THE U.S.-EU SAFE HARBOR: Requirements and Self Certification Procedures Lauren Saadat U.S. Department of Commerce International Trade Administration Office of Technology & E-Commerce

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.

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.

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

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

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

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

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

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

The Safe Harbor Framework November 1, 2000: Safe Harbor becomes effective DoC launches Safe Harbor website at http://export.gov/safeharbor

November 1, 2000:

Safe Harbor becomes effective

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

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.

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.

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)

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)

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

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

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

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

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.

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.

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

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

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.

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.

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.

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.

The Safe Harbor Principles An organization entering the Safe Harbor must adhere to seven privacy principles: Notice Choice Onward Transfer Security Data integrity Access Enforcement

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

Notice

Choice

Onward Transfer

Security

Data integrity

Access

Enforcement

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

(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

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.

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.

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).

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).

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.

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.

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.

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.

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.

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.

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

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

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

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

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 [email_address]

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

[email_address]