WASHINGTON—Ahead of the December 9 hearing by the U.S. Senate Commerce Committee on the invalidation of the EU-U.S. Privacy Shield and the future of transatlantic data flows, the Information Technology and Innovation Foundation (ITIF) released the following statement from Nigel Cory, ITIF’s associate director for trade policy:
When the European Court of Justice invalidated the EU-U.S. Privacy Shield, it effectively raised a draw bridge that more than 5,000 companies depended on as their legal path for transferring data from the European Union to the United States. The future of the growth of transatlantic trade and innovation—a relationship worth $7 trillion—now depends on building a new legal framework to replace it.
One of the unfortunate things about this debate is that some people assume it only matters to big tech companies that can afford to take different paths to comply with EU data-protection laws. That’s not the case. There were 5,211 firms using the Privacy Shield as of October 2020, and the vast majority were small and medium-sized companies. Sixty-five percent had less than $25 million in revenues. They were in a wide range of industries—from business and professional services to health care, agribusiness, and education—and they are headquartered all over the United States, Europe, and the rest of the world.
As data flows and digital commerce continue to become more important in the years ahead, their numbers will continue to grow. Jobs, trade, and economic growth depend on it. Policymakers on both sides of the Atlantic should keep that in mind and move with a sense of urgency to replace the Privacy Sheild.
- For more on this issue, see ITIF’s new policy briefing, “‘Schrems II’: What Invalidating the EU-U.S. Privacy Shield Means for Transatlantic Trade and Innovation,” by Nigel Cory, Daniel Castro, and Ellysse Dick (December 2020).