Opinion of the Economic and Social Committee on the 'Green Paper on Commerce` (97/C 287/09)

On 28 November 1996 the Commission decided to consult the Economic and Social Committee, under Article 198 of the Treaty establishing the European Community, on the 'Green Paper on Commerce`.

The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 7 May 1997. The rapporteur was Mr Folias.

At its 346th plenary session (meeting of 28 May 1997), the Economic and Social Committee adopted the following opinion by 95 votes to four, with 19 abstentions.

1. Introduction

1.1. The Green Paper on Commerce is the first serious attempt at European level to record, analyse and above all plan for one of the most important economic activities in the EU, namely commerce.

1.2. The presentation of the green paper, after many years of unsuccessful efforts in this field, can only be regarded as positive, since it provides the opportunity to begin a serious, responsible dialogue at all the European levels, a dialogue which will not only examine the present situation and current problems in depth, but above all will bring to the surface the new prospects which will mark the progress of commerce in the 21st century.

1.2.1. It must be pointed out, however, that the green paper gives only a very superficial - and hence partly incomplete - presentation of the situation of commerce in the European Union. There is a complete absence of analyses and policy recommendations for the wholesale trade, the import/export trade, commercial agents, middlemen and itinerant trade, although these are particularly important commercial sectors whose specific problems the Commission should begin to investigate, studying their contribution to wealth creation in general, and their future prospects.

1.3. In the run-up to the new century, as the Commissioner responsible for commercial matters, Mr Christos Papoutsis, writes in his inaugural communication, 'commerce is faced with a wide range of challenges including the introduction of the euro, employment, competitiveness and cohesion in both rural and urban areas, and the information society, especially in the context of the electronics commerce`.

1.4. The discussion which the green paper seeks to promote should give priority to sketching a differentiated picture of the structures and development trends in European commerce. A task of particular importance is a comprehensive coverage of the results of empirical research on commerce. The green paper in its present form does not provide firms or political authorities with recommendations for action, which it is hoped will be provided by a 'White Paper on Commerce`.

1.5. The ESC welcomes the Green Paper on Commerce and hopes that it will be the start of a fruitful dialogue and study of the question.

2. Structure and development of commerce

2.1. Economic and social importance of commerce

2.1.1. Commerce is demonstrably the largest job-creating activity in the EU. Because alongside job creation the quality of services offered must be improved, commercial firms must have the aim of creating new skilled jobs for young people and women, rather than for part-time workers such as pensioners, students or visitors to a city, in parallel with skilled full-time jobs and half-time jobs (20 to 25 hours per week) which will be suitable mainly for mothers of small children.

2.1.2. Special emphasis needs to be placed on the development of commercial services both at Community and at national level. The aim to be set, which could also become a slogan, is 'an extra job in every commercial firm`. In practice, achieving this aim would mean 4,5 million new jobs, provided the preconditions for growth are created. And this is not utopian ...

2.2. Concentration and competition in commerce

2.2.1. An uncontrolled process of concentration in commerce would have undesirable side-effects on the market, on industry, on competing traders and on consumers. In order to prevent disadvantageous consequences for all those involved in commerce, the existing legal provisions on unfair competition, cartels, market-dominating positions and monopolistic trends must be strictly applied.

2.2.2. The considerable power possessed by consumers could make a substantial contribution to the rational progress of concentration, since correctly informed consumers are staunch supporters of variety in the goods and services offered.

2.3. The development of independent organized commerce

2.3.1. The observed growth in concentrated commerce does not mean, and must never mean, the disappearance of independent small and medium-sized commercial enterprises.

2.3.1.1 The independent commercial SMEs enjoy some unique advantages over the concentrated commerce in relation to their customers (personal contact, local marketing, daily information on customers' needs, easy home delivery).

2.3.2. The fierce competition currently prevailing at all levels of commerce has placed ceilings, albeit flexible ones, on the selling prices of goods. Thus the emphasis in the pursuit of profit has shifted from the selling stage to the purchasing stage.

