# IMMC.EESC-2023-00148-AC.ENG.xhtml.EESC-2023-00148-00-00-AC-TRA-EN.docx

| OPINION |
| --- |
| European Economic and Social Committee |
| 30 years of the Single Market: how to improve the functioning of the Single Market |
| _____________ |
| The Single Market at 30 – how to further improve the functioning of the Single Market

  Exploratory opinion |
| |
| INT/1011 |
| |
| Rapporteur: Felipe MEDINA MARTÍN |
| Co-rapporteur: Angelo PAGLIARA |

OPINION

European Economic and Social Committee

30 years of the Single Market: how to improve the functioning of the Single Market

_____________

The Single Market at 30 – how to further improve the functioning of the Single Market

  Exploratory opinion

INT/1011

Rapporteur: Felipe MEDINA MARTÍN

Co-rapporteur: Angelo PAGLIARA

EN

Referral

| Referral | Presidency of the European Council, 14/11/2022 |
| --- | --- |
| Legal basis | Article 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Single Market, Production and Consumption |
| Adopted in section | 04/04/2023 |
| Adopted at plenary | 27/04/2023 |
| Plenary session No | 578 |
| Outcome of vote
  (for/against/abstentions) | 137/1/0 |

Referral

Presidency of the European Council, 14/11/2022

Presidency of the European Council, 14/11/2022

Legal basis

Legal basis

Article 304 of the Treaty on the Functioning of the European Union

Article 304 of the Treaty on the Functioning of the European Union

Section responsible

Section responsible

Single Market, Production and Consumption

Single Market, Production and Consumption

Adopted in section

Adopted in section

04/04/2023

04/04/2023

Adopted at plenary

Adopted at plenary

27/04/2023

27/04/2023

Plenary session No

Plenary session No

578

578

Outcome of vote
  (for/against/abstentions)

Outcome of vote
  (for/against/abstentions)

137/1/0

137/1/0

1.Conclusions and recommendations

1.

Conclusions and recommendations

1.1The European Economic and Social Committee (EESC) considers that the internal market has been, and still is, one of the great political and economic successes of the European integration process. Citizens and companies have benefited from it, and it should be considered as a process of continuous improvement that is always adapting to new needs as they arise. Many advantages have been achieved during last 30 years, but a critical review and a new improvement is still needed, not only in terms of what remains to be achieved, but also in terms of the new challenges to be faced such as the COVID-19 pandemic, the energy crisis or Russia's invasion of Ukraine. The EESC wishes to contribute to this process of improvement and proposes the following measures to strengthen it.

1.1

The European Economic and Social Committee (EESC) considers that the internal market has been, and still is, one of the great political and economic successes of the European integration process. Citizens and companies have benefited from it, and it should be considered as a process of continuous improvement that is always adapting to new needs as they arise. Many advantages have been achieved during last 30 years, but a critical review and a new improvement is still needed, not only in terms of what remains to be achieved, but also in terms of the new challenges to be faced such as the COVID-19 pandemic, the energy crisis or Russia's invasion of Ukraine. The EESC wishes to contribute to this process of improvement and proposes the following measures to strengthen it.

1.2The EESC hopes that the "Single Market Program 2021-2027", aimed at improving the functioning of the internal market and the competitiveness and sustainability of businesses, will be accompanied by adequate control and protection tools regarding the quality of work, a level playing field for all companies, citizens' rights, and consumer protection. At the same time, the EESC asks that all the necessaries measures be put in place to overcome all forms of social and fiscal dumping to ensure a fair competition and a correct functioning of the Single Market, avoiding all forms of distortions.

1.2

The EESC hopes that the "Single Market Program 2021-2027", aimed at improving the functioning of the internal market and the competitiveness and sustainability of businesses, will be accompanied by adequate control and protection tools regarding the quality of work, a level playing field for all companies, citizens' rights, and consumer protection. At the same time, the EESC asks that all the necessaries measures be put in place to overcome all forms of social and fiscal dumping to ensure a fair competition and a correct functioning of the Single Market, avoiding all forms of distortions.

1.3The ongoing geopolitical challenges will have an influence on the functioning of the Single Market, supply systems and the resilience of the European economy. The EESC welcomes the move to reduce critical dependencies on third countries and calls on the European Commission to adopt all necessary measures to update European industrial policy by preserving and strengthening the Single Market and benefits for consumers, workers, and businesses.

