President Joe Biden and President Ursula von der Leyen have laid the potential building blocks for the agreement that, among other things, will facilitate data about Europeans to be stored on U.S. soil, WSJ wrote. The two world leaders stated that the new data privacy framework should streamline data flow, improve data privacy and security, as well as consolidate economic relations between the two economic giants.
Preliminary Deal Should Correct Earlier Shortcomings
The new preliminary framework is set to “assuage concerns of companies including Meta Platforms Inc. and Alphabet Inc.’s Google that were facing mounting legal challenges to data transfers that underpin some of their operations in Europe,” WSJ said. Earlier attempts at regulating trans-Atlantic data flows were shut down by the EU’s Court of Justice in 2020, making it the second time since 2015 that the EU deemed that U.S. data privacy regulations did not satisfy EU citizens’ right to question government surveillance of personal data. This had companies considering whether they should pull out of EU markets completely, or enter unsustainable, costly, and unscalable contractual clauses (SCCs) to stay put. This time, the deal also means a general improvement in EU businesses’ ability to use U.S.-based data centers for activities such as measuring website traffic, selling online ads, and managing company payroll in Europe. “Transatlantic data flows enable people and companies to transmit information for online communication, track global supply chains, share research, provide cross-border services, and support technological innovation, among other activities,” the Congressional Research Service said last year. However, the framework is expected to be challenged in courts yet again “raising uncertainty about how long Friday’s deal will last,” added WSJ. This comes as no surprise as the EU’s stringent GDPR is continuously cracking down on organizations, while privacy campaigners are expected to have a field day once the deal hits the courts.
Leaders Did Not Provide Specifics
Washington and Brussels have not stated how the new framework is going to work, what it will be called, or how it will satisfy legal challenges yet. The top question on the table today was how the U.S. could convince the top EU court “with new administrative appeals mechanisms for Europeans, but without a change to U.S. law,” — something Congress would have to approve, wrote WSJ. What can be confirmed is that the preliminary framework should underscore a shared commitment to privacy, data protection, and the rule of law between the EU and the U.S., Biden said. It will safeguard privacy and civil liberties while enabling proper data flows between the two regions, von der Leyen added.
Deal Could Resolve Big Contention Points
The deal could resolve a big, unresolved point of contention between the two regions. This would be “finding creative new approaches to bring our economies and our people closer together on shared values,” Biden said. The two regions had successfully resolved earlier disputes like the subsidy issues between Airbus SE and Boeing Co., U.S. tariffs on aluminum and steel, and closer alignment of their positions about “China’s economic practices,” WSJ wrote. If this deal succeeds, it would “mark a major victory for thousands of companies,” in various sectors that transfer enormous amounts of data between the EU to the U.S. The deal is particularly important for large U.S. technology companies that are currently having legal trouble with trans-Atlantic data privacy and data transfers, with data surveillance and breach of privacy issues being the most problematic.
A Thumbs Up From U.S. Big Tech
The new deal will “start to build those bridges and build the confidence that they [customers] need,” chief privacy officer at Microsoft Julie Brill said.
Two Decades of Impasse Can be Fixed
The deal is set to “bridge more than two decades of wrangling over how to balance privacy and commerce,” regarding trans-Atlantic data flows, WSJ wrote. Albeit, lawyers and lobbyists in the EU do not harbor the same optimism as their U.S. counterparts on whether all of this will withstand legal scrutiny unless they see changes to U.S. surveillance laws. The deal is a breakthrough because it will support US-EU data flows that are the highest in the world, and could “once again authorize trans-Atlantic data flows that help facilitate $7.1 trillion in economic relationships with the EU,” Biden said in joint remarks with von der Leyen today. The deal, essentially an enhancement of the Privacy Shield, comes one day after the European Union’s decision on adopting the Digital Markets Act (DMA), adding value to a seemingly refreshed EU-U.S. friendship and cooperation. The deal also aligns with Biden’s current digital agenda, and the EU’s “A Europe Fit for the Digital Age” action.