2.3.3. This fact is the precise cause of the current rapid growth in independently organized commerce in various forms:

- cooperation between wholesalers;

- cooperation between retailers;

- purchasing cooperatives and associations (partnership groups);

- voluntary chains of wholesalers and/or retailers;

- franchising.

- consortia in logistics, marketing, transport, EDP systems, advertising etc.

2.3.4. A clear framework of Community rules must be drawn up to encourage cooperation between commercial SMEs - something which is essential to their survival and growth.

2.4. The development of the single market and internationalization

2.4.1. Cross-border trading in the single market

2.4.1.1. As long as national rules are maintained there will continue to be difficulties for firms in cross-border transactions within the single market. For this reason it is necessary to intensify efforts at Community and national level to remove all obstacles, whether intentional or not, which still exist.

2.4.1.2. 'Simplified trading` zones could be set up on a regulated basis covering specific areas across the frontiers of Member States of the EU, through agreements between those responsible on the two sides (e.g. Chambers of Commerce) on simplification of certain bureaucratic procedures and acceptance of similar practices in the exercise of commerce on both sides of the border.

2.4.2. Cross-border trading with countries outside the EU

2.4.2.1. The opportunities for successful penetration of third markets by American and Japanese firms are increased by the fact that both the USA and Japan have, each one separately:

- a single legal, regulatory and institutional framework;

- a single currency;

- a single mentality;

- a single language.

This does not so far apply to the EU.

2.4.2.2. Strenuous coordinated efforts must be made to achieve uniformity of regulations in the EU, which would help European firms in their external business.

2.4.2.3. Community commerce is already playing a leading role in modernizing commerce in the countries of the CIS. The same could happen in the markets of the Balkan, Black Sea and Mediterranean countries despite the economic and social problems they are currently facing.

2.4.2.4. The ESC calls upon the Commission to intensify fact-finding missions to ascertain the possibilities for trade and partnership with those countries, through the Committee on Commerce and Distribution (CCD), as it did earlier for Russia, Ukraine and Hungary, with a view to drawing up reports for DG I proposing measures to promote trade and the development of a range of programmes to support trade.

2.4.2.5. The considerable regulatory differences which exist between Member States of the EU and third countries in fact constitute serious obstacles to the growth of cooperation at the desired levels.

2.4.2.6. Special action plans should be adopted for the support of EU commercial activities towards third countries:

- creation of insurance mechanisms, limiting the risks, for investments in third countries;

- more emphasis to be given to identifying third country partners for commercial cooperation;

- training of third country potential executives into management skills, who will be instrumental in the expansion of EU commercial firms.

3. The role of and action undertaken by the Member States and the EU relating to commerce

3.1. Actions undertaken by the Member States

3.1.1. The Committee calls for the creation of a European body composed of high level representatives of the Commission and the national administrations, to examine any factors frustrating the inter-EU transactions.

3.2. Role and actions of the EU

3.2.1. Actions in support of commerce

3.2.1.1. Most of the measures taken and multi-annual programmes for firms are directed at SMEs, covering both manufacture and commerce. However, the needs of these two sectors are completely different, and vary from country to country. For the more effective use of Community funds and for greater transparency, the ESC proposes that SMEs be subdivided into SMECs (commerce) and SMEIs (industry).

3.2.1.1.1. Both Commission and Member States should help commercial SMEs to participate fully in the Structural Funds. This would help commercial enterprises to modernize through:

- supply of know-how on new information technologies;

- supply of know-how on new methods of management and modernization;

- development of logistics systems for enterprises;

- setting up an Observatory to process information coming from commercial SMEs.

3.2.1.2. The application of specific programmes within strict frameworks dealing exclusively with commercial firms and agencies is an urgent necessity, and there should be no more waste of valuable time. The programmes could concern the following sectors:

- financing for renovation, additions, modernization and extension of buildings, organization and storage systems and use of new technology;

- financing for joint ventures by commercial firms which are based in at least two Member States of the EU;

- financing for joint ventures by firms based in at least two Member States of the EU, with the aims of better organization of the selling or purchasing sector and organizational support for firms;

- financing to facilitate cooperation between commercial firms and agencies with a view to creating stronger groups, to the benefit of both commerce and consumers;

- facilitating financing for commercial SMEs on the same conditions as for industrial SMEs, and tackling the problem of the lack of fixed assets as collaterals;

- improving access for SMECs to sources of finance for seed capital and venture capital.

