Opinion of the Committee of the Regions on the "Commission Communication Working together to maintain momentum - 2001 Review of the Internal Market Strategy"

(2002/C 107/21)

THE COMMITTEE OF THE REGIONS,

having regard to the Communication from the Commission Working together to maintain momentum - 2001 Review of the Internal Market Strategy COM(2001) 198 final;

having regard to the Commission's decision of 19 April 2001, under the first paragraph of Article 265 of the Treaty establishing the European Community, to consult it on this matter;

having regard to its president's decision of 7 June 2001 to draw up an opinion on this matter and to instruct Commission 6 - Employment, Economic Policy, Single Market, Industry and SMEs - to undertake the preparatory work;

having regard to the Communication from the Commission to the European Parliament and the Council - The strategy for Europe's internal market (COM(1999) 464 final);

having regard to its opinion on the Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions - 2000 Review of the Internal Market Strategy (COM(2000) 257 final - CdR 311/2000 fin)(1);

having regard to its opinion on the Proposal for a European Parliament and Council Directive amending Directive 97/67/EC with regard to the further opening to competition of Community postal services (COM(2000) 319 final - 2000/0139 (COD) - CdR 309/2000 fin)(2);

having regard to its opinion on the Proposal for a Directive of the European Parliament and of the Council on the coordination of procedures for the award of public supply contracts, public service contracts and public works contracts [COM(2000) 275 final - 2000/0115 (COD)] and the Proposal for a Directive of the European Parliament and of the Council coordinating the procurement procedures of entities operating in the water, energy and transport sectors [COM(2000) 276 final - 2000/0117 (COD)] - (CdR 312/2000 fin)(3);

having regard to the draft opinion (CdR 200/2001 rev. 2) unanimously adopted by Commission 6 on 28 September 2001 (rapporteur: Ms Rodust, D/PSE, chair of the Europe Committee of the Schleswig-Holstein Landtag),

adopted the following opinion unanimously at its 41st plenary session held on 14 and 15 November 2001 (meeting of 14 November).

1. The Committee of the Regions' views on the Communication

Internal Market Strategy

1.1. This is the CoR's second opinion on the Commission's Internal Market Strategy. It has already expressed its views - which it reaffirms here - on the 2000 Internal Market Strategy, the overall approach and the strategic objectives.

1.2. The CoR emphasises that, together with the European institutions, it still considers completion of the internal market a central and hitherto unfinished task on the road to European integration. Without the gradual establishment of a common market in Europe, the EU would lose its momentum for integration. Completion of the internal market has a key role to play given the special challenges currently facing the European Union - its debate about its own future, its enlargement policy and the economic impact of globalisation. The internal market in particular must make the EU tangible for the people of Europe.

1.3. The overall approach developed by the Commission since 1999 for completing the internal market project over the next five years, the strategic objectives, operational objectives and shorter-term target actions established to that end, and the plan to review these objectives every eighteen months and update them with the aid of new guidelines, are essential to any systematic completion of the internal market. This CoR endorses this overall approach.

1.4. The CoR agrees with the Commission on four key starting points for completing the internal market: (i) enhancing the efficiency of Community product and capital markets; (ii) improving the business environment; (iii) improving the quality of life of citizens; and (iv) exploiting the achievements of the internal market in a changing world.

1.5. That said, the CoR's demand that measures designed to improve internal market performance should focus on moves to create long-term, competitive jobs also applies to the 2001 Internal Market Strategy. So far, however, the Committee's proposals on this front have only partially been taken up in the work on the internal market.

1.6. Moreover, the CoR would again highlight the limitations it has identified in a policy of liberalisation, and would stress that Council approval of the Internal Market Strategy may signify a voluntary commitment on the part of Member States, and not an obligation to implement the Commission's specific proposals. When the effectiveness of the national transposition of EU directives is assessed, Member States' scope for action must not be curtailed ex post facto.

1.7. CoR calls for account to be taken of the subsidiarity principle and regional and local authority interests are not mere empty words. The CoR acknowledges the obvious efforts made by the Commission in its Internal Market Strategy to establish an internal market that is markedly more citizen-orientated and thus considerably more open to small and medium-sized enterprises (SMEs). However, the CoR regrets the strategy's failure to establish any clear plans for involving regional and local authorities - with their wide-ranging opportunities and networks - in implementing the proposed measures. The CoR again urges that such plans be put in place - wherever useful and necessary - not least so that application of the subsidiarity principle can be managed more effectively.

2001 Internal Market Strategy

1.8. The Internal Market Strategy can only become effective if the target actions are translated promptly by the EU institutions into legislation and applied in the Member States.

