The Benjamin Franklin quote above is increasingly becoming true, even to the old ‘certainty’ in the EU that common tax policies – demanding unanimous decision-making between Member States – will only move at glacier speed through the negotiations.
Corporate taxation currently features big on the European policy agenda, and is unlikely to lose ground any time soon. A combination of heightened media attention, revelations of tax evasion through Luxleaks or Panama Papers, budgetary constraints in many countries and increased awareness by the public have created unprecedented momentum for a more coordinated EU corporate tax policy.
The undeniable truth (?) of the Hart quote notwithstanding, this opportunity to be civilised in itself comes at a prize. The changes to tax rules that already have been and will be discussed have the potential to substantively impact how businesses pay and report taxes, how the companies are structured and not only how they do tax planning, but how they do business as such, in Europe.
Rules on interest deduction limitations, hybrid mismatches and controlled foreign companies, whilst seemingly ‘just’ an implementation of OECD guidelines might have further reaching consequences than any parties imagined when these issues where negotiated – in the context of voluntary guidelines – at the august Paris based institution.
In parallel, companies’ own corporate taxation policies are increasingly scrutinized by the public, with possible impact on reputation and side-effects on the ability to influence public policy not limited to taxation – and with layers to be further applied, if the Commission’s proposal on public country-by-country reporting gets tailwind through legislative negotiations.
Nevertheless… the time for thinking of EU tax policy is now! Work on greater harmonization of corporate taxation rules in the EU and to close loopholes stemming from different national tax laws is on full throttle as no EU government – or anyone else for that matter – wants to be seen as blocking the crack down on tax evasion. And rightly so!
Automatic exchange of tax rulings between EU Member States’ tax authorities and sharing detailed information on companies’ revenues, profits and taxes paid have already been agreed on – in both cases within only a few months after publication of the Commission’s legislative proposal.
Currently, EU countries – pushed forward by the ambitious Dutch Council Presidency – are working hard on the abovementioned issues of the anti-tax avoidance to tackle base erosion and profit shifting – where substantive changes to interest deductibility or hybrid mismatches are expected to be agreed on soon. A new proposal to increase tax transparency of multinational companies has also just been brought forward and later this year more work on a harmonized EU corporate tax base is expected.
But whilst the pace in acting affirmatively towards tax avoidance is laudable, the speed of the legislative process – leaving only a narrow window for the business community and experts to provide input – entails the risk that whilst the starting point and pace was benevolent and laudable, the end result might lead to unwarranted damages – as is always the risk, when regulation is hastened forward.
May 4, 2016
“The future belongs to those who wake up early,” say the French. The discussion during our roundtable on the Circular Economy Action Plan, which was unveiled last December, proves exactly that.
On 27 April, we had the pleasure to host Mrs. Pietikäinen, the European Parliament’s rapporteur on the 2015 Circular Economy own-initiative report, Mr. Radziejewski from European Commission Vice-President Katainen’s cabinet, as well as industry and NGO representatives for a roundtable discussion on the practical implementation of the Action Plan.
The roundtable clearly showed that no action will move forward without input from civil society and industry. Institutions – including the Council whose role was emphasised – will be looking at concrete case studies as well as proposals, in order to ensure that “Europe closes the loop”. Policy makers underlined they need to know how policy and regulation can support competitive and resource efficient business models.
Speakers and all participants who expressed their views showed genuine commitment to the Circular Economy agenda. Some of them however insisted on the extraordinary challenges that such transition present for both industry and society. These challenges will need to be addressed in the coming months.
“The future will be for those who get it & want to act” will be the institutions’ motto in the coming months, as they consult and work on turning the Action Plan into reality. The roundtable demonstrated a clear interest and commitment to enhance dialogue between stakeholders. At FleishmanHillard we are therefore planning further roundtables, focusing on specific actions, issues and sectors in order to mirror the institutional agendas.
