A committee appointed by the European Commission has presented a set of guidelines to be adopted by all member states of the European Union. This is called the "coalition of Europe". In 2010, it produced a report on "The future of digital policy". It said, "Cyberspace should be a platform for innovation and market entry for small businesses and start-ups, not a place for multinationals to try to dominate the competition." That report was later adopted as the basis for the new Digital Single Market Strategy.
The report noted, "The increasing concentration of corporate power in the technological domains of e-commerce and digital content markets is making it more difficult for smaller enterprises to compete with large companies". Such concentration is creating an artificial barrier between small players and large corporations, which is eliminating the potential benefits that they can enjoy from sustainable market growth. The report recommended various measures to reduce this concentration.
Some of these measures are actually already available in the form of international harmonization initiatives. Others may require further negotiation and commitment by member states to work with each other. The European Union is presently working on its Digital Single Market Strategy. It aims at encouraging digital trade.
Many people would like to see more European companies operating in the U.S. under the condition that they hire workers from within the EU. However, the reality is that many transnational companies prefer to hire U.S. workers because they pay lower wages and attract a higher population. It is actually much more efficient for the transnational company to have someone from the EU do the job, because the costs of training and employing them in the EU are very low. Also, many Europeans are not familiar with the U.S. system, so the transnational company does not face any language barriers. For these reasons, it will not be easy for European companies to start up their operations in the U.S. under the proposal from the Commission.
If the U.S. allows its negotiators to impose strictures on e-commerce, the effect will be very negative on the competitiveness of the European market. For instance, if the Commission insists that all websites must have a payment gateway and only accept electronic transfers, the impact on European companies will be severe. E-commerce is actually beneficial to the EU because it enables small and medium-sized businesses to compete on a fair playing field. Without the free-trade areas that accompany e-commerce, Europe will not be able to maintain its competitive advantage.
If the Commission moves forward with the proposal, there will be an increase in pressure from European companies to close their offshore branches and move manufacturing factories back to Europe. The proposal states that companies should employ the necessary infrastructure in Europe and provide access to the digital market without charging taxes or levies. It is also suggested that companies register and conduct their business in a country where they have a virtual presence. This will ensure that tax regulations do not affect the companies. While these measures are advantageous to businesses, the proposal has met with strong resistance and criticism from Brussels.
According to an estimate by the Brussels think tank, the digital market will expand by thirty percent between 2010 and 2020. The think tank also estimated that this growth will occur despite a reduction in investment levels. This would mean that e-commerce will create approximately one million new jobs in Europe by the end of its second decade. Given that the industry is already growing at a high rate, this figure is quite significant. In the years to come, the industry is expected to contribute more than one million jobs to the economy of Europe.
Despite the fact that the proposal has met with fierce opposition from the European Commission, it is expected that the proposal will be passed. The fall of the value of the Euro against the dollar has led many investors to question whether the growth of the e-commerce industry in Europe is real. However, experts suggest that the digital market is here to stay. With the right policies and the right kind of infrastructure, the industry is sure to expand for years to come.
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