Opinion of the Economic and Social Committee on the "Action Plan for the Single Market - Scoreboard No 3"

(1999/C 116/02)

On 9 December 1997 the Economic and Social Committee, acting under the second paragraph of Rule 23 of its Rules of Procedure, decided to draw up an opinion on the "Action Plan for the Single Market - Scoreboard No 3".

This decision was confirmed by the new Bureau on 15 October 1998.

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 11 February 1999. The rapporteur was Mr Little.

At its 361st plenary session (meeting of 24 February 1999) the Economic and Social Committee adopted the following opinion by 70 votes to two with two abstentions.

1. Introduction

1.1. The third issue of the Commission's Single Market Scoreboard was published in November 1998 and constitutes the third progress report on The Action Plan for the Single Market published in June 1997 and due to be implemented by 31 December 1998.

1.2. The report provides updated information in the same format as the second issue with some additional statistics, a changed emphasis in the reporting of feedback and a presentation of the results of a business survey undertaken in September, 1998.

1.3. In addition to the opinions given regularly on specific aspects of the single market, the Committee has provided opinions on the Commission's "Draft Action Plan for the Single Market" and on the first two Scoreboards.

1.4. As in the previous opinion(1), it is the intention to focus in this opinion on what seem to be the most important issues within the Commission's report and not to reproduce or comment on every item. However, the opportunity is being taken also to express views as to how the momentum generated by the Action Plan should be maintained.

2. General Comments

2.1. Scoreboard No 3

2.1.1. The Committee commends the form of presentation maintained in the third issue. It welcomes the categories of information again provided and the continuing analysis of progress made in different areas and by individual Member States. In identifying achievements and shortcomings, the report achieves a reasonable balance even though it reaches a more favourable overall conclusion as to the outcome from that of the Committee.

2.1.2. The Scoreboard's straightforward and factual presentation has been particularly well-targeted in posing a challenge to the political will to complete the transposition of legislation into national law. The analysis of non-transposed directives for each Member State by the length of delay and by sector is particularly instructive. The Committee considers it to be essential that a political commitment to complete the process be guaranteed.

2.1.3. The Committee feels that the least persuasive section of the report is Part D in which statistics relating to Foreign Direct Investment and State Aids are provided under the heading of Single Market Economic Integration. Whilst it might be implied by the title that there has been movement towards economic integration, the text of the report does not directly link the information given under the two sub-headings with any such movement nor does it provide other pointers which would indicate that economic integration is taking place. The Committee would have preferred to see indicators which show more specifically the economic benefits and social developments attributable to the single market. It looks forward to receiving a separate report on economic integration which, it is advised, will be published by the Commission in 1999.

2.2. Action Plan

2.2.1. The Committee recognizes that the Action Plan has served a very worthwhile purpose in that it has both driven and facilitated progress towards completion of the legislative framework and that a stronger single market is emerging in which citizens and business will be better able to take advantage of the opportunities available.

2.2.2. However, the Committee does not subscribe to the view expressed by the Commission that the Action Plan "can already be counted as a success". Consider that, as of 15 October, 1998:

- one third of the commitments of the Commission, Council and European Parliament under the June, 1997 Action Plan have not been met;

- almost 15 % of Directives (203) have not yet been applied in all Member States(2);

- over half of the Directives dealing with telecommunications, public procurement and transport have not been transposed in all Member States;

- Member States with a poor record on implementing Directives also tend to be the poorest in applying the rules;

- trade barriers are considered to be broadly similar to those a year ago.

Notwithstanding what has been achieved, the Action Plan failed to realize its objectives. No independent business would survive if it failed consistently to meet one-third of its targets!

2.2.3. The Commission acknowledges that much remains to be done and states its intention to issue further editions of the Scoreboard. The Committee agrees that the Action Plan deadline should not be extended and does not advocate the setting of another target date. However, concentrated attention on the implementation and enforcement of single market rules must be maintained by one means or another.

