Digital, Japan, Korea, Latest news, Singapore

EU to seek deeper digital trade ties with Indo-Pacific partners

The European Commission and External Action Service are planning to unveil a proposal to start Digital Economy Partnership Agreement negotiations with Korea, Japan and Singapore as part of the European Union’s new Indo-Pacific strategy.

The EU is also considering launching data privacy legislation “adequacy” negotiations with India, Indonesia, Sri Lanka, Taiwan and Thailand with the aim of boosting cross border data flows whilst bolstering EU-like data privacy standards.

Last May, member states developed initial ideas for an EU-wide strategy in a large area of the world that covers a wide range of countries from Korea to Australia to India and at times West or Central Asia – except China. The Council tasked the institutions with coming up with concrete follow-up actions. These are due to be unveiled next Tuesday (14 September).

Latecomer to international Indo-Pacific strategy drives

The EU move comes as countries such as India, Japan, the United States, the United Kingdom as well as EU member states France and Germany have initiated such initiatives. This trend is a response to China’s rise in the region and the US-China rivalry in this part of the planet.

Indo-Pacific strategies have multifaceted dimensions that range from assuring security of maritime lanes to trade and connectivity. For the EU as a whole security and defence remain difficult topics.

Speaking at a webinar hosted by the European Centre for Foreign Relations earlier this week, Enrique Mora, Deputy Secretary-General of the European External Action Service said:  “For the European Union it’s a story of growing interdependence.”

“This strategy is not an attempt to isolate China. It is about diversification in economics, in trade and also in politics,” said Mora.

Connectivity-focused interests

“We have defined three basic interests of the European Union, in terms of value chains, trade and connectivity – and then also security and defence”.

A new EU’s connectivity strategy in the region is expected to be the central plank of the new approach to the Indo-Pacific.

The connectivity approach is mainly about bolstering infrastructure projects independently of Chinese interference and according to governance standards that are closer to the EU’s conceptions in response to Beijing’s Belt and Road Initiative. It is also about enabling human and digital connections.

The trade dimension of the strategy integrates language on industrial supply chains – not least in the semiconductor sector. The aim is to increase these production networks’ resilience and diversification in the face of shocks such as pandemics or geopolitical tensions.

A very novel feature of the new strategy is the idea of launching digital partnerships with three Asian countries on a wider scale – such a partnership was initiated with India in May 2021.

The term used is very similar to Digital Economic Partnership Agreements coined by Singapore, which signed such agreements with New Zealand and Chile. The UK is also engaged in negotiations with Singapore towards a DEPA.

All these agreements are seen by the signatories of blueprints for international trade rules for the digital era and cover topics ranging from duties on electronic transactions to recognition of e-signatures and other good practices to enable digital and digitally-driven trade.

The European Commission has indicated it would explore launching “Digital Partnership Agreements” with the three most advanced economies in the region. The draft communication seen by Borderlex indicates that the Commission sees the partnerships as something broader than negotiating trade rules. The draft is still liable to change at the last minute in particular on the specific topic of digital partnerships.

The EU is interested in making standards interoperable, not least in the area of artificial intelligence, and creating an enabling environment for small companies and start-ups. It sees DPA negotiations as a complement to ongoing negotiations on a plurilateral agreement on e-commerce in the World Trade Organization.

Semiconductors and Taiwan

In terms of semiconductors, the elephant in the room is the role of Taiwan and its leading role in the global semiconductor supply chains.

The EU’s approach to Taiwan is that of extreme caution as it fears antagonising China if it appears to making any diplomatic move that looks like recognising the island as a state that is independent of China, despite its de facto independence and its enjoyment of a US security umbrella.

However, the EU has been active in seeking to lure the company TSMC, the Taiwanese semiconductor leader, into opening up production facilities in Europe as part of its new industrial strategy.

The new communication will not say much – if at anything at all – on Taiwan per se. The EEAS’ Mora said:  “If we manage to increase production of semiconductors in Europe, we will be solving half the problem between continental China and Taiwan. We will be defusing a lot of tensions”.

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