Opinion of the European Economic and Social Committee on "PRISM 2002"

(2003/C 208/01)

On 17 January 2002, the European Economic and Social Committee, acting under Rule 29(2) of its Rules of Procedure, decided to draw up an opinion on "PRISM 2002".

The Section for the Single Market, Production and Consumption, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 4 April 2003. The rapporteur was Mr Pezzini.

At its 399th plenary session on 14 and 15 May 2003 (meeting of 14 May), the European Economic and Social Committee adopted the following opinion by 87 votes to one with 1 abstention.

1. Introduction

1.1. In its third review of the internal market strategy(1), the Commission reviewed progress since last year. What emerged was a discouraging picture. The success rate for completing target actions stands at just over 50 % - which is about the same as last year. Despite some notable achievements, the overall pace of delivery is still too slow.

1.2. The Single Market Observatory (SMO) contributes to the completion of the internal market, which has yet to become a reality for many citizens and for the majority of the EU's small and medium sized businesses.

1.3. Enlargement is an important milestone for the EU and its institutions. The SMO will seek to assist applicant countries to adapt as best they can to the internal market.

1.4. PRISM (Progress Report on Initiatives in the Single Market: http://www.esc.eu.int/omu_smo/ prism), is central to achieving the above objectives, in the context of the SMO's role. The information contained in the database helps both to boost understanding of the European system and to resolve the difficulties faced by citizens and businesses concerning the internal market.

1.5. The services offered to businesses and individuals by institutions, organisations and specialists are undoubtedly an important tool for developing the single market. The SMO must therefore help to promote and enhance them, via PRISM and other channels.

1.6. Completion of the single market is also aided by increased familiarity with and access to Court rulings and jurisprudence on the part of European citizens and businesses. If they were adequately informed, they could cite the principles laid down by the Court of Justice to defend their rights. During the week of 4-9 November 2002, the General Secretariat of the Commission(2) dealt with twelve written questions from parliamentarians concerning the internal market. The Competitiveness Council of 14 November 2002 called on the Commission to continue to be active and rigorous in ensuring full compliance with Community law across the EU, and asked Member States to fully and swiftly comply with the judgments passed by the European Court of Justice with regard to the free movement of services and freedom of establishment and to ensure appropriate monitoring.

2. Outline of the opinion

2.1. This document is essentially divided into two parts. The first part describes the PRISM and SOLVIT systems and highlights the differences between the two (point 3).

2.2. The second part contains the proposal for a 2003 work programme centred on two aspects in particular:

- the possibilities for linking PRISM and SOLVIT;

- the Commission's Internal Market Strategy for 2003, with particular reference to the recognition of professional qualifications and the action plan for financial services, which require further consideration (points 4 and 5).

3. PRISM and SOLVIT

3.1. The PRISM and SOLVIT systems, of the EESC and the Commission respectively, represent two important instruments available to the EU public and business sector. Together with other initiatives, such as the European Ombudsman Office, Euro Info Centres, Europe Direct, Innovation Relay Centres, Business and Innovation Centres and Dialogue with Business(3), these programmes represent a fundamental support to completing the single market. Each of these measures, with their own specific features, offers a complementary service to provide a swifter and better response to questions. Therefore it is important to maintain and enhance the diversity of instruments that European institutions can set up and offer to Member States and their citizens, and to the applicant countries, using the coordinated approach characteristic of the EU process.

3.2. PRISM (Progress Report on Initiatives in the Single Market) is the interactive information network of the SMO, accessible to all via the Internet, containing a collection of information compiled by EESC members, their organisations and other "users" of the single market. PRISM pools together good practices applied EU-wide in order to face the new challenges of the single market. This has helped raise awareness and promote such initiatives which deserve to be more widely used in the context of the single market since they help expand the market, create synergies and foster complementarity. The long-term aim of the Observatory is to identify the best way to promote these initiatives, and thereby influence the priorities for action concerning the single market set out by the European Commission, the Parliament and the Council.

3.2.1. The PRISM database brings together single market initiatives under four categories:

a) Information and support;

b) Problem-Solving Process;

c) Partnerships;

d) Agreements and Codes of Conduct.

3.2.2. The PRISM search engine enables the user to select data by selecting one of the above categories. The search can be narrowed down by selecting the country involved in the initiative and making a subject-based search using key words.

PRISM is a useful tool for applicant countries since it fosters understanding of the single market and can thus help them to adjust to the EU situation.

