Opinion of the Economic and Social Committee on the 'Action Plan for the single market` (98/C 157/12)

On 30 September 1997 the Economic and Social Committee, acting under the second paragraph of Rule 23 of its Rules of Procedure, decided to draw up an opinion on the 'Action Plan for the single market`.

The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 4 March 1998. The rapporteur was Mr Pasotti.

At its 353rd plenary session (meeting of 25 March 1998), the Economic and Social Committee adopted the following opinion by 76 votes to five, with two abstentions.

1. General comments

1.1. The Committee greets the publication by the Commission of information on the state of progress of the single market, based on the first edition of the 'Single Market Scoreboard`, (presented to the Luxembourg Council in December 1997) with great interest, but also considerable concern.

1.2. In its previous opinion on the subject (), the Committee argued that it was essential for the completion of the single market for all agreed rules to be precisely and accurately transposed into Member State law, for implementing procedures to be defined providing all those involved with straightforward and effective means of seeking redress for conduct not conforming to the rules, and for all citizens concerned to be informed as fully as possible.

1.3. The importance of these aspects is confirmed by the choice of strategic objectives in the Action Plan, and was emphasized when the plan was adopted by the Amsterdam European Council.

1.4. For the first time, the Single Market Scoreboard (SMS), which the Commission plans to publish twice a year, contains essential information in a readily understandable form for assessing these aspects and hence identifying what remains to be done in order to reach the 1999 deadline with the greatest possible degree of single market completion.

1.5. A further important aspect of this initiative to gather and publish information regularly on the commitment of each Member State is the introduction of an element of transparency into relations between European partners. Provided appropriate channels for the publication of the results are devised, this should spur countries to vie with one another in making the benefits of the single market fully available to their own citizens. It is too early, however, to gauge the effect of this potential stimulus. The concern the Committee feels on studying the first report by the Commission on its Scoreboard arises from the extent to which it reveals, as indicated below, that Member States are lagging behind in the actions they are required to take to promote the completion of the single market.

2. The Single Market Scoreboard (SMS)

The present opinion focuses on the SMS. The Committee is however monitoring all the measures relating to single market completion, by means of its Single Market Observatory and by drawing up specific opinions.

2.1. Transposition of directives

2.1.1. The first consolidated indicator of the state of single market progress presented by the SMS is the number of single market directives implemented by all Member States. As of 1 November 1997, an average of more than 25 % of single market measures had not yet been implemented in the EU as a whole: a similar figure applies for primary directives alone (i.e. those not amending earlier directives). The variations in implementation rates are also significant, with the bulk of the figures relating to significant aspects in the completion of the single market. Transport, with 60 % of directives not yet transposed, public procurement with 55 %, and intellectual property rights with 50 %, are singled out.

2.1.2. In order to tackle this problem, the Action Plan called upon Member States to report by 1 October 1997 their timetables for steps to implement all directives. The data contained in the SMS suggest that, provided each Member State complies with the programmes it has announced, the legislative framework of the single market will be complete by the deadline of 1 January 1999.

2.1.3. The Committee nevertheless notes that, despite this forecast, the Scoreboard shows that no Member State has given notification of a full timetable, with around 15 % of notifications not forthcoming, and that the Member States' declared targets are highly ambitious when compared with the time so far required for transposition. In some cases, adding average delays of two years to the periods laid down in the directives, the entire process will take some four years. Such a delay would be damaging to the hopes invested in the satisfactory completion of the single market. The Committee looks to the Commission, in its second Scoreboard report, to state clearly whether it perceives a willingness on behalf of Member States to meet their obligations on time.

2.2. Effective application of legislation and problem-solving

2.2.1. Making the benefits of the single market accessible to citizens does not however only mean making the necessary legal changes to transpose single market rules into national law. While nearly all Member States have appointed their own single market coordination and information centres for businesses and the general public - where, as the Commission points out, the challenge is to ensure that such information now filters down to the latter - and informed the Commission of them, the Scoreboard section on problem-solving and enforcement reveals that few countries have yet taken similar steps concerning structures and procedures for enforcing single market rules.

