Former Swedish prime minister and Friends of Europe trustee Carl Bildt launches Friends of Europe’s work on the 4th Industrial Revolution with a call for Europe to seize a leadership role.
At the moment there is a lot of buzz about the ‘4th Industrial Revolution’. But what we need to address is something that is even bigger – the beginning of the end of the industrial age and our gradual entry into the digital age.
The 4th Industrial Revolution is only one part of that much bigger story.
Today’s Europe is to a very large extent a product of an industrial revolution that started in Europe and then gradually spread across the world. If the different parts of the global economy didn’t differ too dramatically in terms of wealth up until then, it was with the industrial revolution that the ascent of Europe and the wider West – with the United States coming somewhat later – really started.
What has evolved into today’s European Union started as an economic community centred on the two basic commodities of that phase of the industrial age: coal and steel. Integrating the coal and the steel industries of France and Germany would make war between them less and less likely. That was the foundation thought of what has since emerged as the EU.
Industrial production – still often dependent on steel – will remain an important part of our future economies. But gradually we see not only the rise of new sectors of the economy based on information and data and the profound transformation of classical sectors of our economy based on the processing of data.
The huge container ships crossing the oceans with their goods, often between the huge ports of East Asia, America and Europe, remain the symbols of the age of globalisation. And it remains critical to the development of our economies to safeguard the ‘choke points’ of these enormous flows, such as the Suez Canal or the Gulf of Aden.
But gradually, things are changing. While growth in trade has been far less robust since the 2008-2009 global financial crisis, data flows between continents and countries are exploding. A study by McKinsey estimates growth by a factor of 45 between 2005 and 2015 (and it will have, in all probability, accelerated further in the last year).
A glance at how the list of the 20 or so most valuable companies in the world has changed during the last decade illustrates the magnitude of the digital transformation. Companies like Alphabet, Amazon and Alibaba are now driving important parts of the global economy.
The industrial age started around the coal fields of England. The emerging digital age has its epicentre in California’s Silicon Valley, but its impact is spreading far and fast, to every corner of the global economy. It’s impossible to predict who will be the winners and losers five years from now. The future is, plainly speaking, up for grabs.
And Europe must wake up.
A digital single market is obviously a must. It is on the agenda of the European Commission, but progress has so far been slow and cumbersome.
Also critical is the free flow of data between countries and continents – the lifeblood of the emerging new economy. Already we see how important global digital value chains are becoming, and it is important to create conditions for them that are as free and clear as possible.
The now moribund Trans-Pacific Partnership was the first major agreement that included provisions to this effect, and it is important that any forthcoming Transatlantic Trade and Investment Partnership deal between Europe and the United States continues along this road. But other arrangements, like the EU-US Privacy Shield are also of great importance in safeguarding an integrated and free transatlantic marketplace in the new digital age.
I co-chaired, with former US Ambassador to the EU William Kennard, an Atlantic Council task force on transatlantic digital issues. Our report called for a US-EU digital council – based in the White House and at a senior level in the European Commission – to provide the necessary heavyweight EU-US coordination on the rapidly increasing range of digital issues.
In our view, this digital council should seek to proactively shape interoperability policies in the digital space, including on data protection, cybersecurity efforts, the internet of things, broadband development, open data flows, blockchain possibilities, encryption policies, privacy concerns and regulations. And these are just some of the issues that will require close coordination across the Atlantic.
At the moment, we are in a somewhat uncertain situation, with responsibility for some of these issues in the European Commission not clear, and an American administration that will be in a state of transition for months to come.
But perhaps this would be the right time to launch this initiative. There will be a large number of issues that will require coordination, and a council of this sort would help to facilitate the process.
The report from the Global Commission on Internet Governance, which I chaired and which delivered its final report this summer, outlines a broad agenda of issues that must be tackled if we should be able to fully harness the potential of the digital revolution.
We must also be very aware of the fact that there is a silent war going on for control of our digital future. There are regimes – not too difficult to identify – that want to enshrine ‘digital sovereignty’ in international treaties and make as much as possible subject to strict state or multinational control.
The risks here are enormous.
It has been the freewheeling and dynamic spirit of innovation and entrepreneurship that has, within a couple of decades, made the internet the most important infrastructure in the world (and soon the infrastructure of all other infrastructures). The multi-stakeholder model has allowed the technical community, academia, governments, business and civil society all to have their voice in the expanding biosphere of internet governance. The experience has been extremely positive.
But advocates of ‘digital sovereignty’ want something very different.
Here, it is important that the EU, preferably in close cooperation with the US and in partnership with important nations like India and Brazil, formulates a clear global cyber strategy. At the end of the day it’s about setting the frameworks and the rules of the rapidly emerging digital age based on our values of open societies and open economies.
The transformations at the heart of the 4th Industrial Revolution will obviously be profound. We have seen the impact on the media and entertainment industries, and we see the rapid development of e-commerce in all its different forms. Soon autonomous vehicles and the robot revolution, in combination with the internet of everything, will take us into a far more revolutionary phase of the transition.
Europe must not be left behind. We must seek to be among the leaders. But we should recognise that we are not there yet – and so we better speed up.
IMAGE CREDIT: Prasit Rodphan/Bigstock.com