The rationale for digital single market

China Daily European Weekly (15 May), by Luigi Gambardella

The author is president of ChinaEU. The views do not necessarily reflect those of China Daily.

The European Commission unveiled the digital single market strategy for Europe recently. As the name suggests, the intention is to eliminate all unnecessary barriers among member states to allow for the free movement of goods, people, services and capital across the European digital economy, irrespective of their nationality or place of residence.

Achieving a digital single market will help ensure that Europe regains leadership in the digital economy.

In the 1990s, Europe established the Global System for Mobile Communications, dictating standards for 2G mobile communications technology. Since then, the region has gradually lost competitiveness against the United States first and then Asia.

The fragmentation and barriers at the national level are impeding the European industry to offer digital services at the European level. At the same time, they are impeding European citizens from benefiting from more competition and choice.
For the first time in years, Europe has a vision to reverse this downward trend. Europe now has a plan to create the right conditions to allow for new start-ups and give European companies the necessary scale to compete with globally affirmed digital champions.

The strategy aims to remove obstacles to the single market, focusing on three basic pillars:

  • Breaking down barriers in cross-border online activities and harmonizing contract laws, tax regimes, consumer protection and copyright laws among member states.
  • Creating the right conditions for advanced digital networks and innovative services by harmonizing spectrum policy, and by introducing a level playing field between traditional telecom operators and newer Internet-based service providers, which also are called over-the-top players.
  • Supporting the digitalization of every sector of the economy (a concept sometimes referred to as industry 4.0), by promoting the free flow of data, the standardization of e-services and the development of digital skills.

Why is all this so important for Europe? More than 315 million Europeans use the Internet every day. A single market for the Internet and telecom sectors could contribute an additional 415 billion euros ($466 billion) to European Union GDP and could create 3.8 million additional jobs.

This strategy is comprised of a list of actions. The European Commission will make the legislative proposal later this year and next. I believe that in the implementation process, the commission should keep in mind these priorities:

  • We need a new modern industrial policy at the European level that delivers growth and investment in advanced digital infrastructure.
  • It is necessary to significantly reduce the level of regulation and bureaucracy, making sure that slogans like “ensuring a level playing field” among competitors do not result into even heavier regulation.
  • We should keep a solid and strong competition policy to complement the efforts of the industrial policy in building a stronger digital market in Europe.

The last point is of crucial importance, as the possibility of greater consolidation could facilitate the creation of stronger European players and determine their survival in the global dimension. What is at stake for China in all this? For China, the creation of a digital single market could be a huge opportunity. If the plan was successfully implemented, Europe would become more attractive for global companies.

Currently, Apple has 28 different stores obeying 28 different policies across Europe. In the future, if a Xiaomi or an Alibaba wishes to enter Europe, it would only need to establish one single shop covering the whole region and serving, potentially, 500 million customers.

At the same time, the creation of a more confident European digital economy and stronger European digital players would increase the value of collaboration between Europe and China on the most crucial segments of the future global economy: 5G, smart cities, smart energy, Internet, cyber-security, big data and start-ups.

Source: China Daily


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