Search

Begin New Search Topic Regulation Political Geography Europe

21. In Support of Market-Driven Standards

Author:
Matthias Bauer, Fredrik Erixon, Oscar Guinea, and Vanika Sharma
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The EU published its new Standardisation Strategy in 2022. The strategy contains some good ideas to improve the way European standards are set. However, in its attempt to gain more control over technical standards, the EU risks killing the goose that lays the golden egg. The primary motivation behind the strategy is the belief that the process governing the way CEN, CENELEC, and ETSI – the three European Standardisation Organisations – take decisions over EU standards favours non-EU multinationals. To address this perceived imbalance, EU National Standardisation Bodies will have the exclusive power to accept standardisation requests, and adopt, revise and withdraw European technical standards. These changes are particularly significant for ETSI, Europe’s Standardisation Body in charge of telecommunication standards and one of Europe’s most successful organisations. ETSI is a prime example of EU normative power since it hosts companies from more than 60 countries, while retaining a large membership of EU firms. The regulatory changes included in the strategy are not risk-free. There could be unintended consequences that may undermine a standardisation system that has delivered significant economic benefits for the EU and the world. First, giving more responsibility to EU’s National Standardisation Organisations will turn a European discussion into 30 (EU and EEA) national debates. As a consequence, small companies will not be able to contribute to each and every one of the National Standardisation Organisations, diluting their contribution, while multinational companies, with the resources needed to cooperate with a larger number of bodies, will benefit from an expanding role in the EU standard setting process. Second, if standards are fragmented along national borders and companies must multiply their efforts to take part in several Standardisation Development Organisations, there will be less resources for Research and Development spending. Finally, if each and every National Standardisation Organisation needs to have a position with regards to the acceptance of a standardisation request, or adoption, revision and withdrawal of European technical standards, the time period required to adopt a technical standard may be extended rather than shortened, which is the exact opposite of what the European Commission wants to achieve. The regulatory changes included in the EU Standardisation Strategy are akin to cracking a nut with a sledgehammer. If the European Commission is concerned about the influence of non-EU companies in European Standardisation Bodies, it does not need to overhaul their governance systems. Supporting greater participation of European firms in the European standard system will ease EU’s concerns without the downside risks associated with changing the rules of the game that govern Europe’s Standardisation Bodies. The success of the European standardisation system, which is market-driven and based on consensus, has had significant economic benefits in the development of specific industries, like the European Information and Communication Technologies (ICT). Technical standards in ICT have shaped a European industry that is not only dynamic and international but also enjoys some of the highest levels of wages and Research and Development spending. Moreover, if technical standards are not developed through an open, consensus-based, and industry-led voluntary process, they will be developed in different ways. For instance, governments and private companies can develop standards by themselves. Both solutions are inferior to the current market-driven approach that governs European standards. However, the European market-driven approach to set standards is voluntary, and its success and continuation must not be assumed. European policymakers should be worried about tinkering with a European standardisation system which has produced economic specialisation and innovation to the benefits of EU firms and consumers.
Topic:
Markets, European Union, Regulation, Economy, and Standardization
Political Geography:
Europe

22. The value added of central bank digital currencies: a view from the euro area

Author:
Maria Demertzis and Catarina Martins
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Different jurisdictions have set out different reasons for creating central bank digital currencies (CBDCs). Some countries, particularly those with already-operational CBDCs for retail purposes, aim to to promote financial inclusion. But in countries where most citizens have access to financial services, central banks are interested in CBDCs as an aspect of the increasing digitalisation of finance. Central banks could also choose to use CBDCs to guarantee in full citizen’s holdings (currently, deposits in commercial bank are only partially guaranteed), but this would trigger major changes in the financial system in terms of the role of commercial banks in intermediation and the role of fiat money. So far, central banks have not opted to go this way. In the euro area, consumers have multiple payment options and a very efficient retail payments system. The currency enjoys high levels of trust and is not challenged by the emergence of private currencies, such as Bitcoin, or by the risk that cash, a monetary system’s anchor, will disappear. Therefore, creating a CBDC for retail purposes in the euro area offers little obvious value added, at least for the foreseeable future. However, there is a strong case for building a CBDC that banks could use for cross-border wholesale purposes (ie with other currencies). Wholesale CBDCs could revolutionise the way that cross-border, cross-currency payments are made for two reasons. Cross-border payments are currently slow and inefficient. Pilot projects have shown that wholesale payments with CBDCs can generate substantial time and cost savings. Any two central banks that have operational wholesale CBDCs could settle transactions between themselves. This would be very different from the current system, as most settlements today are done via the dollar (and then the euro) infrastructure and use correspondent banks. The euro area and the United States would have to consider carefully from a geopolitical perspective how wholesale CBDCs might affect their global economic standing. By developing a CBDC for wholesale purposes, the European Union would be able to contribute to developing the global standard.
Topic:
Monetary Policy, Governance, Regulation, Central Bank, Digital Currency, and Euro
Political Geography:
Europe

