Trade, prosperity and competitiveness

Trade and security as integral parts of Swedish foreign policy

Innovation linked to digitalisation and new technology has long been a central economic and trade policy interest for Sweden. Swedish companies are at the forefront of the innovative development and use of digital technology that can contribute to solutions to major global challenges. However, Sweden operates in a global market where many countries make significant investments in research and development of new and advanced technologies. There is a global demand for technology developed by Swedish businesses, and within certain strategic sectors Swedish businesses have considerable standing. This gives Sweden an influence, but also underlines the importance of safeguarding and promoting this capacity for Sweden’s future economic base. Digital products and digital trade have an increasing impact on the basic functioning of society. An integrated approach to these issues increasingly entails foreign and security policy considerations.

Goods and services with digital content are manufactured, sold and used in a global market today. Sweden will work to protect the global market from products and software with substandard security functionality or that could pose a security risk – particularly in relation to authoritarian states. Essential services rely on digital technology, which imposes new demands on improving cyber security. Laws, rules and standards are important for strengthening cyber security in general, but can also result in increasingly national or regional preferences and restrict openness in the form of trade barriers to digital development. Sweden wants to minimise regulation’s negative effects on trade and safeguard its compatibility with the WTO rules. 

In cyber and digital matters, Sweden’s trade and security policy interests should be addressed in a comprehensive manner and, as far as possible, be mutually reinforcing.

Public-private partnerships

The private sector accounts for the majority of the funds spent on digital research in Sweden and is a driver in technology development. Competition between countries to attract business investment and high-level skills is increasing, especially in research and innovation concerning advanced technology. Private companies have an increasing influence on security, the mechanisms of democracy, the labour market, innovation, and the media landscape. Sweden has a powerful and innovative digital technology sector of global eminence. Today, it not only forms an important part of Sweden’s economic base but can also make significant contributions to finding solutions to global challenges. Cooperation and the sharing of best practices concerning innovation and technology can strengthen bilateral partnerships, streamline development collaborations in the digital sector, create export opportunities and contribute to making Sweden an attractive investment nation. 

Private sector participation in international cooperation forums, for example within the EU, NATO and the UN, contributes positively to initiatives for international standards and rules, and more cooperation like this should be encouraged. 

Development of the EU and the digital internal market

The EU is a leading global actor on regulation and norms in relation to cyber and digital issues. Sweden is working to make European approaches globally normative. Within the EU, the question of open strategic autonomy, and its digital counterpart digital sovereignty, have been the topic of frequent discussions. The overall goal of the Digital Decade is to make the internal market fully data-driven by 2030, with the EU establishing a model for data use centred on the interests of the individual and European values. Sweden is working to make the EU a stronger actor in the digital area. The discussion on economic security and resilience will continue and Sweden must be part of these discussions with the goal of increased resilience and continued openness – as well as decreased vulnerabilities and perilous dependencies, especially in relation to authoritarian states. However, the aim must be to focus on cooperation and transparency in relation to third countries as well. Any restrictions must be carefully considered so that they do not weaken Swedish interests and national competence. Sweden takes the view that increased European research and innovation capacity will benefit from open global cooperation. Sweden should act to achieve digital sovereignty in an open market and in cooperation with strategic partners, with a view to counteracting regionalisation and fragmentation that might otherwise have economic and security policy consequences.

In June 2023, the European Commission published its Joint Communication on a European Economic Security Strategy. The Strategy highlights the tensions between strengthening economic security and ensuring that the EU continues to benefit from an open economy.. In working with these processes, Sweden welcomes a balanced approach in which the EU strengthens security while we reinforce Europe’s long-term competitiveness and productivity. Any negative effects of strengthened security on the internal market and global institutions, including negative effects on the openness and free trade on which Sweden’s prosperity depends, must be limited as far as possible.

The internal market strengthens the competitiveness of Swedish businesses. Europe should fully utilise the benefits from the innovation and creative power that societies with freedom and competition brings with it. The D9+ group, of which Sweden is a part, is an important network for cooperation and represents an opportunity to influence and lead the digital agenda at EU level. The European Commission has presented a series of proposals aimed at regulating structures and actors in the digital landscape. The value of data is to be fully realised in line with the European data strategy. Substantial investments in the technical structures that are to underpin the regulations are made through strategic projects in funds and programmes such as Horizon Europe, the Connecting Europe Facility and the Digital Europe Programme. These EU rules for digital services and goods affect both the internal market and external trade with non-EU countries. Sweden welcomes in principle regulation that would strengthen predictability. Sweden wants the legislation to be preceded by impact assessments so that it does not hamper businesses’ competitiveness and innovation. The aim should be regulatory frameworks that are interoperable with strategic partners’ systems.

Security of supply in strategic technology areas

Digitalisation has made the global economy increasingly dependent on certain strategic products, minerals and technologies. This is particularly true for Sweden, which is a trade-based, innovation-based and digitalised economy focused on a global, green, secure and digital transition. This places new demands on Sweden to act strategically when interests motivated by trade policy on the one hand and security policy on the other come into conflict.

Globally, particular attention is being paid to the communication technology of the future. Digital telecommunications are a kind of circulatory system, required for societies, economies and states to function, and thus are of great strategic importance. The fact that one of a few trusted suppliers has their research activities concentrated in Sweden is of significance for more than just export promotion. It gives Sweden a role and a responsibility to act strategically and coherently in foreign and security policy dialogues and processes, as well as in those concerning trade policy. Particular attention now needs to be paid to next-generation systems (6G etc.) and to the conditions for security, research and innovation, as well as to central government interventions that affect competition and the level playing field. Fundamental principles of the Swedish approach are technology neutrality, stability, security and diversification in ICT value chains, and the importance of global standards. 

