7 Digital Single Market Strategy for
Europe
| Committee's assessment |
Politically important |
| Committee's decision | Cleared from scrutiny; 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
7.1 In May, the Commission published its strategy for establishing
a European digital single market ("Digital Single Market
Strategy"), a stated priority of the Juncker Commission.
It proposes a mix of legislative and non-legislative initiatives
— across three 'pillars' — to be tabled by the end
of 2016.
7.2 Our previous Report, listed at the end of this
chapter, sets out the detail of the Commission Communication.
7.3 When we considered the Digital Single Market
Strategy for the first time on 14 October, we welcomed the intent
of the package, aimed at improving the competitiveness of the
UK and EU, by removing barriers to trade in digital goods and
services, and harnessing investment in and the growth potential
of the digital economy. Given the far-reaching nature of legislative
proposals expected in this area, we drew it to the attention of
the BIS and CMS Committees and sought clarification from the Minister
of State for Culture and the Digital Economy, Mr Edward Vaizey,
on a number of aspects of the Digital Single Market Strategy,
including:
· What
the Government's priorities are in developing the Digital Single
Market;
· How the Government
is considering trade-offs on the cross-cutting range of initiatives
— both at a UK and EU level; and
· The Minister's
assessment of the impact of the Schrems[30]
judgment, which has the effect of restricting data transfers
to the USA, on the Digital Single Market Strategy and on the Transatlantic
Trade and Investment Partnership ("TTIP") negotiations.
7.4 We are grateful to the Minister for his rapid
response. We reproduce the substance of this letter for ease
of reference below, but draw attention to the following points.
7.5 In response to the Committee's query on what
the Government's priorities are for completing the Digital Single
Market, the Minister:
a) reiterates the two overarching priorities
set out by the Prime Minister in January over the next five years
— a) "creating
a Europe for consumers" and b) "an economy for digital
entrepreneurs";
b) states that the Commission's upcoming proposals
on copyright and consumer protection are the Government's immediate
priorities; and
c) maintains that the Government will "press
the Commission to maintain ambition and pace on the remainder
of its Digital Single Market initiatives".
7.6 In view of the raft of public consultations
currently underway[31]
on the Digital Single Market, including on geo-blocking,
telecoms rules, VAT measures and the role of online platforms,
we are disappointed that the Minister has not provided a clearer
indication of what he is doing to identify and promote UK interests
"early on" (ahead of a legislative proposal by the Commission)
and what specific results he would like to see emerge within the
next couple of years.
7.7 On the question of how the Government is considering
trade-offs — both at a UK and EU level, the Minister:
a) reiterates the Government's commitment
to better regulation, to ensure that policies are evidenced based,
proportionate and do not disproportionately burden SMEs;
b) highlights that the Government is pressing
the Commission to narrow the scope of its proposals where this
would help deliver agreement in the Council; he provides the example
of "lobbying for harmonisation of a narrow 'set of key rights'
which supports consumer and business confidence and excludes areas
that should remain matters for domestic civil law, such as limitation
periods"; and
c) considers that balancing competing interests
and objectives, for example between the free flow of data and
civil liberties, or between consumers having access to and portability
of digital content and businesses being incentivised and remunerated
for creative output "should be achieved in tandem, not at
the expense of one or the other".
7.8 We thank the Minister for his assessment of
how the recent Schrems judgment, impacts the Digital Single
Market, noting that many businesses, including SMEs, have been
affected. We welcome Government efforts to urge the Commission
and US Government to find agreement on data transfer arrangements
as soon as possible.
7.9 As to the impact of the Schrems judgment
on the TTIP negotiations, we note the Minister's assessment that
there is "no direct impact on the context of the [draft Services]
text", but would have expected the Minister to provide some
detail on the wider political or indirect implications, for example
the extent to which it may affect the EU's negotiating position
or EU ambitions for driving a high-level international framework
for digital trade.
7.10 The Minister commits to maintaining regular
communication with the House throughout the development and roll-out
of Digital Single Market proposals. As stressed in our previous
Report on the Digital Single Market Strategy, we expect the Minister
to provide detailed information on each initiative brought forward
by the Commission, early on in — and throughout
— the legislative process, including on:
a) whether the proposed measures comply with
the principle of subsidiarity and are necessary and proportionate;
and
b) the extent to which they reflect UK interests.
7.11 In light of the update from the Minister
and recognising the pace of developments in the implementation
of the Digital Single Market Strategy — as evidenced by
the numerous public consultations underway — we now clear
this Commission Communication from scrutiny, in order to focus
attention on imminent legislative proposals. We draw the Minister's
letter and our conclusions to the attention of the Business, Innovation
and Skills Committee and the Culture, Media and Sport Committee.
Full
details of the documents:
Commission Communication: A Digital Single Market Strategy
for Europe: (36836), 8672/15 + ADD 1, COM(15) 192.
Background
7.12 The detail of the Digital Single Market Strategy
is set out in the Committee's previous Report chapter, listed
at the end of this chapter.