Should you want to engage on this dossier or have a recommendation as far as next roundtables are concerned, don’t hesitate to get in touch with us – with Robert Anger to be precise at Robert.firstname.lastname@example.org.
The FleishmanHillard Circular Economy team
April 29, 2016
“Digitising industry” should be more than wishful thinking and a catch phrase for eurocrats as “Europe’s pride” – traditional manufacturing and production methods have not proved immune to digital transformation; and this is for the best. Over the past year, private sector executives and decision makers from Davos to Washington D.C. have been using their brain power and time to discuss the impact of new technologies for the development of products and the future of the manufacturing sector at global level.
With the EU focusing on growth and jobs in order to maintain its competitiveness, Commission officials are no strangers to the concept of the digitisation of the European Industry. This new space, nonetheless, holds both challenges and opportunities; this is where the “Digitising European Industry Package” comes in.
In case you missed it, the Package, which was published on 19 April, is made up of four non-legislative communications and three accompanying staff working documents covering issues such as Cloud Computing, standardization, internet of things, and funding.
Making Europe strong again
In line with the Commission’s priorities and the pressure from global competitors two trends run through the documents. Firstly, the Commission identifies ‘areas where progress is to be made’ in European digital services and explains that urgent EU-level support is needed to ‘coordinate national and regional initiatives to digitise industry’. Interestingly as well, while European technology companies are trying to take over the world, there is an underlying protectionist sentiment in the texts. The Commission refers to a need to ‘open the door for new competitors’ in some data and web platforms as European businesses are concerned about being locked in with a ‘few suppliers or platform owners. An earlier draft of the package went even further, saying that European digital services had ‘major weaknesses compared to major competitors in the US’ which is why EU-level support is needed for Europe to ‘stay in and win the digital industrial race’.’
Is there space for engagement?
As with every Commission non-legislative proposal, there is an opportunity for the manufacturing sector to engage on some issues that will have a long term strategic and business impact.
Development of common standards and interoperable solutions: This is one of the Commission’s priorities and will be key for the development of the Internet of Things (IoT). New standards will cover areas such as 5G, Cloud Computing, IoT, Data technologies, and Cybersecurity; harmonised standardisation will complement internal market mechanisms and could enable European manufacturers to make their products more competitive. eHealth, smart energy, intelligent transport systems and connected and automated vehicles, including trains, advanced manufacturing, smart homes and cities, and smart farming could be some of the sectors that will benefit in the short to medium term. However, the Commission also acknowledges that standards should continue to be industry-led, voluntary and consensus-driven. This leaves space for prompt engagement, both at EU and national level.
Data protection – The Commission will propose a legislative initiative in 2016 to remove or prevent unjustified localisation requirements introduced by national legislation. Data ownership, access and re-use rules, particularly in relation to data generated by sensors and other collecting devices will be at the centre of the proposal. These are elements that are key for producers of smart devices, especially in the energy sector. The Commission also highlights possible obstacles to data flow, such as uncertainty regarding the distinction between personal and non-personal data and obstacles regarding data interoperability and reliability.
Promoting innovation – The Commission acknowledges that innovation will drive growth. For this reason it encourages new innovative research services, such as data mining, and breakthroughs in supercomputing and secure networking through the European Open Science Cloud and the use of quantum technologies. Alongside the European Data Infrastructure, the Commission believes this will contribute to the digitalisation of industry. With the manufacturing sector driving European excellence, smart cities, smart living environments, driverless cars, wearables, and mobile health will be some of the sectors that are expected to grow thanks to digitisation. Dedicated zones will be set up across Europe to test new technologies, free from some of the regulatory burdens that these sectors face when scaling up projects. As for those complaining about the lack of financial resources, the Communication mentions a number of areas where the Commission will invest Horizon 2020 funds. For example, these include €500 million focused on digital innovation hubs. This will give a boost to companies, mainly SMEs operating in these technology spheres.
Is more coming up?
