Category: Transpacific Trade Partnership

Transborder Data Flows

Available in Spanish. Kindly translated by Daniel Urbina

Early in October, Europe’s highest court invalidated the 15-year-old “safe harbor” – an international agreement that the European Union had negotiated with the United States to loosen the EU’s Data Protection Directive of 1995[1] so that it would allow companies to transfer personal information in digital form from the European Union to the United States.[2]  Is the European Court’s judgment a fundamental change in networking policy – a full stop – or merely a comma?

This is actually a longstanding structural conflict that has reignited. Its beginnings go back nearly half a century – when transborder flows of computer data [TDF] threatened to become a point of sharp conflict between the US, Europe, and often newly independent countries of the then-Third World.

By the mid-1970s, TDF was simultaneously controversial and – for U.S. big business and military agencies – irreplaceable. In 1981, Herbert I. Schiller showed, a few thousand large corporations possessing foreign direct investments outside the United States and (two-thirds of them, anyway) headquartered within the U.S. – relied on “a continuously swelling volume of data flows circulating inside [their] corporate business structures across national boundaries.”[3] Based in all economic sectors, these companies used early computer communications networks to transmit data concerning such things as “raw material stocks, production schedules, quality control, personnel records, tax and legal information, currency transactions, profit repatriation, and investment decisions.” As Schiller underlined, TDF helped to enable the largest corporations both “to transact their global business and further integrate the internationalization of capital.”[4]

A second source of TDF was the U.S. military and its allies. “The ability of American companies to operate on a global scale and enjoy the benefits of worldwide resource and market exploitation,” Schiller explained, “would be unimaginable without the full backup of a concentrated military power, ready for instantaneous deployment and intervention.”[5] Military and intelligence agencies depended on networked TDF to operate bases around the world; to implement attacks; and to conduct increasingly widespread surveillance.

There existed no definitive inventory of TDF; even partial views were highly inexact, for  the data that streamed across jurisdictions remained shielded. How much data was being sent over the private telecommunications circuits that carried most of it?  What portion of TDF was made up of operational and administrative business data? What part of the total was comprised of personally identifiable information?  What were the companies doing with all of “their” data? States did not deign to find out. The absence of meaningful public documentation bespoke an underlying power imbalance. Big companies successfully insisted that policymakers should not peer too closely at TDF, out of concern that such investigation might lead to calls for greater accountability – which in turn might constrain the operations of their profit-projects.

TDF not only conferred power on corporate capital but also, paradoxically, established a new point of vulnerability for it.  Interruptions and oversight requirements both endangered the political economy that was being reconstructed around computer-communications. Physical threats emerged when an earthquake or even the drag of a ship’s anchor engendered a break in the submarine cables over which data coursed; however, far more menacing for big business were political threats, emerging in initiatives that aimed to restrict the content of TDF, or charge according to the volume of data sent, or oversee TDF in the interests of self-government. Read more