Elements of style: digital single market in European Parliament

If better and more uniform regulation than elsewhere, such as the federal United States and Canada, is the Digital single market litmus test or benchmark for each measure, can we learn anything from the reception of the DSM communication COM(2015) 192 and the accompanying evidence paper SWD(2015) 100 in the European Parliament?

But first, let us discuss a few elements of style with regard to the European Parliament.

Monster committee report

Here, as in other cases, the key is to find the procedure reference - the Open Sesame - through the search page on  the Legislative Observatory of the European Parliament. Having found the procedure file 2015/2147(INI) it is plain sailing.

We notice that two rapporteurs, Kaja Kallas and Evelyne Gebhardt, produced a joint report for two committees (the Committee on Industry, Research and Energy ITRE and the Committee on the Internal Market and Consumer Protection IMCO), regaled with opinions from six other committees.

The resulting report A8-0371/2015 on Towards a Digital Single Market Act contained 78 pages, almost four times the number of pages in the DSM communication from the Commission (20 pages).

Since no legal act was proposed, the European Parliament prepared the report on its own initiative (INI).

I find it fair that the EP wants to exercise parliamentary scrutiny regarding developments in important policy areas, regardless of if the Parliament already has powers to legislate on concrete proposals, or if the Council or the governments of the member states have kept the powers. Parliamentary scrutiny contributes to openness (transparency), the fundamental principle evoked in Article 1 TEU.

I appreciate the good documentation of EP reports and resolutions, as one way to facilitate discussion.

But I wonder why the European Parliament has to say something about everything even remotely touching the subject at hand.

If and when the Parliament has an original contribution or different opinion, these tend to drown in an ocean of verbosity.

If the European Parliament chose to concentrate on the points it wants to make (and their reasons), would the plenary debates become a bit more focused and informative as well?     

What’s in a name?

Another thing I wondered at was the naming of the report: Towards a Digital Single Market Act.

The title reminds us of the communication:

Towards a Single Market Act - For a highly competitive social market economy - 50 proposals for improving our work, business and exchanges with one another; Brussels, 11.11.2010 COM(2010) 608 final/2

But this was a green paper, the basis for consultation; after the public hearing the European Commission published the Single Market Act (SMA) white paper communication, the equivalent of the DSM strategy:

Single Market Act - Twelve levers to boost growth and strengthen confidence -  "Working together to create new growth"; Brussels, 13.4.2011 COM(2011) 206 final   

  

The SMA later became the SMA I, when the Commission published its second strategy or package of measures, SMA II:

Single Market Act II - Together for new growth; Brussels, 3.10.2012 COM(2012) 573 final  

Admittedly, a seamless European digital single market is still unborn, but the strategy was a ready enough outline of promised actions and proposals, which is why I have failed to understand “Towards”.

The roadmap or package contained many actions, but I failed to understand the next phase as an “Act”, a word I found somewhat pompous with regard to the SMAs at the time.

What’s in a name? The contents matter, but still I am grateful if someone can explain these oddities to me.

Ralf Grahn

The EU digital single market strategy

The future president Jean-Claude Juncker presented his political guidelines for the new Commission, before it took office on 1 November 2014. We find the ten priorities in the publication A New Start for Europe.

The second priority mentioned was a connected digital single market. The aims are worth repeating:

I believe that we must make much better use of the great opportunities offered by digital technologies, which know no borders. To do so, we will need to have the courage to break down national silos in telecoms regulation, in copyright and data protection legislation, in the management of radio waves and in the application of competition law.

If we do this, we can ensure that European citizens will soon be able to use their mobile phones across Europe without having to pay roaming charges. We can ensure that consumers can access services, music, movies and sports events on their electronic devices wherever they are in Europe and regardless of borders. We can create a fair level playing field where all companies offering their goods or services in the European Union are subject to the same data protection and consumer rules, regardless of where their server is based. By creating a connected digital single market, we can generate up to € 250 billion of additional growth in Europe in the course of the mandate of the next Commission, thereby creating hundreds of thousands of new jobs, notably for younger job-seekers, and a vibrant knowledge-based society.

