EU needs a digital trade strategy fit for purpose

The EU needs a digital trade strategy that is flexible and puts SMEs first, writes Emma McClarkin.

Emma McClarkin | Photo credit: European Parliament audiovisual

By Emma McClarkin

02 Oct 2017

The digital revolution is changing every aspect of our lives, from how we order and consume food to how doctors and nurses treat us. Technological innovation is the driving force behind the EU's economy, and digital trade is growing in importance. The global eCommerce market is now estimated to be worth over €12 trillion. 

Digital trade provides more choice, lower prices and a larger market. The opportunities for consumers and SMEs are significant, and the EU's digital trade policy must work for them. The European

Parliament's international trade committee is developing a digital trade strategy report, and there are three things that the report must address to make the most of the opportunities the digital revolution provides. 



First, the EU must remain ahead of the curve by creating a framework that will enable businesses to innovate and provide consumers with a growing variety of services at lower prices. A rigid and static regulatory framework will stifle innovation and prevent the EU's digital economy from flourishing. The European Commission must take a flexible approach in developing both the digital single market strategy and the trade for all strategy. 

Estonia's EU Council presidency could not have come at a better time. It is a country that has embraced digitisation and allowed innovation - such as the recent creation of a public sector data exchange between Finland and Estonia so that a doctor in either country can instantly access the medical records of a patient from the other. It is vital that Estonia uploads their knowledge on digital trade so that the EU can realise its digital economy's full trading potential. 

Second, SMEs must be at the forefront of the Commission’s approach. Between 2005 and 2014, cross-border data flows have increased 45-fold and now compete with total global flows of trade and finance. 

As a service-based economy, the UK relies on the transfer of data across borders more than most, in particular, our flourishing FinTech industry. However, SMEs do not possess the resources to store big data and cannot incur the costs of operating abroad in restrictive business environments. 

Protectionist measures such as localisation that require companies to have a physical database in the country if they want to operate online platforms will squeeze SMEs and stifle innovation.

Assessments on the impact geographical restrictions have on SMEs must feature and inform future EU trade agreements to open access for European SMEs in foreign markets.

Third, the interests of citizens and consumers must be at the heart of the strategy. Data flows are the lifeblood of the modern global economy, but the need to harness its potential must be balanced with privacy and security threats through transparent and accountable regulation to demonstrate that it is possible both to uphold citizens’ basic rights and extol the virtues of sharing data. We must warn against digital protectionism though, as that harms consumers and is not the solution to privacy concerns. 

These are the three areas I believe that the EU must address in its digital trade policy. Ensuring that the EU negotiates trade deals that include rules for eCommerce, cross-border data flow and reduce digital protectionism will enable our digital economy to thrive. 

They must be rules set with our consumers and SMEs in mind. I look forward to working with colleagues to build this digital trade strategy that will enable trade to evolve and flourish in the 21st century.


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