Antitrust Law Daily Wrap Up, PRIVACY NEWS: Lawmakers stress need to reach new data “safe harbor” agreement with EU, (Nov 5, 2015)

By Brian Hammond,TRDaily

Members of two House Energy and Commerce subcommittees today stressed the importance of negotiators from the United States and the European Union quickly reaching a new safe harbor agreement for data protection in the wake of a European Court of Justice decision overturning the previous safe harbor pact.

During a hearing held Tuesday by the commerce, manufacturing, and trade subcommittee and the communications and technology subcommittee, lawmakers agreed on the importance to businesses of resuming transatlantic data flows, while some of them also stressed the need, in the longer term, for the U.S. to improve its data privacy protections.

U.S. Representative Michael Burgess (R., Tex.), chairman of the commerce, manufacturing, and trade subcommittee, said the two subcommittees wanted to "send an important message.” There is no reason to delay. Both sides have all that is needed to put a sustainable safe harbor agreement in place.

"Our understanding is that there is an agreement in principle," Burgess said. "For the sake of the small and medium sized business relying on the safe harbor, and all of the jobs they support in both the U.S. and the EU, I encourage all parties to stay at the negotiating table to solidify a new data transfer agreement well in advance of the January 2016 deadline. There is no other path forward that I can support."

U.S. Representative Frank Pallone (D., N.J.), the ranking member of the full Energy and Commerce Committee, said the elimination of the safe harbor has created "great uncertainty," but added that the 15-year-old agreement already had been under renegotiation. "During this time, the U.S. and E.U. have been working hard to strengthen the privacy principles of the original agreement to ensure they cover the newest business models and data transfers that exist," he said.

"A new agreement can and should improve consumer privacy and data security," he said. "Businesses can and should adhere to strong privacy principles from inception."

Communications and technology subcommittee Chairman Greg Walden (R., Ore.) said a break in the flow of data "has the potential to cause real impacts to the economies on both sides of the proverbial pond. I am encouraged to hear that the negotiators on Safe Harbor 2.0 have reached an 'agreement in principle,' and I cannot emphasize enough how important it is to reach a new and firm agreement before the grace period elapses in January."

Walden asked what impact "continuing uncertainty around transatlantic data flows have on direct investment in the U.S. and Europe."

Joshua Meltzer, senior fellow-global economy and development at the Brookings Institute, said the implications of the court ruling are "potentially going to be much more significant" than the direct effects on companies that operated under the safe harbor framework.

For example, data protection authorities in Germany have raised concerns about the effects of the agreement on transfers of data among member states, Meltzer said. "There's enormous uncertainty" that affects, "for the moment, all forms of foreign investment."

Marc Rotenberg, president of the Electronic Privacy Information Center, added that several other countries, including Canada and Japan, have begun reconsidering their safe harbor policies in the wake of the court ruling.

"This is not just a matter of trade policy," Rotenberg said. "Where countries have established fundamental rights, they will see a need to protect those rights."

U.S. Representative Joe Barton (R., Texas) said he was conflicted on the best way to proceed. "If I put on my pro-business hat, I want to renegotiate this safe harbor agreement as quickly as possible with as little muss and fuss as possible," he said. "But if I put my privacy caucus co-chair hat on, I think the EU has highlighted a substantial issue—that that the U.S. privacy laws aren't as strong as they could be and that people like me think there should be."

Barton asked what the primary difference is between EU protections and U.S. law.

Rotenberg said, "The Europeans have brought attention to areas of U.S. privacy law where we have work to do." The U.S. has good privacy laws in place, but they date from the 1970s and haven't been updated to deal with new issues, such as biometric identification and facial recognition, he said.

John Murphy, senior vice president-international policy at the U.S. Chamber of Commerce, said the court ruling is not really about the state of U.S. privacy policy.

"Our read on the ruling is that it is fundamentally a federalism issue within Europe, having to do with the European Commission," Mr. Murphy said. "To a significant degree, the renegotiation of the safe harbor reflects their need to renegotiate how they handle privacy.”

"The ruling itself was more process related and about those issues than it was about U.S. privacy protections," he added. "There was no examination of U.S. privacy law in the context of the European Court of Justice ruling."

Rep. Barton said that in the short term, "we want to work with negotiators to solve this problem," adding that small and large businesses throughout the United States "need access to the European market." But in the longer term, "it will perhaps give impetus for this Congress to address these [privacy] issues," he said.

News: Privacy