EUROPEAN COMMISSION Brussels, 10.3.2020 SWD(2020) 54 final COMMISSION STAFF WORKING DOCUMENT Business Journey on the Single Market: Practical Obstacles and Barriers







Accompanying the document



COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Identifying and addressing barriers to the Single Market {COM(2020) 93 final}



Contents Contents Objectives, approach, and caveats Objectives Approach and caveats Main sources Summary: practical obstacles and barriers to the single market Different perspectives on the achievements of the single market Analytical approach List of obstacles to the single market Root causes and link with EU policy General obstacles and barriers Summary table: general obstacles and barriers General barriers and obstacles along the business journey Step 1 Steps before expanding Step 2a Steps to selling cross-border: product and services regulation Step 2b Steps to selling cross-border: marketing and access to clients Step 2c Steps to selling cross-border: delivering goods and services Step 2d Steps to selling cross-border: barriers to entry and uneven playing field

Step 2e Steps to selling cross-border: taxes Step 2f Steps to selling cross-border: after-sales Step 3a Additional steps for establishment: setting up a business activity in another Member State Step 3b Additional steps for establishment: staffing Step 3c Additional steps for establishment: sourcing and supplies Step 3d Additional steps for establishment: investing and financing Step 3d Additional steps for establishment: taxes, subsidies and other public help Throughout the business journey Obstacles identified per sector Summary table: obstacles and barriers identified per sector Obstacles identified per sector Accounting and Tax advice Architecture and engineering Audit Automotive Chemicals Construction Electronic communications networks and services Energy Food and beverages

Hotels and accommodation Industrial machinery Intellectual property agents Legal Pharma Retail Transport Waste management Objectives, approach, and caveats Objectives The European Council has invited the Commission to identify obstacles that keep the single market from integrating further and from providing a level playing field to businesses attempting to benefit from it. At its meeting of 21 - 22 March 2019, the European Council concluded that ‘the single market should be further deepened and strengthened (…)’ and called on the EU and its Member States to act, adding that ‘remaining unjustified barriers must be removed, building on the Commission Communication of November 2018, and no new ones created’. Building on this initial request, the May 2019 Competitiveness Council called on the Commission to ‘complete, by March 2020, the assessment of the remaining regulatory and non-regulatory obstacles and opportunities within the single market, with a special focus on services, building on the European Council conclusions of December 2018 and March 2019 and on the Commission’s November 2018 report, taking the perspective of businesses and consumers….’ This staff working document contributes to the response to this request. The document aims to identify current obstacles to the single market. It is clear that the integration of the single market is an ever-evolving process, influenced by regulatory initiatives at EU or national level, by everyday decisions of various actors, businesses, consumers, investors, workers, etc., and also by technological, society or international change. It is therefore essential to keep in mind that this study provides only a snapshot of the current situation. In 2019, the Commission issued a report on the performance of the single market in the context of the European Semester, relying mostly on indicators related to the integration of the Single Market. It intends to publish such a performance report on an annual basis. That report differs significantly from this one, which identifies general and sector-specific barriers, from a business journey perspective. The two reports therefore complement each other. This study focuses on the obstacles most often reported by businesses themselves, without claiming to be exhaustive, and proposes the ‘business journey’ framework to identify obstacles and hurdles faced by businesses in the different steps involved for the export of goods and services to or for the establishment in another Member State. That framework simplifies what is actually a complex reality. Obstacles to the single market typically occur in many variations and sub-types, and are often complex and multi-layered. An obstacle experienced by a business, such as not being allowed to sell its product, can be due to different root causes, or underlying obstacles, or even to a complex combination of factors. It is therefore not possible to exhaustively identify and analyse all obstacles in their totality, multiplicity, and complexity. This document aims to provide a fact base and foster a common understanding of the current obstacles to the single market faced by businesses. It also aims to provide input into potential future discussions about appropriate single market policies. It supports the Communication ‘Identifying and addressing barriers to the single market’ (‘the Communication’), adopted today, which aims to describe the most relevant areas of concern for businesses and consumers, identify their root causes and set out ways to address them. This staff working document underpins the Communication from the business perspective, through the ‘business journey’. Approach and caveats The starting point of this study is the obstacles experienced by businesses in the single market as reported by them. This means, in practice, that this study first describes the barriers as reported by businesses. In a second step, the study also analyses their root causes in its relevant policy context. This starting point differs from a more policy or legal-oriented starting point, which has often been the approach followed by prior studies. This allows to shed a new light on how the integration of the single market is perceived by its active users, the businesses, in their efforts to reach its other active users, the customers and clients. Consequently, the study addresses the freedoms of circulation of goods, services and capital, and also the free movement of persons to the extent it concerns labour force mobility. The study also touches on some of the EU policies that flank the internal market such as competition rules, judicial cooperation in civil matters, public procurement or social policy related to cross-border issues. The opinions collected in this study reflect this approach. Businesses, chambers of commerce, and other business organisations reported obstacles as they perceive them, and in their own words. They study both regulatory and non-regulatory obstacles. Sometimes, even if a given obstacle affects domestic businesses and non-domestic businesses equally, it can amount to a barrier to entry and may distort competition. Sometimes, a given obstacle represents a hard, ‘binding’ constraint; other times, it could be surmountable, if taken in isolation and using enough effort, time and money. In this document, the word ‘obstacle’ has to be understood as encompassing this wide range of challenges and hurdles faced by businesses across the single market.

This study primarily use sources that capture the perceptions of businesses that intend to become or are already active across the single market, via exports, imports and/or establishments in other Member States. The existing sources included surveys of businesses, databases and analyses. In addition, a specific consultation of chambers of commerce was conducted to gain a more comprehensive picture of different obstacles. Finally, the analysis also builds on in-house expertise at the Commission. Evidence has been collected from two channels, allowing a more comprehensive approach to the issues identified: non sector-specific sources (‘general obstacles and barriers’) and sector-specific sources (“obstacles identified per sector”). While most obstacles have been found in both channels, some are sector specific. Main sources External surveys and reports ·Eurochambres, ‘Business survey – EU Internal Market: Barriers and Solutions’, 2019 (Eurochambres 2019 survey) ·World Bank Group, ‘Doing Business 2019’, 2019 (World Bank Doing Business report) ·Centre for European Policy Studies (CEPS), ‘Hidden Treasures: Mapping Europe’s sources of competitive advantage in doing business’, 2019 (Hidden Treasures report) ·The Association of German Chambers of Commerce and Industry (DIHK), ‘DIHK Survey on Single Market Obstacles 2019: Services, Goods and Investments’ (DIHK 2019 survey) ·Dutch Ministry of Economy, Dutch export agency, ‘Doing Business in Europe’, 2018 (Dutch Doing Business in Europe survey) ·Estonian Ministry of Foreign Affairs and Communications, ‘Mapping: applicable regulatory requirements for a construction company on its export journey to Estonia, Finland, and Sweden’, 2018 ·Governments of Ireland, Denmark, Finland and Czechia, and Copenhagen Economics, ‘Making EU Trade in Services Work for All: Enhancing innovation and competitiveness throughout the EU economy’, November 2018 Dedicated reports, surveys and contributions received from chambers of commerce and other business organisations ·Austrian Chamber of Commerce ·Croatian Chamber of Economy ·Cyprus Chamber of Commerce and Industry ·Czech Chamber of Commerce ·Confederation of Danish Industry ·Confederation of Finnish Industries ·French Chamber of Commerce and Industry ·Latvian Chamber of Commerce and Industry ·Malta Chamber of Commerce ·Spanish Chamber of Commerce ·Confederation of Swedish Enterprise Internal and external databases and reports ·European Commission, ‘Annual report on European SMEs 2017/2018’, 2018 ·SOLVIT database, European Commission ·European Central Bank, ‘Investment Barriers 2019’, 2019 ·European Enterprise Network ·Intellectual Property SME Scoreboard 2019 ·Safety Gate Additional sources are referenced in the text. Obstacles were included in this study if a significant percentage of surveyed businesses and/or if different sources consistently reported them as an obstacle. In that respect, it is striking how often the various sources revealed similar obstacles. While this study used many sources, the obstacles identified should in no regards be seen as exhaustive, in particular for obstacles that occur relatively less frequently and/or that are specific to sectors not under review. It is important to keep in mind that this study provides only a snapshot of the obstacles to the single market. Completely new obstacles that might emerge in the future are beyond of the scope of this study. The study provides some quantification to assess the prevalence and, where available, economic importance of obstacles. This quantification and other figures might not include the most recent economic and political developments, in line with the report’s approach of providing a snapshot. In particular, when data is provided for the EU, it includes the UK (EU28), unless otherwise specified. Beyond quantification, the relative importance of an obstacle also needs to be assessed qualitatively, in relation to its impact on key objectives of industrial policy, such as digital transformation or the transition to a carbon neutral economy, and other megatrends. As a complement to the description of the obstacles as expressed by businesses, the study also provides a preliminary analysis of their root causes and their link to the policy context. This analysis was performed by the Commission services. The root causes of each obstacle can at times be complex and involve a combination of factors (regulatory or not). For some obstacles mentioned by businesses, further research is needed to positively identify their root cause(s).



