29 Jun 2022

‘Times are tough’: DIGITALEUROPE and AAVIT share 5 ways the Czech presidency can tackle Europe’s geopolitical and economic challenges

On 1 July, Czechia will take over the rotating presidency of the Council of the European Union for the remaining half of 2022. DIGITALEUROPE and AAVIT, the Czech association representing the digital sector, have identified five key areas where the new presidency can intervene to help solve Europe’s most pressing challenges, from cyber resilience, to semiconductors, to removing remaining single market barriers.

The Czech presidency will take over at a time when Europe is in the throes of an unprecedented geopolitical and economic crisis, a scenario that the Czechs had unlikely hoped for when they first set sail preparing for their EU rotating presidency back in 2018.

Cecilia Bonefeld-Dahl, Director-General, DIGITALEUROPE

“Times are tough. We are experiencing a watershed moment in the history of Europe: Russia continues wreaking havoc in Ukraine, posing unprecedented security threats to the entire continent, a deep economic recession is looming, slowing down even further any imminent recovery of supply chains, and the EU single market is more fragmented than ever, preventing European small and medium-sized enterprises (SMEs) to thrive.

The upcoming Czech presidency will certainly face enormous challenges, but all hands are needed on deck. The EU must work closely with industry and the private sector to understand the reality of the market and come up with fitting solutions.”

Jaromir Hanzal, Director, AAVIT

“The Czech presidency comes at unprecedented times in our modern history. Europe is confronted with the biggest political crisis over the last decades and has to face the consequences of the Russian aggression against Ukraine. Faced with these threats, we need to strengthen the digital resilience of our society more than ever. Economic prosperity plays a key role in preserving and fostering European strength and values. Successful digitalization of both the private and public sector is essential in this effort.

We believe and hope that the Czech presidency can provide the appropriate platform for the legislative process of many important IT and digitalization related initiatives. Now is the time to act.”

DIGITALEUROPE and AAVIT have identified five key areas where the upcoming Czech presidency can intervene to help solve Europe’s most pressing challenges:

  1. Strengthen Europe’s digital resilience by building a strong pan-European cybersecurity infrastructure, boosting investment in emerging and disruptive technologies (EDTs) and bridging the skills gap.
  2. Bolster EU semiconductor capabilities by putting emphasis in the EU Chips Act on capacity expansion, R&D commercialisation and development of competences.
  3. Harness the economic power of data sharing and artificial intelligence for the benefit of European citizens and businesses.
  4. Remove single market barriers in goods and services to unlock the full potential of digital trade and reduce fragmentation across the EU internal market.
  5. Build on the successful momentum of the transatlantic cooperation to develop a strong united digital front, specifically on semiconductor resilience and cyber capabilities.

Five ways the Czech presidency can tackle Europe’s geopolitical and economic challenges

1.    Prepare Europe for cyber warfare

The invasion of Ukraine shows why we must be serious about building Europe’s digital shield. Cybersecurity should be on top of the Czech political agenda. With no near end in sight of the war in Ukraine, risks of large-scale cyber-attacks are significantly increasing.

The recent deal reached on the revision of the EU framework for the security of network and information systems (NIS2) is an essential step towards a more cyber resilient Europe, but the Czech presidency needs to ensure a pragmatic implementation. For example, the EU should establish a single point to help companies notify and respond to cyber incidents. A divergent national implementation of NIS2 will result in deeper inefficiencies and fragmentation.

Equally important to Europe’s resilience, bridging the digital skills gap requires immediate action. Today, the EU lacks over 200,000 cybersecurity specialists. The Czech presidency should urge the EU to redouble reskilling and upskilling efforts through existing programmes, such as the Digital Europe Programme and Horizon Europe.

Finally, NATO and the EU need to urgently bolster their cooperation to create a more resilient cybersecurity ecosystem based on digital innovation. EDTs such as artificial intelligence, quantum technology and robotics are set to have a tremendous impact on cyber-defence and to revolutionise future military strategies and operations. It is vital that the EU and its NATO allies stay at the forefront of technological advances.

