Counterparties: Trading chickens and data

By Ben Walsh
February 14, 2013

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The EU and the US are working on a trade deal that Reuters calls the “most ambitious since the founding of the World Trade Organization in 1995”.

Some of the hurdles are obvious. With tariffs already pretty low, talks will have to focus on things like agricultural subsidies and food standards, traditional sticking points between the two blocs. The EU and the  US have, for example, been arguing about how to wash chickens since 1997. That’s $300m of annual revenue that the US poultry industry will never see (I’ll spare you the corny puns). Still, that’s not going to be a dealbreaker: the EU’s trade commissioner has said that “this is not a negotiation that has as a prime aim to find… a solution for chlorine chicken”.

The biggest stumbling block may instead be in an area where the EU and the US generally seem to be in agreement: technology. Europe looks enviously at Silicon Valley: politicians from Berlin to Tallinn are pushing their own “silicon [silly local reference]”. But Brussels has very different ideas about regulating the industry from Washington, which some say amounts to “digital protectionism”.

While chickens have to physically cross borders, clear customs and adhere to hygiene standards, data can flow freely. It can also, the FT reports, be seized by the US under the Patriot Act. BAE, Britain’s defense contractor, for instance, had to abandon plans to use Microsoft’s Office 365 because data protection agencies worried the information could be accessed by the US. Such rules act as pretty effective trade barriers.

The two potential partners seem to have conflicting urges. One is America’s obsession with security. The Patriot Act, introduced after 9/11, allows data seizures without the consent of the user.

On the other side of the pond is Europe’s fixation with privacy. The continent’s first major undertaking was the 1995 “data protection directive”, which is EU-speak for member states implement the rule in their own fashion.

Last year, Brussels set in motion the process to introduce a data protection regulation, which differs from a directive in that it becomes applicable the moment it is approved by the European Parliament. Big tech companies have lobbied Brussels to ease up, but to little effect. The US Department of Commerce has tried its hardest to soothe the European Commission’s worries.

The US ambassador to the EU warns that “differences between the EU data protection legislation and the US privacy protection regime should not be allowed to hurt EU-US trade”. Still, no trade pact, no matter how big, will induce Congress to water down the Patriot Act. The whole thing looks like turning into a big game of chicken — with or without the chlorine. — Leo Mirani

Leo Mirani has worked at The Economist and had written for The Independent, The Guardian and AFP. His reporting interests include technology, innovation, South Asia and the European project.

On to today’s links:

Deals
Warren Buffett’s Berkshire Hathaway bought Heinz – Reuters
American Airlines and US Airways have agreed to merge – Dealbook

EU Mess
The European economy is still a problem - Reuters

Crisis Retro
Banks misrepresented 1 in 10 mortgages that went into RMBS - SSRN

Oxpeckers
Elon Musk accuses NYT reporter of fabricating Tesla review facts – Tesla
“All of the profound failings of what Ezra Klein is have very little to do with who Ezra Klein is” – Freddy Deboer
The Knight Foundation regrets paying Lehrer $20,000 to talk about plagiarism – Knight Foundation

Investigations
Finally, a half-decent Goodfellas-esque turn in the SAC case – WSJ

Alpha
George Soros has made nearly $1 billion betting against the Yen since November – WSJ

Pivots
JC Penney is the new Blockbusters – Quartz

RIP
Ronald Dworkin, legal theorist, dies at 81 – NYT

Innovation
Other robots could follow Angelina Jolie’s lead and replace human actors – Live Science

Awesome
“The statistical description we use for [gas particles] matches the behavior of people in mosh pits” – Atlantic

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