23. Digital Sovereignty: European Policies, American Dilemmas

Author:
Mathilde Velliet
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Institut français des relations internationales (IFRI)
Abstract:
European digital sovereignty has been made a priority by Ursula von der Leyen’s European Commission. Due to the privileged position of American companies in the European market, Brussels’ efforts towards digital sovereignty (on privacy, antitrust, data sovereignty, etc.) are closely scrutinized by American policymakers. They often view European initiatives as “protectionist” and unfairly targeting U.S. companies. However, the American vision of European digital sovereignty has evolved in recent years under the influence of two main factors. On the one hand, awareness of the problematic effects and practices of platforms has led to a consensus on the need for reform in the digital sector. On the other hand, technological competition with China has been elevated to a priority. This vision remains fraught with contradictions, along inter-party, intra-party, inter-agency, state-federal, and issue-based fault lines. Washington’s position on anti-monopolistic practices is an illuminating example, characterized by a double discourse between a desire to reform the U.S. digital sector domestically and active diplomacy to dilute these efforts at the European level. Nonetheless, several American actors – particularly in the legislative branch – are seeking to learn from the successes and flaws of European regulations for American reform projects, such as on platform regulation or privacy. The China factor reinforces the ambiguity of the U.S.’ position. It creates new opportunities for cooperation in the face of perceived common vulnerabilities (infrastructure security, inbound investments, etc.) and autocratic definitions of digital sovereignty. However, it also raises tension and misunderstanding on the American side towards European reforms that often target American companies more than Chinese ones. Lastly, while American and European companies have adapted to the need for digital sovereignty through a range of technical and commercial solutions, the temptation of a maximalist definition of European sovereignty continues to create major stumbling blocks, particularly on the cloud.
Topic:
European Union, Regulation, Cloud Computing, Digital Sovereignty, and Data Governance
Political Geography:
China, Europe, Asia, North America, and United States of America

24. Authoritarian kleptocrats are thriving on the West’s failures. Can they be stopped?

Author:
Francis Shin and Ben Judah
Publication Date:
01-2023
Content Type:
Special Report
Institution:
Atlantic Council
Abstract:
A hidden web of power revealed itself to Internet users in early 2022. Following a brutal government crackdown in Kazakhstan in January, anyone using open-source flight-tracking websites could watch kleptocratic elites flee the country on private jets. A little more than a month later, Russia’s invasion of Ukraine brought a new spectacle: social media users were able to track various oligarchs’ superyachts as they jumped from port to port to evade Western sanctions. These feeds captured a national security problem in near real time: In Eurasia and beyond, kleptocratic elites with deep ties to the West were able to move themselves and their assets freely despite a host of speeches by senior officials, sanctions, and structures designed to stop them. Kleptocratic regimes—kleptocracy means “rule by thieves”—have exploited the lax and uneven regulatory environments of the global financial system to hide their ill-gotten gains and interfere in politics abroad, especially in the United States, the United Kingdom, and the European Union. They are aided in this task by a large cast of professional enablers within these jurisdictions. The stronger these forces get, the more they erode the principles of democracy and the rule of law. Furthermore, the international sanctions regime imposed on Russia in response to its invasion of Ukraine has little hope of long-term success if the global financial system itself continues to weaken. The West still has a long way to go to rein in the authoritarian kleptocrats who have thrived on the institutional dysfunction, regulatory failure, and bureaucratic weakness of the transatlantic community for far too long. We need to rethink not just how we combat kleptocracy, but also how we define it. Policy makers need to understand that authoritarian regimes that threaten transatlantic security are closely linked to illicit financial systems. As it stands, our thinking about how foreign corruption spreads is too constrained by stereotypes about kleptocratic goals and actions.
Topic:
Corruption, Diplomacy, Intelligence, Politics, Sanctions, Authoritarianism, Reform, European Union, Regulation, Finance, Economy, Rule of Law, and Russia-Ukraine War
Political Geography:
Russia, United Kingdom, Europe, Ukraine, Canada, and United States of America

