Balancing National

Security and Commerce

Information politics in the
new transatlantic agenda

Henry Farrell
Assistant Professor
Elliott School of International Affairs
George Washington University
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 Balancing National Security and Commerce
Information politics in the new transatlantic agenda

A Report to the German Marshall Fund of the United States

March 2008

Henry Farrell
Assistant Professor
Elliott School of International Affairs
George Washington University

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
New Problems, New Approaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
A General Policy Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Changes to the Transatlantic Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Changes to Domestic Structures in the European Union . . . . . . . . . . . . . . . . . . . 12
Changes to Domestic Structures in the United States . . . . . . . . . . . . . . . . . . . . . 13
Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1 Introduction
Following several years of tension between Europe
and the United States, policymakers on both sides
of the Atlantic have rediscovered pragmatism.
Apparently irreconcilable differences of values are
giving way to new forms of practical cooperation.
However, the new transatlantic relationship differs
from the old one in some very important ways.
New issues that involve access to various forms
of security-sensitive economic information are
becoming increasingly prominent. These issues,
however, do not fit neatly into the traditional
boxes of the transatlantic relationship. On the
one hand, they touch directly on important and
sensitive matters of national security. On the
other hand, they involve a much wider variety of
actors than traditional security issues ever did.
The European Union and the United States have
sought to resolve their differences over these
issues in new ways, opting for decentralized and
often ad-hoc forms of cooperation that build
upon existing relationships in the security realm.
None of this has been planned. Policy actors and
negotiators, as is nearly always the case, have
had to respond to immediate and compelling
needs, without having the luxury to think
through the long-term implications of the issues,
the new range of actors who are involved in
the debates, or the long-term appropriateness
of the ad-hoc institutional structures that are
being created. This is by no means necessarily
a bad thing; when dealing with new issues
that have uncertain long-term implications,
it is rarely a good idea to construct grand
strategies or new institutions from scratch.
However, since it is now becoming clear that
we are likely to face many new issues in the
future that do not fit neatly under the rubrics of
security or economics and that involve a wide
range of non-traditional actors, it is timely to
discuss whether there might be more appropriate
approaches than those that are currently favored.
In particular, should we deal with new issues that
combine both security and economic concerns
in isolation from each other as they emerge—one
after the other? Or should we try to create a
common toolset that can help us anticipate these
issues and prevent them from creating crises?
This paper argues for the latter approach. Rather
than treating issues such as airline passenger
information or financial transfer data as matters
for traditional international security cooperation,
policymakers in the European Union and the
United States should look to models from economic
cooperation (the Safe Harbor arrangement)1 to
domestic accountability for security structures
(the U.S. Congressional system of oversight
for intelligence agencies). Such an approach
would shift the regulatory center of gravity
away from controversy-driven negotiation
toward semi-routinized problem solving, with
clear lines of communication, authority, and
accountability. This would not only allow the
security aspects of these issues to be handled
better; it would mitigate the considerable risks
of disruption that the transatlantic economic
relationship faces under the current approach,
which addresses potential controversies only
when they threaten to become public scandals.
The first part of this paper outlines the
underlying problem and describes two recent
controversies that provide practical and concrete
illustration of the broader issues that are at
stake. The second part discusses structures
that would provide increased oversight and
communication between the European Union
and the United States over these emerging issues.
It advocates an approach that would combine
more coherent and centralized policy decision-
making with a greater degree of accountability
and continued flexibility in implementation.
1 
For further discussion of the Safe Harbor arrangement and its
negotiation, see Henry Farrell, “Constructing the International
Foundations of E-Commerce: The EU–U.S. Safe Harbor Ar-
rangement,” International Organization 57, 2: 277-306, 2003.
Balancing National Security and Commerce 3
2 New Problems, New Approaches
Policymakers on both sides of the Atlantic have
developed a set of institutions and practices that
allow them to deal with traditional security issues
(which are handled through forums such as NATO
or through a variety of more or less formal bilateral
and small-group arrangements) and economic issues
(which are usually handled through negotiations
between the European Commission and the U.S.
administration, or through multilateral institutions
such as the World Trade Organization). However,
many of the new issues that have emerged in the
wake of 9/11 do not fit well into either of these
boxes. On the one hand, they are clearly security
issues. Therefore, they touch directly on sensitive
areas of policy for the states involved. On the other
hand, these issues typically do not involve traditional
international security so much as domestic security
(those issues that usually fall under the category
of “homeland security” in the United States and
“justice and home affairs” in the European Union).
