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European Commission

Neelie Kroes

Vice-President of the European Commission responsible for the Digital Agenda

Digital Agenda Priorities

Giving a boost to the EU-US relations in the field of ICT – American Chamber of Commerce EU conference/ Brussels

17 June 2013

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It's a pleasure to talk to you all today. About the opportunities of trade and exchange, especially for ICT. Trade and exchange are a wonderful opportunity for growth.

You know, my hometown is Rotterdam: the largest port in Europe, one of the biggest in the world; hundreds of millions of tonnes of trade pass through each year. My family’s business was in road transport. We specialised in getting hard-to-move things across borders. So ever since I was young I've seen the opportunities from connecting with the outside world. Be it economic, social or cultural opportunities. So it should come as no surprise to you that I believe in the benefits of trade and openness. It's in my blood.

The EU and the US are the world's two largest economies, together representing over half the world's GDP; and they are among the most open. Our trade relationship already amounts to 2 billion euros a day, and sustains 15 million jobs. In 2012, US investments in Europe amounted to 200 billion dollars: US companies generating welcome jobs and earnings in Europe.

But my message today is simple: our relations can be even more beneficial if we give priority to the digital economy.

The internet and its services are a testament to what happens if you trade good ideas. But more than that, the internet is also the greatest tool for sharing information ever invented. A platform that makes ideas and services travel readily so many everyday activities become at once global and delocalised.

We have the chance of a great agreement on the horizon; the so-called T.T.I.P. between the US and the EU. It offers us a partnership more open, profound and prosperous.

But to make that a reality, there are many barriers to remove, if I can put it in diplomatic terms.

As you all know, this isn't all about tariffs. Fortunately, those are already relatively low. And for ICT, those remaining are for the most part already on the way out—thanks to ongoing WTO agreements.

So we need to look beyond that one issue. At things like regulation, standards and public procurement.

Looking at regulations doesn't mean we need the same rules. But it does mean that we should think together before we make rules. That calls for cooperation between administrations, between regulators like the FCC and BEREC, and in some cases between judiciaries.

I think we can learn a lot from US regulations. Your net neutrality rules, for example, ensure the benefits of the open internet for consumers and creative startups alike.

And you benefit from a single market. American operators can serve 300 million citizens while working under one set of rules. Whereas over here, we have a tangle of twenty-seven different systems. And that's a headache for operators who want to think big and compete globally.

But the American market is not perfect. The EU telecoms market may be too fragmented, but it is certainly competitive. In the States, an effective duopoly makes life hard for new entrants, if not impossible. And rules like equity caps or unequal access to spectrum and networks are outdated, and have no place in a truly open market. The result isn't just unfair competition: it means less choice and a worse deal for Americans. Opening up would serve all our interests.

Second, standards. They matter: especially in new areas like eHealth, cloud computing, or cybersecurity. For example: for cloud computing, there's a lot of evidence that uncertainty and mistrust hold people back. Standards and interoperability can build that trust, and stimulate a growing market.

Often standards best come from the industry itself rather than public intervention. But new standards can sometimes mean new trade barriers; the opposite of what we're trying to achieve. So this is relevant and important for our TTIP aims.

And third, public procurement plays a role. And that's a real area where openness could help. Especially given the many restrictions on US government procurement below national level.

That matters for ICT – because public authorities are big buyers of new digital solutions. Innovations like the cloud could support them, make public services more integrated, and save tax dollars. But to benefit, those public bodies need the widest possible choice of cloud suppliers.

Two more points I'd like to make today, about issues in the news.

First, tax. These days, finance ministers face some tough decisions. ICT offers them a chance to find efficiencies – in healthcare, public services, education, you name it. But they're also looking closely at lost revenue.

Tax avoidance is not only done by ICT companies. Nor only by American companies. But it is increasingly associated with both. And I see a risk here.

Let's be realistic: companies generally won't pay tax unless they have to. But there is a serious issue here of reputation and sustainability. I believe the ICT sector has a lot to contribute, economically and socially. But it is absolutely unsustainable if the sector fails to contribute in the most basic of ways. Multi-billion dollar companies cannot long continue to pay peanuts in tax. There are many people suffering right now in the EU: and large public deficits. US companies should understand that being good citizens in the EU is not compatible with large-scale tax avoidance.

I'm a big fan of what the digital world can do for every part of our lives. And I'm a big fan of greater trade and openness between the EU and US. I believe in both issues, and am trying hard to advocate for both. But tax avoidance on such a large-scale makes that job a lot harder to do.

And last but not least, I have to talk about data and privacy.

Our understanding of privacy is fundamentally changing in the digital age. The rules we have for guarding it have to change too.

That motivation applies to many situations – even those that might seem different on the surface. From the EU’s reform efforts, to the Obama charter supporting a Do Not Track standard, to your Patriot Act, and now the allegations regarding the PRISM programme.

This is a hot topic. Whether privacy is necessary, or possible, and what role policy should play.

I get frustrated when privacy is seen merely as an irritant. Like most Europeans, I see privacy as a fundamental right. And it is set out as such in law.

In my view this leads to a range of policy needs and business opportunities.

First, the US, as a trusted partner needs to be more transparent with Europeans about what has been going on; and it should allow American companies to be more transparent with their customers and potential customers.

If the US government doesn’t choose this course, it will undermine trust in new digital services, with the risk that users will abandon them or never join the digital ranks.

Personally I don't like the idea of data localisation – the idea that data has to be stored where it is gathered. Because then we would miss out on the huge opportunities of a borderless network.

But let’s not be naïve. The PRISM debate will definitely increase calls for a European cloud, with a range of possible consequences for American companies. And PRISM also highlights a golden opportunity for people to make a huge privacy-focussed company. It highlights that being strong on privacy can be a competitive advantage, a great business move, and I welcome that.

Whatever the market developments might be, from a policy perspective, I want Europe to be seen as the safest corner of the internet and for entrepreneurs to be able to build businesses off the back of that.

That is why we have a EU Cloud Computing Strategy, now reinforced by an EU Cybersecurity Strategy. Because we need clear, transparent rules, clear, transparent safeguards, and a clear, transparent legal framework.

I would prefer if that framework were global, but as a minimum we want people to be confident that their data is secure across the EU. 

So my message is that we take both trust and security seriously at the EU, and I hope US governments and companies respect that.

In conclusion, there are some huge opportunities on offer in the transatlantic market. Not just to remove trade barriers; but to establish a true regulatory and investment partnership. Boosting our exports to the US by 28%; boosting our growth, wages and quality of life.

So let's make sure we are absolutely able to capture those benefits.


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