Digitising the European Industry will be the gift that keeps on giving for the next few months. The next peak in activity will take place at the end of the year when the Commission will publish its initiative on the ‘free flow of data’ which could impact companies using private or public data. The Commission also makes sure that industry stakeholders stay on the bench as observers. The time to start thinking about cybersecurity implications for your firm is now, as the deadline for industry stakeholders to draw up ‘practical guidelines’ on cybersecurity in ICT standards has been set for the end of the year.
The new industrial revolution is happening now and the Commission is aiming to have the manufacturing sector at its side in order to improve the environment in which “traditional” European companies operate. Smart value chains will be at the heart of this revolution, embracing a much higher level of both automation and digitisation. While cybersecurity and data protection concerns could leave executives skeptical on the added value for the industry, the future of European manufacturing is fortunately at the mercy of tech geeks. So better start to talking to DG CONNECT in order to harness the opportunities digitisation brings along.
Ilektra Tsakalidou, Catherine Armitage, with the help of Crispin Maenpaa
Image by Malte Helligsøe
April 22, 2016
If you ever find yourself in a room filled with people working on European transport policy, the moment you mention “decarbonisation” heads will turn in curiosity (or despair). We bet this is what happened during the two-day informal council meeting in Amsterdam over the past two days!
Since the 2030 Climate and Energy Package and COP21, everyone has been talking about “decarbonisation of transport” yet no one really knows what the Commission has in its mind in order to solve this complex puzzle. Any action to reduce CO2 emissions from transport could impact everyone, from public transport users to freight operators.
Last week, the Commission shed some light on the strategy with the publication of its long-awaited Roadmap on decarbonising the transport sector. As expected the initiative (which is due to be agreed upon in College at the end of June) will not include legislation, but will provide the framework for a number of other initiatives that advance the transition towards carbon-free or less carbon intensive fuels, improving vehicle efficiency, and managing transport demand.
The publication of the roadmap was preceded by rumors that the Commission was focusing on electrification, especially considering the long and complex discussions on the sustainability of biofuels and the rather weak agreement in favor of alternative fuels a couple of years ago. While the roadmap does not necessarily reflect this strong push on electrification, a study on third countries policies by the Joint Research Centre discusses in depth the many options including electrification.
Realistically, the approach showed in the roadmap is the most promising one to achieve results as it focuses on the idea that reducing emissions from transport requires coordinated action on several fronts:
- CO2 emissions from cars and vans
- Monitoring emissions from heavy duty vehicles
- Action plan for the deployment of electrification and advanced biofuels
- Revision of the Eurovignette Directive and electronic tolling
- Decision on Effort Sharing for non-ETS sectors
- Initiatives on intelligent transport
- Urban mobility initiatives
- Rules for market access for the haulage market
Daunting list, right?! Whether you are a vehicle manufacturer or provide components for vehicles, or even if you work in the electricity generation sector or are a fuel supplier, we would recommend that you:
- Look out – many initiatives will be coming your way in the next months and the time to engage is now
- Brush up your stats – whilst the Commission will not be conducting a public consultation on the Communication, some of its element will require engagement from stakeholders, with concrete data on business impacts preferred.
- Meet with key decision makers – technology neutrality is still the rule, so if you expect to see something specific about your sector this is not going to happen. If you want to stick out, act now.
Ilektra Tsakalidou, Laura Rozzo, and Michael Stanton-Geddes
April 15, 2016
Facts are few and speculation abounds about the European Parliament’s special Committee of Inquiry into Emission Measurements in the Automotive Sector—in short, the EMIS committee or Dieselgate inquiry.
While we wait for certainty, this document prepared by FleishmanHillard offers an overview of what is known: membership, leadership, mandate, and timetable.
There are 45 members, including 1 chairperson, 4 vice-chairs, 2 co-rapporteurs, and 9 group coordinators. 1 member is also the rapporteur on the Commission’s January Proposal for a Regulation on the approval and market surveillance of motor vehicles. In other words, nearly 40% of the EMIS members have some sort of formal function in the committee.
