The United States and the European Union are on course for a hugely disruptive collision next summer, as the newly minted Privacy Shield framework comes under its first annual review. At stake is the free flow of data that undergirds the largest bilateral trade relationship in the world. With slightly more than half a year to go, it is still not clear whether the political will exists on either side to bridge the gap in trust that threatens the agreement.
Privacy Shield, which went live in August of 2016, provides a means for American businesses to self-certify compliance with EU standards for international transfers of personal data. This sort of mechanism is critical for the daily operations of tech companies like Google and Amazon, who serve millions of customers dispersed around the world.
Privacy Shield’s predecessor, the so-called Safe Harbor framework, played a similar role from 2000 to 2015, but was recently declared invalid by the European Court of Justice (ECJ). The ECJ’s ruling centrally found that, in light of U.S. mass surveillance practices, Safe Harbor failed to adequately uphold EU citizens’ rights to privacy.
The decision left many tech companies scrambling to find alternate routes for data processing in the interim before Washington and Brussels could cobble together a new stopgap. Thus far, only 1,700 companies have registered under Privacy Shield, compared to Safe Harbor’s 4,000. While Privacy Shield has, to a degree, allowed for a return to ‘business as usual,’ organizations are rightfully hesitant to embrace it as a long term solution.
Today, we appear no closer to finding common ground on some of the most fundamental issues of data stewardship. Two separate challenges have already been lodged against Privacy Shield concerning the reach of American surveillance activity. In the same vein, watchdogs in Europe are also looking to contest the validity of Binding Corporate Rules and Model Clauses – two important measures among a very small set of alternatives to the self-certification regime.
To ensure the framework’s continued viability, leaders on both sides of the Atlantic must reassess their stances on the issue in the coming months.
This aggressive approach, which has importantly served to reaffirm the inalienable right to privacy has also given voice to a chorus of diverging viewpoints. Until debate among the many stakeholders can be settled, tech companies are left aiming at a moving target, as what constitutes proper conduct is redefined over and over in court. Moving forward policymakers should be mindful of the practical realities of compliance and avoid bias in their scrutiny of American businesses.
To the west, the onus will be on President-elect Trump and his administration to convince EU regulators that “the commitment of the U.S. government is real.”  Sadly, his proposed security platform – which has at times included Muslim registries, interrogative torture, and the military targeting of civilians – does not exactly signal an intent to tread lightly upon civil liberties. Though he has shown some willingness to soften his positions since the election, it may be too late, even with a full about-face, to salvage his credibility in the eyes of privacy advocates in Europe.
There is a sliver of hope that a pro-business Congress led by the Republicans might prioritize the preservation of Privacy Shield. That said, legislative movement to rein in government surveillance – an essential precondition for EU lawmakers – will be quite tough. A 2015 vote to renew sections of the Patriot Act revealed deep divisions on the issue within the party that persist today.
The outcome of Privacy Shield’s first annual evaluation – whatever it may be – will affect many dimensions of the EU-U.S. partnership. As a template for cross-border data transfers, its fate weighs heavily on the minds of banks, insurers, and telecoms, who want desperately to see the model extended to their industries. Should it be sustained, many will surely be frustrated by the perceived concession to civil rights violations. And with dwindling alternatives to use, its annulment would be a huge blow to innovators from Silicon Valley to Berlin, for whom data is the lifeblood of a transatlantic trade flow worth $2.7 billion a day.  While a year two for Privacy Shield remains uncertain, it is clear that a great deal of work remains to be done in order to solidify the foundations for privacy in the digital age.
 Swift, Mike, and Vesela Gladicheva. “Dawn of Trump Era Leaves European Officials Questioning US’s Privacy Shield Commitment.” MLex, 9 Nov. 2016.
 Gladicheva, Vesela. “WhatsApp privacy update prompts latest in ‘cycle’ of regulatory scrutiny, Facebook exec says.” MLex, 10 Nov. 2016
 Quote by: Isabelle Falque-Pierrotin, chairwoman of the EC’s Article 29 Working Party. Swift, Mike, and Vesela Gladicheva. “Dawn of Trump Era Leaves European Officials Questioning US’s Privacy Shield Commitment.” MLex, 9 Nov. 2016
 “European Union.” United States Trade Representative. https://ustr.gov/countries-regions/europe-middle-east/europe/european-union.