Over the past twenty years, cross-border data flows have become a strategic and necessary element of the transatlantic economic relationship. In fact, data flows between the EU and the US are higher than any other cross-border data connection in the world – around 50% higher than the data exchange between the U.S and Asia. But while this huge flow of data nowadays represents an essential part of trade and communication between the EU and the US, contributing to enormous economic growth on both sides, the exchange between the world’s two largest economies also comes with its own set of challenges and risks that threaten such potential growth. To discuss both the benefits and challenges of transatlantic data flow and how to shape such flows in a free and save way for the future, The GED Team, together with the “Global Economy and Development” program at the Brookings Institution, will be holding a conference next week on May 26th in Berlin.
The flow of data across the Atlantic has brought immense benefits for both sides
The ability to access and transfer data freely has boosted productivity, expanded trade and eased foreign investments, thus creating countless opportunities for businesses and customers on both sides of the Atlantic. A large part of the international trade in services takes place almost exclusively in digital form. Such digitally deliverable services include finance, consulting, software and royalties for intellectual property use. In 2012 alone EU exports of digitally deliverable services were estimated at $465 billion and imports at $297 billion.
Outside of international trade statistics we find other ways cross-border data flows act as an important source of economic growth. Global supply chains are managed and software accessed via the large transatlantic data flows. Businesses rely on such data flows to communicate internally as well as externally with customers and suppliers.
In the last decade those channels especially have been used in increasingly innovative ways.
- Through them internet companies can use the interaction with customers, suppliers and other stakeholders to harness their intelligence in product development efforts.
- Evolving mechanisms like crowdsourcing allow people situated all over the world to contribute tasks or become co-creators in a new product or business endeavour.
All these new business models require data and information to move freely across borders and small and medium-sized enterprises (SMEs), especially profit from such free movement of data as they are provided with opportunities to participate in the global economy otherwise not available to them.
Out-dated data protection laws and regulatory differences need improvement
Nonetheless, regulatory dissonances on data privacy, data storage, intellectual property and more still hinder the free and safe circulation of data between the two economic powerhouses, at the expense of citizens and businesses alike. For European and U.S. companies (above all SMEs), navigating the myriad rules and legal approaches often proves time consuming and, from time to time, risky. With many regulations additionally becoming more and more out-dated as technology progresses faster and faster, an adjustment to the current system is bitterly needed.
In the post-snowden world and with a continuous wave of surveillance related news items in European media, data privacy and protection in particular are much criticised aspects of the free flow of data between the two continents. European companies or consumers, for example, who have their data stored in a cloud, could likely be subjected to U.S. data protection laws as 85% of cloud computing service providers are currently located – and thus have their servers on – U.S. ground. On the European side, and in light of the ongoing TTIP negotiations, Brussel hence wants a thorough review of the Data Protection Regulation (DPR). Issues, however, surrounding informed consent for the use of data, sanctions, privacy by design and red tape remain sources of friction between the European Parliament and EU member states. Our ability to fully take advantage of transatlantic data flows will depend on the U.S. and EU’s willingness to sustain and improve the flow of data across the Atlantic.
For that reason we have invited numerous knowledgeable voices for our conference in order to discuss how such an improvement might look like and how we can assure a continued economic growth through free and safe transatlantic data flows for the next decades to come. Our Berlin event will start with introductory remarks by MEP and former Vice President of the EU Commission Viviane Reding on “Rebuilding Trust in Transatlantic Data Flows”, followed by a presentation of Joshua Meltzer’s paper on “The importance of the Internet and Transatlantic Data Flows for U.S. and EU Trade and Investment”. The presentation will give to our selected audience of regulators, business leaders and civil society representatives a better sense of the economic consequences of transatlantic data flows. After Dr. Meltzer’s presentation we will have a short Q&A with Viviane Reding and Joshua Meltzer before we continue with a panel discussion, presenting further prominent voices and designed to tackle the challenges laid out in this article.