Tag Archives: internal market

Recommended Reading on Eurocrisis and Single Market: Dullien / ECFR 64

In his current policy memo for the European Council on Foreign Relations, titled Why the Euro Crisis Threatens the European Single Market, Sebastian Dullien thinks through several possible outcomes of the Euro crisis and their respective impact on the Single Market.

The picture he paints should be considered by all those in the “richer” European countries who cling to the populist notion of “solving” the Eurocrisis by simply throwing all the weaker economies out of the Eurozone.

He makes a convincing argument about the often-neglected interconnectedness of the European Monetary Union and the Single Market, as he presents the three options he thinks realistic for the future of the Eurozone. In (very) short form, the options are as follows:

A complete Euro break-up would completely shatter the single market, as member states reimbursed with power over a new national currency would resort to completely nationally oriented methods of consolidating their finances, while damaging the single market. The Commission couldn’t do much to keep them in line, as a country that has left the Euro has either already left the Union, or is in violation of European law reintroducing their own currency. This would increasingly diminish the European instutions’ legitimacy and at the same time also produce negative spin-offs for the Schengen area, as the large stream of migrants from crisis countries is being stopped by nationalist political forces, who were strengthened in the process.

For a “muddling-through”-approach, which is what he considers most current attempts at solving the crisis, he predicts a “more shallow” single market, as he sees it as disintegrating the banking- and finance sector. Distinctions in finance along national borders also means nationally oriented financing of businesses, which distorts the market by punishing or rewarding companies for their location. This would also prompt migration to the better-off countries, albeit not as badly as in the first scenario, prompting the same negative side-effects for the Schengen area.

As a third approach, Prof. Dullien presents a deeper integration, a step toward true federalism, including EU-level financial and economic oversight, maybe including a Financial Transaction Tax. This, he says, would solve many of the current problems of participating countries. However, this comes at the price of splitting the market for financial services along currency lines, as countries like the United Kingdom opt-out, and would possibly even prompt a recalculation of their benefits from the EU, resulting in an exit of the UK. Thus, this scenario would keep the single market, even integrate it further, but only do so for a smaller single market.

Prof. Dullien makes convincing arguments and definitely clarifies the gravity and complexity of the situation as it is, far beyond simplistic and populist paroles of “let’s throw the PIIGS out, and we’ll be fine!”.

However, there might be a perspective to the smaller single market, his third option, which might not make it seem quite so small. As a recent New York Times comment by Steven Erlanger elaborated, there is currently a tendency of European regions to aspire secession from their national entities. Of particular interest is the fact, that the UK, which, as Prof. Dullien also notes, the member state most likely opposed to fiscal integration, is among those with such a region: In Scotland, for example, there has been a tendency to favour being part of Europe over being part of the UK. Mr. Erlanger points out in his comment, that the Scottish National Party’s slogan still is “Scotland in Europe”, even though they are coming to regret it amidst rising anti-european opinions.

Rising regional influences aside, even David Cameron’s government seems to be moving away from preparing a referendum on the EU in terms of in-or-out, as they contemplate how to keep EU membership, but make fiscal union another part of the two-speed Europe. Consequently, I believe that the last word on the United Kingdom as a whole within the EU and the coming changes to EU structures may not yet have been spoken in this matter.

tl;dr

Read Sebastian Dullien’s paper to learn about possible consequences of the Eurocrisis for the Single Market – Even though I don’t see the UK’s reaction in his third scenario as clear-cut as he does.

EU Digital Agenda moves ahead with collecting society harmonisation

On his blog, Christian Engström, MEP for the Swedish Pirate Party, discusses the upcoming Collective Rights Management Directive, which has just been presented by the European Commission. The directive aims at harmonisation of national royalty collecting societies, as a step to facilitate the Internal Market on the internet, an area where it at this time still has serious shortcomings, as I have commented before.

As Mr. Engström rightfully notes, this is an improvement over the status quo and might really shake up the intransparent structures and the monopoly of rights some national collecting societies currently have. It should be supported.

I also agree with his criticism of the directive. If the author of a work cannot be found within 5 years to be paid his royalties – the work is then considered “orphaned” – the collecting societies should not be allowed to simply keep the money. This would set the wrong incentives and probably weaken the effort to actually search for the rights-holder. The collecting societies have to lose the money in that case, and Mr. Engström’s proposal to donate it to cultural archives and museums in need of funding seems a good idea, though the details of who is eligible might be tricky. Mr. Engström proposes to leave this to the member states, but since the whole idea is to not only make a European Internal Market but a common “cultural zone”, maybe there should be a central European office where cultural institutions and maybe even new up-and-coming creative projects can apply for receiving some of those funds?

The draft directive mentions a due date for payouts of 12 months after the financial year, which is of course ridiculously long. As services like flattr show, flexible distribution of funds between consumers and creators is easily possible on a monthly basis. The distribution societies do of course have a few more transactions to process, but if a small start-up can handle millions of transactions a month, the big collecting societies should easily be able to put up a bigger server or rent some cloud resources to handle billions.

Still, this is definitely a step in the right direction. Though it should not stop here. Like the first draft which I discussed here before, the provisions of the directive do not state an obligation for multi-territorial licensing, it just compels member states to provide specific favourable conditions for this to happen. Should a national collecting society decide not to license multi-territorially, the option to do this falls back to the rights-holder. In many cases, the rights holder will not be the artist, but a record label. And as I explained in my earlier post, they have commercial reasons (regional price discrimination) to refrain from granting a Europe-wide license. In fact, the directive acknowledges that territorial licensing is also grounded in commercial choices in it’s first chapter (page 3). So for many pieces of media, the Digital Internal Market still won’t be realised through the directive.

The goal should be a Cassis-de-Dijon ruling for digital media. The analogy is of course not completely correct as it’s always difficult to compare tangible and digital goods. What I mean by it is that, I, as a consumer or possibly even reseller, should be able to import mp3 or other files that are legally sold in one member state into another via the internet. This is not possible due to nationally-centred licensing, but the button on my favourite mp3 website doesn’t say License. It says Buy. And if I buy something in one member state (the transaction takes place on their server), I own it and should be allowed to take it with me across borders.

However, even though the implementation of the current draft of the Collective Rights Management directive would not bring about this situation, it definitely improves the conditions for forming a true Digital Internal Market in the near future.

 

tl;dr

The criticism I put forth about the earlier draft of the Collective Rights Management Directive still holds true, but Christian Engström and all like-minded MEPs are right to generally support the Directive (notwithstanding the points he rightfully criticizes). It is a step in the right direction and should facilitate further steps toward a Digital Internal Market.