Congressman Nadler Statement on Subcommittee Hearing into Cross-Border Data Flows and the Digital Economy

Nov 3, 2015 Issues: Jobs, Labor and the Economy

Washington D.C. – Today, Congressman Jerrold Nadler (NY-10), Ranking Member of the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet, presided over a hearing on international data flows and the promotion of digital trade in the 21st century. During the hearing, Rep. Nadler discussed the importance of cross-border data flows to global economic growth and called for careful examination of any new regulations.

“The ability to easily transmit data, at low cost, has spurred tremendous innovation and significant economic growth, turning the global economy largely into a digital economy. Supporting so much economic activity, we must carefully examine any restrictions that impede the free flow of data. To ensure that businesses have the flexibility they need, while consumers have the protections they deserve, I believe the United States must work with its partners in the global community to set clear standards governing cross-border data flows." 

Below is the full statement as prepared from Congressman Nadler:

"Today’s global economy is largely a digital economy.  Thanks to the Internet, massive amounts of data can be sent across the globe in an instant, connecting businesses and consumers alike.  The ability to easily transmit data, at low cost, throughout the world has spurred tremendous innovation and fostered significant economic growth.  But, various countries have erected barriers to the free flow of data across borders.

"Some of these restrictions are intended to stifle dissent and free speech, some are purely protectionist in nature, while some are for other policy reasons like protecting the privacy of a country’s citizens.  Today’s hearing presents a good opportunity to examine what rules should govern the international flow of data, and what role the United States can play in establishing and enforcing these policies.

"When we talk about cross-border data flow, it could be something as simple as someone in the New York office of a multinational bank emailing a colleague in the bank’s Hong Kong office.  It could also be someone sitting in Paris accessing their Facebook account, or logging onto iTunes and downloading movies and songs contained on American servers.

"But, it also has much more complex applications.  Cloud computing allows businesses and consumers to store data in servers that could be located anywhere in the world.  And, some global businesses gather data across their world-wide operations to a centralized location where it can be analyzed to better streamline their supply chain or improve service to their customers.

"Companies of every shape and size, and across nearly every industry, rely on data that crosses international borders at some point along its journey.  That’s why it is important that we carefully examine any restrictions that impede the free flow of data.

"Some restrictions, like those that block access to social media or filter out political dissent, are clearly improper and threaten the human rights of those countries’ citizens.  America should continue to lead the world in opposing repressive regimes that stifle the freedom of their people.

"Other restrictions, like those requiring a company to process data domestically, or to locate certain infrastructure in-country, are often intended to bolster domestic companies.  Many of these restrictions can be removed in the context of free trade agreements.  But, I have been a persistent critic of such agreements, in part because of their devastating impact on American jobs, and we should tread carefully in the digital realm before we make some of the same mistakes we have made with physical goods.

"More complicated to address are limitations on data flow that countries impose to advance other policy goals, like privacy protection.  Finding the right balance between protecting the needs of American businesses, respecting the legitimate policies of other nations, and ensuring that other countries respect ours is no easy task.

"That was made clear by the recent decision by the Court of Justice of the European Union to invalidate the U.S.-E.U. Safe Harbor Framework.  This important agreement enabled more than 4,000 American businesses to transfer the personal data of E.U. citizens to the United States if the companies certified that they would comply with certain “adequacy” requirements to protect personal privacy.  However, the Court determined, in part, that because the safe harbor scheme only applies to companies, and not public authorities, there was not adequate protection for E.U. citizens from U.S. surveillance activities, and the entire agreement was invalidated.  The Court also found that E.U. citizens do not have sufficient remedies under U.S. law if their privacy rights after a transfer are violated.

"The Gentleman from Wisconsin, Mr. Sensenbrenner, and the distinguished Ranking Member of the Full Committee, Mr. Conyers, deserve great credit for working to address the second issue by drafting the Judicial Redress Act, which will provide important privacy protections for E.U. citizens under U.S. law.  The Judicial Redress Act has already passed the House, and I hope the Senate will take it up shortly.  I also appreciate the U.S. Department of Commerce, which is hard at work negotiating a new Safe Harbor agreement.  

"I hope a new agreement is reached soon, but I also hope that Congress will view this incident as a wake-up call.  The USA Freedom Act took an important step in curtailing surveillance activities, but we should go much further in strengthening our privacy protections.  It should not take a European court to prod us into protecting our own citizens.
 
To ensure that businesses have the flexibility they need, while consumers have the protections they deserve, the United States must work with its partners in the global community to set clear standards governing cross-border data flow.  I look forward to discussing what these standards ought to be with our esteemed panel of witnesses today, and I yield back the balance of my time."

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