3. Specific Comments

3.1. Infringements (Part B 2 of Scoreboard No 3)

3.1.1. Interesting sectoral information is given regarding the numbers of cases dealt with under the formal infringement procedure which can lead to references to the Court of Justice. The continuing high number of infringement proceedings gives cause for concern, even if many cases are halted after constructive dialogue between the Commission and the Member State in question. The Committee feels that it would have been useful for the Commission to explain reasons for the continuing breaches of Community law. Further developments should be carefully monitored and analysed by the Commission.

3.2. Enforcement and problem solving (Part C 1)

3.2.1. Reports on the operation of Coordination Centres and Contacts are given for only five Member States and, on the evidence available, minimal use is being made of these facilities so far.

3.2.2. The Committee is disappointed that Contact Points do not yet appear to have been utilized at all by citizens facing cross-border labour market difficulties (other than holiday jobs).

3.2.3. Clearly, there remains much to be done by both the Commission and Member States to promote and expand the use of the framework now in place if it is to be an effective conduit for individual citizens and businesses.

3.2.4. Better use of the Internet could also facilitate better understanding and the new "Internet Shop" recently introduced by the Commission may help in this regard.

3.2.5. Other communication channels not linked solely to the single market, e.g. EURES, are available to all citizens and their continuing use should be encouraged also.

3.3. Regulatory simplification (Part C 3)

3.3.1. The Commission refrains from passing any judgement whatsoever on the measures for simplifying legal provisions. It does not repeat the critical comments which it made in the previous report on the inadequate results of the SLIM initiatives. Instead it provides, and sets out clearly, more detailed information than in the past on the transposition to date of the recommendations made by the Phase I and Phase II SLIM teams. Figures 19 and 20 show that it now considers the progress made as satisfactory.

3.3.2. The Committee is pleased to note the continuing focus by both the European Council and the Commission on the desire for regulatory simplification at all levels and the wide-ranging tasks being undertaken through the SLIM initiative. The process is accepted as being one which should bring major benefits in the longer term although it is essential to ensure that the legitimate interests of all parties concerned are not prejudiced by it. The Committee feels that the effectiveness of the action taken has generally still to be seen by users and views the delay in tackling construction products legislation as a matter of concern.

3.3.3. The Committee also welcomes the fact that the Commission, in keeping with the recommendations of the SLIM team, has now presented proposals for simplifying VAT. It once again calls on the Commission and the Member States to ensure that when European legislation is drawn up in future, more attention is paid from the outset to the objective of keeping the legislation as simple as possible.

3.3.4. It is noted that the VAT proposal has been the subject of the first pilot-stage consultation with the new Business Test Panel. The Commission provides brief information about this initiative although, strictly speaking, it does not concern the simplification of legislation but rather the assessment of the implications of a proposed law in terms of costs. It will report in detail in summer 1999 on the first two pilot projects and the Committee eagerly awaits this appraisal. It assumes that this new channel of communication will be used only as an additional check in the case of certain draft laws where it would appear necessary to assess the prospective cost of the proposal, to SMEs in particular. Furthermore, such consultation of firms would only make sense if conducted in the preparatory phase of new legislation in order that, if necessary, an alternative way of solving the problem could be found and provided that such consultation takes place through representative interest groups.

3.4. Action Plan Implementation (Annex)

3.4.1. It is felt by the Committee, taking due account of the fact that progress is measured against the Action Plan targets and not against full completion, that the Commission has been over-optimistic to a degree in its assessment of achievements under the Plan, e.g. with regard to mutual recognition and to the European company statute.

4. Considerations for the future

4.1. One of the most striking statements in the 3rd Scoreboard was that the Business Survey showed that two-thirds of companies had not taken action to overcome barriers faced when doing business in the single market. This situation is not surprising but it is very useful that it has been quantified. However, it cannot be satisfactory that such issues are not being addressed and that, in consequence, full single market benefits are not being realized. Use of the Contact Points set up under the Action Plan might help in this regard but, in addition, there is an opportunity here for the ESC, through the Single Market Observatory, to provide a facility for businesses to expose such problems outwith the formal complaints procedure and to help to have them overcome. It is a major objective of the SMO to so do but clearly consideration will have to be given as to how it can be undertaken more effectively.