3.2.1.3. The study of programmes for industry and manufacture which have already been successfully applied can produce conclusions and measures to assist commerce, which has so far not enjoyed its fair share of Community support.

3.2.2. The consultative framework

3.2.2.1. Commerce, with its 4,5 million businesses and 22 million employees, is currently supported by an administrative unit within DG XXIII consisting of only a dozen people!

3.2.2.1.1. Directorates-General exist for industry, agriculture, consumer policy and even fisheries: the low status of commerce quite reasonably gives rise to questions.

3.2.2.1.2. In order for the dynamic, economic and social role of commerce to be put to optimal use, the ESC recommends the establishment of a Directorate-General for Commerce containing all Community services directly or indirectly concerned with commercial activity.

3.2.2.2. Given the important role that the Committee on Commerce and Distribution (CCD), has played, so far, in its capacity of a unique and specialist consultative trade body for the Commission, the ESC believes that it needs to be upgraded and reinforced.

3.2.2.3. The employers' and trade-union organizations of the commerce sector are today among the strongest and most reliable social partners, and should be treated as such by the Community institutions. Accordingly, they should play a role in all matters which concern their sector, through their current representatives, Eurocommerce, alongside Euro-Fiet representing employees.

3.2.2.3.1. The ESC calls upon the Commission to provide more substantial support for the social dialogue currently under way between the social partners in commerce, Euro-Fiet - which represents employees - and Eurocommerce, with a view to mutual understanding, further developing the social dialogue, boosting employment and enhancing commercial services. In addition, the outcome of the dialogue should be taken into serious consideration by the Commission before taking any decisions in this field.

3.2.2.4. The lack of a structured dialogue between traders' and consumers' representatives sometimes creates certain gaps in the consultation process which raise barriers to achieving a relationship of trust.

Healthy commerce is not served by confrontation with consumers: rather, it is concerned to provide them with the best and fullest information it can, so that practices which distort free competition can be made public.

3.2.2.4.1. The ESC proposes:

- the creation of a permanent consultative committee of traders and consumers, sponsored by DGs XXIII-XXIV;

- the presence of consumer and trader representatives at meetings of the CCD and of the Consumers' Consultative Committee when matters of mutual interest are discussed;

- regular consultation of commercial and consumer representative bodies.

4. New challenges facing commerce

4.1. Ensuring the effectiveness of the single market

4.1.1. Barriers to the single market

4.1.1.1. The Member States must overcome the prejudices of earlier times and make immediate moves to harmonize regulations which hamper the single market.

4.1.1.2. All national and local authorities must understand that if they create obstacles to the free movement of businesses and goods, their competitors will respond in kind.

4.1.2. Consumers' concerns

4.1.2.1. Consumers and traders, approaching from different starting points, converge in the market place, where they are completely interdependent.

4.1.2.2. Informed consumers ensure healthy competition on the part of business: only they can penalize bad traders, and can even drive them from the market.

4.1.2.3. Traders owe their existence to consumers, and should recognize this by offering them the best possible combination of information, quality, service and price.

4.1.2.4. A number of thoroughly anachronistic and unfounded prejudices still persist in trader-consumer relations, which can and must be reduced by means of an open dialogue, to the benefit of both parties, since there are more shared than divergent interests.

4.1.2.5. Effective use of data on consumer behaviour can be of great help for the development of commercial SMEs.

4.1.2.6. Commerce can make an effective contribution to protecting the environment by opting for eco-friendly packaging, consuming less energy and using 'clean` sources of energy.

4.1.3. The introduction of the euro

4.1.3.1. Introducing the euro into everyday transactions will be the task, principally, of commerce, although clearly the banking sector will be affected more than any other.