Furthermore, they have substantial implications
for the burgeoning EU–U.S. economic relationship,
and how economic regulation takes place in both
jurisdictions. These issues involve controversies over
flows of information between the two jurisdictions
and more particularly about the rules that should
govern access to and use of this information.
Take, for example, two recent areas of controversy
between the European Union and the United
States: The disputes over airline Passenger
Name Record (PNR) information and the
transfer of financial transaction data by the
Society for Worldwide Interbank Financial
Telecommunication (SWIFT). Both involved
security issues, albeit non-traditional ones.
The PNR controversy began following the
November 2001 passage of the U.S. Aviation
and Transport Security Act.2 As part of the Act,
2 
For analysis of the first part of the PNR negotiations, see Dor-
othee Heisenberg, Negotiating Privacy: The European Union,
the United States and Personal Data Protection, Boulder: Lynne
Riener, 2005.
4 The German Marshall Fund of the United States
international airlines landing in the United States were
required to provide U.S. customs and immigration
authorities full access to PNR data in advance of
takeoff. This information could then be shared
with other security agencies in the United States to
detect potential terrorists and serve a variety of other
unspecified law enforcement purposes. These U.S.
requirements apparently required airlines to disobey
EU data protection and privacy law. However, because
the United States could more credibly threaten airlines
with severe penalties than the European Union,
airlines indicated that they would comply with U.S.
rather than European law. The United States, despite
its stronger position, indicated that it was willing to
enter into negotiations with the European Union to
reach a mutually acceptable framework. Both sides
reached a semi-formal agreement under which
the United States would have access to European
PNR data beginning in July 2004. The European
Parliament challenged the agreement in the European
Court of Justice. Although the European Parliament
eventually won its case, leading to the nullification
of the agreement, its victory was a pyrrhic one.3
The Parliament won on a technicality that arguably
substantially increased the European Commission’s
freedom of maneuver on international data protection
issues that had a security dimension. This led to
a second set of negotiations in which the United
States successfully pressed for further concessions,
leading to a replacement agreement in July 2007.4
Currently, the European Union is considering
introducing its own internal PNR access system.5
3 
Henry Farrell, “Privacy in Europe Suffers in Terror War,” The
Financial Times op-ed page, July 2, 2006.
4 
“Agreement between the European Union and the United States
of America on the Processing and Transfer of Passenger Name
Record (PNR) Data by Air Carriers to the United States Depart-
ment of Homeland Security (DHS) (2007 PNR Agreement,”
Official Journal of the European Union L204/18, August 4, 2007.
5 
Commission Staff Working Document: Proposal for a Council
Framework Decision on the Use of Passenger Name Record
(PNR) for Law Enforcement Purposes: Summary of the Impact
Assessment, COM (2007) 654 Final, available at http://www.
statewatch.org/news/2007/nov/eu-com-pnr-ia-summary-sec-
1422.pdf.
Similarly, the controversy over SWIFT’s provision
of information on financial transfers to U.S.
Treasury authorities involved a dispute over
whether SWIFT should comply with EU or U.S.
laws. After The New York Times revealed that
SWIFT (which is based in Belgium but has a U.S.
data center) had complied with U.S. subpoenas
for information on financial transfers, European
Parliamentarians and national data protection
authorities argued that SWIFT was in violation
of European data protection laws.6 Although
SWIFT had informed central bank authorities of
U.S. demands, it had not informed data protection
authorities, nor sought their guidance.7 This led
to an investigation by the Belgian data protection
authority. Following discussions between the
European United and the United States, the U.S.
Treasury Department agreed to provide a set of
non-formal “representations” about how it would
work with SWIFT in the future.8 More specifically,
it agreed only to access SWIFT data for counter-
terrorism purposes; to only provide access to the
data to people with security clearance on a need-to-
know basis, and to only retain data for a maximum
of five years. SWIFT has more recently informed
European data protection authorities that it intends
to close down its U.S.-based data center by 2009.
6  placed in an impossible legal position. To obey
Eric Lichtbau and James Risen, “Bank Data is Sifted by U.S.
in Secret to Block Terror,” The New York Times (June 23, 2006);
Dan Bilefsky, “Data Transfer Broke Rules, Report Says,” The
New York Times (September 28, 2006).
7 
Article 29 Data Protection Working Party 01935/06/EN WP
128 Opinion 10/2006 on the Processing of Personal Data by the
Society for Worldwide Interbank Financial Telecommunication
(SWIFT).