1.3

The ongoing geopolitical challenges will have an influence on the functioning of the Single Market, supply systems and the resilience of the European economy. The EESC welcomes the move to reduce critical dependencies on third countries and calls on the European Commission to adopt all necessary measures to update European industrial policy by preserving and strengthening the Single Market and benefits for consumers, workers, and businesses.

1.4The recent crisis showed that the main priority of the EU Single Market should be to improve living standards and working conditions by promoting growth and fair competitiveness, and creating a business-friendly and socially friendly environment. The EESC considers the free movement of people and workers to be one of the cornerstones of the Single Market, and so it calls for an acceleration in the recognition of qualifications and diplomas between Member States. Specific attention for displaced workers is a must.

1.4

The recent crisis showed that the main priority of the EU Single Market should be to improve living standards and working conditions by promoting growth and fair competitiveness, and creating a business-friendly and socially friendly environment. The EESC considers the free movement of people and workers to be one of the cornerstones of the Single Market, and so it calls for an acceleration in the recognition of qualifications and diplomas between Member States. Specific attention for displaced workers is a must.

1.5The EESC considers that European businesses face problems related to shortcomings of the Single Market which seriously affect competitiveness and sustainability. - In spite of a huge effort regarding the implementation of the Single Marker rules, most of the regulatory burden continues to be generated at national level. At this end the EU institutions should aim, ensuring their higher standards, for a full harmonisation, and MS should keep in mind the possible impacts of their additions on the integrity and proper functioning of the market and should, if possible, avoid measures that could cause significant distortion and fragmentation, the EESC recommends that the EU institutions act more proactively and swiftly to come up with legislation in time to foster harmonisation. It is essential to limit as much as possible national initiatives that could jeopardise the internal market and its common rules. In this connection, the EESC highlights that TRIS mechanism should be reinforced to enable the conditions for a real Single Market and not 27 different ones.

1.5

The EESC considers that European businesses face problems related to shortcomings of the Single Market which seriously affect competitiveness and sustainability. - In spite of a huge effort regarding the implementation of the Single Marker rules, most of the regulatory burden continues to be generated at national level. At this end the EU institutions should aim, ensuring their higher standards, for a full harmonisation, and MS should keep in mind the possible impacts of their additions on the integrity and proper functioning of the market and should, if possible, avoid measures that could cause significant distortion and fragmentation, the EESC recommends that the EU institutions act more proactively and swiftly to come up with legislation in time to foster harmonisation. It is essential to limit as much as possible national initiatives that could jeopardise the internal market and its common rules. In this connection, the EESC highlights that TRIS mechanism should be reinforced to enable the conditions for a real Single Market and not 27 different ones.

1.6The EESC advocates for a firm commitment to improve the quality of legislation in Europe and in the Member States. The EESC believes that a review should be carried out at the preliminary stages of European legislation – a compulsory impact analysis prior to any legal initiative, and a public consultation – to make the initiative more transparent and improve its objectives. Along the same lines, the Better Regulation agenda and REFIT programme should concentrate on achieving greater openness and integration of the markets for goods and services, to achieve the greatest benefit for citizens and the European economy, -analysing if superfluous legislation exists and concentrating mainly on those areas where harmonisation is necessary and enhancing existing social protection legislation.

1.6

The EESC advocates for a firm commitment to improve the quality of legislation in Europe and in the Member States. The EESC believes that a review should be carried out at the preliminary stages of European legislation – a compulsory impact analysis prior to any legal initiative, and a public consultation – to make the initiative more transparent and improve its objectives. Along the same lines, the Better Regulation agenda and REFIT programme should concentrate on achieving greater openness and integration of the markets for goods and services, to achieve the greatest benefit for citizens and the European economy, -analysing if superfluous legislation exists and concentrating mainly on those areas where harmonisation is necessary and enhancing existing social protection legislation.

1.7The EESC considers that greater emphasis must be put on implementation, simplification and enforcement, especially regarding Member States. The EESC calls on them to strictly implement and enforce common rules and avoid further national regulations when these are not necessary
  1
  .

1.7

The EESC considers that greater emphasis must be put on implementation, simplification and enforcement, especially regarding Member States. The EESC calls on them to strictly implement and enforce common rules and avoid further national regulations when these are not necessary

1

.

1.8The EESC urges the European Commission to evaluate each regulation in terms of its contribution to the competitiveness of companies and the well-being of citizens, and to identify barriers to be systematically removed and eliminated.

1.9The EESC considers that the existing number of legal instruments available to the European Union to defend its internal market are sufficient and commensurate with needs: the TRIS procedure, mutual recognition of legislation, SOLVIT, the 28th regime, the complaints procedure, CEN-CENELEC, standards, etc. These are essential instruments for the protection of the Single Market, but their potential is not always exploited as they must be more efficient and useful.

