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Building up Trust- The Digital Potential of the EU’s Internal Market

Submitted by on 10 Oct 2011 – 12:04

Morten Løkkegaard MEPBy Morten Løkkegaard MEP, Member of the ALDE group and substitute in the Internal Market Committee (IMCO)

It´s all about trust! The European consumers trust in the future and in the market.

The ongoing financial crisis is not only about the potential collapse of the global financial system and the heavy burdens of debt, but also about the lack of European consumer trust when it comes to purchasing goods across the borders.

In 2012, the European Internal Market can celebrate its 20 year anniversary, and in the middle of a turbulent economic crisis, we – as politicians – are celebrating the anniversary of a success that is under huge pressure.

The relaunch and renewal of the Internal Market is paramount for Europe’s ability to compete with the emerging market economies, such as China and India.

A free market is the engine for growth, and we should use the anniversary to fine tune this engine and help Europe get back on a track of prosperity and growth.

EU Commissioner, Michel Barnier, is the ‘chief mechanic’ in charge of this fine tuning, but we are many people working on the modernisation of this engine. This is where the consumers´ trust becomes an important issue.

One of the most important tools is the development of the digital single market. Europe has come a long way when it comes to high speed broadband, internet and the use of social media, but it is a fact that our competitors have come even further in the digital development. It is also a fact that consumers do not yet have confidence in online trade.

So what is at stake?

Today 30 million citizens in the EU are holding a job with relation to our common single market. The market represents 18% of the GDP in the EU – corresponding to 2.000 billion Euros – and a well-functioning digital single market has the potential to boost the European economy with 500 billion Euros more. Just to mention a few incentives to boost the digital single market.

But the rest of the world will not wait for the EU to pick up pace.

What we need now is to continuously make sure that the single market ensures both growth and job creation. To accomplish that, we have to develop the digital single market.

Access to high-speed internet connection

If we are to benefit fully from the digital potential, we have to – first and foremost -make sure that everybody has access to high-speed internet connection. This is key in order to ensure economic growth, job creation, and welfare – and to ensure that EU citizens have access to the information they need.

Broadband is the very artery that makes information available- and boost the EU´s Internal Market.

Europe is lacking behind the countries that we normally compare ourselves with when it comes to investments in the digital sector. The EU only invests 40% of what the U.S. invests in the sector. All EU-citizens should have access to 30 Megabits/second (Mpbs) internet-connections by 2020 and 50% or more than European households should have subscriptions above 100 Mpbs.

E-commerce

E-commerce is already an important part of our trade. In my home country, Denmark, 68% of the Danish population purchased goods online last year. This puts Denmark on top of the ranking as one of the most online trading people in Europe. But this is the exception rather than the general rule in the EU.

E-commerce and the purchasing of online goods and services should be as natural – and easy – as it is to purchase goods and services in a physical store. Why?

Because there are numerous advantages! The retailer saves money because he doesn’t have to pay monthly rent for an actual store.

Internet based stores reach a much larger number of consumers, with the advantage of being able to reach consumers across borders.

This creates competition between retail stores, not only from their own national competitors, but also from retail stores located in other countries. This increased competition not only lowers prices for consumers, but also increases the variety of choice.

Common solution to common problems

Unfortunately, the EU is lacking behind when it comes to cross-border online trade. Only about 8% of European consumers purchase goods online from a company located in another member state as few consumers trust online trading from companies located outside their own country.

The lack of trust of the consumers is increased by an uncertainty about their rights in case of difficulties in terms of delivery, return policy, etc.

These uncertainties make it difficult to harvest the full potential of the digital single market. One of the ways to overcome these obstacles is to continue the removal of the existing barriers to trade, especially for online trade.

A first big step was the Parliament´s adoption of the new Consumer Rights Directive in June this year. The new directive increases the protection of consumers throughout the entire European Union in both off-premises sales, sales by phone – and much needed – the increasingly popular online sales.

Most countries have already taken the big step into the new digital era – but there is still a need for the EU to stop playing hide and seek with protectionist measures, to avoid being stuck in the last millennium.

EU is still economically ahead of the rest of the world but we need to consolidate the lead position; through the relaunch of the Single Market, the Europe 2020 Strategy and the Consumer Rights Directive which all sets the agenda of making common solutions to common problems.

We still have a long way to go to make sure that both consumers and companies have trust in the cross border and online trade.

Today, only one fifth of online stores in the EU are selling goods to consumers in other countries. The aim of the Consumer Rights Directive is greater online trade harmonization between the 27 different member states is an important step in the right direction but there are still things to be done.

The problems? Trust and fragmentation. The solution: EU and harmonization!