8 
Department of the Treasure, Office of Foreign Assets Control,
“Notice: Publication of U.S./EU Exchange of Letters and Ter-
rorist Finance Tracking Program Representations of the United
States Department of the Treasury,” Federal Register 72, 204,
60054 (October 23, 2007).
These examples share four important features.
First, they illustrate the important role of non-
traditional security actors in policy areas that
involve the gathering of security-relevant
information. This is not to say that more
traditional forms of state-to-state action are no
longer important—far from it. But in both of
these cases, state authorities sought to mandate
new information gathering and provision roles
for private actors. This is no accident. The ability
of states to collect, collate, and organize data is
dwarfed by the power of the private sector to do
so. This means that states are increasingly going
to turn to private sector actors in order to carry
out information gathering and perhaps other
security functions. However, this also means
that the network of informal relations that EU
member states and the United States have relied
on in more traditional areas of intelligence
gathering is unlikely to provide a solid basis for
state-private actor relations. Private actors will
require a much greater degree of legal certainty,
given the greater range of commercial, legal, and
reputational risks that they are exposed to.
Second, the cases illustrate the difficult position
that private actors find themselves in when
dealing with conflicting laws in the European
Union and the United States. In both cases, the
relevant private actors (airlines, SWIFT) were
the laws of one jurisdiction, they had to actively
disobey the laws of another. This creates profound
problems of legal uncertainty for the private
actors involved and unacceptable legal risks.
We may see similar problems emerge in the future.
The ever-greater intertwining of the EU and U.S.
economies means that policy interdependence
between the two jurisdictions is increasing. On
the one hand, policy decisions that are taken by
either the European Union or the United States for
Balancing National Security and Commerce 5
purely domestic reasons will have more substantial
implications for actors in the other jurisdiction. On
the other hand, both the European Union and the
United States will find that they need to deliberately
impose obligations on actors primarily based in the
other jurisdiction in order to achieve policy goals.
Third, in neither case did the relevant regulatory
actors have to take full account of the costs they
imposed on private parties. This fact is likely
to become increasingly problematic over time.
Within both the European Union and the United
States, there are powerful economic lobby groups
that can protest regulations and policies that aim
to improve security but carry too high a cost.
Consequently, security laws that are economically
infeasible for prominent domestic actors usually do
not get passed. However, it is far more difficult to
successfully oppose new regulations and policies
when actors from third countries bear their brunt.
Although both international umbrella groups
(such as the TransAtlantic Business Dialogue) and
affected foreign governments can protest, they
often find it difficult to fight effectively against laws
or policies that explicitly aim to protect national
security. As a result, in many areas restrictive
laws and policies have been passed without
adequate regard for the costs imposed on non-
citizens. This may lead to the threat of tit-for-tat
policies and exacerbate the problem even more.
Given the burgeoning economic relationship
between the European Union and the United
States and the temptation that state actors in
both jurisdictions face to impose new mandates,
it is likely that many private companies will
find themselves in similarly invidious situations
in the future. This may weaken transatlantic
economic cooperation (as actors such as SWIFT
relocate their activities to minimize regulatory
risk) and create the risk of future controversies
once these arrangements are publicly exposed.
6 The German Marshall Fund of the United States
Fourth, even if the differences between the
European Union and the United States are
exaggerated, these controversies reflect EU and
U.S. divergence in their approach toward security
and economic exchange. The European Union
and the United States both value continued
economic interchange. They are still each others’
most important markets. They both recognize that
terrorism is a major problem. Nonetheless, they
disagree over the specific approaches that should
be used in situations where security needs and
economic interchange overlap. Even though this
is changing, the European Union has been less
willing than the United States to deploy extensive
forms of surveillance and data gathering. It has
emphasized more traditional law enforcement
instruments and has not sought to systematically
break down barriers between law enforcement
and intelligence services. The United States has
been more willing to employ extensive forms
of surveillance and information collection over
large segments of the population in order to
prevent attacks. It has sought (albeit only with
partial success) to break down previously existing
barriers between law enforcement and intelligence
agencies that were perceived as having helped the
9/11 hijackers evade the attention of authorities.
These different approaches have led to friction and
misunderstanding in the transatlantic relationship.
For example, many European politicians would
be willing to share more information with law
enforcement or immigration authorities in the
United States, but not if this information is then
passed on to intelligence services. U.S. authorities
for their part feel that exactly this kind of
information sharing is necessary and appropriate
to provide security in the wake of the 9/11 attacks.
