US and Europe clinch privacy deal

US secretary David Aaron admits differences exist

The US and Europe have reached agreement on data protection rules.

The move eases fears as to how European personal data is protected when it is sent to the US, where data protection rules are less strict than in Europe.

US companies will now be required to match European standards of data protection when dealing with European data.

The dispute had threatened to become a source of tension between the two countries and halt growing internet trade.

"We are ready to recommend a package to our respective authorities," John Mogg, director general for internal EU commerce, said.

The deal is expected to be ratified in June or July.

European legislation

While US companies abide by a code of conduct, their European counterparts are bound by legislation.

A European directive on private data protection in e-business came into effect in October 1998.

It barred the exchange of data with countries which did not offer similar protection to Europe.

But now, under the new agreement, US companies can continue to receive data as long as they commit themselves to safeguarding that data.

US under secretary of state David Aaron said: "Our system is significantly different...We've had many creative ideas on how to deal with that but quite frankly we ran up against the basic fact that we were trying to paint a moving train."

One of the trickiest areas of negotiation was that surrounding the financial services sector.

These negotiations on the financial services sector have been stripped out of the data protection negotiations.

These negotiations will continue separately and will only later be merged into the new agreement.

Privacy has recently become an important issue in the United States after revelations that e-commerce companies are "mining" data to get information about individuals and their buying patterns.

The Clinton administration was keen to reach agreement with the EU before its term of office expires in November.

The deal is still subject to Congressional approval.