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The European Commission this month published a report regarding e-commerce trends in the European Union and potential cross-border obstacles. The aim of the report was to analyze the direction cross-border e-commerce is taking in the EU.
While e-commerce is taking off at national level, it is still relatively uncommon for consumers to use the Internet to purchase goods or services in another Member State. The gap between domestic and cross-border e-commerce is widening as a result of cross-border barriers to on-line trade.
From 2006 to 2008, the share of all EU consumers who have bought at least one item over the Internet increased from 27 percent to 33% while cross-border e-commerce remained stable (6%-7%). According to the report, one-third of EU citizens would consider buying a product or a service from another Member State via the Internet because it is cheaper or better.
Some of the barriers to cross-border on-line trade relate to language, demographics, individual preferences, technical specifications or standards, Internet penetration or the efficiency of the postal or payment system. Thirty-three percent of EU consumers say they are willing to purchase goods and services in another language, while 59% of retailers are prepared to carry out transactions in more than one language.
Other problems are the inability of consumers to access commercial offers in another Member State because of mechanisms that prevent them from placing orders. Eight percent of consumers who had made a cross-border purchase in the past year have been prevented from purchasing cross-border because they lived in a country other than where the trader was located (on average for all retail channels). Therefore, 33% of consumers reported that sellers refuse to sell or deliver goods or services because they are not resident in their country (on average for all retail channels).
The report found that the Internet has created heightened expectations on the part of consumers regarding the availability of goods and services, which are not always met by businesses. It is also a problem for consumers when some traders do not explicitly state where they are prepared to deliver in the EU.
In addition, traders may be unwilling or unable to expand to other EU markets in the face of a number of practical and economic obstacles, some of which have regulatory underpinnings. Regulatory barriers result in significant compliance costs for businesses, which considerably diminish the appeal or feasibility of cross-border expansion.
Although measures have been taken to foster harmonization, regulatory barriers continue to affect a number of areas, including consumer law. Law and regulation involving VAT, the territorial management of copyright necessary to offer legitimate on-line services and the national transposition of the European legislation on electronic-waste disposal have been modified.
The report found that it is crucial to address these potential market barriers so that future growth is not stymied and to unlock the potential of cross-border e-commerce. As a result of these barriers, traders may refuse to serve new markets or may develop on-line business models that fragment the internal market along national lines.
Solutions to these problems may consist in streamlining regulatory hurdles that increasingly appear unfair and unjustifiable to consumers and businesses on a national and European level.
Promoting the transparency and comparability of information on the Internet should also have spill-over effects on retail markets in general. In addition, it might be necessary to promote on-line trust by strengthening on-line and cross-border enforcement, putting in place efficient and speedy dispute resolution, and by enhanced market monitoring and information.
Ari Syrquin is the head of the international department at GSCB Law Firm.