Summary: practical obstacles and barriers to the single market Different perspectives on the achievements of the single market The EU’s single market is the world’s largest interconnected market, comprising more than 500 million people and 27.5 million companies. Designed to allow goods, services, capital and people to move freely across borders, the single market makes it easier for firms and professionals to reach customers and suppliers all across Europe. The level playing field provided by the single market has helped increase the level and fairness of competition and the quality and supply of goods and services. It has been liable to lead to price reductions, improved productivity and strengthened the economies of the EU’s Member States. ·The single market has a positive impact on GDP. A recent study by the European Commission estimates that, compared to a counterfactual scenario in which EU countries trade under WTO rules, the economic benefits of the single market range between 8% and 9% higher GDP on average for the EU. Abstracting from trade and focusing only on the effect of increased competition, the benefits still amount to about 2% of GDP. ·The single market has a positive impact on trade. The increasing globalisation does not reduce the importance of the single market. While extra-EU exports in goods stood at almost EUR 2 trillion in 2018, intra-EU cross-border trade were more than EUR 3.5 trillion in 2018. For services, the picture is similar, with a total of EUR 1.2 trillion intra-EU cross-border trade and EUR 0.9 trillion extra EU exports. ·The single market has reduced mark-ups and increased productivity. According to a recent study, the welfare gain from the single market for EU Member States would amount to about EUR 427 billion per year. A large part of this benefit comes from higher productivity and lower mark-ups. While there are major differences between European regions, estimates indicate that all regions benefited from belonging to the single market. ·The single market also has a positive impact on employment, mainly thanks to the impact on GDP and productivity. Calculating the number of additional jobs that exist thanks to the single market is very difficult, but according to some rough estimates, up to 56 million jobs in the EU could depend on trade within the single market. Focusing on services only, the number of employees dependent on cross-border services may have almost doubled in the EU since 2000, recording a 94% increase as compared to a 5.5% raise in total employment. These estimates rely on the assumption of a linear relationship between employment and production, and so should be interpreted with caution. Nonetheless, they can be illustrative of the magnitude of the positive impact on employment of the single market. ·The single market has a positive impact on investment. If the single market did not exist, the EU capital stock could fall by 10% according to recent Commission estimates. Moreover, a recent study from the European Central Bank shows that, on average, joining the EU increased inward foreign direct investment (FDI) flows from other EU countries by 44 %. As a result, EU Member States are by far the most important investors in almost all countries of the EU: more than 50 per cent of international investments are held by other EU Member States. ·The single market is the go-to market for European SMEs. It accounts for 70% of the value of SME exports of goods, while 80% of all exporting SMEs sell to other Member States. Still, only 16.5% of SMEs in industry export to other Member States and this proportion has been relatively stable in recent years. There exists a clear relationship between enterprise size and internationalisation, with medium-sized and large enterprises more often exporting than micro and small enterprises. ·The single market is a key enabler of efficient value chain integration across the EU, which is increasingly important in both manufacturing (e.g., car production, Airbus) and services (e.g., Uber). A recent IMF study suggests that, based on a simple global value chain participation index, Europe is significantly more integrated into international value chains than the Americas and Asia. Between 2000 and 2013, the share of European exports involved in global value chain trade increased by 10 percentage points (pps), reaching about 70% of total exports of goods and services. Over this period, this ratio increased by only 2 pps in the Americas and 6 pps in Asia. While this might also be due to the ability of European firms to find opportunities abroad, the IMF points also to the role played by the single market and the European monetary union. ·The single market has been a valuable asset in multilateral and bilateral trade negotiations, and in our push for global and sectoral standard setting, as foundations of a rule-based international order. The European economic sovereignty will be further reinforced with the modernisation of the single market to support the green and digital transition.

But despite all these positive achievements, when businesses are asked about their perception of the single market, they often draw a different picture. ·In October 2018, at the final European Parliament of Enterprises of the 2014-2019 legislative term, 69,3% of entrepreneurs replied “No” to the question “Is the single market sufficiently integrated, allowing your company to operate and compete freely?”. ·While the majority of companies agree that legislation in the EU helps ensure the quality and safety of goods and services (65% agree, 29% disagree) and improves access to suppliers and customers (55% agree, 35% disagree), opinions are more evenly divided on whether it reduces or removes the differences in legal requirements in different Member States to the benefit of companies (46% agree; 39% disagree), helps to create a level playing field for all companies (45% agree; 48% disagree), to be competitive (44% agree; 47% disagree) and to encourage companies to invest (43% agree; 44% disagree). In addition, the lack of means for debt recovery is a major problem for 49% of businesses. ·According to the Annual report on European SMEs 2017/2018, only 4% of European SMEs undertake FDI in the EU. Medium-sized firms that experienced strong growth in turnover and that belong to an international group are more likely to undertake FDI. The Flash Eurobarometer 451 reveals that many SMEs do not think that EU legislation is supportive of investment. ·Most companies perceive legislation in the EU as complex and burdensome, increasing the amount of paperwork (70%) and the cost of administrative processes (67%). This is confirmed by several sources and has not substantially changed in the last years. For instance, according to an Executive Opinion Survey run by the World Economic Forum, the burden of (domestic) government regulation has only slightly improved in recent years, moving from 3.21 out of 7 (with 7 corresponding to “Not burdensome at all”) in 2014 to 3.35 in 2018. Similarly, according to the Flash Eurobarometer 457, the share of businesses who think that the complexity of administrative procedures is a problem when doing business has changed only from 63% in 2013 to 60% in 2017. The burden can be even higher when crossing borders, to the extent that different rules and procedures require further adaptation from firms. ·Also according to the ‘Hidden Treasures’ report by the CEPS (2019), businesses often perceive Europe negatively when it comes to entrepreneurship and innovation: a land of red tape, a mix of precaution and bureaucracy where doing business is difficult if not impossible. ·The analysis of the World Bank Doing Business Report can also help identify some patterns within the single market. The table below shows how EU Member States rank according to different indicators that measure the ease of doing business for small and medium-sized domestic firms in the largest business city of each economy. None of the indicators is tailored to measure the performance of the single market, but a visual analysis of the table suggests marked differences in the performance of Member States. The red cells identify countries ranking below 50, while the green cells identify countries in the top 10. In column 8, a star identifies Member States whose main trade partners (both for import and export) are other EU Member States. Overall, the table suggests that EU Member States perform very well in the indicator measuring the ease of trading across borders, with 16 countries earning the maximum score and top rank. This amounts to 80% of the countries whose main trading partners are within the EU. The situation is relatively less positive for other indicators, as for instance the ease of getting credit, dealing with construction permits or starting a business, for which several Member States rank below 50. These contrasted views call for a deeper analysis of obstacles experienced by the users of the single market, i.e. businesses which attempt to do business across the single market. Analytical approach This study follows a two-step approach, centred on the journey of businesses attempting to do business across the single market. The starting point of the approach chosen for this study is the obstacles as experienced and reported by businesses active on the single market. It therefore reflects how the integration of the single market is perceived by its active users – businesses – in their efforts to reach its other active users, the customers and clients. The study builds on several sources: existing business surveys or analyses, databases and a dedicated consultation of chambers of commerce and other business organisations. The Commission services also provided valuable input. Obstacles were included in this survey if a significant percentage of surveyed businesses and/or if different sources consistently reported them as an obstacle. The analysis of the study follows the journey of a business attempting to benefit from the single market. This allows us to identify the actual obstacles that it reports that it encounters. This journey typically starts with an analysis of the market opportunity and feasibility of exporting to or establishing a business in another Member State. When the business starts exporting, it may be asked to comply with regulatory or administrative requirements, will need to access its clients, deliver its goods or services, or might face micro-economic obstacles to competition. It will also have to meet tax obligations and ensure after-sales service and obligations. If and when it establishes itself in another Member State, a business may need to set up its business activity, hire staff (locally or from its headquarters), find local suppliers, invest and finance itself locally, and meet its local tax obligations. This approach and framework addresses the freedoms of circulation of goods, services, capital (in the business journey steps of establishment, investments and financing), and also freedom of movement to the extent it concerns worker mobility. In the second step, the root causes of each identified obstacle are analysed in their relevant policy context. This analysis mainly relies on the sector and policy expertise of the Commission services. It is important to be mindful of the unavoidable limitations of the causal analysis in this report. Indeed, it is sometimes difficult to reliably understand root causes without further investigation. Often the root causes are a complex combination of several factors; sometimes obstacles are linked, and their root causes must be analysed more holistically. In addition, the study analyses the practical obstacles and barriers in a sample of economic sectors, to better appreciate sector specificities. The selection of sectors included in the sample does not imply prioritisation, but was composed to ensure sufficient representation of different sector characteristics: size, importance for other sectors, relevance to the green and digital transitions, and a balance between manufacturing and services and domestic or export orientation. List of obstacles to the single market The following table sets out the general obstacles reported by businesses that apply to all or most sectors of the EU economy. Business journey step Obstacle / barrier 1. Steps before expanding 1 Insufficient information about business opportunities and partners as well as applicable rules 2. Steps to selling cross-border a) Product and services regulation 2 Difficulties in meeting requirements to sell goods or services 3 Problems with mutual recognition affecting the free movement of goods not covered by EU harmonisation legislation 4 Fragmentation of rules for digital services 5 Differences in consumer protection 6 Uneven access to public procurement 7 Differences in liability rules and insurance requirements b) Marketing and access to clients 8 Burdensome advertising and marketing restrictions c) Delivering goods and services 9 Transport bottlenecks, lack of access and restrictions 10 Insufficient internet and cloud infrastructure 11 Burdens and obstacles in the context of posting workers to other Member States d) Barriers to entry and uneven playing field 12 Market power 13 Price regulations 14 Problems with recognition of electronic identification e) Taxes 15 Burdensome procedures due to differences in tax systems and administrations 16 Tax reimbursement refusals and double taxation 17 Uneven playing field due to taxation differences f) After-sales (debt collection, guarantees, dispute resolution, etc.) 18 Heterogeneous rules on guarantees and contractual remedies 19 Ineffective contract enforcement and dispute resolution 20 Costs and delays of collecting payments and recovering debt 21 Barriers to data availability and unclear data privacy rules 22 Obstacles to effective intellectual property rights protection 3. Additional steps for establishment a) Setting up a business 23 Hurdles to starting a business b) Staffing 24 Lack of skilled workers and limited worker mobility 25 Difficulties with accessing a regulated profession 26 Complex, burdensome and/or uneven labour and social regulations c) Sourcing and suppliers No frequently reported barriers or obstacles in this step d) Investing and financing 27 Obtaining finance for operations in another country of the single market 28 Restrictions on corporate ownership 29 Insufficient credit information e) Taxes, subsidies and other public help 30 National tax exemptions for direct taxes, subsidies, and financial contribution requirements Throughout the business journey 31 Language

