What’s Going On With the EU-US Privacy Shield Agreement?
The Latest With Privacy Shield
On July 16, the Court of Justice for the European Union made a landmark decision to invalidate the EU-US Privacy Shield arrangement for international data transfers. Prior to this announcement, Privacy Shield was one of several mechanisms for meeting GDPR data protection requirements for data leaving the EU for the US. The Court’s decision impacts the thousands of organizations participating in and relying on Privacy Shield to facilitate international commerce.
Privacy advocates and the Court’s real contention was not with Privacy Shield itself, but with the nature of US federal surveillance abilities and practices. The Court’s statement explains, “In the view of the Court, the limitations on the protection of personal data arising from the domestic law of the United States on the access and use by US public authorities of such data transferred from the EU to that third country…not circumscribed in a way that satisfies requirements that are essentially equivalent to those required under EU law, by the principle of proportionality, in so far as the surveillance programmes based on those provisions are not limited to what is strictly necessary.”
How Does This Impact Your Business Today?
First, data transfers between the EU and the US will still be permitted, but the invalidation of the EU-US Privacy Shield agreement will require US businesses receiving EU data to find an alternative compliance solution. Specifically, US organizations will need to use either the standard contract clauses or binding corporate rules to satisfy GDPR’s international data transfer requirements.
Second, just because Privacy Shield no longer satisfies GDPR does not mean that you can stop following Privacy Shield requirements. The Federal Trade Commission commented, “We continue to expect companies to comply with their ongoing obligations with respect to transfers made under the Privacy Shield Framework. We also encourage companies to continue to follow robust privacy principles, such as those underlying the Privacy Shield Framework, and to review their privacy policies to ensure they describe their privacy practices accurately, including with regard to international data transfers.”
Third, now is the time to review your contracts and requirements of your processors or sub-processors. What is their plan to replace Privacy Shield? How will their plan impact you?
What Will Happen to EU-US Data Transfers in the Future?
The bottom line is that we are operating in a period of uncertainty. Fortunately, we now have a baseline for privacy best practices, but it gets complex when then there are specific regulations and requirements for your business. That is why it’s crucial for your organization to continue to meet the baseline, but also assign responsibility to someone internally to monitor new developments.
In the future, the US may create a Privacy Shield replacement. U.S. Secretary of Commerce Wilbur Ross stated, “While the Department of Commerce is deeply disappointed that the court appears to have invalidated the European Commission’s adequacy decision underlying the EU-US Privacy Shield, we are still studying the decision to fully understand its practical impacts. We have been and will remain in close contact with the European Commission and European Data Protection Board on this matter and hope to be able to limit the negative consequences to the $7.1 trillion transatlantic economic relationship that is so vital to our respective citizens, companies, and governments. Data flows are essential not just to tech companies—but to businesses of all sizes in every sector.”
#ECJ: the Decision on the adequacy of the protection provided by the EU-US Data Protection Shield is invalidated, but @EU_Commission Decision on standard contractual clauses for the transfer of personal data to processors established in third countries is valid #Facebook #Schrems pic.twitter.com/BgxGAvuq3T
— EU Court of Justice (@EUCourtPress) July 16, 2020
KirkpatrickPrice’s team of privacy experts will be closely watching new developments with Privacy Shield and other data privacy regulations. If you have concerns or questions about this update’s implication for your business or if you need GDPR compliance solutions, let’s talk.