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Removing barriers to digital trade and data flows – 4 key issues for the Spanish EU Presidency

· September 18, 2023

The world is becoming more volatile and unpredictable. Authoritarian governments are on the rise, and the rules-based international order is being eroded. Europe cannot face these challenges alone, especially when we look at the field of digital and tech policy.

That is why the Spanish Presidency of the Council of the European Union should take a leadership role in enhancing the EU’s cooperation with international partners and allies, and in particular with regard to the following key issues.

1. Keep access to the cloud market open and non-discriminatory

A thriving data-driven economy requires a competitive European market for cloud computing services. Certification, standards, or other specifications that exclude global and EU cloud vendors subject to foreign laws from the market steer Europe towards digital isolationism. Hence, the EU Cybersecurity Certification Scheme for Cloud Services (EUCS) needs to be rethought. Blanket discriminatory exclusion from entire market sectors based on the nationality of companies, their shareholders, or employees is something that only non-market economies would do – not the EU.

The EUCS should focus exclusively on advancing the EU’s cybersecurity goals instead. As currently drafted, however, the EUCS would prevent EU enterprises and public entities from procuring cloud services originating from outside the EU. If Europe is serious about wanting 75% of EU enterprises to take up “cloud computing services, big data, and artificial intelligence” by 2030, it should seek to expand – not decrease – the offer of cloud technologies in Europe.

A recent ECIPE study details the threats the EUCS poses to Europe’s digitalisation. It also explains how the Scheme risks fragmenting the EU digital single market, while increasing cybersecurity risks in parallel. Where there are concerns about government access to non-personal data, the EU should seek convergence with like-minded partners. Like it did when negotiating the recently adopted Data Privacy Framework with the United States, the EU should maintain its efforts to reach a transatlantic agreement on law enforcement access to electronic evidence.

2. Adopt robust GDPR enforcement reform

The European Commission’s proposal to improve enforcement of the General Data Protection Regulation (GDPR) is an opportunity to address some of the most severe shortcomings Europe has witnessed over the last five years. Defendants’ most basic rights should be respected, for instance, including the right to appeal an EDPB decision affecting them and the right to a fair hearing within a reasonable time period. The proposal should prioritise preventing inconsistent GDPR enforcement. Preserving the one-stop-shop mechanism is also essential. Addressing cooperation between national authorities responsible for enforcing other laws than data protection and data protection authorities is equally important to ensure consistent enforcement across Europe.

Moreover, lawmakers should consider introducing swift fixes to ensure faster case-handling, including mandatory exhaustion of a company’s internal processes before complaints can be made to supervisory authorities (SAs). It would also be helpful to introduce new rules specifying to what extent an SA can initiate proceedings with a controller whose main establishment is situated in another Member State, a fair and consistent admissibility threshold, and automatic closure of cross-border complaints past a given period of inactivity.

3. Cooperate with like-minded partners to advance shared interests

In its pursuit of digital sovereignty Europe must not neglect common principles such as non-discrimination, mutual consultation, and dialogue with close partners whenever regulatory tensions arise. More than ever, the transatlantic allies need to step up their commitment to protecting shared values and the rule-based international trading system.

The EU-US Trade and Technology Council (TTC) should serve as a forum to identify and structurally address transatlantic issues, with a view to ensuring closer alignment. The EU, and its partners, should remove global barriers to digital trade and the free flow of information. Likewise, Europe needs to provide more legal certainty to attract investments that can resolve supply-chain issues and secure access to critical (raw) materials and components.

4. Lead on implementation of global tax reform, replace unilateral measures

Europe should lead efforts towards the coordinated and consistent implementation of global tax reform, replacing today’s jumble of unilateral tax measures. The OECD/G20-led tax agreement would be a game changer in this respect. The technical implementation of this tax reform should be profit-based, administrable, and respect the US global intangible low-taxed income regime. The EU should refrain from introducing any new discriminatory digital taxes or levies to avoid derailing global tax reform.

European Union

DisCo is dedicated to examining technology and policy at a global scale.  Developments in the European Union play a considerable role in shaping both European and global technology markets.  EU regulations related to copyright, competition, privacy, innovation, and trade all affect the international development of technology and tech markets.