This article is part of our special report Digital Summit for Growth.
SPECIAL REPORT / Heads of government meeting tomorrow (24 October) for the first European-level summit dedicated to the digital agenda will seek to focus on single market issues and steer the debate away from the controversial NSA snooping scandal and data protection.
Draft conclusions from the summit, seen by EURACTIV, confirm that member states would rather focus on the “digital single market” than engage in an open dispute over the controversial data protection regulation.
The draft conclusions focus heavily on the new telecoms single market package published by the European Commission and still under consideration by the Parliament.
“The European Council welcomes the presentation by the Commission of the "Connected Continent" package and encourages the legislator to carry out an intensive examination with a view to its timely adoption,” the conclusions say.
Within the ambit of the telecoms single market, however, contentious issues appear within the conclusions. The need to harmonise spectrum frequency allotment is backed, but with the caveat that this should “respect spectrum as a source of national revenue”.
Google tax likely to cause friction
Although the Commission’s plans do give member states the right to continue to raise money from spectrum licenses, this would be hemmed in, subject to new harmonised limits, and subjected to decisions made ultimately in Brussels, according to the proposals.
France, Germany and the UK are all thought likely to resist allowing Brussels ultimate control over spectrum.
French-backed proposals for a new so-called “Google tax”, a levy on so-called ‘over-the-top’ service providers, are alluded to in pledges within the conclusions to look more closely at taxation across the digital sector.
“The on-going work to tackle tax avoidance, tax base erosion and profit shifting is important also for the digital economy. Member States should coordinate their position in order to achieve the best possible solution for the EU,” the conclusions say.
They also charge the Commission, in the context of its ongoing VAT review, to consider “differentiated tax rates for digital and physical products” and report back to leaders at a December summit, which will consider a raft of taxation issues.
The French minister for the digital economy, Fleur Pellerin, has pushed hard for such a proposal, reprising her calls in Brussels recently when she told a conference that the top five US-based internet companies were stifling European innovation in new technologies and should be more tightly regulated and taxed.
The Google tax proposal is likely to be strongly resisted by many member states' leaders at the summit however.
Popular proposals to cut telecoms roaming charges across Europe, another essential element of the single market for telecoms proposal, is also thorny, since member states with large incumbent telecoms operators, such as France, Italy and Germany, might seek to protect the interests of these companies. In addition, groups representing the interests of the telecoms sector have bitterly complained that fading out roaming charges will deprive them of income at a time their profits are declining.
Data protection the elephant in the room
The elephant in the room at the summit, however, will be data protection. The conclusions currently bury the issue beneath the telecoms proposals, referring only to the importance of fostering “trust of citizens and businesses in the digital economy, including through a strong data protection framework.”
The Council draft adds that the adoption “next year” of the EU general data protection regulation “is essential for the stability and growth of the Digital Single Market”.
Council President Herman Van Rompuy will be hoping that progress on the digital single market is not waylaid by disputes underlying these simple conclusions, but the Parliament and Justice Commissioner Viviane Reding will be hoping for a more detailed debate on the issue.
On Monday (21 October) lawmakers in the European Parliament’s civil liberties committee voted to strengthen Europe's data protection laws, including plans to impose fines of up to €100 million on companies such as Yahoo!, Facebook or Google if they break the rules.
Moreover the Parliament, and Reding, have consistently tied the need for stronger data protection to acknowledge alleged privacy abuses – including by member states – arising from data leaked by former US espionage contractor Edward Snowden.
Prism scandal not mentioned in the conclusions
Issues of substance in the data protection dossier – including controversial provisions on data-transfers from outside the EU, which would require US operators to seek authorisation from European data authorities to access EU citizens data – are unmentioned in the conclusions. Nor is there any mention of the Prism scandal.
Speaking at a press briefing in Strasbourg yesterday, German Green MEP Jan Philipp Albrecht, the rapporteur on the data protection regulation, said: “On the Snowden revelations I am not the only one really surprised that after Snowden’s revelations – which also touch on abuses by EU intelligence agencies – no government took action on the fundamental breaches of human rights.”
“I realise that you have to be a pragmatist, but the fact that there has been no message [about Prism] at EU level is the wrongest message possible… and I wish the EU would find a new self-confidence,” Dimitrios Droutsas, a Greek socialist MEP who also sits on the LIBE committee added.
“The European Parliament has thrown down the gauntlet – European leaders must now rise to the challenge. Heads of state and government should make clear that common European data protection rules are very much needed and that they are needed now,” Viviane Reding added in a statement.
However, these arguments could be swamped at the summit.
Hosuk Lee-Makiyama, a director of the Brussels based European Centre for International Political Economy (Ecipe), a think-tank, told EURACTIV that he believed focusing on digital single market issues was a Council strategy, designed to yield success and avoid leaders becoming mired in dispute.
In relation to the Snowden allegations, Lee-Makiyama said: “The problem is that the member states all have intelligence agencies, but the Parliament and the Commission do not, which is why they are more exercised about the issue.”