EU Digital Policy and International Trade

A “Europe fit for the digital age” is a top European Union (EU) priority and a key part of EU economic recovery efforts from the Coronavirus Disease 2019 (COVID-19) pandemic. Under the European Commission’s digital policy roadmap, “Shaping Europe’s Digital Future,” the EU aims to strengthen the EU economy and improve the region’s digital competitiveness, especially with the United States and China.

The EU initiative may raise several issues for the United States, such as the impact on U.S. firms doing business in the EU and U.S. leadership in setting global digital rules and standards. The initiative may also offer the potential for partnership between the United States and the EU to address areas of common concern.

The EU has several digital efforts underway, including The draft “Digital Markets Act (DMA)” that aims to establish competition rules for large online platforms designated as “gatekeepers” and specify a list of “do’s and don’ts” among other requirements.

The draft “Digital Services Act (DSA)” that seeks to modernize the 2000 E-Commerce Directive, which set the legal framework for online services in the EU, and set liability rules related to illegal online content and products, transparency, and other requirements for all online intermediary services.

The enacted General Data Protection Regulation (GDPR), which took effect in 2018 and creates obligations on firms and rights for individuals regarding processing of personal data, including cross-border data flows.

The proposed ePrivacy Regulation, still under debate, that is to impose requirements that ensure the privacy of electronic communications by both traditional telecommunications providers and messaging services. The draft “Data Governance Act” that seeks to regulate data and set the legal foundation for a single market for sharing industrial and nonpersonal data across the EU.

The proposal on artificial intelligence (AI) that is to ensure “trustworthy AI” and a human-centric approach. Rules would categorize certain AI applications as high-risk, requiring ex ante approval for market access, while non-high-risk AI applications would be subject to a voluntary labeling scheme.

The transatlantic economy is key to the United States and the EU. In 2019, U.S. exports of information and communications technology (ICT) services to the EU was $31 billion, with potentially ICT-enabled services adding another $196 billion.

Because the EU existing and proposed rules would apply to all organizations doing business in the EU, some stakeholders have raised concerns that the rules may hinder U.S. firms’ ability to compete in the EU market, especially if the rules do not align with U.S. policies. In addition, the EU’s head start establishing digital rules may allow it to set global norms in the absence of clear U.S. direction or multilateral agreements. Various ongoing efforts in the United States to address many of the technology issues that the EU is targeting (e.g., online competition, platform content, data privacy, and AI) create thepotential for U.S.-EU cooperation both bilaterally and multilaterally.

Both political leaders and policy experts have recommended that the United States and the EU build a technology-focused alliance of like-minded democratic countries. Such an effort could help offset the rising digital and trade challenges from China as that country has sought to advance its authoritarian approach and set global guidelines and standards to regulate and control the internet. At the same time, greater U.S.-EU cooperation faces challenges amid different approaches, rules, and regulations in the digital realm, and increased tensions in the broader U.S.-EU relationship.       Purchase this Volume