Building digital partnerships and promoting free trade
The EU is a global leader in advancing data protection, enabling cross-border data flows, building digital partnerships, and promoting free and open trade. According to the Organization for Economic Co-operation and Development (OECD), the EU is the world’s largest trader of services, with services constituting 25 percent of its GDP and exports exceeding €900 billion annually. These services support 21 million jobs within the EU and account for a significant portion of both outbound and inbound foreign direct investment.
The EU’s 2021 trade strategy underlines that “European businesses rely on digital services, and this will only increase. Data are the lifeline of many businesses and a critical component of the EU’s supply chains.”
To ensure Europe continues leading the way in digital trade, here are a few recommendations from BSA:
Recommendation #1: Embrace Policies That Enable Free Data Flows
Forward-thinking digital policy must enable the free flow of data, as it directly helps job creation, economic competitiveness, and innovation across all sectors. The EU must recognize that global services rely on seamless cross-border data flows, which positively impact the economy and contribute to digital trade between the EU and third countries.
BSA advocates for policies that build trust in the digital economy while ensuring the transfer of data across borders. This means avoiding the imposition of data localization requirements, which can hinder the free flow of data. Contrary to common beliefs, data localization does not necessarily enhance data protection. Whether it pertains to privacy legislation, health data spaces, certification schemes, or rules for non-personal data transfers, data localization can undermine the objectives of European data protection laws.
The cornerstone of EU data protection legislation, the General Data Protection Regulation (GDPR), is designed to ensure a high level of protection while facilitating the free movement of personal data. As the EU strives to establish its standard for personal data flows as a global benchmark, it must also promote international best practices that support a risk-based approach and the interoperability of privacy systems.
Recommendation #2: Enhance Personal Data Transfer Mechanisms
To promote the free flow of data, the EU should strengthen its toolbox for international personal data transfers. Businesses rely on a robust data protection system to facilitate global data flows, making it imperative for the EU to strengthen its existing GDPR-compliant transfer mechanisms. This includes leveraging adequacy decisions, certifications, codes of conduct, Binding Corporate Rules, and Standard Contractual Clauses.
Furthermore, the EU should prioritize expanding adequacy negotiations with third countries and international organizations to accommodate the evolving global data economy. Businesses need additional support to utilize Standard Contractual Clauses, especially in analyzing third-country legal systems. Each transfer mechanism plays an important role in supporting cross-border data flows, catering to diverse company needs while maintaining strong data protection safeguards.
Moreover, successful negotiations for an EU-US Cloud Agreement would establish an improved law enforcement coordination mechanism, benefiting both EU and United States citizens. This agreement would enhance safeguards, strengthen law enforcement agencies’ ability to combat crime, streamline cooperation processes for companies, and reinforce transatlantic cooperation on data transfers.
Recommendation #3: Expand Digital Partnerships for International Data Flows
The EU should build on its successful digital trade agenda by leveraging the EU-Japan agreement as a blueprint for future trade deals. This agreement sets a precedent for facilitating international data flows and bridging differences in data governance approaches, which is necessary for driving economic growth and digital innovation.
Furthermore, the EU’s emerging digital partnerships with countries like Japan, Korea, Singapore, and Canada are instrumental in advancing shared visions for economic advancement. To maximize impact, the EU should broaden the scope of these partnerships and establish new ones with like-minded countries.
Initiatives like the EU-US Trade and Technology Council exemplify outcome-oriented forums that promote the free flow of data and prevent data localization requirements, reinforcing transatlantic tech and trade ties.
BSA welcomes the EU’s global leadership on trade at the World Trade Organization and urges continued efforts to shape digital trade rules, including rules on data flows, prohibition of localization, protection of source code, and customs duties for electronic transmissions. Upholding principles of non-discrimination and minimizing trade barriers, particularly in the context of e-commerce, is essential. The EU should continue supporting ambitious work on a Joint Statement Initiative on e-commerce and protecting a customs-free regime for electronic transmissions.
Recommendation #4: Collaborate Internationally on Emerging Technologies
To maintain competitiveness and prosperity, the EU must embrace digital transformation while ensuring the safe and ethical use of emerging technologies. This necessitates close collaboration with international partners, leveraging existing multilateral initiatives. By engaging with developers, companies, and stakeholders, the EU can promote innovation while upholding global standards.
Following the EU-US agreement on drafting the world’s first global AI Code of Conduct, the EU should continue engaging with G7 partners to advance International Guiding Principles on AI. Moreover, collaboration with like-minded countries, such as the US and the United Kingdom, along with international organizations, like the OECD and the Council of Europe, is central to promoting global AI governance.
By fostering international cooperation, the EU can shape a shared vision for the responsible development and deployment of emerging technologies, ensuring their positive impact on economies and societies worldwide.
