4 Digital Single Market Strategy for
Europe
| Committee's assessment |
Politically important |
| Committee's decision | Not cleared from scrutiny; further information requested; drawn to the attention of the Business, Innovation and Skills Committee and the Culture, Media and Sport Committee
|
| Document details | Commission Communication: A Digital Single Market Strategy for Europe
|
| Legal base | — |
| Department | Business, Innovation and Skills
|
| Document Numbers | (36836), 8672/15 + ADD 1, COM(15) 192
|
Summary and Committee's conclusions
4.1 In May, the Commission published its strategy for establishing
a European digital single market (Digital Single Market Strategy).
Its completion represents the second of ten political priorities
identified under President Juncker's ten point plan aiming to
create jobs and growth across the EU.
4.2 The Digital Single Market Strategy proposes a
mix of legislative and non-legislative initiatives to be tabled
by the end of 2016. The initiatives are centred on three 'pillars':
· Improving
access to digital goods and services across the EU for consumers
and businesses, by removing barriers to e-commerce;
· Creating
the conditions and a level playing field for digital networks
and services to prosper, through effective rules and frameworks;
and
· Maximising
the growth potential of the EU digital economy, by encouraging
the flow of data and take-up of digital technologies, as well
as inclusiveness and skills.
4.3 The Minister of State for Culture and the Digital
Economy, Mr Edward Vaizey, endorses the Commission's Digital Single
Market Strategy as it supports growth, employment and productivity
and reflects UK economic interests. He stresses the importance
of ensuring that forthcoming proposals are based on clear evidence
and are in line with the better regulation agenda.
4.4 A well-functioning Digital Single Market is
vital to ensuring the long-term competitiveness of the UK and
EU. The initiatives outlined by the Commission are rightly aimed
at removing barriers to trade in digital goods and services, establishing
the rules and frameworks necessary for digital networks to thrive,
and encouraging the dissemination and take up of digital products.
4.5 While we are disappointed that the Minister's
original Explanatory Memorandum lacked sufficient detail on the
Government's position, we welcome the supplementary information
provided by the Minister on 10 July on the Government's intended
approach to considering individual dossiers. We nevertheless ask
the Minister to provide a clearer indication of the Government's
priorities in developing the Digital Single Market.
4.6 In addition, we consider the cross-cutting
nature of the Digital Single Market — encompassing competition
policy, consumer protection, data privacy, trade and network regulation
— presents challenges, as well as opportunities. In particular,
there will be inevitable trade-offs on each of, and between, the
various initiatives — for example, between dossiers promoting
consumer protection and data privacy versus those encouraging
the free flow of data. In that context, and related to our question
on the Government's priorities, we ask the Minister to explain
how trade-offs are being considered — both at a UK and EU
level.
4.7 Given the fast-moving nature of most digital
markets, it is vital that innovation in the digital space is not
pre-empted or stifled by policy makers. We therefore welcome the
Government's focus on better regulation. In scrutinising individual
measures put forward by the Commission, we will pay particular
attention to whether the policy proposals are evidence based,
necessary and proportionate.
4.8 We agree that the relationship between the
EU's Digital Single Market Strategy and its external facing digital
strategy — through international digital trade negotiations
— is complicated. We would welcome the Minister's assessment
of how the recent Schrems judgment,[ 44]
which has the effect of restricting data transfers to the USA,
impacts the Digital Single Market and the TTIP negotiations.
4.9 Given the Minister's intention to "make
as much progress as we can on this agenda as swiftly as possible",
and the forthcoming raft of measures on the Digital Single Market
over the next 12 to 15 months, we ask him to provide regular updates
on developments, focusing on the extent to which the initiatives
brought forward by the Commission reflect the Government's priorities.
4.10 Pending the information and updates we have
requested, we retain this Communication under scrutiny and draw
it to the attention of the Business, Innovation and Skills Committee
and the Culture, Media and Sport Committee.
Full
details of the document: Commission Communication:
A Digital Single Market Strategy for Europe: (36836), 8672/15
+ ADD 1, COM(15) 192.
Background
4.11 The Commission recognises that the completion
of a genuine Digital Single Market provides considerable opportunities
for growth in the EU. In July 2014, President of the European
Commission, Jean-Claude Juncker, identified it as the second priority
in his "Agenda for Jobs, Growth, Fairness and Democratic
Change". He pledged to take "ambitious legislative steps"
within the first six months of his Presidency to move the project
forward.
