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Regulating the Data that Drive 21st-Century Economic Growth - The Looming Transatlantic Battle

28 June 2017

This paper examines how governments on both sides of the Atlantic are establishing frameworks that attempt to govern the commercial uses of data. It covers areas such as data analytics driving productivity and growth, the 'industrial internet of things', and the policy context and political forces shaping data rules in the US and Europe.

Dr Christopher Smart

Former Associate Fellow, US and the Americas Programme

2017-06-23-TsystemsData.jpg

Data centre for T-Systems, a subsidiary of Deutsche Telekom. Photo by: Thomas Trutschel/Photothek/Getty Images

Summary

  • As the US government and European governments once again grapple with the challenges of reinforcing and expanding the transatlantic economic relationship, traditional negotiations over trade or tax policy may soon be upstaged by a far thornier and more important issue: how to regulate the storage, protection and analysis of data.
  • Growth in the traditional global trade in goods and services has levelled off, but cross-border data flows continue to expand rapidly and the challenges of developing policies that protect privacy, security and innovation are already tremendous. For example, data analytics are driving dramatic productivity gains in industry, particularly for large and complex installations whose safety and efficiency will increasingly depend on flows of data across jurisdictions. Meanwhile, ‘fintech’ (financial technology) start-ups and large banks alike are testing new modes of accumulating, analysing and deploying customer data to provide less expensive services and manage the risk profile of their businesses.
  • While the US debate on the use of data has often been framed around the trade-off between national security and personal privacy, Europeans often face an even more complex set of concerns that include worries that their digital and technology firms lag behind dominant US competitors. The political and regulatory uncertainty helps neither side, and leaves transatlantic companies struggling to comply with uncertain and conflicting rules in different jurisdictions.
  • A global consensus on data regulation is currently well out of reach, but given the expanding importance of data in so many areas, basic agreement on regulatory principles is crucial between the US and the EU. This paper proposes a ‘Transatlantic Charter for Data Security and Mobility’, which could help shape a common understanding. While it would hardly resolve all concerns – or indeed contradictions – around the prevailing traditions on both sides of the Atlantic, it could provide the basis for better cooperation and establish a framework to protect the promise of the digital age amid an unpredictable and emotional debate.




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