The following table sets out the identified obstacles for a sample of sectors. Sector Obstacle / barrier Accounting and Tax advice 32 National entry and exercise requirements for the profession of accountant/tax advisor 33 Lack of comparability in national accounting/tax standards and practices Architecture and engineering 34 National entry and exercise requirements for architects and engineers Audit 35 National adaptation of audit regulatory requirements under audit directives and regulations Automotive 36 Different national rules on spare parts 37 Market of used vehicles: different national rules for the import and registration of vehicles Chemicals Few identified legislative barriers remain Construction 38 Market access and exercise requirements for construction services 39 Burdensome and complex building permit procedures 40 Posting of workers and cross-border service provision by self-employed persons 41 Late payments 42 Additional national requirements for construction products Electronic communications networks and services 43 Economic and legal barriers to deployment of electronic communications networks 44 Legal and economic barriers to accessing networks and services at reasonable prices and under non-discriminatory conditions Energy 45 Inefficient unbundling may create market distortions 46 Access to markets for demand response aggregators 47 Retail price regulation hinders free competition; uncertainty concerning future regulatory developments 48 Data critical for operations is difficult to access or of low quality 49 Flat taxes and charges reduce importance of price signals for end-users Food and beverages 50 Additional national requirements on food labelling Hotels and accommodation 51 Authorisation and registration requirements for hotels or other accommodation providers and related detailed requirements Industrial machinery 52 Undue additional national markings, standards and requirements 53 Uneven market surveillance and enforcement creating uneven playing field for industrial machines 54 Different regulatory requirements among Member States for modifying or refurbishing construction and agricultural machinery in use Intellectual Property Agents 55 National entry and exercise requirements for patents and trademark agents Legal 56 National entry and exercise requirements for legal services Pharma 57 Restrictions to e-commerce of medicines based on health grounds 58 Restrictions regarding the establishment, ownership and advertising of pharmacies and health care service providers 59 Labelling language requirements Retail 60 Restrictions to retail establishment 61 Restrictions to retail operations 62 E-commerce: complexity and uncertainty of applicable rules for cross-border sales and purchases Transport 63 Information on market opportunities: difficulty for small road transport operators to have access to market information (market opportunities) 64 Information on market opportunities/network: lack of information on service facilities and services offered to railway undertakings 65 Lack of information on posting rules, enforcement and road traffic restrictions 66 Excessive complexity of rules on inland waterways 67 Inconsistent and unclear rules in public procurement in transport, and access to these rules is too restrictive 68 Lack of flexibility linked to driving time restrictions 69 Restrictions on work time in inland waterways 70 Different enforcement practices in road transport among Member States 71 Staffing: Skills shortages and mismatches in the rail sector 72 Territorial supply constraints and/or sourcing restrictions: availability of adapted rail rolling stock 73 Restrictions on cabotage in road transport 74 Lack of interoperability in railways 75 Lack of harmonised processes for authorisation of railway products and for safety certification of railway operators 76 Lack of rail network coordination 77 Fragmented EU airspace with 28 separate air traffic management systems 78 Fragmentation of the aviation radio band spectrum Waste management 79 Lack of information on the availability of materials 80 Non-harmonized end-of-waste criteria 81 Absence of standardised system to demonstrate the performance of recycled materials 82 Insufficient enforcement of European environmental legislation 83 Heterogeneity of Extended Producer Responsibility schemes in Member States Obstacles have been found to limit businesses in their cross-border operations in four ways: ·The most extreme way is when a business is prevented from providing its goods or services or from establishing itself in another Member State. This can occur when a local authority does not grant an authorisation, for example, or when a business cannot get access to the distribution infrastructure. ·The second way is when a business faces significant additional costs or burdens in order to find basic information. This might be information about multiple and complex regulatory requirements and administrative procedures, or information about market opportunities and business partners. ·The third way is when a business faces delays and uncertainty in its operations. This can occur when administrative procedures cause delays or when businesses find it hard to access capital or skilled workers. It can also occur in cases of weak or slow enforcement of legal rights, and legal uncertainty. ·The fourth way is when the obstacles create an uneven playing field by giving some businesses a competitive advantage over others. This can occur when some regulatory or non-regulatory requirements disproportionately affect businesses expanding from another Member State. In practice, these obstacles accumulate. Additional costs or burdens can be overcome when dealt with one by one. However, a business often faces several constraints at the same time when doing business in another country (such as obtaining a product authorisation, dealing with tax forms and procedures, labour and social requirements for hiring staff, setting up the business activity, understanding and complying with local consumer protection laws). This burden of combined constraints multiplies by the number of Member States where the business would like to expand, as the differences in the procedures of Member States allow for very limited economies of scale. Together, these constraints deter many SMEs from doing business across borders in the EU and therefore from taking their most natural direction for growth, which is the single market. For micro-enterprises, the cumulative effect of a few of those can weaken the business case for venturing beyond borders, to the point that entrepreneurs prefer to pass on the opportunity. Similarly, administrative delays can even make it impractical to operate or sell in another Member State in some sectors, and generate uncertainties on potential cross border operations. Some obstacles affect domestic and cross-border businesses alike. Local and foreign businesses may face the same challenges, such as access to skilled staff or complex local administrative procedures. Nevertheless, obstacles can in practice affect businesses from other Member States relatively more than local businesses. For instance: ·Non-harmonised rules and/or procedures force businesses to inquire about and deal with this diversity and associated complexity. As the differences found in Member States do not allow for economies of scale, the burden increases in proportion to the number of Member States across which a business is active. This favours businesses that focus on their domestic markets, and protects incumbents. ·The scarcity of some resources (such as skilled staff, energy or high-speed broadband) favours incumbents that enjoy a first mover advantage for these scarce resources, and may even prevent the entry of new business models that depend on access to these resources. Since the launch of the single market, obstacles that were both regulatory and discriminatory have been the first ones addressed. The tangible achievements of the single market, as shown in external assessments such as the World Bank Doing Business report, demonstrate how successful the EU has been in reducing such obstacles. The list of obstacles reported by businesses demonstrates that to deepen the single market today, it is necessary to look also at non-regulatory and non-discriminatory obstacles, and often very practical obstacles. This also helps explain the apparent contradiction between the tangible achievements of the single market and external policy analyses on the one hand, and the views of businesses on the other. When looking at a sample of sectors representative of the diversity of the economy, the same or similar general barriers were identified. For instance, entry and exercise requirements are found to be important barriers for many regulated professions (such as accountants, tax advisers, auditors, construction tradespeople, architects and engineers, legal professions or intellectual property agents). Some general barriers are especially important for some sectors. For instance, undue additional markings, standards and requirements for products already complying with harmonised legislation are particularly prevalent in the industrial machinery or construction product sectors. In addition, some barriers are sector-specific. For instance, the lack of rail network coordination on issues such as IT tools for traffic management or performance of maintenance work can discourage new entrants in the market. Root causes and link with EU policy Root causes of these practical obstacles and barriers vary. Often, one obstacle is due to a combination of root causes. This study identified five main types of root causes.

