Rapporteur:

Mira-Maria DANISMAN

Plenary Assembly decision	25.1.2023
Legal basis	Rule 52(2) of the Rules of Procedure
	Own-initiative opinion
Section responsible	Single Market, Production and Consumption
Adopted in section	3.10.2023
Adopted at plenary	25.10.2023
Plenary session No	582
Outcome of vote (for/against/abstentions)	210/0/7

1.   Conclusions and recommendations

1.1.

The European Economic and Social Committee (EESC) believes that digitalisation plays a significant role in the single market and suggests in this own-initiative opinion how digitalisation could bring further added value to the functioning of the single market and improve the enjoyment of the single market’s freedoms.

1.2.

Digitalisation in transport and logistics are key in enhancing the free movement of goods. This highlights the need for proper investment in a future-proof transport infrastructure. The EESC also calls on the Member States to step up their efforts to facilitate the use of transport-related electronic documents.

1.3.

The introduction of ‘digital product passports’ is one example of how digital information can contribute to the free movement of goods in the single market, while it is also important to ensure the protection of trade secrets and intellectual property rights in this context.

1.4.

E-commerce offers businesses significant opportunities to reach customers in other Member States, and provides consumers with more choice and easier access to goods and services. The EESC calls for action to overcome existing barriers to e-commerce in the single market, e.g. through enforcing the EU’s rules on geoblocking.

1.5.

The EESC suggests that the withdrawn Commission proposal for a ‘services e-card’, aimed at helping service providers to operate across borders, should be put back on the agenda, as it is a practical means of promoting the single market in services.

1.6.

The EESC urges the introduction of secure and standardised digital identification systems such as eID-cards in order to provide EU citizens, residents and businesses with a secure means of digital identification that can be used in various online services and platforms within the single market.

1.7.

The EESC calls for the development and scaling up of initiatives in the sphere of digitalisation of social security and labour mobility and encourages the introduction of initiatives such as the European Social Security Pass.

1.8.

Digitalisation plays a central role in the free movement of capital in the single market and the cross-border activity of financial services. To boost FinTech applications, the European Union (EU) should further harmonise the regulation of digital financial services and increase innovation funding for digital solutions.

1.9.

The EESC highlights the importance of ensuring a well-functioning single market in data, as it is a prerequisite for enhancing the other four freedoms through digitalisation. A well-functioning single market, accompanied by robust cybersecurity and proper data protection, also strengthens the resilience, sovereignty and competitiveness of the EU in the global context of digitalisation.

1.10.

The EESC highlights the importance of intensive investment in digital infrastructure, research and innovation, and skills development, all of which are key enabling factors of digitalisation.

1.11.

The EESC stresses the need for digitalisation to take place in an economically, socially and environmentally sustainable way. Due attention must be paid to the prevention of harmful environmental impacts of digitalisation and the digital divides regarding access to infrastructure and skills.

1.12.

The EESC calls for a supportive regulatory framework and effective enforcement of common EU rules by the Member States. Moreover, the digitalisation of public governance (e-governance) is crucial to make it easier, quicker and cheaper for individuals and businesses to operate in the single market, for example with respect to public procurement, taxation, registrations and other administrative obligations.

2.   Background

2.1.

Digitalisation has had a growing role in the economy and society during the entire 30-year period of the European single market. Digital technologies such as mobile devices, e-commerce and cloud computing have taken a central place in the everyday life of European citizens and businesses. These technologies have also facilitated the enjoyment of the free movement of goods, services, people and capital — and generated a fifth single market freedom, the free movement of data — ultimately promoting a competitive EU economy and a higher standard of living.

2.2.

The EU has taken an active role in the field of digitalisation by developing the regulatory framework and standards, investing in digital infrastructure and boosting digital skills and innovation. These investments have paid off, as we have seen improved connectivity, innovative products and services and strengthened economic growth. However, the single market is far from perfect.

2.3.

Given the evident need to further develop the functioning and integration of the single market, this own-initiative opinion examines the role and potential of digitalisation in enhancing the possibilities to enjoy the single market freedoms. The opinion relates to numerous previous EESC opinions on digitalisation and the single market (1).