1.9. Experience with the 2000 Internal Market Strategy has shown that a strategy programme that is too comprehensive and insufficiently focused is difficult to put into practice. The CoR shares the Commission's view that, over the past twelve months, progress made in translating target actions into legislation has remained unsatisfactory. The CoR welcomes the Commission's conclusion that the number of specific actions under the Internal Market Strategy are to be reduced to 76, and only 40 are to be given priority status.

1.10. There is also still room for improvement in transposing legislation in the Member States - although it has been possible to reduce Member States' transposition deficits. In a number of Member States, transposition levels are still well below average. It remains to be seen whether the target of full transposition called for by the Stockholm European Council in March 2001 and the reduction in the transposition deficits to 1,5 % by spring 2002 can in fact be met. In the light of experience to date, however, the CoR considers this too ambitious.

1.11. Completion of the internal market touches a wide range of sectors. Nonetheless, it is better served if fewer actions are translated into internal market directives - and put into effect by the Member States - than if a comprehensive strategy is not implemented to a satisfactory extent. Hence, the CoR backs the Commission's prioritisation approach. The plan to improve the flow of information concerning transposition between the Member States and the Commission is also sound. However, it is essential to secure the active involvement of the various regional and local information disseminators.

1.12. Actions under the 2001 Internal Market Strategy have been selected on the basis of the Commission's own studies and observations, which also include feedback from consultations with businesses and the public. Available statistics on shortcomings in the operation of the internal market indicate that the main difficulties for SMEs and the public are in the following areas: the free movement of goods, freedom of establishment and rules on services, the free movement of persons, taxation, the environment, difficulties in consumer protection and problems relating to public procurement and competition. The CoR proposes focusing the Internal Market Strategy's operational and shorter-term target actions more strongly on these problem areas and laying down priorities accordingly.

1.13. SMEs and the public frequently find it difficult to exercise existing rights within the internal market. The internal market contact points established in the Member States to investigate complaints of this nature and to resolve any difficulties that might arise, operate very unevenly. The very existence of these bodies is not universally known, and their problem-solving capabilities remain limited. To complete the internal market, it is essential to expand these contact points and make them part of an interactive network. The aim must be to secure a high public profile for these bodies and to ensure that they are able to resolve individual problems quickly and without red tape - even across borders. This cannot be done solely by electronic networking and by providing direct information on the current state of internal market legislation.

2001 Internal Market Strategy: target actions

1.14. The CoR considers that the target actions proposed by the Commission under the 2001 Internal Market Strategy will facilitate further completion of the internal market. The following suggestions should, in its view, be particularly borne in mind:

1.15. The planned online, interactive problem-solving network and interactive policy-making initiative can result in the speedier, problem-oriented completion of the internal market provided the Commission ensures the active involvement of regional and local players in this dialogue. Such tools will only be successful in practice, however, if the recommendations and initiatives are actually taken up in the ongoing development of the Internal Market Strategy.

1.16. The CoR endorses in principle the intention to further open up individual market sectors, including, for instance, the internal market in rail freight and international passenger transport. European liberalisation policy must not, however, result in the development opportunities of individual regions or local authorities being curtailed or even blocked all together. Public authorities must retain the possibility to take action, especially where it is needed but no private-sector alternative is warranted or available.

1.17. The CoR shares in principle the Commission's concern to free companies from red tape and to facilitate market access through further product standards. It expressly welcomes the Commission's plan to devise a strategy to simplify the regulatory environment, and trusts that such a strategy will be applied above all at EU level.

1.18. The CoR also feels that the establishment of a framework for state aid for research and development is a worthwhile venture, if it results in a level playing field. This also implies an EU research policy that does not exclude support for medium-sized research projects and permits differentiated national - and, where appropriate, regional - aid for research.

1.19. Moves to open up new European labour markets must be at the forefront of the target actions to secure a citizen-centred internal market. The actions relating to the integration of environmental considerations into internal market activities, food safety, the elimination of obstacles in the social sphere, and education and training must in particular foster this objective. The proposed action plan must not only remove cross-border barriers in order to promote mobility, but must also give regional and local authorities scope to tap these new European labour markets effectively. The CoR welcomes the Commission's plan to take candidate countries into consideration in the internal market's external dimension even at this stage.

2. The Committee of the Regions' recommendations

Horizontal priorities

2.1. So that the actions provided for under the Internal Market Strategy can be promptly translated by the EU institutions into legislative measures, the CoR recommends that particular importance be attached to the priority target actions and that the Council presidency of the day be encouraged to include these "priority actions" in its work programme.

