TRANSBORDER DATA FLOW:EU DIRECTIVE AND IMPLICATIONS FOR INTERNATIONAL BUSINESS

The knowledge economy leverages off the use of information, including personal data. The advent of global networks, such as the internet, now makes it possible to collect, process and transmit personal data on an unprecedented scale. This can be high volume use, such as in the form of the transfer of databases, or multiple one-off collections and exchanges from activities such as web browsing on the internet. The European Union Privacy Directive (1995) contains certain standards of privacy protection. It imposes export restrictions by prohibiting the transfer of personal data to countries which do not have privacy laws meeting the standards set out in the Directive or otherwise adequate levels of protection for those personal data. This constraint on transborder data flows from Europe could have far-reaching effects on those businesses in third countries that rely on continued access to personal data originating in Europe. The cost of various compliance mechanisms (such as tbdf contracts), and the need to build consumer trust and confidence, may make the economics and efficiency of third countries implementing their own domestic privacy laws, increasingly attractive.