UNITED STATES COMMERCE Secretary Wilbur Ross has warned that Europe and the US face dire economic consequences if the issues thrown up by the Schrems ruling are not resolved.
The billionaire global financier, whose private equity fund held a 5.5% stake in Bank of Ireland until 2014, was speaking this afternoon via video link at Zoom event organised by Business and Finance Media.
In July, a decision by the European Court of Justice invalidated a legal mechanism called Privacy Shield, a data protection agreement between the EU and the US.
The ruling was made following a case taken by Austrian privacy lawyer Max Schrems, who took the case to highlight the gulf between European data protection laws and American rules that allow tech companies to hand over European user data to US government spying programmes.
The case was first brought to the Irish High Court after Schrems complained to the Irish Data Protection Commissioner about Facebook’s use of standard contractual clauses (SCCs) to transfer personal data to the US.
In his opening remarks today, Ross — who has served in US President Donald Trump’s Cabinet since 2016 — said that the US remains “deeply concerned” by July’s ECJ ruling.
He said the judgment “has complicated the free flow of data that undergirds most innovative relationships between the United States and Europe.”
“This ruling has negative implications for the viability of using SCCs, binding corporate rules, and other mechanisms for EU-US data transfers,” which “underpin our $7.1 trillion transatlantic economic relationship”, Ross said this afternoon.
“If EU and US companies continue to face legal burdens and uncertainty while transferring data across the Atlantic, the United States and Europe will face severe economic consequences.”
In September, the Trump administration published a white paper on the issue.
Its goal was to help US companies make the legal argument that they can transfer personal data from the EU to America in compliance with EU law.
However, its authors — Ross’s Commerce Department, the US Justice Department and the Office of the Director of National Intelligence — warned that it does not “eliminate the urgent need for clarity from European authorities or the onerous compliance burdens generated” by the Schrems decision.
This afternoon, Ross said the Trump administration was committed to working with European policymakers to resolve those issues.
Ross also said that his department would “continue to make resources available to Ireland’s business and government” with a view to “deepening bilateral economic ties”.
Butter tariffs
Ross’s comments were followed by a roundtable discusssion on the future of Irish-American economic relations between Finance Minister Paschal Donohoe; US congressman Richard Neal; IBEC chief executive Danny McCoy and John Jordan, chief executive of Kerrygold-maker Ornua.
Jordan said that tariffs imposed by the Trump administration on $7.5 billion of European imports to the US last year mean that his company is paying an extra “$60 million a year in tax to get Kerrygold into the United States”.
“One of the products that got hit with tariffs was butter coming from Europe — a 25% additional tariff on butter,” he said.
“Ornua exports 90% of the butter coming from Europe into the US. So it’s not a tariff that’s penalising Europe. It’s a tariff is penalising Ornua, and ultimately penalising Irish farmers.”
Congressman Neal, chairman of the United States House Ways and Means Committee, said that one of the biggest challenges in the US is that the idea of free trade “does not have the popularity that it once had”.
This is, he said, “despite the fact that so much of our history is based upon successful trade treaties”.
“The Democrats had been the original party of free trade and they became much more protectionist as the years went on largely because we’re very much dependent — for good reason —on labour.
“The problem for us then became that it was very difficult to put together any sort of a trade accord, and many of the workers who previously had found comfort in our positions, they began to migrate to the Republican party,” he said.
President Trump, Neal explained, “figured out the politics and the emotions that were involved. He took a very hard line on trade and blamed trade for all of the ills that confronted America when there was little evidence to support it.”
Neal said that he remained hopeful that the US economy will rebound from the pandemic and that a “broad stimulus” package can be agreed by politicians after today’s election.
“So on Wednesday morning, I hope we’ll we’ll wake up and say, ‘we’ve had another election and, as always, we’ve survived it,’” he said.
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