South Korea Joins Asia-Pacific Data Transfer System

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By Elaine Ramirez and George Lynch

South Korea has joined the Asia-Pacific Economic Cooperation’s privacy program to ease international data transfers, APEC announced June 27.

The APEC Cross-Border Privacy Rules (CBPR) system requires a country to adopt national data transfer procedures, including an independent public or private sector accountability agent and an enforcement agency. Businesses in South Korea, such as Samsung Electronics Co. and LG Electronics Inc., that may want to participate in the system must then develop internal rules on cross-border data privacy procedures that comply with minimum requirements based on the APEC Privacy Framework.

South Korea is the fifth APEC member to formally join the CBPR, following the U.S., Mexico, Canada, and Japan. In the U.S., IBM Corp., Cisco Systems, Apple Inc., Hewlett Packard Inc., and Merck & Co. Inc., among others, have registered under the CBPR scheme. TrustArc Inc.—formerly TRUSTe Inc.—is the U.S. accountability agent, and the Federal Trade Commission is the U.S. enforcement agency.

APEC said in a June 27 statement that it hopes adding South Korea to the CBPR will help boost e-commerce development, entrepreneurship and trade in the Asia-Pacific region.

Sang Woo Kim, a partner at Ernst & Young Hanyoung Corp., who specializes in cybersecurity risk, told Bloomberg BNA that South Korea expects its internet and e-commerce companies to be most affected by the CBPR as they are expanding their territory to nearby regions, including China.

Ethan Cho, manager for the international trade desk at the Korea Chamber of Commerce and Industry (KCCI), told Bloomberg BNA that, once accepted to the CBPR, companies don’t need approval from foreign governments to transfer information overseas. “This will save a lot of time and resources of companies in doing business globally in terms of utilizing the information,” he said.

Park Kwang-bae, partner and leader of the technology, media, and telecommunications group at Lee & Ko in Seoul, told Bloomberg that, although domestic and private sector data protection certification systems have been used in South Korea, adopting the CBPR system marks the first time the Korean government has taken the initiative to gain acceptance into an international data protection certification system.

Existing Korean Law

South Korea’s Personal Information Protection Act (PIPA) is closely aligned with the CBPR, as they are both based on the Organisation for Economic Co-operation and Development’s Privacy Guidelines, Park said.

It is highly probable that PIPA-compliant Korean companies may already satisfy many of the CBPR certification requirements, he said.

The fundamental difference is that PIPA is a binding, enforceable framework that directly impacts individuals and institutions, while the CBPR is a voluntary, accountability-based certification system that is neither binding nor enforceable. That means a company doesn’t have legal obligations even when it is CBPR-certified, data privacy professionals said.

The CBPR doesn’t have a direct impact on a country’s respective domestic regulations, so it doesn’t exempt Korean companies from complying with PIPA, Cho said.

Launch in 2019

The operational framework and specific assessment standards will be determined by the Korea Internet and Security Agency (KISA), Park said. South Korea has designated KISA President Baik Kee-seung as its certifying authority.

KISA will also develop an operating system for CBPR, based on its experience running its own Personal Information Management System (PIMS), and submit the application by the end of 2017.

South Korea’s Ministry of the Interior and KCCI are now working with KISA to gather opinions on how to effectively operate the system, and they plan on officially launching the CBPR in 2019, after its certifying authority is approved.

The ministry didn’t respond to Bloomberg BNA’s request for comment.

To contact the reporter on this story: George Lynch in Washington at gLynch@bna.com

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

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