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THE U.S.-EU SAFE HARBOR: Requirements and Self Certification Procedures

Lauren SaadatU.S. Department of Commerce

International Trade AdministrationOffice of Technology & E-Commerce

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Implications of the different approaches to data flows and trade

European Data Protection Authorities have broad legal authority to stop data flows.

Implications of EU Directive: According to the U.S. Census Bureau, Foreign

Trade Division, in 2004, the U.S. and its top six European trade partners shared approximately $355 billion in trade.

Most of this trade could be dependent on the exchange of personally identifiable information.

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Finding a Solution

U.S. and EU expressed commitment to bridge their different approaches to privacy while maintaining data flows and high level of privacy protection

FTC Act permitted each side to maintain their position U.S. companies made voluntary

commitments EU satisfied because FTC Act made those

commitments legally binding

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Finding a Solution

Safe Harbor registration is a voluntary “representation” to European business partners and European citizens that U.S. companies will comply with the framework.

Failure to comply with Safe Harbor could constitute an unfair or deceptive trade practice under FTC Act Could result in injunctions and redress

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Finding a Solution

July 2000: U.S. Receives “adequacy” determination from European Commission for the Safe Harbor framework

However, U.S. companies only eligible if their regulator (i.e., FTC or DoT) agrees to enforce their commitments

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The Safe Harbor Framework

November 1, 2000:

Safe Harbor becomes effective

DoC launches Safe Harbor website at http://export.gov/safeharbor

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What Is the Safe Harbor Framework?

Safe Harbor framework includes:

7 privacy principles 15 FAQ’s EU’s “adequacy” determination Letters between DoC and European

Commission (EC); the Federal Trade Commission and the Department of Transportation and the EC; etc.

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Where Can We Find Information About It?

Safe Harbor website includes:

Safe Harbor List (currently more than 820 organizations, including multinationals and SMEs)

Safe Harbor Workbook Compliance Checklist/Helpful Hints Safe Harbor Documents (including

principles, FAQ’s, correspondence, etc.) Historical documents (including public

comments)

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Helpful Hints

Confirm the jurisdiction of FTC or DOT Establish independent recourse

mechanism Ensure verification mechanism Designate contact point Develop Compliant Privacy Statement

Conforms to principles Makes specific reference to SH adherence Provide accurate privacy policy statement

location, available to the public

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Benefits of the Safe Harbor

Benefits of Implementing the Safe Harbor Framework:

Predictability and Continuity (all 25 Member States, plus EEA countries, bound by “adequacy” determination)

Eliminates need for prior approval to begin data transfers

Flexible privacy regime congenial to U.S. approach

Simpler/more efficient means of compliance

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Who may join the Safe Harbor?

What organizations may join Safe Harbor?:

U.S. Organizations subject to jurisdiction of the Federal Trade Commission with respect to unfair or deceptive acts or practices under Section 5 of the Federal Trade Commission Act or the U.S. Department of Transportation

Companies that are uncertain as to whether they fall under the jurisdiction of these agencies can seek clarification from the agencies.

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Who should join the Safe Harbor?

What organizations should join Safe Harbor?:

Organizations that receive personally identifiable information from EU member states must demonstrate “adequate” privacy protections

Organizations that have not identified another basis for demonstrating “adequacy” should consider joining Safe Harbor

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Compliance & Enforcement

How and where will Safe Harbor be enforced?:

In general, enforcement will take place in the U.S., in accordance with U.S. law, and will rely, to a great extent, on private sector enforcement.

Private sector enforcement has three components: verification, dispute resolution, and remedies.

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Compliance & Enforcement Failure to comply with Safe Harbor

requirements:

If an organization persistently fails to comply with Safe Harbor requirements, it is no longer entitled to Safe Harbor benefits.

Independent recourse mechanisms are required to notify DoC of such facts. Safe Harbor list will indicate failure to comply.

Failure to comply may also result in an enforcement action by the FTC or DoT.

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The Safe Harbor Principles

An organization entering the Safe Harbor must adhere to seven privacy principles:

1. Notice2. Choice3. Onward Transfer4. Security5. Data integrity6. Access7. Enforcement

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The Safe Harbor Principles

(7) Enforcement: Organizations must have the following enforcement mechanisms in place:

follow-up procedures for verifying that safe harbor policies and mechanisms have been implemented

readily available and affordable independent recourse mechanisms to investigate and resolve complaints brought by individuals

obligations to remedy problems arising out of a failure by

the organization to comply with the principles

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The Safe Harbor Principles

Verification:

An organization may use a self-assessment (in-house) or an outside/third-party assessment program.

Under self-assessment, a statement verifying the assessment should be signed by a corporate officer or other authorized representative at least once a year.

Under outside assessment, a verification statement should be signed either by the reviewer or by the corporate officer/authorized representative at least once a year.

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The Safe Harbor Principles

Dispute Resolution:

Organizations may choose to have disputes resolved by third-party dispute resolution programs (such as TRUSTe, BBBOnLine, DMA, AICPA WebTrust, JAMS, Entertainment Software Rating Board, etc.), or they may choose to cooperate and comply with the European Data Protection Authorities (DPA’s).

In the case of human resources data, the organization must agree to cooperate and comply with the DPA’s (See FAQ 9).

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The Safe Harbor Principles Human Resources Data:

See FAQ 9 Organizations transferring employee data from

Europe to the U.S. must: Submit to the EU DPAs for purposes of dispute

resolution; and Comply with member state law regarding the use

of information (i.e. processing requirements) as well as any restrictions under national law for transfer of such data.

Access: Employers in the EU must comply with member state regulations and ensure that employees have access to such information. Organizations processing such data in the U.S. must provide access either directly or through the EU employer.

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The Safe Harbor Self-Certification Procedure

How do organizations join Safe Harbor?:

Organizations must comply with the framework’s requirements and publicly declare that they do so (see FAQ 6).

Organizations that decide to join the Safe Harbor may do so by:

Self-certifying via the Safe Harbor website at http://www.export.gov/safeharbor; or

Sending a letter to the Department of Commerce.

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The Safe Harbor Self-Certification Procedure (cont.)

Once received, the DoC reviews the information submitted for completeness and to verify that the information submitted is consistent.

To be assured of Safe Harbor benefits, an organization needs to reaffirm its self-certification annually to the DoC.

The Safe Harbor includes a searchable list with compliance status.

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Since Then and Moving Forward

January 2002: First joint EC/DOC review of Safe Harbor completed

February 2002: EC submits interim report on functioning of the Safe Harbor

March 2002: Data Protection Authorities visit Washington

Late 2003: DoC and EC resume dialogue and review implementation of the Safe Harbor

October 2004: EC releases second report/staff working paper on Safe Harbor compliance/implementation

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Other Options for Meeting the EU Directive’s Requirements

Joining Safe Harbor is not the only means of meeting the EU Directive’s requirements

Other alternatives include:

“Unambiguous” consent Necessary to perform contract Codes of Conduct Model Contract Clauses Direct compliance/registration with EU Authorities

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Contact Information

Questions? Comments?:

Lauren Saadat or Shannon Ballard U.S. Department of Commerce International Trade Administration

HCHB 2003 14th & Constitution Avenues, NW Washington, DC 20230 Ph: (202) 482-3709 E-mail: Lauren.Saadat@mail.doc.gov

Shannon.Ballard@mail.doc.gov