1.10The EESC considers that of all the new challenges facing the Single Market, priority must be given to promoting the EU's open strategic autonomy in relation to supply and trade, in the energy sector, in critical raw materials and, more generally, in innovation leadership, digitisation and advanced research. The EESC recommends enhancing cooperation and agreements with like-minded countries.

1.11In the area of goods and services, the EESC recognises the positive impact of joint purchasing in different sectors such as gas or retail. These kinds of European alliances have many pro-competitive effects and evident benefits for consumers, so such alliances must be clearly supported by the EU institutions.

1.12The EESC is convinced that the challenges of the Single Market deriving from the digital transition must be addressed through social dialogue and a leading position of the EU also in the application of shared legislation to protect the most vulnerable and ensure that the efficiency pursued does not undermine social, economic and territorial cohesion as well as political stability.

1.13The Single Market is not perfect but must be continuously adapted to changing circumstances to keep functioning even in times of crisis and actively foster its freedoms (the pandemic has shown that free movement cannot be taken for granted). This anniversary should therefore be an opportunity to put this policy back on the European agenda and to propose improvements for the near future.

1.14The EESC is worried that the relaxation of State aid rules in response to the Inflation Reduction Act (IRA) could create further asymmetries between Member States, thus jeopardising the resilience of the Single Market, and believes that the best way to provide new momentum to European industrial policy and investment in green technologies is to develop a European Sovereignty Fund.

1.15The EESC highlights the important contribution of the Single Market to avoid protectionism and develop a level playing field within the EU. In this connection, the EESC considers that a necessary reflection on the criteria for allocating State aid, their effects, their utility, and their resilience must be deeply analysed. There are economic sectors that have never been able to access this type of aid which, moreover, is unbalanced between some Member States and others, causing differences in competitiveness within the EU.

2.Introduction

2.12023 marks the 30th anniversary of one of the European Union's greatest political, economic and social successes in the European integration process: the Single Market. However, the anniversary should be the occasion to fundamentally adapt the Single Market philosophy and align it with current challenges. The process began in 1986 with the Single European Act, which promoted the adoption of common rules – instead of national ones – in many different areas, through the approval of hundreds of strategic legislative measures and the application of the principle of mutual recognition.

2.2Today no one denies that there are positive but also negative effects of the Single Market. The latter can be considered an essential component of the European model that has allowed goods, people, services and capital to flow freely throughout the European Union, making life easier for companies, institutions and citizens in most cases.

2.3The Single Market has driven progress not only economically and socially, but also politically, accelerating the integration process. The free movement of people thanks to the Single Market has marked the lives of several generations of Europeans who, through programmes such as Erasmus, have been able to embrace the European spirit from a very young age, having established bonds of union and understanding with numerous people like themselves from different Member States and sharing a common European way of life.

3.General comments

3.1The pandemic showed that the EU needs a new economic and business model. The recent crises, the current geopolitical tensions, the challenges of the twin green and digital transitions and the recent approval of the US IRA all show that the time has come to update the Single Market and give it fresh impetus, always remembering that the Single Market is a tool for Europeans and not an aim in itself.

3.2The Single Market has evolved as the process of European integration has progressed. While initially the Single Market focused on eliminating non-tariff barriers and measures having equivalent effect on intra-Community trade in goods and on harmonising legislation (the Single European Market), successive political needs and ambitions have broadened its scope to new areas such as services and the digital economy.

3.3All this progress has been achieved only with enormous efforts on the part of all stakeholders, administrations, and economic and social operators. However, in recent years the Single Market has no longer seemed to be a political priority, and the opening up and integration of goods and services markets has fallen down the agenda. In this regard, the first shortcoming to be noted is the lack of commitment in recent years on the part of the Member States. The Council has on many occasions pledged to improve and strengthen the Single Market, but its conclusions have rarely been translated into national policies. The EESC, therefore, calls on the Council and the Member States to take further action in this regard.

3.4The EESC remarks that the Single Market must be useful for making European companies more competitive in global markets. It is designed to be a continuously evolving process, which is both a weakness and a risk, but also gives it a new role: resilience. This new role joins the traditional ones, which need to remain dynamic and cannot be taken for granted.

3.5The EESC invites the Commission and the Council to adopt all necessary measures to assist European industrial policies and companies in achieving the objectives of the green and digital transitions, by using the existing EU tools and by following, if necessary, the proposal to develop a European Sovereignty Fund. It reminds Member States and the Commission, however, that there are already numerous funding programmes and tools in existence that should be used to their full potential before adding further instruments. The EESC calls on the European Commission to involve the EESC in discussions on State aid rules.