These differences in approach are as or
more important than the more traditional
EU–U.S. differences over privacy law
and protection of personal data.
However, recent policy developments have
narrowed the gap between the different approaches
to security and privacy on both sides of the
Atlantic. While the European Union still seeks
to ensure that citizens’ data is protected, it has
sought to recalibrate the relationship between
privacy and security in favor of security over the
last three years. On the other side of the Atlantic,
as the recently published U.S. National Strategy for
Information Sharing stresses, U.S. law too places
important limits on the degree to which the U.S.
government can share information on U.S. citizens
and permanent residents with other countries.9
Policymakers on both sides of the Atlantic are
trying to find ways to work together on these
issues while minimizing the risk of dispute.
However, because policies are being formulated
9 
White House, National Strategy for Information Sharing,
Washington DC: White House (2007).
in a much more decentralized arena than in the
past—thus allowing state actors to pursue their
own agendas—they need to address important
problems of accountability and consistency.
The current approach which treats each issue
in isolation may exacerbate these problems.
Furthermore, it leads to policies that are often
Iriuscidunt verci
driven as much by scandal or the threat of scandal
tinciduisi. Lis ad
as by actual policy needs. Some of the recent
arguments were entirely avoidable. There is reason elessi. Um alis
to believe that the European Union and the United dolor si. Ing eum
States are not as far away from each other on core dolorem nullaor
principles of regulation as they might appear to tionseq uipsum
be at first sight. However, when policy actors are ipsusto dolore
trying to formulate agreements in the wake of feum quiscil iscilis
scandals, their ability to reach mutually acceptable er si et vent amcor
solutions is likely to be quite constrained. This ad dio eum vel
problem will probably getting worse rather than
better over time as new issues come to public light.
Balancing National Security and Commerce 7
3 A General Policy Framework
Even if we acknowledge that the current approach
is unsatisfactory, how do we best address these
new policy issues? Traditional international
institutions provide a good means of resolving
disputes between states. However, they are also
extremely cumbersome and not well suited to deal
with complex issues that involve a variety of private
actors who need clarity in the short- to medium-
term. Purely informal and ad-hoc arrangements
have their own problems. As discussed above,
they do not provide sufficient certainty over a
longer-term period, they tend to be associated
with an ex post scandal driven political process
rather than ex ante problem solving, and they
have murky lines of accountability and authority.
Any alternative approach, then, should fulfill
four criteria.
• It should not rely heavily on cumbersome
formal treaty arrangements between states or
anything like them. Such institutions may prove
valuable at some future point in time, when
the need for institutional stability outweighs
the need for flexibility. This point is unlikely
to be reached for a considerable period.
• It should create a broad framework that provides
at least some predictability across related
issue areas. This is not to say that it should
mandate a one-size-fits-all policy solution.
There should be sufficient flexibility to tailor
sets of principles that address the particular
challenges that are posed by specific policy
issues. However, these principles should be
backed up by common procedural mechanisms
of decision making and accountability.
• It should have clear lines of accountability and
authority. Much of the current controversy over
information sharing between the European
Union and the United States is the result of
administrative murkiness. It is not clear who
8 The German Marshall Fund of the United States
has responsibility for which area of decision-
making and who should be held accountable
when things go wrong. Furthermore, there
is little direct connection between elected
politicians (MEPs, national parliamentarians,
members of Congress) and actual decision-
makers on many of these issues. Indeed, one
reason why currently existing arrangements
are so informal is precisely to ensure that
these politicians do not have direct veto power
over them. Therefore, an alternative system
should not only provide for clearer lines of
authority, but should also ensure that there is
some degree of democratic accountability.
• It should create mechanisms through which
both the European Union and the United States
are required to take explicit account of the costs
that their regulatory actions may have for private
actors in the other jurisdiction. Formal measures
of censure, let alone sanctions, are likely to be
politically infeasible for a variety of reasons.
Nonetheless, if the European Union must
account for the implications of its regulations
for U.S. actors at an early stage in the policy
formulation process, and the United States must
account for the implications of its regulations for
EU actors, we may minimize the burdens that
domestic legislation imposes on external actors.
