The Financial Times reported in an extensive article that Viviane Reding, vice-president of the European Commission and the EU’s top justice official, said that data protection was outside of the scope of the Transatlantic Trade and Investment Partnership negotiation.

Ms Reding told the Financial Times:  “The Commission’s view and the position taken by all leaders at the recent European Council is clear: let’s not mix up the phone tapping issue with the ongoing trade talks,” “Including data protection in the trade talks is like opening Pandora’s box.  The EU is not ready to lower its own standards . . . That is why the free trade agreement negotiations are not going to include privacy standards.”

EU officials stressed that at present there are no common transatlantic standards on data protection and therefore they fear that finding a middle ground with the US would only lower overall EU privacy standards.

Prominent US law firms speaking “on behalf of an informal coalition of tech and Internet companies” argued it was essential to include privacy in the TTIP as it would be in the best interests of American business.

“To date, US businesses operating online in the EU or engaged in transatlantic digital trade have encountered significant obstacles and impediments,” wrote Alan Charles Raul, a partner at Sidley Austin law firm, which represent US tech groups.

“The obstacles that US tech . . . companies face in the EU are analogous to classic technical barriers to trade – they disfavour US business in cloud computing, social media, mobile apps and other internet services without any substantial justification.”

BIIA’s comment to that is “Who said the US has lower data protection standards?”  This is where opinions clash.  BIIA has covered this issue several times in its ‘Regulatory’ section of its website:

Trade and information have been intertwined since humans started to trade. Thus inevitably information exchanges need to be part of trade agreements.  In essence with out information there will be no credit, thus no free flow of trade. Is it suggested that we go back to a ‘cash based’ economic system or once again to subjective lending?

The latest study commissioned by the DMA (Direct Marketing Association) states plainly that information exchanges are vital for economic activities.  The study is US centric, but the concept applies to all economies.  The study comes a bit late in the heat of the latest discussions on data protection, but better late than never.

The Bottom Line of the study is:  “Well-Meaning but Poorly-Conceived Legislation or Regulation Restricting the Responsible Use of Data Would Harm the U.S. Economy.  It would impact billions of dollars in revenue and hundreds of thousands of jobs, make small business less competitive, and stifle innovation. In the end, it would hurt consumers by limiting choices and raising prices.”

In the opinion of the editor the proposed EU data protection regulations most likely will harm transatlantic trade, but also trade within the EU.  The proposed EU rules may put people back in control over their data, however they will no longer be in control over access to finance.  Modern credit information solutions have helped to remove the subjectivity in lending.  Having less information or no information as the result of erasure may put the EU back into the ‘dark ages’ of subjective lending.  Perhaps if the EU privacy advocates have their way we will be heading back to a cash-based society and commerce (see the above link on unintended consequences).

This is not just an issue between the US and the EU.  What about the rest of the world?   It can be safely assumed that there are many countries which do not have data protection regulations conforming with current or proposed EU privacy regulations.  Does this mean that data exchange between these countries will be curtailed impairing trade and credit?

Editorial Opinion:  Part of this article may not necessarily reflect the opinion of BIIA members