1.Some barriers originate in regulatory choices at EU level and national level. These can be: Restrictive national rules and limited role of EU legislation Businesses active across the single market often face restrictive national rules, in particular in policy areas where Member States take different regulatory approaches, including areas characterised by innovation and new business models. Divergent and restrictive regulatory approaches also occur in areas where the EU has no or limited legislative competences, and/or where there are unanimity requirements in the Treaty (taxation/social security or education). Finally, the limited role of the EU can also be due to the need to comply with the principles of subsidiarity and proportionality in a given area. EU legislation may leave flexibility in the level of harmonisation and/or Member States’ practice (‘gold plating’) In some areas, minimum harmonisation leaves room for Member States to set standards above an identified baseline. This may lead to divergent rules across the single market, which impose burdens on market actors. Member States often consider that setting additional requirements at national level is necessary for certain public policy purposes, such as safety or environmental protection. While there may indeed be good reasons to exceed the requirements of EU legislation when transposing them into domestic law, this often translates into additional administrative burdens for companies, thus undermining the single market, with a particular impact on SMEs. Gold plating can be particularly severe in services provision. In some cases, as for instance the interpretation and application of requirements for industrial machinery, it can even be considered as the real cause behind regulatory differences. Requirements justified for public policy reasons Some of the concerns reported by users can stem from situations in which the EU legislation pursues other legitimate policy objectives, striking a balance between such objectives and the imperative of market freedoms within the single market. These policy objectives include consumer protection and protection of social rights (e.g. the posting of workers directive). Complex EU legislation The interaction between various pieces of legislation, often at EU and at national level, and frequently changing legislation are a challenge. This may generate legal uncertainty as well as compliance costs, and thus adversely affect the business environment and economic activities, with a particular impact on SMEs. In addition, a more green and digital economy requires adapted rules for products at EU level. 2.Some barriers originate in the transposition, implementation and enforcement of EU legislation. This can be: Imperfect transposition of EU directives The lack of timely and correct transposition of EU directives by Member States undermines the proper functioning of the single market by increasing regulatory fragmentation. This may be for example the case of selling goods or services cross-border. Inadequate implementation of Union Law In addition to correctly transposing EU directives, Member States are also responsible for the correct implementation of EU legislation. Several existing principles (e.g. mutual recognition, administrative simplification such as the points of single contact, etc.), while potentially formally transposed by Member States, often lack (full) implementation in practice. This generates unnecessary or disproportionate obstacles for businesses active across the single market. The issue of implementation and application of EU law is also important at the level of regional and local authorities in the Member States. Inadequate enforcement of EU legislation Detecting, investigating and addressing situations of non-compliance is key for a well-functioning single market. Different types of enforcement responsibilities are held at both EU and national levels. Failure to resolve breaches of EU law results in barriers faced by businesses remaining unaddressed, or illegal products continuing to circulate across the single market. 3.Some barriers originate in administrative capacity and practices. These can be: Insufficient or incompatible e-government solutions at national level Insufficient development of e-government solutions can hamper the development of the single market. This is particularly an issue for access to information on rules and requirements. This is also a root cause of the difficulties linked with national formalities or procedures to meet requirements for selling goods or services cross-border.

Insufficient coordination between the Commission and national administrations and among national administrations This particular situation is a major factor undermining trust and fair competition on the single market. This issue often arises when businesses or professionals try to grow their business in another Member State. Insufficient cooperation is particularly relevant in the area of market surveillance, where different views of product market surveillance authorities have been identified as an obstacle, but is also relevant in the area of services. Due to limited exchange of information between Member States, national procedures often do not take account of requirements that service providers have already complied with in their home Member State. As a result, controls are unnecessarily duplicated, adding complexity for cross-border service providers. Insufficient staff or expertise at national, regional or local level Insufficient administrative capacity dedicated to implementing single market rules, including at regional and local level, undermines trust in the single market and the level playing field. This root cause is relevant when businesses or professionals want to grow their business in their home or another Member State (including in the field of public procurement). 4.Some barriers originate in the general business environment in Member States. To a large extent, the business environment is common to domestic businesses and to those active across borders. Such barriers are not specific to cross-border activities, yet affect businesses active across Member States and are thus reported by them as obstacles. They include regulatory and administrative burdens, lack of predictable regulatory frameworks, and relate to the quality of governance and institutions. Barriers include dealing with construction permits (for instance in the area of telecoms infrastructure), entry and exercise requirements for certain activities or professions, getting electricity, solving business disputes in and out of court and paying taxes. 5.Some barriers are not linked to public policy. Root causes of barriers may not be linked to public policies, whether national or EU. Markets in different Member States exist within broader cultural contexts. Different consumer preferences or languages throughout the EU make cross-border activities more complex than domestic ones. The commercial choices by private parties – which can be perfectly legitimate – or logistical issues can explain certain difficulties reported by companies, such as in the case of rejection or redirection of cross-border purchases or territorial supply constraints on retail businesses. General macroeconomic and microeconomic conditions can play a role. Geographical and infrastructural features can also create barriers to accessing a market, for example due to increased transport times and distances, or natural barriers to entry.



General obstacles and barriers This section lists practical obstacles and barriers as reported by most surveyed businesses, irrespective of their sector. As noted previously, the list is based on what the businesses currently report, and might therefore not reflect emerging or future developments. Summary table: general obstacles and barriers Business journey step Obstacle / barrier 1. Steps before expanding 1 Insufficient information about business opportunities and partners as well as applicable rules 2. Steps to selling cross-border a) Product and services regulation 2 Difficulties in meeting requirements to sell goods or services 3 Problems with mutual recognition affecting the free movement of goods not covered by EU harmonisation legislation 4 Fragmentation of rules for digital services 5 Differences in consumer protection 6 Uneven access to public procurement 7 Differences in liability rules and insurance requirements b) Marketing and access to clients 8 Burdensome advertising and marketing restrictions c) Delivering goods and services 9 Transport bottlenecks, lack of access and restrictions 10 Insufficient internet and cloud infrastructure 11 Burdens and obstacles in the context of posting workers to other Member States d) Barriers to entry and uneven playing field 12 Market power 13 Price regulations 14 Problems with recognition of electronic identification e) Taxes 15 Burdensome procedures due to differences in tax systems and administrations 16 Tax reimbursement refusals and double taxation 17 Uneven playing field due to taxation differences f) After-sales (debt collection, guarantees, dispute resolution, etc.) 18 Heterogeneous rules on guarantees and contractual remedies 19 Ineffective contract enforcement and dispute resolution 20 Costs and delays of collecting payments and recovering debt 21 Barriers to data availability and unclear data privacy rules 22 Obstacles to effective intellectual property rights protection 3. Additional steps for establishment a) Setting up a business 23 Hurdles to starting a business b) Staffing 24 Lack of skilled workers and limited worker mobility 25 Difficulties in accessing a regulated profession 26 Complex, burdensome and/or uneven labour and social regulations c) Sourcing and suppliers No frequently reported barriers or obstacles in this step d) Investing and financing 27 Obtaining finance for operations in another country of the single market 28 Restrictions on corporate ownership 29 Insufficient credit information e) Taxes, subsidies and other public help 30 National tax exemptions for direct taxes, subsidies, and financial contribution requirements Throughout the business journey 31 Language General barriers and obstacles along the business journey Step 1 Steps before expanding 1. Insufficient information about business opportunities and partners as well as applicable rules Practical obstacles and barriers reported by businesses Businesses report difficulty to access several types of information: i) commercial information (e.g., on market size, clients, potential partners) from the private sector, ii) business registers, and iii) information on rules and regulations applicable in another Member State. i) Commercial information Stakeholders report difficulties in obtaining commercial information in order to expand their business abroad. Surveys from both Eurochambres 2019 survey and the Dutch Doing Business in Europe survey find that entrepreneurs need more information about networks and opportunities to do business in other Member States. In particular, respondents to a survey of the Confederation of Finnish Industries identify difficulties “across the value chain, from assessing and finding good dealers and partners even before entering the market and in the bidding phase, to after sale services (e.g. installation and construction of equipment)”. The problem is particularly prominent among SMEs. The Latvian Chamber of Commerce and Industry reports that entering foreign Member States’ markets can be even more difficult for SMEs because they do not have sufficient resources to do a proper evaluation of market risks and opportunities. Similarly, the Interim Evaluation of the COSME programme finds that SMEs are in need of information to help them develop their activities outside their home country. It states that “the limited capacity of SMEs to internationalise their activities and their challenges in ‘finding customers’ can be considered an information asymmetry failure.”