These criteria are not easily reconciled. Nonetheless,
by building on existing structures in the
transatlantic relationship, it is possible to create
new arrangements that would combine flexibility
with considerably more predictability and
accountability. Such arrangements would give
more legitimacy to transatlantic relations in these
difficult areas and mitigate or avoid the kinds
of public controversy that have accompanied
differences over PNR information and financial
transaction data. Continued flexibility would be
assured by adapting existing arrangements in the
transatlantic relationship, as well as incorporating
elements of the Safe Harbor arrangement over
data privacy (specifically, efforts to reach an
agreement on broad principles that can be flexibly
implemented but have a real regulatory backstop).
Greater predictability would be ensured through
a common set of oversight mechanisms and
centralized policy coordination through a Senior
Level Group process. Greater accountability
would be achieved through proper oversight, a
role for public comment by participants in the
appropriate transatlantic dialogues, Data Protection
Commissioners in the European Union and privacy
officials in the United States, and an enhanced
role for the Transatlantic Legislators’ Dialogue.
Balancing National Security and Commerce 9
 4 Changes to the Transatlantic
Relationship
A new system would require adaptation of both
the existing Senior Level Group process and the
Transatlantic Legislators’ Dialogue. Of these two
institutions, the Senior Level Group process has
a much more substantial policy history. It seeks
to anticipate and avoid regulatory clashes that
may emerge in the future, and facilitates the
Cumsan hendio resolution of those clashes that have not been
con vullaorem anticipated or that have proven unavoidable. Such
zzrilit laorting an approach is well suited to anticipate and to
el do exer si tin deal with complex issues such as those discussed
ulputem iure in this paper. Under the current system, however,
velendrer sequat. such issues are frequently not discussed by the
Senior Level Group or similar dialogues until
Ummy nissis eum
they have already become crises. This is because
dolummy nullaor
they blur the boundaries between domestic
amconsecte and international regulation, allowing domestic
exercilisl ut regulators to take actions that have international
vullandio odo spillover consequences without wider consultation.
The SWIFT financial information controversy is an
excellent example. Public evidence suggests that the
U.S. Treasury Department’s subpoenas to SWIFT
were not discussed between the European Union
and the United States before the controversy had
erupted. The U.S. Treasury Department treated
these subpoenas as a simple exercise of its domestic
authority over a foreign actor (SWIFT) with a
substantial U.S. presence. This interpretation of
U.S. law was not unreasonable, but it ignored the
substantial international spillovers of the Treasury’s
actions. If a Senior Level Group-type mechanism
had been invoked at an early stage, it could have
mitigated, and perhaps prevented entirely, what
turned out to be a highly awkward issue for both
the United States and the European Union.
Thus, there is good reason to believe that we
should have a more comprehensive Senior Level
Group process with an enhanced mandate and a
corresponding level of administrative resources.
Such an enhanced mandate would dovetail with the
10 The German Marshall Fund of the United States
more general reforms to provide early consultation
on regulatory issues identified in Stuart Eizenstat,
Grant Aldonas, and Frances Burwell’s recent paper
on transatlantic leadership.10At a minimum, this
Senior Level Group should be informally consulted
for an advisory opinion by agencies in the European
Union and the United States when agencies
contemplate actions that carry a substantial risk
of regulatory overspill from one jurisdiction to
the other. While it is unlikely that agencies in
either jurisdiction will fully internalize the costs
of their regulatory actions for private actors in
the other jurisdiction or refrain from actions that
they perceive as urgently required, a system along
these lines will at least require agencies to justify
themselves before doing so. It will also provide
the European Union and the United States with a
better means of identifying emerging regulatory
problems and proposing modifications that
minimize the fallout from regulatory overspill.
Specifically, the Senior Level Group would
seek to (a) identify potential problems arising
from regulatory overspill, including a variety of
problems that slip under the radar given current
arrangements and (b) propose solutions to these
problems. Such solutions would typically involve
agreement upon broad sets of principles, along
the lines of the SWIFT arrangement described
earlier or the Safe Harbor arrangement that
helped ease regulatory clashes in the early part
of this millennium. These broad principles
would be backed up by clearer accountability
mechanisms. It would also provide a means for
centralizing the informal EU–U.S. dialogues
that are already taking place about how best to
reconcile clashes on information rules and to
deal with these rules in the transport sector.
10 
Stuart E. Eizenstat, Grant D. Aldonas and Frances G. Bur-
well, Transatlantic Leadership for a New Global Economy, The
Atlantic Council of the United States, Washington, DC 2007.
