The EU-US Data Protection Umbrella Agreement concluded in December 2016 introduced high privacy safeguards for transatlantic law enforcement cooperation. It contains a comprehensive set of data protection rules that apply to all transatlantic exchanges between criminal law enforcement authorities. In this way, it also strengthens law enforcement cooperation by facilitating the exchange of information. It therefore meets the two-fold objective of working with our U.S. partners to combat serious crime and terrorism while advancing the level of protection of Europeans in line with their fundamental rights and the EU data protection rules.
On January 25, 2017, U.S. President Donald Trump signed an executive order entitled "Enhancing Public Safety" which states that U.S. privacy protections will not be extended beyond US citizens or residents:
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Agencies shall, to the extent consistent with applicable law, ensure that their privacy policies exclude persons who are not United States citizens or lawful permanent residents from the protections of the Privacy Act regarding personally identifiable information.[12]
The Privacy Shield has been challenged legally by privacy groups.[19][20] Initially, it was not clear whether the cases would be considered admissible.[21][22] However, by February 2017 the future of the Privacy Shield was contested. One consultant, Matt Allison, predicted that "The EU's citizen-driven, regulated model will swiftly come into conflict with the market forces of the US and the UK."[23] Allison summarized a new paper in which the European Commission lays out its plans for adequacy decisions and global strategy.[24]
On 25 March 2022 the US and EU announced that a new data transfer agreement had been reached.[5] The new framework, called the Trans-Atlantic Data Privacy Framework, would allow EU citizens to pursue data privacy violations through a new "Data Protection Review Court".[5][30] On 7 October 2022 President Biden signed an executive order to implement the European Union-U.S. data transfer framework, which adopts new American intelligence gathering privacy safeguards.[31][32]
U.S. companies will be able to certify their participation in the Data Privacy Framework by committing to comply with a detailed set of privacy obligations. According to the U.S. Department of Commerce, which is charged with administering and monitoring the Data Privacy Framework, the privacy principles and the process to self-certify and recertify annually under this new framework will remain substantively the same as those under the EU-U.S. Privacy Shield Framework.
Teams should build resiliency to privacy change, focusing on controls providing the right level of protection for personal information in alignment with risk appetite while maintaining flexibility to support the data needs of the organization.
However, while the GDPR applies for EU countries, US-based global companies should also consider local privacy regulations, such as the California Consumer Privacy Act (CCPA). This can sometimes lead to additional complexities and even conflict.
This Framework will reestablish an important legal mechanism for transfers of EU personal data to the United States. The United States has committed to implement new safeguards to ensure that signals intelligence activities are necessary and proportionate in the pursuit of defined national security objectives, which will ensure the privacy of EU personal data and to create a new mechanism for EU individuals to seek redress if they believe they are unlawfully targeted by signals intelligence activities. This deal in principle reflects the strength of the enduring U.S.-EU relationship, as we continue to deepen our partnership based on our shared democratic values.
The new Trans-Atlantic Data Privacy Framework underscores our shared commitment to privacy, data protection, the rule of law, and our collective security as well as our mutual recognition of the importance of trans-Atlantic data flows to our respective citizens, economies, and societies. Data flows are critical to the trans-Atlantic economic relationship and for all companies large and small across all sectors of the economy. In fact, more data flows between the United States and Europe than anywhere else in the world, enabling the $7.1 trillion U.S.-EU economic relationship.
While affordable, Privacy Shield was not necessarily easy or cheap. It was much more than just a box-ticking exercise, as many firms invested considerable money, time, and effort to build new data protection policies and procedures as part of self-certification (and to maintaining compliance). For example, identifying and renegotiating contracts with outside vendors (to embed data handling requirements) involves considerable complexity and administrative costs. Unless firms were already subject to specific U.S. data privacy laws (such as the U.S. Health Insurance Portability and Accountability Act), they may not have had to do an inventory of their data and build out their data protection practices for EU personal data. Firms also had to provide a readily available independent recourse mechanism to hear individual complaints (at no cost to the individual).
Privacy Shield had a significant impact on the data privacy practices of many firms involved in transatlantic trade and innovation. It led many new, especially smaller, firms to allocate more resources and attention to data compliance, which left them better positioned to meet future data compliance requirements in Europe and elsewhere. Thus, the EU-U.S. Privacy Shield established a higher baseline for transatlantic data flows. EU and U.S. policymakers should recognize that this was a good-faith effort by the many firms involved in Privacy Shield, and a positive overall outcome in terms of improved commercial data privacy and digital trade. This is the progress they should aim to build on.
An interoperable privacy mechanism is critical to the transatlantic economic relationship. Privacy Shield, and Safe Harbor before it, made the two different approaches to personal data protections compatible. Although both U.S. and EU authorities have indicated that discussions are underway to explore the potential for a new framework to serve the same purpose as Safe Harbor and Privacy Shield, it seems firms that engage in transatlantic data flows will not have a direct substitute for the foreseeable future.[37] This is unfortunate because complex firm-level compliance requirements are a poor substitute for international agreements that embed shared data protection principles and processes alongside a recognition of the value of free data flows.
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On July 16, 2020, the Court of Justice of the European Union (CJEU) struck down the EU-U.S. Privacy Shield as a valid mechanism for transferring personal data from the European Economic Area (EEA) to the United States (Schrems II). The European Commission Standard Contractual Clauses (SCCs) for data transfers remain valid but are subject to increased due diligence on the part of data exporters to ensure that the privacy laws of the importing country are adequate. Below, we discuss the background to Schrems II, the judgment itself and key takeaways.
The EU and the U.S. subsequently negotiated and implemented the Privacy Shield as the data transfer mechanism to replace the Safe Harbor framework. While the Privacy Shield sought to address the issues the CJEU had raised with the Safe Harbor, the basic mechanism remained the same; companies could self-certify adherence to various privacy principles and then transfer data from the EEA to the U.S. Over 5,000 U.S. companies took advantage of the Privacy Shield.
Privacy Shield was recently replaced by the Data Privacy Framework Program, a mechanism for legally transferring personal data from the European Union, the United Kingdom (and Gibraltar), Switzerland, or other participating countries to the United States. Designed by the U.S. Department of Commerce to support transatlantic commerce in coordination with the European Commission, these mechanisms promote greater transparency around international data processing and enable U.S. businesses to demonstrate that their privacy practices meet data protection requirements such as GDPR, including enhanced protections for consumers. Privacy Shield was officially replaced by the Data Privacy Framework Program on July 2023.
The Data Privacy Framework Program helps U.S. businesses receive and process personal data from the European Union, the United Kingdom (and Gibraltar), Switzerland, or other participating countries after self-certifying their adherence to the protections set out in the program Principles. Your public self-certification with the U.S. Department of Commerce will ensure that European organizations and consumers know your business provides enhanced privacy protection when:
US-based organizations that self-certified their commitment to comply with the Privacy Shield must comply with the DPF principles, including by updating their privacy policies by October 10, 2023. Those organizations do not need to make a separate, initial self-certification submission to participate in the DPF and may begin relying immediately on the DPF.
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