3.6The EESC agrees
  2
  that the EU needs a robust, ambitious digital policy to capitalise on the opportunities offered by digital innovation to make the EU more competitive. The EESC highlights the fact that a real Single Market and simple, cross-border legislation will enable many sectors to respond to consumer demands and compete in a globally competitive, more digital environment.

3.7The digitalisation of the Single Market can provide further growth and well-being for Europeans and European companies. The EESC therefore calls on the European Commission to adopt all necessary measures to step up investments to overcome the existing digital divide between European regions. It is crucial for the Member States to step up investments in education and training in order to develop the Digital Single Market and make it more efficient. The objective must be to ensure that there are skilled workers, innovative businesses and good quality jobs by fighting precarious working conditions.

3.8The EESC calls on the European Commission to focus on the risks stemming from the production, circulation and storage of personal and sensitive data deriving from digitisation processes, as well as from their use and control. At the same time, the EESC asks the Commission to adopt all necessary measures to prevent this risk and take into consideration the conclusions of the current negotiations on the Council of Europe Agreement on Artificial Intelligence, human rights, democracy and rule of law
  3
  as a basis for the regulatory framework. The objective must be to protect personal data, workers and consumers but allow their confidential use to enable the benefits of new technologies to be exploited.

3.9It is crucial to accelerate initiatives towards digitalisation and sector-specific cross-European data spaces to enable better analysis and use of data for the benefit of European society and the competitiveness of Europe's businesses. The data spaces could seed and boost new scalable industrial innovators and start-ups. A well-functioning Single Market for data is crucial also because it is intrinsically linked to the Single Market for goods, services, capital, and people, as well as to energy and transport systems.

4.The Single Market for goods and services

4.1The EESC considers that the Single Market's shortcomings still need to be analysed and measures taken to eliminate them, in particular, by overcoming the unnecessary regulatory and administrative burden to facilitate the competitiveness and sustainability of European companies while preserving and enhancing the existing social protection legislation.

4.2The EESC highlights the problems caused by Member States when they anticipate the adoption of common measures at European level, and how they influence and guide the common solutions found in European legislation. In some cases, this is because the European Commission has not proposed measures, but sometimes it is caused by Member States that are ahead of the European proposal (e.g. origin labelling of meat products, front-of-pack food labelling (FOP), Irish proposal on health warnings for alcoholic drinks, etc.), hindering the harmonisation process and the free movement of goods. For this reason, the EESC urges the European Commission to anticipate regulations when necessary to avoid the proliferation of national regulations that fragment the Single Market.

4.3Directive 1535/2015 establishes the procedure for the provision of information in the field of technical regulations and rules on information society services available for Member States. This legislative measure provides for the possibility for a Member State to be obliged to postpone the adoption of a draft regulation by 12-18 months if there is an EU initiative underway that could be compromised by the national rule and it is being renewed. However, in practice the European Commission's prerogative is published not to be enforced, and in the end it is the Member States that condition European legislation.

4.4Another tool available designed to stop or counteract any action contrary to the Single Market is SOLVIT. This is a procedure applied in cases where the administration of another Member State does not apply European legislation correctly and prevents the full exercise of the rights of citizens and companies in the Single Market. It is a system of mediation between national administrations which in practice relies more on the determination of the administrations than on their legal force to remedy a situation, so the EESC considers its effectiveness to be limited and needing to be improved.

4.5Another tool available is the complaint procedure before the European Commission. This tool is considered effective by EESC as it is flexible and transparent, but it needs strong political support and the procedure should be improved in terms of efficiency and effectiveness.

4.6A strategy for opening and developing the various European sectors was approved in 2018. However, problems remain, discrimination continues, and not all Member States notify the European Commission under Article 15(7) of the Services Directive.

4.7The EESC points out that some sectors such as the financial services or the retail and wholesale sector are highly fragmented but have been able to unite and become stronger at European level. The retail and wholesale sectors have embraced the spirit and undeniable advantages of the Single Market to serve European consumers better everyday thanks to buying alliances and the Single Market. Major challenges remain in terms of harmonisation and effective implementation of the freedom of establishment in the case of retail and the wholesale sector, which continues to see its strategy "A Retail Sector fit for the 21st Century" still not fully implemented. In addition, support for buying alliances in retail is needed as a means to improve consumer welfare under a pro-competitive effect at European level.