ii) Access to business register information Legal and financial information on other businesses may be costly. Such information is available in a business register, but majority of business registers charge a fee to provide company information. For example, the Austrian Chamber of Commerce reports insufficient free access to commercial registries data. For example, the central portal of the German business register does not provide information in machine-readable formats and charges “high administration fees”. Similarly, the Czech Chamber of Commerce reports “insufficient reliable information about legal status and financial situation of potential business partners in other Member States” as an obstacle. At the same time, national business registers have been connected through the Business Registers Interconnection System (BRIS) since 2017. BRIS allows companies and entrepreneurs to search and obtain free information on EU limited liability companies in a multilingual and user-friendly way through the e-Justice Portal. iii) Information on rules and regulations applicable in another Member State This obstacle has different dimensions. On the one hand, the national rules themselves can be complex and unclear. Participants in a 2016 public consultation claimed that, even when online information about applicable national rules related to doing business in another Member State exists, it is difficult to find or understand it or it is too general. The Confederation of Finnish Industries, for example, states that the “complexity of regulations and bureaucracy,” reinforced by difficulties in finding correct information, is a frequent issue that companies face. Similarly, the DIHK 2019 survey mentions a lack of information or understanding of the different rules that apply in each Member State as a frequent barrier. On the other hand, online information on rules can be missing, incomplete or unclear. In a survey by the Czech Chamber of Commerce, the inaccessibility to information on rules and requirements was highlighted to be an extremely significant or significant barrier. The Confederation of Danish Industry highlights that because many references to standards are not published, some companies might be forced to use third-party certification before they can market their products. Available quantification 7 out of 11 business organisations that replied report issues related to this barrier. More specifically: i) Commercial information The Czech Chamber of Commerce reports that 52 % of Czech companies say that a lack of accurate and clear information is a serious or a very serious obstacle. For 53% of SMEs, “identifying business partners abroad is too difficult” according to the 2017/2018 Annual Report on European SMEs. This makes it one of the top five obstacles to exporting. Similarly, 31% of SMEs with exporting experience and 21% of SMEs without such experience mention the “difficulty to identify business partners” in another Member State as a barrier to doing business across the single market, according to the Centre for European Policy Studies. In addition, 22% and 11%, respectively, also report “not knowing where to find information about potential market”. In the area of public procurement, availability of information on public procurement opportunities varies greatly across Member States in the EU in spite of a single point of access at EU level (Tender Electronic Daily – TED). The table below illustrates this variation. Publication rate (value of procurement published in TED as a share of the GDP): Source: European Commission, TED ii) Access to business register information According to the Eurochambres 2019 survey, “insufficient legal/financial information about potential business partners in other countries” ranks eight in obstacles to the single market, reported by 58.9% of respondents. It is particularly important for companies with less than 10 employees. Nonetheless, the available statistics about the Business Registers Interconnection System (BRIS), show a constant increase in its use, including by companies and entrepreneurs, with over 732,000 company searches since BRIS went live in June 2017. iii) Information on rules and regulations applicable in another Member State According to the Eurochambres 2019 survey, “inaccessibility to information on rules and requirements” ranks third in obstacles to the single market, reported by 69.1% of respondents. According to the Hidden Treasures report, “not knowing the rules which have to be followed” is a barrier for 31% of SMEs in the five largest Member States. Analysis of the reported practical obstacles and barriers

As regards Commercial information about business opportunities ((i) above), there is limited role of EU legislation to provide information about business opportunities for the private sector. Finding such information is, to a large extent, dealt at firm level. Still, Member States have put in place networks and dedicated administrations to support their exports. In the area of public procurement opportunities, there is a problem of inadequate enforcement, notably, with uneven publication rates among Member States (cf. graph). As regards information on companies available in business registers ((ii) above), Directive (EU) 2017/1132 requires EU Member States to ensure disclosure of information on limited liability companies. Such information includes important documents such as instruments of constitutions, statutes and name of legal representatives. Business registers can charge fees for those documents, which must not exceed the administrative cost incurred by the business register. This Directive also requires Member States to provide additional information free of charge through the system of interconnection of registers (BRIS), including names of legal representatives, object of the company and information on their branches. The issue of information on rules and regulations applicable in another Member state ((iii) above) seems to be a problem of inadequate implementation of EU legislation. For example, the Services Directive requires Member States to make information on rules and requirements easily accessible at a distance and by electronic means through the so-called Points of Single Contact. In particular during the implementation of the Services Directive, the Commission invested major efforts in partnership with Member States, with a view to making them reach concrete achievements on that front. In view of some persistent shortcomings, the Commission has recently launched infringement procedures to solve Member States’ partial inaction on that front. It is also linked to other broader aspects of the general business environment in Member States. The issue has recently been addressed at EU level through the Single Digital Gateway. Regulation (EU) 2018/1724 establishing a Single Digital Gateway aims at facilitating online access to the information, administrative procedures and assistance services that businesses need to get active in another EU country. By the end of 2020, through a single point of access, they will be able to find reliable, qualitative information on EU and national rules that apply to them when they want to exercise their single market rights, know how to carry out administrative procedures and what steps they need to follow. In addition, if users are still confused about which rules apply or have trouble with a procedure, they will be guided to the EU or national assistance service most suited to address their problem. In addition, specifically as regards information about company law related procedures and requirements, Directive (EU) 2019/1151 requires Member States to provide such information free of charge through the single digital gateway and, where applicable, on the e-Justice Portal and at least in a language broadly understood by the largest possible number of cross-border users. This includes information on the formation of limited liability companies and registration of branches online. Member States will also make national online templates available for the formation of private limited liability companies (and can decide to provide such templates also for other types of companies). The timely transposition of this Directive by Member States will be important in this context. Step 2a Steps to selling cross-border: product and services regulation 2. Difficulties in meeting requirements to sell goods or services Practical obstacles and barriers reported by businesses Businesses report four different categories of difficulties in meeting requirements to sell goods or services: i) they are prevented from providing their goods or services or they have to adapt them, ii) unfair competition of non-compliant products, iii) they face administrative burdens to conform to technical requirements and other national rules, and iv) difficulty to access information on requirements (see section of access to information). i) Businesses are prevented from providing their goods or services or they have to adapt them Sometimes, goods lawfully marketed in one EU country are refused market access in another without good reason, as reported by the Austrian Chamber of Commerce. For example, the Spanish Chamber of Commerce reports issues with the acceptance of products in several Member States. Specifically, this organisation reports that electrical equipment and electrical safety and security systems exported to some Member States must be certified by the certification authority of that country. Other European certifications are not accepted. In addition to the certification costs, exporters are reportedly required to pay the certification authority a share of their sales revenue as a fee. Businesses, particularly SMEs that are faced with national rules preventing them from marketing their products, which have already been lawfully marketed in another Member State, tend to either adapt their products instead of relying on mutual recognition or not enter that market. In the construction sector, the Confederation of Danish Industry reports that several Member States continue to require national quality marks and documentation. This often goes beyond the CE marking laid out in the Construction Product Regulation. An example is fire safety, where Sweden, Belgium and France appear to require several certificates which cover the same characteristics as the CE marking. The demand for additional certificates “constitutes a heavy bureaucratic burden for manufacturers wishing to export their products to the aforementioned markets”. Similarly, the Confederation of Finnish Industries reports that technical standards for constructions and building materials are frequently divergent, which leads to a need to locally adapt projects. The Confederation of Danish Industry reports that temperature requirements for semi-preserved foods vary throughout Europe. This causes problems for companies that produce their products in one Member State and wish to export them to other Member States. For example, as Danish legislation requires lower temperature, a foreign company had to send its products to external cooling facilities to comply with the Danish temperature requirements. Several business organisations and multiple SOLVIT cases report that “Member States use different requirements on entering of products in their domestic markets, ignoring the EU rules on mutual recognition,” as formulated by the Czech Chamber of Commerce. The DIHK 2019 survey reports that there are “difficulties with the mutual recognition of national regulation in other EU Member States”. The survey adds “For instance, certain companies complain about the inconsistent recognition of professional qualifications in the single market. The same applies to eSignatures”. DIHK claims that there should be guaranteed freedom to provide services under the EU law (including in the European Court of Justice case law), but that in practice, it is “not always effectively implemented”. “Different national service rules” are the second most significant obstacle to the single market, indicated as significant or very significant by 71% of respondents to the Eurochambres 2019 survey (81% and 60% for service providers and producers, respectively). The majority of respondents to a survey by the Czech Chamber of Commerce highlight that different national service rules are an extremely significant or significant problem. Similarly, “different technical standards” are reported as an obstacle by 18% of self-employed, according to the Dutch Doing Business report. For example, the Greek Chamber of Commerce states that when exporting, different product and services market regulations per country “make business more complex and increase cost to comply”. Similarly, Malta Chamber of Commerce argues that “once a product is registered in the EU, it should not have to be re-registered”. In the area of goods, certain national measures may have a restrictive effect on goods leaving the territory of that Member State. Such measures can be a direct ban or restriction of exports, such as, an obligation to sell the entire production or a percentage of it (gas, electricity, wood, etc.) on the domestic market, which prevents economic operator from selling their products in another Member State. It can also take the form of a national measure indistinctly applicable to domestic and foreign economic operators that may have a greater (restrictive) effect on goods leaving the territory of that Member State, such as an obligation to draw up all invoices relating to cross-border transactions exclusively in the official language of that Member State. Export restrictions are in principle prohibited under Article 35 TFEU. Therefore, Member States putting in place such national measures need to demonstrate that these are justified by a public objective, and proportionate as to achieve the said objective. Furthermore, where the matter is harmonised by EU rules, Member States must comply with those rules.

