US and EU Reach Preliminary Deal to Continue Data Flows

U.S. President Joe Biden and European Commission President Ursula von der Leyen announced on Friday (March 25) that the U.S. and the European Union have reached a preliminary agreement that would allow digital data transfers between the two regions.

“I am very pleased that we have found an agreement in principle on a new framework for transatlantic data flows. This will enable predictable and trustworthy data flows between the EU and US, safeguarding privacy and civil liberties. We manage to balance security and the right to privacy and data protection,” von der Leyen said.

This agreement, if finally approved, will represent a huge relief for U.S. tech companies that could otherwise see data flow between Europe and U.S. stopped.

This is because an earlier agreement regulating trans-Atlantic data flows was considered illegal by the European Court of Justice in 2020. In its ruling, the EU court deemed the U.S. safeguards of Europeans’ data to be insufficient. Under EU law, information about Europeans can’t be sent overseas unless the country where it is being sent is deemed to give the same level of protection as the EU. Although the U.S. has never been able to provide the same assurances, both countries struck a special deal by which U.S. companies could opt into a program to apply EU privacy principles.

This new preliminary agreement may provide a solution to some of the issues raised by the EU court. The most complex one is how to provide EU citizens with effective means to challenge U.S. government surveillance of their data. One option raised in the negotiations was the adoption of new administrative appeals mechanisms, but it is yet to be seen if this new procedure would stand a legal challenge. Another option would be to change the U.S. surveillance laws, but this would require approval by Congress, and it would be more difficult to get.

This issue is of utmost importance for companies like Meta, which in a securities file earlier this year stated that if the two countries aren´t able to find a solution, the company may not be able to continue providing its Facebook and Instagram services in Europe. Meta’s inability to transfer data from the EU to U.S. comes from an order issued by the Irish privacy regulator (where Meta is headquartered in Europe) citing the court ruling that struck down the previous trans-Atlantic data deal. Therefore, other tech companies could in theory be subject to similar restrictions if national regulators across Europe adopt a similar approach as the Irish regulator.

Read more: Meta Warns of Facebook, Instagram Service Interruptions Over EU Data Rules

Biden is confident that this deal would normalize data flows between the countries. “This framework underscores our shared commitment to privacy, to data protection and to the rule of law” and would allow EU authorities “to once again authorize trans-Atlantic data flows that help facilitate $7.1 trillion in economic relations with the EU.”

This agreement comes on the same day that the U.S. and Europe struck another important deal to reduce the EU’s reliance on Russian fossil fuels. Under the new deal, the U.S. commits to provide the European Union with an additional 15 billion cubic meters of LNG this year. And looking ahead, this quantity may increase to 50 billion cubic meters of U.S. LNG until 2030.