2.2.2. The Committee attaches great importance to this aspect, considering it to be a gauge of the efforts - as yet inadequate - made by the Member States to overcome the difficulties encountered by individuals and businesses in exploiting single market opportunities.

2.2.3. Similarly, the Committee agrees with the Commission on the importance of Member States following up on notification actions by coordinating their own information points in a functional network, allowing problems to be resolved in the first instance bilaterally.

2.2.4. Regarding cases requiring Commission intervention under the terms of Treaty Article 169, the fact that the average Member State response time to letters of notice addressed to them is twice the 60 days provided under the infringement procedure gives cause for concern. Close adherence to the Treaty on this point is essential.

2.2.5. In the eyes of the general public and businesses, the credibility of the Member States' commitment to completing the single market also depends upon their chances of obtaining rapid and effective solutions to the obstacles they encounter in using it. As highlighted in the Committee's opinion on the Communication from the Commission on the impact and effectiveness of the single market, the smaller the scale of the single market actors, the greater the obstacles.

2.2.6. From this point of view, the Committee is struck by the business survey's finding that approximately half the SMEs in a situation justifying the introduction of a formal complaint had not done so because they were unaware of the procedures or found them too costly and complex. The figure rises to over 80 % for those feeling that the efforts required outweighed the expected benefits.

2.2.7. This confirms the value of a drive for transparency in the completion of the single market, in part by stepping up actions to inform citizens in line with the provisions of the 'Citizens First` initiative - which alone, however, cannot resolve the problem of slowness in the process of Member State administrative change.

2.2.8. The Committee therefore takes note of the proposal for a Council regulation () allowing the Commission to intervene with regard to Member States in which clear infringements of the right of freedom of movement of goods have occurred, to ensure they take the necessary measures. Such action must protect the right of workers and trade unions.

2.3. Implementing the Action Plan

2.3.1. Strategic objective 1: Making the rules more effective

2.3.1.1. The Committee is particularly concerned that major actions designated as necessary to the satisfactory completion of the single market, such as public procurement and in the area of European standards, are at a stand-still. The Committee looks to the Commission for a fuller report on the state of progress with such matters in its second Scoreboard report.

2.3.2. Strategic objective 2: Dealing with key market distortions

2.3.2.1. Issues of fiscal policy represent an aspect which is complex and sensitive, but of paramount importance in relation to market distortions. The relevant actions under the Action Plan concentrate on such distortions, together with the rules governing competition.

2.3.2.2. Once harmful fiscal competition begins to affect the natural competitive playing field between countries, Member States' room for manoeuvre in restructuring their own fiscal systems is reduced. This has major implications for the coordination of fiscal systems within the European Union.

2.3.2.3. The Committee looks with great interest upon the measures contained in the conclusions of the Ecofin Council meeting on 1 December 1997 (), concerning the code of conduct for Member States on harmful tax competition, finding a minimum Community solution to taxation of capital income and withholding taxes on interest.

2.3.2.4. The importance of the Action Plan's moves on indirect taxation is confirmed by the business survey's finding that companies, regardless of size, single out the complexity of VAT rules as one of the greatest remaining obstacles to the free movement of goods and services.

2.3.2.5. A consensus on the part of the single market's users is certainly a critical factor in its success, but the Committee must also emphasize that there are major opportunities to channel the Member States' commitment into positive action in the field of tax harmonization.

2.3.2.6. Concerning State Aids, where the SMS notes that progress is almost complete, the Committee would take this opportunity to make the general point that, from the socio-economic actors' point of view, it is not entirely convincing to base the table on the degree of implementation of the Action Plan as the judgment is based only on implementation of administrative procedures with no mention of subsequent stages.

2.3.3. Strategic objective 3: Removing sectoral obstacles to market integration

2.3.3.1. A number of significant obstacles remain, some of which have long been in need of specific action. One such is the preparation of the European company statute. In particular, as regards the proper definition of rules to govern competition, much remains to be done on important topics such as telecommunications and airports.

