*This content has been aggregated and redacted to highlight the areas that are of most importance the digital business community. The full document can be found here*
An Innovative Market
Technology and globalisation have changed markets forever. Global value chains are becoming ever more integrated so rarely can one country (or business) claim full credit for an end product. Manufacturers are reliant on high-performing service providers to remain competitive. When they sell their goods they’re now often packaged with a service – and services represent about 40% of the value the EU adds to its exported products. This is particularly the case for sophisticated, high-value-added products, those that are in demand from Europe in the rest of the world. E-commerce, the sharing economy, 3D printing and ever-more-powerful software are radically altering production and consumption patterns and generating new business models. The single market has achieved great things in the past, adding over 2% to EU GDP since its inception in 1992.
But times have changed, and Europe needs to raise its game. Our continued prosperity requires high productivity and competitiveness at the global level. The single market, if used effectively, should be one of our most powerful tools for achieving this goal because of the innovation, competition and resource efficiency it can deliver. Where the single market is most obviously failing to fulfil its purpose is in digital goods and services. Services generally make up 70% of Europe’s economies and generate over 90% of new jobs, but account for only 20% of intra-EU trade. Uncompetitive services markets are the most significant driver of the EU’s productivity gap with the US. The IMF, World Economic Forum, OECD and the European Parliament all agree that strengthening the single market is key to securing Europe’s place at the forefront of the global economy. It could also drive down economic disparities within the EU.
The digital era has transformed the economic landscape for European consumers and businesses. Disruptive, innovative business models in the sharing economy are revitalising parts of the economy, creating new jobs and providing new products. There is strong growth potential for the EU not only for platforms, but also for micro businesses and peer-to-peer providers. Estimates of the value of the global sharing economy in 2014 were around £9bn, expected to rise to £230bn by 2025. Creating the right conditions for growth will create scale-up and export opportunities for businesses across the EU. But this potential is put at risk by national regulatory systems that are often outdated – bureaucracy quickly thwarts the growth of new international business models.
Why, for example, in a connected world, should people have to pay tax in person at the town hall or provide physical documents for so many processes that could be digital? Incumbents are protected at the cost of consumers and entrepreneurs, which is bad for innovation and growth. Regulation needs to enable new technologies to come forward and consumers to get a fair deal online. The digital single market package published in May has already presented an inspiring and ambitious vision for a connected Europe. The Commission understands that we need to act fast and aim high. We must build on this by making sure that the next generation of businesses are able to start up and scale up across the single market.
The UK proposes the European Commission should:
- Take measures to ensure that the sharing economy thrives by stopping Member States banning or imposing unfair rules on new business models where this fragments the market or imposes excessive burdens. We need to protect against abuses that threaten people’s safety, but must also avoid punitive national regulation that stifles innovation
- Take action on unfair price discrimination. Unjustified price discrimination based on geographic location should be stopped. Internet Protocol or payment card addresses should not be used to block access to special offers and lower prices. Factors like national tax rates, content licensing arrangements and postage costs are of course legitimately reflected in price differences, but large businesses should be transparent about why consumers in one place are being offered a different deal to those in another
- Make life easier for online businesses by extending the VAT Mini One Stop Shop concept to simplify business obligations, removing national restrictions on sales promotions and domain names, and ensuring that they only have to go through one digital process, wherever they’re based, to set up and operate across the EU
- Support the digitisation of industry, in particular by facilitating standard-setting and interoperability. Breakthroughs in the car industry are already making European industry more competitive. By backing standard-setting in an open and competitive way, the EU can strengthen the links between European supply chains, increasing efficiency and consumer choice
- Making goods regulation fit for the digital age by allowing businesses to upload e-compliance documents online and provide e-labelling at the point of sale, reducing the reams of paperwork currently required
- Assessing whether the Single Market is working to facilitate the integration of EU businesses into industrial value chains
- Working with industry to develop standards for automated communication (IoT) between production lines
- Ensuring the implementation of the recent package of better regulation measures announced by First Vice-President Timmermans, in particular proposals on impact assessments
- Increase access to finance by improving EU venture capital frameworks for SMEs following publication of the recent Capital Markets Union package, in particular by encouraging the return of safe securitisation. The EU should also make sure that the European Fund for Strategic Investment and the forthcoming mid-term review of Horizon 2020 help channel funding to SMEs
- Set up a network of Digital Single Gateways, operated by each Member State, to help businesses to start up, scale up and trade across borders by providing information in a clear and efficient way and offering access to online procedures
- Introduce exemptions for microbusinesses where possible and look at ways to lighten the regulatory load on innovative companies while they’re scaling up
- Ensure public procurement takes place online and is more accessible to small businesses and businesses from other Member States
- Streamline and improve the consistency of market surveillance in the single market for goods, including potentially implementing a scheme similar to the UK’s primary authority programme to reduce burdens on businesses
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