ii) Unfair competition of non-compliant products There are still many unsafe and non-compliant products sold on the EU market, although one would expect that EU rules should be applied uniformly throughout the EU. This not only endangers consumers, but also puts compliant businesses at a competitive disadvantage. For instance, third-country products could in some instances be unsafe and also therefore non-compliant with EU legislation. However, Member State authorities can have difficulties to control this trade for several reasons. One reason is that it is problematic for them to take efficient action against the responsible operator when located outside the EU. In particular, this is the case in relation to consumer products not covered by EU harmonisation legislation. Other reasons can include lack of administrative capacity for market surveillance authorities or lack of cooperation between them cross border. Again, this results in an unequal level playing field for companies. iii) Businesses face administrative burden to conform to technical requirements and other national rules Even when information about technical requirements is available and businesses have to legally undergo a given procedure and meet certain requirements, the process of registration and approval of a given product or activity can be seen as slow and administratively heavy. These administrative delays can create hurdles for companies, as two SOLVIT cases illustrate. In one case, an agrochemical company reported that it applied for a parallel trade permit to another Member State for two plant protection products. Two months later, the Member State’s authorities confirmed they received documents to assess one of the applications. Another month later, they confirmed they received documents for the other application. However, the applicant still has not received a decision on either of their applications three months later. In another SOLVIT case, a foreign company reports that it was in contact with a company interested in the sale of their nutritional and cosmetic products in that company’s Member State. The products had been sold on the foreign company’s market for more than 10 years and are regularly registered in the Member State. The foreign company requested a registration at the Member State’s authorities. However, two years later, these authorities are still analysing whether the products can be approved. Available quantification 10 out of 11 business organisations (that replied to a Commission survey) reported issues related to this barrier. More specifically: i) Businesses are prevented from providing their goods or services or they have to adapt them Up to 71% of SMEs were faced with a market access denial decision after using mutual recognition for entering a market ‘Different national service rules’ are the second most significant obstacle to the single market, indicated as significant or very significant by 71% of respondents to the Eurochambres 2019 survey (81% and 60% for service providers and producers, respectively). Similarly, ‘different technical standards’ are reported as an obstacle by 18% of self-employed, according to the Dutch Doing Business in Europe survey. ii) Unfair competition of non-compliant products The number of unsafe and non-compliant products sold on the EU market is deemed to be as many as 32% of toys, 58% of electronics, 47% of construction products or 40% of personal protective equipment inspected. This is particularly relevant as, over the last few years, the share of people ordering goods or services online increased steadily. 60% of EU consumer purchased products online in year 2018 (Eurostat). More and more of the dangerous products notified in the Rapid Alert System for non-food dangerous products are sold online. In 2018, a total of 2257 alerts were circulated in this system. 53% of products notified in the Rapid Alert System originate from China. iii) Businesses face administrative burden to conform to technical requirements “Complex administrative procedures” are the most serious obstacle to the single market, indicated as significant or very significant by 79% of respondents to the Eurochambres 2019 survey (80% and 78% for service providers and producers, respectively). Similarly, according to the Hidden Treasures study, administrative procedures are an obstacle for 37% of SMEs without exporting experience and 26% of SMEs with exporting experience. According to the Dutch Doing Business in Europe survey, 20% of self-employed respondents mentioned major obstacles in the area of importing and exporting services, particularly regarding the complexity and duration of the process in order to receive consent for delivering a service. For example, in only a quarter of Member States does the consumer protection authority take a decision in a case covered by EU consumer law in less than three months on average, according to the Hidden Treasures report. A recent assessment shows that the administrative costs created by national sector-specific requirements in the areas of regulated business services and construction services can go up to EUR 10,000 and more. Per company level total compliance costs for European businesses are estimated to amount to 0,48 % of turnover. The problem is also prevalent among SMEs. According to a EU Flash Eurobarometer, 24% of respondents reported that administrative procedures for exporting are too complicated. Analysis of the reported practical obstacles and barriers

The problems that businesses may be forbidden from providing their goods or services and may have to adapt them, are in most cases due to either restrictive national rules (and a limited role of EU legislation), or EU legislation leaving flexibility to Member States, as well as an inadequate enforcement and implementation of EU law. On these issues it is worthwhile differentiating services from goods as they have different legal frameworks. It should also be added that as regards e-commerce, criteria triggering goods requirements are not always clear and consistent (see barrier 59 on complexity and uncertainty of applicable rules for cross-border sales and purchases). In addition, many intra-EEA trade barriers and obstacles to cross-border e-commerce are rooted in private behaviour of businesses rather than regulation. In recent years, the Commission has intervened through competition enforcement action to stop certain companies’ illegal practices that partitioned the Single Market and prevented licences in Europe from selling products cross-border and across customer groups. Goods In the opinion of Confederation of Danish Industry, there is a lack of a systematic follow-up on Member States’ obligations to enforce common EU rules, insufficient reporting of the surveillance, and a lack of publication of references to European harmonised standards. Enforcement differences can indeed create an uneven playing field. Sometimes, one Member State’s market surveillance authority may consider that a product is compliant with EU legislation, whereas in other Member States, authorities may take a different view. In those cases, a company may be requested to take corrective actions and even take the product out of the market, which can create significant economic loses. However, it is important that there is a common understanding among market surveillance authorities of what are non-compliant products. To this end, the recently adopted Market Surveillance Regulation 2019/1020 (which builds on market surveillance and compliance of products and amending Directive 2004/42/EC and Regulations (EC) No 765/2008 and (EU) No 305/2011), will reinforce the coordination among Member States market surveillance authorities in the harmonized area, with the set-up of the EUPCN (European Union Product Compliance Network). Among other aspects, the EUPCN will facilitate the exchange of information via the electronic portal ISCMS on the outcome of the inspections, and will also allow authorities to share and agree on product-specific risk-assessment methodologies. Requirements linked to the need to ensure the safety of products also might constitute an obstacle. This is, nonetheless, a justified obstacle to ensure health and safety. On the other side, the different regime in place for harmonised and non-harmonised products constitute an avoidable obstacle. There is therefore the need to have a more coherent safety regime for both type of products. Additionally, a procedure called “safeguard clause” is foreseen in the harmonised legislation to allow Member States and the Commission to take a position concerning a national restrictive measure. The sectoral sections on industrial machinery and construction provide concrete examples of these problems, which also can find their origin in sector-specific legislation. Services The main root causes seem to be related to inadequate implementation of EU law and more generally the general business environments in Member States. Both Treaty and secondary legislation like the Services Directive clearly distinguishes between the rules applicable to establishing service providers and those applicable to providers of temporary cross-border services (e.g., service providers like lawyers or IT specialists when posted in another Member State). It requires Member States to abstain from imposing their own requirements on temporary cross-border service providers except in cases justified by a limited number of overriding reasons of public interest. This means that the requirements Member States can impose on these temporary service providers are limited. In practice nevertheless, service providers still face regulatory obstacles when providing temporary services in other Member States. Furthermore, there is often a lack of clarity in the legislation of Member States as well as for example on the points of single contact whether and how national requirements apply to temporary cross-border providers. Administrative capacity The root cause of the administrative burden borne by businesses seems to be often linked to insufficient administrative capacity and practices for the implementation of EU law by national authorities. Administrative burden can in certain circumstances be justified in order to protect public interests, such as safety or health, but must be in compliance with rules such as the principles of non-discrimination and proportionality and going along with at least partly harmonised market regulation, which is properly enforced. Lack of capacity for effective market surveillance is discussed in the next section. The Services Directive addresses the issue of administrative burden faced by companies to comply with national requirements. It requires Member States to abolish unjustified authorisation schemes, simplify administrative procedures and formalities for those services and areas falling into this ambit of application. Moreover, under the Services Directive, authorisation procedures must comply with a number of requirements such as clarity, publicity, impartiality, reasonable waiting period. Information on requirements should be easily accessible and service providers should be able to complete procedures at a distance and by electronic means (through the national "points of single contact"). To make these rules operational, the Commission has carried out over the years substantial work together with Member States. There is still important scope for improving the implementation of these provisions by Member States. Administrative capacity and the dedication of national resources plays an important role in this regard. 3. Problems with mutual recognition affecting the free movement of goods not covered by EU harmonisation legislation This barrier is a part of the previous section on difficulties in meeting requirements to sell goods and services. However, it is of such importance that it requires a section of its own. Practical obstacles and barriers reported by businesses Building on the previous section, business organisations point out general issues in particular on the free movement of goods not covered by EU harmonisation legislation, which cover a wide range of consumer goods (such as textiles, footwear, childcare articles, jewellery, tableware or furniture). As reported by the Austrian Chamber of Commerce, in some instances goods lawfully marketed in one EU country are refused market access in another without good reason. Similarly, “different technical standards” are reported as an obstacle by 18% of self-employed, according to the Dutch Doing Business in Europe survey. The Greek Chamber of Commerce states that when exporting, different product and services market regulations per country “make business more complex and increase cost to comply”. Similarly, Malta Chamber of Commerce argues that “once a product is registered in the EU, it should not have to be re-registered”. According to a survey by the Confederation of Finnish Industries, 44% of respondents mention different standards as a barrier and 36% mentioned regulatory differences as a barrier. The Czech and German chambers of commerce as well as multiple SOLVIT cases report that Member States use different requirements on entering of products in their domestic markets, ignoring the EU rules on mutual recognition.