A modified and more subject-specific set of
meetings within the broad framework of the
Transatlantic Legislator’s Dialogue could provide
the basis for greatly enhanced “democratic
accountability.” The current patchwork of ad-
hoc solutions has encountered substantial
skepticism from critics, who argue that, even
when these schemes sound good in principle,
they are broadly unaccountable. They often rely
on chains of authority that are unclear, and there
is little direct role for democratically elected
politicians in supervising them. Proponents of
these solutions argue that these schemes must be
flexible and preserve confidentiality since they
touch upon sensitive issues of national security.
Here, the Transatlantic Legislators’ Dialogue
could borrow ideas from the existing system of
oversight over intelligence issues in the United
States, as well as from reforms to this system
suggested by the 9/11 Commission.11 Within the
broad framework of this dialogue, a select group
of legislators drawn from the U.S. Congress, the
European Parliament, and interested national
parliaments in the European Union would meet
either annually or semiannually. They would hear
reports from officials involved in the Senior Level
Group and other agencies as appropriate, on both
emerging problems at the security-commerce
nexus and on issues that have arisen in the
implementation of solutions to existing problems.
Such an exchange would significantly enhance
the role of the Transatlantic Legislator’s Dialogue,
and fulfill one of its original goals, which was to
serve as a stepping stone on the road to a more
comprehensive Transatlantic Legislators’ Assembly.
Meetings of legislators would be off-the-record, so
as to preserve confidentiality and allow officials to
discuss sensitive—albeit unclassified—issues. Other
11 
Kristin Archik, U.S.-EU Cooperation Against Terrorism, CRS
Report for Congress 2005.
actors, more specifically data protection authorities
in EU member states, privacy officials within the
U.S. administration, and members of the relevant
transatlantic dialogues (the TransAtlantic Business
Dialogue and the Trans Atlantic Consumer
Dialogue) would present regular reports identifying
potential issues on an advisory basis. They
would thus provide an important independent
source of information and a crucial check on the
actions of officials in the European Union and the
United States who might otherwise be tempted
to glide over problems in implementation.
In broad terms, this arrangement would have
some resemblance to the Safe Harbor arrangement
between the European Union and the United
States, which similarly sought to resolve differences
in approach through a regulatory “interface”
solution that did not impose undue difficulties
on either system. The key difference, however,
would be that this system would have a greater
degree of accountability, more frequent reporting
requirements, and a direct role for democratically
elected officials in monitoring implementation.
This would help answer many of the criticisms that
were made of the original Safe Harbor arrangement.
Over time, more ambitious structures, similar to
the Transatlantic Economic Council (TEC), might
be grafted onto this institutional base. However,
it is almost certainly wiser to create a set of more
flexible institutions in the first instance. This would
make it easier to adjust them as inevitable teething
problems arise. It would also allow policymakers
to learn from the experience of the TEC, which is
a very new institution that must still find its feet
and establish a set of strong working relationships.
Balancing National Security and Commerce 11
 5 Changes to Domestic Structures
in the European Union
A new system in the European Union and
the United States would also require some
modifications to domestic structures of
information sharing and accountability. This
would supplement transatlantic arrangements for
accountability with better domestic arrangements
for information sharing and coordination.
Cumsan hendio
con vullaorem Many of the current tensions in the transatlantic
relationship could be eased by changes within
zzrilit laorting
the European Union. For example, the European
el do exer si tin
Parliament has often objected strongly to EU–U.S.
ulputem iure coordination, in part because of its belief that it
velendrer sequat.
is being systematically excluded from decision
Ummy nissis eum making over external relations. While the European
dolummy nullaor Parliament has some role in supervising treaties
amconsecte with third countries, it has little effective oversight
exercilisl ut over the non-treaty arrangements that have come
vullandio odo to dominate key areas of EU–U.S. relations.
There is good historical reason to believe that
the European Parliament would play a more
constructive role if it is given a significant stake
in the decision-making process. As the European
Parliament has gained more power in internal
lawmaking through the creation and extension
of the codecision procedure, it has accepted the
challenge of acting as a serious co-legislator, rather
than behaving irresponsibly as some critics feared.
This suggests that Parliament, if it is given a more
direct voice in the transatlantic relationship, will
be prepared to act responsibly, and to eschew
opportunities for grandstanding in favor of serious
work. The changes to the Transatlantic Legislators’
Dialogue proposed above might go some distance
toward providing Parliament with this voice.
Enhanced cooperation between the Parliament
and the Council presidency might also be helpful
in providing Parliament with a stake in the game.
This cooperation could be modeled on the forms
of coordination that have sprung up around the
so-called “early agreement” procedure for especially
12 The German Marshall Fund of the United States
urgent, sensitive, or technical legislative dossiers.
