ECIPE and ZPP Conference: Renewing Efforts to Create the Digital Single Market

What are the key areas for digital change in the near future? And how can Europe make greater progress towards creating a Digital Single Market? These were the key questions covered by a high-level conference with senior speakers from policy, academia, business and think tanks organized by the European Centre for International Political Economy (ECIPE) and the Union of Entrepreneurs and Employers (ZPP) in Brussels on September 17th 2018. Featured topics of the conference were AI, 5G, IoT and cybersecurity policy – and what policies that should be front and centre as the EU gears up for new reforms. Moreover, it was discussed how countries in Europe can collaborate more to help best practices flow through Europe and push Europe-wide policy improvements.

Poland’s Vice Minister for Digital Affairs, Mr Karol Okoński, gave a keynote presenting valuable insight into the current  challenges. Europe’s recent history offers important lessons for the process of secureing Europe’s unity and reclaiming global leadership.  The key is digital which is no longer just a market cash cow, but has grown to have a strong political side to it that has to be embraced be EU leaders. The next Commission should show strong and clear digital leadership while the European Council should continuously reflect on ways to push the digital topics quickly and boldly, said Mr Okoński in his intervention.

Mr Okoński stressed the importance of what he described as a friendly neighbourhood attitude, which is a multi dimension platform of exchange between EU countries designed not to be a competitor to the EU, but on the contrary  to be an ally in the restoration of what the EU once was. This type of cooperation can be best achieved between neighbours or across geographical regions – be it the Baltic Sea Region, the Visegrad Group, the 3 Seas Initiative, or the Weimar Triangle just to name a few. The substance for countries getting together is modern infrastructure and data (key AI enablers), while the guiding principle is human centricity.

Countries like the Visegrád group members – Czech Republic, Poland, Hungary and Slovakia – as well as the Iberian economies Portugal and Spain have been catching up in terms of both economic prosperity and digital performance. These digital converger countries stand to profit as much from digitalisation as countries with bigger digital endowments (e.g. digital infrastructure like networks).

Ambassador Jaroslav Zajíček from the Permanent Representation of the Czech Republic to the EU mentioned some of the successes the EU has already achieved in the digital area. One of the priorities for the Czech Republic is the regulation on free flow of data, telecommunications package or Single Digital Gateway. He then urged the audience to look at the lawmaking from an entirely new perspective: “We should no longer create offline laws and then check if they are digital friendly. The digital needs to be the core aspect of our lawmaking, something that is on our mind all the time. As a first step, I would like to simply propose to stop speaking about the Digital Single Market as if it was something different from the Single Market. There is no clear distinction anymore between offline and online world and this is also how we should look at the rules we are making. “There  is  a  clear  role  for  greater  regional  cooperation  between  countries  –  cooperation.

That seeks  to  further build  regional  coalitions  and  share  experiences  of  what  has  worked  well  in  regulatory  policy  and  the  investment  in  digital  endowments. Digital  convergers also have  strong  economic  interests  to  associate  themselves  with  the  digital  frontrunners. Converger countries should embrace initiatives like the “D16 group”, linking them directly to the digital frontrunner countries.

Fredrik Erixon, Director at the European Centre for International Political Economy (ECIPE) added that “Europe can do more to increase the economic payoff from all the investments that go into digital networks and capabilities. Taking new steps to open up for digital commerce in Europe are key and as Europe now prepares for a new Commission and Parliament, it is important that member states set out visions, ideas and concrete reforms for how increase the contribution of the digital economy to economic growth.”

If we want to progress digital performance and harness payoffs from digital investments, we need to abandon high flying strategies and declarations and get back to basics. The best way how to build DSM is to remove legislative barriers to DSM mainly at a national level, instead of creating new ones at the EU one said Milena Jaburkova, Vce President of Confederation of Industry of Czech Republic.

Marcin Purta, Managing Partner of McKinsey & Company in Poland explained that for years, the main growth drivers in CEE were traditional industries, dynamic exports, investments from abroad, labor-cost advantages and funding from the European Union. Now these drivers are beginning to lose their momentum. CEE economies are generally undercapitalized compared to more advanced European economies. Workforce costs are rising and there are limited labor reserves left to plug into the economy, with unemployment at record low levels. He also stressed that labor productivity still lags behind Western Europe. If the countries of CEE hope to catch up with the world’s most advanced economies, they need to redefine their growth strategy and identify new sources of development. According to McKinsey’s analysis, creating digital, tech-driven economies that closely cooperate could be the growth engine that the region urgently requires. CEE has the chance to make a strategic choice that will determine its growth path for decades to come. Our analysis shows that developing the region’s digital economy would have significant economic impact thanks to the resulting productivity gains. He also referred to the upcoming publication of a detailed analysis of this impact in a comprehensive “CEE Digital Challengers” report.

The single digital market is from the point of view of entrepreneurs from the SME sector, who plan to operate on other Member States’ markets, or at least do not exclude such possibility, one of the key agencies within the European Union – said Marcin Nowacki, vice president of ZPP. – We believe that equal conditions of free competition for all players in the digital space are critically important and will serve both companies and consumers and, as a result, the entire economies of the Member States. However, for this to happen, the key is to meet two conditions – no legislative initiatives that violate this competition and limit the opportunities for smaller companies to operate, and increase the digital competence of entrepreneurs.

What we could as business do in order to  create working coalition? Crucial is involvement. Such involvement means preparedness to dedicate extensive amount of expertise, time, human and financial resources. Particularly, new MS, CEE countries (governments, business associations, other stakeholders) are not committed to do it. The Czech Republic and Poland are exceptions summarized her intervention Milena Jaburkova, Vce President of Confederation of Industry of Czech Republic

Furthermore, Philipp Lamprecht, Senior Economist at the European Centre for International Political Economy (ECIPE), states: „Further increasing cooperation among EU member states on digital affairs is crucial. Digital frontrunners should act as a network also for non-frontrunner countries to facilitate an exchange on lessons learned in setting regulatory policy and investing in digital capabilities“.

Presentation of Minister Karol Okonski is available under the link

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The original version of this article was published by Union of Entrepreneurs and Employers here.