Euractiv | 23 November 2017

MEPs amp up pressure on Commission over digital trade

By Catherine Stupp

MEPs are exerting pressure on the European Commission to draw up rules on data flows in foreign trade agreements, an area where the EU executive has so far not pinned down any tangible policy.

The European Parliament’s Trade Committee (INTA) will vote Thursday (23 November) on a set of demands for clearer rules on digital trade deals and a stop to barriers that hamper the operations of European companies outside the bloc.

“It’s a rapidly changing field and I think we have no time to lose to set up a strategy that we would like to see in relation to our trading partners,” Dutch Liberal MEP Marietje Schaake, the author of the Committee report, said in an interview.

The report is not legally binding, and the Commission has not announced plans to come out with such a strategy.

Schaake said there’s an urgent need for the bloc to agree on rules that guarantee European firms benefit from trade, and that safeguards citizens’ data protection rights.

A range of industry groups have urged the Commission to outline conditions for data transfers in free trade agreements. Schaake argues that governments should craft those rules instead of private companies, like Chinese ecommerce giant Alibaba did earlier this year when it set up a digital free trade zone with the Malaysian government.

“We need to make sure that public interests are served and that it’s not companies setting the norms,” Schaake said.

Her report takes aim at countries outside the bloc that impose restrictions on European companies.

Schaake said a legislative proposal that the Commission announced in September to get rid of national data localisation laws in EU countries could have a knock-on effect of discouraging similar restrictions in other parts of the world. The explicit goal of the law is more narrow: to open up data flows only within the EU and allow firms to store data in any member state.

“The global context is very important if we want to address Russia and China’s measures to force servers to be on their territory, including the access for authorities that comes with it. It makes sense that we lead by example,” she said.

Russia and China both have laws that force companies to store consumer data in the countries, which increases business costs. Lawmakers in Brussels refer to the measures as protectionist barriers to trade.

So far, the Commission has shied away from agreeing to put data rules in free trade agreements, despite pressure from more than a dozen EU member states. In May, ministers from 15 countries wrote to the EU executive asking for data rules in trade deals.

Different departments within the Commission have squabbled over whether to include rules on data flows in those deals. Officials opposed to putting data flows on the negotiating table have concerns about data protection.

But Schaake argues that leaving data out of foreign deals misses an opportunity to craft rules that could be in Europe’s interests, which she says include privacy rights.

“It’s an illusion to think there are no data flows now. It’s just about what rules you want around them to make sure that principles and rights are protected,” she said.

Other MEPs have also called on the Commission to draw up rules on how data can be transferred abroad under free trade agreements.

“The Parliament is saying that the way to do those negotiations cannot be ignored by the Commission: Come up with an action plan,” said Luxembourgish centre-right MEP Viviane Reding, who is a former EU Commissioner in charge of data protection and technology policy. MEPs from across the political spectrum have backed Schaake’s report, Reding said.

For now, companies can transfer data out of the EU if they receive clearance through contractual agreements, or are moving data to countries that have secured so-called adequacy agreements that prove their privacy rules meet the bloc’s strict standards. The EU has such agreements with 12 countries, and is now trying to seal similar deals with Japan and South Korea.

Schaake called on the Commission to make its criteria for those adequacy deals more transparent and predictable, which she said could help to clarify how trade affects citizens’ rights online.

Adequacy agreements have come under increased scrutiny since the European Court of Justice ruled in 2015 that the EU-United States safe harbour deal was illegal because the US government did not safeguard Europeans’ data protection rights. Safe harbour was replaced last year by the privacy shield agreement.

Schaake’s report also outlines demands for the EU to protect net neutrality when it agrees to spend foreign development aid money, and calls for export control rules on surveillance technologies.

In a separate vote on Thursday, MEPs in the INTA Committee will also decide whether to approve a draft bill to overhaul the bloc’s export rules. The Commission proposed a change to the law last year that puts new controls on technology products that can be used for surveillance.

MEPs must negotiate an agreement on the law with member states and the Commission before it can go into effect.