Since the European Union's introduction and consequent implementation of its data-privacy directive in October 1998, an ongoing battle with the US has ensued over this ordinance. The objectives of the data-privacy directive are to erase national boundaries and obstacles to the transmission of data among the member states of the EU by creating a uniform standard of data transmission and, to give individuals unilateral dominion over how their personal information is used. The point of contention that arises from the data protection law is that it mandates non-EU countries to practice similar and comparable standards in order to have access to data transmission.

The US has been opposed to what it perceives to be a seemingly onerous directive and instead, has been advocating self-regulation by the private sector. Both the US and EU, in an effort to prevent a trade war, have facilitated talks to discuss ways the US could comply with the data privacy directive.

The US Commerce Department has devised a "safe harbor" proposal in which the EU would grant companies "safe harbor" status. In turn, the companies would adhere to certain regulations protecting personal data. The European Commission has accepted this idea but would like to see more stringent safeguards in the enforcement and access aspects of consumer data.

However, the US faces domestic challenges. The US Commerce Department is afraid that companies, built on the tradition of laissez faire, will not support such strict regulations. US industries have been lobbying for a more flexible and liberal "safe harbor" provision, moving against the tide of the EU's demands. Many fear that the sluggish efforts of the United States and demands to extend the transition period for company compliance may force the European Commission to bar transatlantic data access.

However, according to David Aaron, US Undersecretary of Commerce for International Trade, new optimism and morale have characterized recent discussions. The EU currently is emphasizing self-regulation, which is sparking US enthusiasm and support. This coupled with the newly confirmed team of commissioners headed by President Romano Prodi have revitalized excitement and have been a great impetus in advancing negotiations.

Although more discussions are needed, Aaron believes that a resolution can be met before the close of the year.