Privacy Advisor

The EU and APEC: A Roadmap for Global Interoperability?

November 26, 2013

 
By John Kropf, CIPP/US, CIPP/G, and Malcolm Crompton, CIPP/US

The steady stream of media reports on the privacy differences between the EU and the U.S. would have you believe that cross-border data sharing is nothing but storm clouds over the Atlantic. There is, however, a bright spot for cross-border information flows if we turn our attention to the Pacific.   The forecast for this part of the world appears to be fair weather and blue skies, and the data protection authorities (DPAs) in Brussels are taking note.   

The Challenge: Interoperability

Global data flows are accelerating. At the same time, data privacy laws around the world are proliferating. Around the Asia-Pacific rim, for example, of the 21 economies that comprise the Asia-Pacific Economic Cooperation forum (APEC), nearly a dozen have introduced or updated laws that protect personal information privacy since 2010. The EU, which represents the largest economy in the world, is working to strengthen its already-stringent data protection law. This has a far-reaching impact on data flows worldwide. The EU has found very few jurisdictions to meet its adequacy requirements.   Add to this the calls in recent months by EU data protection authorities and certain members of the European Parliament to suspend the EU-U.S. Safe Harbor agreement, one of the most widely utilized cross-border sharing arrangements between the EU and its largest trading partner. If the tension between the EU and U.S. can be expected to inhibit the holy grail of privacy interoperability, are there other regions that hold greater promise?

Look To Asia-Pacific: APEC’s Steady Progress

The 21 economies of APEC are a region to watch. APEC represents 40 percent of the world’s population, 54 percent of the world’s GDP and 40 percent of world trade—and growing fast. In the last 10 years, APEC has made steady progress in establishing a regional privacy framework that maximizes privacy protection while facilitating cross-border information flows. In brief, here is a snapshot of APEC’s progress:

  • 2004 — APEC issues a privacy framework, based on a set of nine principles
  • 2010 — APEC Cross-Border Privacy Enforcement Arrangement (CPEA) commences
  • November 2011 — APEC announces the Cross-Border Privacy Rules (CBPR) system
  • September 2012 — U.S. announces that it will become the first participant in the APEC CBPR system.
  • August 2013 — IBM becomes the first company certified under the CBPR system

CBPRs are a set of enforceable rules developed by an organization based on APEC Privacy Principles. The organization commits to apply these rules to its activities involving transfers of personal information across borders. Compliance with the rules and management of any complaints and investigations is achieved through a series of third-party accountability agents as the first line of defense. Privacy enforcement authorities through the CPEA provide the enforcement spine as a second line of defense if needed. In August, IBM became the first company certified under the CBPR system.

The EU Takes Interest

At the same time APEC has been developing the CBPR system, the EU has been experiencing a slow-but-steady increase in the use of Binding Corporate Rules (BCRs). Multinationals have increasingly seen BCRs as a way of undertaking cross-border transfers within the company group even if some group members are not within the EU. BCRs for some of these companies have become a de facto baseline for their global compliance and accountability programs.   

In January 2012, the EU sent DPA representatives to the APEC meeting in Jakarta to review APEC’s CBPR system and compare it with the EU. EU interest led to a formal joint review between European DPAs—the Article 29 Working Party—and the APEC Data Privacy Subgroup to determine where the systems share similarities, where there are potential gaps and how the two might work together. That review is still underway.   

External commentators have noted that there are some substantial similarities between BCRs and CBPR. Both systems require internal policies and procedures to be implemented with protections enforced externally. Further, the level of data protection can be viewed as following similar principles with some exceptions within each system. In terms of significant differences, BCRs operate globally within an organizational structure (intra-company transfers) while the CBPR system applies to transfers between the geography of the participating APEC economies, including between unrelated participating organizations.   

In sum, if the results of the comparison are substantial similarities, the two systems may provide a potential basis for connecting two of the world's largest economic powers.  

The synergies of the CBPR-BCR systems have the potential to become the brightest spot on the horizon for finding interoperability among two enormous economic regions. From a business standpoint, compatibility between CBPR and BCR could offer an effective approach to developing a solution to sharing cross-border data sharing globally. For now, keep watching for blue skies over the Pacific.

John Kropf, CIPP/US, CIPP/G, serves as Reed Elsevier’s deputy counsel for privacy and information governance. John previously served as the deputy chief privacy officer for the Department of Homeland Security's Privacy Office and as an attorney advisor for U.S. Department of State. He is also the author of the Guide to U.S. Government Practice on Global Sharing of Personal Information as well as numerous articles on global and strategic privacy issues.

Malcolm Crompton, CIPP/US, is managing director of Information Integrity Solutions Pty Ltd, a global consultancy that works with public- and private-sector organisations wishing to embed trust and privacy as core value propositions in their products and services. Malcolm was Privacy Commissioner of Australia from 1999-2004 and founded IAPP Australia New Zealand (iappANZ) in 2008. He received the 2012 Privacy Leadership Award from IAPP in recognition of his global reputation and expertise in privacy.