EU Digital Single Market

How the EU can contribute to supporting innovative economies in the Eastern Neighbourgood?

Innovative economies are based on improvement of technologies, production and export of tech and innovative products and services. ICT technologies can benefit sustainable development and inclusive growth by reducing poverty, empowering the most vulnerable people and fighting inequalities. Digital technologies also proved to be effective in combating corruption and enhancing transparency and accountability. However, the wide use of digital technologies requires connectivity and affordability of digital tools and services, good level of digital skills and smart investments which would ensure the modernization of economies.

Countries which belong to the Eastern Partnership program, which was launched in 2009 by the EU, namely Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine have recently identified digital transformation as one of priority areas of cooperation with the EU. Digital economy has yet untapped potential for the EU and EaP countries to boost social and economic development as well as contribute to social justice. Сurrently, the EU and EaP countries are holding negotiations on strengthening cooperation within the Digital Single Market to boost digital trade. There is also a number of joint efforts on cyber security and common projects on ICT innovations and research.

The state of play on innovative economy in the EaP countries and the role of the EU

Eastern Partnership countries declared the ambition to transform their economies into innovation-driven and knowledge-based. Some of them have adopted respective strategies and legislation (Georgia, Moldova, Ukraine) and others launched ambitious digital programs such as eGovernment in Belarus and Azerbaijan. While EaP countries have great potential to build innovative economies, the strategic vision of innovative development which would harness that potential remains the biggest challenge.

ICT Innovations and cyber security

Innovative development and internet security are crucial for innovative economies. EaP countries do not have strong regulatory and legal frameworks on ICT innovations, internet and cyber security. However, all of the governments in the region are showing interest in fostering ICT innovations and legal framework will be a part of that process. Currently, the challenges in this include shortage of financial, technical and human resources to manage cyber security threats and personal data breaches. There are existent vulnerabilities of critical infrastructure connected to internet both in public and private sectors. Some of these risks are being addresses by the Association Agreement which the EU signed with the three countries in the region – Moldova, Georgia and Ukraine. Belarus, Armenia and Azerbaijan are working with the EU on those issues bilaterally.

Electronic identification and E-Government

These are important components which enable the Digital Single Market in the EU. EaP countries are showing strong leadership on introducing e-identification and strengthening e-government technologies. For example, Moldova and Azerbaijan are using mobile identification services, some of such technologies are also being introduced in Ukraine. Georgia, Moldova, Azerbaijan and Ukraine are implementing Estonian X-Road E-Government system which provides interoperability and security of different government databases. The challenges within this area include weak legislation and slow bureaucratic procedures.

Connectivity and telecom rules

The average broadband penetration in the EaP countries is much lower than in the EU. This gap is particularly large in rural areas. For example, mobile broadband penetration per capita is 21% comparing to 61% in the EU. Neither of EaP countries have developed a consistent policy for universal access to high speed broadband. On the contrary, Digital Agenda of the European Union aims to provide universal access to high speed broadband for EU citizens by 2020. The EU’s experience in putting forward policies that enabled investments in broadband can be crucial for the EaP countries.

eCustoms

This initiative aims to substitute paper procedures at customs in order to increase transparency and fight corruption. While at the legislative level EaP countries have achieved a substantial progress to contribute to the paperless environment for customs and trade, little has been done to implement key information services such us identification and registration of authorized economic partners. Also, the electronic customs and single window systems are not interoperable with the ones in the EU. Another important part for enabling eCustoms is the Anti-Counterfeiting and Anti-Piracy systems which can be shared by the EU.

eCommerce for SMEs

E-Commerce has been identified as one the first priority areas of the EU-EaP cooperation in the digital sector. This area of digital cooperation is by far the most advanced as EaP countries have harmonized almost half of required legislation to enable trading of products and services through the internet. However, the remaining obstacles such as little internet security and privacy as well weak consumer rights protection hinder the free movement of information society services. None of the EaP countries established online dispute resolution system for e-commerce customers. At the moment, the EU is looking at setting up a pilot eCommerce platform that would assist SMEs from EaP countries to engage in e-commerce.

Digital Skills

Digital Skills are essential for enabling digital transformation of the society and economy. Both the EU and EaP countries are facing the digital skills gap which is exemplified by shortage of ICT specialists and absence of basic IT skills in large parts of population. While the digital skills gap is the EU is as high as 40%, there is no official statistics on the situation in the EaP countries. There are few Digital Skills initiatives supported by the EU in the region but there are no quick and short-term solutions to such a systemic issue. The development of digital skills requires coordinated policy approach in education and training sector, competitiveness, employment and social policies.

Next steps of the EU and EaP cooperation: EU4Digital

Both the EU and EaP countries are interested to harmonize digital environments between each other in order to boost digital cooperation. Such cooperation will increase digital trade, ensure the timely provision of e-services, enable common approaches to cyber security, bridging digital divide and create more jobs in the digital sector.

To this end, the European Union launched an ambitious multilateral project EU4Digital which aims to support digital development in EaP countries by:

-   achieving a common roaming space among Eastern Partner countries by 2020

-   supporting cross-border digital trade in order to simplify export procedures and provide transparency

-   enabling supportive environments for ICT innovations and start-ups

-   contributing to educational and training programmes to boost digital skills

-   ensuring common cyber security space between the EU and EaP countries

-   sharing experience on implementing e-Health procedures

The project will run from 2019 till 2021 and its budget is EUR 11 million for 6 EaP countries. The first results of the project will be reported in the beginning of 2020 and will show to which extent the region is ready to integrate to the EU Digital Single Market and contribute to European innovative economy. This first phase reporting of the project will also allow for broader engagement of stakeholders and interested parties to influence the project’s plans and outcomes in the next years of the duration of the project.

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