By Jeff Joseph, President, SIIA
I was honored to serve as one of four presenters at a session held November 18, 2021 by the U.S. Department of Commerce as the agency seeks input to inform US government participation in the US-EU Trade and Technology Council (TTC). The session provided a forum to enable a variety of stakeholders to discuss the importance of digital tools to the success of small- and medium-sized enterprises (SMEs), and identify their needs, experiences, strategies and best practices with a “view to ensuring a better understanding of the barriers to their digital empowerment.”
I made four key points during my presentation:
First, we need to foster a regulatory environment that reflects the unique needs of SMEs. Specifically, we need tailored rules. As we have learned during the pandemic, small businesses require more flexibility now than ever before. A law that broadens its scope to expand the definition and provides leeway to include more small business exemptions would greatly benefit many sinking businesses that are trying to stay afloat. More, a lack of tailored regulations not only creates barriers for SME’s, it ultimately is anti-consumer and anti-economic growth, by slowing or preventing new innovations from coming to market altogether.
Annual or periodic filing requirements with regulators provides one example of the challenges presented by a one size fits all approach. It is one thing to require public companies to make annual filings with regulators. It is quite another to require essentially the same level of reporting and disclosure of SMEs and startups that cannot afford to slow-track innovation and hire a cadre of lawyers.
We’ve also seen close hand how the GDPR has made it harder for US-based SMEs to operate in Europe. The standard contractual clauses require American businesses to submit to the jurisdiction of a European regulator. They also create third party beneficiary rights in data subjects via contract, giving them private causes of action against businesses that allegedly mishandle their information. A small business cannot afford to litigate overseas.
Second, we must ensure that the US and EU work together to foster diversity, equity, and inclusion (DEI). Our members are united in a shared belief that promoting better outcomes in DEI is not only morally correct but will lead to more innovation – research proves diverse organizations provide better business results – and expand economic opportunity.
This is not just esoteric. This view translates into the policy realm in many concrete ways for the TTC.
One, we should explore measures to increase access to high-speed broadband. There is a wide division of access across the EU as 36 percent of the Central and Eastern European population lack connectivity, compared to roughly 19 percent in Western Europe. While there are similar problems in the US we are extremely pleased that Congress has enacted measures to expand broadband access.
Two, we should develop joint US-EU credentialing and apprenticeship programs to create a diverse, multinational workforce, leveraging the available resources of the US and EU governments to support cross-border education and training opportunities.
And three, we should explore ways to enhance education, including upskilling and continuing education, to foster a diverse, skilled and robust workforce for the digital economy in both the US and the EU. This includes identifying policies that undermine these efforts such as those in place in the EU that impede access to US-based students and researchers to existing programs.
Third, regulators must recognize that efforts to regulate large tech companies can have debilitating, if not devastating, impacts on SMEs and continued innovation. More than 5,000 European and American companies – the vast majority small- or medium-sized – long relied on the Privacy Shield Framework to govern the transfer of personal data from the European Union to the U.S. In July 2020, the EU’s Court of Justice invalidated that framework in a case that’s become known as “Schrems II” – and thus launched a new era of legal peril for the vast daily transfer of transatlantic data. Large enterprises can afford the legal support to review and execute the now required standard contractual clauses. Not so for most SMEs.
In a similar vein, overly broad regulations governing competition in the tech sector and data privacy can handcuff smaller enterprises that lack the necessary legal and public policy resources, discourage investment and thus chill continued innovation.
And finally, we must collaborate to create a framework for a democratic digital era in this period of intense and expanded competition to set de facto or real global standards for the digital economy. The TTC can be one of the most important forums for shaping a global model and consensus to promote democratic values across a healthy digital ecosystem in a world that is being transformed by technological advancement.
Data localization requirements have grown exponentially in recent years. The rise of digital protectionism serves the interests of those who would segregate the Internet and use technology to further anti-democratic ends. As President Biden told the United Nations earlier this year, we must, together, “Ensure a future where technologies are a vital tool to solving human challenges and empowering human potential, not a source of greater strife and repression.”
We urge US officials to continue to reinforce these goals and focus on how the US and EU have deep, shared interests. Simply put, there is much more that brings us together than separates us.