4.1.3.1.1. The commercial sector will be faced with new and costly challenges, such as adaptation of cash-registers and other equipment to the new notes and coins, adjustment of prices, new price-lists, etc.

4.1.3.2. If the euro is to be brought onto the market as smoothly as possible, the following are required:

- a programme of training for traders and employees, covering opportunities, advantages and disadvantages arising from the use of the euro;

- a programme to support SMEs in the transition process (e.g. information meetings and leaflets, subsidized loans for investment in necessary electronic media);

- the information campaign already launched by DGs II and X must take account of the particular features of the peoples of Europe, irrespective of which countries take part in the first or second stages of the EMU and avoid distortions which might generate anti-European feelings, but also of the potential of commerce for promoting the euro among the public;

- implementation of specific information programmes for the primary and secondary education sectors, so that young European citizens are swiftly and effectively prepared for the new currency situation.

4.1.3.3. The transition from national currencies to euro on 1 January 2002 will create enormous problems for commerce, since that date coincides with the busy sales period of Christmas and New Year, the drawing-up of balance-sheets, annual stocktaking and the start of the sales.

On practical grounds, the ESC would propose an earlier date.

4.1.3.4. As regards the indication of prices on goods for which the unit price is also required, after the introduction of the euro, and throughout the planned transitional period, in which prices must be indicated temporarily in both the national currency and in euros, the indication of three prices is proposed:

- selling price in national currency;

- selling price in euros;

- unit price in euros.

This method would appear to be adequate, given that a clear conclusion can be drawn by comparing prices expressed in the same currency, regardless of what that currency is.

4.2. Enterprise environment

4.2.1. Administrative burdens and simplification of legislation

4.2.1.1. The ESC hopes that actions under the SLIM initiatives will indeed have the anticipated effect of enabling SMEs to invest their dynamism in production rather than to red tape.

4.2.2. Training

4.2.2.1. The ESC proposes:

- the establishment of commercial technical schools with a common basic syllabus for all countries to train commercial sector clerical and managerial staff;

- the funding of special training programmes for commercial employers;

- the involvement of the social partners on vocational training boards;

- transnational education and training of employers and employees in the commercial sector which could start new initiatives, new jobs and new activities and enterprises.

4.2.3. Statistical information

4.2.3.1. The statistics given in the green paper are out of date (1986-1992) and have only historical value, given the rapid changes in the commercial sector, which occur almost daily.

4.2.3.2. The ESC urges Eurostat and the national statistical offices to make whatever efforts are needed for the timely collection of reliable commercial data.

4.2.3.3. It must be fully realized that, in the absence of reliable statistics, Community resources allocated in support of initiatives will be wasted.

4.2.3.4. The various national statistics on employment will need to be comparable, and to refer to employees by sex, age, type of work (full-time, part-time or seasonal employment), and by occupation (employed, retired, students, second job holders) etc.

4.2.3.5. The Committee proposes that a 'Statistical Observatory on Commerce` be established that will gather, correlate and publish information on, among others:

- data both on the supply and the demand side (market share by distribution channel, price levels, volume levels, etc.);

- data by business sector and by region.

4.3. Employment, competitiveness and cohesion

4.3.1. The rural environment

4.3.1.1. The EU should support SMEs (in rural centres) with specific policies, where its presence is deemed essential to the support and development of small communities. Such policies might include, by way of example among many other possibilities:

- special commercial loans with subsidized interest rates for businesses operating in semi-urban or rural communities of less than 10 000 inhabitants;

- special programmes to fund the modernization of businesses operating in semi-urban or rural communities of less than 10 000 inhabitants through the purchase of computers and connection to networks (especially Internet);

- easy, low-cost access to telecommunications networks.

4.3.1.2. Businesses in rural areas should be supported by public or private sector services such as postal, welfare and other comparable services.

4.3.1.3. The ESC suggests that special attention should be given to organizing and setting up distribution networks in island regions which are isolated from the mainland as soon as the tourist season ends. As a result, the small remaining populations frequently go without goods of primary necessity or medicines.