The Minister's letter of 30 October 2015
7.13 In response to the Committee's question on what
the Government's priorities are for achieving a Digital Single
Market, the Minister first sets out the Prime Minister's overarching
ambitions:
"The Prime Minister's 'UK vision for the digital
economy' paper of last January sets out an overall vision for
the Digital Single Market and two overarching priority areas,
which the Government is focused on delivering over the next five
years. Our vision for the Digital Single Market is one which is
digital by default, where it is even easier to operate online
across Europe than it is do things offline in a single state.
The two priority areas are:
"1. A Europe for consumers
"Consumers should be able to shop anywhere,
anytime, and buy from the widest range of providers. They should
be given the confidence that their rights will be protected and
their data will be used in a responsible and transparent way.
"2. An economy for digital entrepreneurs
"We should design an environment that helps
new entrants in an inclusive playing field where they can sell
to a potential 500 million consumers, not an obstacle course that
defeats many would-be online exporters at the first hurdle."
7.14 The Minister goes on to set out the Government's
immediate priorities for the Digital Single Market:
"The priorities for the next few months are
upcoming proposals on copyright and consumer protection. We expect
that these will be published by the European Commission in December
of this year. However, the other initiatives are also important
because of the huge potential of digital to fuel innovation and
growth, and to underpin competitiveness."
7.15 The Minister does not provide any detail on
how other initiatives may be prioritised:
"We will continue to press the Commission to
maintain ambition and pace on the remainder of its Digital Single
Market initiatives."
7.16 In response to the Committee's question on how
trade-offs on the likely policy initiatives and actions are being
considered at a UK and EU level, the Minister states:
"We recognise that the Digital Single Market
is a wide ranging policy space that affects many different stakeholders.
In terms of policy formulation, we remain committed to better
regulation principles, here and in the European Union. Policy
should be evidenced based, proportionate and not unnecessarily
or disproportionately burden SMEs.
"During the development and roll-out of Digital
Single Market proposals, we will be pressing the Commission to
narrow its scope, where this would help deliver agreement, and
therefore early wins for consumers and businesses. For example,
on consumer rights we have been lobbying for harmonisation of
a narrow 'set of key rights' which supports consumer and business
confidence and excludes areas that should remain matters for domestic
civil law, such as limitation periods. The UK is the first country
in Europe to have bespoke consumer protection on digital content
— enshrined in the Consumer Rights Act 2015 — and
we believe this would be a good starting point for the Commission
to consider too.
"Going forward we want to see EU data protection
legislation that protects the civil liberties of individuals,
that strikes a balance between the free flow of data while providing
data subjects with confidence that their data will not be misappropriated.
These should be achieved in tandem, not at the expense of one
or the other.
"It is also vital that we ensure the balance
between consumer and business is correct. Upcoming proposals on
copyright should widen legal access and enable portability of
digital content answering consumer demands. However the framework
must also ensure that we maintain Europe's rich creative output,
and continue to remunerate and incentivise the creative industry
effectively."
7.17 The Minister's assessment of how the recent
Schrems judgement, which has the effect of restricting
data transfers to the USA, impacts the Digital Single Market and
TTIP negotiations is set out as follows:
"The Court of Justice ruling that invalidates
the Commission's adequacy decision on Safe Harbour is disappointing.
Companies need to be able to transfer data to third countries,
with appropriate safeguards — that is why the UK intervened
in this case.
"My colleague the Minister of Data Baroness
Neville-Rolfe held a roundtable with business on the 19th October
2015 to better understand the impact of this judgement on their
operations. Many businesses are being directly or indirectly affected,
especially SMEs, and it is clear that there are costs involved
in changing contractual agreements for the transfer of data. The
Information Commissioners Office was also present, and reiterated
its earlier public statement (6th October) that it will provide
updated guidance to business on complying with EU data protection
law when transferring data to the US over the coming weeks. The
free flow of data, with appropriate safeguards, will be key to
delivering on the ambitions of the Digital Single Market. The
Government will therefore continue to press the Commission and
the US Government to step up their current discussions to ensure
adequate data transfer arrangements are not disrupted.
"In relation to trade negotiations and the EU-US
Free Trade Agreement (TTIP) specifically, the judgement has no
direct impact on the content of the text. The EU's draft Services
text for TTIP includes provisions intended to liberalise the flow
of data and facilitate increased e-commerce between the USA and
the European Union. However, the text also includes a provision
in its 'general exceptions' making clear that even though TTIP
sets out principles for the free flow of data, both parties are
still able to adopt and enforce measures necessary for the 'protection
of the privacy of individuals in relation to the processing of
personal data and the protection of confidentiality of individual
records and accounts'. In the case of the EU, this would cover
its Data Protection legislation and the Safe Harbour scheme as
a means to demonstrate compliance with it."
7.18 The Minister concludes that he "will maintain
regular communication with the House of Commons European Scrutiny
Committee and the House of Lords Select Committee on the European
Union throughout the development and roll-out of Digital Single
Market proposals over the next five years".
Previous Committee Reports
Fifth Report HC 342-v (2015-16), chapter 32 (14 October
2015).
30 US-EU Data Sharing: Case C-362/14: Maximillian
Schrems v Data Protection Commissioner. Back
31
See http://ec.europa.eu/digital-agenda/en/consultations for an
up-to-date list of open consultations. Back
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