The globalization of privacy: implications of recent changes in Europe

American Journal of Economics and Sociology, The,  July, 1993  by Priscilla M. Regan

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Because exchanges of personal information are integral to a global economic system, variations in national laws generated regional and international interest. The importance of TDF is, perhaps, best captured in an often-quoted statement of France's Magistrate of Justice at an Organisation for Economic Cooperation and Development (OECD) symposium in 1977:

Information is power, and economic information is economic power. Information has an economic value and the ability to store and process certain types of data may well give one country political and technological advantage over other countries. This in turn may lead to a loss of national sovereignty through supranational data flows.(9)

While Europeans have been more likely to emphasize privacy and national sovereignty aspects of TDF (the ability to control information reaching one's citizens and about one's citizens), the United States has emphasized economic implications and the negative effect national laws could have on the development of global communication and economic systems. This 1977 statement of Senator George McGovern, then chairman of the Subcommittee of International Operations of the Senate Committee on Foreign Relations, is illustrative of the US position:

One way to "attack" a nation such as the United States which depends heavily on information and communications is to restrain the flow of information--cutting off contact between the headquarters and the overseas branches of a multinational firm; taxing telecommunications crossing borders; building information walls around a nation.(10)

Fragmented responsibility for TDF within the executive and Congress(11) has resulted in a vacuum in federal leadership which was filled largely by multinational corporations who view data protection laws as restricting their operations and increasing their costs.

The implications of national data protection laws on TDF have provoked heated debate in a number of regional and international forums, where discussion has been framed primarily in terms of the "free flow of information" versus trade restrictions.(12) The United States champions "free flow" and regards data protection laws as erecting non-tariff trade barriers that protect national industries and communications providers. As was pointed out in a 1984 article in Harvard Business Review,

The very idea that a simple transfer of information between a parent company and its affiliates can be subject to restrictions seems unthinkable to U.S. executives, most of whom have grown up in a society where information has always flowed freely across thousands of miles.(13)

The author also argued that data protection legislation imposed "onerous obligations on the custodian of the data," and that multinational businesses, providers of global information services, international financial industries and services companies were those most likely to be affected by national laws.(14) Although the free flow perspective is consistent with the First Amendment, it is not neutral in terms of economic impact. This point has not gone unnoticed. Thus Australian Justice Michael Kirby pointed out