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International Privacy Laws May Challenge U.S. Firms
For U.S. businesses dealing in international trade and commerce, the New Year is ushering in much more than a new millennium. Many U.S.-based firms will see the introduction of a slew of global privacy regulations that, like it or not, are going to impact the way companies trade personal information, either about consumers or employees.
Proliferation of New Laws
Within the last few years, countries have been addressing the conundrum of how to protect personal information about their citizens in an age of instantaneous global e-commerce. In January, for instance, Canada began implementing the Personal Information Protection and Electronic Documents Act, dubbed C-6. It roughly governs the way organizations, both private and public, can treat personally identifiable information.
"The good news is there was consensus on the part of the stakeholders, businesses, government, private industry and consumer groups," says Bill Munson, director of policy for the Information Technology Association of Canada. "So there's no particular problem. We all helped write it."
Australia also has taken action. Its recent privacy law, the Privacy Amendment (Private Sector) Act, implements restrictions on how private organizations and individuals handle personally identifiable data. It essentially extends existing federal rules to the private sector.
New Zealand's Assistant Privacy Commissioner Blair Stewart told a conference in Washington last year that the bulk of privacy laws proliferating globally is based on key principles presented by the Organization for Economic Cooperation and Development (OECD). Those principles — notice, consent and choice — form the basis for much of the concern over information that is digitally transferred over the Web.
While the proliferation of privacy to bills can impact how U.S. firms transfer data — even internally — between foreign subsidiaries, some industry players indicate that the new standards simply reflect how companies are going to have to update data management.
"Privacy is a moving target. We constantly have to look at our privacy policies and update them," says Microsoft spokesman Rick Miller. "It's not necessarily because of laws but for changing consumer demands."
The "Border" Conundrum
But regulations that cover cross-border information transfers pose a problem. In Australia, while citizens can demand to see their private information, even from a U.S.-based company, the law does allow exceptions for employee information and translations at transfers. If countries can assure reasonable privacy, then data can easily flow between countries.
Argentina's privacy law, however, reflects the trend of the European Privacy Directive and the Canadian law. It prohibits the transfers of personally identifiable information to countries and international entities. The law, which could serve as a blueprint for Latin America privacy policies, does make some exemptions for specific types of data, including financial and medical information, but it requires that anyone who collects date register with the government.
Munson and other industry experts have indicated that for large multinational companies, such privacy regulations are reasonable and fairly routine to implement. Yet the effect could be dramatic for smaller and medium-sized firms.
"It is hard to say [what the effects will be]," said Denise Froning, a trade analyst for the Heritage Foundation. "If the cost of implementing different countries' privacy rules outweighs the benefits of locating part of a company in a country where, say, the labor pool needs and provides that opportunity, then it makes the benefits of globalization less diffuse."
The Canadian law allows for a three-year transition for small businesses to implement and comply with the new regulations. Australia also provides some exemptions.
Miller, however noted, that the environment for privacy is changing worldwide. It is something that must be on the radar for the private sector as the Internet and international trade proliferates. "In order to succeed," he said, "you have to have a relationship with customers. It is inherent in making the business model work that privacy protection is built into a model on Web."
Technology Helps Reform China's Tax System
In order to streamline government operations, Chinese officials announced this week that government offices would begin implementing new technologies to coordinate a variety of government services as well as spur economic development.
China's government is set to complete work on a national computer network designed to implement a new taxation system, the Xinhua News reported this week. By July, the "Golden Tax" project, as it is called, will roll all outstanding provinces and municipalities into a nationwide network that will administer printing, authentication, cross-examination and information-collecting of value-added tax (VAT) invoices that companies issue.
Officials say that computerizing the VAT tax system effectively will close loopholes and increase tax revenue. Additionally, it will harmonize and regulate tax operations within the country.
Meanwhile, officials and Beijing have reached agreement with Beijing Telecom to outfit more than 3,000 buildings with access to broadband Internet facilities, Xinhua News reported last week. The bulk of these buildings are residential, with some lines allocated for office use, officials at Beijing Telecom said.
"Broadband will boost Internet transmission, and bring changes to the way people live," said Zhao Jidong, president of Beijing Telecom. "Video on demand as well as online education will be available through the broadband network, officials said, citing two examples.
Justice Served, Money Saved
In Australia, one expert is mulling the idea of replacing aspects of legal hearings with Internet chat rooms. New South Wales Law Society President Nick Meagher indicated that the timesaving convenience of the Internet could drastically reduce legal costs, promoting citizens' ability to seek legal solutions to matters.
"The thing about justice is, it's got to be seen to be done as well as be done," Meagher told the Sydney Morning Herald. "The problem in the past has been if you have an e-mail-type system, the public doesn't have access to that particular dialogue that's taken place. If you have a chat-room situation, any person could have access to what happened."
Meagher also said conducting pre-trail hearings over the Internet could save clients money. "If you've got five of those sort of [hearings] during the course of the case in which you didn't have to turn up to the court, you're talking about a considerable amount of money," he said.
Meagher will meet New South Wales state attorney general chief justice in three weeks to discuss the proposal.
France Weary Of Unbundling The Local Loop
A new regulation requiring France Telecom to open its local telephone networks to competition took effect last week, but officials signal that the transition may mean that consumers won't get relief for many months, reports the Financial Times.
French communications regulator ART and potential rivals of France Telecom have accused the monopoly telecom provider of slowing the "unbundling" process. ART ruled last week that contrary to its current practices, France Telecom must make public the necessary information on how to connect local exchanges for competitors.
France Telecom also proposed connection tariffs for potential competitors. But the development of high-speed Internet access will depend on the outcome of unbundling.
sThe European Union regulation to open the local telecom facilities with each of the 15 members states took effect Jan. 1. The reform mandated that each country begin taking steps to deregulate access to local telecommunications infrastructure to potential competitors and privatize government-run telecom service providers.
- by Maureen Sirhal
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