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Each year, eight trillion dollars is exchanged through e-commerce. That’s right … eight trillion. This number shows that the Internet is a significant channel for commerce, which is facilitated by strong privacy and trade policies. As the European Union (EU) works to revamp its  data protection laws and the United Sates (US) prepares to negotiate a trade agreement with the EU, many wonder how the interplay of differing privacy regimes will impact international trade. 

Last week, Commissioner Julie Brill of the Federal Trade Commission addressed the Mentor Group Forum for EU-US Legal Economic Affairs. This forum brings together Supreme Court Justices, European Union Commissioners and corporate Chief Legal Officers on a biannual basis to discuss tangible legal-economic developments between the EU and US. 

Brill’s speech, which focused on the United States’ privacy regime, comes in the midst of Europe’s major overhaul of its privacy framework. This effort kicked off last year after European Union Justice Commissioner Viviane Redding proposed a comprehensive reform to unify the EU’s existing data protection laws into a single law across all EU member states. The new law will apply to companies that operate in the EU, including U.S. companies that engage in the movement of data across borders.

Given the impact the EU’s potential data regulation would have on U.S. entities, Brill took the opportunity to note important similarities between the EU and US in rethinking privacy in the digital age but also highlighted key implementation differences.

One major difference is the EU’s approach to cross-border data transfers, which the Commissioner rightly characterized as “a more restrictive approach.” Rather than evaluating an entity’ privacy policy, the EU often assesses whether a foreign nation meets an “adequate” level of privacy protection. Brill suggested that interoperability between the two regimes could be achieved through a more flexible approach to cross border data flows and could ultimately strengthen privacy protection, promote innovation, and facilitate international trade.

As the EU moves forward in finalizing its new privacy law, implications for the upcoming U.S. Trans-Atlantic Trade and Investment Partnership with Europe should be considered. Could the EU’s updated privacy regime present a trade barrier?

The Internet Association supports Commissioner Brill’s view on international data flows. Today, the Internet continues to revolutionize innovation, commerce, and trade. Strong trade policies that promote the free flow of information are critical to the continued growth of the Internet as a gateway to new markets for goods and services.