22 January 2018. By Joanna Sopinska.
The European Commission is close to breaking a year-long stalemate on digital trade rules after the executive’s trade and justice departments reached a compromise on how to address barriers to data transfers, MLex has learned.
The two departments had clashed over data privacy. Justice officials sought strong safeguards for all personal data transfers in the new rulebook, whereas trade and internal-market officials said the bloc needed to ease cross-border data flows and localization rules to unleash the full potential of e-commerce.
The compromise proposal will address these issues “in a more balanced way,” an EU official told MLex. The commission plans to send a letter to lawmakers and national governments next week outlining its new proposal.
The impasse has sparked criticism from many governments and European industries, which want to facilitate e-commerce and digital trade — a broad term that encompasses the online sale of products and services, data flows that enable global value chains, and transactions on Internet-connected devices.
The deadlock prevented a data-flow element from being agreed in the EU’s trade deal with Japan, finalized last month. This week’s compromise may allow the EU to introduce data-flow provisions into its ongoing trade talks with countries including Mexico, Chile, New Zealand and Australia.
The EU is the largest exporter of digitally delivered services, and the global market in e-commerce is worth more than 12 trillion euros ($15 trillion).
Striking a balance
In its 2015 trade strategy, the commission pledged to use future trade deals to set new business-friendly rules for e-commerce and to ease cross-border data flows, at the same time protecting Europeans' personal data.
But it soon became clear that striking a right balance among all these elements would be a challenge for the commission, because of divergent views among some of its departments.
The disagreements led to a complete impasse and the commission withdrew its 2017 concept paper on data flows in trade accords, which was meant to serve as a basis for a final proposal.
The new document, which is the product of long internal discussions and consultations with EU governments, lawmakers and industries, is meant to strike a balance between the need for strong privacy safeguards and easier flow of data, MLex understands.
The text, just a few paragraphs long, is meant to serve as the basis for the bloc’s negotiating position on data flows with third countries.
“We expect the EU governments and lawmakers to endorse it,” the official said.