25. UK-EU regulatory divergence tracker Q3 2023

Author:
Joël Reland
Publication Date:
10-2023
Content Type:
Special Report
Institution:
UK in a Changing Europe, King's College London
Abstract:
UK in a Changing Europe’s series of regulatory divergence trackers provide an overview of where and how the UK has used its regulatory freedoms to diverge from EU regulation. It identifies and analyses the most significant cases of divergence between the UK and EU which have taken place since Brexit. It explains what the changes are, what impact they are having, and likely further consequences. This is the ninth edition of the regulatory divergence tracker, covering developments from August to October 2023. There are six cases of active divergence (where the UK, or some part of it, changes its rules); nine of passive divergence (where the EU changes its rules and the UK, or some part of it, does not follow); two of delayed divergence (where active divergence is delayed); and five of active alignment (where the UK takes steps to align more closely with EU rules, systems or programmes). In a what is now a recurring theme under Prime Minister Rishi Sunak, the UK has opted to delay some major cases of upcoming divergence.
Topic:
European Union, Regulation, and Divergence
Political Geography:
United Kingdom and Europe

26. UK-EU regulatory divergence tracker: eighth edition

Author:
Joël Reland
Publication Date:
07-2023
Content Type:
Special Report
Institution:
UK in a Changing Europe, King's College London
Abstract:
UK in a Changing Europe’s series of regulatory divergence trackers provide an overview of where and how the UK has used its newfound regulatory freedoms to diverge from EU regulation. It identifies and analyses the most significant cases of divergence between the UK and EU which have taken place since Brexit. It explains what the changes are, what impact they are having, and likely further consequences. This is the eighth edition of the UK in a Changing Europe’s regulatory divergence tracker, covering developments from April to July 2023. There are eleven cases of active divergence (where the UK, or some part of it, changes its rules); eight of passive divergence (where the EU changes its rules and the UK, or some part of it, does not follow); two of passive convergence (where the EU takes steps which align with UK rules); three of managed divergence (where the UK and EU make joint efforts to manage the implications of divergence); and one of internal divergence (changes in rules between different parts of the UK).
Topic:
European Union, Regulation, Brexit, and Divergence
Political Geography:
United Kingdom and Europe

27. UK-EU regulatory divergence tracker: seventh edition

Author:
Joël Reland
Publication Date:
05-2023
Content Type:
Special Report
Institution:
UK in a Changing Europe, King's College London
Abstract:
UK in a Changing Europe’s series of regulatory divergence trackers provide an overview of where and how the UK has used its newfound regulatory freedoms to diverge from EU regulation. It identifies and analyses the most significant cases of divergence between the UK and EU which have taken place since Brexit. It explains what the changes are, what impact they are having, and likely further consequences. This is the seventh edition of UK in a Changing Europe’s regulatory divergence tracker, covering developments since January 2023. There are seven cases of active divergence (where the UK, or some part of it, changes its rules); two of active convergence (where the UK, or some part of it, aligns to EU rules); 17 of passive divergence (where the EU changes its rules and the UK, or some part of it, does not follow); and one of internal divergence (changes in rules between different parts of the UK). In addition, the Windsor Framework is significant case of ‘managed divergence’: a UK-EU agreement which alters the regulatory border between Great Britain (GB) and Northern Ireland (NI), as created by the Protocol.
Topic:
European Union, Regulation, Brexit, and Divergence
Political Geography:
United Kingdom and Europe

28. UK-EU regulatory divergence tracker: sixth edition

Author:
UK in a Changing Europe
Publication Date:
02-2023
Content Type:
Special Report
Institution:
UK in a Changing Europe, King's College London
Abstract:
UK in a Changing Europe’s series of regulatory divergence trackers provide an overview of where and how the UK has used its newfound regulatory freedoms to diverge from EU regulation. It identifies and analyses the most significant cases of divergence between the UK and EU which have taken place since Brexit. It explains what the changes are, what impact they are having, and likely further consequences. This is the sixth edition of the divergence tracker, covering developments since October 2022. There are six cases of active divergence (where the UK or some part of it changes its rules), 13 of passive divergence (where the EU changes its rules and the UK, or some part of it, does not follow), two of active alignment (where the UK and EU take the same regulatory steps in parallel), and five of delayed divergence (where either side postpones an upcoming case of divergence). This edition of the tracker finds that the UK has engaged in less active divergence over the past quarter. This is due in part to political instability, but also to Prime Minister Sunak’s emphasis on calming the markets and projecting a wider sense of political stability. The new administration has signalled its ambition to reform EU legislation, though in a more targeted manner than under the two preceding premierships.
Topic:
European Union, Regulation, Brexit, and Divergence
Political Geography:
United Kingdom and Europe

