Press release: Digital Markets Act and Digital Services Act – Opportunities and challenges for EU-China relations

Brussels, 25th October 2022 – Digital Markets Act (DMA) and Digital Services Act (DSA)- Opportunities and challenges for EU-China relations: high-level dialogue with European Parliament’s member and lead rapporteur dr. Andreas Schwab (Germany) and dr. Wang Huiyao, President of China Center for Globalization (China)

The Digital Markets Act (DMA) and the Digital Services Act (DSA) marked a substantial legislative step of digital governance of the European Union. Regulations, which will in current framework mainly target business practices of the U.S. tech giants, created legitimate concern for European policy makers on the future of the EU digital markets, as Chinese digital technology firms could be left alone to grow. While DMA lacks consideration of the future state of Chinese digital technology firms in the EU, the DSA offers elements of policy overlap with Chinese measures in establishing accountability mechanism for digital platforms. Question arises on what opportunities and future challenges DMA and DSA can bring to the EU-China relations.

In the opening address, the Chairman of Europe-Asia Center, Amb. (ret.) Piet Steel highlighted: “the DMA and DSA are two landmark legislative steps in Europe’s strive for strategic autonomy, less external dependence and mitigating vulnerabilities.” However, with ongoing geopolitical and trade tensions, one of the landmark trade negotiations of the Comprehensive trade agreement between the EU and China, remains halted. Despite of the challenges, he addressed the need for structured, bilateral or multilateral dialogue in the area of internet governance and leveraging of technology as an enabler for global growth and peace.

In his keynote address Dr. Andreas Schwab, member of the European Parliament, People’s Party (EPP) for Germans Christian Democratic Union Party (CDU) and lead rapporteur on DMA/ DSA, highlighted the objective of DMA is to «ensure contestability of 10 specific digital markets such as browsers, operating systems and messaging services». Regulation is therefore focused on the tech giants fulfilling the gatekeeper’s requirements. As for DSA, emphasis is on illegal content and deals with the proliferation of illegal services and the verification of information on digital platforms. However, “the DSA does not define what is illegal (…), making it an issue of alignment with the Criminal law of 27 EU members states.”

He highlighted that “both DMA and DSA present laws that tackle internal market legislation and affect all companies (…), and are therefore not discriminatory.” The geopolitical competition between EU, China and the US may lead to tensions in the process of applying the laws. In response to possible tensions, the EU has set up the Trade and technology Council, which will mediate in such circumstances among the key stakeholders. He concluded: “EU wants digital governance to be democratic and as business-oriented as possible…There is space for cooperation, which is not exclusively limited to mutual learning, but also on how online regulation is operating and internet governance can be successfully implemented.”

Dr. Henry Huiyao Wang, founder and president of China Center for Globalization (CCG), shared his keynote address highlighting: “Digital economy accounts for 40% of China’s total GDP, so we are at a crucial time to put forward a global acceptable operating standards and regulations…In this aspect, DMA and DSA are setting high standards for all parties.”

He emphasized the enormous business cooperation potential between EU and China. “China and EU included the topics of Digital governance on the High-level Environment and Climate Dialogue. What can be anticipated after the 20th National Congress of the Chinese Communist Party is a greater focus on the economy.” He suggested China and EU could make a step forward and already in November 2023 simultaneously announce to abandon mutual sanctions, thus facilitating the business communities on both sides. He concluded with emphasis on “China needing international exchanges on digital regulations.” EU on the other hand has the advanced legislative process, which China could really learn from. “I would like to see more corporations in that area.”

In the expert roundtable session, Dr. Sebastian Hallensleben, Chair of CEN-CENELEC JTC 21, expert advisory board of EU Stand ICT and co-chair of OECD ONE.AI group, shared his opinion on how do DMA and DSA and possibly upcoming AI Act deal with jurisdiction issues. “We still lack the understanding of how does jurisdiction in the physical geographic space maps to the digital space. In the rounds of applicability of the DMA and DSA we are talking about the reach of content blocking.” He argued that China has directly mapped its political geographic sovereignty to the digital space, while EU and the US are not keen on following such path. An approach to resolve the gap could be numerous cases in spectrum use, maritime law or tax system, where overlapping jurisdiction challenges are addressed in multiple ways. Enlightened by standardizing AI ethics, he suggested the issue of acceptability to be tackled on national levels rather than global, due to (limited) eligibility of global standardization.

Ms. Mireia Paulo, Head of Management of the Centre for EU-Asia Connectivity (CEAC) and Lecturer/Research Associate at Ruhr-Universität Bochum stated that even though Chinese big tech companies would eventually be identified as gatekeeper, she does not want to exaggerate the impact implications. She supported the reasoning with firstly, “similar tendency for regulating big tech and large online companies in China”. Similar to DMA, China’s Anti-Monopoly Law focuses on competitiveness of digital market, and DSA also offers elements of policy overlap with Chinese online safety regulation. Secondly, “Chinese tech companies are getting used to constant change of domestic regulation and foreign market regulation is within their expectation.” And lastly, as in example of ByteDance “Chinese platforms often have the separate versions for domestic and global markets, (…) making compliance with new EU regulations slightly easier for Chinese stakeholders.”

Dr. Maria Adele Carrai, Assistant Professor of Global China Studies at NYU Shanghai, highlighted the potential DMA provides to the Chinese companies such as Alibaba, Tencent and Baidu with expansion of their EU presence. Nevertheless, “EU still has discretionary the power to investigate companies that do not meet criterial set for the formal definition of gatekeeper. In such way, Chinese companies will be forced to open up in the same way as US companies.” She noted that although current DMA has not given clear consideration on the future of Chinese

She noted that although current DMA has not given clear consideration on the future of Chinese tech firms in European markets, “political consideration, Trans-Atlantic ties, shared democratic and market values, are likely to influence Europe to take further steps in regulating or possibly limiting the expansion of Chinese digital technologies in Europe.” Lastly, she expressed hope for trilateral collaboration between EU, China and the US in developing regulatory framework on big tech.

Following the contribution of experts, moderator Mr. Matic Gajsek, Deputy Director of Europe-Asia Center raised a question of whether digital governance can be resolved purely on bilateral level or should there be an aim of trilateral framework, supported by the strong dialogue of technological players. Dr. Henry Huiyao Wang highlighted his D20 (Digital 20) proposal which would create dialogue arena for digital industry, think-tank’s and policy makers. Dr. Andreas Schwab emphasized the need for involvement of broader range of stakeholders, specifically citizens and small enterprises that are to be provided with “basic rights and values legislation.” Dr. Sebastian Hallensleben suggested the creation of new platforms that can secure continuous advancement of discussions on digital policy making. Ms. Mireia Paulo advocated for the constructive role legislative and research working groups can have in such process and raised the concern for possible counter-productive “blocking narratives”, dividing stakeholders into different blocks. Dr. Maria Adele Carrai reiterated the trilateral cooperation between EU, China and US as the best way forward in the creation of a global tech regulation.

Full webinar available on the link: https://youtu.be/E0rVqj0aERY                                                                                                                                                  

For press enquiries:

Matic Gajšek, Deputy director Europe – Asia Center E-mail: m.gajsek(at)europe-asia.org