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51. Germany’s Role in Europe’s Digital Regulatory Power: Shaping the Global Technology Rule Book in the Service of Europe

Author:
David Hagebölling and Tyson Barker
Publication Date:
11-2022
Content Type:
Special Report
Institution:
German Council on Foreign Relations (DGAP)
Abstract:
Four elements help to map the strengths and, at times, the limits of German power in digital rule-making. First, Germany anticipates EU ­digital regulation and attempts to establish facts on the ground. Second, Germany has outsized influence in the formal stages of EU digital regulatory policy­making. Third, the EU, in turn, provides ­Germany with a launch pad for influencing worldwide regulatory norms. Fourth, a belated reawakening of the capacity of the German private sector and affiliated technical standard bodies to influence global technical standards is occurring. Germany, as an EU member state, is engaging in three significant areas of data governance and cybersecurity: digital identities and open data, lawful access to electronic messaging systems, and rules for sovereign cloud usage. Germany’s largely successful role as a key incubator for the EU’s regulatory approach to ­digital technology and, therefore, as a proponent of the “Brussels Effect” of influencing global markets is not widely appreciated or understood at home. The lag among regulations, tech-nology, and international context is evident in areas such as data protection, content moderation, and market power of online platforms. Even meaningful regulatory debates on quantum, the metaverse (AR/VR), and 6G have yet to arise in Germany. Germany must change its approach to digital regulation to more accurately reflect the dynamic, general-purpose nature of emerging digital technologies against an increasingly fraught international landscape in which technological rules are a dimension of geopolitical power. This includes more fully addressing political trade-offs associated with digital regulation choices, expanding reviews and sunset clauses in digi-tal regulation to encourage flexibility, and making greater use of multi-stakeholder regulatory approaches that incorporate civil society, companies, and other non-state actors. Germany must also increase the engagement of its foreign policy and national security communi-ties in EU technology diplomacy and in global regulation enforcement.
Topic:
Science and Technology, European Union, Regulation, and Digital Policy
Political Geography:
Europe and Germany

52. Implications of the European Union’s Digital Regulations on U.S. and EU Economic and Strategic Interests

Author:
Kati Suominen
Publication Date:
11-2022
Content Type:
Special Report
Institution:
Center for Strategic and International Studies (CSIS)
Abstract:
In recent months, the European Union has adopted several sweeping digital regulations, such as the Digital Services Act (DSA) and Digital Markets Act (DMA), while proposing a number of new measures—including the Data Act, the Artificial Intelligence Act, and the Media Freedom Act. These regulations will shape, likely quite dramatically, the environment for doing digital business in Europe and beyond. They will have profound implications on the leading U.S. digital service providers designated by the European Union as “gatekeepers”—large digital services providers that are expected to adhere to regulatory requirements—as well as these companies’ hundreds of millions of transatlantic European business and individual customers. By impacting primarily U.S. companies instead of Asian or European ones, Europe’s digital policies will also shape U.S. and European global strategic and national security interests. This study will assess the potential implications of new and proposed EU digital acts on U.S. digital service providers, on their customers in Europe and the United States, and on the EU and U.S. economies and exports.
Topic:
European Union, Regulation, Regionalism, Strategic Interests, and Digitalization
Political Geography:
Europe, North America, and United States of America

53. The EU Digital Markets Act: Assessing the Quality of Regulation

Author:
Matthias Bauer, Fredrik Erixon, Oscar Guinea, Erik van der Marel, and Vanika Sharma
Publication Date:
02-2022
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The proposed Digital Markets Act (DMA) is an opportunity to prevent and remedy anti-competitive conduct by large digital platforms. If the Act is designed in an adequate manner to target specific problems, it can improve the contestability of platform services markets and markets that rely substantially on digital services. However, the DMA takes a novel approach to regulation, and novelty in concepts and regulatory requirements can lead to outcomes that later have to be corrected. Fortunately, the EU is not alone in experimenting with new regulations that specifically target the market power of large digital platforms. There is a great scope for policymakers to learn from similar frameworks in Europe and the United States. In this study, we compare key parts of the DMA proposal with similar legislation implemented or proposed in Germany, the United Kingdom and the United States –– in light of established principles for good regulatory design. We analyse the structure and quality of these regulations, not if they go in a certain ideological, political or commercial direction. We find that there are some areas where the EU could learn from other proposals to make the DMA more fit for purpose, and avoid unintended consequences on Europe’s economy.
Topic:
European Union, Regulation, Digital Economy, and Digital Markets Act (DMA)
Political Geography:
Europe

54. After the DMA, the DSA and the New AI regulation: Mapping the Economic Consequences of and Responses to New Digital Regulations in Europe