Available quantification The share of goods in intra-EU trade makes up significant part of the single market. It generates around 25% of EU GDP and 75% of trade in goods between EU Member States. The EU accounts for around one sixth of the world’s trade in goods. Trade in goods between EU Member States was valued at EUR 3,063 billion in 2015. According to a EU Flash Eurobarometer, more than one third of SMEs (36%) have imported from another country within the EU, while 30% have exported to another EU country. Additionally, 7 out of 11 business organisations (that replied to a Commission survey) reported issues related to this barrier. A wide range of consumer products are not harmonised by EU legislation (the so-called “non-harmonised goods” such as textile, footwear, childcare articles, jewellery, tableware or furniture). Up to 71% of SMEs who tried the existing mutual recognition system were faced with a market access denial decision. The lower intra-EU trade for textiles could be explained by strong imports from third countries. In 2018, the EU imported EUR 115 billion in textiles and clothes. In particular, for clothes imports are very large, with over EUR 80 billion in 2018. Analysis of the reported practical obstacles and barriers EU legislation leaves flexibility for the free circulation of goods not covered by EU harmonisation legislation by relying on the principle of mutual recognition. Inadequate enforcement of EU law and insufficient administrative capacity and practices: there is often limited information about national and EU rules that have to be complied with. This includes procedures and guidance, documents templates and information, or information about relevant authorities. Some aspects of products may be partially covered by EU harmonisation legislation. It might be complicated to identify the applicable national technical rule for certain types of goods and it is not always easy to find the right authority at the national level to provide the necessary information. The mutual recognition principle ensures that products not subject to EU-wide harmonisation legislation can, in principle, move freely within the single market, if they are lawfully marketed in one Member State. This principle should in theory allow manufacturers to sell their products across Europe without any additional requirements. To make the principle faster, simpler and clearer in practice, the EU adopted Regulation (EU) 2019/55 on the mutual recognition declaration which was adopted in March 2019 and will start applying as of 19 April 2020, together with an action plan to speed-up the implementation of the mutual recognition principle. The new Regulation 2019/515 establishes a voluntary Mutual Recognition Declaration, stronger administrative cooperation and alternative business friendly problem solving procedure in case of denial. The Regulation also foresees that Product Contact Points of Member States provide economic operators with the necessary information concerning their products (e.g. the applicable technical rules, the contact details, etc.)- Guidance on Regulation 2019/515 shall also ease the application by economic operators and authorities of the principle of mutual recognition in the EU single market. 4. Fragmentation of rules for digital services Practical obstacles and barriers reported by businesses This barrier is a part of the section on difficulties in meeting requirements to sell goods and services. However, as it plays out differently for digital services, it deserves a section of its own. Digital services face different legal requirements across the single market. This fragmentation is increasingly burdensome and leads to ineffective supervision of digital services. As a consequence, the protection of citizens’ safety and rights online can be more difficult. This affects disproportionately small businesses that offer innovative online services. Available quantification Conservative estimates point to around 10 000 EU start-ups established in Europe that might be struggling with the fragmentation of digital services . More data is currently being collected and analysed in the context of the evidence-gathering and consultation exercise feeding into the Digital Services Act that the Commission has announced for the end of 2020. Analysis of the reported practical obstacles and barriers The root cause of this barrier relates to the renewed need for harmonisation at EU level. The regulatory framework for digital services dates back to 2000, when the landscape of services was significantly different from today. The current legal framework for digital services, anchored in the Treaty’s freedoms for establishment and service provision, is set out in the e-Commerce Directive, which harmonised several key aspects relating to the free provision of digital services across in the internal market of the EU. With 20 years of case law interpreting the E-Commerce Directive, sometimes in diverging ways, the legal notions on the services covered and their respective responsibilities lack precision. Member States are also regulating in this field, in particular to address legitimate public policy concerns raised by the dissemination of illegal content on their territories. This creates a patchwork of national rules and fragmentation in the Digital Single Market, as well as legal uncertainty which is discouraging for businesses, particularly SMEs, from benefitting from the opportunities that the single market has to offer. Moreover, the cooperation procedures amongst competent authorities are not being used today, and Member States are taking further unilateral actions.

A number of recent policy and regulatory interventions have addressed specific challenges for the dissemination of content online, in particular with regard to the illicit dissemination of copyrighted content (Copyright Directive) or cover specific types of platforms and a subset of illegal content (Audiovisual Media Services Directive covering video-sharing platforms). A Commission Recommendation of 2018 sets general lines for the actions expected from all hosting services (including online platforms). Against this background, the President of the European Commission announced a Digital Services Act to ‘upgrade our liability and safety rules for digital platforms, services and products, and complete our Digital Single Market’. 5. Differences in consumer protection Practical obstacles and barriers reported by businesses Despite the existing set of consumer laws at EU level, businesses, as reported for instance by the DIHK 2019 survey, widely reported that they face divergent consumer protection rules in such areas as consumer rights, consumer sales and guarantees, contract terms, price indication and disclosure, which create additional costs, especially for retailers. According to the businesses, differences in national rules related to consumer protection create additional costs, particularly for retailers. Businesses perceive that this problem may be exacerbated by the Geo-blocking Regulation. Even if, from a strictly legal point of view, the Geo-blocking Regulation does not oblige entrepreneurs to sell to consumers in another Member State, businesses warn that prohibiting them from discriminating on the basis of the customer's nationality, residence or establishment when selling can lead in practice to the same result. Beyond the Geo-blocking regulation, the Commission has contributed through competition law enforcement to tackle anti-competitive cross-border trade restrictions and geo-blocking practices that limit the availability of products for European consumers. The Commission undertook a comprehensive evaluation of general EU consumer protection legislation during 2016-2017, which identified limited redress possibilities for consumers and diverging enforcement across Member States as the main issues hindering the effectiveness of EU consumer legislation. Available quantification Differences in consumer protection rules and contract law -including legal advice- was considered a ‘very important’ or ‘fairly important’ obstacle to the development of cross-border sales to other EU countries by 42 % of retailers using face-to-face sales channels and by 46 % of retailers using distance sales channels. In particular, differences in national rules that currently exist in some Member States and go beyond the minimum harmonisation level of the Consumer Sales and Guarantees Directive were reported as causing moderate to major costs for retailers, such as the free choice of remedies as opposed to the hierarchy of remedies (54%), periods of reversal of burden of proof longer than 6 months (38 %), the absence of an obligation for consumers to notify a defect within 2 months (37 %) and a longer legal guarantee period (36 %). In addition to different substantive rules, barriers related to consumer protection stem also from the national consumer protection proceedings. In only a quarter of Member States does the consumer protection authority take a decision in a case covered by EU consumer law in less than three months on average. In the Eurochambres 2019 survey, “differences in national (online) consumer rights” are reported as an obstacle by 36.30% of respondents. Finally, 6 out of 11 business organisations (that replied to a Commission survey) reported issues related to this barrier. Analysis of the reported practical obstacles and barriers The main root cause of this potential hurdle stems from the fact that EU legislation leaves flexibility in the level of harmonisation, which creates space for differences in national rules. There may be legitimate reasons for Member States to maintain specific national rules in some cases. The revised Consumer Protection Cooperation Regulation (EU) 2017/2394, which strengthens enforcement cooperation procedures and the powers of national authorities to address cross-border and widespread infringements of EU consumer law, entered into application on 17 January 2020. Additionally, in e-commerce, criteria triggering regulatory/consumer protection obligations and jurisdiction are not always clear and consistent (cf. barrier 59 on complexity and uncertainty of applicable rules for cross-border sales and purchases). i) Significant EU rules leave flexibility in the level of harmonisation Consumer protection is embedded in a broad scope of EU legislation. While the Consumer Rights Directive and the Unfair Commercial Practices Directive follow, in general, a full harmonisation approach (with exceptions in certain areas and allowing Member States several regulatory choices), the other four substantive legal acts (Consumer Sales and Guarantees Directive 1999/44/EC (CSGD); Unfair Contract Terms Directive 93/13/EEC (UCTD); Price Indication Directive 98/6/EC (PID); Geo-blocking Regulation) provide for minimum harmonisation. ii) Recent relevant initiatives The revised Consumer Protection Cooperation Regulation, entered into application on 17 January 2020. It provides a new procedure to address Union wide violations of consumer law and a better surveillance system. The Commission also has a stronger coordination role and is able to prompt coordinated enforcement investigations in the event of Union wide infringements. In addition, a new regulation on Market Surveillance and Compliance is expected to address some of the challenges mentioned above when it comes to products covered by EU-wide harmonisation legislation. It will come into force in 2021. The issue of differences in national laws has also been partly addressed by the recently adopted Directives on sales of goods and the supply of digital content/digital services: Directives (EU) 2019/770 and 2019/771 fully harmonise certain key contract law rules that were identified as obstacles to cross-border trade of goods and of digital content/digital services within the EU. These include rules on conformity requirements, as well as consumer remedies in the event of a lack of conformity and the conditions for their exercise. However, the length of the legal guarantee period remains subject to minimum harmonisation.

