The United States and Europe have failed to agree on the mutual transfer of digital data, including financial information and social media.
Despite last-minute talks on Sunday, the two sides remained far apart on specific details required to approve a comprehensive deal, according to the New York Times.
Without an agreement, companies that regularly move data, including tech giants like Google and nontech companies like General Electric (GE), could find themselves in murky legal waters.
European and American officials had until Sunday evening to meet a deadline set by Europe’s national privacy agencies, some of which have promised aggressive legal action if the current negotiations founder. Those agencies will publish their own judgment on how data can be moved safely between the two regions on Wednesday.
With time ticking down, the two sides are now hoping to agree to a broad deal before European national regulators act on Wednesday, according to several officials with direct knowledge of the talks, who spoke on the condition of anonymity because they were not authorized to speak publicly.
Still, negotiators said sticking points remained — including over how Europeans’ data would be protected from surveillance by the American government and how Europeans could seek legal remedies in American courts — and neither side could guarantee the final outcome.
The rules governing the transfer of online data have become a vital issue for many businesses. Facebook and Google, for example, use the information to help tailor the advertisements that are central to their businesses. Many nontech companies, like GE, move data related to their customers and employees, as well as on how their products are used.
No big American company is expected to change how it does business immediately. But many have gathered teams of lawyers to protect themselves in case no deal emerges.
With the talks increasingly stalled, Penny Pritzker, the United States commerce secretary, was expected to call Vera Jourova, the European commissioner of justice, on Sunday in the hopes of brokering a deal.
The negotiations began three months ago after Europe’s highest court invalidated a 15-year-old data-transfer pact, a so-called safe harbor agreement. The judges ruled that Europeans’ data was not sufficiently protected when being transferred to the United States.
European and American negotiators had been talking for years about a new deal, but the court’s decision — which went into effect immediately — made action increasingly urgent.
In recent weeks, American officials have offered a number of concessions to their European counterparts. They include increased oversight over American intelligence agencies’ access to European data, according to several officials involved in the discussions, who spoke on the condition of anonymity.
European officials, though, have expressed doubts that such moves would hold up if challenged in European courts. They have asked the Americans to provide specific details about how the current proposals would work in practice.
In particular, Europeans want more information on the limits to American intelligence agencies’ access to European data, and on how Europeans can file legal claims in the United States.