It’s High Time to Modernise Digital Trade Rules

IMG_0074.jpg comprThe digitalization of trade is transforming what we understand as “traditional trade” today. Besides a constant flow of goods, services, capital and people, a seamless cross-border flow of data is becoming absolutely necessary for competitive production, underpinning whole value chains across all sectors of our economy. This economic transformation is as significant to our age as when the East-India shipping company begun globalisation.

Given that “digital trade” will form a key element of EU Trade Commissioner Malmstrom’s autumn plan for a new vision for trade policy and following on from the recently announced Digital Single Market proposal, the trade team at FTI Consulting in Brussels organized a well-attended breakfast discussion about “Trade in the Digital Age”. We invited three high-level renowned speakers from the European Parliament, European Commission and voice of the tech industry DigitalEurope to discuss the key challenges and opportunities that the “digital trade” agenda currently faces.

Representing the European Parliament’s International Trade Committee and the Parliamentary Delegation for relations with the United States, Marietje Schaake (ALDE) emphasised how trade has become highly politicised because it is in the public spotlight. The impact of the digital revolution only makes it more so. Ms Schaake stressed that digital trade offers unprecedented opportunities but that accusations toward Europe of ‘‘digital protectionism’ is extremely unhelpful. Rather, the EU and US should work to find common solutions to common problems in the digital field: especially on date privacy issues.

John Higgins, Director General of DigitalEurope, highlighted the close link between the EU’s internal market and international trade, and illustrated how the recently published Digital Single Market (DSM) package by the European Commission can further help remove trade barriers on the one hand, and improve digital infrastructure on the other hand. He emphasised how SMEs were a major winner from the digital revolution with the web creating the new trade routes giving them global reach and creating greater choice for consumers.

Digital trade negotiator at DG Trade, Jan-Willem Verheijden offered his insights from the European Commission’s perspective. He mentioned that data flows are the backbone of global value chains and international trade in general, and emphasized how the EU remains strongly against digital protectionism. He underlined that data protection is considered as a fundamental right and so making this issue non-negotiable in free trade agreements with the EU. While the recently presented DSM package already takes into account digital trade, one of the key priorities of Juncker’s mandate will be to revise the much anticipated trade strategy in autumn 2015 and to include all kinds of aspects of digital trade too. One key aim of the strategy is to increase the level of trust in this area.

As regards ongoing trade negotiations, Mr Verheijden was hopeful that the Information Technology Agreement (ITA) will be finalized in autumn 2015. The EU maintains its ambition to one day multilateralize the ongoing plurilateral negotiations of the Trade in Services Agreement (TiSA) and incorporate it into the WTO system. He also added that Vietnam’s intention to adopt a law that could potentially hinder European companies to export data in its territory is a very important issue which is also being discussed in the context of finalizing an agreement with Vietnam.

The event, which was moderated by Lénaïc Vaudin d’Imécourt, Editor at EU Trade Insights, provided an excellent opportunity to all 40 participants to gain insights on how digital trade is addressed in current trade negotiations and how the EU will continue to regulate this domain. Yet, given the uncertainty regarding the DSM package, the EU’s new trade strategy and other key policy milestones, it was clear that this highly complex issue will stay a key part of the Brussels agenda in the coming months and years. The trade experts at FTI Consulting will therefore continue to follow the whole digital trade agenda and bring more insights to your attention.

Vladimir Beroun, Senior Consultant, and John Clancy, Senior Director, are in FTI Consulting’s international trade team in Brussels

 

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