Europe goes protectionist on data, ends Safe Harbor system

The European Union has this fantasyland idea that regulation can fix the privacy problem; or at least with respect to private corporations. EU Directive 95/46/EC on Data Protection, which took effect in 1998, prevents private businesses from sending data outside of the EU. The massive regulatory state does not have to comply with any of its privacy protections. However international commerce is greatly threatened by the directive.

Cooler heads prevailed for a long time, and a ‘Safe Harbor’ program was put in place to allow Internet commerce to continue between the US and the EU. Until now, as the European Court of Justice has invalidated the Safe Harbor program.

European Parliament Strasbourg

The Safe Harbor program was more than a piece of paper. It did have a number of requirements, and the FTC did enforce the program. Program participants include companies that serve huge numbers of Europeans like Google, Microsoft, Red Hat, and Apple.

So what now? In the immediate term, every American company that tries to do business in Europe is at risk of being slammed with fines as they negotiate every EU member state’s own implementations of the data security directive. It could become impractical to do business in Europe for smaller American businesses, and larger ones who can’t afford to pull out could be subjective to years of legal problems, as anti-American prosecutors pounce.

When Americans are kept from selling to Europeans, then everyone loses out. Europeans have less choice. Americans have a smaller target market. They can’t buy what they want, and we can’t grow, creating new jobs, new investment, and new opportunity. The loss of the Safe Harbor is a roadblock in front of what has been a huge area of economic growth: online commerce and services.

The Senate and House are raising the alarm about this, while the administration’s site for the program is silent. Ultimately it’s up to President Obama to do some diplomacy and instead of just wringing his hands.

It really is remarkable just how badly relations with the world have soured under Barack Obama, eh?

Photo by Cédric Puisney on flickr

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