Moving Data Between Japan, U.S.? Use Asia Privacy Rules System

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By Stephen Gardner

Companies transferring data from Japan to the U.S. should continue to rely on an Asia-Pacific cross border data transfer program, given that Japan doesn’t plan to give a blanket designation that the U.S. provides adequate data protection, Japan privacy office officials told Bloomberg BNA Sept. 27.

U.S. companies, such as Apple Inc., Cisco Systems Inc., HP Inc., and IBM Corp., rely on the Asia-Pacific Economic Cooperation (APEC) Cross Border Privacy Rules (CBPR) system to transfer data out of Japan to the U.S.

Japan’s amended Protection of Personal Information Act (PPIA) allows for data transfers out of Japan if a finding is made that the receiving jurisdiction offers an “adequate” level of data protection. However, Japan has no plan to enter into talks with the U.S. on adequacy, Tatsuya Fujioka, director of the Japan Personal Information Protection Commission (PIPC), told Bloomberg BNA.

Nozomi Matsui, PIPC international affairs specialist, told Bloomberg BNA that most U.S. companies are likely to have sufficient privacy safeguards, and “we haven’t seen the necessity to designate” the U.S. as offering adequate data protection.

The European Union is the only jurisdiction now involved with Japan in adequacy talks, and Japan has no plans to speak to others, Fujioka said. The EU has made declaring that Japan offers equal privacy protection as the EU a priority that will open the door for EU-Japan data transfers.

Alternately, companies could obtain express consent from all data subjects to transfer their data out of Japan, but that’s a “very difficult” proposition, Fujioka said.

The APEC CBPR system requires a participating country to adopt national data transfer procedures, including an independent public or private sector accountability agent and an enforcement agency. Participating companies also must implement data privacy policies consistent with the APEC Privacy Framework. The framework is formally recognized in Canada, Japan, Mexico, South Korea, and the U.S., and could be adopted throughout APEC’s 21 member economies.

Currently, two agents are registered under the program to certify that a company’s privacy policy is consistent with the APEC Privacy Framework. They are TrustArc Inc., formerly TRUSTe Inc., in the U.S., and the Japan Institute for Promotion of Digital Economy and Community (JIPDEC) in Japan. TrustArc has certified the privacy policies of 21 companies and JIPDEC has certified just one. The Federal Trade Commission acts as the U.S. enforcement agency under the program.

Untested Enforcement

Companies not acting on the basis of explicit consent when transferring data out of Japan, or without CBPR certification, may be vulnerable to enforcement action should Japan’s privacy office receive complaints.

Under the amended PPIA, the privacy office can warn companies found in breach of the legal requirements and may seek sanctions of up to 300,000 yen ($2,665) or, for individuals, up to six months in prison. “We think the new act is strong enough,” Fujioka said.

However, these enforcement powers have yet to be tested. The amended law took effect May 30, and so far no enforcement actions have been pursued, Fujioka said. The reason may be that the privacy office has fewer resources than privacy commissioners in many other countries, he said.

Matsui said that the Japanese privacy commission acts on enforcement “in principle only when there are complaints” and doesn’t lack the resources to follow through on all such complaints.

Japan-EU Adequacy Talks

Japan and the EU have been in discussions since July on mutually recognizing their respective privacy regimes’ adequacy. Japan’s PPIA is somewhat modeled on the EU General Data Protection Regulation, which will enter fully into force in May 2018.

Fujioka declined to comment on the details of the EU-Japan talks. The goal is to arrive at a finding in principle of mutual recognition of adequacy early in 2018. “It’s not easy but we hope we can reach the approval decision,” he said.

To contact the reporter on this story: Stephen Gardner in Hong Kong at correspondents@bna.com

To contact the editor responsible for this story: Donald G. Aplin at daplin@bna.com

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