Finally, the Geo-blocking Regulation provided a harmonised approach to blocking the access to online interfaces and other discriminatory practices, with a view to favour access to offers by consumers in specific situations, while providing ex lege clarifications as to the applicable provisions in these cases. Beyond the Geo-blocking Regulation, the Commission’s competition enforcement has tackled certain companies’ illegal practices that partitioned the Single Market to the ultimate detriment of European consumers. In 2018, the Commission fined four consumer electronics manufacturers (Asus, Denon & Marantz, Philips and Pioneer) for resale price maintenance (“RPM”) in relation to a number of widely used consumer electronics products. In the case of Pioneer, the infringement also covered restrictions to cross-border trade between EU Member States. The Commission also fined the US clothing company Guess for imposing, among others, restrictions of cross-border sales to consumers (contractual geo-blocking) and RPM. Between March 2019 and January 2020, the Commission fined three brand-owners and licensors of rights for merchandising products (Nike, Sanrio and NBC Universal) for their licensing and distribution agreements restricting cross-border and online sales of merchandising products such as bags, toys, school accessories and clothes, notably for children. 6. Uneven access to public procurement Practical obstacles and barriers reported by businesses There is a perception among chambers of commerce and other business organisations of several Member States that local suppliers tend to be favoured over foreign ones, which discourages companies from making the effort and taking the time to bid across borders. Although overall transparency has increased during recent years, cross-border activities as measured by the number of contracts awarded to non-domestic suppliers, are limited. For instance, the Confederation of Danish Industry reports that between 2009 and 2015 only 2% of tenders were won by European companies in another Member State. According to the Dutch Doing Business in Europe survey, access to public procurement is the single most significant obstacle for SMEs: 32% of self-employed and 42% of SMEs in the area of services say they face barriers in gaining access to public procurement. This is also a barrier for the export of products, according to 37% of respondents to the same survey. The Austrian Chamber of Commerce reports that, in the summer of 2015, a company producing vehicle restraint systems was excluded from participating in a public tender in another Member States on the grounds that the product suddenly no longer complied with the local safety provisions’. However, the product was CE marked and was legally and properly used as a vehicle restraint system in all other countries. The Confederation of Finnish Industries reports that each Member State has its own process, which can include requirements for a priori references within a very specific field, obviously favouring a preferred supplier; requests in specific languages, requirements for service attention (e.g. response time) that effectively prohibit remote bidders from complying; extensive documentation requirements regarding the bidder's organisation, business plans, ownership, other business, key employee background, etc. In addition, businesses report that in Italy, the anti-corruption regulation seems to cause disproportionate administrative burdens for non-local companies participating in public tenders. Other business reports suggest that the main issues affecting public procurement systems in many Member States are the lack of professionalism regarding procedures, preparation of tender documents and use of criteria for evaluation of tenders; as well as lack of legal or technical training that leads to lack of specific skills and capacities. The Czech Chamber of Commerce reports that 69% of Czech companies find public procurement practices arbitrary and would prefer to establish a single EU-wide repository where they can enter company data and documentation required or public tender processes in order to avoid multiple requests. Businesses reported in a recent survey the following main obstacles for bidding cross-border (in parenthesis the percentage of respondents that perceived each of these as a “high relevant barrier”): High competition from national bidders (40%); Perceived preference among contracting authorities for local bidders (39%); Unfamiliar legal context or formal requirements (e.g. contract, labour law, certificates to provide such as special permits necessary for offering services abroad etc.) leading to market entry barriers in the awarding country (32%); Additional costs due to geographic distance (i.e. implementation of contract is more expensive compared to delivery of contract close to own location) (30%); Language barriers (23%). Finally, architects report a certain number of difficulties with procurement rules. The majority of architectural practices (more than 99%) are small companies with fewer than 50 employees. This can create obstacles related to the public procurement requirements such as minimum turnover. In response to the Architects' Council of Europe survey in 2018, 78% of architects said that they had experienced difficulties as part of the bidding process for OJEU advertised projects. About 40% of these respondents reported they had difficulty in fulfilling the minimum turnover threshold, while nearly as many felt the process was too onerous. More than 30% thought the bidding process was too costly, or that they had insufficient past experience. According to the same survey, currently around 17% of the architectural companies’ turnover is on average generated through public tenders. The vast majority of architectural/engineering contracts registered in the TED database (around 98%) is still awarded domestically. Available quantification Cross-border contracts (direct or indirect i.e. through a subsidiary) represented approximately ¼ of the number of awarded contracts in the EU and of the total value of the contracts between 2009 and 2015. The direct cross-border share in the number of awards was below 5% in the majority of the 28 Member States. At EU level, on average, SMEs only win 55 % of the contracts published in TED (this does not reflect their share in the EU economy). According to the Dutch Doing Business in Europe survey, access to public procurement is the single most significant obstacle for SMEs: 32% of self-employed and 42% of SMEs in the area of services say they face barriers in gaining access to public procurement. In the Eurochambres 2019 survey, “arbitrary public procurement practices” are reported by 38.2% of respondents. Additionally, 6 out of 11 business organisations (that replied to a Commission survey) reported issues related to this barrier. As regards enforcement and remedies, the available data show many divergences in the design and functioning of national remedies systems: ·There are specialised review bodies in 16 Member States; in 11 Member States, non-specialised administrative or common courts are in charge of the review. The appointment of members of review bodies is different in administrative review bodies and in judicial review bodies, and the number of their members varies from 3 to 70. ·The median length of the review fluctuates from around 15 days (Poland, Romania) to almost 267 days (Luxembourg). For some Member States, data is not available. Moreover, time limits for delivering decisions are different or non-existent in some Member States. The number of decisions as a percentage of the number of calls for competition published in TED per year varies from 1.7 % (Luxembourg) to 59.7 % (Romania). ·Review fees differ significantly among Member States. While in a few Member States the review is free (France, Spain, Luxembourg, Sweden, Latvia), in some countries the fees can be as high as EUR 380,000 (Czech Republic). In some Member States, the fees take form of a refundable deposit, in others it is non-refundable. As for the proportion of appealed first instance decisions, while in Denmark only 3 % of decisions are appealed, almost half of decisions are appealed in Bulgaria. Analysis of the reported practical obstacles and barriers

Based on the analysis of the general performance of the EU public procurement market, a number of barriers can be identified as follows: (i) access to and awareness of public procurement opportunities; (ii) geographical distance, unfamiliarity with the legal context, cultural differences; (iii) weak administrative capacity, bureaucracy, lack of professionalisation; (iv) barriers to enforcement and remedies. These relate to EU legislation leaving flexibility as regards implementation and different policy objectives, inadequate enforcement of EU legislation, and insufficient administrative capacity and practices. The diversity of the national enforcement systems generates in some cases legal uncertainty and practical problems especially for cross-border economic operators. The Remedies Directives introduce minimum level of protection of economic operators’ rights during public procurement procedures and minimum requirements on national public procurement review systems. Nevertheless, Member States remain free in how to establish their national remedies systems and in their choice of the body responsible of the review. Potentially affecting all bidders (national and foreign alike), diversified remedies systems can deter economic operators from taking part in public procurement procedures, which can lead to a decreased transparency and ultimately to limited competition across the single market. Insufficient administrative capacity (of EU and national public procurement rules). Contracting authorities often face a lack of administrative capacity, lack of knowledge of the rules and of technical expertise. Administrative capacity to manage public procurement processes varies greatly between Member States and limitations can be perceived at all levels, but administrative capacity is frequently weakest at the level of local authorities. The lack of administrative capacity, adequate systems, and effective governance structures have been identified as main challenges in complying with procurement rules when implementing ESI funds. Complex EU legislation. As single market instruments, the public procurement directives regulate only those contracts that are above the EU thresholds. Mindful of the principle of subsidiarity the directives regulate the most important issues and give Member States a large margin of manoeuvre in their implementation. Furthermore, through the new public procurement framework, public buyers are encouraged to use more quality criteria justified by public policy reasons (e.g. green, social, innovative), whose introduction might create challenges to economic operators during the transition to sustainable procurement practices. Recent initiatives In terms of relevant policy context, EU public procurement rules have been fundamentally modernised with the adoption of the new generation of EU public procurement directives in 2014, in force since 2016 but transposed by Member States with an average delay of 2 years. The Commission facilitated the creation of the Network of First Instance Remedies Bodies with the aim to strengthen cooperation and to increase the EU-wide efficiency of review. The European Commission develops guidance and good practices on green, social and innovative procurement as well as access of third country operations to the EU market. Professionalisation of public procurement aims to improve the whole range of professional skills and competences of the people conducting or participating in tasks related to procurement. The new rules on e-procurement introduced by the 2014 Directives are expected to increase efficie