Going Digital – Digital Trade Is the Future

Caroline King © SAP

Digitalisation is an engine of economic growth in Europe and worldwide. The inclusion of digital trade rules in EU trade agreements would secure a level playing field for European companies across sectors and promote technology innovation. The European Commission should create a strategy on digital trade, explains Caroline King and Karolina Telejko of the German multinational software corporation SAP.

Digital technologies increase value-creation opportunities for companies across industry. But to achieve that, the EU must remove regulatory barriers and combine the (still) 28 national markets into a single one. It is not only within the EU that European companies are up against structural obstacles. In recent years, important growth markets such as Russia and China have significantly increased protectionist measures. It is key that the European Commission creates a comprehensive digital trade strategy to address market entry barriers for European providers.

Forced Localisation Requirements Obstruct Free Competition

Despite the benefits of digitalisation, increasing number of governments are imposing or considering restrictions on flows of data, source code and IPR requirements, or restricting access to public procurement, Governments have a legitimate interest in protecting their citizens against the misuse of data. In some cases, however, the new regulations allow local providers to gain an advantage vis-à-vis foreign competitors and push them out of the local market for the medium-term. This form of protectionism sharply reduces innovative activity in the affected countries, distorts competition, and makes it difficult for the local economy to grow.

European Commission Must Promote a Strategy on Digital Trade

In order to secure the competitiveness of European companies in the long-run, a new European Commission strategy on digital trade is essential to create a level playing field, open up government procurement and promote technology innovation. The Commission must also open Blockchain and Artificial Intelligence (AI) markets for European industry worldwide.

We believe that a 21st century trade agreement should include a strong emphasis on digital trade. The integration of digital trade rules in future EU free trade agreements could advance global digital economy, enable cross-border data flows, and ensure company data and intellectual property is protected, and standards and norms for digital trade harmonised. In this respect, we welcome the report by the INTA Committee of the European Parliament entitled “Towards a Digital Trade Strategy”, shaping the rules of an ambitious EU Digital Trade Strategy.

WTO Digital Trade Agenda

At the global level, SAP is a strong supporter of the WTO trading system and encourages governments to advance discussions on digital trade rules during the Ministerial WTO Conference. We encourage the EU to take the lead in shaping the digital trade rules together with WTO members. It is also crucial that countries around the world use the full benefit of their WTO membership to open up, diversify its economy and promote technology innovation.

Caroline King is Director of International Government Relations at SAP, Karolina Telejko is Director Digital Government EU at SAP.