Opinion of the Economic and Social Committee on the 'Action plan for the Single Market` (98/C 407/12)

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`.

The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 8 July 1998. The rapporteur was Mr Lyons.

At its 357th plenary session (meeting of 9 September 1998), the Economic and Social Committee adopted the following opinion by 108 votes to three with two abstentions.

1. Introduction

1.1. The second issue of the Commission's 'Single Market Scoreboard` was published in mid-May 1998. The first issue, published in November 1997, was the subject of an Opinion by the Committee on 25 March 1998 (). At the time it published its 'Action Plan for the Single Market` in June 1997 (), the Commission stated that from then on it would publish detailed indicators of the state of the Single Market, and of Member States' level of commitment to implementing the Action Plan every six months.

1.2. This issue of the Scoreboard deserves as warm a welcome as greeted the first. Detailed, itemized information is presented, which portrays clearly the progress which is being made relating to different areas of the implementation process. The achievements and non-achievements of Member States are individually identified.

1.3. The second issue expands considerably on the information contained in the first Scoreboard. In addition to updating the information provided in the first Scoreboard about the implementation of Single Market Directives and infringement procedures, it reports on progress with technical harmonization and standards, as well as transparency, and contains reports on feedback from European citizens, and Single Market economic integration. It is not the intention in this Opinion to reproduce the Commission's information under all these headings, still less to comment on every item, but simply to highlight what seem to be the most important issues.

2. Report and comment

2.1. The implementation of Single Market Rules

2.1.1. The percentage of Directives not yet transposed into legislation in all Member States (i.e. across the Union) fell to 18,2 % in May 1998. This compares with the figure of 26,7 % in November 1997 reported in the first Scoreboard. Sweden, Finland, Germany and Greece are Member States picked out for the progress they made between the two dates. However, as of 1st May, 249 Directives (nearly a fifth of all Single Market legislation) had not yet been implemented across all Member States.

2.1.2. An interesting new table gives a quantitative analysis of the problem areas. These turn out to be pre-eminently in the fields of telecommunications, intellectual and industrial property, transport and public procurement. In each of those fields, well over 50 % of the Directives have yet to be transposed across the whole Union. The Committee would like to see the Commission's analysis of the reasons for the difficulties in these particular areas.

2.1.3. In general, the figures concerning the transposition of Directives are encouraging. Worthwhile progress can be observed since the publication of the first Scoreboard. Yet there remains a long way to go to the target of 100 % transposition by the end of the year, and it is more than likely that it will be missed. The Committee would again urge the Commission to consider the use of Regulations rather than Directives more frequently, as an aid to effective enforcement.

2.1.4. Undoubtedly, the best news conveyed under this heading in the second Scoreboard is that all Member States have now established co-ordination centres for processing and resolving Single Market problems; all have set up contact points for businesses and citizens; and all have provided information of complaints and infringement procedures. This means that there is now an administrative structure in place across the Union which should, in principle and in time, enable both the Commission and the Member States to address infringement and enforcement issues on an informed and consistent basis. However, now that it has got this structure in place, the Commission must not sit back and await developments. It must move with all haste to make sure that the contact points and co-ordination centres are made widely known to businesses and citizens of each and every Member State, and that throughout the Union access to them is actively facilitated.

2.1.5. In one paragraph the Commission makes the notable, even mysterious, comment that 'any suspicion the Member States may be implementing Single Market legislation selectively in such a way that serves national interests must be dispelled`. The comment is notable because it stands alone, out of context. It does not indicate that anyone in particular holds the suspicion; or whether any particular Member States are the object of the suspicion. And it is not written to dispel such suspicion! Member States, no less than the Committee, will be interested to know whether and when the Commission intends to follow up the statement in any concrete way.

2.2. Infringements

2.2.1. The infringement procedure is about the formal arrangements under which the Commission notifies a Member State of its concern about a possible infringement of Single Market Rules, and the process thereafter leading either to a resolution of the problem or a reference to the Court of Justice. The infringement may relate to incorrect transposition of Single Market Directives or Rules, including Treaty provisions. The Commission will initiate a complaint by a letter of formal notice to the Member State in question. If not satisfied with the response the Commission will then address a Reasoned Opinion to the Member State and then, in the event of an unsatisfactory response to that, decide whether to take the Member State to the Court of Justice.

