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March 23, 2001
Mr. John Mogg
Director General
Internal Market Directorate General
European Commission
Rue de la Loi 200
B-1049 Brussels
Belgium
Dear Mr. Mogg:
We are writing to reinforce our concerns over the proposed
standard contract clauses as described in the Treasury-Commerce
joint letter on February 16, 2001.
Over the last year, U.S. financial institutions have been
implementing new consumer privacy protections mandated by
the Gramm-Leach-Bliley Act of 1999. In the coming months,
the U.S. Treasury Department would like to resume negotiations
with the EU Commission on the adequacy of data protections
provided by U.S. laws governing the financial services sector.
We are concerned future negotiations for the financial services
sector may be adversely affected by the Commission's proposal
to adopt standard clauses for contracts governing data transfers
from firms in the EU to firms in other countries. The standard
clauses incorporate duties and liabilities that are not found
in the directive. We recognize the model contracts are not
the only means to meet the requirements of the directive.
Still, we believe there is a serious danger the adoption of
the standard clauses as drafted will create a de facto standard
that would raise the bar for U.S. and foreign firms that might
be covered by other agreements - including any arrangement
resulting from Treasury's financial services negotiations.
In short, we share the concern of a number of multinational
firms that the adoption of the proposed standard clauses will
introduce uncertainty about the use of contracts.
The proposed standard clauses are not a workable alternative
model. They impose unduly burdensome requirements that are
incompatible with real world operations. While revisions and
improvements have been made since the standard contract clauses
were presented for comment in September 2000, the revision
process has not been transparent to those seeking participation.
We urge the Commission to provide more time for an open exchange
of views with the private sector, impacted countries, and
other stakeholders, especially given the above concerns. In
light of our broad concerns and specific implications for
future Treasury negotiations on adequacy, it is our view that
the Commission should defer consideration of the standard
contract clauses.
It is in the interest of both the U.S. and the EU to ensure
that neither side adopts new measures that will weaken the
prospects for reaching an agreement on an adequacy finding
for the U.S. financial services sector. We appreciate your
consideration of our views and look forward to further discussions
on these issues in the coming months.
Sincerely,
Donald V. Hammond
Acting Under Secretary (Domestic Finance)
Bernard Carreau
Acting Under Secretary for International Trade
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