it illegal after October 1998 for EU businesses to "export" personal data for commercial purposes to countries which lack comparable privacy laws. Such a ban could prevent the sale of customer information, or even exchanges of marketing databases between subsidiaries of international companies. The clause has already been cited by financial services groups as a potential barrier to trade. Commission officials said they were concerned that consumers would refuse to buy products or services on the internet if they were not confident that personal data they provided would be secure, and that they would not be bombarded by unsolicited marketing. Brussels wants the US to introduce European-style privacy laws. "The creation of a federal privacy body with powers to hear and investigate complaints, and act as interlocutor for European data protection authorities, would be a big step in the right direction," a Commission official added. But the US fears heavy-handed privacy rules could stifle trade, and prefers industry self-regulation. Mr Magaziner suggested internet traders should develop a voluntary code of conduct, with "seals of approval" for companies pledging to respect privacy and security of personal information. "Industry and consumer groups have the same incentive as we have to protect privacy, because they won't do business unless people feel their privacy is protected," he said. "Ultimately the power rests with consumers. They can buy or not buy, go to one web site or not go." Mr Magaziner suggested it would be a mistake for the EU to isolate itself by applying the clause in its data protection directive next year. © Copyright the Financial Times Limited 1997 "FT" and "Financial Times" are trademarks of The Financial Times Limited. -- End We are not amused Theodor Schlickmann