The Transatlantic Trade and Investment Partnership: The Intersection of the Internet, Digital Commerce and Data-Privacy
PattonBoggs.com Client Alert 1
JULY 29, 2013
This Alert provides only general
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THE TRANSATLANTIC TRADE AND
INVESTMENT PARTNERSHIP: THE
INTERSECTION OF THE INTERNET, DIGITAL
COMMERCE AND DATA-PRIVACY
On 8 July, the EU and U.S. launched the first round of negotiations on a
free trade agreement – the Transatlantic Trade and Investment Partnership
(TTIP) – in Washington, D.C. The trade relationship between the
European Union (EU) and the United States (U.S.) is the largest in the
world, with the exchange of goods and services across the Atlantic totaling
more than $2.2 billion on a daily basis. TTIP represents a unique
opportunity for the EU and the U.S. to work together to define future
global rules and standards on a variety of issues facing the increasingly
global economic landscape, including effectively harnessing digital
commerce and balancing data-privacy concerns.
The Internet, and its effects on the global economy, is one of the key
themes to emerge in the early TTIP talks. Innovation and new platforms
for content distribution, communications and commerce are increasingly
driving international trade and breaking down traditional barriers to trade.
To this point, electronic commerce represents 10 percent of growth in
GDP in the world’s most developed economies in the last 15 years. In the
United States, innovation in the digital economy is most visible
representing an estimated 30 percent of global Internet revenues.
The rapid growth of the Internet ecosystem has produced a demonstrated
change in behavior and the way people, businesses, and governments
collect, share, and use personal and other data. Trade issues associated with
digital commerce can be complex. Electronic commerce and online
services produce significant amounts of personal data that is often
anonymized, aggregated, stored, and sold for advertising or other purposes.
However, there are concerns about de-anonymization of data and sensitive
information. This information can, with or without the knowledge or
consent of the parties involved, cross international borders. In addition,
the economic efficiency of cloud computing provides and its obvious
infrastructural enhancements enable businesses, as well as governments, to
utilize resources more productively and to further drive economic growth
PattonBoggs.com Client Alert 2
and prosperity. Balancing the issues of consumer privacy with the promotion of the development of the
next innovative applications will be essential for advancing a framework that may also be expanded to
address global 21st
Century technological advances.
Complicating the start of the TTIP negotiations was Eric Snowden’s revelations of top-secret security
information surrounding the U.S. Government’s online surveillance tactics (known as “PRISM”). PRISM
certainly spotlighted the differing U.S. and EU approaches to data-privacy. A former French
counterterrorism judge, Jean-Louis Bruguière, appropriately summarized the differences when he said: “For
Americans data privacy is a matter of consumer law; for Europeans it’s a fundamental right.”
Indeed, the European Union currently defines information privacy as a fundamental human right for all EU
citizens. The 1995 Data Protection Directive establishes basic safeguards across the EU for data protections,
including providing for restrictions on data transfers to countries that lack “adequate” protections as
determined by EU standards. In January 2012, the EU Commission introduced a data-privacy regulation
that seeks to streamline the 28 national laws passed under the 1995 Data Protection Directive and ultimately
promote a European digital single market that affords citizens with more control over their personal
information. Meanwhile, in the United States individual privacy is protected through a sectoral approach
that utilizes constitutional guarantees, federal and state statutes, and regulations. While the United States has
not been deemed a country having “adequate” protections by the EU, the EU provides for a “safe harbor”
framework that allows U.S. companies and entities to avoid interruptions in their business dealings with the
EU and prosecution by Member State Data Protection Authorities. Currently, the U.S.-EU “safe harbor”
policies are enforced by the private sector in the United States. As Europe tightens its data-privacy
provision, this practice could be re-evaluated or the whole program eliminated.
The United States, like Europe, is also dealing with public outrage related to Snowden’s revelations. Perhaps
somewhat reassuring to U.S. citizens was President Obama’s statement that PRISM “does not apply to U.S.
citizens and it does not apply to people living in the United States.” Last week, however, the House
narrowly defeated an amendment to defund PRISM’s metadata program. This week, the Senate Judiciary
Committee will hold a hearing to examine strengthening privacy rights and yet balancing national security
needs. President Obama’s aforementioned statement does not similarly reassure those living outside of the
United States. Moreover, Europeans also probably find it disconcerting that much of the world’s Internet
traffic is routed through the United States.
With the first round of TTIP negotiations in Washington largely focused on structural and organizational
issues, the second round of negotiations – to be held the week of 7 October in Brussels – is expected to be
the start of substantive discussions on issues of concern, such as data-privacy. At a minimum, the “safe
harbor” framework provides for a starting point in likely TTIP discussions that will seek to address new
data-privacy concerns brought into the spotlight. Snowden’s revelations may ultimately afford the EU with a
stronger hand when negotiating data-privacy issues and perhaps other digital commerce issues under TTIP.
As such, those companies with specific digital commerce and data privacy issues or concerns should have a
strategy in mind for approaching both U.S. and EU TTIP negotiators. Patton Boggs’ Trade and Policy
practice group is well positioned to advise those seeking to influence the TTIP negotiations and helping to
find common ground on data-privacy issues.