External Publication

Data flows, artificial intelligence and international trade: impacts and prospects for the value chains of the future

In-depth briefing and analysis on the issues of digital trade and the geopolitics of trade provided to the European Parliament.

By: , , , and Date: November 26, 2020 Topic: European Macroeconomics & Governance

This study was prepared for the European Parliament’s Committee on International Trade (INTA). The study is available on the European Parliament’s online database, ‘ThinkTank‘. Copyright remains with the European Parliament at all times.

On November 26 2020, the European Parliament published a paper requested by the European Parliament’s Committee on International Trade (INTA), in which Bruegel scholars Georgios Petropoulos (Senior fellow), Niclas Poitiers (Research fellow) and André Sapir (Senior fellow) provided both an in-depth briefing and analysis on the issues of digital trade and the geopolitics of trade. This follows a discussion and testimony given November 9 2020 before MEPs at the webinar entitled ‘Data flows, artificial intelligence and international trade: impacts and prospects for the value chains of the future’.

Socio-economic effects of digital trade and artificial intelligence on EU industries

Artificial intelligence and new digital technologies are transforming digital trade. They facilitate the development of new business models of trade and reduce the geographical barriers of economic transactions. Such transformations are quite useful for the small and medium enterprises. Artificial intelligence is being adopted by both digital and non-digital sectors, but its adoption varies a great deal across countries, including within the EU. Data and information flow play a crucial role in digital trade by allowing personalization.

Digital trade is not new, but it is taking new forms that are ushering a new phase of globalisation. So far digital trade mainly affected trade in goods, including through global value chains, though some service activities have already become more tradeable thanks to digital technologies. The new phase of globalisation driven by artificial intelligence and new digital technologies is likely to do for services what the previous phase did for manufacturing: to vastly increase trade between advanced and emerging economies. This prospect raises important issues for domestic policies and trade policy.

Geopolitical Aspects of Digital Trade

This in-depth analysis discusses issues in trade in digitally deliverable services and the geopolitics of digital trade policy. Digitally deliverable services are becoming increasingly important for global value chains, both in terms of final products exported to other countries, and in terms of inputs embedded in manufactured goods. To harness the potential of digital trade in services, both the regulation of the digital means by which a service is traded and the regulation of the services themselves have to be accommodative. Digital trade policy is still in its infancy, and many challenges in terms of policy and measurement remain. Looking at regulation of data flows, the EU’s focus on privacy policy is incompatible with the laissez-faire approach pursued by the US administration and the political control of the internet by the Chinese government, limiting the potential for trade in digitally deliverable services and plurilateral agreements on digital trade. However, a number of other major economies are following similar approaches to the EU, which creates the potential for cooperation and intensifying trade in digital services. The EU should also increase its competitiveness in this strategically important services sector by completing the single market with respect to services and capital, and by strengthening research and development in digital technologies.

Read article More on this topic More by this author
 

Blog Post

The double irony of the new UK-EU trade relationship

The Trade and Cooperation Agreement signed between the European Union and the United Kingdom goes against six decades of UK efforts to avoid being economically disadvantaged in Europe. Tracking the evolution of the EU-UK relationship over the last 60 years can help in understanding this.

By: André Sapir Topic: European Macroeconomics & Governance Date: January 12, 2021
Read article More on this topic More by this author
 

Opinion

Regulation in the era of matchmaking economics

New approaches and new tools are needed to prevent excessive concentration of economic power in the hands of a few matchmaking digital platforms that form multi-sided markets. Regulation in this area is only just emerging.

By: Maria Demertzis Topic: European Macroeconomics & Governance Date: January 5, 2021
Read article Download PDF More on this topic
 

Policy Contribution

Deglobalisation in the context of United States-China decoupling

After decades of increasing globalisation, there now seems to be a slowing, or even a turn to deglobalisation, meaning decelerating trade and investment and reduced global value chains. This trend seems to have accelerated because of the United States’ push to contain China in the context of their strategic competition. So far, however, there is less evidence of deglobalisation in terms of financial flows.

By: Alicia García-Herrero and Junyun Tan Topic: Global Economics & Governance Date: December 21, 2020
Read article More by this author
 

Podcast

Podcast

The new EU digital regulations: Explained

Bruegel's experts walk you through all the details of the EU's Digital Services Act and Digital Markets Act.

By: The Sound of Economics Topic: Innovation & Competition Policy Date: December 16, 2020
Read about event Download PDF More on this topic
 

Past Event

Past Event

Europe and India: Comparing Approaches to Global Economic Challenges

Stakeholders from government, private sector, media and academia/institutions come together to review India-EU relations and point to a promising direction for the future.

Speakers: Yamini Aiyar, Suman Bery, Navroz K Dubash, Ignacio Garcia Bercero, Alicia García-Herrero, Rajat Kathuria, Gautam Mukhopadhaya, Ananth Padmanabhan, Georgios Petropoulos, André Sapir, Shyam Saran, Simone Tagliapietra and Guntram B. Wolff Topic: Global Economics & Governance Date: December 15, 2020
Read article More on this topic More by this author
 

Opinion

Brussels’ Digital Plan Leaves the Key Issue Unaddressed

To promote well-being and shared prosperity, EU decision-makers will need to show the same desire for competition beyond the boundaries of digital markets.

By: Mario Mariniello Topic: Innovation & Competition Policy Date: December 14, 2020
Read about event More on this topic
 

Past Event

Past Event

Innovative approaches to monitoring the risks and impact of COVID-19

What new innovative tools can we use to measure real-time economic and social risk?

Speakers: Zsolt Darvas, Jaime Garcia, Ben McWilliams, Nicola Villa and Georg Zachmann Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: December 8, 2020
Read about event More on this topic
 

Past Event

Past Event

What's the hype all about: the future of social media

What is the future of social media? Conversation with Nick Clegg and Sinan Aral.

Speakers: Sinan Aral, Nick Clegg and Guntram B. Wolff Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: December 7, 2020
Read article More on this topic
 

Blog Post

Europe is losing competitiveness in global value chains while China surges

The European Union owes much of its economic weight to its regional value chain and integration into the global value chain. But the EU’s global value chain role is shrinking, and while EU trade integration with China is increasing, it is mainly to China’s benefit, undermining the EU’s external competitiveness.

By: Alicia García-Herrero and David Martínez Turégano Topic: Global Economics & Governance Date: November 27, 2020
Read article More on this topic More by this author
 

Opinion

A timid start for European Union data governance

Europe needs all pieces of its data strategy puzzle to be in place to enhance its competitive position: there is still a long way to go.

By: Mario Mariniello Topic: Innovation & Competition Policy Date: November 26, 2020
Read about event More on this topic
 

Past Event

Past Event

Digital Platforms, Regulation and Competition: What's next for Europe?

Will the new rules of the internet go far enough for consumers and creators? Should we regulate platforms or will a code of conduct suffice?

Speakers: Diane Coyle, Jorge Padilla, Georgios Petropoulos and Alex A. Saliba Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: November 26, 2020
Read about event More on this topic
 

Past Event

Past Event

Free movement of data: how to maintain necessary sharing among the EU, UK, and USA?

In the current legal climate, how can the EU, the US and the UK continue to share data?

Speakers: Christian Borggreen, Joe Jones, Christian Kastrop, J. Scott Marcus and Reinhilde Veugelers Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: November 25, 2020
Load more posts