Data flows between the U.S. and Europe are significant drivers of trade and investment. For this reason, it is critical that leaders on both sides of the Atlantic get data flow policy right – adopting measures that promote data flows while ensuring that privacy, cybersecurity, law enforcement and national security equities are respected.
Today, the Brookings Institution is hosting an event to highlight a new report authored by Joshua Meltzer on “The Importance of the Internet and Transatlantic Data Flows for U.S. and EU Trade and Investment.”
This discussion is both vitally important and timely. Critical components of the effort to improve the data flows framework are represented in a number of ongoing U.S.-EU dialogues, including but not limited to the U.S.-EU Safe Harbor Framework, Mutual Legal Assistance Treaty reform, Transatlantic Trade and Investment Partnership negotiations, and the U.S.-EU umbrella agreement negotiations on law enforcement cooperation.
As these and other efforts progress, transatlantic policymakers should pay close attention to the five principal takeaways from the Brookings report.
First, data flows are mutually beneficial. In 2012, the United States exported $140.6 billion in digitally-deliverable services to the European Union. That same year, the EU exported to the U.S. $106.7 billion worth of digitally-deliverable services.
Second, the U.S. and the EU are globally competitive exporters of digitally-deliverable services. In 2012, the European Union ran a $168 billion trade surplus with the world in this category. The U.S. trade surplus was $150 billion.
Third, data flows between the United States and the European Union are so significant that the two partners have it within their power to influence how data flows will be considered all over the world. This opportunity should be seized as data flows are a source of badly needed economic growth.
Fourth, “the majority of growth in transatlantic data flows will be generated by commercial and research needs.” Indeed, already today almost 40% of data flows between the U.S. and EU are over business and research networks. European firms such as BMW, Dassault Systems, and SAP are examples of this phenomenon.
Fifth, the potential for growth is particularly strong as the Internet of Things increasingly becomes a reality. Given the EU’s $125 billion trade surplus with the U.S. in goods, data flows originating from Europe will likely increase.
Brookings has made an important contribution to our understanding of the economics of data flows. It is our hope that this report and today’s event will help policymakers understand the mutual importance of those flows and guide their leadership in setting policy.
Carl Schonander is Director of International Public Policy at SIIA.