EU sees data transfer deal with Japan early next year

BRUSSELS (Reuters) - The European Union aims to conclude a deal allowing businesses to seamlessly transfer personal data between the bloc and Japan by early next year, building on the recent agreement on a free trade pact.

Cross-border data flows are key to most businesses. These can include moving employee information around, credit card details to complete online transactions, and people’s browsing habits to serve them targeted ads.

However, strict EU data protection rules forbid companies from storing Europeans’ information on servers in countries deemed to have an inadequate level of privacy - only 12 meet the standard - meaning firms have to rely on other more complex legal contracts.

EU Justice Commissioner Vera Jourova said on a trip to Japan the EU executive was committed to adopting a decision declaring Japan’s data protection framework “adequate” early next year.

“An adequacy decision would be great news for business as it would allow for the transfer of personal data from the EU to Japan without the need for extra authorisations,” Jourova said.

“This will cut red tape and thus reduce costs.”

A person familiar with the talks said differences remained on the protection of sensitive data, such as sexual orientation and trade union membership, which are not recognized in Japanese privacy law, as well as how complaints from EU citizens would be investigated and remedied.

A similar data transfer pact with the United States which underpinned billions of dollars of transatlantic trade was struck down in 2015 by the EU’s top court on the grounds it did not sufficiently protect Europeans’ data from U.S. snooping, throwing the business world into legal limbo.

A new one has since been negotiated and has been in place for over a year.

The EU and Japan earlier this month concluded the world’s largest free trade agreement which will make up about 30 percent of global output.

Jourova said she wanted to complement that agreement with one on data flows as “data are emerging among the most important assets of the 21st century economy and are underpinning the trade relations.”

Reporting by Julia Fioretti, editing by David Evans