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Michael Mandel

Chief economic strategist at the Progressive Policy Institute

No adequacy deal would mean a damaging data wall – and European tech as a whole would suffer

When Americans like myself look across the Atlantic, we see a vibrant European tech sector. By our estimate, we see 2 million app economy jobs across the continent as of April 2018, with more than 350,000 in the UK alone. We see a fast growing EU digital economy. And we see tremendous potential for Europe to lead in the digitisation of manufacturing and other “physical” industries.

Then we look at Brexit, and worry that this potential for growth could be put at risk – particularly over data.

Data flows have never been the most exciting topic. It is, however, critical to the global economy and to Europe’s continued development as a tech leader. Our paper, launched in Brussels today against a backdrop of political uncertainty on Brexit, urges both sides of the negotiations to adopt a pragmatic approach to data: an adequacy agreement with a view to additional cooperation in the future. If not, we risk the development of a damaging “data wall” across the English Channel.

The absence of an adequacy arrangement will be damaging for both the UK and the EU. First, startups across Europe rely on building a base within the EU in order to get sufficient scale to compete globally. The UK, as the leading digital economy in Europe with 2 per cent of all EU information technology and communications professionals, has been a critical part of this growth. Unfortunately, withholding the adequacy designation from the UK will effectively shrink the EU digital talent footprint. To put this in context, a data wall between the UK and the EU is equivalent to the United States losing the tech workforce of California, Massachusetts and New York combined.

Second, a data wall between the UK and the EU will make it more difficult for the European tech sector to keep up with advances in the United States and China. This is especially true in key areas such as artificial intelligence and the digitisation of manufacturing, where global leadership requires as many sharp minds as possible.

Finally, the EU has been actively developing its own vision of the future of technology, with the GDPR being emblematic. We don’t agree with every aspect of this regulatory path. Nevertheless, we find it odd that the EU would turn down a chance to build a broader coalition for its vision by holding back on an adequacy agreement with the UK, a country that has enthusiastically embraced the GDPR. The message being sent by the EU would be that it doesn’t want pragmatic alliances on tech issues, and instead intends to forge its own path without partners globally. This would be a mistake.

Both sides need to maintain cool heads. It’s clear that data issues are being wrapped up in broader uncertainty of the overall Brexit discussions talks – but to avoid a data wall, pragmatic progress is needed as soon as possible.

Dr. Michael Mandel is chief economic strategist at the Progressive Policy Institute, a DC-based think tank, and senior fellow at Wharton’s Mack Institute for Innovation Management.