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Net privacy policy in the works

White House adviser Ira Magaziner is confident that the United States and the European Union will reach an agreement on Net privacy policy.

White House senior adviser Ira Magaziner said today that he is confident that the United States and the European Union will resolve their conflicting Net privacy practices by this summer.

Magaziner and other U.S. officials are negotiating with the European Union over its strict privacy directive that goes into effect in October.

Electronic data collectors governed by the European Union will be mandated to publicly post privacy policies, disclose how the data will be used, and give people access to their data so they can make changes or object to it being used at all. Members must set up an authority to monitor the policy, and there are legal ramifications if companies violate the rules.

This provision, which is the cornerstone of the struggle between the United States and Europe, states, "The transfer of personal data to a third country which does not ensure an adequate level of protection must be prohibited," unless "the data subject has given his consent."

"I wouldn't characterize it as being close in agreement, but we're hopeful to resolve this by summer," Magaziner told CNET's NEWS.COM today after speaking on the topic at McGraw Hill in New York. "We think the idea of restricting the data flow between Europe and the United States is a horrendous idea and would not benefit anybody."

EU members essentially could be forced to cut off access to sites around the world that don't adhere to its rules. The Clinton administration has been preaching an industry self-regulatory approach for the Net and electronic commerce, and doesn't plan to bend when it comes to consumer online privacy. The White House will try to reach a middle ground so that U.S. Web sites aren't hindered by the EU privacy policy.

"We are in general agreement about the substance of trying to protect privacy on the Net and that it should be based on notification and choice. But we disagree on the enforcement," Magaziner noted. "We think private-sector self-regulation will work better on the Net. We want to take a path toward enforcement that fits better with our culture."

The Federal Trade Commission has been the chief force investigating privacy on Net, where surfers are asked for an array of personal information in exchange for goods and services.

During hearings last summer, the FTC was told that many sites request a visitor's name, address, phone number, birth date, Social Security number, or annual income, for example, without disclosing how the data will be used. Information collected from children was no exception, which prompted the FTC to threaten action against Web sites that gather and sell minors' data without parental permission.

Still, in a report to Congress last December, the FTC endorsed industry self-regulation, rather than legislation, to protect consumers' privacy online.

Since then, the FTC's former Net guru, Christine Varney, has said the industry can expect some regulation if better privacy practices aren't widely adopted.