4.12 The structure of the Juncker Commission reflects
the importance of the Digital Single Market. Andrus Ansip, one
of the six Vice Presidents of the Commission, is directly responsible
for delivering the strategy, which includes steering and co-ordinating
the work of 12 other Commissioners.
4.13 The European Commission estimates that the creation
of a genuine Digital Single Market could add an additional €415
billion (£304 billion) to EU GDP.
The Commission Communication
4.14 The Communication sets out the Commission's
strategy for boosting the digital single market, arguing that
it can be a spur for jobs, growth, competition, investment and
innovation. The strategy contains a mix of legislative and non-legislative
proposals which are divided into three pillars.
4.15 The first pillar is "Better access for
consumers and business to online goods and services across Europe".
It is intended to expand consumer choice and make it easier for
businesses to trade across national borders, and includes initiatives
to:
· Simplify
digital commerce for consumers and businesses by harmonising EU
rules for online purchases, allowing the application of the trader's
national law within a set of EU contractual rights applicable
to domestic and cross-border sales, and reviewing existing rules
with a view to strengthening the enforcement of consumer laws;
· Increase
price transparency and regulatory oversight of the delivery of
goods;
· Deal
with unjustified "geoblocking" —
that is, the restriction of access to digital
content based on the user's geographical location;
· Reform
the copyright regime to improve the portability of online media
content across borders, allow the sale of content across borders,
promote easier use of copyright content across borders through
the harmonisation of copyright exemptions and clarify the rules
on the activities of intermediaries in relation to copyright content;
and
· Reduce
VAT-related business burdens by extending the single registration
and payment for cross-border services to online sale of goods
(known as the VAT Mini One Stop Shop), introducing an EU-wide
VAT threshold to help small, start-up e-commerce businesses, allowing
a single audit of cross-border businesses for VAT purposes and
removing the VAT exemption for the importation of small consignments
from suppliers in third countries.
4.16 The second pillar is "Creating the right
conditions and a level playing field for advanced digital networks
and innovative services". The purpose of this is to improve
digital networks and services within the EU, and includes initiatives
to:
· Reform
telecoms rules to create a consistent approach to spectrum policy
and management, deal with regulatory fragmentation to allow efficient
network and service providers to achieve economies of scale and
promote investment in high-speed broadband networks;
· Review
the Audiovisual Media Services Directive, particularly in relation
to the promotion of European works, the protection of minors and
rules on advertising;
· Examine
and assess the role of online platforms to look at transparency
in the collection and process of information, data usage, conditions
for the use of copyright-protected content, the ability of individuals
and businesses to move from one platform to another and illegal
content; and
· Reinforce
the security of personal data.
4.17 The third pillar is "Maximising the growth
potential of our European Digital Economy". This aims to
increase the adoption of digital technology by businesses across
the EU, and to make it easier to interact with the public sector
and reduce the burdens on business. It intends to do this by:
· Improving
free movement of data, addressing unjustified restrictions on
the location of data for storage and launching a European cloud;
· Supporting
interoperability between devices and systems;
· Adapting
national education and training systems to meet the increasing
demands for digital skills; and
· Improving
online public services such as the interconnection of business
registries, and introducing a 'once only' principle for submitting
data to public administrations.
The Minister's Explanatory Memorandum of 15 June
2015
4.18 The Minister welcomes the Commission's Digital
Single Market Strategy, stating that "it is an area in which
the EU can add value in supporting growth, employment and productivity".
4.19 The Government stresses the importance of reducing
the regulatory burden on businesses to make it easier for new
businesses to start up and for existing businesses to grow.
4.20 In particular, the Government places particular
emphasis on better regulation and evidence-based policy making.
It supports the Commission's decision to take a "cautious
approach" to online platforms and to analyse the market situation
and the evidence before taking action.
The Minister's letter of 10 July 2015
4.21 The Minister supplements the information contained
in the Explanatory Memorandum in relation to the Government's
position as follows:
"UK position
"The Commission's Digital Single Market package
will support growth and employment, whilst also providing better
access to digital products for consumers and encouraging the take
up of digital technologies in EU businesses. As such it reflects
UK economic interests and the UK Government endorses it. However
this does not sign us up to the full detail of the Commission's
individual proposals.
"We will need to continue to pay close attention
to the more detailed policy proposals which the Commission will
present over the next 18 months ensuring they are evidence based
and that we influence early to protect UK interests.
