European Commission President Jean-Claude Juncker's Chief of Cabinet Martin Selmayr positions on digital trade have rankled some within the Commission | Patrick Seeger/EPA EU trade, the Martin Selmayr way The chief of staff to Commission President Jean-Claude Juncker prefers analog to digital trade deals.

In a behind-the-scenes struggle over free trade playing out in Brussels, Martin Selmayr got his way — yet again, as his admirers and detractors might say.

The powerful chief of staff to President Jean-Claude Juncker this month blocked a plan supported by advocates of digital trade in Brussels and EU capitals to include data in future trade agreements.

"For the EU, privacy is not a commodity to be traded. Data protection is a fundamental right in the EU," Commission spokesperson Mina Andreeva said, responding to questions on Selmayr's views on data in trade.

Critics warn the position could set a dangerous precedent for the bloc's potential global leadership on trade in data. Diplomats and Commission insiders say it points to Selmayr's desire to keep trade deals uncontroversial.

German and French citizens, in particular are skeptical of sending data across borders after revelations that millions of private videos, phone calls and messages had been recorded by British and U.S. intelligence services as those data travel across the Atlantic. As the mastermind of the EU’s elaborate data privacy regulation, Selmayr is particularly sensitive to these concerns.

The EU has been on a trade deal streak, ratifying CETA, and signing a major political deal with Japan — thanks in part to careful strategies to keep out some of the most controversial provisions.

Trade enthusiasts, however, see clear benefits. So-called “data flows” clauses in trade deals would allow companies to move personal data, such as credit card details or search history, across borders without having to store them in the country where the customer is. Such provisions would make it much cheaper to do business, because firms would not have to build expensive servers in every country where they want to operate.

Selmayr insists that questions of data movement should remain outside of trade agreements, specifically intervening to keep it out of the latest deal with Japan, according to two diplomats and a Commission official.

"Dialogues on data protection and trade negotiations with third countries follow separate tracks," Andreeva said.

European Commissioner for Justice and Consumers Věra Jourová confirmed Selmayr's thinking at a POLITICO Playbook Breakfast on Wednesday. "It will be a matter of future development ... there is such a discussion going on," she said, adding that she hopes to draft a separate privacy agreement on data transfers with the Japanese.

Selmayr's opposition angered the Commission’s trade arm, which was fighting to include those provisions. The internal power struggle has left Commission officials publicly contradicting themselves.

Selmayr’s maneuvering also enraged more than 15 EU countries — including Spain, Italy and Northern European countries — whose officials say trade deals should allow data to zip freely between Europe and Japan, or Mexico, or South America. That would boost competition, they argue, and beat back protectionist policies on data around the globe. They were angered by the Commission’s fait accompli approach, one diplomat said: “They’re saying take it or leave it.”

Exception becomes rule

Like-minded countries vented their frustration during a meeting with the Commission’s top trade official Jean-Luc Demarty on October 6, two EU diplomats present at the meeting and one briefed on it said.

During the meeting, Demarty declared that future trade deals would include data flows.

“Japan will be the exception,” Demarty promised, according to the accounts of the EU diplomats.

After this article was published, Demarty denied that account of the meeting. He told POLITICO that he explained to the diplomats that a “specific” solution had to be found for the accord with Tokyo, but insisted that Brussels had no “view on the applicability to other trade negotiations of the approach taken in Japan.”

“We risk ending up as a rule-taker instead of rules-makers if we do not act now" — Marietje Schaake MEP

On October 9, however, the Commission publicly contradicted Demarty, telling journalists that Tokyo could indeed be a template for leaving out provisions on data flows from the trade accords with Mexico and the South American trade bloc Mercosur.

“It’s very possible that we will have something similar to what is the solution with Japan,” the Commission said in the official briefing with reporters.

Trade attachés said Selmayr intervened over the weekend to rein in Demarty. “Selmayr’s line is very clear: The solution found in the Japan deal is not an exception but a blueprint for all trade deals," one EU diplomat said.

Commissioner for Trade Cecilia Malmström said she is hopeful this won't be the case.

“That balance is quite tricky, we are not fully there yet. But I think it is approaching,” the Swedish commissioner said, referring to the issue of data flows also being raised at a summit of EU leaders in Brussels on Thursday. “We are doing our utmost to find that formula and I hope and I believe that [data flows] will be in the Mexican agreement."

