Article 4 of the EU Data Protection Directive and the irrelevance of the EU-US Safe Harbor Program?

The relationship between the EU-US Safe Harbor Program and the applicable law provisions set forth in the EU Data Protection Directive and the proposed EU Data Protection Regulation requires clarification. A central concern for US companies is that the benefits of enrolment in the EU-US Safe Harbor Program will be undermined by the broad assertions of extraterritorial jurisdiction made by the EU pursuant to Article 4 of the Directive/Article 3 of the proposed Regulation. If the extraterritorial scope of the Directive/Regulation is widely interpreted then many US companies may lose their incentive to join the Safe Harbor Program because the major benefits of joining the Safe Harbor Program-the ability to rely on industry dispute resolution mechanisms, US law to interpret the Principles, and US courts and administrative bodies to hear claims-will be removed.