Carl Bildt
Once upon a time, there was something called the Transatlantic Trade and Investment Partnership (TTIP). Proposed with fanfare in 2013, it was meant to usher in a new era of economic integration in the Atlantic region, much like the ambitions for the Trans-Pacific Partnership in the Pacific area.
Of course, there was already the security alliance across the Atlantic with NATO, but the TTIP was supposed to be its counterpart in a world where the competition with a rising China already started to loom large. With TTIP in place, the Atlantic region was expected to be able to set the rules and standards for global trade in the years ahead.
But the TTIP is now history. Regulatory alignment in different areas, despite the potential it would have unleashed, turned out to be a tricky business. And there was a fair deal of suspicion in parts of Europe against aligning with U.S. standards that were sometimes seen as too weak.
Then, of course, came the Trump administration. It didn’t kill off the TTIP talks, as it did with the Trans-Pacific Partnership (TPP) agreement. They just faded away and were never mentioned again. And in Europe, it was quickly recognized that talking trade with President Donald Trump was inviting trouble.
Four years later, the world has changed. The European Union has gone forward with a series of agreements with key partners around the world. And over the past few months, China has emerged as a larger trading partner to the E.U. than the United States.
But even more important is the rise of digital issues. Container ships are still plowing the oceans, but it’s the data flows that increasingly dominate and define the relations between the economies of the world. The pandemic has further boosted our entry into the digital age.
Here, as well, the rise of China is a significant factor. It continues to invest heavily in all possible digital technologies, its agile entrepreneurs have been successful in harnessing their potential, and the leadership has recognized the importance of these technologies to bolster their control on society. There is little doubt that China is a rising digital superpower.
Europe has been late to wake up, and has thus far tended to concentrate its efforts on trying to regulate whatever can be regulated. The General Data Protection Regulation on privacy is the most important example, but there are a number of far-reaching other proposals on the table in Brussels.
Often this has been clouded in the language of “digital sovereignty.” Exactly what that means in a world where we are more and more dependent on free flows of data is far from clear. For some, there is little doubt that it means sovereignty primarily from the United States. In some countries, American tech giants are seen as mortal threats to the European way of life.
But a Europe that has fallen behind in the digital race — that’s an uncomfortable fact — can never regulate itself to the top. Only a dramatic focus on fostering innovation can hope to achieve that, but that will require a policy reorientation.
Just one example: The one area where Europe has a global leadership position is 5G, which is a key to the next stage in the digital revolution. With Ericsson and Nokia, Europe can give China a match. But regulatory and other hurdles mean Europe is now significantly behind both China and the United States in deploying and starting to use these networks.
Europe faces a choice: Either it works toward “digital sovereignty,” aiming at least partly against the United States, or it seeks a deep digital partnership across the Atlantic.
In its policy paper welcoming the Biden administration, the European Commission calls for a “joint EU-US tech agenda,” wants to “join forces as tech-allies to shape technologies, their use and their regulatory environment” and proposes setting up a E.U.-U.S. Trade and Technology Council.
That’s an excellent policy approach, and the sooner a deep dialogue on digital issues starts, the better. The Privacy Shield arrangement that facilitated the free flow of non-personal data across the Atlantic has been shred to pieces by the E.U. Court of Justice and requires an urgent replacement to prevent major damage to the relationship. There is a lot of pressure in Europe for different forms of digital taxation, which could lead to major problems in bilateral ties if a compromise is not found. Then there is the issue of the regulation of the digital platforms, where there might be some convergence across the Atlantic but where much more work needs to be done.
China is trying to shape the standards and rules of the future Internet and global digital infrastructure, and does it with skill and determination. The brutal fact is that if the United States and Europe start to go down different roads on digital issues, this is bound to make Chinese global digital ambitions easier to achieve over time.
The TTIP — along with the industrial age — is history. Now the digital age is coming, and we need an ADP: an Atlantic Digital Partnership.
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