4.2. The ESC held a Hearing with a wide range of socio-economic representatives on 15 September 1998 and, with regard to those topics covered in the Business Survey published in the Scoreboard, the conclusions which emerged relate closely to the Survey's results. It is clear that prime concerns of economic players remain the need for the elimination of barriers to trade by even enforcement of legislation and rules and the elimination of protectionism. The suspicion voiced in the second Scoreboard that "Member States may be implementing single market legislation selectively in such a way that serves national interests" has not been dispelled.

4.3. The Hearing also concluded that a successful and efficient single market is essential to ensure competitiveness, employment and cohesion within the EU on the launch of the euro and with the real prospect of further major enlargement.

4.4. In its Opinion(3) on "Preventing new barriers to trade from arising in the Single Market", the Committee encouraged both the EFTA countries and the states which have applied for membership to take similar measures as the EU countries. To this end, the EFTA Surveillance Unit has now published two single market scoreboards but the Committee continues to be concerned with the importance of the enlargement candidates adopting, as far as possible, single market rules before joining the EU.

4.5. A majority of respondents to the questionnaire associated with the above Hearing were not satisfied with the way the single market was operating and it was felt that the benefits derived from it were not sufficiently clear to citizens and consumers.

4.6. Whilst the Committee concurs with the Commission's view that the introduction of the euro will bring a new dimension to the single market, it is by no means the final piece of the jigsaw. Rather, it will serve to expose uncompleted areas by making differing prices and costs more transparent. After a period when energies and vision have been focused on launching the euro and reaching the next phase of EMU, there should now be scope to redirect resources and efforts at the single market.

4.7. The Scoreboard tabulates and describes many areas of ongoing action required to be taken by Member States, Council, European Parliament and the Commission. The Committee would like to see a continuing concerted effort made to achieve further progress and welcomes, in principle, the Commission's intention to produce further reports on progress.

4.7.1. However, it is understood that consideration is now being given to the issue of reports on a more frequent but more limited basis. The Committee is concerned that such a change would detract from the necessary longer-term perspective and, indeed, it feels that as far as economic indicators are concerned, it would be better for these to be provided on a less frequent, say annual, basis. It would prefer to see the continuation of consolidated reports and reiterates the wish expressed in its previous opinions that these reports be further developed so as to reinforce their impact. The Committee proposes that they should include performance indicators that reflect the experience of employees as well as that of business. Such reports should become a main source of information for all participants in the single market.

4.7.2. The Committee acknowledges that the "Scoreboard" title has provided a very succinct and eye-catching banner under which to report progress under the Action Plan. Notwithstanding, the Committee doubts whether it is appropriate to present future comprehensive reports as "Scoreboards". The title would continue to be associated with an Action Plan the termination date of which has now passed and which set another unfulfilled target date for completion of the Single Market; to continue to use the Scoreboard heading could suggest complacency by implying infinite extension of the Action Plan deadline and would be much less appropriate when the stated intention is to focus more on qualitative data. The Committee suggests that further comprehensive reports be produced under a heading such as "Progress and Backlog" which would be, deliberately, less neutral than "Scoreboard" and could be equally media-friendly.

4.8. The Committee notes with considerable interest that, in addition to reports such as discussed above, the Commission intends to publish a number of strategic reports on the single market(4) in the near future culminating with a presentation to the June Summit in Cologne of the status of the single market and the perspective for the following three years. On its own initiative, the Committee itself will continue to monitor, investigate and report on the general progress of the single market and on both specific and horizontal facets.

Brussels, 24 February 1999.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI

(1) OJ C 407, 28.12.1998, pp. 60-66.

(2) Subsequently reported by the Commission to be 13,2´ % (181) at 2.12.1998.

(3) OJ C 157, 25.5.1998, p. 36.

(4) The first of these reports "Economic Reform: Report on the Functioning of Community product and capital markets" (COM(99) 10) was published on 20 January 1999.