1 May 2015

Negotiating data flows in the global economy

Since 2008, as part of the EU’s ambitious trade agenda, 10 Free Trade Agreements have been completed and 14 FTAs are currently under negotiation. 
In parallel to this, the WTO agreement in Bali in 2013 appears to have somewhat revived the multilateral agenda. At the same time, the relationship between trade and digitalisation, specifically data, has seen increasing importance.
Data is dubbed the new oil or gold by some and further digitalisation of the global economy has immense potential for growth, however, governments and citizens also have legitimate concerns that can justify data restrictions. The revelations about US intelligence agencies accessing data of EU citizens on a large scale has put the relationship of trade and data protection firmly on the EU’s agenda, and has led to citizens becoming increasingly wary of how their personal data is being used. Both at the EU as well as at the global trade regime, an adequate approach to address this issue is yet to be found.
Out of the agreements currently under negotiation, the clear priority of the EU is the Transatlantic Trade and Investment Partnership with the US. With the US Presidential election looming in 2016, EU leaders recently emphasised the importance to conclude negotiations by the end of 2015 (although reaching this deadline is highly unlikely). This could provide a timely impetus to drive negotiations forward and achieve concrete results in a year that has been referred to as extremely important in trade policy for the EU and the US. Aside from the important economic impact, the European Commission also seems aware of the importance of TTIP for the future of global (trade) standards and indeed the fact that TTIP would enable the EU and the US to set these standards for the coming decades.
At the end of 2013, the EU requested the US to implement a number of EU recommendations to the 2000 Safe Harbour agreement on data-transfers otherwise the EU would have suspend its application. This matter has threatened TTIP negotiations and toughened the EU’s position that it refuses to discuss data protection related issues in the context of free trade negotiations. As a consequence, the wider discussion about cross-data flows and trade agreements has also been negatively impacted in the EU. Whereas this debate has attracted more and more attention at the global level, and the matter has been addressed to some extent in other bilateral trade agreements (e.g. US-Korea), the EU has been remarkably absent.
In the long term, with regard to trade and data privacy, the main challenge will be to build (or re-build) trust between countries (and their citizens). It will also be important that the EU formally acknowledges that data flows are an intrinsic and key aspect of global trade and the global economy, and that they merit a comprehensive set of (trade) rules. The fact that governments and citizens have legitimate concerns about data flows, and should be able to restrict them in certain circumstances, should not prevent the EU from leading the global debate on this matter. In the long term, such rules should be elevated to a global standard, however in which form or forum should such discussions take place? It would appear that for the time being the WTO still seems to be most logical choice, but will this still be the case in 5-10 years from now?

Related contacts :

Daniel Hart
Account Executive, EU Public Affairs

email: daniel.hart@hkstrategies.com