EU-US Privacy Shield: What Now, What Next?

The recent U.S. and European handshake deal on a new framework for trans-Atlantic data transfer, dubbed the EU-U.S. Privacy Shield, has given global businesses renewed optimism that their operations will not be hampered by complex legal maneuvering. As with the defunct Safe Harbor framework before it, once Privacy Shield is approved by the Article 29 Working Party, businesses that become certified as meeting the agreement’s privacy and data security provisions will have a streamlined administrative path for cross-border data flows.

With Privacy Shield, the good news is that we will finally have a clear direction for continuing trans-Atlantic data transfer after spending several months in limbo. That bad news is in the remaining uncertainties.

One of the biggest areas of ambiguity with Privacy Shield lies with the potential enforcement of regulations or fines across the 28 member countries in the EU – especially now that we’ve passed a critical milestone which put a hold on penalties for organizations still following the outdated Safe Harbor rules. A small handful of U.S. companies with ample resources, like Microsoft and Facebook, have European data centers for keeping the collection of information on EU citizens within the Union’s boundaries.

Keeping data operations thus contained goes a long way toward ensuring compliance with European privacy law with or without a new framework. However, the vast majority of businesses that do overseas business, whether large or small, aren’t so equipped. For them (and their legal teams), waiting for a signal from the EU has been a test of patience, trying to read the regulatory tea leaves and determine how to make the decisions that would allow them to continue doing business without crossing ambiguous lines in shifting regulatory sands.

Yet, even as the U.S. business community breathed a collective sigh of relief at word of an agreement, questions remain as to what—if any—form EU-U.S. Privacy Shield will take in its final implementation. Many EU member states remain suspicious of U.S. intelligence agencies and of American companies’ ability to resist requests for access to their data for national security purposes. The level of trust between the U.S. and EU in the post-Edward Snowden era remains low, even with subsequent revelations of aggressive domestic surveillance programs among European countries.

While it’s a good bet Privacy Shield will be ratified by the Article 29 Working Party, if your organization does business internationally, it should take steps to ensure it can continue to transfer data from the EU and do so in a way that is in compliance with regulation and best practices. That begins with a thorough review of current processes, including the legal agreements, tools and policies used to effect such operations.

The attention paid to Privacy Shield underscores the value of data in today’s economy. Whether that data is personal information or intellectual property, the information we collect, create, share, and store is vital to the success of any organization and, as such, should be handled and protected with care.

As for the lessons of Safe Harbor and Privacy Shield, they are just the beginning. Expect more of the same both at home and abroad as the importance of data—and its protection and management—becomes better understood by everyone.

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