The European Union (EU) approved the U.S.-EU Safe-Harbor Agreement in 2000. Since that time, Safe Harbor has allowed companies to transfer personal data from the EU to the United States without violating EU data protection laws. EU data protection laws permit transfers of personal data to countries deemed to lack adequate protections for personal data only when those transfers are governed by certain legal mechanisms. One of those mechanisms is Safe Harbor, which was negotiated, with stakeholder input, between EU and U.S. officials who recognized the need for cross-border data transfers despite the EU’s position that the United States does not provide adequate protection for the personal data of EU data subjects.

Under Safe Harbor, U.S. organizations certify to the U.S. Department of Commerce that they provide certain protections for personal data. Those protections are designed to ensure that organizations meet EU data protection requirements. Safe Harbor certifications are enforced by the Federal Trade Commission or the Department of Transportation as appropriate. Over four thousand organizations are currently listed on the U.S.-EU Safe Harbor list. These organizations rely on Safe Harbor to authorize transfers of personal data from the EU to the U.S. Recent events, however, have created uncertainty for Safe Harbor and the organizations that depend on it.

Early this year, EU parliamentarian Jan-Phillip Albrecht, who is charged with steering the European Commission’s proposed data protection reform package through the EU Parliament, released a report in which he recommended 350 amendments to the Commission’s proposal. Albrecht surprised many by recommending that the EU discontinue the Safe Harbor framework two years after enactment of the data protection reform.

Further signs of EU discontent over Safe Harbor came to light after the announcement of the Transatlantic Trade and Investment Partnership (TTIP) negotiations. Those negotiations are aimed at establishing a free trade agreement between the U.S. and the EU. Because of the substantial contribution that data transfers make to international trade, senior U.S. officials wanted cross-border data transfers to be included in TTIP negotiations. The Coalition for Privacy and Free Trade, launched by Hogan Lovells in March of this year, stated in comments to the United States Trade Representative that TTIP offers a unique “opportunity to progress the interoperability of data privacy frameworks in a way that endures.” But not all stakeholders felt that TTIP was an appropriate forum for addressing cross-border data transfers. Germany’s data protection commissioner, for example, blogged that the United States data protection framework is lacking and that the Safe Harbor “cannot compensate for these deficits.” 

Recent attention to the National Security Agency’s (NSA’s) surveillance operations have made things even tougher for Safe Harbor. The European Parliament has called on the European Commission to conduct a full review of Safe Harbor. Parliament’s resolution notes that some companies involved in NSA’s PRISM surveillance program are certified under Safe Harbor. Parliament claims that PRISM surveillance may have involved a “serious violation” of EU data protection laws, and that the Commission may therefore be obliged to reverse or suspend Safe Harbor. Germany’s data protection commissioners wrote a letter asking German Chancellor Merkel to recommend that the EU suspend Safe Harbor. EU Vice President Viviane Reding announced the European Commission’s plan to conduct a full review of Safe Harbor by the end of this year. Reding, who drafted the Commission’s proposed data reform package, called PRISM a “wake-up call” and said that Safe Harbor “may not be so safe after all.” These claims come a little more than one year after Reding, in a joint release with then U.S. Commerce Secretary John Bryson, reaffirmed the EU’s commitment to Safe Harbor “as a tool to promote transatlantic trade and economic growth.”

Criticisms of Safe Harbor and other mechanisms that allow data to be transferred from the EU to the United States have, in many instances, been blind to the nature of government surveillance in EU countries. As Hogan Lovells privacy lead Chris Wolf wrote in a recent Privacy Perspectives blog post, “[I]t is naïve to think that intelligence agencies in European countries do not utilize information collected from phone and Internet companies in their investigations.” And those countries often lack the judicial and legislative oversight protections incorporated into U.S. surveillance laws. Regardless of the relative strengths and weaknesses of the privacy protections in EU and U.S. surveillance laws, however, the outcry over U.S. government surveillance has apparently reenergized EU data protection reform efforts. That could spell trouble for Safe Harbor even though Safe Harbor facilitates substantial and valuable data transfers that have been undisturbed by government access.

Moreover, there have been no allegations that the FTC has failed to adequately address EU complaints of perceived Safe Harbor violations. Although the FTC does not publicize filed complaints, complainants may disclose their complaint and whether they have been resolved satisfactorily. In addition, there have been no allegations that the certification/dispute resolution bodies—operated by organizations such as TRUSTe and the BBB—are not working.

In spite of Safe Harbor’s success at facilitating cross-border transfers, the mechanism does appear to be in danger. Organizations that have certified under Safe Harbor should closely monitor the EU’s legislative process and the TTIP for indications about Safe Harbor’s future. And they should give careful thought to contingency plans for handling the personal data of EU data subjects. 


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