To achieve this, I intend to take, within the first six months of my mandate, ambitious legislative steps towards a connected digital single market, notably by swiftly concluding negotiations on common European data protection rules; by adding more ambition to the ongoing reform of our telecoms rules; by modernising copyright rules in the light of the digital revolution and changed consumer behaviour; and by modernising and simplifying consumer rules for online and digital purchases. This should go hand-in-hand with efforts to boost digital skills and learning across society and to facilitate the creation of innovative start-ups. Enhancing the use of digital technologies and online services should become a horizontal policy, covering all sectors of the economy and of the public sector.

Commission Work Programme

Since the new European Commission started late in 2014, it had time for little more than planning for its first year of real activity, 2015. We turn to:

Commission Work Programme 2015 - A New Start; Strasbourg, 16.12.2014 COM(2014) 910 final  

The Commission Work Programme (CWP) presented the following aims towards a digital single market (DSM), in particular the promised strategy and some main ingredients (page 6):

2. A Connected Digital Single Market

The Digital Single Market holds one of the main keys to a new dynamic across the European economy as a whole, fostering jobs, growth, innovation and social progress. All areas of the economy and society are becoming digital. Europe needs to be at the forefront of this digital revolution for its citizens and its businesses. Barriers to digital are barriers to jobs, prosperity and progress.

The Commission is preparing a Strategy which will identify the major challenges to complete a secure, trustworthy and dynamic Digital Single Market. The Strategy will focus on six strands: building trust and confidence, removing restrictions, ensuring access and connectivity, building the Digital economy, promoting e-society and investing in world-class ICT research and innovation.

In 2015, as part of the Digital Single Market Strategy, the Commission will aim to conclude ongoing inter-institutional negotiations on proposals such as the common European data protection reform and the Regulation on a Connected Continent. It will also propose new initiatives, legislative and non-legislative, to bring the Digital Single Market to the level of ambition needed to respond to the existing challenges. In this context, the Commission will notably complement the regulatory telecommunications environment, modernise EU legislation on copyright and on audiovisual media services, simplify the rules for consumers making online and digital purchases, facilitate e-commerce, enhance cyber-security and mainstream digitisation across policy areas.   

We find the DSM strategy in the annex with new initiatives COM(2014) 910 final ANNEX 1 (page 2):

A Connected Digital Single Market

Digital Single Market (DSM) Package

The aim is to ensure that consumers enjoy cross-border access to digital services, create a level-playing field for companies and create the conditions for a vibrant digital economy and society. The package will include, among other legislative proposals, the modernisation of copyright.

DSM strategy and evidence  

In May, the Commission duly produced two official documents, first of all the communication in the official EU languages:

A Digital Single Market Strategy for Europe; Brussels, 6.5.2015 COM(2015) 192 final (20 pages)

The second document was the accompanying the more hefty staff working document (SWD), published in English only, but with evidence to underpin the proposed actions:

A Digital Single Market Strategy for Europe - Analysis and Evidence; Brussels, 6.5.2015 SWD(2015) 100 final (109 pages)

The communication started by offering the quote from the political guidelines you already saw above.

Referring to the supporting staff working document, the communication (p. 3) from the Commission presented a new estimate of the potential gains in economic growth:

Europe has the capabilities to lead in the global digital economy but we are currently not making the most of them. Fragmentation and barriers that do not exist in the physical Single Market are holding the EU back. Bringing down these barriers within Europe could contribute an additional EUR 415 billion to European GDP.  

Breaking down all obstacles and unleashing the full digital potential of Europe fast enough would make a huge difference for the citizens of the union.

***

If you are interested, I compiled links to recent DSM articles in Finnish and Swedish in the blog entry Bloggartiklar kring strategin för en digital inre marknad.

Ralf Grahn

Services in EU single market strategy

In the blog entry Evidence-based European market reforms?, we saw that the condensed single market communication could be used in parallel with the staff working document underpinning the reforms:

Upgrading the Single Market: more opportunities for people and business; Brussels, 28.10.2015 COM(2015) 550 final (22 pages)

A Single Market Strategy for Europe - Analysis and Evidence; Brussels, 28.10.2015 SWD(2015) 202 final (108 pages)

(We found that cross-border VAT offered crushing prima facie evidence of failure from the viewpoint of a single market for SMEs, but we left a detailed discussion until later.)