2.2.2. The Commission reports that in about 15 % of the cases (in 1997) there was no response to either the Commission's letters of formal notice or the ensuing Reasoned Opinions. Italy, Luxembourg and Portugal appear to have had the greatest difficulties, particularly in responding to some of the Reasoned Opinions. On the other hand, all Member States bar one (Ireland) exceeded - on average by between 20 and 30 days - the normal 60 day response time allowed for either of these two types of communication. The Netherlands, Portugal and the UK all took well over 120 days to respond to Reasoned Opinions during the year.

2.2.3. The Commission states that 'the number of infringement procedures shows no signs of abating`, though it adds (since only the Court of Justice can finally decide) that its data should be treated with caution. If the twelve month period 1 March 1997 - 1 March 1998 is compared with 1 September 1996 - 1 September 1997, it emerges that the number of letters of formal notice were 392 compared with 242; the number of Reasoned Opinions were 140 compared with 68; and the number of cases referred to the ECJ were 38 compared with 27. It cannot be said whether the jump in the figures for the later period should be regarded as an aberration or part of a trend until further figures from the Commission are forthcoming.

2.2.4. On the other hand, in the period 1 March 1997 - 1 March 1998 132 cases were closed following a letter of formal notice (out of 392 issued), and a further 42 cases were closed following a Reasoned Opinion (out of 140). Member States which received most Reasoned Opinions during the period were Belgium, Germany, Spain, France, Italy and Portugal. Finland had no Reasoned Opinions addressed to it, Denmark 1 and Sweden 2. The number of cases which were finally referred to the ECJ were relatively few (total 38). Belgium, Germany, France and Italy each had six cases referred to the ECJ, and Spain 5.

2.2.5. The Commission's concluding remarks on infringements are striking. 'There is a correlation`, it writes, 'between the countries which have the highest share of infringement cases and those which are slower in transposing legislation. Though this should not be considered as conclusive, there is a clear indication of those Member States which apply the rules of the Single Market in the most rigorous manner`. This is such a strong statement that the Committee believes that before long the Commission will have to follow it up by naming the Member States to which it thinks it applies, or else withdraw it.

2.3. Enforcement

2.3.1. Given the views it expressed in its original 'Action Plan for the Single Market`, enforcement is one of the areas on which the Commission is saying less than might have been supposed. In this issue of its Scoreboard mention is made of the delays inherent in the judicial process. For example, in cases in which a judgement of the Court is required to resolve a dispute the time taken 'can stretch to 5 years in cases of non-transposition and to 8 years in case of incorrect application or incorrect transposition of rules`.

2.3.2. These times are surely too long for both parties to disputes. The Committee has already drawn attention to the length of the judicial process, and how this weakens the whole enforcement process. It is said that justice delayed is justice denied. It is surely appropriate that a review be put in hand of the time taken to resolve cases.

2.3.3. In its 'Action Plan for the Single Market` the Commission considered alternative and/or supplementary measures of enforcement. It wrote that if necessary the Commission 'will submit serious cases of non-application to the Internal Market Council`. The Commission has not reported any cases so far and it must be assumed therefore, that there have not been any.

2.3.4. The Commission also wrote that in cases of serious breach of Community law which gravely affect the functioning of the Single Market, 'the Commission should be able to take urgent action against Member States ... using sanctions where necessary. Strengthening of the Commission's enforcement powers would contribute to this end and to the reduction of delays in problem solving`. The Committee has been given to understand that the Commission is working on proposals to this end which it hopes to present later in the year. If it does it will be a significant development, and one in which the Committee will take a keen interest.

2.4. Transparency mechanisms

2.4.1. This is a new section of the Scoreboard. It comments on technical rules, notification of national measures, and progress with the SLIM project.

2.4.2. Directive 83/189 requires Member States to notify the Commission (as well as each other) of new technical rules they intend to introduce. This enables the Commission (or other Member States) to decide whether they will be compatible with Single Market rules.

2.4.3. The rapid growth in the number of these notifications was the subject of an Own-Initiative Opinion by the Committee on 25 March 1998 (). The concern expressed by the Committee in that Opinion is echoed by the Commission in this issue of the Scoreboard. However, the Commission's figures show that the proportion of notifications which may be in breach of Community law has not increased proportionally, and has remained at about 230 for the last two years. Whether this justifies any optimism as to Member States' behaviour it is too soon to say. The Committee's view - that a growing proliferation of national standards is undesirable in itself - remains unaffected.

2.4.4. The Commission also reports on Decision 3052/95, which requires Member States to notify the Commission of national measures which hinder the free movement of goods legally manufactured or marketed in another Member State. The Commission is unhappy that so far only three Member States have made notifications under the Decision, namely Germany, France and Finland. It comments sternly that it will 'insist on national authorities applying the Decision at all levels, and if necessary will open infringement procedures against the less diligent Member States`. The Committee believes the Commission is entirely right to issue this warning, and will want to see it followed up vigorously wherever necessary.