Not another TTIP

For Selmayr, including personal data in trade deals could trigger public upheaval similar to a proposed deal with the U.S., the Transatlantic Trade and Investment Partnership, and the new arrangement with Canada, called CETA, two EU officials familiar with his thinking said.

Opposition to those deals mobilized hundreds of thousands of people in Germany, who marched on the streets of Berlin, Hamburg and Munich — and millions more across Europe who donated to campaign groups and signed petitions opposing the deals in protest of possible job losses and lowered environmental and consumer standards in Europe.

That backlash caught the Commission off guard and nearly froze its whole trade agenda — one of the Commission’s most important competences. The episode led to soul searching in Brussels, with fears of Juncker’s presidency ending without major accords in his legacy.

The EU has other backlash as precedence too: The European Parliament in 2011 voted down the Anti-Counterfeiting Trade Agreement (ACTA) largely because of data privacy concerns.

But in 2017, the tables turned. The EU has been on a trade deal streak, ratifying CETA, and signing a major political deal with Japan — thanks in part to careful strategies to keep out some of the most controversial provisions.

Data is now viewed as one of those provisions sacrificed to make trade deals politically viable.

Selmayr has some allies: France, Greece and Slovenia have spoken in favor of keeping data out of trade deals, arguing the provisions could undermine the EU’s strict data privacy rules.

Deals should include things like cars, cheese and beef. Data shouldn't be a part of deals until the EU has set up a common position on privacy, Selmayr insists, according to diplomats and EU officials.

Most importantly, free trade should not come at the expense of privacy, said Finnish Greens MEP Heidi Hautala, adding: “We should not trade away the citizens’ rights.”

Digital leadership at risk

Excluding data flows puts the goal of global EU leadership in the digital arena at risk, Dutch Liberal MEP Marietje Schaake said.

“The EU should take the lead in shaping values-based rules for digital trade,” she said. “We risk ending up as a rule-taker instead of rules-makers if we do not act now.”

The EU taking charge appeared to be the game plan — until recently.

At the beginning of the year, the Commission’s trade and justice officials reached an agreement on the role of data in trade. The justice department wanted to guarantee that data flowing between trading partners was protected according to the EU’s privacy regime. Two EU officials said the College of Commissioners reached a common position that data flows should be included, with safeguards for privacy.

A draft concept paper was even floated to member countries to ensure everyone was on the same page.

As soon as Selmayr reviewed that paper, the agreement was off, according to two EU officials.

Selmayr's stake in the game dates back years.

“With EU-Japan … we have a window of opportunity to take a [leadership role] for our digital standards globally" — Vivane Reding

Viviane Reding, a former Commission vice president in charge of justice, promoted him from a spokesperson to her chief of staff in 2010. It was in this position that he played a major role in rewriting Europe’s data protection regime, enshrined in the General Data Protection Regulation. Through that regulation, he set out rules on how personal data should move across EU countries.

When his former boss Reding, now a European People’s Party MEP, wrote an opinion piece directed at the Commission late last year in March on the role of data protection in trade agreements, Selmayr was reinvigorated, EU officials indicated.

Shortly after that he slammed the brakes on any proposals to include data flows in trade.

The officials said he had no right to do so, arguing Selmayr ignored the commissioners’ already agreed-upon common position.

Even those who support Selmayr’s view on privacy in data flows are still rooting for action, soon. They include his former boss, Reding.

“With EU-Japan ... we have a window of opportunity to take a [leadership role] for our digital standards globally,” she said.

Selmayr hasn't budged, and Reding seems to be understanding of his data protection justification. "A chef de Cabinet has to counsel the president [of the European Commission,] and the president is the guardian of the treaties. You must know that data protection is inscribed in the treaties, and in the Charter of Fundamental Rights and we have legislation on this. It is basic," she said.

When 15 trade ministers wrote to the Commission in May, asking it to include data flows in trade deals, Selmayr waved off their request, according to the account of one trade attaché.

“Of course they say that, they are trade ministers,” the diplomat recalled Selmayr saying.

“I asked the Commission what it would take for Selmayr to change course,” the attaché said. “They answered: an intervention at the highest political levels” — meaning presidents or prime ministers.

UPDATED: This story has been updated with comments from Jean-Luc Demarty, the European Commission’s director general for trade.