PERMANENT SECRETARY MICHAEL DITHMERS SPEECH AT THE CONFERENCE THE EU IN A DIGITAL AGE, 25. FEBRU- ARY 2015 [THE SPOKEN WORD APPLIES] Dear Danish Chamber of Commerce; Lady Neville-Rolfe; ladies and gentlemen. We are gathered here in one of Copenhagen s most outstanding buildings. As some of you may know, it was built in the early 16th century by order of King Christian the Fourth as a place for trade and commerce. Side 1 af 14
At that time, there was water on both sides of the building making it possible for ships from countries far away to land their goods. From the 20 trade stalls on the ground floor you could buy the most exclusive and exotic goods. Nowadays, you don t have to leave your home or even your sofa to order goods from the other side of world. With just a few clicks on your tablet, you have access to everything from goods to movies, music, news and entertainment. Just as our shopping habits have been affected by digitization, digital services and new technologies affect other parts of our economy. With digiti- Side 2 af 14
zation, working methods and business models in all sectors are undergoing a revolution. One of the most obvious examples of how digitization changes businesses is the story of Blockbuster and Netflix. In 2004, Blockbuster had as much as 60.000 employees and 9.000 stores. Only six years later Blockbuster was history. The old and dominant film supermarket was unable to compete with new services like Netflix. The remarkable thing is, though, that Blockbuster back in 2000 had the opportunity to buy Netflix, but was not interested. Side 3 af 14
This shows that even though a business is thriving, the entire business model can become obsolete in only a few years time if you are not able to adapt to the digitized society. In Europe, we have so far not been as good as the US or even some Asian countries in re-thinking business models in a digitized society. Just think of the largest digital companies today Google, Apple, Facebook, Amazon, Ali Baba none of them are European. So we need to do better. In Europe we have to ensure the right digital infrastructure and legislation fit for the digital age is in place, enabling new business models and e- Side 4 af 14
commerce to evolve. Otherwise we risk a drop in competitiveness and slower growth rates in Europe than in the US and in Asia. Europe needs to take full advantage of the opportunities in the digital economy. The European Commission estimates that a truly connected digital single market can create up to 250 billion euro of additional growth in the EU in the next 5 years. In Denmark, we have recently launched a growth plan for digitization, setting ambitious targets for Danish businesses. The plan presents concrete actions in order to ensure proper digital infrastructure, enhance the use of IT and Big Data in Danish businesses, pro- Side 5 af 14
mote digital competences and increase the use of digital solutions in the public sector. Furthermore, we are looking at the challenges and opportunities the manufacturing sector faces in a digitized economy. The government has set up a Production Council, where business representatives, employers and researchers have been tasked with identifying how Denmark can grasp the potential of smart production including looking into how digitization affects the manufacturing sector. Side 6 af 14
The fact is that we are standing on the verge of a new era for industry in our part of the world. In Germany, they call it the fourth industrial revolution. It will be characterized by the use of big data, internet of things etc. However, no European country can fully realize the potential of the new technologies on its own although we of course are proud of the EU Digital Agenda Scoreboard places Denmark as number 1 in Europe. If we are to reap all the benefits we need to build on the EU s single market. The Danish government therefore highly appreciates the EU Commission s renewed attention to the digital agenda and looks forward to the Commission s Digital Single Market strategy to be presented in May. Side 7 af 14
It's a very important agenda. We gave it a high priority in the Danish Presidency in 2012, and the Danish government has also done some preparations by launching the publication Denmark in Europe 30 paths to a better single market. It outlines concrete measures that can improve the single market in general, including the digital single market. You can get a copy of the publication here today, but let me just highlight a few of the proposals aimed at improving the digital single market, and also mention some important aspects needed to be addressed in the EU s Digital Single Market strategy. First, we need the legislation to be fit for the digital age. All legislation should be digital by default. No rules or regulation should set up unneces- Side 8 af 14
sary barriers to digitization. Often such barriers stem from outdated legislation or are unintended effects of regulations. Second, we need a high-speed digital infrastructure. A strong digital infrastructure is a key foundation of a digitized society and a digital economy. For Europe to become a well-functioning digital continent, a broad coverage of high-speed fixed and mobile broadband is needed. Third, we need clear rules to enable digital consumer trust. Consumers in the digital sphere should be ensured strong consumer rights by clear and understandable rules. Facilitating consumer trust is vital for the success of the digital single market. Side 9 af 14
Fourth, we need a coherent framework for European e-commerce. E commerce benefits consumers greatly and gives new opportunities for the retail sector. Increased cross-border e-commerce brings increased consumer choice at lower prices and makes it easier for businesses to access a European or even global market. I will now expand a bit further on the issue of e-commerce. In order to improve e-commerce we first need to identify and remove barriers. We need to have a consistent focus on not introducing unnecessarily burdensome obligations and requirements on e-retailers. Side 10 af 14
Also, consumers have to feel safe when shopping in an Internet shop located in another EU member state. And they must be able to trust that their consumer rights are enforced across the border. This will benefit the consumers as well as create more uniform competition across the EU. Thus, we need to revisit EU regulation in order to enhance cross-border cooperation on enforcement. We will also have to take a close look at the taxation related to e-commerce. Today, the rules are very complicated. Businesses have to deal with 28 different sets of VAT if they sell to customers in all of EU. Clearly, that is a hassle. Side 11 af 14
A more streamlined VAT-system with simpler procedures within the EU would help our companies as well as consumers. Simplified procedures regarding VAT are already put in place in the form of a Mini-One-Stop- Shop for VAT on digital services. [As mentioned by Baroness Neville-Rolfe,] We also believe that the mini-one-stop-shop on VAT for digital services should be expanded to goods as well, so that all businesses only need to be VAT-registered in one country and can handle all cross-border VAT-declarations there. Though there is still a long way to a well-functioning digital single market in the EU, we must not forget the successes already made. Side 12 af 14
Roaming is a popular example. Roaming costs have dropped considerably, though we still have some way to go. The proposal on a Roam-Like-At- Home + model which is currently being discussed in Brussels is a step in the right direction. But is not the final answer as it doesn t fully address the issue of wholesale prices. Another important example is the new public procurement regulation in the EU. It will make it easier for companies to bid on assignments in other EU countries. From 2018 companies have the option of sending in their bid online. It will lead to more competition and make it easier for companies to do business. Side 13 af 14
We hope that such very concrete measures that will improve the digital market will be a corner stone in the Commission's up coming Digital Single Market Strategy. We will do our best to reach a broad agreement on such an ambitious strategy. Action is needed, but also speed, because the digital market is developing very fast. Side 14 af 14