US and EU head for ecommerce stand-off

US President, Bill Clinton may be heading for further conflict with EU states over Internet privacy, after calling on governments to take a hands-off approach to ecommerce.

As he launched the White House's report on Internet commerce earlier this week, Clinton said the Internet "should be a free trade zone?supervised not by governments, but by people who use the Internet every day."

The plea is likely to needle EU ministers, who are still locked in discussions over encryption standards. Under the European Data Protection Directive, which comes into effect next spring, Companies based in Europe are only allowed to send personal data to countries that have data protection laws in place. The EC wants to prevent private information being used by US companies for marketing purposes.

US companies with offices in Europe must comply with EU law, but companies which collect data from outside Europe are out of reach of the European courts.

A spokesman for the EC commissioner for IT, Martin Bangemann, said the US need not sign up to EU law, but it must offer a guarantee that private data will be safe. "We have talked about having a code of conduct for non-EU companies where, if it is violated, the company would offer reparations," he said.

The US government is still in discussions with the EC about how to overcome the problem.