The thing that makes modern economies tick is data. Insight and information are the lifeblood of enterprise, both private and public. It is particularly the case for those companies operating on both sides of the Atlantic who rely on data transfers between the EU and the US in order to operate global services.
It is well known that Ireland hosts the European headquarters of many leading US technology companies. Nearly 1,000 US companies are based here, employing more than 200,000 people directly. But foreign direct investment flows both ways and Irish businesses are now also significantly invested in the United States.
That Irish investment illustrates the interconnectedness of the American and European economies. EU-US trade is worth over €1 trillion and supports 16 million jobs in businesses on both sides of the Atlantic.
Thousands of those businesses transfer data between the EU and the US every day. Transatlantic digital trade makes up more than half of Europe’s data flows and about half of US data flows globally. Some 90 per cent of EU-based firms transfer data outside Europe, often to multiple countries. But an agreement on that flow of data – and a framework and set of rules on how that data is handled – has still not been finalised. As a result, thousands of companies remain in legal limbo.
The framework must be agreed – and soon. Without it, business is hampered, growth is stymied and confidence is lessened
The framework that provided a stable legal footing for transatlantic data flows, known as the EU-US Privacy Shield, has yet to be fully replaced. The Shield was invalidated in 2020 – and nothing has taken its place. Work is now ongoing on its replacement, the transatlantic Data Privacy Framework, but progress is too slow.
The framework must be agreed – and soon.
Without it, business is hampered, growth is stymied and confidence is lessened. It will become impossible for businesses to share data legally across borders. This includes moving HR information from a subsidiary to a parent company, transferring health data for ground-breaking research, or simply being able to use the necessary software application for the tasks you need to do.
We know policymakers across the US and EU want to enable home-grown companies to flourish in whatever way they can, including by supporting transatlantic trade. At a recent meeting President Joe Biden and the President of the European Commission, Ursula von der Leyen, agreed that the EU and the US must “share the most comprehensive and dynamic economic relationship in the world”. While the progress made to date should be welcomed, building a new transatlantic data framework needs urgency to safeguard privacy and the needs of modern business, big and small, across our economies.
Crucial structural role
The importance of the international flow of data can hardly be overstated – it plays an invisible but crucial structural role in the delivery of products and services that EU citizens rely upon in day-to-day life. Businesses need the new EU-US deal to protect transatlantic data flows over the long term. Balancing privacy and security concerns while allowing data to continue to flow freely requires compromise and, just as crucially, time.
President Biden’s recent visit to Ireland was a timely reminder of the important role of the US in the peace process as well as the prosperity that has stemmed from strong US ties. The historic trip brings sharply into focus the prosperity that the Irish business model has delivered. It is a model of substance which benefits enormously from the mutually beneficial relationship enjoyed by Ireland and the US.
Ireland should use its influence in the EU and the US, an influence that is way beyond our country’s small size, to spur the Commission and US authorities into rapid action
Ireland has acted as a strategic gateway to Europe for US companies for over a century. In turn, Ireland provides US firms with a “home away from home” experience including a strong business environment and access to an EU market of more than 500 million people. Key attractions for inward investment include certainty in the Irish tax code, the stability of its political institutions and world-class talent.
[ Small firms warned of increasingly sophisticated cyber scamsOpens in new window ]
Ireland should use its influence in the EU and the US, an influence that is way beyond our country’s small size, to spur the Commission and US authorities into rapid action to conclude ongoing work to ensure a revised and resilient framework for EU-US data exchange, addressing privacy issues as well as the needs of modern digitalised business.
Considering the special bonds we share, solving this issue is more than just sensible economics, it is an opportunity to establish our strong digital economic alliance.
President Biden’s visit is a pertinent reminder of the social and economic investment made between Ireland and the US. Our two economies have embraced trade and internationalisation, to the benefit of the citizens of Ireland and the US. Safeguarding transatlantic data flows benefit us all.
Now is the time to resolve and ratify the political commitment to a new transatlantic data framework.
Danny McCoy is chief executive of Ibec.
