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The globalization of privacy: implications of recent changes in Europe
American Journal of Economics and Sociology, The, July, 1993 by Priscilla M. Regan
I
Introduction
THE DEVELOPMENT of global economic and communication systems is receiving much attention. But no global system is designed and constructed at the international level; all evolve out of the interconnection of national systems. In constructing global systems, national governments, regional consortia and international organizations all struggle with the task of enacting rules and standards that allow national systems to work together as global systems. The global economic and communications systems are fundamentally global information systems. These collect, transmit, exchange and manipulate vast quantities of information, and overcome the traditional barriers to the international movement of information, "time, language, distance and cost."(1) Much of this information is about people--their purchases, travel plans, investments, employment, entertainment preferences, health care and personal contacts. Most industrialized countries have laws relating to the collection and exchange of personal information.(2) Given the diversity of political cultures and systems, it is not surprising that these national laws vary.(3) But, this variation can be a barrier to the transfer of personal information from one country to another and a barrier to the operation of the global economic system.
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In order to move towards one European market, "Europe 92," the European Community is harmonizing national laws that affect the workings of the European economic market. Included among such proposals is one that requires the twelve countries in the European Community to harmonize their privacy or data protection legislation.(4) The proposed "Directive on the Protection of Individuals with Regard to the Processing of Personal Data and on the Free Movement of Such Data"(5) (hereafter referred to as Data Protection Directive) has provoked discussion not only among the members of the European Community, but also in countries that trade or deal commercially with members of the European Community. Much discussion is occurring in the United States, which will be affected by the Data Protection Directive both because of its extensive trade with the European Community and also because many observers believe that the privacy laws of the United States do not provide the level of protection that the Data Protection Directive will require.
The construction of the European Market is likely to lead to a strengthening of privacy laws in the United States. This event outside American borders will affect the development of American public policy and be able to accomplish something that privacy advocates within the United States have been unable to for over twenty years, i.e., establish an independent agency to oversee personal information practices and establish more legal requirements for certain private sector entities, such as direct marketing and health care. It appears somewhat ironic that protection of a basic cultural value within a country would occur in response to a perceived economic threat from outside that country.(6) But a simple economic argument is not adequate to explain the likely American response to the European Data Protection Directive. To American corporations, this issue has been one of economic competitiveness since the late 1960s and their view of this policy issue has not changed. The likelihood of changes is instead explained by the more complex social, economic and political environment of the 1990s. The European Directive provides a "policy window"(7) through which policy changes can occur.
II
The International Privacy Environment
CONCERN FOR protecting the privacy of personal information began in the late 1960s as a result of two related developments: the computerization of personal information, and the increased reliance public and private organizations placed on the collection, use, storage and exchange of personal information. Policy discussions about information privacy have occurred on three levels: national governments, regional consortia and international organizations. In the early 1970s countries began to adopt laws to protect the privacy of information within their countries, and by the late 1980s most advanced industrial countries had adopted such laws.(8) They vary in some significant ways. Some regulate only computerized records while others regulate manual and computerized records; some regulate the private and public sectors similarly while others provide different standards for the two sectors; some provide for regulatory agencies, others establish advisory or ombudsman type agencies, and still others do not provide any new institutions; some protect only citizens of that country, while others protect residents; and some protect "natural persons" and others protect "legal persons," including corporations.
As debate and legislation occurred at the national level, international and regional bodies recognized that domestic data protection laws could affect the flow of personal information into and out of a country. Transborder data flows (TDF), the exchange of personal information across national boundaries, especially via computer networks and telecommunication lines, meant that variation in national laws could cause problems for countries, individuals and corporations. Information about an individual may be collected in country A, transmitted by a telecommunications network owned and operated by a private firm in country B, processed in country C, stored in a computerized database in country D, transmitted to country E for analysis, and repackaged and sent to country F for another use. All six countries could have different standards of protection for personal information, meaning that the individual's legal privacy protection changed as the data changed countries and that the obligations of the users and disseminators of personal information, primarily multinational corporations, changed as well.
