Ministers sign off on fast-track EU data flow deal

By Benjamin Fox |

The EU took a step towards finalising a key piece of digital single market law on Wednesday (20 December) after EU diplomats agreed to scrap rules that require data to be stored only in a certain country.

The free flow of data regulation, which covers all non-personal data, aims to create a single market for data storage and processing services, such as cloud computing.

The legislation sailed through the Council of the European Union at break-neck speed, suggesting a high degree of consensus in the body representing the 28 EU member states. The European Commission only published its proposal in September.

The bill is now being passed on to the European Parliament, where the Internal Market committee will begin formal discussions on the file. Anna Corazza-Bildt, a Swedish centre-right MEP, will pilot the regulation through Parliament early next year, with negotiations between the three EU institutions likely to begin in spring.

The agreement is a coup for Estonia, one of the EU’s most tech-savvy governments, which had put kick-starting the Commission’s stalling digital single market project at the heart of its six month EU presidency, which ends this month.

“Rather symbolic to reach agreement on this at the last meeting of the Estonian Presidency. The entire team looking pretty blissed out,” tweeted Estonian presidency spokesperson Annikky Lamp.

“By summer 2018 we need to agree on the free movement of data,” said Estonian Prime Minister Jüri Ratas at the European Council summit in September.

The following month leaders agreed a December 2018 deadline for completing 18 outstanding digital single market laws.

The EU executive estimates that removing data localisation restrictions would be worth an additional €8 billion per year to the bloc’s economic output, and the proposal had long been requested by the digital sector.

Its advocates say that scrapping data localisation rules will cut the costs of data services for companies and expand their choice of providers.

The proposal had threatened to expose a divide between the EU’s tech leaders and laggards. Sixteen member states demanded EU rules on the free flow of data.

But at a meeting of EU telecoms ministers in early December, France, Germany and Spain had pushed to broaden the scope of the exception to include “public sector data”.

That prompted an angry reaction from industry groups including BusinessEurope and the Computer and Communications Industry Association who warned that this would make the law “effectively irrelevant”.

Ministers have retained an exemption only for “national security”. Governments would be required to “immediately” notify the Commission of any data localisation requirements.

National authorities will also have access to data when it is stored or processed in another country.

“Seamless data mobility saves costs for businesses, especially for start-ups and SMEs, and is essential for many next-generation digital services. This proposal has been a top priority for the Estonian presidency,” said Estonian Minister for Entrepreneurship and Information Technology Urve Palo.

The agreement “sends a strong signal against ‘data protectionism’ in the EU”, said Cecilia Bonefeld-Dahl, director-general of DigitalEurope, the pan-EU trade association.

The trade body called on MEPs to “maintain their support for the principle of the free flow of data without limiting the scope or extending the exemptions”.

“Things got better but it’s hardly the digital single market we have in mind,” said Poland’s digital affairs minister, Krzysztof Szubert.