3.3. SOLVIT(4) is a network providing informal solutions to cross-border problems concerning the single market. It was set up by the European Commission to tackle problems resulting from misapplication of single market provisions by public administrations. Since it offers a mediative approach to problem solving, SOLVIT cannot deal with issues that are before the Community or national courts. However the user is free to commence legal proceedings at any time, thereby closing the case with the SOLVIT network.

3.4. The difference between PRISM and SOLVIT lies in the fact that PRISM is a database pooling best practices regarding single market legislation, which can be accessed instantly via Internet at any time and in any place. SOLVIT, on the other hand, is a consultative system that proposes solutions to problems regarding cross-border issues which are not already subject to legal proceedings and which concern specific problems faced by individuals or businesses in their dealings with public administrations.

4. Proposal for work in 2003 on PRISM and SOLVIT

4.1. The following three conditions are essential to glean the maximum benefit from the opportunities offered by PRISM:

a) it should be more widely publicised and marketed to the public and to businesses in both EU and applicant countries;

b) the database should include more examples of good practices implemented in the context of the single market, for instance by increased relations with relevant organisations, in particular those representing service industries;

c) it should be made more accessible and user-friendly for consumers, businesses and consultants.

4.1.1. Regarding points a) and b), and with a view to cooperation with EU institutions, the proposal to integrate the work of the two systems set up by the EESC and the Commission is bound to be beneficial to the single market and to European citizens and businesses. To this end, it is important to find simple and straightforward methods of accessing both systems and exploiting available information(5).

4.1.2. Since PRISM is a collection of good practices implemented within the single market, it could also include cases submitted to and solved by the SOLVIT network. Of course, these would omit any names or specific details in order to respect the parties' privacy. In turn, information available on PRISM could support the SOLVIT network if users could weed out requests that have already been solved. This would provide a more efficient and rapid service for European citizens and businesses.

4.1.3. One practical proposal could be to insert reference links in both websites and on home pages of EESC and EU sites to enable users to view and use the other system with ease. This would help increase the visibility of both PRISM and SOLVIT amongst users of either system.

4.1.4. It would also be useful for the PRISM database to include information on markets and services (together with details of any single market exemptions for the applicant countries) and on Court of Justice judgments regarding the single market.

5. Further areas for development in 2003

5.1. The Internal Market Council concluded in March 2001 that "improving the internal market in services is a crucial strategic challenge for the Community. Competition should be reinforced in services sectors, supported by the removal of barriers to cross-border trade and market entry". The Commission launched the Services Strategy in January 2001(6). Under the Strategy, the Commission sought during 2001 to resolve problems in specific areas (e.g. recognition of qualifications and sales promotions); it also carried out a survey to identify persistent barriers to cross-frontier movement of services. For 2002, the Commission set precise deadlines for Member States to dismantle the identified barriers concerning service provision, present non-legislative supporting measures (codes of conduct) and propose rules for service provision where strictly necessary, and only after harmonisation. A horizontal directive for services is still foreseen for the end of 2003.

5.1.1. There are many reasons why the Council highlighted the crucial strategic challenge posed by the EU's services sectors. The Commission has provided evidence(7) of the importance of services in creating employment in the EU. Regional data show that services were clearly the real engine of employment growth throughout the Community in the late 1990s.

A survey on business services carried out for the Commission showed that eliminating barriers to cross-border trade in business services would increase current EU GDP by between 1,1 % and 4,2 %. However, since business services represent only a third of all services, the impact of integrating all EU service markets could be even larger(8).

According to data provided by Eurostat(9), gross value added in the EU of 15 in 2000, as a percentage of the total economy, was distributed as follows:

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The figures for employment, as a percentage of the total economy, were distributed as follows:

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5.1.2. Completing the single market is a process requiring a range of actions to solve persisting problems in its many constituent sectors, including:

- financial services in the single market;

- recognition of professional qualifications.

5.2. The single market in financial services

5.2.1. The European Council of Barcelona confirmed the crucial importance of integrating capital markets in order to obtain sound results regarding economic growth and employment creation, stabilising the financial sector and enabling consumers and businesses to take full advantage of the euro.

5.2.2. As stated by the European Commission(10), there is a clear link between an efficient and integrated financial sector on the one hand and economic growth and employment creation on the other. A study commissioned by the European round table on financial services estimated that integration could add between 0,5 and 0,7 % to the EU's GDP per annum, which is equivalent to EUR 43 billion per year(11).

5.2.3. These potential benefits highlight the urgent need to complete the Financial Services Action Plan (FSAP)(12) by 2005 (but before 2003 for securities and venture capital). In order to implement the decision taken at the Lisbon European Council, which anticipated a mid-term stage in 2005 and a final stage in 2010, the following must be completed by 2003:

- a new framework for communication services;

- rules governing VAT and e-commerce;

- a new EU legislation impact assessment system;

- integrated venture capital markets;

- opening the rail transport market in trans-European networks;

- a mid-term review of social policy;

- programming new Structural Funds.

