Transatlantic data protection debate nearing resolution

The EU is on the brink of reaching an agreement with the US in the debate over data protection.

A voluntary set of rules, concerning the treatment of data, to which US firms can pledge their allegiance is gaining ground in both the US and European governments, according to the EU. However European regulators were concerned that US companies were under no obligation to adhere to EU directives.

The EU has confirmed that significant progress was made in talks between the EC director general of Internal Markets, John Mogg, and the US commerce Under Secretary, David Aaron to make EU directives on data protection enforceable in the US.

The dispute between the US and EU is based on a 1998 EU directive which requires users of personal information to inform the subjects if their data is transported outside of the EU.

This directive would directly impact multinational companies who either collect information in one country but process that information overseas, or those who simply have a datacentre situated in the US.

Aaron explained that even though the agreement is entered into voluntarily, the US could use statutory powers to legally censure companies who breached such an agreement. He said that such cases would be treated as a matter of urgency.

Industry reaction has been mixed. Adrian Friend, European director of TrustE, a data protection certification company, said the move was a substantial step in the right direction: "The EU is now accepting there has to be some sort of compromise to reach a functional agreement."

However, an industry insider said the move demonstrated the EU backing down, and that the consumer would lose powers over personal data as soon as it left the country.

The EU directive on data protection is due to come in to force in the UK on 1 March.