European integration has led to a decline in trade costs. Still, trade between European countries is estimated to be about four times less than between US states once the influence of language and other factors have been accounted for. Non-tariff obstacles to trade are estimated to average only half of the value of trade.
The focus on a green economy has nowhere been as pronounced as in Europe. Services are the most resource and climate-friendly sectors of value creation. The sharing economy allows for higher capacity utilisation - flats, cars, streets etc. - by the means of digital services. Buying lunch at a hip coffee shop instead of preparing it oneself does not increase the consumer’s carbon footprint. But it increases turnover, employment, life quality, and GDP.
The digital revolution is reshuffling the cards in the industrial and especially the services sectors. Europe is already falling behind in creating global champions and losing the most profitable segments of the value chain. Of the world’s 15 largest digital firms, all are American or Chinese. Such firms matter. They operate dominant platforms and are writing the rules of our present economy. Europe desperately needs room for disruptive services.
In a study conducted by the European Consumer Centre, less than 10 percent of European insurance companies offered cross-border contracts via the Internet. Still, the insurance sector is one of the few service sectors where European companies (like AXA and Allianz) score high in global rankings based on the total size of assets and collected net premiums. Their businesses are growing faster outside of the EU than within.
It’s not only the companies that would benefit from a large internal market for services. Such a market would be first and foremost in the consumers’ interest. The more variety there is, the higher the quality of life. A single market is no silver bullet, though. It needs to be competitive, too.
The reason why there is no European Amazon is not the lack of harmonisation in legal architecture. American firms have figured out how to work our vastly different markets. Facebook sells ads in Finland and Spain just like in the US. Uber has its drivers chauffeur clients across the world’s cities.
We need more best practices, not harmonisation at any cost. The European approach too often appears to favor slowing innovation unless all possible harms are minimized. One such example is the controversial Copyright Directive passed by the European Parliament last year. Some fear it might be another nail in the coffin for Europe’s dreams of developing its own Google.
Innovation requires learning by doing. When deepening our single market we should focus on two things. We should always act in the consumers’ interest and not protect existing players at the cost of the future. Our main asset is human capital. Why don’t we rely on it just a hunch more and let it experiment - across borders. Down the road, we might end up creating a giant and saving the planet. The European way.
Elina Lepomäki
Member of Parliament, National Coalition Party
This article was written for MP Talk, a regular column from the Helsinki Times in which Members of Parliament are encouraged to contribute their thoughts and opinions. All opinions voiced are entirely those of the contributor and do not necessarily reflect the viewpoints of the Helsinki Times.