Author:
Fredrik Erixon, Oscar Guinea, Erik van der Marel, and Elena Sisto
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The European Union (EU) has pursued an ambitious agenda for regulating the digital economy, and it is now planning to establish a new package of regulations, including the Digital Markets Act (DMA), the Digital Services Act (DSA), and a new regulation of Artificial Intelligence (AI). These regulations build on an already established structure of digital and business regulations in Europe that is comparatively restrictive but that varies substantially between EU member states. In this study, we take stock of the new incoming regulations and review their effect on EU member states’ economies. More precisely, the paper considers how different countries in Europe will be affected by the regulations and how they should balance these effects with policies that help the economy to prosper. The European Commission’s economic analyses and impact assessments of the new regulations are thin. In fact, they are grossly inadequate for the purpose at hand: to better understand how the economy will change because of these regulations. The Commission identifies some benefits – for instance, positive competition outcomes from reduced network effects and more trust in AI-based goods and services. There are good reasons to think that these benefits are real. However, these regulations will also lead to new costs and have broader consequences for firms and resource allocation in the economy. Remarkably, the only costs identified in the impact assessments are direct compliance and administrative costs. Obviously, for far-reaching regulations such as the DMA, the DSA and the AI regulation, the main costs will not be the direct compliance burden, but the dynamic and downstream economic effects spurred by their implementation. This is because these regulations will prompt firms and markets to change their current and future behaviour: these changes are likely to define the most important costs. Furthermore, it is important to get a better idea of the distribution of these costs. It is highly unlikely that all sectors and countries will be affected equally. Some sectors will be more affected than others just as some countries will experience economic consequences that are bigger than in other countries. The question is: what factors will lead to the expected variation in the costs and consequences of the three new regulations? In this paper, we argue that two factors are important for grasping the distributive patterns of costs from digital regulations. First, the industry structure of a country is key. In the economy, countries have different endowment structures, and the modern European economy is defined by factor endowments such as data and digital competences. These factor endowments are exploited in the economy by firms and organisations that use them to create different comparative advantages. In turn, these advantages influence how a firm and a country market, sell and trade. Second, the existing structure of a country’s business and digital regulations will influence how an economy will respond to new and additional digital regulations. In fact, the restrictiveness of regulations that we know to impact on the digital economy vary substantially in the European Union – both between countries and between sectors. This variation will have consequences for the distribution of the costs of the three new regulations that are going to be implemented. This paper maps countries and country groups in the digital economy: their endowments, advantages, and flows. Especially, it evaluates the digital performance of countries in a number of key indicators and data points, and anchors the analysis in the academic literature. The paper points to some specific consequences of the DMA, the DSA and the AI regulation, and how different regulations will affect endowments structures and advantages. One key finding is that the distributive effects of the regulations will depend on size advantages and disadvantages. In short, small economies and small firms will likely carry a disproportionate part of the cost of new digital regulations. Furthermore, countries that have used their endowments to specialise in the digital economy will be more affected than others. On this score, there is a vast difference between EU countries. For instance, countries in Europe’s North – generally small, competitive, and open economies – will be most affected by these new regulatory burdens. Countries in Central and Eastern Europe will also be negatively affected, especially through risks of market exclusion effects for small firms. It is important for European policymakers to now consider how they can avoid that these new digital regulations continuously reinforce size advantages for big economies and big firms. There are some policy strategies that should be considered. First, regulations can be changed to better fit the overwhelming evidence that young, dynamic, and innovative firms drive a substantial part of productivity growth in the economy. Second, EU and national policymakers can pursue policies that make the transition into a more size-balanced economy easier, for instance by taxing and regulating small firms differently. Smaller economies can also be helped by having corporate taxes that are lower than in big economies. Third, EU and national policymakers can reform other digital and business regulations and make them less burdensome. Fourth, the EU can help to support the build-up of digital advantages in smaller economies.
Topic:
Markets, European Union, Regulation, and Digital Economy
Political Geography:
Europe

55. Combating Unsafe Products: How to Improve Europe’s Safety Gate Alerts

Author:
Joana Purves and William Echikson
Publication Date:
04-2021
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The European Union has built a one-stop-shop for its member state regulators to post product safety notifications – Safety Gate (European Commission 2021d). Constructed on top of the Rapid Alert System for Dangerous Non-Food Products, or RAPEX, the Safety Gate web portal is designed to make public the “quick exchange of information” between 31 European countries and the European Commission “about measures taken against dangerous non-food products.” While Safety Gate represents a significant achievement, our research revealed areas for improvement to increase its utility for manufacturers, marketplaces and consumers. Many product notifications published on the website lack details required to facilitate speedy removals and recalls. The study graded eight essential criteria for a total of 918 Safety Gate notifications published over eight months in 2020. The average notification score was a respectable 70 out of 100, but over 98% of the notifications omitted at least one key criterion. Only 14 notifications included all the information to enable efficient and accurate product identification.
Topic:
Health, Food, European Union, and Regulation
Political Geography:
Europe