2.2. For its dialogue with grassroots market players, the Commission can use various websites as well as national co-ordination centres and contact points, including the consumer information centres (Euroguichets) and the Euro Info Centres (EICs). In order to improve the flow of information between the Member States and the Commission on the internal market, the CoR proposes that greater use be made of mutual consultation in completing the internal market than has been the case so far. It proposes not only expanding the EICs as contact points - possibly with the involvement of the Euroguichets - but also establishing "single-market working parties" within these contact points which bring together representatives of trade associations, trade unions, chambers, regional and local authorities etc. This will enable the Commission to consult these information disseminators on the implementation of the Internal Market Strategy and its impact on regional and local markets. Other instances show that the Commission is quite able to launch and promote such processes.

2.3. The CoR shares the Commission's view that meaningful indicators must be developed to measure progress in the various internal market fields. It expects the Commission to come up with indicators that cover the development and impact of the new internal market rules, particularly at regional and local level. This not only includes indicators relating to the free movement of goods and services, freedom of establishment, prices and progress made in standardisation, but also indicators concerning the expansion of the European labour market and employment trends, the compatibility of social systems and the harnessing of the "entrepreneurial spirit".

Operational and shorter-term target actions for the key strategic areas of the internal market (markets, business, citizens, external aspects)

2.4. The Internal Market Strategy review should also include an examination of both the shortcomings and achievements of the operational and shorter-term target actions which come to light from the Commission's own networking, from dialogue with SMEs and the public and from the planned interactive policy-making initiative.

2.5. Introduction of the euro as the European currency is the next decisive step to be taken in order to establish and strengthen the internal market. It is widely feared - whether justifiably or not - that the introduction of the new currency will bring about a further upward movement of prices. The CoR asks the Commission to take additional measures in order to give public confidence in the new currency a further boost and vet the impact on the trend in prices. In particular, the charges for non-cash payment transactions between Member States should be reduced and aligned.

2.6. Price comparisons are an effective indicator of economic integration and market performance. Price differences in the EU are as high as 40 % in the case of, for example, consumer electronics products and are even higher for fresh food products. These price differences cannot be put down solely to differing rates of VAT; brand image also accounts for up to a third of the price differences in Europe. The differences are probably also due to obstacles to competition, sales and marketing in the service sector. Legal provisions and difficulties in the field of technical harmonisation are also matters of the utmost concern to enterprises. The only way to bring about a constant downward pressure on prices is by having efficient markets which are geared to competition and on which goods can be freely traded. The CoR calls for studies to be carried out with a view to elucidating these problems and putting forward solutions and demands that work be continued on implementing the comprehensive strategy for the internal market in services.

2.7. In the CoR's view, the current civil dialogue aimed at achieving a citizen-orientated and viable consumer policy provides an opportunity for making necessary corrections to agricultural policy, the policy which pioneered the way for the common market. The primary objective is to produce, process and market healthy, top-quality food whilst, at the same time, improving animal welfare and protection of the environment. EU Member States are bound by intra-Community trade rules and international rules governing imports and exports. This has enormous consequences for consumer protection. The CoR calls for a permanent EU-wide ban on the use of feed containing meat- and bone-meal and animal fats, compulsory BSE testing of cattle aged 24 months and over and an extension of the tests to sheep and goats. The protection of animals needs to be improved by tightening up EU and national rules governing livestock farming. Subsidies in respect of the export of live animals for slaughter should be abolished and there should be strict limits on journey times for live animals. The CoR calls on the Commission to change the current system of aid for agriculture. EU payments for expenditure linked to production should in future be switched more to promoting "second-pillar" measures, such as nature conservation, the promotion of quality-assurance schemes and the energy use of biomass. The CoR calls for consideration to be given to a possible increase in the level of EU co-financing for second-pillar measures.

2.8. Liberalisation in the fields of transport, energy, communications, postal services and financial services has generated a market dynamism from which all EU Member States have so far benefited. However, market liberalisation is also having an increasingly adverse effect on the provision of amenities in structurally-weak rural areas in particular. The CoR therefore calls on the Commission to pay greater attention to the territorial impact of liberalisation policy in future. When liberalisation measures are proposed in future (e.g. rail freight liberalisation package, due to be published in December 2001) a separate chapter should always be included in which this territorial impact is described and assessed. This also applies to proposals which would place SMEs and structurally-weak areas under more severe competitive pressure and, not least, to the implementation of the "Basel II" recommendations.

2.9. The CoR calls for the establishment of an EU competition and aid policy which takes account of regional-policy objectives and guarantees fair competition. This also applies, in particular, to public infrastructure and other measures designed to optimise regional location factors. The CoR trusts that the Commission will create a clear and positively formulated legal framework for public infrastructure policy and for measures in respect of public services based on public-private partnerships (PPP).