4.3.2. The urban environment

4.3.2.1. The green paper quite rightly highlights the dramatic effects of the changing role of traditional commercial centres in larger towns. In essence this has been caused by the desire of consumers to be able to reach commercial centres using private cars. Fewer people are using public transport. This poses problems of reconciling conflicting pressures in urban policy between commercial interests, public transport, the convenience of the private car and suburban planning. If identifying the difficulties is to lead to solutions, the interaction between commercial and land-use planning policies must be more clearly understood and public acceptance of the outcomes secured.

4.3.2.2. The imposition of some kind of restriction (in some Member States) on the uncontrolled proliferation of out-of-town shopping centres is an attempt to lessen the distortions appearing in national economies as a result of the decline of historical town centres and the move away from important urban areas.

4.3.2.3. The ESC proposes that research be carried out on representative urban centres with a view to measures which could bring about a revival in their fortunes.

4.3.2.4. Granting powerful tax incentives to businesses relocating to town centres could reverse the current trend of decline.

4.3.2.5. The establishment of dialogue and close cooperation between representatives of commerce and municipal authorities will not only solve local problems, but will also foresee and avoid the creation of new ones. The interdependence between commerce and transportation systems must be pointed out.

4.4. The information society and commerce

4.4.1. The green paper fails to describe the main characteristics of the information society and its basic defining features, which include electronic commerce. A more systematic and detailed assessment is required of the impact of the information society on existing forms of commercial activity.

4.4.2. The primary effect of the use of networks is the globalization of commerce, which is taking place regardless of the views of nation-states, public representatives of trade or international organizations, who are supposed to serve the facilitation of commercial practices throughout the world.

4.4.3. Consumers can now fulfil their needs without restriction, in a climate of ferocious competition, which works to their advantage - at least, at first sight.

4.4.4. Special studies should be made of the new distance sales methods based on the new technologies, and all European companies made familiar with them, since they will certainly bring about profound changes in consumer habits and in how commerce works.

4.4.5. Europe is, very slowly, beginning to adjust to the new technologies and the use of information networks. Use of electronic commerce applications already represents the new commercial revolution which is set to bring about radical changes in world trade structures, the physical and geographical expansion of trade, trader-consumer relations, the functioning of accounting systems, internal organization, information systems and employment norms.

4.4.6. It needs to be stressed that there is no time to lose: events are moving fast and Europe's commercial competitors are already making extensive use of the new technologies.

4.4.7. Security of electronic transactions represents the main problem in fully adopting the new forms of electronic commerce, particularly in the payments sector with verification of electronic signatures for the authorization of such transactions. Verification would lend a high level of security to commercial transactions using electronic means and would encourage consumers to overcome their hesitations and make use of the possibilities offered to them by the new technologies.

Employers' and trade union representatives from the commerce sector must play an important role in the dialogue under way among credit institutions.

4.4.8. A clear definition is required of everything covered by the term 'electronic commerce`, in order to distinguish between those sectors and activities concerned with inter-company practices (e.g. EDI, ECR, etc.) and those involved in daily commercial transactions with consumers.

4.4.9. Commercial businesses are the end users-consumers of all the electronic applications produced by specialist companies, and are confronted with the serious problems involved in using them.

End users-traders must therefore play a decisive part in the Commission's development and funding of electronic commerce, so that the sectors developed are those which are effectively beneficial and necessary for transactions in the 21st century.

4.4.10. The World Trade Organization should initiate a worldwide debate on the electronic media with a view to codifying the rules governing their use and consolidating their internal practices with the necessary safety valves and reliability.

4.4.11. The earliest possible implementation of the second phase of the COMMERCE 2000 action would be a great boost to the use of the necessary electronic applications among commercial SMEs.

4.4.12. The abolition of national telecommunications monopolies (by 1998) and the expected liberalization of telecommunications services in the EU will encourage a reduction in the cost of the new services offered: as a result, even the smallest commercial undertakings will be able to benefit from them.

4.4.13. The Commission must take the necessary measures to protect consumers on electronically-accessible markets (teleshopping) so that under no circumstances can the protection they currently enjoy be eroded.