3.   Strengthening the single market through digitalisation

3.1.   Free movement of goods

3.1.1.

Digitalisation in transport and logistics plays a key role in enhancing the free movement of goods. This involves the digitalisation of the physical transport system, including vehicles, infrastructure and traffic management. On the other hand, it involves the digitalisation of freight information, thus streamlining processes and reducing administrative burdens in EU cross-border trade. In this field, Member States should step up their efforts to facilitate the use of transport-related electronic documents.

3.1.2.

Digital development improves the conditions for intermodality and contributes to increased efficiency, productivity and safety for freight transport and logistics. Proper investment in both traditional infrastructure and advanced digital infrastructure is thus needed to support future-proof transport infrastructure, ensuring smooth cross-border movement of goods both within and beyond the EU. Furthermore, given the growing electrification and use of hydrogen in transport, digital, energy and transport infrastructure are ever more interconnected.

3.1.3.

The introduction of digital product passports (DPPs) is one example of how digitalisation can further contribute to the free movement of goods in the single market by enabling consumers, businesses and authorities to access a wide range of digital information about product characteristics, increasing trust in the market (2). However, it is important to support micro, small and medium sized enterprises (MSMEs) — by improving their digital skills and knowledge of environmental impacts. Specific attention should be paid to those MSMEs operating in supply chains. In addition, protection of trade secrets and intellectual property rights needs to be ensured in the take-up of such passports.

3.2.   Free movement of services

3.2.1.

The free movement of services within the single market has taken significant steps forward over the past 30 years, although challenges still exist. The European Services Directive has significantly contributed to the integration of the EU services market. However, there are still additional national requirements, such as complex licensing regimes that hinder the free movement of services in the EU single market. The EESC believes that digitalisation can tackle some of these challenges, for instance by facilitating the provision of e-services.

3.2.2.

Digital platforms enable businesses to supply, and citizens to acquire, a wide variety of services in the single market. While the EU has worked to support the European platform economy, the regulatory framework should be properly implemented, monitored and regularly reviewed to ensure that it keeps pace with the evolving digital landscape and does not create unnecessary barriers to market entry and innovation.

3.2.3.

While transforming business models, e-commerce offers significant opportunities to businesses to reach customers in other Member States more easily. Correspondingly, online shopping provides consumers with more choice and easier access to goods and services. Actions to overcome existing barriers to e-commerce can help improve the functioning of the single market, e.g. through enforcing the EU’s rules on geoblocking (3). It is also important to ensure that rules are technology-neutral in terms of sales channels. In addition, adequate consumer protection is needed to tackle misleading and deceptive practices in e-commerce.

3.2.4.

The Commission proposal for a services e-card (4) which aimed to help service providers to operate across borders was one attempt to overcome some of the obstacles to the free movement of services. The card would have enabled service providers to use a fully electronic EU-level procedure to complete formalities when offering services in another Member State, leading to reduced administrative burdens and increased legal certainty for service providers. The EESC calls for this item to be put back on the agenda, as it is a practical example of how digitalisation can further enhance the free movement of services in the single market.

3.3.   Free movement of people

3.3.1.

The creation of the European Digital Covid Certificate is a recent example of how digitalisation can support the free movement of people even in exceptional situations, including during a global pandemic.

3.3.2.

Secure standardised digital identification systems such as eID-cards are an essential means to facilitate the free movement of people. They simplify verification processes in the Member States and reduce the need for manual checking and paper documents. In this respect, the recent Commission proposal on the Framework for a European Digital Identity (5) is a positive step forward providing EU citizens, residents and businesses with a secure means of digital identification that can be used in various online services and platforms within the single market.

3.3.3.

Further digitalisation in the sphere of social security and labour mobility can bring added value to the single market and the free movement of people. Actions at EU and national level need to be scaled up to further simplify procedures, reduce administrative obstacles and move towards more interoperable, interconnected and automated social security systems (6) that enable faster and correct application of the way in which contributions are collected and benefits paid out. Promising initiatives with the potential to boost labour mobility are being developed in this regard.

3.3.4.

