Privacy Shield: Traffic light parties for new EU-USA data deal

In the summer, several Dax bosses, including the CEOs of Allianz and Volkswagen, Oliver Bäte and Herbert Diess, contacted Chancellor Angela Merkel (CDU) directly to point out the problem.

The fact that the government has not yet been able to provide a solution to the data dilemma “fills us with great concern in view of the high relevance for the digital innovation capability of our economy,” said a letter to Merkel dated July 13, 2021. “Against this background, we ask you to take on this topic personally and to help find a workable solution.” The letter is available to the Handelsblatt.

The corporate executives are still waiting for a solution today. Since the federal government is only executive in office after the federal election, it is now up to the next government to address the issue. Negotiations between the SPD, the Greens and the FDP to form a traffic light coalition began on Thursday. The parties will then hardly be able to avoid putting the problem of data transfer on the agenda.

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“One of the main concerns of the new federal government must be to vigorously advocate legally secure and GDPR-compliant data transfer at European and international level that enables innovation,” said the Vice President of the SPD Economic Forum, Matthias Machnig, the Handelsblatt. “This includes a follow-up agreement to the EU-US Privacy Shield and regulatory interim solutions until a new agreement can come into force.”

The smooth and legally secure data transfer is of “enormous importance for the competitiveness of companies”.

Data transfers “indispensable” in a global economic order

Representatives of the Greens and FDP also emphasize the urgency of a new data agreement. The EU Commission and the German government are “responsible for finally taking on this urgent problem and working towards a solution with the necessary determination,” said Green parliamentary deputy Konstantin von Notz of the Handelsblatt.

The FDP MEP Moritz Körner, who is involved in the traffic light negotiations like von Notz, said: Companies need legal certainty and “no data protection fig leaf” like the “Safe Harbor” and “Privacy Shield” agreements that were overturned by the ECJ.

Both legal bases for the transfer of personal data of European citizens to the USA had been withdrawn by the EU judges due to insufficient data protection. The ECJ criticized the fact that the US secret services have extensive access to the data stored by US companies. Many US cloud services, such as Amazon or Microsoft, therefore collide with the European General Data Protection Regulation (GDPR). Fines of up to 20 million euros are possible against companies that use the services anyway.

The situation is unsustainable for many companies. In their letter to Merkel, the Dax bosses emphasize the importance of international data transfer, which is “indispensable” in a global economic order. “This not only applies to the sale of products and services or the purchase of software and cloud solutions, normal communication and control in international companies is also not possible without data transfer.”

FDP brings “EU / US no-spy agreement” into play

The signatories of the letter, including Bäte and Diess, the head of Telefónica Germany, Markus Haas, the CFO of SAP, Luka Mucic, and Facebook’s European boss, Angelika Gifford, warn not to underestimate the problem. “In the age of extensive digitization and continued digital research and innovation, practically all companies are dependent on legally secure solutions,” they point out. This is all the more true for local medium-sized companies, the export industry and other international companies.

The EU is aiming for a new data protection agreement with the USA. However, this is not an easy task. There will be no “short cuts” or “quick fixes”, that is, no half-baked solutions that do not stand up to legal scrutiny, the EU Commission recently said. Commission Vice-President Valdis Dombrovskis is responsible for negotiations with the USA. How he intends to solve the problem, he has not yet revealed.

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The federal government does not feel responsible for the issue and refers to Brussels. However, in response to a written question from the Greens parliamentary deputy von Notz, the Federal Ministry of the Interior announced that the EU Commission and the USA were discussing “concrete options” as to how the latest ECJ ruling on the “Privacy Shield” could be implemented.

“According to the European Commission, the first progress has been made, but essential questions still need to be clarified,” says the ministry reply to von Notz, which is available to the Handelsblatt. However, there is currently no specific schedule for the conclusion of the talks.

As an interim solution, the EU has developed so-called standard contractual clauses with which companies can obtain permission to store data in the USA. Whether this will hold up legally is a matter of dispute.

Greens criticize “lethargy” of political decision-makers

Von Notz also demands a “crystal clear” legal basis. The “lethargy” of political decision-makers on this issue is “irresponsible and unacceptable”, he criticizes. The EU Commission and the Federal Government would have missed “finally eliminating this deficit, which is highly problematic both for the protection of basic rights for users and for the legal security of companies”. The serious legal problems have been evident for years.

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According to the FDP European politician Körner, it is above all the USA that must move for a new data protection agreement. “The US security laws on the one hand and the EU Charter of Fundamental Rights on the other are like two trains racing against each other – they are incompatible,” he said. “We need legislative changes on the US side in their security laws or an EU / US no-spy agreement.”

More: Bitkom President warns: The lack of a data protection agreement with the USA “is massively damaging the German economy”.

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