New Common Sales Law could be a revolution
At a time when Europe is confronting serious economic headwinds, the European Union is committed to helping consumers and businesses get the most out of a market that stretches 3,000 kilometres from Lisbon to Helsinki. That’s why this week the European Commission will propose an optional Common Sales Law for the European Union.
In the past 20 years, Europe’s single market has brought huge benefits – lower air fares, a 70 per cent cut in mobile roaming charges and a giant leap in cross-border trade – but customers and businesses are still not taking full advantage of a market of 500 million people.
Only 39 per cent of Maltese consumers buy online from another member state, and only 9.3 per cent of businesses in the European Union sell across EU borders.
This contrasts with the United States’ internal market, where a trader in Maryland can easily sell his products to a consumer in Alaska. In contract law terms, the United States is much more an internal market for US traders than the EU is for European traders.
Maltese businesses wishing to carry out cross-border transactions must adapt to up to 26 different national contract laws, translate them and hire lawyers, costing an average €10,000 for each additional export market. In practice, only big multinationals with an army of legal staff can afford this.
We must continue to break down barriers and maximise consumers’ choices. This is even more important today as we face the challenges of creating growth and jobs. Traders forego €26 billion in cross-border transactions each year because they are dissuaded by contract law barriers.
To help businesses and consumers get the most out of the internal market, the EU Common Sales Law will establish an optional common regime of contract law for all member states – identical in all 27 EU countries; provide the same high level of consumer protection throughout the EU; focus on areas of real need, namely cross-border contracts and contracts for the sale of goods – the bulk of intra-EU trade – as well as digital content, such as music, films, software or smartphone applications; and offer companies and consumers a choice to use it or continue using their national contract laws.
This voluntary approach with a cross-border focus will, therefore, not replace national contract laws. Rather, the EU Common Sales Law is a novel way to tackle problems in the internal market.
It will reduce costs for companies that want to trade beyond their national borders and thereby increase the goods and services that are on offer. With businesses competing on a broader market, consumers will have a wider choice of goods at lower prices.
At the moment, people shopping online from another European country can be refused sale or delivery in their country: this happens to three million consumers in Europe and 40,000 in Malta each year.
Online shoppers should not receive messages such as, “This product is not available in your country.” The EU Common Sales Law would put an end to this.
At the same time, consumers will be able to rely on the EU Common Sales Law as a mark of quality. For example, it offers consumers a free choice of remedies in case they buy a defective product – even several months after a purchase.
This means that consumers could terminate the contract, ask for a replacement or repair or a price reduction. At present, 44 per cent of Europeans say they do not buy abroad because they are uncertain of their rights.
The Common Sales Law will also set standards in terms of clear information: consumers will have to expressly agree to conclude a contract on this basis and they will be given a clear explanation of key rights in their own language.
The EU Common Sales Law will be a win-win solution compared with the current legal patchwork for cross-border trade in the single market. It will allow firms to expand their business to new markets in Europe and give consumers a better deal. That’s good news for the economy – just when we need it most.
Ms Reding is EU Justice Commissioner and Dr Busuttil is a Member of the European Parliament (EPP).