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The drive to buy local is very much in vogue, even though the note of nationalism in the Buy British slogan may not sit comfortably with some.

And despite the many good reasons to support one’s local economy, there are limits: this writer is not buying local bananas until well into retirement on Mustique.

Outsourcing is also a necessary part of managing costs in a highly competitive business environment.

But when it comes to managing your data in the cloud, a little parochialism may be a good thing.

Buyers of off-the-peg cloud contracts could unwittingly be putting themselves in breach of UK data protections laws, says Kathryn Wynn, an associate at the law firm Pinsent Masons.

Many service providers have standard terms that specify compliance with US laws, for example, which could put the customer in breach of the UK's Data Protection Act.

“In a bespoke system, this can be tackled, but in standard contracts customers struggle to get this kind of protection,” she says.

Spoiling for a fight

There are safe-harbour agreements in place to ensure data can be held in a way that complies with EU data protection laws, but not all providers are safe harbour certified, Wynn warns.

The closest thing we have to a test case for data protection in the US is the Passenger Name Records incident from a few years back, she adds. On that occasion the EU was quite firm about not allowing the US government unfettered access to data and ensured that EU-level protection was applied.

The way this was handled suggests that if the safe-harbour agreement were to be tested, the EU would take a defensive stance, but the US Patriot act that could make for quite some scrap.

And the US is not the only place that can give data controllers legal headaches. Although the EU technically has the same protection requirements across all member states, there is still some variation.

"Creating an international regime would be very difficult”

Conor Callanan, chief executive of cloud service provider Core GB, says: “Different regions have different approaches to risk. Generally, yes, your data will be safe anywhere in the EU, but in Germany, for example, insurance regulations go above and beyond what is in EU laws. There are higher requirements.”

Both he and Gary Jensen, lead consultant at Silversands, a Microsoft partner, expect more pan-EU harmonisation as cloud deployments become common.

“It used to be that data in France could not be encrypted if the government wasn’t given the key, for instance,” Jensen notes. That was changed around the turn of the century amid fears that France would be isolated within the EU and would fail to take advantage of the new online economy.

Disunited nations

Speaking this month at a cloud computing forum at the National Institute of Standards and Technology in Gaithersburg, Maryland, Vivek Kundra, the US’s recently-departed federal chief information officer, said: "It's not going to be a question of technology. [Data sovereignty] is going to be a question of international law and treaties that we will need to engage in the coming years.”

But Wynn is unsure how easy it will be to harmonise across wider geographies. “There are high-level principles out there, but they are all very theoretical," she says.

"Managing data with the US under safe-harbour agreements will be easier, but creating an international regime would be difficult. Really, this is something that needs to happen commercially.”

She says that increasingly US companies are willing to sign up to the model clauses that would provide “adequacy” of data handling and protection under EU law, but cautions that companies still need to exercise their right to audit. The other point of order to watch out for is ISO 27001, an internationally recognised security standard.

“It is not always obvious where data is held. Customers might not even know where their data is,” she emphasises.

“This is why the due diligence process is so important. Asking the right questions reveals a lot: if a company is evasive, that should sound warning bells.” ®

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