US eyes breakthrough on data dispute with EU as Biden visits Brussels

By Updates

March 24, 2022

Sci & TechUpdates

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The United States thinks it has a trump card to resolve a long-running dispute over data protection with the European Union: the war in Ukraine.

Political pressure from senior political leaders on both sides of the Atlantic, including European Commission President Ursula von der Leyen, is mounting to approve a new Privacy Shield pact as early as this week with technical details to be smoothed out over the coming weeks, according to three people briefed on the ongoing discussions. They spoke on the condition of anonymity because they were not authorized to speak publicly.

American negotiators sent their European counterparts a new offer last month to secure a revamped Privacy Shield agreement. That’s almost two years after the EU’s top court invalidated a previous legal agreement that allowed everything from social media posts to company payroll to flow freely between two of the world’s largest trading blocs.

The disagreement is plaguing transatlantic trade, angering privacy groups and remains a thorn in transatlantic efforts to reboot relations in the post-Trump era.

Yet after Russia invaded its Western neighbor in late February, some within U.S. policymaking circles have highlighted how the ongoing conflict in Eastern Europe — and the ability for U.S. intelligence agencies to provide real-time insight to their European counterparts — is just another reason why an agreement should be reached, and quickly.

U.S. President Joe Biden is set to meet with fellow NATO leaders on Thursday in Brussels to discuss Russia’s invasion of its neighbor. Attention has again turned to how Brussels and Washington are still at loggerheads over how European citizens’ privacy rights are protected in the U.S., as well as how American intelligence agencies can access foreigners’ data in the name of national security.

But U.S. and EU negotiators have yet to hash out details of a potential new agreement, particularly on how Europeans will be able to file legal challenges if they believe American government agencies have mishandled their personal information. The talks have dragged on for almost two years after Brussels balked at previous offers from Washington that EU officials did not believe went far enough to uphold Europe’s privacy standards.

For some, particularly on the American side of the debate, the war in Ukraine shows how fundamental such an agreement is for global security. Alex Joel, a U.S. academic and former national security official at the forefront of suggesting ways out of the impasse between Washington and Brussels, drew a direct line between the war in Ukraine and a new transatlantic data pact. 

“The invasion of Ukraine by Russia has highlighted the importance of strong relationships between like-minded democracies,” he said. “To me, it’s highlighted the role that intelligence and Big Tech plays in facing very real threats.”

Speaking at a conference earlier this month, Google’s European head, Matt Brittin, said transatlantic data flows were vital to protecting websites, including those in Ukraine, from cyberattacks. He name-checked the search giant’s own “Project Shield” — the search giant’s toolbox to protect human rights and election monitoring sites from cyberattack — that one EU official quipped sounded similar to the Privacy Shield pact.

But four EU and U.S. officials, again speaking on the condition of anonymity, dismissed the link between Privacy Shield and the conflict in Eastern Europe. They said such connections failed to grasp the legal complexities of securing a new transatlantic data transfer pact, which was expected to face immediate challenges from privacy campaigners in Europe’s highest court.

“The fundamental problems of getting a deal done don’t go away because of the war in Ukraine,” said one of the officials.

The need for a deal

The failure to secure a new transatlantic data transfer pact is starting to bite.

In July 2020, Europe’s highest court invalidated the Privacy Shield agreement after ruling that Washington did not provide sufficient protections for European citizens when their data was moved across the Atlantic.

Despite that ruling, companies have continued to transfer such information between both regions, and national EU regulators had mostly turned a blind eye in the hope that Washington and Brussels would agree to a new deal to improve people’s privacy protections.

Yet with the two-year anniversary of the court’s ruling fast approaching, several European data protection agencies, including those from France, Austria and the Netherlands, have started to ban local companies from moving data to the U.S. in line with the bloc’s data protection standards and the court’s ruling. 

That has heaped even more pressure on EU and US officials to sign off on a deal before further regulatory announcements harm the transatlantic economy — at a time when Washington and Brussels are eager to show a united front against Russia’s aggression in Eastern Europe.

“We are at an inflection point,” said Caitlin Fennessy, chief knowledge officer at the International Association of Privacy Professionals, a trade group, who was previously the Privacy Shield director at the U.S. International Trade Administration. “Getting a new deal done is critical for business and groups to avoid an ongoing trend [to keeping data siloed within national borders].”

Much will come down to what Washington can offer Brussels in terms of privacy protections.

The European Commission and the U.S. Department of Commerce, which are overseeing the lengthy negotiations, did not respond to requests for comment on the talks. 

But five officials and company executives told POLITICO that Washington’s latest offer was based, in part, on recent suggestions from a group of privacy experts. That included the creation of a new agency within the U.S. Department of Justice to oversee how the country’s intelligence agencies handle Europeans’ data; a White House executive order to give that group hefty investigative powers; and the ability for Europeans to challenge that data collection through U.S. federal courts.

Peter Swire, a former Obama official and current professor at Georgia Institute of Technology who co-authored those proposals, declined to comment on whether Washington had copied his approach to finding a way through the Privacy Shield impasse. “I know the negotiators are aware of the basic structure,” he said. “I’m optimistic that both sides understand the importance of working out the last details.”

Supreme Court headache

Still, not everyone is convinced a new transatlantic data pact can be secured by next month. A recent U.S. Supreme Court ruling may have even made the negotiations more challenging after the justices gave Washington legal cover for keeping documents associated with government surveillance hidden from the public — a key sticking point in the EU-U.S. negotiations.

On March 4, the highest court in the U.S. ruled unanimously that the federal government could invoke its state secret privilege, or ability to not disclose material in court on national security grounds, when individuals filed lawsuits against potential illegal surveillance activities.