Businesses urge Commission to revive stagnating single market and launch a new phase of European integration

In a letter sent today to Commissioner Thierry Breton, DIGITALEUROPE and four other leading European business associations urge the Commission to launch a new phase of European integration by finally overcoming market fragmentation and reviving a stagnating single market.

The single market is the bedrock of the EU economy and the foundation upon which many of the EU’s current objectives are being built. DIGITALEUROPE, BusinessEurope, ERT, Eurochambres and EuroCommerce urge the Commission to close the gaps that still remains thirty years after its creation by reducing market fragmentation and removing red tape including for cross-border business operations.

In the digital age, the data economy should be at the core of the single market. We call therefore on the EU to fully recognise this by establishing the freedom of data movement as the “fifth freedom” underlying the single market, in addition to people, goods, services and capital.

Recommendations

• Remove all barriers to cross-border business operations and intra-EU investments, developing a true Union for Energy, Environment, Digital, Retail, Banking & Capital, Health as well as Defence.

• Build a real Digital Single Market in which data can flow freely across borders.

• Create a true Single Market for services by eliminating unjustified or disproportionate regulatory and administrative barriers and simplifying access to market, especially for smaller businesses.

• Ensure fully harmonised regulation or country of origin principles across Member States and their administrations, to avoid restricting market access based on national rules.

Background

• The benefits of removing barriers to the Single Market for goods and services could amount to €713 billion by the end of 2029, a sum similar to the investments foreseen under the ‘Next Generation EU’ recovery package.

• Businesses no longer experience the Single Market as a true free trade area due to different transposition of EU law in Member States and lack of enforcement policy. Companies – especially SMEs – cannot scale-up to other countries without facing a wide variety of barriers, including a growing number of costly compliance obligations.

Examples

• Rules governing data sharing and use in Europe. Data-related legislation is already abundant, from the GDPR, to the newly adopted Data Governance Act, to the upcoming Data Act, creating a complex framework for companies to understand. This legal maze is likely to sow confusion among the European business community, as DIGITALEUROPE has shown in its latest report.

• Europe’s fragmented Single Market for digital health. Companies looking to scale up in Europe have to deal with national and regional fragmentation in data protection rules (GDPR and additional rules outlined above), data standards (semantic, syntactic etc.) and reimbursement systems. This is complicated by the fact that they use large- or hyperscale cloud services that are generally not present in every individual region.

• Substantial regulatory compliance costs for SMEs, even when EU rules intend to facilitate cross-border trade. A good example of that is the VAT registration system. Distinct requirements in Member States for businesses storing and selling goods in multiple EU countries result in a high compliance burden for SMEs.