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By Joey Gardiner, 5 March 2001 14:30

NEWS Federal Trade commissioner Orson Swindle has warned American firms to take the initiative on customer privacy, or expect to see the government stepping in. Swindle's comments come in light of the ongoing unpopularity of the Safe Harbour agreement, which has so far signed up just 25 US companies. Free market advocate Swindle is known to be in favour of industry self-regulation, and could be President Bush's next choice for Federal Trade Commission (FTC) chairman when the post becomes open in September. But even he admits the US government will have "no choice" but to introduce tougher data protection legislation - more in line with EU rules - if industry doesn't take a lead in addressing the issues. The Safe Harbour agreement was meant to side-step stringent EU rules that make it illegal to export data to the US by getting US firms to agree to an internationally recognised code of practice on customer data. The agreement was signed in November last year after over two years of negotiations. Adrian Friend, former European chairman of kite-marking body Trust-e, said: "Safe Harbour could well be the straw that broke the camel's back over privacy in the US. If it fails then industry will be leaving the government with little choice but to legislate." He added: "At the moment Safe Harbour is pretty disastrous. If it doesn't improve dramatically, then in a year's time the politicians will look back and say their effort has been wasted." These comments were backed up by lawyer Andrew Rigby, head of the ecommerce division for law firm Tarlo Lyons. He estimates that about 80 per cent of multinationals are currently breaching the EU data rules. "The fact that only 25 have signed up to Safe Harbour means that there are quite literally hundreds of thousands of companies potentially breaking the law. The failure of safe harbour really puts Us attempts at self-regulation in the last chance saloon," he said.