Domestic keys

The many facets of overdeveloped obstacles for (domestic and) cross-border services and the underdeveloped EU-wide markets were discussed in section 2.3, in the strategy COM(2015) 550 on pages 7-10, but in much greater detail in the analysis paper SWD(2015) 202, on pages 13-39.

Restrictions in the retail sector (section 2.4), page 10 in the communication and pages 39-50 in the supporting working paper, raise similar thoughts:   

EU “red tape” is not the only villain. In many cases the improvement of markets for services - to the benefit of consumers and businesses - requires reforms primarily in the EU member states.

The most concrete Commission proposal was a legislative act to create a services passport to demonstrate professional qualifications. Despite enforcement powers regarding clear breaches, increasingly the Commission seems to assume the role of a guiding mentor and motivational coach, hoping to sway local, regional or state authorities.

Discrimination

The discussion about discrimination (section 2.5), pages 10-12 of the communication and pages 51-54 of the evidence paper, turns to annoying geo-blocking and lame excuses, but with burdensome and fragmented VAT and copyright, how much single market can we realistically expect from SMEs (or anyone under contractual freedom)?

Since the Commission refers to Article 20(2) of the Services Directive 2006/123, let us at least take a look at the excuses provided by the non-discrimination provision:

Article 20

Non-discrimination

1. Member States shall ensure that the recipient is not made subject to discriminatory requirements based on his nationality or place of residence.

2. Member States shall ensure that the general conditions of access to a service, which are made available to the public at large by the provider, do not contain discriminatory provisions relating to the nationality or place of residence of the recipient, but without precluding the possibility of providing for differences in the conditions of access where those differences are directly justified by objective criteria.

“Directly justified by objective criteria” is one more question to remember, when we deal with the concrete actions and proposals of the Commission, based on the 2015 strategy for the single market.

Ralf Grahn

Evidence-based European market reforms?

During its first year, the Juncker Commission published a limited number of key proposals, strategic roadmaps for the first years or the rest of the mandate. They included the new single market strategy, available in 23 official EU languages; here the English version:

Upgrading the Single Market: more opportunities for people and business; Brussels, 28.10.2015 COM(2015) 550 final (22 pages)

The communication takes aim at the goods and services markets. It was accompanied by two staff working documents, with more detailed facts and reasons, but available in English only.

Analysis and evidence, the first Commission staff working document is mercifully available through Eur-Lex in one piece:

A Single Market Strategy for Europe - Analysis and Evidence; Brussels, 28.10.2015 SWD(2015) 202 final (108 pages)

The second document, with internal market integration and competitiveness analysis, is contained in a Commission staff working document SWD(2015) 203, available through the legal portal Eur-Lex in three parts.

Although I prefer the order and  permanence of the multilingual Eur-Lex when possible, in this case it may be more convenient to download the document from a Commission web page as a whole “printed” publication:

Single Market integration and competitiveness in the EU and its member states - Report 2015; SWD(2015) 203 final (112 pages)

Single market analysis and evidence

Think of the European Union, at least potentially, as a learning organisation aiming at evidence-based structural reforms. This is about to be tested.

We take a closer view of the first Commission staff working document:

A Single Market Strategy for Europe - Analysis and Evidence; Brussels, 28.10.2015 SWD(2015) 202 final (108 pages)

The staff working paper is structured like the communication, which had measures falling  into three categories (page 3-4):

1. Creating opportunities for consumers, professionals and businesses by enabling the balanced development of the collaborative economy, giving start-ups the opportunity to scale up and grow cross-border, unlocking investment (in particular for SMEs), creating a ‘services passport’ for companies, modernising the regulation of professions, addressing restrictions in retail establishment and preventing unjustified discrimination against consumers and entrepreneurs;

2. Encouraging and enabling the modernisation and innovation that Europe needs, through more transparent, efficient, sustainable and accountable public procurement, promoting innovation procurement, modernising the EU’s intellectual property framework, and raising quality and promoting interoperability through a modernised standardisation system and European standards; and