4.4.14. The Member States should respond directly to the new conditions prevailing in the information society and take urgent legislative measures to cater for the new requirements of businesses and consumers.

4.4.15. As the market share of electronic commerce grows, a corresponding loss of traditional jobs in the commercial sector will take place. This negative effect is however expected to be offset by the creation of new jobs in the business support, message receipt and product packaging and distribution sectors.

5. Conclusion

5.1. Treaty Article 129a concerns consumers; Article 130 industry.

5.1.1. The ESC proposes that reference be made to commercial activity in one article of the revised treaty which will emerge from the IGC.

5.2. More active intervention by the Commission in European commercial issues is needed so that a modern commercial environment can rapidly be created in the European Union, helping companies to withstand fierce global competition, incorporate the new technologies and deal with the problems of training and specialization which will arise.

5.2.1. Despite its very substantial economic and social importance, commerce is still suffering in some countries from a bad image attributed to it by political scleroses over the past decades, which are now outdated. The Commission should take action to promote the real image of commerce for the benefit of the economy and employment.

5.2.2. The ongoing pan-European dialogue on commerce, launched with the publication of the Green Paper on Commerce, must lead to the drawing up of an action plan that will cover all the Community policies on commerce.

Brussels, 28 May 1997.

The President of the Economic and Social Committee

Tom JENKINS

APPENDIX to the opinion of the Economic and Social Committee

The following amendments, which obtained more than one quarter of the votes cast, were rejected during the discussions.

Point 2.1.1

Reword as follows:

'Commerce is demonstrably the largest job-creating sector in the EU. The quality of services offered must be improved, hand in hand with the creation of new - preferably full-time - jobs closely connected with the commercial sector. Recourse should be had to part-time jobs only for the purpose of replacing part-time workers such as pensioners, students or visitors to a city.`

Reason

Full-time jobs closely connected with the commercial sector should take precedence over part-time jobs with no commercial connection.

Result of the vote

For: 26, against: 40, abstentions: 8.

Point 3.2.2.2

Insert the following:

'Here it is worth bearing in mind the Euro-Fiet and Eurocommerce opinion on the development of social dialogue at Community level, which states "... There is a need for DG XXIII to consult properly and systematically the social partners for commerce, including within the framework of the Commerce and Distribution Committee."`

Reason

The DG XXIII Commerce and Distribution Committee must develop along lines that ensure representation of both sides of industry so as to place the Committee in a better position to discuss matters such as employment.

Result of the vote

For: 31, against: 60, abstentions: 11.

Point 4.1.3.3

Delete the last sentence ('On practical grounds, the ESC would propose an earlier date.`)

Reason

The ESC has already delivered an opinion on the practical aspects of introduction of the Euro. This opinion made no recommendation that the date of introduction should be changed from 1 January 2002. In addition, there are other strong reasons for introduction on 1 January, e.g. bookkeeping for the year in the same currency and all statistics produced on an annual basis.

Result of the vote

For: 48, against: 55, abstentions: 12.

Point 4.3.2.4

Delete.

Reason

This suggestion is premature. The proposal in 4.3.2.3 would be a more appropriate route to evolving new policies.

Result of the vote

For: 35, against: 64, abstentions: 17.

The following section opinion texts, which obtained more than one quarter of the votes cast in favour of their retention, were rejected in favour of amendments adopted by the assembly.

Point 3.2.1.4

'The considerable differences between national fiscal policies on commercial firms distort the terms of competition and hinder the proper operation of the single market. The ESC would welcome the adoption by the Commission of initiatives to harmonize not only indirect but also direct taxation among the EU's Member States.`

Result of the vote

For: 46, against: 48, abstentions: 6.

Point 4.4.13

'Acquisition of the equipment needed, together with the necessary training programmes, represent the two fundamental questions requiring direct funding by the Commission. The Commission should study the needs of SMEs with particular care and should push ahead with an effective aid programme for them.`

Result of the vote

For: 49, against: 55, abstentions: 18.