Europe and US resolve two-year data dispute

The bitter dispute over data protection between the US and Europe is almost at an end after politicians reached a provisional agreement over the use of electronic personal information.

The deal heralds the end of two-years of arguments caused by conflicting policies. The debate had threatened to disrupt trade between the EU and the US, where American companies were unwilling to comply with more stringent European legislation on data protection.

The agreement sees the setting up of a 'safe harbour' where US companies can sign up to work under EU rules according to a voluntary code of conduct.

Until recently, the sticking point has been the enforcement of this voluntary code. In late February, the US decided any company who signed up to the code would then be legally liable to comply with it - with enforcement carried out by the Federal Trade Commission.

European Commission Internal Markets spokesman Jonathan Todd, said the announcement represented a significant move forward. "We now have a package more or less ready to be submitted to the various bodies for approval in the US and EU," he said. The details will be finalised by the summer, he added, although it is still conditional on approval from EU member states and the European Parliament.

Todd rejected the suggestion that the deal represents a climb-down for the EU on data protection. He said: "The major issue over the past two years has been enforcement, and we now have undertakings that are satisfactory in that area. If the US side of the bargain is not kept, and we see systematic breaching of the safe harbour principal, this decision will simply be reversed."

The UK office of the Data Commissioner welcomed the news, but said it will reserve judgement until the details are defined. Francis Aldhouse, deputy data commissioner, said: "The proof of the pudding is in the eating. The real question is whether it will be effective."

Under EU rules, European companies are not able to transfer data outside the European block without assurance that the data would be treated in accordance to EU rules, or without notifying the subject of the data. This legislation affects any transnational companies who may route information via a server in the US, as well as companies actually dealing in personal information.