Typically, in these dossiers, a rapporteur from
the Parliament coordinates extensively with the
Presidency and the Council, with the Commission
serving as facilitator, in order to reach mutually
acceptable policy solutions. An arrangement along
these lines that allows discussion between actors
in the European Union and the United States of
non-legislative arrangements that have significant
policy repercussions would go some way toward
alleviating distrust between the Parliament and
other actors. It would also help smooth the
transition to a new institutional dispensation in
which the Parliament (assuming that the EU’s
draft Reform Treaty is ratified) will have greater
influence over so-called ”Third Pillar” issues
such as domestic security. A greater advisory
role for data protection commissioners in these
discussions would also be appropriate; it would
help to alleviate the risk that policies would have
unexpected and unfortunate political consequences.
Finally, there is some cause for worry about the
degree to which business and consumer interests
are represented in current negotiations over
sensitive issues in the EU–U.S. relationship.
There are widespread complaints about the lack
of consultation over key discussions between the
European Union and the United States on these
issues. Business and consumer interests are usually
informed ex post about decisions that have been
made, if they are informed at all. Much of this
appears to be due to the overwhelming focus on
security and confidentiality in these discussions and
the adoption of consultation standards that cannot
appropriately manage situations that involve a wide
range of private actors. More input from outside
actors would not only lead to more harmonious
politics, but it would also lead to better policy. Many
of these discussions turn to arcane technical points
which are likely to be understood better by issue-
area experts than by international negotiators.
6 Changes to Domestic Structures
in the United States
Better policy on the U.S. side requires some
significant changes to the current operational
system. First, the United States should have a
clearer internal policy coordination structure on
issues of information exchange. There is no single
coordinating authority or informal coordination
point to handle information issues within the
U.S. administration. The Clinton administration
did have a so-called privacy “czar,” albeit one
with little independent power and resources. The
Bush administration has an Information Sharing
Council, headed by a program manager, which
is intended to develop an Information Sharing
Environment. However, neither approach is at all
sufficient for the challenges faced. A Clinton-style
privacy czar has neither the policy breadth to cover
issues beyond privacy rights nor the bureaucratic
resources to push coordination between a variety
of agencies, each with its own interests and
perceived prerogatives. Conversely, the Information
Sharing Council appears to treat privacy as an
appendage to more serious concerns, while having
insufficient leverage to engage in anything beyond
the development of pilot programs. Like many
other elements of the post-9/11 reform agenda,
the Council seems to have run aground on the
shoals of entrenched bureaucratic interests.
Furthermore, the effort to graft privacy offices
onto various government departments has run
into substantial operational difficulties. The
Department of Homeland Security’s privacy
office, for example, has seen frequent personnel
changes and controversies, despite the best efforts
of some of those who have sought to implement
policy. Even while information sharing has
exploded in importance within the government,
supervisory structures have not kept up.
This has international as well as domestic
consequences. Former U.S. Secretary of State
Henry Kissinger famously observed that he did
not know whom to call when he wanted to speak
to Europe. European officials now face the same
dilemma when they seek to interface with the U.S.
government. The lack of a centralized coordinating
office makes it difficult (a) for the United States
to negotiate with a coherent voice on information
sharing issues, (b) for external actors to interact
with the United States on these issues, and (c) for
outsiders to trust that information rules will be Iriuscidunt verci
adhered to in a system that is not transparent.12 tinciduisi. Lis ad
elessi. Um alis
The solution is threefold. First, a central federal
information policy clearing house must be dolor si. Ing eum
appointed with a significant budget and personnel dolorem nullaor
resources to oversee U.S. implementation of tionseq uipsum
controls over information sharing and the ipsusto dolore
development of appropriate privacy policies.13 feum quiscil iscilis
This would have substantial domestic and er si et vent amcor
international benefits. Second, an inter-agency ad dio eum vel
process with some involvement of relevant actors
in the intelligence community must be developed
to coordinate policy across different parts of the
administration. This would supplement the work
of the clearing house, both by allowing different
parts of the federal government some input into
the formulation of policy and by providing a
means of coordination on information policy
issues. And third, appropriate incentives must
be created for relevant agencies and departments
to support internal privacy and information
management offices and coordinate appropriately
with other departments. These incentives
might include, for example, a requirement that
a small percentage of a specific agency’s or
department’s budget be devoted to setting up an
internal office covering privacy and information
management issues, or else be forfeited.
