While the U.S. government has been treating privacy as if it were just another issue to be inserted in a contract, there has been another North American approach to dealing with the implications presented by last year's European Union (EU) directive on data protection. That directive states that personal information should not be sent to countries where the protection of personal information is not adequate by European standards.

Since it has been clear from the beginning that U.S. statutory privacy protections were considered inadequate, particularly for private-sector information, the Commerce Department, acting on behalf of U.S. business, has been negotiating with the EU. Commerce has proposed what is known as a "safe harbor," a self-regulated privacy environment in which American companies could operate without running aground on the shoals of European data protection. Although Commerce Undersecretary David Aaron and European Union Internal Market Director-General John Mogg have been negotiating an agreement ever since the EU directive came into effect late last year, every self-proclaimed deadline to come to an agreement has come and gone without a final resolution. It seems likely that an uneasy truce will eventually be hammered out since neither the United States or Europe want this disagreement to lead to a trade war.

While U.S. business was sticking to laissez-faire frontier individualism, Canada was trying another approach. Privacy is more front and center in Canada than in the United States, and when Canadian industry commits itself to respecting personal privacy, it at least sounds more convincing than its American counterparts. With the help of government and industry representatives, the Canadian Standards Association (CSA) developed a model privacy code several years ago, which provided reasonably thorough protections under fair-information-practices principles. Armed with CSA code, Industry Canada put together a draft bill that built a framework of private-sector privacy around the features of the code, making the code enforceable through reliance on privacy commissioners and the courts.

Bill C-54

Last year the federal bill was introduced into Parliament. Bill C-54, jointly sponsored by the minister of industry and the attorney general, was really two bills in one -- the private-sector privacy bill, which was Industry Canada's contribution, and an electronic-documents portion shepherded by the Ministry of Justice. Like the United States, Canadian officials had succumbed to the reality that such privacy protections stood a better chance of being written into law if they were sold on the basis of improving and expanding the economic environment for electronic commerce. The dividing line is clear -- private-sector privacy is needed in North America only if it benefits business, while in Europe, privacy is viewed as a basic human right.

From its inception the bill has been dogged by some basic constitution jurisdictional problems and many thought it could not succeed unless the provinces agreed to pass parallel laws. But when C-54 was introduced, it cast its net broadly, using the federal authority to regulate interprovincial commerce to extend the reach of the bill to records pertaining to the commercial aspects of any provincial business.

While this extended the federal law to a much greater universe of records, without the cooperation of the provinces in passing similar laws there would still be no coverage of personal information such as personnel files held by provincial companies since such records did not reflect on commerce. The bill gave provinces three years to pass their laws, at which time the provincial laws would supersede the federal law as it applied to provincial records. However, if the provinces failed to act, the status quo instituted by C-54 would remain. Quebec was specifically excluded from the bill's coverage because the province already has a law that protects personal information held by the private sector.

The bill received criticism from privacy advocates and business alike. When the law enforcement community

Harry Hammitt  |  Contributing Writer