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Although some informed American observers anticipated the decision, most were caught flat-footed; some seemed downright bewildered. The vice president of the US Chamber of Commerce, Myron Brilliant, responded in shock that “it is particularly alarming that this long-standing agreement has been invalidated with no discussion of a transition period or guudence regarding how companies should comply with the law…” Critics of the decision, including Commerce Secretary Penny Pritzker, argue that it will devastate the transatlantic digital economy, costing U.S. firms billions of dollars. Without a new agreement, there is a significant risk that personal data will have to be quarantined within Europe, creating, as Alphabet Chairman Eric Schmidt warned in his response to the decision, “per-country-Internets”. If that occurred, he continued, it could risk destroying “one of the greatest achievements of humanity.” Critics charge that the EU is acting unilaterally to protect its businesses against foreign competition, damaging the open, democratic nature of the Internet.
But the main reason that U.S. companies and officials are flustered is that they are used to being the ones who make the rules. Over the past 70 years, the United States has built a global system in which trade, investment, and information move quickly and easily across borders. That openness has created an interdependent world in which the national rules and preferences of one country can shape the rules and preferences of others. The outsized power of the U.S. economy usually gives that role to the United States.
In the aftermath of the 9/11 attacks, the United States began to exploit interdependence, deliberately using its economic power as an instrument of national security. Despite advocating for free flows of capital, it has systematically used sanctions to oblige foreign banks and financial actors to isolate people, businesses, and states from the global financial system. Despite publicly promoting an open and secure Internet, it has privately undermined online communications and surreptitiously created vast international surveillance systems in cooperation with close allies including the United Kingdom. In short, the United States has leveraged the world’s reliance on its economy to influence and spy on foreigners.
This strategy is reaching its limits, and the Safe Harbor decision powerfully demonstrates that Washington needs to wake up to its costs… [continue reading here]