The members have already agreed on the broad direction and timetable; the details of what will be discussed and which guests will be invited are being thrashed out between coordinators and members and should be agreed during the April regular meetings and those to follow.
Currently, the status is that:
- The rapporteurs are responsible for preparing a programme of hearings, which will be discussed by the coordinators. It appears that each group is currently preparing its list of guests to invite to appear before the committee. Keep in mind that the committee has already a calendar of 18 meetings, of two and a half hours each, for 2016, and has reserved the right to organise additional meetings in Brussels for hearings.
- EMIS has asked the Parliament’s research division to prepare two briefings, one to cover the legal obligations of ‘economic operators’ which can mean the car manufacturers as well as testing centres, and a second to cover the implementation and enforcement of the legal obligations with a focus on penalties and the ban on defeat mechanisms.
- The committee is planning missions, to be determined by the coordinators, though the number of missions will be limited to the minimum necessary.
Special committees happen once in a blue moon, so this offers an opportunity for MEPs to sink their teeth into a meaty issue that has the attention of the media as well as the interest of many European consumers. It is an occurrence to watch closely.
Michael Stanton-Geddes, Laura Rozzo and Ben Carpenter-Merritt
April 3, 2016
Irish election results show that austerity measures, even when resulting in economic recovery, will be punished by electorates.
The results are in. In the first general election since 2011, the previous coalition government of Fine Gael (centre-right) and Labour, has been rejected by the Irish people. This time around Fine Gael and Labour, despite an uptake in the economy, suffered unprecedented losses, and the main opposition parties Fianna Fáil (centre-right) and Sinn Fein (left) both gained a number of extra seats, as well as an increased number of disparate independent candidates. Without a doubt, on a national level this election has been seen as a huge blow to Fine Gael and a direct consequence of the unpopular austerity measures imposed on the Irish people.
Thus, since last Friday, two things have been undeniably changed: firstly, the Irish political landscape and secondly, claims that austerity measures, even when they bring economic stability, can be popular amongst an electorate. While at the EU level, Ireland may be seen as the star pupil amongst the P.I.G.S., closer to home, voters either aren’t feeling the recovery or are embittered with how the austerity measures were imposed. Indeed, at the EU level, the result represents the recurring theme, witnessed recently in Portugal and Spain, of centre-right austerity imposing government’s being rejected in recent general elections.
Ireland: the star pupil?
Among the P.I.G.S. (Portugal, Ireland, Greece, Spain, the EU members that received rescue packages from the EU following the economic downturn in 2008) Ireland has been touted as the poster child for recovery; the country that has bounced back from the depths of economic crisis unlike any of the others. Accepted by the then Fianna Fail government, and implemented by Fine Gael and Labour when they were elected in 2011, the package was seen as necessary in order to protect against a destroyed real estate sector, unprecedented levels of unemployment, increased taxes, excessive household debt and mass emigration of the country’s youth. The Irish people, fresh out of a period of economic prosperity referred to as the “Celtic Tiger” years, were hit hard.
Of course, there was push back. The rescue package offered by the EU and the IMF was deemed excessively harsh by a huge proportion of the Irish people. The last number of years has seen numerous anti-austerity protests and the founding of the new Anti-austerity Alliance party. Political anoraks all over the country and across Europe are saying that the election results indicate that the Irish people are saying “no thanks” to the austerity imposed over the last five years. Admittedly, the minority coalition partner for the previous government, the Labour party, was decimated over the weekend. But so have all minor coalition parties in the last few elections. Although this weekend’s election results replanted Fine Gael with the highest number of candidates elected, overall the huge drop in support for the party shows that the people of Ireland seem to have had little faith in Fine Gael’s campaign slogan to – “keep the recovery going”. Arguably Ireland’s great comeback: it is returning as the star pupil of an EU-led economic recovery, when failing miserably at the bottom of the class just a few years ago. Yet the reality is that although the statistics show a successful economic recovery, unlike anything seen among its fellow P.I.G.S., the political class have massively underestimated the lasting psychological damage that the bailout had on the Irish psyche. In the minds of many of the Irish people, the bailout has not been a success.
