Tuesday 2 May 2017

Digital single market litmus test

After the Main points of EU digital single market strategy we turn to the potential gains and necessary means, according to the digital single market (DSM) communication COM(2015) 192 and the evidence report SWD(2015) 100.

Potential DSM gains and conditions

If we try to find the  potential gains from a future digital single market, as well as the required means, this seems to be the core according to the official documents:

1 Huge growth potential

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.

2 Necessary conditions

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.

Growth potential
The estimated GDP growth potential of 415 billion euros was mentioned in the DSM communication (page 3), which referred to the staff working document SWD(2015) 100 with evidence. I quote one sentence and one paragraph (page 5):

Between 2001 and 2011, ICT accounted for 30% of GDP growth in the EU but for 55% in the US.


The DSM is an opportunity to close this gap. The potential contribution to European GDP from achieving such a fully functioning DSM has been estimated at EUR 415 billion. The long-run impact on GDP growth of the already observed digital reform efforts has been estimated at above 1%, while further efforts in line with the Digital Agenda for Europe targets would lead to an additional 2.1% of growth. Benefits from the current level of cross-border e-commerce are estimated at 0.27% of GDP. On the other hand, without a completed, secure and trustworthy DSM, new digital services for consumers and businesses, as well as services underpinning them (the Internet of Things, big data and cloud computing), may happen later or to a lesser extent in Europe.

The assertions of the staff working document were based on three studies offered as evidence:

European Parliament Research Service: Mapping the cost of Non-Europe, 2014-19, 2015

Lorenzani, D. and Varga, J.: The Economic Impact of Digital Structural Reforms, European Commission Economic Papers No 529, 2014

Francois, J. et al.: The Macro-economic Impact of Cross-border e-commerce in the EU, JRC/IPTS Digital Economy Working Paper No 2014-10, 2014

Breaking down national silos

Breaking 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, in other words creating a seamless digital single market without national borders, was first mentioned in the political guidelines for the European Commission - see the publication A New Start for Europe - and reiterated in the DSM communication COM(2015) 192.

DSM litmus test

If the European Union and the European Economic Area want to catch up and overtake in order to become world leaders, digital single market regulation has to become better and more uniform than elsewhere, such as the federal United States and Canada.

This is the litmus test for each DSM proposal and reform in Europe.  Do the  governments of the member states, but also the European Commission and the European Parliament, have the political will and the ability to succeed?

Ralf Grahn

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