Infrastructure

Sweden is dependent on international fibre-optic cables for communication with the outside world and, in practice, also for safeguarding national needs for electronic communication and access to digital services. Businesses’ competitiveness is dependent on well-functioning connectivity. Physical or cyber attacks on international connectivity pose a significant threat and the changing security situation has brought the vulnerability in both the EU’s and Sweden’s connectivity with Asia to the fore. It is important for Sweden to promote redundancy and resilience of its digital infrastructure.

Data flows, digital trade barriers and storage

The capacity to manage and realise the value of data is fundamental to the development of new technologies and for trade in both goods and services. This makes functioning and free data flows central to Sweden’s and Europe’s competitiveness. EU businesses, regardless of size or industry, are increasingly dependent on data flows, and the capacity to capitalise on the value of data is paving the way for completely new businesses and business models. Conditions for technology development, innovation and trade as well as data protection must be taken into consideration. The conditions for Swedish innovation and technology exports to thrive are improved by providing dimensioned and adapted data protection, including for personal data and immaterial assets. 

For data to be used, free flows are not sufficient. From the trade perspective, it is important to combat digital barriers to trade in third countries such as unjustified requirements concerning data localisation and the disclosure of source codes. It must also be possible for data to be processed in a controlled manner, with respect for the rights of individuals, and to be shared and stored stably and securely. This is central to the economic model underpinning most internet and technology companies. The technology industry today makes up an increasing share of the economies of many countries, including Sweden. Without free flows of data and stable and secure data processing, Swedish trade and competitiveness and innovation are at risk. In the longer term, this threatens Sweden’s economic security and development. As an innovative and information- and data-intensive country, Sweden needs to be able to pursue these issues internationally in order to safeguard Swedish trade interests. In trade policy, Sweden strives for ambitious regulation of digital trade in EU trade agreements and in plurilateral negotiations on eCommerce in the WTO. 

Standards

International standards in the technology and cyber area are central to ensuring that different products are interoperable and can be sold on a global market, which is positive for diversification, connectivity and competition. Sweden has long had a significant influence on international standardisation, since Swedish stakeholders, i.e. companies, government agencies, research and academia, have been well represented in international standards bodies. In recent years, the development of international standards in the technology and cyber area has been marked by increased competition between the great powers. Authoritarian states’ increased engagement in standardisation processes has been noted, for example, in questions concerning the internet’s architecture and facial recognition technology in the International Telecommunication Union (ITU), but also in the increased presence of state-controlled companies within the International Organization for Standardization (ISO). If the current trend of increased competition continues, it would weaken the multilateral trade policy and market economic principles that have been the basis for the great increases in prosperity of recent decades.

As far as Sweden is concerned, it is crucial to maintain compliance with the WTO Agreement on Technical Barriers to Trade and ensure that standards can maximise the benefits and potential of technology and are non-discriminatory, transparent and technology-neutral. For Sweden, it is important that the regulation of stakeholders and current forms of cooperation for standardisation are safeguarded. At the same time, Sweden needs to actively work against standards being set on the basis of political and strategic motives that are not in line with Sweden’s interests. 

Cyber security certification

The implementation of the EU Cybersecurity Act means that the EU is developing its own certification schemes within the framework of the EU acquis, thereby facilitating an internal market for goods and services that has an appropriate level of cyber security. For Sweden, it is important to work to ensure that the EU’s framework for cyber security certification does not to lead to companies being required to apply for dual and more expensive certifications, with the consequent risk of trade barriers, and of reciprocity applying for market access under different certification schemes. Transatlantic cooperation in the area of cyber security certification is also an important aspect.

Focus areas – trade, prosperity and competitiveness

• Contribute to the work for a stronger, more coherent Europe in the digital area, including a deepening of the EU’s digital internal market, open digital sovereignty and strengthened EU cooperation on digital diplomacy (the EU’s external digital policy).
  
  
• Promote economic security with the aim of strengthened resilience and continued openness – as well as decreased vulnerabilities and perilous dependencies, especially in relation to authoritarian states.
  
  
• Through the EU and other international cooperation forums, promote stable and diversified supply chains for strategic technologies, components and input goods.
  
  
• Advocate for international data flows to be and remain free-flowing.
  
  
• Promote Sweden’s digital technology sector and engage in dialogue with the Swedish business sector to harness its expertise and look after its interests in international contexts. Promote exports from Sweden and investments in Sweden in the digital sector. Engage in dialogue with the business sector in order to harness its competence and skills and look after its interests in international contexts in accordance with Sweden’s Trade and Investment Strategy.
  
  
• Promote the development of dialogue on international norms and rules between governments and the private sector at EU and international level.
  
  
• Advocate for the development of international trade-related regulation to conform to the WTO’s rules.
  
  
• Advocate for ambitious rules on digital trade and data flows in trade agreements, including the plurilateral negotiations on e-commerce in the WTO, together with like-minded EU Member States.
  
  
• Contribute to new standards and certifications that simplify and enable increased trade, and to the avoidance of any that may constitute undue barriers to trade or competitive disadvantages for Swedish businesses. Actively pursue regulatory interoperability between the EU and its strategic partners.
  
  
• Promote Sweden’s capacity to manage a more competitive international standardisation process and to actively defend Swedish positions and interests, including by ensuring that international standardisation bodies remain stakeholder-driven and that the negative consequences of international competition within the standardisation bodies are minimised.
  
  
• Actively participate in the ITU’s Standardization Sector.
  
  
• Promote Sweden’s position as a priority partner for a green and secure digital transformation globally. Sustainable trade in critical raw materials, minerals and other input goods of strategic importance for a green and digital transition must be assured.