EU Needs to Modernize ‘Ancient View’ on Intangible Tech Transfers, Digital Europe Says
The EU needs to modernize and revamp its regulations surrounding intangible technology transfers, which lack sufficient export control guidance, said Magnus Nordeus, vice chair of Digital Europe, a trade policy group. He also said EU companies want more predictability from U.S. export controls, which can be especially difficult to manage for small- and medium-sized businesses.
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Nordeus, speaking during a June 14 Regulations and Procedures Technical Advisory committee meeting, said the EU has a “very ancient view” of intangible transfers, which can include exports involving cloud services or data transfers. He said the Commerce Department's Bureau of Industry and Security has provided helpful guidance to “make industry understand what is controlled” and what isn’t, but the EU is still far behind.
“In the EU we have a total lack of this guidance, and we have been promised guidelines for cloud computing for 12 years without anything,” said Nordeus, who is also the head of trade compliance for Ericsson. “So here we are really pushing for more clarity and hopefully alignment with the U.S. line of thinking when it comes to controls of intangibles and what is actually an export.”
Nordeus said Digital Europe has brought the issue to the U.S.-EU Trade and Technology Council. In recent comments outlining priority areas under the TTC, industry told the EU that companies developing cloud services or handling data transfers across jurisdictions are often unclear about whether an export license is required (see 2206010007).
“When we're talking about encrypted technology or software as a service, where there is no export” of a physical item, “these are areas we are really trying to move the needle with the [European] Commission,” Nordeus said. “We hope that we have that, and also that it is brought into consideration in the TTC.”
EU companies are also hoping to “address the extensive application of U.S. export controls” and to better align U.S. and EU export licensing, Nordeus said. Many smaller businesses struggle with stringent U.S. export control requirements, Nordeus said, adding that the two sides should consider creating a “license-free transatlantic export system.”
“I have personally worked in a company that's focused a lot on U.S. export controls for the last 25 or 30 years with big investments, but honestly that is not as easy for these small- and medium-sized enterprises in the EU which we also represent,” he said. The U.S. should “find a way to trust the EU export control regime and to introduce simplifications for the EU industry when it comes to U.S. export controls or exports from abroad.”
The suggestion is a “big ask,” Nordeus said, but it’s deeply desired by European companies and trade associations. “We really hope that we will see and have our government stakeholders put their money where their mouth is, because it's been clear that here the regulators are really trying to find concrete measures and results,” he said. “Sometimes they’re low hanging fruits, but also some systemic issues might be discussed, and that's something we hope to see progressing going forward.”