5.2.4. Out of the 42 measures planned for the FSAP, approximately 30 have already been adopted. Six out of the eight measures planned for 2002 have been adopted(13). Decisions are pending on:

- mutual recognition of qualifications;

- European rules for taxation on savings.

The EESC calls for a concerted drive by the institutions to adopt without delay the directive on pension funds and to finally finish work on the prospectuses directive.

5.3. Concerning the wholesale market for financial services, ministers at the informal ECOFIN meeting in Oviedo on 13 April 2002 welcomed the Commission strategy drafted to help avoid cases such as Enron occurring in the EU. This strategy focuses on five aspects: financial information, legal auditing, corporate management, transparency of the international financial system, financial analysts and credit rating agencies.

5.3.1. Concerning transparency, in line with the FSAP, the EU Council of Ministers reached a significant political agreement on 5 November 2002 in Brussels concerning the proposal for a directive on prospectuses(14). A prospectus is a legal document containing essential financial and non-financial information published by businesses for potential investors when they issue securities (shares, bonds etc.) in order to acquire capital and/or when they list their own securities for trading on a regulated market.

5.3.2. The single market must enable all EU citizens to operate in all Member States indiscriminately, on the same terms as they operate in their home country. Consequently, general and common rules must be proposed and implemented wherever possible. The 2003 deadline which the FSAP set for publication of the prospectuses directive must be respected.

5.4. Implementation of the FSAP will bring about two significant changes regarding the single market for retail financial services: consumers and SMEs will benefit not only from a more reliable and efficient payment system, but also from greater opportunities for trading and more competition, due to the lower financial costs involved in trading(15).

Although the reform of the financial markets represents a crucial step towards completing the single market, one must not underestimate the importance of the mutually supportive development that will occur as ethical financial instruments begin to operate on a transnational level.

5.4.1. Consumer and business uncertainty about the scope for appeal in the case of a cross-border contract-related dispute is one of the most significant obstacles to a single financial market.

5.4.2. Legal proceedings are often complicated, lengthy and costly, which regularly dissuades citizens from pursuing their rights, especially when only small amounts are involved. This breeds mistrust in the single market, which is perceived as remote and alien. This is clearly a failing of the single market.

5.4.3. FIN-NET - an extra-judicial procedure for the financial services sector - is a cooperation network of current national systems for settling disputes. It has three specific aims:

- to provide consumers with easy and informed access to extra-judicial arbitration of cross-border disputes;

- to ensure efficient information exchange between European systems, so that cross-border disputes can be settled as swiftly, efficiently and professionally as possible;

- to ensure that national systems of extra-judicial dispute resolution involving Member States of the European Economic Area apply a set of common minimum standards.

5.4.4. The SMO welcomes the success of the FIN-NET initiative, and endorses the Commission's view that the FIN-NET network must be monitored to ensure greater visibility and efficiency of the system and that European consumers must be able to contribute in a more structured and effective manner to the Community decision-making process in the field of investor protection(16). To this end, the SMO could explore in 2003 the possibility of contributing to the dissemination and use of the FIN-NET network within the single market, and could assess the potential for improving consumer use of this instrument.

5.5. Recognition of professional qualifications

Regarding the recognition of professional qualifications, as previously mentioned, it is essential to pursue the objectives laid down in the proposed directive(17), as well as the recommendations made by the EESC(18), by means of:

1) a clearer procedure to codify and simplify existing directives on professional qualifications and diplomas;

2) increased involvement of the specialist skills, at EU and national level, of organisations representing professional groups and associations, by holding consultations at European level;

3) retention and further development of mechanisms that have proved their effectiveness for the automatic recognition of professional qualifications.

This is in order to respond, as swiftly as possible, to the need expressed by 83 % of small businesses, 90 % of medium-sized businesses and 92 % of large businesses, which is to be able to operate in the single market using one set of rules instead of fifteen(19), and to secure greater support for citizens, workers, professionals and businesses that deal with and operate in the single market on a daily basis.

6. Main activities from October 2001 to December 2002

6.1. In close liaison with the European Commission, the European Parliament and the Committee of the Regions, the SMO has sought to increasingly involve organised civil society in the Member States and in applicant countries in the considerable efforts made by the European Union as a whole to achieve an effective barrier-free market. The widespread opinion is that the only way to eliminate the legal and administrative barriers that prevent the achievement of an effective single market in the Member States is to conduct a major cultural and organisational campaign that galvanises all strands of society.

