EU – Baltic States, Good for Business, Legislation, Markets and Companies, Technology, USA

Opportunities of trade and exchange between the EU and US are great; as so is the opportunity for growth in the ICT sector including digital.

 The EU and the US are the world's two largest economies, together representing over half of the world's GDP; and these economies are among the most open in the world. Two blocks’ trade relationship already amounts to about €2 billion a day, and sustains 15 million jobs. In 2012, US investments in Europe amounted to $200 billion and the US companies are generating jobs and earnings in Europe.

Reference: SPEECH/13/539 by Neelie Kroes, Vice-President of the European Commission responsible for the Digital Agenda, “Digital Agenda Priorities” (Brussels, 17 June 2013). 

Priority to the digital economy

The EU-US relationships could be even more beneficial if both sides would give priority to the digital economy, argued the Commissioner. The internet and its services are an active part in commercial trade; internet is also the greatest tool for sharing information, a platform that makes ideas and services travel readily so many everyday activities become at once global (so to say, delocalized).

The TTIP between the US and the EU offers a partnership more open, profound and prosperous.

But to make that a reality, there are many barriers to remove, said the Commissioner.

First, the free trade agreement is not only about tariffs as they are already relatively low. And for ICT, those remaining are for the most part already on the way out—thanks to ongoing WTO agreements.

Most important are the issues concerning various kind of regulations, standards and public procurement.

Both sides should think together before making any rules: it calls for cooperation between administrations, between regulators like the FCC and BEREC, and in some cases between judiciaries.

Some US regulations are inspiring, e.g. US net neutrality rules, which ensure the benefits of the open internet for consumers and creative startups alike.

In the US single market in ICT, American operators can serve 300 million citizens while working under one set of rules. In the EU, however, there are about twenty-seven different systems; it makes a headache for operators who want to think big and compete globally.

It has to be noted, argued the Commissioner that the American market is not perfect; the European telecoms market may be too fragmented, but it is certainly competitive. In the United States, an effective duopoly makes life hard for new entrants, if not impossible. And rules like equity caps or unequal access to spectrum and networks are outdated, and have no place in a truly open market. The result isn't just unfair competition: it means less choice and a worse deal for Americans. Hens, opening up would serve all interests on both sides of the Atlantic, argued the Commissioner.

Second, issue is standards; they matter a lot, especially in new areas like e-Health, cloud computing, or cybersecurity. For example, in cloud computing, there's a lot of evidence that uncertainty and mistrust hold people back. Standards and interoperability can build that trust, and stimulate a growing market.

Often standards best come from the industry itself rather than public intervention. But new standards can sometimes mean new trade barriers, which cross the relevant and important ideas of TTIP’s aims.

And third, public procurement plays a role; this is an area where openness could help, e.g. in those spheres where there are many restrictions on US government procurement below national level.

That matters for ICT – because public authorities are big buyers of new digital solutions. Innovations like the cloud could support them, make public services more integrated, and save tax dollars. But to benefit, those public bodies need the widest possible choice of cloud suppliers.

Other important issues

The Commissioner commented also on other important points. First, taxation: finance ministers face some tough decisions. ICT offers them a chance to find efficiencies – in healthcare, public services, education, etc. though they're also looking closely at profits.  

Tax avoidance is done by ICT companies in the US as well as by other states: companies generally won't pay tax unless they have to. But there is a serious issue of reputation and sustainability; the ICT sector has a lot to contribute, economically and socially and it is absolutely unsustainable if the sector fails to contribute in the most basic way.

Multi-billion dollar companies often continue to pay small taxes; “the US companies should understand that being good citizens in the EU is not compatible with large-scale tax avoidance”, added the Commissioner.

The digital world has already transferred peoples’ lives. With greater trade and openness between the EU and US, these two issues can deliver great changes.

The ICT involves personal data and privacy; peoples’ understanding of privacy is fundamentally changing in the digital age. Thus, the rules that are guarding these issues have to change too.

That motivation applies to many situations – even those that might seem different on the surface, e.g. the EU’s reform efforts, the US government efforts to support so-called “Do Not Track” standard, the US Patriot Act, and the PRISM programme.

The issue is both complicated and urgent: whether privacy is necessary, or possible, and what role policy should play. Privacy is not supposed to be seen as merely as an irritating issues; privacy is a fundamental right and it set out as such in the EU law. Therefore it leads to a range of new policies for society and businesses.

Therefore, the US, as a trusted partner needs to be more transparent with Europeans about what has been going on; and it should allow American companies to be more transparent with their customers and potential customers, argued the Commissioner. If the US government doesn’t choose this course, it will undermine trust in new digital services, with the risk that users will abandon them or never join the digital ranks.

The idea of data “localization”, i.e. the idea that data has to be stored where it is gathered, does not seem optimal, argued the Commissioner. And explained: “then we would miss out on the huge opportunities of a borderless network”.

On the other hand, the PRISM debate will definitely increase calls for a European cloud, with a range of possible consequences for American companies. And PRISM also highlights a golden opportunity for people to make a huge privacy-focused company. It highlights that being strong on privacy can be a competitive advantage and a great business move.

EU Cloud Computing Strategy

Whatever the market developments might be, from a policy perspective, Europe has to be seen as the safest corner of the internet and for entrepreneurs to be able to run businesses.

That is why the Commission established EU Cloud Computing Strategy, now reinforced by an EU Cybersecurity Strategy. It supports the idea of Europe as a region with clear, transparent rules and safeguards, as well as a clear and transparent legal framework.

Soon that framework will be global; in the meantime, as a minimum the Commission wants people to be confident that their data is secure across the EU.

There are some huge opportunities on offer in the transatlantic market, besides removing trade barriers. There is a need to establish a true regulatory and investment partnership, i.e. boosting European exports to the US by 28%, as well as boosting European growth, wages and quality of life. The Commission is aware that the member states are able to capture those benefits, concluded the Commissioner.

Reference: http://europa.eu/rapid/press-release_SPEECH-13-539_en.htm?locale=en