China and data protection tensions overshadow Portugal-US trade summit

Simmering tensions over data protection and China surfaced again this week during a Lisbon transatlantic summit which had been organised to build even stronger commercial ties between Portugal and the United States. This time a US high-tech ‘cloud’ company has become a fly in the ointment in relations between the two countries.

After the row in 2019 over Portugal wanting to use Huawei technology to construct Portugal’s 5G infrastructure, a new row is brewing, this time involving Cloudflare.
Cloudflare, Inc. is an American web infrastructure and website security company that provides content delivery network services, DDoS mitigation, Internet security, and distributed domain name server services.
But personal information which may have been provided to the company from Portugal’s census programme Censos has been shut down after interference from the Portuguese National Data Protection Commission (CNPD).
In 2019 the US government had already signalled through its then ambassador to Portugal, George E. Glass, that significant Chinese investment in high-tech Portuguese companies in economically or security sensitive areas was not well viewed. It led the Portuguese foreign minister, Augusto Santos Silva, to make it clear that Portugal was an independent sovereign state that would accept investment from wherever it was offered if it aligned with Portugal’s economic interests.
The latest irritant over Cloudflare was voiced at the summit on Wednesday during a speech by the US embassy’s chargé d’ affairs, Kirstin M. Kane at the Transatlantic Economic & Trade Summit organised by AmCham – the American Chamber of Commerce in Portugal.
Cloudflare’s services sit between a website’s visitor and the Cloudflare user’s hosting provider, acting as a reverse proxy for websites. The company’s headquarters are in San Francisco, California.
“We are concerned at the recent decision by the Portuguese data protection agency regarding Cloudflare. The consequences threaten to not only upset commerce between the US and Portugal, but also have other significant implications and affect Portugal’s digital transition,” she warned. The large US companies Google and Cisco have both been actively supporting Portugal in its digital transition process at administrative, training and workforce levels through a number of protocols.
The row began on April 27 when the CNPD gave the Portuguese national statistics institute (INE) 12 hours to suspend sending personal data collected from the Portuguese Census 2021 to the US or other third-party countries without adequate levels of data protection, whether via Cloudflare, Inc., or any other company, following an investigation into information received (by Cloudflare) as part of a survey.
The INE now has to quickly close the link to the US company’s cloud data storage service. The following day (April 28) Cloudflare told the newspaper Público that there had “never been a transfer of Portuguese census data to the United States,” adding that the statements from the Portuguese data protection commission “do not precisely reflect the service provided.”
However, it now seems that the INE has severed business relations with Cloudflare.
Michael Lally, the Minister Councillor for Commercial Affairs at the US Mission to the European Union (pictured) said at the conference “I’d like to thank the chargé d’affairs (Kirstin M.Kane) for her comments on this specific issue, including over Cloudflare in Portugal.
“I support her observations as a really remarkable example of what we are up against in this area,” he said.
He defended the “capacity to move data freely and without unnecessary barriers, but with adequate data privacy protection”. “It is vital for innovation and the growth of business in all sectors and companies of all sizes,” he said.
Michael Lally stressed the willingness of the new US secretary of State for Commerce, Gina Raimondo to reach a compromise with the EU concerning a “privacy shield”.
Kirstin Kane told the summit, “We know that Portugal’s critical infrastructure is one of the main targets of Chinese investment in Europe and we remain concerned about these Chinese interests and investments used to gain economic and political influence,” adding “this concern also extends to regions where democracy and good governance are still in the process of being built.”
“I am referring to regions that are important for Portugal and the US such as Africa and Latin America where Portuguese companies with strong Chinese capital shares are making inroads,” she added.
China’s latest shareholding in a Portuguese company is in the international construction company Mota-Engil in which the China Communications Construction Company now holds a 23% capital share.
However, Luís Castro Henriques, president of Portugal’s overseas trade and investment agency AICEP told the delegates at the summit that Chinese capital was welcome.
“I think that everyone understands that Portugal, which wants to be competitive, is a country open to investment providing local rules are respected. If this is investment of a productive nature, I see no reason for Portugal to damage its own interests,” he said.