"Guiding Principles
"The UK's approach to the individual dossiers
in the Digital Single Market will focus on:
· "Expanding
consumer experiences: including increased choice and lower prices
through e-commerce; better access to creative content from a range
of providers; and participation in the sharing economy.
· "Empowering
citizens: ensuring that individuals have trust and confidence
in how their data will be used, as well as in the consumer protection
regime.
· "Encouraging
innovation: We should support an approach that is light-touch
and flexible enough to respond to rapid technological changes;
in particular, we do not want regulation to close down innovation
and the potential of fast-moving technologies such as big data
and cloud computing. We should champion technological neutrality.
· "Ensuring
better regulation: We should ensure that any new measures do not
impose disproportionate regulatory burdens on business and we
should support the removal of existing burdensome regulatory barriers.
· "Supporting
digital disruption: We should recognise that changes in technology
will create winners and losers. We should not use regulation to
shield companies from the effects of legal, more popular competitors.
· "Supporting
digital start-ups to become 'scale ups': We should focus our efforts
on supporting businesses to expand, and not introduce regulations
that make it difficult for them to grow.
· "Supporting
creativity: We should seek to ensure that any proposals brought
forward support creativity and innovation, investment in creative
content and the appropriate remuneration of creators. We will
need to continue to work closely with the creative industries
to ensure that their concerns are understood and that appropriate
safeguards are considered where evidence supports them.
· "Supporting
an evidence-based approach to policy making: The Commission has
recently launched a Competition Sector Inquiry focussing on the
application of Competition law in e-commerce, and will launch
later this year a comprehensive assessment of the role of platforms.
We should oppose any attempt to pre-empt the outcomes of these
investigations.
· "Protecting
the public: We should seek to ensure that any proposals brought
forward do not unnecessarily undermine the ability of the police,
security services and other law enforcement agencies to protect
the public and safeguard national security.
· "Trade:
The digital opportunity is a global one. Our overarching level
of ambition for the DSM negotiations should be reflected in our
approach to international digital trade negotiations, particularly
the Trade in Service Agreement (TiSA) and the EU-US Free Trade
Agreement (formerly known as TTIP). We will need to be tactical
to take account of the sensitivities within the EU and ensure
that any policy positions adopted on the DSM do not unduly affect
our ability to develop a high level international framework for
digital trade through these agreements."
4.22 The Minister makes it clear that the Government
wishes to make progress as swiftly as possible on the Digital
Single Market agenda and undertakes to provide further updates
as more information from the Commission is brought forward.
The House of Lords EU Committee
4.23 In separate correspondence with the House of
Lords EU Committee, the Minister expanded on the Government's
position in a number of areas, explaining:
· The
Government has contributed to the Commission's comprehensive assessment
of the role of online platforms by sharing with the Commission
the Competition and Market Authority's two recent reports—on
Online Reviews and Endorsements, and the Commercial Use of Consumer
Data—to help build its evidence base.
· The
Government in principle believes that better coordination of spectrum
allocation is more efficient, would tackle regulatory fragmentation
and increase competition to allow economies of scale; however,
it is cautious on the issue of how best to achieve this. It argues
that, while the Commission may play an important facilitating
role in achieving harmonisation, a mandated approach may fail
to take into account specific conditions within Member States
and ultimately lead to a worse outcome.
· Changes
to the consumer protection framework are one of the most important
parts of the Commission's package. The Government identified a
number of key questions, including whether harmonisation would
lead to different sets of consumer rights for on- and off-line
sales, and what evidence existed to justify changes.
· On geo-blocking,
the Government supports reforms intended to enable content portability
within the single market, but accepts that it is in some cases
justified, for example for compliance with local laws or to enforce
copyright.
· There
has been engagement with SMEs and start-ups, and with consumer
groups. The Government indicated that the former group had prioritised
a reduction of barriers to e-commerce and the implementation of
the "think small first" principle in framing legislative
proposals so as to encourage innovation and technological advances,
while consumers had highlighted increased competition and choice,
effective consumer protection and transparency on the use of consumer
data.
4.24 On 17 September 2015, the House of Lords EU
Internal Market Sub-Committee launched an inquiry into Online
Platforms and the EU Digital Single Market.
Previous Committee Reports
None.
44 US-EU Data Sharing: Case C-362/14: Maximillian
Schrems v Data Protection Commissioner. Back
| 
