19 Dec 2016

Entrenched data localisation is holding back Europe’s digital economy

Entrenched data localisation is holding back Europe’s digital economy

Is the Commission hearing the calls for action?

DIGITALEUROPE has long supported the European Commission’s original plans in its DSM strategy to remove the obstacles to data flows in the EU that prevent companies from accessing markets across national borders. Unfortunately, the current legislative framework does not address the data localisation requirements that exist in national law and administrative rules in public procurement.

These anticompetitive measures do not necessarily offer better protection. Instead they entrench a fragmentation of the Single Market, which in turn is hampering the development of the digital economy in Europe. Worse, the trend is clearly towards more data localisation in the EU, not less.

On 2 December at the Transport, Telecommunications and Energy Council and again on 13 December ahead of the European Council, a clear majority of Member States (as of now, the coalition represents sixteen) very explicitly called for “resolute Commission action to keep the DSM ‘free flow of data’ initiative on track, in particular through early presentation of a legislative proposal to prevent unjustified data localisation requirements.” The national ministers voiced criticism of inexplicable delays and hesitations over the past few months. They stressed that the Commission should bring forward a legislative proposal as soon as possible.

On 15 December, EU Heads of State and Government gathered at the European Council echoed this call for action, requesting in their conclusions that EU Institutions “further increase the level of ambition notably in the vital areas of services and the Digital Single Market, ahead of the March 2017 European Council.” The European Council specifically “calls for removing remaining obstacles within the Single Market, including those hampering the free flow of data.”

We are therefore surprised that the European Commission appears not to be planning to respond positively to these strong calls for action, at least according to a draft of the “Building the Data Economy” Communication to be published in January that was recently circulated in the media. While the Commission accurately describes all the problems caused by data localisation in the EU, it paradoxically postpones any meaningful solution, only offering a vague allusion to a hypothetical “horizontal initiative” in the future.

DIGITALEUROPE urges the European Commission to reconsider. Only a Regulation banning unjustified data localisation in the EU, and one which addresses both localisation mandates in national law and public procurement rules, can solve the problems the Commission itself has identified. There is a good reason why the whole industry and most Member States have been relentlessly calling for the Commission to decide on this necessary action to keep the Digital Single Market out of jeopardy: the very principle of a Single Market in the 21st century cannot tolerate data localisation

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