56. What is Wrong with the German Economy? The Case for Openness to Technology and Human Capital

Author:
Philipp Lamprecht
Publication Date:
04-2021
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Advanced economies like Germany need to focus more on attracting foreign high-skilled labour and become better at importing foreign technology and business models. This might not sit well with current thinking of economic sovereignty in Berlin, but it is a necessary step for improving technology-penetration, competitiveness and productivity. Supply of high-skilled labour is getting more difficult to obtain and the cost of generating and adopting new ideas is increasing. Policymakers need to create the right conditions to open their markets to foreign technology and high-skilled labour. But openness alone is only a necessary condition – not a sufficient one. Policymakers also need to focus on creating the right environment domestically to attract a specialised and highly-skilled labour force, despite fierce competition from around the globe. The crucial question is to what extent companies make use of innovation capacities that can be obtained from international recruitment. Our analysis focuses on what German policymakers can do to increase openness for, and its attractiveness to, the high-skilled labour. Germany’s policy framework should focus on public policy initiatives aimed at increasing the incentives and removing obstacles for firms to attract the global high-skilled labour force. To stay attractive, Germany’s policies should also target issues of bottleneck regulation to facilitate field-testing new technologies and to support innovation sandbox processes of companies. And German policies should focus on the regulatory environment, notably the type of regulations that policymakers pursue. Many current regulations in Germany do not sufficiently allow for experimentation of technologies and ideas.
Topic:
International Political Economy, Science and Technology, Labor Issues, Regulation, Human Capital, Innovation, and Skilled Labor
Political Geography:
Europe and Germany

57. Immunity Passports in the context of COVID-19: Τechnological Solutions, Regulatory Considerations and Ethical Challenges

Author:
Mihalis Kritikos
Publication Date:
06-2021
Content Type:
Policy Brief
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
The European Parliament and the Council of Ministers of the EU recently reached an agreement on COVID-19 certificates designed to facilitate travel and help revive tourism in Europe. Although the certificate is expected to greatly simplify travel within the EU, its large-scale deployment is not without scientific, legal, and ethical challenges. The current analysis sheds light on the main tenets of the agreed EU framework and highlights the positions and initiatives of the main stakeholders. It also examines the major ethical and legal questions associated with the release of the certificate and makes a series of recommendations that could contribute to the efficient handling of some of these challenges so as to ensure a socially-responsible and effective use of this new EU instrument.
Topic:
Science and Technology, European Union, Regulation, Ethics, and COVID-19
Political Geography:
Europe

58. UK-EU regulatory divergence tracker

Author:
UK in a Changing Europe
Publication Date:
10-2021
Content Type:
Special Report
Institution:
UK in a Changing Europe, King's College London
Abstract:
The UK in a Changing Europe’s regulatory divergence tracker provides an overview of where and how the UK has used its newfound regulatory freedoms to diverge from EU standards. It identifies and analyses the most significant cases of divergence in regulatory standards 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. It forms the first of a series of trackers which will keep tabs on the latest developments in the regulatory divergence landscape.
Topic:
European Union, Regulation, Brexit, and Regional Integration
Political Geography:
United Kingdom and Europe

59. The impact of Brexit on UK services

Author:
Sarah Hall and Martin Heneghan
Publication Date:
12-2021
Content Type:
Special Report
Institution:
UK in a Changing Europe, King's College London
Abstract:
The service sector stands as a clear exemplar of the trade-offs entailed by Brexit. The emphasis placed by the government on reclaiming regulatory autonomy during the negotiations over the Trade and Cooperation Agreement (TCA), and the particular importance of ending freedom of movement had particularly serious consequences for those who import or export services. In this report, Sarah Hall, Senior Fellow at UK in a Changing Europe and Martin Heneghan, Research Fellow at the University of Nottingham explore the consequences to date of Brexit, and particularly of the TCA, for service providers.
Topic:
Treaties and Agreements, European Union, Regulation, Economy, Brexit, Services, and Trade
Political Geography:
United Kingdom and Europe

60. UK-EU regulatory divergence tracker: second edition

Author:
UK in a Changing Europe
Publication Date:
12-2021
Content Type:
Special Report
Institution:
UK in a Changing Europe, King's College London
Abstract:
UK in a Changing Europe’s regulatory divergence tracker provides an overview of where and how the UK has used its newfound regulatory freedoms to diverge from EU standards. It identifies and analyses the most significant cases of divergence in regulatory standards 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 second edition of the tracker, covering changes which took place predominantly between September-December 2021.
Topic:
European Union, Regulation, and Brexit
Political Geography:
United Kingdom and Europe