Wicker Open to PS Solutions as Cantwell Calls for EU-US Tech Council

Ranking member Maria Cantwell, D-Wash., voiced support during a hearing for the EU’s tech council proposal, saying it could address issues like privacy, 5G, 6G and artificial intelligence. “We can probably get something figured out” on the commercial side for PS, she told us: It’s an opportunity for U.S. and EU leaders to set the stage for the rest of the world and push back against security involving China and Russia.

Testimony from FTC Commissioner Noah Phillips, International Trade Administration Deputy Assistant Secretary-Services James Sullivan, who led PS deliberations for the Commerce Department, and several others didn’t leave Wicker optimistic about a deal, he told the hearing. The testimony highlighted the complexity of the issue, he said.

Phillips regarded Schrems II (see 2012080002) as an impediment to cross-border data flows. The decision raises questions about standard contractual clauses (SCCs), creating uncertainty, the bulk of it shouldered by smaller companies, he said. Reaching a new agreement is a priority for this administration and will be for that of President-elect Joe Biden, he said. Phillips argued the U.S. has privacy protections as strong as domestic laws of many European allies, which regularly collaborate with the U.S. on intelligence collection. Sullivan highlighted the differences in U.S. and EU privacy regimes, noting that the U.S. takes a sectoral approach while the EU has one universal law.

The Senate Commerce Committee should think about longer-term solutions for intelligence-gathering tools and what guardrails are needed, said BSA|The Software Alliance CEO Victoria Espinel. Wicker acknowledged in his opening remarks the need to address the underlying issues that led to the PS invalidation. It should be a top priority for the Biden administration, said Cantwell, noting $1 trillion in U.S.-EU trade is at risk.

The U.S. has equivalent surveillance protections, argued Georgia Tech law professor Peter Swire, but the European Court of Justice disagreed, given objections to U.S. surveillance practices. Washington University in St. Louis law professor Neil Richards noted that Irish officials questioned the legitimacy of SCCs, which companies rely on heavily since Schrems II. Research suggests that U.S. national security practices afford just as many rights, if not more, for U.S. citizens compared with EU counterparts, said Phillips.

Brian Schatz, D-Hawaii, asked Sullivan about transition conversations. Current administration officials have met multiple times with the Biden transition team at Commerce and also prepared a transition memo about PS litigation and multilateral efforts, Sullivan said.

Marsha Blackburn, R-Tenn., asked if data localization will become the “new norm” if the two sides fail to reach an agreement. Sullivan defended past bilateral efforts in finding common ground with EU officials but said data localization is a “very significant concern.” Keeping EU data inside the region isn’t a viable solution, he said. Data localization would result in greatly increased costs for companies or the end of operation in the EU entirely, said Espinel. Phillips agreed with both assessments.

Richard Blumenthal, D-Conn., asked if federal privacy legislation would assist with negotiations between the two sides. Sullivan said it would help “atmospherically,” but it won’t address the national security concerns cited in the ECJ’s decision. Phillips agreed, while defending U.S. privacy enforcement as the best.

Majority Whip John Thune, R-S.D., asked about FTC enforcement since the ECJ invalidated the PS. Phillips noted the settlement with NTT Global Data Centers (see 2010290037). The agency will continue to enforce the rules against companies that don’t live up to their public commitments, said Phillips.

Wicker asked for information about EU lawsuits since the ECJ decision. Swire cited public reports about ongoing court proceedings against Facebook in Ireland and a lawsuit in Germany against Amazon. He said there are potentially other lawsuits in Germany.