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Getting Practical and Thinking Ahead: “Interoperability” Is Gaining Momentum

In a world of disparate privacy regimes, pragmatic privacy professionals, experts and regulators have in recent years championed “interoperability” as the way forward for providing consistent privacy protections for global data flows. Of course, many in the privacy and data protection community continue to pursue the ideal of a global privacy standard and have made various recommendations to that effect over the years. Witness the recent “Resolution on anchoring data protection and the protection of privacy in international law” adopted by the International Conference of Data Protection and Privacy Commissioners in Warsaw, Poland, last September.

But the prospect of achieving such an international standard any time soon seems low. That forces all those concerned about privacy to focus on practical solutions that can be accomplished in the near term, and—who knows— such near-term solutions may ultimately lead to increased global harmonization in this field.

Interoperability provides such a “near-term” practical solution.

The basic idea behind interoperability is that different privacy regimes can be made to work together through negotiated codes of conduct or similar schemes. Such schemes would encompass the protections that the different regimes already have in common as well as any additional necessary elements mutually agreed by the parties.

In fact, in the U.S., it is the conceptual underpinning of the Obama administration’s approach to cross-border privacy protections. In its 2012 whitepaper on privacy, the administration explained how industry-specific codes of conduct developed through multi-stakeholder processes could be used both domestically and for cross-border data transfers. In its 2012 privacy report, the Federal Trade Commission (FTC) similarly heralded interoperability as the way forward in protecting cross-border data flows.

The basic idea behind interoperability is that different privacy regimes can be made to work together through negotiated codes of conduct or similar schemes. Such schemes would encompass the protections that the different regimes already have in common as well as any additional necessary elements mutually agreed by the parties. The U.S.-EU Safe Harbor Framework is an early example of such a negotiated interoperability scheme, and the current discussions between EU and U.S. authorities to improve and fine tune the regime are a testament to its viability.

The APEC Cross-Border Privacy Rules (CBPRs) are a more recent example of a regional interoperability scheme. In Europe, of course, we have the related concept of Binding Corporate Rules (BCRs) to facilitate cross-border data flows, and the proposed regulation provides for the development of privacy seals, certifications and codes of conduct as legitimate and additional data protection mechanisms, including for cross-border data transfers.

While the APEC CBPR system is still in its early stages of implementation, its uptake is gaining momentum among APEC stakeholders. Two APEC economies are already members (U.S. and Mexico); two are in the process of joining or have announced their intent to join soon (Japan and Canada); others are exploring how they can join the system, and many more have expressed their desire to join in the future. One APEC accountability agent—the third-party certifiers under the system—is already certifying companies for participation in the CBPRs, and the interest among forward-looking companies to become APEC-certified is growing. APEC privacy regulators and stakeholders are working harder than ever to turn the promise of the CBPR system into reality, and indeed, they are looking beyond APEC and toward interoperability with other regions.

At the beginning of March, a joint working group of APEC and European Article 29 Working Party members announced that they have developed a document, the Referential, which provides an at-a-glance comparison between the respective requirements of the APEC CBPRs and the EU BCRs. The Referential intends to be a practical tool for businesses that seek certification under both systems. It does not create mutual recognition or interoperability between APEC and the EU. However, participants in this work accurately pointed out that the Referential could be viewed as a step toward interoperability and suggested that future follow-on work could continue toward that goal.

Enforceable privacy codes of conduct and similar schemes hold significant promise for providing effective privacy protections, and not just because they can bridge the gaps between different privacy regimes. They can be tailored to the needs of specific industries, products or services or to specific privacy risks and can be updated more easily.

Stakeholders should welcome such further work based on the CBPR/BCR Referential.

Looking ahead, the Referential itself might be refined or adapted for various purposes. A second future work stream could devise a streamlined joint certification and oversight mechanism for certification and complaint-handling in both systems. This could address the inefficiencies and costs of dual or multiple certifications. Finally, privacy enforcement authorities could develop an effective backstop enforcement component for an APEC-EU interoperability scheme along the lines of the APEC Cross-border Privacy Enforcement Arrangement (CPEA).

Enforceable privacy codes of conduct and similar schemes hold significant promise for providing effective privacy protections, and not just because they can bridge the gaps between different privacy regimes. They can be tailored to the needs of specific industries, products or services or to specific privacy risks and can be updated more easily. In a world of quickly changing technology and business practices, such flexibility can help minimize the relevance gap between the applicable standards and the regulated conduct.

Further, certification requirements, ongoing third-party oversight, third-party dispute resolution mechanisms that are incorporated into such schemes or even some form of co-regulatory oversight and enforcement can help solve the resourcing problems associated with purely top-down, exclusively law-based and ex-post enforcement by privacy authorities.

The realities of global data flows coupled with the increasing need to find real privacy solutions may very well make codes of conduct increasingly appealing to privacy pragmatists—and not just in APEC and the EU but wherever there is a privacy regime that needs to link to the rest of the world.

Written By

Markus Heyder

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