Feb 25, 2016 - 3:30pm

Progress Made in Fixing Transatlantic Data Fiasco; Obama Signs Data Judicial Redress Act

Former Senior Director, Center for Global Regulatory Cooperation International

Fixing the transatlantic data fiasco that began last year after Europe’s highest court declared the 15-year-old U.S.–EU Safe Harbor framework invalid has been an intricate process with many moving pieces, but progress is being made.

As Myron Brilliant, U.S. Chamber vice president and head of International Affairs, noted in 2015 after the European Court of Justice’s ruling:  

More than 4,400 European and American companies of every size have relied on this agreement to be able to move data seamlessly across the transatlantic economy while providing a high standard of protection for consumers.

This is a problem for companies of all sizes, not just so-called Internet companies. Tossing out Safe Harbor put basic business functions at risk such as paying employees or interacting with customers in multiple markets.

Uncertainty over data flows will cost a bundle. A McKinsey study found “data flows account for $2.8 trillion” of world GDP.

Thankfully, action is happening on both sides of the Atlantic.

Earlier this month, the U.S. and EU agreed to a new data pact replacing Safe Harbor with the EU-U.S. Privacy Shield.

Also, Congress passed the Judicial Redress Act giving “foreign citizens will have the same judicial redress that Americans do if their personal information is misused by federal agencies in pursuit of law enforcement action.” President Barack Obama signed the bill into law on February 24.

While this is progress, it’s only another step down a long road.

With the U.S. doing its part, the EU must now recognize the changes to U.S. law meet or exceed their own laws as explained. A report by the law firm Sidley Austin concludes they are “essentially equivalent," meeting a term of art coined by the recent Safe Harbor ruling.

Next is seeing what’s in the Privacy Shield text and if it actually ensures consumer protections while allowing smooth commercial data transfers across the Atlantic.

In the 21st Century, data is the lifeblood of business. Continued regulatory uncertainty will block its flow and restrict economic growth.

About the Author

About the Author

Former Senior Director, Center for Global Regulatory Cooperation International