Foreign & Security Policy

Seeing the Forest for the Trees: Why the Digital Single Market Matters for Transatlantic Relations

January 19, 2016
Guillaume Xavier-Bender
Robert Atkinson
Andrea Renda
3 min read
The European Union and the United States are far from being able to create a fully integrated transatlantic digital economy.

The European Union and the United States are far from being able to create a fully integrated transatlantic digital economy. Beyond difficulties resulting from different legal traditions, regulatory paths, and market outcomes, digital policymaking on both sides of the Atlantic is increasingly affected by political developments. In the EU in particular, moving ahead with the implementation of the Digital Agenda has increasingly been hampered by concerns over the possible control of Europe’s digital future by U.S. companies. Recent decisions over the right to retain and transfer data — such as the invalidation of the U.S.-EU Safe Harbor agreement in October 2015 — have further cast a cloud over transatlantic economic relations in general.

When the European Commission launched a new Digital Single Market strategy in June 2015, there was hope on the other side of the Atlantic that such initiative would contribute to reducing the gap between partners, and would possibly lead to further integration of the two economies. Indeed, the Digital Single Market Strategy matters for the United States. Yet current tensions between Washington, Brussels, and European capitals may actually increase distances between all stakeholders — paradoxically at a time when further digital integration within the EU, and with the United States, is called for.

As the European Union embarks in a series of initiatives under the flagship of the Digital Single Market strategy, policymakers should see the forest for the trees. Current discussions over data protection, data privacy, data retention, e-commerce, copyright, platforms, etc. are laying the pipes of new economies and societies across the continent. They may also redefine the narrative of transatlantic economic relations.

Key points:

  • The EU’s Digital Single Market Strategy could widen the gap between political and regulatory approaches to digitalization on both sides of the Atlantic.
  • There are still significant differences in the way the United States and the EU regulate their digital markets.
  • There are still significant differences in the way Americans and Europeans perceive and adapt to disruptive technologies and digital transformation.
  • Keeping the gates of the EU open to U.S.-based platforms and stimulating entrepreneurship and innovation in Europe is the best recipe for digital champions to emerge in Europe.
  • Co-regulation through enhanced cooperation between public and private stakeholders would quicken the realization of the transatlantic digital economy.
  • Cooperation between the EU and United States is essential in making sure that the transatlantic economy reaps fully the benefits of increased digitalization.
  • It is counterproductive to regulate the digital economy in silos, as digital innovation in one sector increasingly affects innovation in another.
  • Getting the politics of digital transformation right matters as much as getting the policies right, especially in the context of transatlantic relations.