The challenge of boosting the Data Economy by deploying the EU's digital diplomacy at the global level

The growing importance of data goes beyond the economic and social spheres at state level to a multinational dimension that raises the challenges, opportunities, threats and uncertainties surrounding the development of the Data Economy to a global scale. In the case of the European Union, the issue has been on the institutional agenda in recent years, as evidenced by the profusion of specific and cross-cutting regulations already adopted or in progress; or the promotion of multilateral initiatives both within the framework of the Union and beyond its borders. In July 2022, this global political dimension took a major qualitative leap forward with the adoption by the EU Council of what it called 'Conclusions on EU Digital Diplomacy'Conclusions on EU Digital Diplomacywhich aimed to set out priority actions to strengthen EU action in international digital affairs.

These conclusions - updated in July 2023 - are, in a way, a milestone in that they give the concept of 'digital diplomacy' a legal status. They recognised, on the one hand, the need for "stronger, strategic, coherent and effective" EU policy and action on digital issues; and detailed, on the other hand, priority actions to respond to that need.         

Three ways to engage with third countries

Under the title 'The European Data Strategy from a multidimensional perspectivethe think tank network PromethEUs1 published in June 2023 an analysis that breaks down the European Data Strategy from two main perspectives: the political and regulatory aspects, and the geopolitical aspects.. The analysis of the latter was prepared by Raquel Jorge Ricart of the Real Instituto Elcano, and explains that the EU has been addressing the way in which its goods, services, assets and personal data relate to third countries through various channels:

The analysis of the latter was carried out by the whose researchers explain that the EU has been addressing how its goods, services, assets and personal data relate to third countries through various channels:

1. The regulatory route, which, as they say, "has been closely followed by most stakeholders". 
2. Through multilateral initiatives, "coalitions of the willing" and international meetings.
3. "Through the importance of digital diplomacy, as a policy area to institutionalise the geopolitics of data, along with other technological challenges". In this sense, the term 'digital diplomacy' is used to bring together in a single 'box' all the initiatives that, independently, would have been carried out to date.

Further information on each of these pathways is provided below.

Regulatory pathway

In relation to the regulatory approach, the main challenge for the EU to deploy the regulatory tool as a geopolitical asset lies, according to the Elcano researchers, in influencing other countries to follow the same approach. "It is not just a matter of imposing standards on those who already interact with the EU, but of encouraging others to do the same with theirs," they say. Likewise, they add, "another challenge for the geopolitical instrumentalisation of these regulations is to understand that geopolitical strategies must vary according to the country and the type of technology company", as they may have different geopolitical approaches.

But, the authors conclude, regulation, while important, is not the only approach on which the EU should build its data geopolitics. The other two approaches are as important as they are strategic.

Multilateral initiatives

With regard to international forums for dialogue, the following stand out:

• Those maintained through institutionalised and long-standing organisations and spaces, e.g. G7, UN, OECD, etc.
•  More recently established issue-specific coalitions, such as the Quadrilateral Security Dialogue (involving the US, Australia, India and Japan), Digital Economy Partnership Agreement (with Chile, New Zealand and Singapore) or the proposed Data Free Flow with Trust DFFT-2019 (driven by Japan).

Digital diplomacy

Regarding the third approach - the promotion of digital diplomacy - Elcano analysts highlight as positive the various regional technological partnership initiatives that the EU has deployed in recent years, and stress that already in 2019 'the EU began to see technology through the lens of ethics' and as a political and geopolitical issue. In this respect, they underline that the Conclusions of the European Council on Digital Diplomacy (July 2022) are the starting point "with which the EU institutionalised all aspects related to the external agenda in third countries and digital policy as a unique aspect of EU foreign policy". And that is why the goal of digital diplomacy deployed by the EU through its External Action Service is none other than to "secure the EU's global role in the digital world, protect its strategic interests and promote its dynamic and people-centred regulatory framework for an inclusive digital transformation".

The latter is, moreover, a crucial factor, as revealed by the priority actions set out at the initial European Council meeting in July 2022, revised in july 2023. The EU, says the Council, must promote a human rights-based and people-centred digital transformation, which translates, for example, into:

• Regular and thorough" human rights due diligence practices and human rights impact assessments.
• Pay special attention to the protection of the rights of vulnerable or marginalised people.
• Bridging the gender digital divide.
• Promote an open, free, neutral, global, interoperable, reliable and secure Internet.

The Spanish Charter of Digital Rightslaunched in July 2021, and the European Declaration on Digital Rights and Principles for the Digital Decadeare a clear example of the vocation with which the European Union wants to provide itself with an internal or domestic reference, while establishing a shared framework for its action in the field of digital diplomacy.

The EU's challenges

In any case, from the analysis of the different actions established by the EU in this area, the Elcano Institute's researchers identify three major challenges:

1. How to address the role of member states in EU data geopolitics, as most foreign and security policy provisions depend on the unanimity of all 27 countries, and this "may make it difficult for certain activities related to data governance to be approved".
2. How to partner with developing countries "or, particularly, with non-aligned countries", a concept that could be undergoing some revitalisation and which, they argue, "should be an area for further work". The global Gateway initiative would be in this area and, in fact, is one of those that the EU wants to promote by also broadening private sector participation.
3. How to "pay attention to certain technologies that are still underdeveloped, notyetwidely commercialised or not yet deployed, but which could generate a great deal of competition between countries".

In short, the development of digital diplomacy is already a crucial vector in the development of the Data Economy and, in fact, the EU Council will return to this issue before the summer of 2024, two years after the issuing of the Conclusions and one year since the first review. Indeed, until then, the Council "invites the High Representative, the Commission and Member States to assess progress on a regular basis and to continue to report regularly to the Council on the implementation of digital diplomacy". To take its diplomacy to the next level, they stress, "the EU must act with a Team Europe approach - that is, EU institutions and EU member states, together with other partner actors - jointly protecting its strategic interests and promoting its people-centred approach to the digital transition".

Economic security

The aforementioned link between digital diplomacy, the Union's strategic interests and the Data Economy underlies the European Economic Security Strategy a joint communication adopted by the Commission and the High Representative on 20 June 2023.  The strategy is based on a three-pillar approach:

• Promoting the EU's economic base and competitiveness
• Protection against risks
• Partnering with as many countries as possible to address common concerns and interests.

Fostering (competitiveness); preserving (economic security); and cooperating (with each other and with others) are the vectors that the Strategy defines to address the four risks it identifies. Namely:

1. Risks related to the resilience of supply chains.
2. Risks to the physical and cyber security of critical infrastructures.
3. Risks related to technology security and technology leaks.
4. Risks of economic dependencies being used as a weapon or economic coercion.

As a first follow-up to the Strategy, the Commission adopted on 3 October 2023 a Recommendation on critical technology areas for EU economic security, identifying ten critical technology areas, four of which are identified as "highly likely": advanced semiconductors, artificial intelligence, quantum technologies and biotechnologies.

In order to make immediate risk assessments on these areas, the Commission will deploy an intensive dialogue with Member States with results expected by spring 2024. A dialogue in which the Data Economy, with an increasingly relevant weight in European productive ecosystems, will be omnipresent. And Spain, as an international hub and secure destination for information flows and data storage, should pay special attention to aspects such as guaranteeing the correct integration of the different data infrastructures; guaranteeing interoperability between the different actors; and reinforcing its cybersecurity, especially in view of the vulnerability of the supply chain and the need to guarantee effective competition and diversity of suppliers.