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The new US Executive Order for transatlantic data flows: where does that leave the UK?

Businesses were pleased by President Biden’s Executive Order proposing new commitments for EU-US data flows. While encouraging for future cross-Atlantic digital trade, decision-makers must prioritise turning this long-awaited deal into a reality.

The Order addresses the legal concerns raised in the Court of Justice of the European Union (CJEU) decision in July 2020 which invalidated the data adequacy agreement (known as Privacy Shield) relied on by many organisations transferring personal data between the EU and US.

This includes new safeguards for US Intelligence Services' access and use of personal data, redress mechanisms for individuals in such circumstances, as well as processes to review the Intelligence Community's compliance with the new requirements. 

Although this marks a significant step in reaching a new data transfers agreement, there is still a lengthy process ahead for the proposal to be ratified by the European Commission, which could take anywhere as up to six months to complete. The new agreement will also have to stand the test of scrutiny from privacy and civil liberties groups which could trigger a new legal review by the CJEU.

A fragmented landscape

Since the invalidation of the Privacy Shield, businesses have operated under a period of persistent uncertainty while trying to transfer personal data between the EU and US. Alternative transfer mechanisms such as standard contractual clauses (SCCs) have proven unreliable and inaccessible for organisations of all sizes. 

This has a direct impact on businesses seeking to innovate, enter new markets, offer new products to consumers, or deliver basic businesses services. By the US Chamber of Commerce’s own estimation, the data transfer relationship between the US and EU is worth around $7.1 trillion. In fact, global data flows now contribute more to global growth than global trade in goods.

While this agreement provides firm reassurance to the hundreds of businesses relying on EU-US data flows, it is long-awaited and has ultimately come at a cost to consumers and businesses trying to innovate. It has also led to delays in the UK’s own plans to reach a data adequacy agreement with the US.

The national security tensions underpinning EU-US data transfers sits at the centre of growing complexities on how personal data can flow across borders. As we see increasing fragmentation between countries and their approaches to data protection, businesses are forced to navigate complicated and often overlapping legal requirements.

This opens up questions as to whether new frameworks are needed to resolve these tensions and what role the UK could play in shaping these solutions.

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