2.    Bolster EU semiconductor capabilities

Chips are critical as health or food security for our society. The twin digital and green transition won’t be possible without a resilient semiconductor ecosystem. The EU Chips Act has the potential to strengthen semiconductor leadership in Europe, and the Czech Presidency will have a historic opportunity to help the EU get it right.

Crucially, Czechia can drive consensus on the importance of first-of-a-kind EU facilities for a more geopolitically-balanced production of chips. Eligibility for manufacturing of both small- and large-node chips will help guarantee that sectors of excellence in Member States, such as ICT equipment, automotive or renewable energy, can all benefit from increased chip capacity in Europe. There is also a compelling case for defining robust initiatives on R&D deployment — where public efforts are punching below the EU’s weight — which remain accessible to all relevant entities across the EU as well as deepening global partnerships with like-minded partners that can enhance stability in the global semiconductor industry.

3.    Unleash the power of AI and data

The second half of this year will likely witness the finalisation of the European Parliament and Council’s positions on the AI Act as well as the Data Act. Both legislative proposals have great potential to support entrepreneurship and create new jobs through digital transformation. But as a global economic recession is looming and as Europeans grow more concerned about the record inflation rates, we can’t afford putting up additional roadblocks in the face of European SMEs who employ over 95 million people and contribute with €4 billion to the European economy.

Data availability is essential to harness the power of digital, and the success of AI. The Data Act proposal, currently under review by EU co-legislators, sets out broad new rules governing data sharing, access and transfers within and outside Europe. Data-related legislation is already abundant, from the GDPR to the newly adopted Data Governance Act, creating a complex framework for companies to understand. This legal maze is likely to sow confusion among the European business community, as DIGITALEUROPE has shown in its latest report. Providing clarity must be the Czech presidency’s number one priority.

AI will be a massive growth booster. We must mitigate potential risks while ensuring that European businesses can benefit from game-changing AI capabilities. The AI Act should set practical requirements that can easily be implemented by companies and especially SMEs that are often too under-resourced to invest money and time in bureaucratic compliance obligations. It should also opt for a “wait and see” approach, by focusing on specific categories of higher-risk use cases and opening the possibility to amend them later based on additional experience and assessments.

4.    Remove single market barriers

Thirty years after its launch, the EU still doesn’t have a truly unified single market. The Czech presidency should use the 30th anniversary of the internal market as a symbolic opportunity to address the remaining barriers and help break them down.

The single market is the beating heart of EU integration. Over 56 million jobs in the EU depend on it. Removing existing fragmentation can strengthen the foundations of our European society.

Yet, we continue to see the rise of worrying trends that threaten digital trade across the EU:

  • Largely divergent interpretations of EU laws, creating fragmentation in areas where the EU supposedly brought harmonisation. For example, in the digital health sector, companies looking to scale up in Europe must deal with national and regional fragmentation in data protection rules (GDPR and additional rules) as well as divergent data standards and reimbursement systems.
  • Unilateral legislative actions at national level in areas where the EU already has existing rules or is creating relevant ones.
  • Substantial regulatory compliance costs for SMEs, even when EU rules intend to facilitate cross-border trade. A good example of that is the VAT registration system. Distinct requirements in Member States for businesses storing and selling goods in multiple EU countries result in a high compliance burden for SMEs.

5.    Bolster transatlantic cooperation

The EU and the US have united in their condemnation of Russia’s invasion of Ukraine by imposing rapid and harsh economic sanctions on Russia and providing billions of dollars of security assistance and humanitarian aid to Ukraine. The EU-US Trade and Technology Council (TTC) has served as a valuable forum in this regard. It is crucial for the Czech presidency to build on the positive momentum of the partnership to strengthen transatlantic cybersecurity and supply chain resilience.

Through the TTC and NATO, the EU-US partnership should build a united digital front to combat any major cyberattack in the future. The next TTC meeting, expected to be held in the US before end of 2022, should focus on setting common cybersecurity standards.

It is also important to set common standards for key new technologies such as AI, which would generate a larger market for businesses to innovate in, and provide greater protections for Americans and Europeans.

On supply chain resilience, Europe’s chips strategy needs to closely align with that of the US to optimise resources and avoid unnecessary duplications.

For more information, please contact:
Samia Fitouri
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