(Bloomberg) -- New York Democratic Senator Chuck Schumer said he is concerned that European negotiators working to replace a trans-Atlantic data-sharing pact may be trying to bar U.S. technology companies from operating in Europe.
Negotiators from the U.S. and the European Union are racing to meet a Jan. 31 deadline to find a replacement for the Safe Harbor agreement that permits user data from companies like Facebook Inc. to be transferred to the U.S. The Safe Harbor pact was struck down last year by the EU’s highest court.
"I am worried that the Europeans are using -- that their real motivation is to keep our companies out because they’re so superior to the European companies," Schumer, the likely successor to Senate Democratic Leader Harry Reid, said in an interview Wednesday.
His comments come ahead of a Thursday meeting of the Senate Judiciary Committee, where Schumer has a seat. The panel is scheduled to address a bill, H.R. 1428, that would grant European citizens the same data privacy protections as U.S. citizens.
Companies such as Microsoft Corp., Yahoo! Inc. and Google Inc. sent letters to Senate leaders in June supporting similar legislation that would permit certain foreigners to sue the U.S. government for privacy violations when Internet and other communications are improperly used by law enforcement. U.S. citizens already have that right.
In October, the EU struck down the Safe Harbor pact provisions due to concerns about a lack of privacy safeguards for EU citizens when U.S.-based companies process personal data on customers, such as billing information or the content of messages. If no agreement is reached on a replacement, companies might face enforcement actions -- such as fines -- for transferring the data of EU users.
The legislation is important to negotiations between U.S. and the EU over how to govern the transfer of commercial electronic data, said Josh Kallmer, senior vice president for global policy at the Information Technology Industrial Council, a trade group that represents technology companies including Apple Inc. and Microsoft.
"It’s an important confidence-building tool and an expression of commitment to the trans-Atlantic relationship," Kallmer said in a phone interview Wednesday. Still, if the Senate doesn’t pass the bill before the Jan. 31 deadline to replace Safe Harbor, it isn’t likely to tank the agreement, he said.
"I wouldn’t necessarily draw a one-to-one connection to it -- it’s an important signal either way, though," he said.
John Cornyn of Texas, the Senate’s second-ranking Republican, told reporters Wednesday he wasn’t sure how quickly the Senate would move on the legislation.
The bill is important for "restoring trust in trans- Atlantic data flows," said Christian Wigand, a spokesman for the European Commission, the Brussels-based EU regulator.
Wigand suggested it is still possible that the EU and U.S. will reach an agreement on how to replace the Safe Harbor agreement within the week. "Intense negotiations are still ongoing," he said.
"The sense of urgency of finding a sustainable solution is shared by both sides," Wigand said. "There has been some movement on the U.S. side, which is welcome, but we need further clarification on transparency and effective oversight issues."
If negotiators are unable to come to an agreement, EU regulators might subject companies to fines or impede their ability to move data, said the Information Technology Industrial Council’s Kallmer.
"It could have incredibly serious effects for many companies, and existential effects for some," he said. He said he didn’t share Schumer’s concern that the whole process might be aiming to make it tough for American companies to operate in Europe.
"Looking at things through a national lens is not one of our first reactions," he said. "Everybody will be significantly impacted by a failure to get this right."
--With assistance from Chris Strohm and Stephanie Bodoni.
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