3. Ensuring practical delivery that benefits consumers and businesses in their daily lives, by taking a smart and collaborative new approach to enforcement and implementation, improving the delivery of the Services Directive by reforming the notification procedure and strengthening the Single Market in goods

However, the SWD(2015) 202  is more detailed and well documented, laying a foundation for reforms (page 4):

This document is structured around these three categories and provides evidence to underpin each measure. Each measure is complemented by an analysis of the policy context and a description of the problem encountered and the expected impacts. The legislative measures will be subject to further impact assessment work, which will ultimately form the basis for the Commission’s decisions.  

Parallel use

This means that for each section you can consult and profit from the SWD, when you read the condensed internal market strategy communication.

By way of example, where the SWD discusses the development of the collaborative economy (sharing economy) on pages 4-8 (about four A4 pages of text), the strategy communication has boiled down the issue to about one A4 page (on pages 3-4).

Or, the communication helps SMEs and start-ups on a little less than three A4 pages (numbers 4-7), while the working document expands on the equivalent of five A4 pages (numbered 8-13).

Cross-border barriers: VAT

Ask almost any local, regional, national or EU politician ahead of elections about creating growth and jobs. Despite all the talk about helping small and medium-sized enterprises, what do they do when they face the SWD evidence (footnote 32 on page 10)?

Around 75-80 % of respondents mentioned the change in VAT regulations which came into effect in January 2015 as being a significant (or indeed the most significant) inhibitor to cross-border activities. 'Startups and the Digital Single Market, Final Report', NESTA, tech.eu and The Lisbon Council, 2015.

If you want to, you can contemplate the devastating effect of the regulatory burden of national value added tax, while reading the whole paragraph following Barriers to cross-border expansion (here cleaned of footnotes you find on page 10 as well):

Start-ups and SMEs find it difficult to identify and meet the regulatory requirements when trading across borders. Amongst others, SMEs and start-ups complain about a heavy burden that a set of VAT registration and reporting obligations puts on them. Compliance with the VAT rules inevitably becomes more complicated and burdensome when a business engages in online cross-border transactions with customers located in other Member States or third countries. Since VAT is levied in the country of the customer and in accordance with that country's laws, different national VAT rules will apply and different tax authorities will be involved. Overall, 16 % of SMEs that are trading across the borders and 18 % of those that do not trade internationally perceive complicated foreign taxation regimes as a major obstacle to cross-border expansion.

This is a massive collective failure, just the case for evidence-based structural reform.

The Commission seems to have noticed, as shown by the various components of the Action plan on VAT, but is a simple, EU-wide VAT regime going to see the light of day?  

Ralf Grahn

Focused and strategic approach ahead of the Single Market Act (2011)?

What did the contemporaries think about the fifty proposals of the consultation paper (green paper):

Towards a Single Market Act

For a highly competitive social market economy

50 proposals for improving our work, business and exchanges with one another

Brussels, 11.11.2010 COM(2010) 608 final/2 (45 pages)?

SEC(2011) 467

The different language versions of the Commission’s Single Market Act pages - English here - offer us links to three distilled documents about the public consultation.

First: On eight pages the first overview of responses gives us a picture of the 840 respondents and highlights some of the preferences of different stakeholder groups: individual citizens, trade unions, industry federations, individual companies, consumer organisations, non-governmental organisations, other organisations and public authorities.

Second: The statistical charts of the public consultation (44 pages) dealt with the 740 responses given on the Commission’s form.

Potentially interesting with regard to internal market challenges would be the 366 who thought that the green paper proposed adequate measures only partly; likewise the 245, 228 and 151 respectively for the different chapters wishing for other issues to be addressed.

Third: We are not directly invited by the SMA page to study the individual contributions, and the access page promised by the Commission Staff Working Paper (CSW) can not be found. Thus, we are restricted to the 32 pages of the CSW published, in English only, on the same day as the Single Market Act (SMA) communication:

Overview of responses to the public consultation on the Communication ‘Towards a Single Market Act’; Brussels, 13.4.2011 SEC(2011) 467 final  

Beside the statistical basics covered in the earlier documents, the discussion about the wishes of member states, local authorities and European Economic Area (EEA) countries offers us some interesting nuggets.  