Ireland: the class swot?
Ireland may have been absent from school the day political idealism was taught. As a nation, Ireland has not produced the same polarised anti-austerity movements to the extent that have emerged in its fellow hard-hit countries. Ireland has had no equivalent of the Syriza party, no Jeremy Corbyn and no Front Nationale emerging strongly following severe austerity. Irish politics have never experienced such polarised political views. This is evidenced perfectly by the fact that the parties in power have see-sawed back and forth since the founding of the state, from the centre-right Fine Gael (the nearest equivalent being the UK conservative party) and the centre-right Fianna Fáil (the nearest equivalent also being the UK conservative party). Why is this? Why has Ireland experienced similar tough measures imposed on its people, and yet never experienced the same level of public outrage and pushback? Is it perhaps not that Ireland is the success story of EU austerity measures, but rather, that our nation’s cultural inclination is too reluctant to rock the boat and to disagree with teacher?
What does this election mean for the EU?
The general elections taking place in this island nation affect neither legislative processes in Brussels, nor broader issues such as the upcoming Brexit referendum to any large extent. Although a member of the EU since the 1970’s and a strong supporter of the European Project, Ireland is far from the position of countries such as France, Germany or the UK. Despite debates over the stability of this newly elected government (and whether or not we will be rewriting this post in a few months’ time…) this election does indicate that a precedent has been set in terms of how we measure the success of EU bailout packages. It’s now clear that austerity, even when it successfully regenerates an economy, is political suicide on a national level.
True, the European Union can now use Ireland as a successful example: an EU member state, once in dire economic straits, has accepted the government that imposed austerity and has emerged with good results with the help of an EU bailout package. Pigs can fly, it seems. Yet, it would be foolish for the EU to ignore what has just happened in Ireland: the price of instability and the bailout has been paid by national politicians, not by Brussels. EU imposed recovery has not been successful, but the EU as an entity does not have to answer for the strict measures it helped to impose. The EU would do well to heed this warning.
Yasmin Hamed and Cillian O’Donoghue
March 4, 2016
“Europe has gone from 27 (sic) fragmented, independent, not-talking-to-each-other regulatory authorities in the healthcare space to one. That’s a big deal.”
Andrew Witty, CEO of GSK
Until relatively recently, the pharmaceutical sector has been more or less absent from the Brexit debate. Finally, the silence was broken by the likes of Merck, Eli Lilly and GSK, proving that the lack of noise throughout 2015 should never have been mistaken for a lack of interest by pharma or lack of concern on the issue. In fact, pharma has every reason to be worried about this. In Europe, the pharmaceutical sector will be negatively impacted by a Britain outside of the EU to the detriment of both the business and its patients.
Pharmaceuticals is one of the most highly regulated industries, and quite rightly so. We only have to look at the severity of the consequences of the misuse of medication (loss of trust in healthcare systems, drug resistance and even premature death) to understand why. Without the EU, this ‘regulation’ looks like 28 separate countries creating their own separate rules and consequently differing standards – making authorisation of and patient access to drugs a difficult process. Luckily, thanks to the EU, these 28 separate systems have been pulled under one ‘European Medicines Agency’ umbrella, meaning an authorisation of a drug in Germany, means relatively easy authorisation of a drug in the UK, for example. As a consequence, quicker access to the drug for patients.