6.2. In conjunction with and in support of the PRISM project launched on 1 January 2001 (referred to frequently in this opinion), the SMO has drafted several own-initiative opinions on cross-border and regional issues, liasing with various representatives of organised civil society from a number of Member States (France, Sweden, Belgium, Spain, Italy and the Netherlands), two applicant countries (Hungary and Poland), and the countries of the European Economic Area (EEA), who met in Oslo, Norway(20).

6.3. Moreover, at the specific request of Romano Prodi, President of the European Commission, the SMO drew up two opinions(21) on simplifying and improving legislation and is working on another own-initiative opinion(22).

In addition, other opinions were drafted on electronic commerce, mutual recognition and the free movement of workers.

7. Future work of the SMO

In 2003, the SMO plans to focus its work on the following main areas:

- contributing to the completion of the single market;

- supporting policies connected with EU enlargement;

- encouraging an improvement of existing legislation.

In this context, it would be useful to draw up opinions on:

- simplification;

- annual review of the single market;

- impact assessment, of the effects on business, workers, and individual citizens;

- co-regulation.

Moreover, the SMO is well aware that, in the immediate future, priority will be given to matters linked with, for example, the accession of the new Member States, revision of the Treaties, Europe's increased role on the world stage (Lisbon 2000), subsidiarity and simplification and food safety.

The SMO has already produced discussion documents on all these matters and on many others of key importance, to which the reader is referred for further information.

8. Appendices

The following documents are attached:

- opinions drawn up by the SMO between October 2000 and September 2002;

- details of hearings and conferences organised by the SMO between October 2000 and September 2002;

- the PRISM report of 1 December 2002.

Brussels, 14 May 2003.

The President

of the European Economic and Social Committee

Roger Briesch

(1) COM(2002) 171 final, 11.4.2002 - Communication of the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions on the 2002 Review of the Internal Market Strategy - Delivering the Promise.

(2) SP(2002) 3637 of 11.11.2002 - Directorate E/2.

(3) The websites for the initiatives mentioned are as follows:

- www.euro-ombudsman.eu.int

- www.europa.eu.int/comm/enterprise/ networks/eic/eic.html

- www.europa.eu.int/europedirect

- www.irc.cordis.lu/

- www.cordis.lu/innovation-smes

- www.europa.eu.int/business

(4) Commission Recommendation of 7.12.2001 on the principles for using SOLVIT - the network for solving problems regarding the single market.

(5) Therefore, internet access to PRISM should be promoted with information and links to the system available via, at minimum, the main portals currently in use, starting with Europa (www.europa.eu.int) which is yet to provide access. Research has shown that access to information contained in PRISM is available via the following portals: Yahoo, Tiscali, Libero/Arianna, Virgilio, Google and Altavista. Selecting information from the PRISM database of the SMO proves difficult since the user would have to already know that the system existed in order to filter out other sites with the same name.

(6) COM(2000) 888 final, 29.12.2000 - Communication of the Commission on an internal market strategy for services.

(7) Employment in Europe 2001, Recent trends and prospects, Directorate-General for employment (July 2001).

(8) COM(2001) 736, 7.12.2001 - Communication of the Commission on Economic Reform: Report on the functioning of Community product and capital markets.

(9) Source: Eurostat - Economic situation in Europe in 2000, March 2002.

(10) COM(2002) 267 final, 3.6.2002 - Report of the Commission to the Council and the European Parliament on the 6th progress report on implementing the action plan for financial services.

(11) The Benefits of a Working European Retail Market for Financial Services, www.zew.de/erfstudyresults/

(12) COM(1999) 232 final, 11.5.1999.

(13) IAS Regulation (International Accounting Standards)

- Directive on financial collateral

- Directive on distance e-commerce of financial services

- Directive on insurance intermediaries

- Directive on financial conglomerates

- Directive on market abuse

(14) IP/02/1607, IP/02/1209.

(15) COM(2001) 736 final, 7.12.2001 on the Commission Communication on Economic Reform: Report on the functioning of Community product and capital markets.

(16) COM(2002) 267 final.

(17) COM(2002) 119 final, 7.3.2002.

(18) OJ C 61, 14.3.2003, p. 67.

(19) MEMO/02/231 of 11.11.2002, as previously quoted.

(20) See the SMO Opinion on the Impact of the enlargement of the European Union on the single market.

(21) OJ C 125, 27.5.2002, p. 105; OJ C 14, 16.1.2000, p. 1.

(22) INT/156 - CESE 1311/2002.