2.4.5. About the progress with the SLIM () initiative, in which the Committee has taken a considerable interest, the Commission is rather downbeat. 'It falls short of initial expectations. There is a discrepancy between the political support behind simplifying Community legislation and the ability of Community institutions to take quickly the necessary decisions to carry through the policy of simplification.`

2.4.6. 'Increased commitment` is called for by the Commission 'at all levels`. Doubtless it is needed, but there is a need as well for an explanation for the difficulties being encountered. Unfortunately, the Commission has the embarrassment of not having simplified any of its own Directives, which cannot help it when it is urging others to act, and may well explain the Commission's relative reticence on this issue. The Committee believes it is time the Commission led by example in this field.

2.5. Feedback from European citizens

2.5.1. This is another new feature of the Scoreboard. The information contained in this issue, which has been gathered from the Commission's Signpost Service, relates to labour mobility across frontiers. The Commission believes that the basic legislative framework providing for this is in place at the EU level. It was concerned to learn peoples' views about seeking work, right of residence, social security rights, transfer of state pension rights and recognition of qualifications in Members States other than their own. It is acknowledged that considerable practical difficulties can prevent people taking up their rights, and that this arises in the first place from a lack of relevant information.

2.5.2. The analysis contained in the Scoreboard report is interesting as well as useful, but is more detailed than can be replicated in this Opinion. The information contained below reflects only the most general features thrown up the survey, and relates to the proportion of people who raised certain issues. Thus, the figures quoted do not address the causes of people's concerns; they indicate the main areas for further inquiry followed by appropriate action.

2.5.3. On the subject of employment, the Member Sates most frequently mentioned were the UK, Italy and Germany. On the recognition of qualifications, the Member States most frequently mentioned were Italy, Austria and Spain. On the subject of right of residence the Member States most frequently mentioned were France, Spain and the UK. On Social Security issues the Member States most frequently mentioned were, in respect to unemployment, Sweden, Portugal and Belgium; in respect to pensions, Greece, Belgium and France; and in respect to health, Belgium, the UK and France. All Member States should be following up the information published in this section of the Scoreboard.

2.6. Single Market Economic Integration

2.6.1. Again, this is a new feature in the Scoreboard publication. The Commission presents information which encourages it to think that the advent of the Single Market heralded a greater degree of economic integration within the EU.

2.6.2. Considering first the question of trade, the Commission states that the average intra-trade ratio between member States rose by 2,6 percentage points between 1985-1997. The fastest growth was experienced among the southern Member States and those which have most recently joined the Union. However, given the low percentage increase over more than a decade, it is difficult to associate this development specifically with the introduction of the Single Market. A more convincing statistic is the 20-30 % growth in intra-EU manufacturing trade since 1985 - a growth which has exceeded both the growth in GDP and the trade between Member States and third countries.

2.6.3. The Commission considers the amount of direct foreign investment into the EU. As it says, in the 1980s foreign investment flows world-wide expanded very rapidly, but the EU has attracted a high and increasing share of these. In the period 1991-1993 the EU's share was 44 % compared with just over 28 % in the period 1982-1987. Investment flows between Member States provided 65 % of the EU's total foreign investment in 1992-1996 as against 57 % over 1986-1991. The Netherlands, the UK and Germany were the biggest recipients of foreign domestic investment in 1992-1996, with Belgium and Luxembourg close behind.

2.6.4. On mergers and acquisitions, these tripled in number over the period 1986-1996, both in manufacturing and services. Nearly 60 % of all operations inside the Union involve companies within the same Member State. About 16 % are between companies from different Member States, and less than 24 % involve companies from within the Union and a third country.

2.6.5. The Commission argues that the above figures reflect in some measure the progress of economic integration within the EU, but it is not clear that this can be deduced. The number of cross-border operations between companies from different Member States peaked in 1990 at more than 2000 deals, and although the number picked up after 1994, the 1990 figure has not yet been bettered. This would suggest a different conclusion. It is difficult therefore to attribute the figures relating to these activities as having any particular relationship with the introduction of the Single Market.

2.6.6. Finally, in this section of the Scoreboard, the Commission has looked at prices to see if it can find a recognizable relationship to the introduction of the Single Market. It believes it has. Its Single Market Review (), the Commission writes, 'demonstrated that price convergence in consumer goods had been accelerated by the Single Market Programme. In 1993 the price variations of identical products and services in different Member States were 19,6 % for consumer goods (down from 22,5 % in 1985) and 28,6 % for services (down from 33,7 % in 1985)`. Here, the Commission is perhaps on firmer ground in the conclusion that it reaches.