The European Social Security Pass (ESSPASS) is a new Commission initiative creating a digital tool for citizens to prove coverage and entitlements when they are in another EU country. Another interesting project is the European Tracking Service on Pensions aimed at establishing an online information system on individuals’ pensions in EU countries, helping workers to find their pension providers.

3.3.5.

Digital labour ID cards can be used to ensure that social or other requirements have been met by the worker’s employer or the worker him/herself. These cards, such as the European Professional Card (EPC), facilitate labour mobility in the EU. Although labour cards are considered mainly a national responsibility, the EU can have a role in creating interconnectivity between cards as well as in sharing best practices in this field.

3.4.   Free movement of capital

3.4.1.

Digitalisation plays a central role in promoting the free movement of capital in the single market and can strengthen cross-border activity of financial services in the EU, for example in retail financial services and insurance. Digitalised payment processing facilitates the free movement of goods and services in the single market via faster transactions with lower costs to consumers and businesses. Digitalisation simplifies currency conversion and offers secure payment transactions, increasing overall trust in cross-border trade. Also, digital online platforms focused on investment, crowdfunding and trading facilitate the free movement of capital.

3.4.2.

To boost these FinTech applications, the EU should continue harmonising the rules for digital financial services as harmonised regulatory frameworks make it easier to operate across borders. The EU should also support the development of digital FinTech solutions via innovation funding. In addition, investing in data protection and cybersecurity will increase trust in FinTech services and cross-border digital transactions.

3.5.   Free movement of data

3.5.1.

Data is at the centre of all digitalisation efforts in the single market and the free movement of data is a prerequisite for enhancing the other single market freedoms through digitalisation. A well-functioning single market in data is also necessary to strengthen the resilience, sovereignty and competitiveness of the EU in the global context of digitalisation. The European Data Strategy provides a roadmap for building a strong European data market. Data sharing and exchange enable businesses and policymakers to collaborate across borders, develop common standards and promote interoperability. Ultimately, this will deepen the single market for people and businesses and increase cross-border activity and economic integration.

3.5.2.

Enhanced use of data is a source of new innovations, products, services, and business models that lead to wider customer choice, and increased growth and competitiveness in the single market. The EU needs to continue its work to facilitate access to and sharing of data via European Data Spaces. For instance, the establishment of the European Health Data Space is a promising initiative to secure the exchange and use of health data across borders. Regulatory initiatives such as the Data Act and the Data Governance Act also contribute to better access to data.

3.5.3.

Ensuring harmonised data protection rules is important to build trust to secure data flows within the single market. Considering that more people are entrusting their data to cloud services, the principles of data privacy and security deserve further attention. The EESC calls for the upcoming revision of the General Data Protection Regulation (GDPR) to address the shortcomings in enforcement as well as to simplify the applicable rules especially for MSMEs.

3.5.4.

Cybersecurity also has a crucial role to play in establishing trust in digital technologies that enhance the data economy in the EU single market. The EU Cybersecurity Strategy establishes a consistent framework for strengthening cybersecurity in the EU Member States.

3.5.5.

In order to fully foster the benefits of digitalisation in the single market, all regions, including rural and remote areas, should have access to digital infrastructure such as broadband networks and eventually 5G and 6G networks. Further investments in data centres and cloud computing infrastructure are also needed to support the moving, processing and storage of data in the single market.

3.6.   Enablers and preconditions of digitalisation

3.6.1.

To make it possible to further enhance the digitalisation of the single market, the existence and good performance of the key enabling factors of digital transformation must be ensured. This calls for increased investment in research and innovation and the promotion of innovation ecosystems. While it is important to enhance AI, quantum and other advanced technologies, many MSMEs face big challenges in adopting even basic digital technologies. European Digital Innovation Hubs are valuable platforms to also involve MSMEs in the development and adoption of digital solutions and their reach should be extended to larger audiences.

3.6.2.

The development of skills and competences, from basic digital skills to high-level talent, is another crucial enabler of digitalisation, needed for the purposes of both working life and citizens’ everyday lives. Moreover, establishing a European framework for digital skills certification, a standardised recognition of digital competencies, would help individuals demonstrate their skills and qualifications across the EU and thus facilitate working in another Member State.