In addition to many positive calls from industry federations with regard to ongoing actions or promised proposals, we take note of this paragraph (page 15):

A large number of respondents in this category welcome the comprehensive approach of the SMA. Some of them invite the European Commission to adopt a more focused and strategic approach, and to seek coherence with the other policy areas and the EU 2020 flagship initiatives.

Single Market Act

I did not notice that the Commission would have elaborated on the theme of  strategic level in the SEC(2011) 467 document, but perhaps we can hope that the Commission’s proper potential strategic level response was the communication published in the official EU languages (here to the English version):

   

Single Market Act

Twelve levers to boost growth and strengthen confidence

"Working together to create new growth"

Brussels, 13.4.2011 COM(2011) 206 final (26 pages)

Ralf Grahn

Towards a Single Market Act (2010)

On this blog, we traced Mario Monti’s new strategy for the Single Market and the European Parliament’s resolution on delivering a single market to consumers and citizens (here and here).

For the first semester of 2010 we still needed to check on the collective views from the EU member states, namely the conclusions of the Council of the European Union and the European Council:

Economic and Financial Affairs (Ecofin) 16 February 2010 (6477/10)

Competitiveness (Internal Market, Industry and Research) 1-2 March 2010 (6983/1/10 REV 1)

European Council 17 June 2010 (EUCO 13/1/10 REV 1)

COM(2010) 608 final/2

It came to pass in those days , when José Manuel Barroso was president of the European Commission and Michel Barnier was commissioner for the internal market,  that the EU Commission responded to the strategy, the resolution and the conclusions  by publishing a communication on 27 October 2010.

However, about two weeks later the English language version was replaced by a new and corrected text:

Towards a Single Market Act

For a highly competitive social market economy

50 proposals for improving our work, business and exchanges with one another

Brussels, 11.11.2010 COM(2010) 608 final/2 (45 pages)   

The other language versions remain unaffected.

On page 2 we find a reminder that this is a text with relevance to the European Economic Area (EEA) and the Commission’s credo that during the past two decades, the creation of the single market and the opening of borders have been two of the main driving forces behind economic growth in Europe.

Consultation paper  

The European Commission presented this consultation paper (“Green Paper”) hoping that the relaunch of the single market would become the subject of a wide-ranging public debate for four months throughout Europe.

After this discussion, the Commission intended to invite the other institutions to give their formal agreement to the final version of the Act.

The Commission saw the future adoption of the Single Market Act as a dynamic way to commemorate the 20th anniversary of the single market at the end of 2012.

The Commission also recalled that the Single Market Act and the EU Citizenship Report 2010 were meant to complement each other (page 5), with the Citizenship Report dealing with non-economic rights (page 20).

The drawbacks of market fragmentation were among the problems the Commission underlined (page 6):

Businesses often cite the fragmentation of the single market as a handicap to their competitiveness and, indeed, the variety of different national regulations places a considerable burden on them, delaying investment, limiting economies of scale and synergies and raising barriers to market entry. It is therefore important for markets to be integrated and obstacles removed by precisely identifying the areas where a lack of coordination and harmonisation are hampering the proper functioning of the single market.

Fifty proposals!

Rereading the fifty proposals after all these years still makes me wonder if I see an emerging strategy or a mythological cornucopia. I still feel at a loss to present this loosely structured collection of good intentions, an inventory of actions for the internal market.

But reading continues to make sense as an immersion into the different aspects related to achieving a real single market in some distant future. If they keep going like this, a lot of patient grunt work is going to be needed from here to something close to eternity.

Eternal harmonisation or a real upgrade through unitary market rules of strategic importance, is the question that nags me.

With regard to the public consultation, the Commission asked for the contributions by 28 February 2011, in order to turn the 50 measures into a Single Market Act, comprising a definitive policy action plan for 2011-2012. (page 35). A second phase was promised for later (page 36).

Ralf Grahn