U.S. and EU firms warn of 'enormous' consequences if data pact talks fail

Sun Jan 17, 2016 2:14pm EST
 
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By Julia Fioretti and Dustin Volz

BRUSSELS/WASHINGTON (Reuters) - The two largest American and European trade groups have warned of "enormous" consequences for thousands of businesses and millions of users if Brussels and Washington fail to wrap up talks on a data transfer pact by the end of the month.

The United States and Washington accelerated negotiations on a new framework enabling firms to easily transfer personal data across the Atlantic after the previous one was struck down by a top EU court last year on concerns about U.S. snooping.

Under European Union data protection law, companies cannot transfer EU citizens' personal data to countries outside the bloc deemed to have insufficient privacy safeguards, of which the United States is one.

Since the EU's highest court ruled on Oct. 6 that the 15-year-old Safe Harbour framework, used by over 4,000 firms to transfer Europeans' data to the United States, did not adequately protect the data because U.S. national security requirements trumped privacy safeguards, firms on both sides of the Atlantic have been in legal limbo.

In a letter, seen by Reuters, to U.S. President Barack Obama, European Commission President Jean-Claude Juncker and the 28 European heads of state, four business associations warned of the dire economic impact if data flows between the two blocs were disrupted.

"This issue must be resolved immediately or the consequences could be enormous for the thousands of businesses and millions of users impacted," the letter from U.S. Chamber of Commerce, BusinessEurope, DigitalEurope and the Information Technology Industry Council says. (bit.ly/1OqqMKX)

The groups also ask for a transition period to comply with any revised data transfer framework, especially for those small and medium-sized businesses that relied entirely on Safe Harbour.

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An illustration picture shows a projection of binary code on a man holding a laptop computer, in an office in Warsaw June 24, 2013. REUTERS/Kacper Pempel