5.The Single Market for workers

5.1Among the challenges facing the Single Market, the EESC points to the transformation of work and the consequent reshaping of the relationship between the parties, as well as the associated risks in terms of flexibility (of hours, location and services), in particular regarding platform workers and, more generally, digital professions and smart workers.

5.2Recent crises showed that the main priority of the EU Single Market should be to improve living standards and working conditions while promoting growth and fair competitiveness and creating a business and socially-friendly environment. Despite the progress made, 21.7% of the European population is still at risk of poverty or social exclusion (Eurostat, 2021).

5.3The EESC considers the free movement of people and workers to be one of the cornerstones of the Single Market, and so it calls for an acceleration in the recognition of qualifications and diplomas between Member States. Specific attention must be given to ensuring fair treatment of posted workers in regard to salaries and working conditions.

5.4As the pandemic crisis has demonstrated, the free movement of health professionals has been a factor of convergence and self-protection for the European Union, but to date many professions still remain on the margins of this process (for example in the legal field and in teaching). The EESC
  4
  asks for a redesign of employment and skills support measures and investment in the skill sets of future workers through improved vocational and educational training and individual learning, supporting companies in this way. Particular attention should be dedicated to green jobs.

5.5Digital infrastructure is crucial for a successful application of the benefits of the Single Market in all European areas and regions, especially those that lag behind the average. The infrastructure lag increases inequalities and affect opportunities for people and businesses. The EESC therefore invites the European Commission to adopt the necessary measures to strengthen investments in order to overcome the existing digital divide in the EU. Specific attention to enterprises, especially SMEs, is needed.

6.The way ahead. Future challenges for the Single Market

6.1The EU institutions need to further strengthen the Single Market to unleash its full potential to create growth, jobs, and a better society in the future.

6.2The EU institutions should aim, ensuring the higher standards, for a full harmonisation of EU law where possible and appropriate to prevent unnecessary fragmentation of the Single Market, for example on taxation. The EESC would point out that the challenges facing the Single Market include continuing to move towards tax harmonisation between Member States and avoiding dumping and, in the medium term, towards wage convergence, also preventing social dumping and/or unfair competition, particularly when attracting investment, locating enterprises, and hiring workers.

6.3Enforcement to make implementation and simplification the priority and guiding principle for the Single Market is crucial. The EU institutions need to ensure that the Commission's role as Guardian of the Treaties is safeguarded in a highly politicised European environment. If national legislators – using their margin of discretion – decide to add requirements on the national level, they should do this transparently, notify the Commission and other national authorities and explain their reasons, in line with their commitment in the Interinstitutional Agreement on Better Law-Making. Furthermore, sanctions must not deviate within the EU.

6.4Quality of legislation means better legislation. The preparatory process should include a competitiveness check in policy making, improved modelling of impact assessments and deeper analysis of how regulations affect the cumulative bureaucratic burden of companies, especially SMEs.

6.5Remove unnecessary national barriers: the European Commission and Member States should evaluate whether national technical rules are still fit for purpose, future-proofed and proportionate to improve the free movement of goods and services.

6.6The Commission and Member States need to ensure a level playing field for all operators, underpinned by a strong legal framework ensuring that all products and services sold on the EU market are EU-compliant and safe, to maintain consumer trust and safety in accordance with the new product and service safety regulation, which also included digital products and services.

6.7The EU institutions need to address Member States protectionism and discrimination effectively to ensure that consumer interests are equally served in EU and national policy decisions.

6.8Improvement of available tools to allow access of companies and consumers to information regarding notification (single notification window) and make the processes more useful and flexible, for example by strengthening the complaints network for cross-border consumers. The EESC encourages setting up networks of easily accessible dispute resolution schemes, as consumers would gain trust in the Single Market if they could find redress vis-à-vis companies established in other Member States without effort.

6.9Regarding a Single Market for public procurement: this is an area with national limitations and restrictions for companies based in another Member State that can distort the normal functioning of the Single Market and which needs a strong response from the EU institutions to complete the regulatory framework that contributes to the social progress of citizens
  5
  .

6.10The European Commission, Member States and other stakeholders should collaborate to ensure sustainable communities. The climate crisis is both a threat and an opportunity: a rapid realignment of the Single Market is necessary to reflect the changed priorities under the green deal. The use of zero-emission technologies needs to be promoted, and workforce training needs to be adapted quickly. Green investments could usher in a long period of growth in the EU's internal market and at the same time make an important contribution to the fight against climate change.

Brussels, 27 April 2023

Oliver RÖPKE

The president of the European Economic and Social Committee

_____________