Of course, if the UK leaves the EU (which puts into question its membership of the EMA); it is still going to be subject to the EU’s rules and regulations on pharmaceutical products. UK producers will have to abide by these rules to ensure that their products are authorised to be marketed and sold within the EU. Moving forward, not only will we most likely have to continue to abide by these rules, if we chose the EEA option for example after a vote ‘No’, but we will also lose our seat at the table in discussions on the development of further regulation. If we look at countries like Norway and Iceland, as part of the EEA, they’ve had to implement things such as the Falsified Medicines Directive, for better or for worse, without any say in its development. This has included things such as the implementation of electronically authenticating medicines. If the UK were to totally remove itself from the single market, and follow a Swiss model for example, then the UK will of course have to implement its own regulation, so that’s double regulatory burden for pharma companies to deal with and likely a host of complex bilateral deals with other member states. None of this is sounding ideal.
‘Brexit would be “challenging” for Merck’s scientists, who have “benefited from a world where they receive grants from the European Union.”’
Roger Perlmutter, Head of R&D at Merck & Co.
Let’s move away from regulation, the pharmaceutical sector lives or dies by its ability to research and develop new drugs and therapies. Scientists working at huge R&D sites in the UK will likely lose access to cross-European scientific research programmes, such as Horizon 2020 and the Innovative Medicines Initiative (IMI). These programmes are working on some of the world’s most significant health threats such as AMR and oncology. In January 2016, the European Investment Fund made a £24.8m commitment to help commercialise innovations at the University College London, with a specific focus on new medicines, further highlighting how the EU benefits British science. On the topic, just last week, more than 50 biotech and pharmaceuticals chief executives signed a letter putting across the business case for remaining in the EU.
Equally, the free movement of people contributes to the strength of Europe’s knowledge economy. The best researchers are able to travel freely from one member state to the next and collaborate with each other. What will happen to UK research institutions when this movement is restricted or becomes so burdensome it prevents us from hosting Europe’s scientific talents?
If the UK is to leave the EU, it’s going to have to think very carefully about whether or not it deviates away from current EU standards in pharmaceuticals. If it is, then I’d really like to know the rationale as to why. The EU (and the US) is recognised as having the highest standards in pharmaceuticals. If it’s not, it’s going to be subject to the same rules and regulations that it already is, without a seat at the table, potentially complex bilateral deals and perhaps even the burden of double regulation. All meaning one thing – it’s going to take longer for patients inside of the UK to get access to drugs launched in the EU, and vice versa. Furthermore, the UK, which is currently seen as a hub of excellence in scientific research, will likely suffer from a cut in funding and loss of some of its most talented scientists, stifling research and innovation. The impact of Brexit on the pharma sector doesn’t just impact the pharmaceutical business, its impact is likely to be most felt by the patient at the end of the supply chain.
Emma Cracknell, Healthcare Practice.
March 2, 2016
Despite its undoubted transformative potential, there still exists large swathes of people in the Brussels Bubble who just ‘don’t get’ Twitter. As a social strategist I sometimes find that pretty frustrating; there are so many great things which industries, associations and individuals could be doing, but there is just such little appetite for them. The challenge is to demonstrate to the bubble just how easy, accessible and effective Twitter is.
Although everybody knows that Twitter should be part of a successful public affairs strategy, many just don’t know how. To understand, we need to stop viewing it as this newfangled, modern tool and realize that it’s the same as other broadcasting platforms which we’ve been using for years. To explain, here are 3 similarities between Twitter and radio which demonstrate just how easy it is to build a successful social media strategy for your clients.
- Stations with a clear direction are the most successful
In Radio, the most popular stations are often those with a clear and accessible offering. Popular stations are successful in part because they are synonymous with certain values, messages and content and they are consistent in the way they communicate all of these things. The same is true for Twitter. Too many accounts are run without a clear objective and so don’t stand out. Users who have a clear “brand” are typically successful and that’s because they have identified what works for them and have repeated it.
