01/12/2014 08:20 am ET Updated Mar 13, 2014

The US/EU Privacy Debate Could Be Devastating

Last week the squabble over the concept of privacy in the U.S. and Europe burst onto the world's stage.

According to Andrew Higgins and James Kantor of the New York Times, "Europe in an uproar over intrusive united states surveillance (exacerbated by the Snowden leaks) ... its leaders are looking for ways to slow down legislation aimed at preventing violations of privacy at home."

The U.S. government, probably because of big business lobbying, has been reluctant to pass laws restricting access and use of personal data. Europe on the other hand has been forceful in its efforts to keep personal and corporate data (on the pretext that corporations are people too) protected and kept at home.

Two major issues lay just beneath the surface.

One, most obvious in the age of "big data," is whether Face book, Twitter, Google and other social media sites that accumulate massive amounts of data used to predict consumer and citizen behavior, runs afoul of EU laws protecting personal privacy and is effectively prohibited from collecting data in Europe. Or two, that the free flow of information and data America depends on, is entrapped in a downward spiral of lawmaking which prevents the U.S. from exporting its information good and services. This could seriously erode the U.S. economy.

As nations around the world awaken to the importance of creating a robust communications infrastructure, they will be less dependent and less willing to accept what has been considered a one-way flow of information and communications goods and services from the United States. This undoubtedly places a greater burden on U.S. policy makers to pursue the basic idea of a free, unregulated, unrestricted flow of news, entertainment and information. Clearly trade in information goods and services and the future of journalism itself face new challenges.

Writing about the U.S./EU privacy debate in the Wall Street Journal, Sam Schechner, said:

"In Europe, some politicians see personal data as a new natural resource from which European companies should profit. Others see privacy laws as a bulwark against tyranny. Both camps are reluctant to let U.S. companies transfer personal information -- such as Web-browsing patterns or purchase histories -- without guarantees that the U.S. will enforce the same privacy rules as the European Union does."

This concern about the "free flow" of information across borders is certainly not new. In the late '70s and early '80s, the term "The New World Information Order" was part of the debate by the MacBride Commission -- named after Nobel Prize winner Sean MacBride, chairman of the panel -- whose concern, then as now, is that the current flow of information and communications heavily favored the U.S. The developing countries were expressing their frustration with what they were calling a form of electronic colonialism with the U.S., indeed the Western world, dominating media flow. In protest, the U.S. and the United Kingdom, among other countries, withdrew from UNESCO in the '80s and rejoined just a few years ago.

Despite the concerns expressed by the McBride Commission report and the call for a New World Information Order, the report's concern with concentration and commercialization, and what it felt was unequal access to information and communications, has not changed significantly. The commission's call for a "strengthening of national media to avoid dependence on external sources" has had some success, and as noted earlier, many countries are now focusing on developing a robust communications media unique to their national economy and culture. The dispute over privacy could easily lead to a kind of de-globalization affecting U.S. prowess in the Internet sector.

Concern over U.S. dominance in the information sector was not limited to the developing world alone. In the mid-'70s France published a treatise called "The Computerization of Society" written by the then-secretary of the Treasury, Simon Nora and co-authored by his assistant Alain Minc, which called for a way of taxing information flows as well as information assets. As early as 1976, the French government realized that there was a basic change in the structure of its economy and it was going to be increasingly difficult to tax or control information products and services.

It was also concerned with the collection of information for subsequent data processing that was being done in the U.S. by multinational corporations located in France. To keep the data from being transmitted and processed elsewhere -- and in turn to create a robust data processing industry in France -- the French devised the concept of "data protection" and argued that nations such as France had a duty to control "the transborder flow of data" in order to preserve and enhance the communications and information technology infrastructure so essential to the economy of the future. For the first time, it was clear that data flow and media flow were one and the same and that the loss of information could hurt domestic economic development.

France and much of Europe subsequently developed privacy laws to control the flow of all data -- they called it "name-linked data" -- under the guise of protecting privacy. Such laws applied to both persons and corporations and severely threatened the free flow of trade and commerce.

Multinational banking and financial corporations and indeed all multinationals doing business in France and elsewhere in Europe were concerned about the new data protection laws and vigorously expressed those reservations. Consequently, government authorities backed away from strict enforcement as it applied to corporations. Yet the die was cast. It was clear for many reasons that if possible, information processing should be done locally and that these nations would assume greater responsibility for developing the industries important to their future in the coming, yet-to-be-defined knowledge economy.

All this may seem arcane and distant to the average American. Perhaps too little has been said or written about these issues. Perhaps most Americans don't care or simply trust the UN system. Yet unless the U.S. has a plan to negotiate and establish global polices which satisfy the worldwide hunger for the bold new future promised by the growing Internet, our own future may be in peril.