2.10. SMEs find it much more difficult than larger businesses to withstand competition. The Commission has recently started to ask for bank guarantees from aid recipients for the advance payments made at the beginning of a project. These guarantees not only give rise to costs but also reduce an enterprise's credit line in respect of other projects, thereby sharply restricting SMEs' scope for action. The CoR calls on the Commission to impose severe penalties on aid recipients in the case of misconduct in order to prevent irregularities. It also urges the Commission to examine whether it would be possible to grant derogations for SMEs in respect of the guarantees to be provided for advance payments.

2.11. The CoR shares the Commission's view that the European Economic Area suffers from over-regulation with the result that SMEs, in particular, are permanently hampered in their scope for development. The CoR deplores the fact that the EU itself has contributed in no small measure to this trend. It therefore warmly welcomes the Commission's plan to present a comprehensive strategy for simplifying regulation at both EU and national level by the end of 2001. The CoR asks the Commission to adhere strictly to the subsidiarity principle and to concentrate on framework provisions when drawing up this strategy.

2.12. The CoR deplores the fact that the effectiveness of many of the attempts by the EU to promote economic development in the internal market has suffered as a result of the complex nature of the requirements and the lack of transparency in the decision-making processes. This also applies to the administration of Structural Fund aid with the aid of rules which frequently conflict with the working practices of efficient institutions already in place in the Member States, thereby resulting in the establishment of parallel administrative structures. The CoR asks the Commission to pay particular attention to this aspect in its interim review and to present a report setting out proposals for streamlining administrative procedures, based on the working practices of existing regional and national administrations.

2.13. The CoR agrees with the Commission that particular attention should be paid to the challenge of enabling SMEs and the public to exercise their rights in the internal market and finding solutions as soon as possible to the problems which arise. With a view to giving a human face to anonymous networks for dialogue, and solving concrete problems more rapidly in individual cases too, the CoR proposes that an "Internal Market Ombudsman" be appointed at EU level whom members of the public and enterprises can contact directly and who would liaise with the contact bodies and governments in the Member States to ensure that internal market laws are enforced.

2.14. The completion of the internal market means that there is now no stopping the process of achieving freedom of movement, freedom of establishment, competition and growth. Cross-border activities of SMEs can, however, be jeopardised by "hard" and "soft" barriers, as the examples set out below illustrate.

2.15. Every enterprise operating across a border has to expect to be called upon to conclude a wage agreement which is valid in the neighbouring country. Furthermore, trade unions in the neighbouring country expect posted workers to join the relevant specialised trade union even in cases when the posting enterprise has no place of business in the neighbouring country. This creates a legal uncertainty for the posting enterprise, particularly as there are frequently no codified minimum wage provisions (e.g. in the case of wage agreements in respect of construction sites) and wage and salary conditions in neighbouring countries also cannot readily be compared. The reason for this is that the structure of ancillary wage costs differs, with the result that in some cases these payments are not recognised under the minimum hourly wage provisions. The COR calls on the Commission to draw up a brief overview, setting out practical proposals, in order to provide enterprises with at least a methodology for rough comparability.

2.16. The CoR shares the Commission's view that worker mobility in the internal market is still being curbed by a large number of factors and that removal of these barriers to mobility has to be a key task in the implementation of the internal market strategy. Achievement of this objective does not necessarily have to involve harmonising Member State's tax and social security systems. Instead it is vital to introduce general rules designed to make different institutional systems compatible for individual workers. In this respect the CoR welcomes the action plan for opening up new European labour markets which the Commission is due to present in early 2002 and also welcomes all further proposals for recognising vocational qualifications. The CoR would, however, draw attention to the fact that these measures must promote and increase the mobility of every type of skilled worker and not just highly qualified workers.

2.17. Following on from the benefits which have accrued so far for frontier regions, the CoR would ask the Commission to also include in its aid programmes, (e.g. EURES or INTERREG) more measures for eliminating "soft" barriers to mobility. Priority must be given to language learning, above all in frontier areas, in order to promote mobility in the EU and the completion of the internal market. In this context the CoR welcomes, for example, the information and publicity campaign for the European Year of Languages 2001. With a view to promoting mobility, the CoR asks the Commission and the Council of Europe to make continued use of this instrument in the form of specific actions.

Brussels, 14 November 2001.

The President

of the Committee of the Regions

Jos Chabert

(1) OJ C 148, 18.5.2001, p. 16.

(2) OJ C 144, 16.5.2001, p. 20.

(3) OJ C 144, 16.5.2001, p. 23.