- The key is being able to cut through the noise
Having a clear direction is the starting point, but it is increasingly not enough. In radio, there are a plethora of stations which occupy the same space, playing the same music and interviewing the same artists. Popular stations have to find a way to stand out. Twitter users are faced with the same problem. As I mentioned in my last post (and as our team constantly say to clients) in 2016 it’s not enough to just write tweets. Just like the best radio stations use quizzes, phone-ins and features to stand out, so Twitter users need to be bolder and more creative when it comes to communicating.
- it’s essential to know your audience
The best radio stations are those that develop content which speaks to their own niche audience. If a station which specialized in classical music suddenly started playing Kanye West, their audience would quickly lose interest- no matter how good Ye’s songs may be. As I’m sure you’ve guessed by now, this also applies for Twitter. Interaction with an audience is useless unless it’s targeted and tailored to suit their needs. Otherwise they won’t be interested in what you say and if they’re not interested in what you say then you may as well not be tweeting to them at all.
As you can see, the similarities are as simple as they are obvious. Despite this, the majority of Twitter accounts in Brussels lack direction, produce little to no cutting edge content and fail to target their audience.
So, next time you’re typing out a tweet, think about how you can learn from your favourite radio station. If you do, you’re more likely to achieve your objective- and that’s always a good thing.
February 25, 2016
In 2007, the European Commission decided that people should be protected from spyware and other tracking software being planted in their devices without their knowledge. This led to the ‘cookie law’, designed to give people ‘clear and comprehensive’ information about what was being tracked and why, so that they could choose to allow it or not. The Commission’s logic is as follows: give people information, and they will make informed choices.
In a world where we exchange our data willingly for free services like email and search, most of us would like to be able to make informed choices about what data we share, based on how it will be used and what we get out of it. We are all vaguely aware that when we get something for free online, our data is being used in some way to bring profit to the companies providing the services we use, for example for advertising.
Helping people make informed choices about how their data is used is a lot harder than it sounds.
Unfortunately, the cookie pop-ups we see on every website we visit don’t actually lead to us making informed choices about how our data is tracked and used. In many cases, the pop-up simply disappears after a few seconds – or, if needed, we just click the ‘close’ button and get on with what we came to the website to do. The Commission’s logic is wrong – if you give people information, it doesn’t necessarily mean they will use it to make informed choices. Helping people use information to make informed choices about how their data is used is actually a lot harder than it sounds. When the cookie law came into force in the UK, I was in London working for tech business JustGiving. Like most companies, we understood there was a legal obligation to add this pop-up and we put aside valuable time and resources to do it. But the guidance from the Commission was unclear and contradictory. We looked at the Commission’s own website hoping for a best-in-class example of implementation, and were dismayed to see reams of text obscuring half of the homepage, written in legalistic language that most people wouldn’t understand. What is the point of this, we wondered?
We need a shift from the decades-old offline system of adding labels and warning.
The problem is that the Commission hasn’t invested enough in thinking about the best way to help people make informed choices. They simply transferred a decades-old system from the offline world to online – essentially, adding labels and warnings. This may be the only solution when it comes to adding product safety information to electronic appliances, for example. But online there are many more possible ways of displaying information – which could be more effective in helping people understand, learn more and make informed choices. Giving people information is important, but it needs to be done in the right way, at the right time.
In the e-commerce world, every word and picture on a website is chosen and positioned in exactly the right way to help people find the information they need. Every variable is tested thoroughly to improve the browsing experience. Should that link be in the top-left or top-right of the page? What size should the font be? What colour makes people click on it the most? How will it look on a smartphone, or a tablet? It would make sense to apply the same approach to the way information about privacy and cookies is presented to users. How should it be written and presented in order to make sure people actually read and engage with it, rather than simply clicking it away?
The geo-blocking debate risks following the same flawed logic as the cookie law.
