May 05, 2016 - 12:00pm

TTIP: Underlining the Importance of Digital Trade

Senior Director, European Affairs
Senior Director, U.S.-UK Business Council

At last week's Transatlantic Trade and Investment Partnership (TTIP) negotiating round in New York City, the Chamber and the Business Coalition for Transatlantic Trade made the case that TTIP must include a strong digital trade chapter to take advantage of the fastest growing sector of the U.S. and European economies. Alongside implementing an effective Privacy Shield agreement on data transfers, a strong digital trade chapter in TTIP can help ensure the U.S. and EU remain standard setters, not standard takers, all while strengthening our mutual commitment to an open Internet which benefits consumers, workers, and companies of all sizes.

One part of the TTIP agreement that I feel hasn’t gotten quite enough attention lately. Digital trade, the seamless flow of data and information, and e-commerce facilitated by the Internet are critical components of any truly comprehensive twenty-first century trade agreement.

The Internet has ushered in perhaps the fastest and most comprehensive shift in the global economy in its history. Whether we look at eBay, where something like 95% of its sellers are now exporting, or the future of manufacturing where machines depend on constant connections and communication, the Internet and data flows are underpinning the modern economy.

The importance of digital trade and data flows have gone so far beyond the Googles, Facebooks, Spotifys, and SAPs of the world. Everyone is a digital company now, whether they know it or not — just ask any automotive manufacturer, any energy company, or any financial services firm, not to mention anyone who uses or buys the goods or services from any of these companies. To put it simply, everyone depends on a secure and open flow of data and information all of the time.

In late April, President Obama, USTR Michael Froman, and Commerce Secretary Pritzker joined German Chancellor Merkel, EU Trade Commissioner Malmstrom, and EU Digital Commissioner Oettinger, among many other leaders, to discuss the importance of TTIP and the digital economy at the world’s largest industrial fair in Hannover, Germany.

At first blush, it may seem odd to have such a heavy focus on trade and digitalization at a conference focused on technical manufacturing processes. But, once you consider the advances of 3D printing, small-scale individualized manufacturing, machine to machine communications, and the importance of online and virtual services across the entire economy, the focus makes sense. The engagement at the highest levels of the U.S., European, and German governments should prove to be a much-needed and important boost to these negotiations.

In recent months, we have seen transatlantic debates on digital issues splashed across the headlines several times. From the suspension of the Safe Harbor data transfer arrangement to the conclusion of the EU-US Privacy Shield which acknowledges and encourages several enhanced privacy protections for data transferred across borders. We’ve also seen the passage and implementation of the Judicial Redress Act which improves the ability of European citizens to seek redress when they feel their data has been misused by U.S. government authorities.

There are important steps which remain ahead — including the final EU approval and implementation of the Privacy Shield agreement. Thanks to the diligent and hard work done by the European Commission and the US Department of Commerce, the future of transatlantic data flows is on much firmer ground, but we cannot rest just yet.

Progress on the digital trade and e-commerce sections of TTIP — and the larger Trade in Services Agreement being negotiated at the WTO — has been considerably slowed by the lack of an enforceable agreement on transatlantic data transfers. While both the European and American negotiating teams recognize the necessity of an open and seamless flow of information to the modern economy, the stalemate on Safe Harbor and then the lack of certainty about Privacy Shield has limited negotiating maneuver.

We at the Chamber sincerely hope that this time has passed. It is incredibly difficult, and in fact virtually impossible to imagine a scenario where we could have a comprehensive trade agreement in place without a functioning and enforceable data transfer agreement by its side. With that in mind, we’re working hard with the Commission and member-states to see this agreement through and we’re eager to move beyond this impasse — it’s time to put discussions on digital trade and e-commerce onto the table in TTIP.

After all, digital trade is the fastest growing segment of the global economy, representing nearly $10 trillion a year and some estimates have this amount increasing to half of the entire economy by 2025. Products and services relying on the transatlantic transfer of data are expected to add $1 trillion in value to the U.S.-EU economic relationship within the next 10 years.

The Internet is the great equalizer for small businesses, enabling end users to find the best available product to meet their needs, regardless of location or size of the company. It also allows SMEs from Athens to Atlanta to quickly and easily find new markets and consumers who they would have never been able to reach before.

The Business Coalition for Transatlantic Trade has outlined a few key objectives for the digital trade component of TTIP:

  • TTIP should enshrine and build on shared US-EU information communications technology principles and include binding and enforceable provisions that will serve to set global standards.
  • TTIP should allow for businesses to use the best available products and technology, regardless of location or methods of delivery.
  • There should be a cluster of commitments across chapters to ensure benefits run to all components of the digital economy. Basically, we are agnostic on the question of the architecture of how to ensure the benefits of TTIP extend to the digital space.
  • TTIP should allow businesses on both sides of the Atlantic to use the most dynamic, cutting edge technologies and ensure speedy innovation through the ability to leverage industry-led, global standards.
  • ​And TTIP should lock in existing levels of openness to digitally-delivered services, without preemptively carving out so-called “new services” which have yet to have even been invented yet.

​If the goal of TTIP is truly to build on and expand the strength and competitiveness of the United States and EU, the agreement must include strong, enforceable provisions on data flows, digital services, and e-commerce. These are the fastest growing parts of both of our economies. In the modern economy, an open Internet and free flows of data are not just necessary for tech companies, but for all companies and consumers.

On this last point, it is important to underline that there is so much more that unites us than divides us with regards to our approach to the Internet. Both the United States and European Union, and ordinary Americans and Europeans, place high value on their personal privacy. As they should! And both the U.S. and Europe also greatly cherish our rights to the freedom of expression online and off. It goes almost without saying that there are many world powers who do not share these values, and whose governments do not value or protect privacy. The U.S. and EU must work together to advance our common objectives here, or risk ceding our leadership on the Internet and the digital economy. Failure to agree on both the Privacy Shield and to ensure open data flows and a thriving digital economy via TTIP would have real and significant consequences.

In closing, the Chamber and the Business Coalition remain fully commited to seeing these negotiations conclude successfully. With increased stakeholder and political engagement and a willingness to make hard choices so that both the U.S. and EU will “win” from TTIP, we are confident that we can find an agreement that we can all be proud of. The Chamber and the BCTT look forward to helping you achieve that goal.

About the Author

About the Author

Garrett Workman
Senior Director, European Affairs
Senior Director, U.S.-UK Business Council

Garrett Workman joined the U.S. Chamber of Commerce in June 2015.