EU must pick up pace to advance digital commerce

Steady progress, but the EU must do more if it is to reap the economic benefits that a digital single market offers.

Slowly – too slowly – the European Union is adapting to an era of digital commerce. The European Parliament’s legal-affairs committee this week issued its response to a European Commission proposal to amend copyright law to bring it up to date with the current practice of downloading music online, so that artists and performers stand some chance of being rewarded.

On similar lines, the Commission was congratulating itself this week as it published a proposal to provide greater protection to consumers who book holidays online. The existing law on package holidays dates from 1990 and the habits of both the travel industry and consumers have changed much in the meantime. Essentially, the proposed law would give similar protection to those who book online as EU law already gives to those who book through travel agents. Such baby steps are to be applauded as far as they go, which (in the nature of baby steps) is not very far. Although the European Council has, at various moments of economic distress, mouthed brave words about a digital single market, the EU’s deeds have not matched the rhetoric.

Some aspects of the problem are very familiar to the EU. The obstacles to a digital single market are many and varied, so dismantling the cross-border barriers involves immersion in technical detail. And in every industrial or commercial sector, there are vested interests prepared to fight for their livelihoods to protect their revenue. The music copyright collecting societies are a case in point. Some are adapting to the future, but others (established long before the cassette tape, let alone webstreaming) would rather turn the clock back.

The package-holiday legislation illustrates another challenge for the Commission – the subject-matter crosses various departments of the Commission. Viviane Reding, always with an eye to the populist main chance, styles herself as a champion of citizens’ rights. But even without her big-footing presence, the legislation might plausibly belong to the departments for enterprise, for travel, for consumer policy, for the internal market, for the digital agenda.

If the EU is to reap the economic benefits that a digital single market offers, then the overall objective has to be lifted up out of the regulatory undergrowth and the bureaucratic thickets. National political leaders would do well to engage with the embarrassing question of why, despite a widely used single currency, digital commerce is still limited by national boundaries.

Some of the answers will be painful. Taxation is particularly problematic, and national leaders rarely like talking about tax in EU gatherings. But unless the EU does face up to these bigger-picture issues, the European economy will be limited to piecemeal progress. Music downloads this year, package holidays next…that is not sufficient to restore the EU to economic health. And nor is attending to these very visible business-to-consumer transactions enough. What matters even more is the economically important business-to-business commerce.

Ahead of the next legislative cycle – the creation of a new Commission and a new European Parliament – the EU should collectively identify the most important steps to take towards a digital single market. Removing barriers should be the priority. Entrepreneurial spirit will do much of the rest.