2.6.7. On the last page before the Annex, the Commission has a table of products and prices, and, against each item, names the most expensive and least expensive countries. Denmark, followed by Sweden come out, on this table, as the two most expensive countries overall. Portugal, followed by the UK and Greece, come out as the least expensive. However, diverting though it is, this information has no discernible relationship to either the introduction or operation of the Single Market.

3. Assessment of the Scoreboard

Purpose and achievements

3.1. In its 'Action Plan for the Single Market`, the Commission set out four strategic targets. These were: Making the Rules More Effective; Dealing with Key Market Distortions; Removing Sectoral Obstacles to Market Integration; and Delivering a Single Market for the Benefit of Citizens. Within each of the targets it identified a limited number of important specific actions aimed at improving the functioning of the Single Market by 1 January 1999.

3.2. The purpose of the Scoreboard is to illuminate progress in achieving the targets set, to show what has been achieved and what remains to be achieved. The first two editions of the Scoreboard have served these purposes well in respect to the limited areas of activity they have covered. This is not a criticism; it could not have been expected that a great deal more ground could have been covered in the time available. Gathering the information required in the manner required meant mounting an enlarged, and perhaps innovative, programme of statistical inquiry which necessarily takes time and resources to set up and then run.

3.3. The actual production of the Scoreboard is excellent, with relatively short descriptive pieces well laid out, and supported by up-to-date statistics and clearly displayed tables. The naming of Member States in relation to their performance has the merit of making specific what would otherwise be hidden by averages or anonymity (or both), heightening the readers' interest and attention. The mistake has not been made of trying to cover too much ground in a single issue, although of course more material will become available as time goes on. There is only time for one more issue before we reach the target date, but the Committee urges the Commission to continue with the Scoreboard indefinitely ().

3.4. Furthermore, the Scoreboard should be developed. Now that the Commission has ceased to publish its Annual Report on the Single Market, it will have to utilise other channels to inform people about the Single Market, and the Scoreboard might be seen as one of them. More importantly, however, the Scoreboard should be developed to have a much wider impact. It has the potential to become a key information instrument for the actors throughout the Single Market. The Commission should consider both the frequency of its publication and the breadth of its circulation. The contents of each issue should for certain be placed on the Internet.

Striking the right balance

3.5. The one problem (understandable and easily put right) the Commission has with the Scoreboard is striking the right presentational balance between the achievements and non-achievements of the Action Plan. Without doubt the Action Plan has stimulated activity in many areas in which activity was previously dormant, and the credit for that must lie with the Commission. The Scoreboard is above all the place for presenting the achievements of the Action Plan, and for this to be done clearly and attractively, as it has been.

3.6. Natural pride combined with enthusiasm has, however, tended to cause the Commission to lose sight of the fact that most of the activity which is to be completed by the target date of 31 December 1998 is activity by the Commission, mainly in initiating actions or completing them. While this is the vital first step, it is only the first step. It is at Member State level that the Single Market has to work. And it is at Member States level that much the greater scope for improvement exists.

3.7. It is this fact which is obscured by some presentational aspects of the Scoreboard. For example, the successful measures listed in the Introduction under the heading 'The Action Plan is largely on course` are essentially a list of measures adopted at Commission and Council level, and therefore give a false impression of overall progress.

3.8. Another example is provided in the Annex, containing the 'Detailed Commentary on Action Plan Implementation`. Here, the great majority of the symbols indicating progress relate to Commission or Council actions, not what Member States have agreed to do, or are doing. A glance at the marks the Commission has awarded itself over the phases of the SLIM programme, for example, should be compared with what it says in the text about the reality of progress (see 2.4.5 above). The Commission will need to adjust this aspect of presentation in futures issues of the Scoreboard.

Future use

3.9. As to future issues of the Scoreboard, the Committee looks to the Commission to develop it so as to provide information about how individual Member States are coping in particular areas of activity. To do this it is not always essential to make invidious comparisons but, rather, to give examples of Member States where progress is being made and by what means. This is the 'Best Practice` principle, which the Committee feels could play an important part in developing best practice in many areas across the EU.

3.10. A good example of an area of activity about which more detailed information should be given is that of enforcement. This has been the subject of comment above (see 2.3) in relation to the instruments available to the Commission. In the Action Plan, however, it was stated unambiguously that 'the primary responsibility for enforcing Single Market rules rests with the Member States` and that 'those who breach rules should be subject to penalties under national law that are effective and proportionate and act as a deterrent` (). It would be valuable to know if all Member States do have appropriate legislation on their statute books and, if they do, to provide information about its use.