2.3.3.2. The Commission's 1995 Communication on late payments which, by the December 1997 deadline set out in the SMS, had not yet led to the adoption of a proposal for a Directive, fails to take proper account of the serious issue of payment periods, as proposed by the Committee's earlier Opinion of 30 June 1993 ().

2.3.4. Strategic objective 4: Delivering a single market for the benefit of all citizens

2.3.4.1. Considerable delays continue to exist in establishing mobility for individuals in terms of the complete removal of border controls, the right to settle and the right to work in any Union country.

2.3.4.2. Following the Amsterdam Treaty, which is still to be ratified, the relevant measures contained in the Action Plan should be reviewed.

2.3.4.3. The Commission is asked to draw up a communication on citizens' mobility and obstacles to it.

2.3.4.4. The Action Plan's proposal for a directive on the completion of legislation on pension systems should be included among the priorities.

2.3.4.5. On these as on the other questions discussed in the present opinion, the Committee hopes - as it did in its specific opinion on this subject - that the various EU institutions will make full use of the contribution which associations and foundations can make to implementing Community policies.

2.3.5. The international dimension of the single market

2.3.5.1. The single market cannot, of course, be looked at in the abstract, away from the broader economic and political context of the European Union's development. The completion of the single market has a key role to play in the EU's enlargement procedure, and in its relations with the European Economic Area and, more generally, with other world market players.

2.3.5.2. The Committee therefore proposes that these issues - which are, moreover, specifically included in the Action Plan - be specifically addressed in further editions of the SMS.

3. Broadening the scope of the SMS

3.1. While expressing its interest in the information provided by the SMS, and its positive view of the Commission's decision to accompany the publication of the Scoreboard with a survey and sector report - which, to some degree, extends the scope of analysis to the expectations and needs of single market users - the Committee would point out that an assessment of such a complex and demanding programme as this one cannot be restricted to purely quantitative aspects.

3.2. Although quantitative data are indeed necessary, they cannot be considered enough to judge the efficacy of the planned actions. As the data on the options for securing application of the rules make abundantly clear, a more detailed analysis of single market users, whether companies, workers or consumers, is the only way of obtaining an accurate picture of the degree of commitment of those involved, in their different capacities, in completing the single market: the Council, the Commission and the Member States.

3.3. Since the inception of its Single Market Observatory, the Committee has given priority to what might be defined as a 'bottom-up` approach to assessment, designed to complement the Commission's 'top-down` approach. Two public hearings with the socio-economic actors were held, in 1994 and 1997. Indeed, in view of its mission, the Committee constitutes an ideal vantage-point for identifying the needs of single market users and monitoring the real impact of action undertaken at political level. Combining these two perspectives also helps to foster the atmosphere of general trust which is a prerequisite for completion of the integration process. Indeed, the Committee's Opinion on Preventing new barriers from arising in the Single Market specifically states that the Commission's Scoreboard on implementation of Directives should include a test for 'real lifting of barriers`

3.4. The Committee intends to pursue this line consistently in the future, with its own independent, direct monitoring in order to assess such qualitative aspects as the consistency of Member State, Council and Commission actions in the areas covered, progress in terms of simplification of rules and transparency, and the impact on opportunities for economic growth and employment.

Amongst the improvements which could usefully be made to the Commission's assessment reports, the Committee urges that:

- the scoreboard indicators be backed up by the following information: data showing comparative changes, at EU and national level, to technical rules, standards and patents; and data showing the trend in the percentage of public contracts open to competition which have actually been awarded to non-nationals;

- in tandem with the scoreboard, data be presented on economic and social developments in the single market; this data should cover inter alia, trends as regards: economic growth, employment, mobility of individuals, intra-EU and extra-EU trade and international investment.

Brussels, 25 March 1998.

The President of the Economic and Social Committee

Tom JENKINS

() Opinion on the Communication from the Commission to the European Parliament and the Council on the Draft Action Plan for the Single Market - OJ C 287, 22.9.1997, p. 89.

() Proposal for a Council Regulation (EC) creating a mechanism whereby the Commission can intervene in order to remove certain obstacles to trade.

() OJ C 2, 6.1.1998, p. 1.

() OJ C 249, 13.9.1993, p. 21.