3.6.3.

As digital transformation requires a considerable amount of investment, well-functioning financial markets and proper allocation of public funding for digital development must be ensured. Moreover, the EU must provide a supportive regulatory framework that is fit for purpose, encourages innovation and investment, minimises the administrative burden and ensures equal conditions in the single market, including full commitment and proper enforcement of common rules by the Member States.

3.6.4.

Digital transformation must also be economically, socially and environmentally sustainable. Besides increasing economic efficiency and productivity, digitalisation is an essential way of advancing the green transition, provided that the climate and environmental aspects of digital systems, including the use of energy and materials, are well managed. It is also important to address the digital divides regarding access to infrastructure and skills, and enable the whole of society to be fully involved in digital development.

3.7.   E-governance

3.7.1.

In this opinion, the EESC wishes to point out in particular the importance of the digitalisation of public governance (e-governance) in delivering a more efficient, accessible and transparent single market. Digitalisation can streamline administrative processes making it easier, quicker and cheaper for individuals and businesses to operate in the single market. The EU should promote further harmonisation of public digital services across Member States, including common standards, protocols and frameworks for e-government services, such as company registration, tax filing, and public procurement. The EESC also calls for sharing of good e-governance practices between Member States.

3.7.2.

Public procurement plays an important role in the integration of the EU’s internal market of goods and services. Digitalisation of public procurement promotes cross-border participation in tendering. The EU has digitalised public procurement processes, for example via the use of e-procurement platforms and by establishing the e-Certis platform that helps businesses to identify the different certificates requested in procurement procedures across the EU. Furthermore, the development of the European Public Procurement Data Space (PPDS) is set to further facilitate the free movement of goods and services through the enhanced use of public procurement data across the EU. The EESC considers the PPDS to be an excellent example of the potential of digitalisation and encourages its further development.

3.7.3.

The EESC believes that European e-governance will benefit from a fully developed European digital identity framework that enables individuals and businesses to have a secure and recognised digital identity in the single market.

3.7.4.

The Single Digital Gateway is a centralised online platform providing user-friendly access to various digital services and information related to living, working, and doing business in the EU. The EESC believes that the Gateway should be constantly evolved as a tool, for instance by strengthening collaboration with civil society organisations and expanding the range of services available through the Gateway.

3.7.5.

Digitalisation of tax systems can also have substantial benefits in the single market. Thus the main outcome of the European Commission’s recent proposal VAT in the Digital Age should be a VAT system that is better adapted to current developments in the digital economy, improving the functioning of the single market. However, there are also concerns about the impact of the proposal on the single market, as it leads to additional reporting requirements for companies (7).

3.7.6.

The EU and Member States should continue to open up the non-sensitive public sector data for the reuse of businesses and citizens and for academic purposes, as it can contribute to creating new innovations and business opportunities in the EU single market.

3.7.7.

For the digitalisation of public governance to fully reach its potential, it is necessary to invest in digital skills and the literacy of public administrations, including in cybersecurity and data management.

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(1)   OJ C 228, 29.6.2023, p. 22; OJ C 194, 12.5.2022, p. 87; OJ C 443, 22.11.2022, p. 51; OJ C 228, 29.6.2023, p. 17; OJ C 311, 18.9.2020, p. 19.

(2)  The Commission initiative (COM(2022) 142 final) to renew the ecodesign requirements.

(3)   OJ C 34, 2.2.2017, p. 93.

(4)  COM(2016) 824 final.

(5)  COM(2021) 281 final.

(6)  See key findings of the conference on Digitalisation in social security coordination (ESSPASS) and ‘Labour Cards’, held in March 2023.

(7)  Opinion of the European Economic and Social Committee on the proposal for a Council Directive amending Directive 2006/112/EC as regards VAT rules for the digital age (COM(2022) 701 final –— 2022/0407 (CNS)) and the proposal for a Council Regulation amending Regulation (EU) No 904/2010 as regards the VAT administrative cooperation arrangements needed for the digital age (COM(2022) 703 final (OJ C 228, 29.6.2023, p. 149).