Reding warns data protection could derail US trade talks

Viviane Reding Picnik_0.jpg

Justice Commissioner Viviane Reding yesterday (29 October) issued a stark warning that data protection should be kept off the agenda of the Transatlantic Trade and Investment Partnership (TTIP). But EURACTIV understands that US pressure is mounting to keep the debate open on data issues.

“There are challenges to get it [the TTIP] done and there are issues that will easily derail it. One such issue is data and the protection of personal data,” Reding told an event jointly arranged by Johns Hopkins University's School for Advanced International Studies (SAIS), and the EU’s Washington DC mission.

“I warn against bringing data protection to the trade talks. Data protection is not red tape or a tariff. It is a fundamental right and as such it is not negotiable,” she added.

Data protection not up for negotiation

Reding has always insisted that data protection issues have been cut out of the TTIP as a result of “a political decision by the US and EU”.

“Data protection is a fundamental right. It is different in nature to the tariff of a good or to the schedule of a service. That’s why a discussion on standards of data protection should be kept separate from the give and take of a trade negotiation,” the justice commissioner explained recently (17 September).

In her Washington speech, Reding added that Europe would expect similar rules to be introduced by the US once the EU’s data protection regulation was in place, castigating what she described as the US “self-regulation” approach.

“Once a single, coherent set of rules is in place in Europe, we will expect the same from the US. Inter-operability and a system of self-regulation is not enough,” Reding said.

US companies concerned about new data protection rules

She said that the inclusion in the forthcoming US Privacy Act of a legal provision on judicial redress for EU citizens, regardless of their residence, would be “an essential step towards restoring trust among partners”.

Various clauses within the proposed regulation would impact on the larger US companies offering so-called “over-the-top” data services, such as Google and Amazon, and more significantly the burgeoning cloud computing sector.

US-based cloud service providers – including Google, Amazon and Microsoft – currently account for around 85% of global markets.

However EU and US technology industries doubt that data protection – which encompasses data flows across the Atlantic critical to cloud providers – can truly be kept off the agenda.

Intense lobbying in the US

EURACTIV understands that US tech company representatives within the President’s Export Council (PEC) – an influential industry group which advises the US government – expressed disquiet with the TTIP data protection veto at a White House meeting held in September attended by US Trade Representative Michael Froman.

Froman has never publicly said that data protection should be off the agenda, whilst a senior US government official told EURACTIV on condition of anonymity that the issue of trade flows would need to be dealt with in the talks.

The Commission acknowledges that this is one of the reasons it is so keen to push for the data protection regulation to be introduced by next spring.

“Attempts to delay the data protection regulation will play into the hands of those who would like to see these issues dealt with in the TTIP, that is why Reding is being clear on the matter,” an EU source told EURACTIV.

Another factor likely to embolden industry is the parallel trade negotiations taking place between the US and Asian partners – including Japan, Malaysia and Vietnam – to create a so-called Trans–Pacific Partnership (TPP).

Separate US trade deal with Asia could apply pressure

Froman has indicated that progress on the TPP will advance more swiftly than the TTIP, since the process was begun many months before.

Data flows are high up on the agenda of the TPP, which will leave US and European industry with an expectation that the issue will be handled within the TTIP too, according to analysts.

“[The US Trade Representative] USTR has been very active in pushing for data flows within the TPP and as far as we know its high on their agenda for TTIP too,” David Ohrenstein, the director of global trade policy with BSA, the global group representing the software industry.

“It’s important to ensure data can flow across borders unimpeded. This is critical for companies offering and using digital products and services and for global enterprises managing their international operations,” Ohrenstein added.

According to John Boswell, a senior vice president with business analytics and software company SAS, data is the new ‘oil’ and data analytics are essential to business, job growth, innovation, prosperity and will lead to the creation of millions of jobs in the future.

“Core to this objective, are data-friendly policies that encourage the use, free-flow and analysis of data, facilitate the location of companies in Europe that focus on data-driven innovation and build the necessary framework of trust for European citizens who will ultimately benefit from the deluge of data and its analysis,” said Boswell.

"The movement of data is central to how business is done in the 21st century. That's why it needs to be a part of the TTIP discussion from the outset. If negotiators fail to address this reality of the modern economy, not only will it be a huge missed opportunity, but it will also render the agreement meaningless to the very many companies who depend on transatlantic data flows on a daily basis," said Liam Benham, Vice President, Governmental Programs, Europe at IBM.

Negotiations between the US and the EU on the Transatlantic Trade and Investment Partnership (TTIP) commenced in July this year.

If successful, the deal would cover more than 40% of global GDP and account for large shares of world trade and foreign direct investment.  The EU-US trade relationship is already the biggest in the world. Traded goods and services are worth €2 billion.

The agreement, the biggest bilateral trade deal ever negotiated, could result in millions of euros of savings to companies and create hundreds of thousands of jobs. It is expected that every year an average European household would gain an extra €545 and our economy would be boosted by around 0.5% of GDP, once the deal was fully implemented.

Brussels and Washington have set the ambitious goal of completing negotiations by the end of 2014.

Nov. 2013: Ongoing TTIP negotiations

Dec. 2013: Third TTIP negotiations round

Jan. 2014: Stock-taking exercise with EU Commissioner Karel de Gucht and US Trade representative Michael B. Froman

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