3.11. Just as important is the closely related issue of the adequacy of Member States' arrangements for identifying infringements of the rules, and for following up such infringements once identified. Now that all Member States have set up contact points for citizens and co-ordination centres for handling problems, such information should be more or less easily obtainable in a consistent form. Such information should certainly be published, for the players in the Single Market must be informed of what is happening where if they are to be able to use it productively.

3.12. Other areas in which the Commission has been experiencing difficulties, such as mutual recognition of standards, and the whole subject of right of residence and labour mobility, so important from the point of view of employment, would benefit from information and analysis on a Member State basis being published in the Scoreboard. Yet further examples were given at 3.4 in the previous ESC Opinion already referred to ().

4. Other considerations

Labour mobility and citizens' rights across frontiers

4.1. The report on the experience of European Union citizens in relation to labour mobility across frontiers contained in the second issue of the Scoreboard is particularly welcome. All too often the importance of citizens' rights across the EU is both overlooked and underplayed. As the Commission indicates, the subject of labour mobility is particularly important to both the economic and social success of the Single Market. The need for citizens to know their rights in the EU, and to be able to avail themselves of them in each and every Member State is paramount. The Committee looks to the Commission to develop its analyses on citizens' and social issues, and to report on them in the Scoreboard and elsewhere, as one of its central priorities.

The importance of adequate statistics

4.2. The Committee welcomes the first appearance of paragraphs in the Scoreboard about the effect of the Single Market in integrating Member States' economies. This is a subject of great importance, and the more so with the impending introduction of the Euro. It is highly relevant to seek and publish the information which will demonstrate the extent and the benefits (as well the problem areas) of the increasingly integrated European market - as the Committee itself urged in its recent Opinion on the first Scoreboard.

4.3. However, the information so far available is sketchy, and it is important that the Commission does not read more into it than is there. The Committee appreciates that this will require the collection and analysis of more up-to-date, extensive, and sophisticated information than is presently available to the Commission. The Committee made some specific suggestions about this at point 3.4 of that Opinion (). In addition, it made extended comments in its recent Opinion on the Commission's proposals for a Community statistical programme (), proposals which it welcomes but felt did not necessarily go far enough.

Transparency: the overriding issue

4.4. Above all, the Committee wishes to see the Scoreboard used to promote transparency. Transparency as to what is happening in the internal market; transparency as to citizens' rights; transparency as to market players' rights; transparency as to how to find out what to do if things appear to go wrong; transparency as to how complaints are handled and can be resolved; transparency as to what is happening in the different Member States so that there is general confidence that everyone is playing to the same set of rules.

The momentum of the Action Plan must be maintained

4.5. There will be only one more edition of the Scoreboard before the target date of the Action Plan is reached. The Committee understands the Commission does not intend to launch a second Action Plan, although no decision has yet been taken. However, the Committee feels that the Action Plan cannot simply be allowed to lapse. This would encourage the feeling that - the special effort having been made - everyone could relax. The value of much of what had been achieved could be undermined. It is essential that concentrated attention to the implementation of the requirements for the Single Market is maintained, even if in a different form. The Committee believes the Commission should publish a communication in the early Autumn setting out what it has in mind for 1999 and beyond, by way of sustaining the momentum and interest generated by the Action Plan.

Brussels, 9 September 1998.

The President of the Economic and Social Committee

Tom JENKINS

() OJ C 157, 25.5.1998. That Opinion commented chiefly on numerous aspects of the Action Plan. Since there is no point in repeating these, this Opinion concentrates mainly on the contents and quality of the 2nd Scoreboard itself.

() CSE 97/1.

() Preventing new barriers from arising in the Single Market., OJ C 157, 25.5.1998.

() SLIM - refers to the Simpler Legislation for the Internal Market project launched in 1996.

() 'The Impact and Effectiveness of the Single Market`, published 30.10.1996.

() The Committee is pleased to note that the EEA EFTA countries have begun to publish their own 'Scoreboard`. It feels sure these countries will speedily appreciate its value.

() Action Plan for the Single Market: 'Communication from the Commission to the European Council` - CES(97) final, June 1997, p. 3.

() OJ C 157, 25.5.1998.

() OJ C 157, 25.5.1998.

() Opinion on the Proposal for a Council Decision on the Community statistical programme 1998-2002, OJ C 235, 27.7.1998, p. 60.