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.

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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

The Single Market Strategy in the EU Competitiveness Council

The first day, 28 November 2016, of the EU Competitiveness Council was dedicated to issues relating to the internal market and industry. Despite more concrete news items available, I am going to approach the horizontal issue of the Single Market Strategy.

Single Market Strategy

Thirteen months ago the European Commission published the new single market strategy (available in 23 of the 24 official EU languages): Upgrading the Single Market: more opportunities for people and business; Brussels, 28.10.2015 COM(2015) 550 final (22 pages).

The communication was accompanied by two staff working documents, available in English only, but with more detailed facts and reasons.

The economic and competitiveness analysis is contained in SWD(2015) 203, available through the legal portal Eur-Lex in three parts, but more conveniently downloaded from a Commission web page as a “printed” whole document: Single market integration and competitiveness in the EU and its member states - Report 2015 (112 pages).

The second Commission staff working document is A Single Market Strategy for Europe - Analysis and Evidence; Brussels, 28.10.2015 SWD(2015) 202 final (108 pages).

For a structured overview you may want to study the Commission web page The Single Market Strategy.

Competitiveness Council

In order to prepare the discussion in the Competitiveness Council 28 November 2016, the Slovakian presidency had prepared a discussion paper: Single Market: One year after Single Market Strategy adoption (document 14246/16).

After a brief description of the Single Market and the Single Market Strategy, the discussion paper summarised some of the progress and future work:

C. Progress so far

The Commission has delivered first initiatives identified in the Single Market Strategy. In May 2016, the Commission adopted its legislative proposal to prevent discrimination against consumers based on nationality or residence (initiative on geo-blocking), as part of the e-commerce package. In June 2016, the Commission adopted a Standardisation package, which included the Joint Initiative on Standardisation (presented in the Competitiveness Council of 28 September) and a dedicated guidance document on service standards. The Commission also adopted a European agenda for the collaborative economy in June 2016. This Communication identifies good practice solutions and explains how existing EU law should be applied; clarifying key issues faced by market operators and public authorities alike, namely market access requirements, consumer protection, liability, labour law and tax. Moreover, in November 2016, the Commission will adopt the Start-Up initiative, a communication that aims at helping young firms to scale up and grow in the Single Market.

D. Steps forward

Many of the initiatives have not yet been adopted by the Commission. The Commission plans to deliver some important proposals and packages in the remainder of 2016. Towards the end of the year the adoption of the services package is foreseen. The package will include a proposal to improve the notification procedure for legislation with regard to services, a proposal for a European Services Card (identified as the Services passport initiative by the Single Market Strategy), which is to improve the cross-border provision of services and initiatives on regulated professions, such as a proportionality test to be applied when developing new legislation in this field and guidance to Member States on the matter of regulated professions.  

The Commission will continue adopting the remaining initiatives announced in the Single Market Strategy in 2017. These include a review of the intellectual property rights enforcement framework (IPRED), a Compliance and assistance package, including the Single Digital Gateway, the Single Market Information Tool and the Action Plan for SOLVIT. This will be followed by a Goods package, including initiatives regarding mutual recognition and addressing the increased rate of noncompliance within the Single Market for Goods. Also in 2017 the Commission will present a Public Procurement package including the voluntary ex-ante mechanism for large infrastructure projects. Finally, the Commission is planning to publish a Communication setting out best practices to facilitate retail establishment within the Single Market.

The presidency tried to structure and to focus the discussion by providing the following questions to the national delegations:

E. Questions for discussion

1. What is your assessment with regards to the implementation and the progress achieved so far concerning the Single Market Strategy?

2. Where do you see the biggest potential to inject new dynamism into the Single Market, to the benefit of EU consumers and the EU's industrial competitiveness?

3. How can the Council help ensure the swift and ambitious implementation of the Single Market Strategy?

The press conference wrapping up the first day (internal market and industry; 28 november 2016; webcast 17:05) emphasised the sense of urgency among ministers to achieve progress on the single market.  

Ralf Grahn