29. Forests, foreign policy and trade

Author:
Johannes Weberling
Publication Date:
11-2023
Content Type:
Commentary and Analysis
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
The EU’s Regulation for Deforestation-free Products (EUDR) marks an important milestone in addressing demand-side deforestation governance, being the first regulation targeting deforestation driven by agriculture. Yet it must be understood as more than an effort to protect the world’s forests – it showcases the European Commission unilaterally acting to promote values and policy ideas abroad. It displays issues of transnational social justice and power discrepancies, shedding light on shifting market power dynamics in global structures. And it questions the EU’s standing as a trustworthy partner on the international stage as well as its relationships with important producer countries. Analysing the EUDR from these angles offers valuable insights that can be transferred to other due diligence instruments that are currently being drafted or negotiated, such as the Corporate Sustainability Due Diligence Directive (CSDDD). Unilateral action may provide a semblance of control but is by nature limited in the depth of scope. As its market influence wanes, the need for the EU to position itself as a reliable partner becomes increasingly important. To prevent leakage, demand-side measures such as the EUDR must be paired with supply-side measures. The EUDR’s success will hinge on careful and efficient implementation, accompanied by meaningful consultations and engagements with producer countries. Overall, prioritising the external dimensions of such legislation must first and foremost uphold trust and strengthen collaborative relationships with partner countries.
Topic:
Foreign Policy, Regulation, Trade, Forest, and Deforestation
Political Geography:
Europe

30. Artificial intelligence: Europe needs to start dreaming again

Author:
Niccolò Bianchini and Lorenzo Ancona
Publication Date:
11-2023
Content Type:
Working Paper
Institution:
Robert Schuman Foundation (RSF)
Abstract:
To date, there is no universally accepted definition of artificial intelligence (AI). However, a number of definitions do capture the fundamental aspects, such as the one updated by the OECD, from an earlier version in 2019, which will probably be integrated into the law on artificial intelligence now under discussion in the European Union. This definition stipulates: “An AI system is one that is based on a machine which, for explicit or implicit purposes, deduces, from the inputs it receives, how to generate outputs such as predictions, content, recommendations or decisions that can influence physical or virtual environments. Different AI systems vary in their levels of autonomy and adaptability once deployed”. This draws a broad perimeter, which is useful for framing the largest number of existing AI technologies and, although it does not consider the human component, it clarifies the operation of AI technologies as statistical inference systems which, from the processing of inputs, generate different types of output. But this definition ignores other essential elements of artificial intelligence. As immediate as it is provocative, it must be made clear that AI is neither intelligent nor artificial. As Kate Crawford, co-founder of the University of New York’s AI Now Institute, artificial intelligence is not a synthetic product but “comprises natural resources, fuels, human labour, data, infrastructure and classifications”, which illustrate the extent to which economic, political and technical dynamics are central. As far as intelligence is concerned, Luciano Floridi, founder of the Digital Ethics Center of Yale University, speaks of “artefacts with the ability to act without being intelligent”, i.e. to carry out tasks without having any autonomous consciousness, but solely thanks to computing power and statistical inferences. These details are not mere philosophical flights of fancy, but the premises of a conscious reflection on the subject. While the general public discovered AI with ChatGPT a year ago, it is worth pointing out that generative AI, which forms its base, is just one of the different types of AI, and that various AI applications were already present in our daily lives. These include the algorithms in social networks used to recommend content, predictive analysis for finance or programmes for diagnosing and personalising therapies in medicine. Once these doubts have been dispelled, some of the considerations raised so far can be assessed. The transformative nature of this technology is clear : AI has the potential to revolutionise different areas of human experience and, more profoundly, to change reality and the very role of human beings within it[1]. Among the various fields of application, the world of work is under particular scrutiny, with several analyses which forecast major business changes and a significant impact on productivity. The challenge of AI has recently been taken up by the international community, notably at the regulatory level. Great effort is being made to ensure future-proof legislative action, given the extremely rapid evolution of AI technologies, in particular the rise of fundamental models. Although a number of recent initiatives, such as the Executive Order issued by American President Biden, the summit on AI security at Bletchley Park, the G7’s Code of Conduct and the world AI governance initiative launched by China, reflect the growing awareness of this issue, the European Union is proving to be a forerunner in regulating this technology with the law on AI. This is why, according to Anu Bradford, a theoretician behind the Brussels Effect “it is reasonable to expect that the European regulatory role will continue. What's more, the European Union is influencing other players in this field: the United States is steadily moving towards the European model, abandoning one that is purely libertarian”[2]. Beyond this, the industrial development of AI technologies has been underway for some time, and is shaping up to be a new arena of fierce confrontation between global players. Indeed, it is likely that the market-led US model, the state-led Chinese model and the rights-led European model will clash not only in a global regulatory challenge, but also in terms of technological development.
Topic:
Development, Science and Technology, Regulation, and Artificial Intelligence
Political Geography:
Europe