12 
Abraham Newman, Transatlantic Cooperation and Conflict
over Data Privacy Rules: Lessons for International Market
Regulation, Washington, DC: The German Marshall Fund of the
United States, 2007.
13 
Francesca E. Bignami, “European versus American Liberty:
A Comparative Privacy Analysis of Antiterrorism Data Mining,”
Boston College Law Review, 48:609-698, 2007.
Balancing National Security and Commerce 13
 These reforms would have substantial benefits
that are outside the ambit of this short paper.
Most importantly, they would better allow a new
U.S. administration to deliver on the agenda
promised in the 9/11 Commission report by
obliging federal government departments and
agencies to rationalize existing information sharing
Cumsan hendio practices and build better patterns of collaboration
con vullaorem across the U.S. government. However, they would
zzrilit laorting also help resolve many of the difficulties for
el do exer si tin international cooperation discussed in this paper.
ulputem iure First, they would allow the U.S. government to
velendrer sequat. negotiate coherently with external actors such
Ummy nissis eum as the European Union on issues of information
dolummy nullaor sharing. By providing a combination of a central
amconsecte clearing house and a regularized inter-agency
exercilisl ut process, they would allow concerned actors
vullandio odo to arrive at more coherent and thought out
positions that represent a clearer starting point
for international discussions. Second, as a result
of the first, they would solve Kissinger’s problem
and provide a single centralized actor that could
manage negotiations with the outside world.
Third, they would allow the U.S. government to
make more credible commitments about how
14 The German Marshall Fund of the United States
information would be handled when it enters
the federal system. Many of the problems over
information sharing in the EU–U.S. relationship
stem from the perception on the part of EU officials
and elected representatives that it is impossible
to predict what will happen to information on
EU citizens once it enters the federal system. A
unified system, with clear rules and a centralized
actor charged with ensuring that these rules
are obeyed, would help allay these concerns.
Finally, one should note that the current
administration’s theories about a strong
executive with loose domestic constraints on the
Presidency have the unintended consequence
of making the executive seem less trustworthy
and predictable to outside actors. Furthermore,
policies that are not open to public scrutiny such
as extraordinary renditions and wiretapping
make it difficult for European governments to
justify cooperation to their citizens. This problem
cannot be solved without fundamental political
changes that go far beyond the scope of this
paper. However, its importance to these debates
should surely be explicitly acknowledged.
7 Conclusions
The United States and the European Union
confront an important set of new issues, which
involve both commerce and security. Both the
United States and EU member states increasingly
rely on commercial actors to provide them with
security-relevant information. This heightens
tensions and uncertainties between the European
Union and the United States, as their differing
systems and legal obligations come into conflict
with each other. It also leads to enormous
uncertainty and risk for business, which is often
left in the unpleasant position of deciding which
actor’s regulations it should comply with.
To date, the United States and the European Union
have sought to resolve these tensions through ad-
hoc arrangements rather than adopting a coherent
approach across issues. This is understandable,
but may lead to more problems than it solves
over the long run. We are likely to see many more
of these issues emerging over time because of
each party’s reliance on private actors to provide
informational resources that they themselves do
not have access to. It is now time to begin thinking
about how to adopt a more coherent approach
to policy making, which also preserves sufficient
flexibility to deal with the vagaries of specific issues.
This paper argues that this might best be
accomplished through the adaptation of existing
transatlantic arrangements, particularly with
the Senior Level Group and the Transatlantic
Legislators’ Dialogue. The Senior Level Group
would be given a more specific mandate to
advice on regulatory issues that have important
transatlantic implications, while the Transatlantic
Legislators’ Dialogue would provide a framework
within which a more specialized group of
democratically elected representatives could Iriuscidunt verci
provide a backstop of accountability. This tinciduisi. Lis ad
paper also argues for institutional changes in elessi. Um alis
the European Union and the United States that
dolor si. Ing eum
provide a greater degree of involvement by the
dolorem nullaor
European Parliament in the European Union,
tionseq uipsum
and a more coherent governmental approach
to information issues in the United States. ipsusto dolore
feum quiscil iscilis
These proposed changes would not completely er si et vent amcor
solve the problem of differing approaches to ad dio eum vel
security and information on the two sides of the
Atlantic. However, they would build a bridge
from the current approach, which is often driven
ex post by the discovery of scandals with their
subsequent international fallout, toward a process
that would seek ex ante to reflect the interests of
relevant stakeholders, thereby mitigating scandals
or preventing them from arising entirely.
Balancing National Security and Commerce 15
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