Unfortunately, policymakers still seem to be pushing the same old logic of ‘give people information and they will make informed choices’, without further thought as to how this information should be presented. The logic is threatening to creep into new pieces of legislation that are currently being developed as part of the Digital Single Market. In recent documents published by the Commission about the upcoming geo-blocking legislative proposal, there are ominous references to ‘imposing transparency obligations’ to explain when and why geo-blocking is being used. This rings cookie law alarm bells in my head. The logic is there again – give people information about geo-blocking practices, and they will make informed choices. I can imagine pop-ups appearing every time I click on a different product as I do my online shopping: “This product is only available in our UK, German, French and Dutch stores. It is not available in the Czech Republic, Bulgaria, Spain or Greece. It may be available in Estonia, Ireland and Luxembourg subject to our geo-blocking policy. By continuing to browse the site you are agreeing to our use of geo-blocking. For more details about geo-blocking and how to manage it, click here to read our geo-blocking policy”.
The challenges of the DSM are not purely regulatory. The implementation is also crucial.
Maybe it’s time for policymakers to step back and consider alternative ways to help people make informed choices online. Simply throwing information at us does not seem to be working. And the more information we have to wade through in order to do basic things online, the less we will care about what it actually says. As the Commission moves forward with the Digital Single Market (DSM), it has the opportunity to bring together expert stakeholders from across the tech sector to try and find a better way to achieve this. They could bring in UX experts, web designers, e-commerce and online marketing analysts, experts in online behaviour and monitoring and many, many others. The challenges of the DSM are not purely regulatory. The implementation is also crucial and, when it comes to digital policy, regulation needs to be designed with the implementation in mind. This can be done hand-in-hand with industry experts, who would welcome the opportunity to avoid another cookie law coming into force in several years’ time. Let’s not repeat the mistakes of the past with the geo-blocking proposal.
February 16, 2016
If you are reading this sentence then you must be curious to see how a country that is currently racked with political uncertainty, multiple regions seeking independence, a financial crisis, and both high public debt and unemployment can resolve its issues in the near future. Spain is suffering from ‘jobless growth’ and social and territorial cohesion cracking along the seams. While the DSM will not be the solution to resolve these issues, the future is clearly digital, driving e-commerce, online services and Spain’s growth potential.
After chairing a lunch discussion here at FleishmanHillard’s Brussels offices with leaders in the financial, consumer and government I was left with more questions than answers on if it was possible.
Let’s start with the facts. Economically it remains the 5th largest economy in the EU with its exports 3% higher than imports. According to the IMF, Spain’s expected GDP growth is set to outperform Germany and France in 2016. It was also earmarked by the Davos crowd in their Global Competitiveness Report to be in 10th place for having a world class infrastructure. Its public debt, unlike many EU countries, is dropping and there are signs that jobs (many short term) are returning back to the market with less people leaving the country looking for opportunities. But there is still a lot more room for improvement.
Some areas called out during the discussion included longer term investment in education and digital skills. Spain also needs to tackle the challenges being felt for cross border e-commerce. This includes problems of delivery often attributed with high costs, differing VAT regimes from country to country and ensuring there is a level of security that can increase consumer confidence. It would be safe to say this is not unique to Spain only but endemic across the EU.
Some felt that the DSM is too lengthy in its processes to tackle the issues Spain is experiencing. Many of the legislative processes will take several years before they are agreed and even longer to be implemented in each member state. There were calls for more urgency and more of a top down approach fast tracking specific legislative areas.
Clearly there was consensus in the room that DSM has a lot to prove to deliver results to Europe as a trading block helping it compete internationally. It will require massive coordination by local authorities throughout the 28 Member States as well in Brussels to ensure the goals of the DSM are not politicized and distorted. Many pointed out the European Commission goals on key areas such as data flows, ecommerce geo-blocking, and cloud computing still remains unclear and definitions for each of those should be clarified before any legislative proposals are made. There was also concern on the changes to the upcoming legislative proposal for the DSM, as it makes its way through the European Commission, Council and Parliament. But the rewards are also high with a professed €415 billion in growth and hundreds of thousands of new jobs.
February 9, 2016