No new Safe Harbour agreement: Experts warn of "absolutely enormous" disruption to business as EU and US fail to strike data transfer deal before deadline

Clara Guibourg
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"The collapse of the free flow of data across the Atlantic would be a disaster" (Source: Getty)

As EU and US negotiators failed their mission to reach a new landmark Safe Harbour agreement before the deadline, experts are warning of “absolutely enormous” risks to business.

The deadline to strike a new data transfer regulation ran out yesterday, as talks reportedly hit a brick wall over EU citizens’ options in the event of a data privacy violation. The European Commission announced yesterday that the talks were continuing, with a spokesperson admitting they had been “constructive but difficult”.

But the difficulty in striking a new deal could already have major consequences, according to Phil Lee, data protection partner at law firm Fieldfisher, who warned that even if a new deal is reached soon “its reputation is already shot to pieces”.

“The disruption to transatlantic business is absolutely enormous,” he also said, adding:

If you're a US supplier trying to sell into Europe, the tone coming from European customers now is very much one of “Why should we trust you with our data?”.

The Safe Harbour agreement, which allows Europeans’ data to be sent across the Atlantic, was introduced 15 years ago but ruled invalid by the European Court of Justice last autumn.

Tech businesses have been struck especially hard by the ruling, said Mike Weston, chief exec of data science consultancy Profusion, who called the lack of agreement a “watershed moment for the global tech community”:

For tech businesses and consumers throughout the world, the collapse of the free flow of data across the Atlantic would be a disaster.

Costs will go up as companies increase data storage throughout Europe, smaller companies will find it much harder to grow globally, and consequently, innovation will be severely curtailed.

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