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Federal data privacy legislation could benefit U.S. economy

Data privacy laws are becoming part of a 'modern economy,' according to Google's Kate Charlet, director for data governance.

California, Virginia and, most recently, Colorado have adopted comprehensive online data privacy laws -- but a state-by-state rather than a federal approach won't be enough to keep the U.S. secure and competitive.

That's according to a panel of data privacy experts during a recent discussion of a new study from the R Street Institute, a nonprofit public policy research organization. The paper, "Congress needs to start caring about our privacy as much as China does," will be released June 14 and focuses on the need for federal data privacy legislation.

More than a web of state data privacy laws, federal data privacy legislation would be a stepping stone to a stronger national security framework in the U.S. and would help forge better relationships with foreign governments that have adopted data privacy laws, argued experts like Cory Simpson, managing director of cybersecurity, strategy and policy development and national security at Boston-based Ankura Consulting Firm and one of the report authors.

Some federal efforts are underway, such as the June 9 executive order signed by President Joe Biden seeking to protect Americans' personal data from foreign adversaries like China, but Simpson said efforts like these are not enough. Other federal efforts haven't yet gained traction, including the Information Transparency and Personal Data Control Act, a consumer privacy law that was introduced to Congress in March.   

"Congress needs to act. We need a legal construct in place," Simpson said. "If we want a truly open, interoperable, secure, uncensored by government internet that extends American values, then we need this legislation in place."

Making the case: national security

Federal data privacy legislation would benefit the U.S. in national and economic security, particularly when it comes to competition with China, Simpson said.

A federal data privacy law would enable U.S. diplomats to speak definitively about the country's position on data privacy, which is currently flimsy due to the lack of legislation, Simpson said. A U.S. federal data privacy law would establish trust with countries that value data privacy and demonstrate a willingness to compete with countries like China, which is racing to enact its own data privacy laws.

"From an allied perspective, it reinforces our relationships and makes clear that we extend American values into the digital space," Simpson said.

Kate Charlet, director for data governance at Google and a panel participant, said the U.S. is already a leader in tech and data services, and should be a leader in data protection as well, particularly since the country has had to deal with major cyber attacks against SolarWinds and the Colonial Pipeline.

A federal data privacy law sets clear rules and protections detailing how U.S. companies and companies around the world should process and transfer national data, which helps protect data that may be vulnerable to cyber attacks and ultimately helps with national security.

"Consistent standards around data collection, use and sharing give support and structure to cybersecurity efforts because a federal law can establish duties of reasonable security to protect against things like unauthorized access, disclosure and modifications," she said. 

Economic benefit in data privacy

Federal data privacy legislation would also benefit the economy, Simpson said.

If the U.S. adopted a federal data privacy law, it would facilitate a better exchange of data with businesses that fall under privacy regulations like GDPR because U.S. business data would be more compatible.

Until the U.S. has a comprehensive privacy law, America's digital economy leadership and companies will be at a global disadvantage over trust when it comes to data transfers.
Kate Charlet Director for data governance, Google

"It's needed to enable our businesses to reconnect with those around the globe and empower them to fully wield our economy internationally," he said.

Indeed, federal data privacy legislation would be "good for U.S. global influence," Charlet said. 

"The flow of data contributes more to GDP growth than the flow of goods," she said. "Federal privacy legislation can really grow digital trade … in particular promoting cross-border data flows and compatibility with rules that are in other countries that are both pro-privacy and pro-innovation."

From both a national security and economic perspective, the U.S. would benefit from federal data privacy legislation that would establish trust with other nations and enable secure data flows between businesses, Charlet said.

"What I think is clear is that privacy laws are steadily becoming an expectation of a modern economy," Charlet said. "Until the U.S. has a comprehensive privacy law, America's digital economy leadership and companies will be at a global disadvantage over trust when it comes to data transfers."

Makenzie Holland is a news writer covering big tech and federal regulation. Prior to joining TechTarget, she was a general reporter for the Wilmington Star-News and a crime and education reporter at the Wabash Plain Dealer.

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