In 2012, US law professor Anu Bradford coined the term “The Brussels Effect”, referring to the European Union’s unilateral ability to regulate global markets. Today, we have entered the Digital Age where data is replacing land, labour and capital as an economy’s main factors of production.
To thrive in the digital economy, companies will need to reimagine how value is created and distributed in such an economy. We need unified technical standards, as well as rules for data governance. Europe, with the Brussels Effect, may be the only global market with both the will and the ability to set these regulations in the Digital Age.
Some are calling data “the new oil”. But there is a fundamental difference between data and oil. Data is unlimited and sources of data are increasing indefinitely. This means economic development will no longer be restricted by limited supplies of natural resources. The way we have created value since the Industrial Age is going to change.
We urgently need governance and regulations for data, as governance has consistently lagged behind technological development. The EU is particularly strong when it comes to regulatory capabilities. Frankly speaking, data governance has been overlooked in many parts of the world. The EU, in contrast, has been a trailblazer.
The General Data Protection Regulation (GDPR) marked a huge leap forward in personal data protections. It not only allows for informational self-determination, but also provides remedies for instances when individual privacy is infringed upon. When it comes to setting standards, Europe must continue to have the confidence to move forward.
As an economy with extensive connections and trade links to other global economies, the technical standards that would best suit Europe are ones that are globally unified and support cooperation and inclusiveness.
A global market governed by unified standards would benefit many exceptional European companies, by allowing them to fully leverage their strengths. Since the Industrial Revolution, Europe has contributed more to the development of standards than any other region.
The EU’s industry standards have influenced the types of products that we produce and the way global business is done. For example, the EU’s REACH chemicals regulation guides US-based Dow Chemistry’s product execution the same way EU standards for dairy products guide how Chinese dairy factories install their equipment.
In the end, these regulations drive quality around the world. Rules-based governance and multilateralism will reinforce Europe’s position in the digital age and contribute to a thriving digital economy in Europe. This will also influence other markets to develop their own industries and economy in a more balanced way.
Today’s world is full of uncertainty. Businesses need the certainty of rules and systems to point them in the right direction. Europe is well positioned to become the world’s foremost technological regulator and the primary rule-maker for the digital economy. I hope Europe will continue to lead the development of multilateral standards and rules. All globalised companies, whether in Europe or elsewhere, will benefit from such leadership.