It’s Time to Come Together on Digital Trade

Digital trade between the U.S. and the EU is big business – really big business. The U.S. exported $140.6 billion worth of services to the EU alone in 2012 and over 70 percent of trade in services between the U.S. and EU is delivered digitally. Put simply, digital trade between the world’s two largest trading partners is vital to our global economy and cannot be interrupted.

However, all this activity could come to a halt if swift action isn’t taken to retain and preserve these digital exports. Currently, two issues stand in the way of restoring businesses as usual, the “Judicial Redress Act” (JRA) and U.S. “Safe Harbor” status. We have until the end of January to build new pathways between the U.S. and the EU before our current regulations expire and we cannot allow political gamesmanship to allow us to miss these critical deadlines.

The JRA supports the exchange of law enforcement data between the U.S. and EU. Without passage of the JRA, important law enforcement data, such as airline passenger records, may cease being shared between U.S. and EU. This legislation has passed in the House, but failure by the Senate to approve this critical piece of legislation endangers law enforcement cooperation and could put American and European citizens at unnecessary risk. The Senate Judiciary Committee has put the JRA on its legislative calendar and we hope that they will pass the bill expeditiously so it can head to the Senate Floor.

The purpose of the JRA is to address the concerns of EU citizens about their ability to address misuse of their personal information when it is shared with the U.S. government. Under the JRA, EU citizens will have recourse to U.S. courts in the event that the U.S. government misuses this information just as U.S. citizens have before European courts. It is difficult to imagine a scenario in which U.S. citizens should be given the right of redress for U.S. government misuse of their data when EU citizens should not.

U.S. “Safe Harbor” status is the second critical issue that must be resolved in order to ensure digital trade between the U.S. and the EU remains intact.  

In the mid-1990s the European Commission implemented a new privacy directive that was implemented by individual EU members into their laws and requires that certain data of EU citizens may only be sent outside the EU to countries whose privacy practices are deemed “adequate.” Many countries, including the U.S., who maintain privacy standards that are different than those used by the EU do not meet this designation. To remedy this, the U.S. and EU negotiated a voluntary program administered by the U.S. Department of Commerce called the “U.S.-EU Safe Harbor Framework.”

Under the Safe Harbor Framework, U.S. companies could meet the EU definition of adequacy by providing additional privacy protections to data of EU nationals transmitted to the United States. This allowed companies in the EU to send data to Safe Harbor-certified companies in the United States and meet the legal obligations required under the laws of their respective countries. Over the past two years, the U.S. and EU have sought to update the U.S.-EU Safe Harbor Framework and had reached a “handshake” agreement. However, that went out the window in October when the European Court of Justice (ECJ) determined that the Safe Harbor Framework did not meet adequacy standards. Now the U.S. and EU must negotiate revisions in the Safe Harbor Framework by the end of January 2016 or data transfers between the U.S. and EU will cease.

The U.S. government can and should move forward to pass the JRA and finalize the Safe Harbor negotiations; however, they are currently being used as a political tool in an international debate surrounding privacy.

While the U.S. and the EU have chosen different routes to protect individual privacy, both continue to study and create mechanisms to meet their citizen’s rightful expectations in privacy. Given the significant amount of digital trade between the U.S. and EU, the two partners must keep in mind the privacy aspirations, and political realities, of each other. Simply put, neither trading partner can afford to “dictate” policies to the other, or ignore concerns that are based on thoughtful deliberation. Digital trade is simply too valuable to be put in the balance.

Standing in the way of this valuable program does nothing to send a message, other than the fallacious message that transatlantic business does not matter. We call on the Department of Commerce to swiftly finalize Safe Harbor negotiations, and our Congressional representatives to facilitate these negotiations.