US FTC and PRC SAIC Enter Into Information Exchange Agreement

June 12, 2007. The U.S. Federal Trade Commission (FTC) and the People's Republic of China's (PRC) State Administration for Industry & Commerce (SAIC) entered into a short and vaguely worded Memorandum of Understanding on Consumer Protection Matters [4 pages in PDF]. See also, FTC release.

This MOU states that the two nations "intend to use their best efforts to exchange information".

This MOU, on its face, might be construed to apply to the sharing of investigative information. Moreover, it might be construed within the context of the recently enacted US SAFE WEB Act, which authorizes the FTC to conduct investigations for, and share information with, foreign government agencies, and to enter into agreements with foreign government agencies regarding the sharing of investigative information.

However, this is not the FTC's interpretation of the MOU. TLJ spoke with Yael Weinman of the FTC's Office of International Affairs. She said that this MOU "relates to policy level cooperation, not investigative assistance".

This MOU does enumerate several types of information sharing related to policy. It states that "the Participants intend to use their best efforts to cooperate in the area of consumer protection, including, but not necessarily limited to: ... exchanging views on consumer protection issues of common interest; ... exchanging information concerning consumer protection laws, regulations, policies and other consumer protection-related subjects as mutually agreed by the Participants; ... exploring the possibility of working together to sponsor or participate in symposia, seminars or workshops on issues relating to consumer protection; ... exploring the possibility of conducting personnel training in the area of consumer protection; and ... exploring the possibility of conducting mutual visits relating to important consumer protection issues that are of mutual concern."

US SAFE WEB Act. Late last year the Congress enacted, and President Bush signed, S 1608 [109th Congress], the "Undertaking Spam, Spyware, And Fraud Enforcement With Enforcers beyond Borders Act". This title renders the near acronym of US SAFE WEB Act. This Act increases the investigatory and information sharing powers of the FTC. See, story titled "Congress Expands Powers of FTC" in TLJ Daily E-Mail Alert No. 1,504, December 13, 2006. See also, FTC summary [3 pages in PDF] of the US SAFE WEB Act.

Section 4 of the US SAFE Web Act amends the Federal Trade Commission Act (FTCA) to authorize the FTC to conduct investigations and discovery for, and provide information to, foreign law enforcement agencies.

The US SAFE WEB Act, among other things, adds a new subsection (j) to 15 U.S.C. § 46, that provides that the FTC may provide "Investigative Assistance for Foreign Law Enforcement Agencies ... Upon a written request from a foreign law enforcement agency to provide assistance in accordance with this subsection, if the requesting agency states that it is investigating, or engaging in enforcement proceedings against, possible violations of laws prohibiting fraudulent or deceptive commercial practices, or other practices substantially similar to practices prohibited by any provision of the laws administered by the Commission ..."

It further provides that the FTC may "conduct such investigation as the Commission deems necessary to collect information and evidence pertinent to the request for assistance, using all investigative powers authorized by" the FTCA.

It also provides that in determining whether to provide assistance to the foreign government, the FTC shall consider "whether the requesting agency has agreed to provide or will provide reciprocal assistance to the" FTC.

Finally, it provides that "If a foreign law enforcement agency has set forth a legal basis for requiring execution of an international agreement as a condition for reciprocal assistance, or as a condition for provision of materials or information to the" FTC, the FTC "may negotiate and conclude an international agreement, in the name of either the United States or the Commission, for the purpose of obtaining such assistance, materials, or information ..."

However, neither the MOU nor the FTC's release accompanying the MOU reference the US SAFE WEB Act. Moreover, the FTC's Weinman stated that the MOU is not related to the recently amended 15 U.S.C. § 46.

ISP Data. There are two other circumstances that are not addressed in either the MOU or the FTC's release, which may or may not be relevant to the MOU. First, Attorney General Alberto Gonzales has advocated mandating data retention by ISPs, and sharing this data with foreign governments. Second, the PR China has a history of interpreting its consumer protection and other laws to include protecting people from online expression that it opposes, but which is protected free speech in the US.

AG Gonzales has advocated imposing a data retention mandate on internet service providers. See, for example, story titled "Gonzales Proposes Data Retention Mandate, Web Site Labeling, and Ban on Deceptive Source Code" in TLJ Daily E-Mail Alert No. 1,357, April 25, 2006. He has also pressured ISPs to collect data. See for example, story titled "Gonzales pressures ISPs on data retention", by Declan McCullagh, in CNET, May 26, 2006. Gonzales has also argued that "we must preserve data and have it available to be shared with another country". See, story titled "Gonzales Says Foreign Governments Should Have Access to Information Collected under Data Retention Mandate" in TLJ Daily E-Mail Alert No. 1,365, May 8, 2006.

The MOU also includes clauses that, read literally, would apply to the decision of whether or not to share investigatory information under circumstances where there are different legal frameworks in the US and PRC. First, the MOU provides that "It is understood that the Participants do not intend to communicate information to the other Participant if such communication is prohibited by the laws governing the Participant possessing the information or would be incompatible with that Participant’s interests."

Second, it provides that "It is understood that the Participants do not intend to engage in any activity that is prohibited by their respective national laws, enforcement policies, or other interests."

What would happen if the PRC's SAIC were to ask for assistance from the FTC in investigating the ownership, registration, financing, operation, and/or use of a Chinese language web based service in the US? Weinman told TLJ that the FTC evaluates all such requests on a "case by case basis". She added that this applies to requests from other countries as well.