EU-US Commercial Data Transfer Pact Enters Into Force

The EU-US Privacy Shield will give businesses moving personal data across the Atlantic - from human resources information to people's browsing histories to hotel bookings - an easy way to do so without falling foul of tough EU data transferral rules.

The previous such framework, Safe Harbour, was struck down by the EU's top court in October on the grounds that it allowed US agents too much access to Europeans' data.

Revelations three years ago from former US intelligence contractor Edward Snowden of mass US surveillance practices caused political outrage in Europe and stoked mistrust of big US tech companies.

In the months that followed the EU ruling companies have had to rely on other more cumbersome mechanisms for legally transferring data to the United States.

The Privacy Shield will underpin over $250 billion (roughly Rs. 16,79,226 crores) of transatlantic trade in digital services annually.

Google and Microsoft said they would sign up to the Privacy Shield and would work with European data protection authorities in case of inquiries.

A person familiar with social network Facebook's thinking said the company had not yet decided whether to sign up.

"It's too early to say as we haven't seen the full text yet but like other companies we will be evaluating the text in the coming weeks," the person said.

The Privacy Shield seeks to strengthen the protection of Europeans whose data is moved to US servers by giving EU citizens greater means to seek redress in case of disputes, including through a new privacy ombudsman within the State Department who will deal with complaints from EU citizens about US spying.

However the framework also faces criticism from privacy advocates for not going far enough in protecting Europeans' data and is widely expected to be challenged in court.

Max Schrems, the Austrian law student who successfully challenged Safe Harbour, said the Privacy Shield was "little more than a little upgrade to Safe Harbour". However he added that he did not have plans to challenge it himself for the time being.

"We are confident the framework will withstand further scrutiny," Penny Pritzker, US Secretary of Commerce, told a news conference.

EU data protection authorities, who had demanded improvements to the Privacy Shield in April, said they were analysing the framework and would finalise a position by July 25.

© Thomson Reuters 2016