Opinion on the 'Single market and consumer protection: opportunities and obstacles'

(96/C 39/12)

On 30 March 1995, the Economic and Social Committee, acting under the third paragraph of Rule 23 of its Rules of Procedure, decided to draw up an Opinion on the 'Single market and consumer protection: opportunities and obstacles'.

The Section for Protection of the Environment, Public Health and Consumer Affairs, which was responsible for preparing the Committee's work on the subject, adopted its Opinion on 17 October 1995. The Rapporteur was Mr Ceballo Herrero.

At its 330th Plenary Session, held on 22 and 23 November 1995 (meeting of 22 November), the Economic and Social Committee adopted the following Opinion by 76 votes to 34, with 19 abstentions.

1. Introduction: the single market and the protection of consumer interests

1.1. General considerations

1.1.1. The completion and implementation of the single market has important consequences for the protection and defence of consumers. Their interests should have been taken more into account from the outset.

They have still not been taken sufficiently into account, either in the ideas at the heart of the single market or in its practical implementation - despite the progress made with the Single European Act and, more recently, the Maastricht Treaty.

Although Article 129a(1)(b) of the EC Treaty as expanded by the Maastricht Treaty explicitly established a new legal basis for consumer protection, it is symptomatic that at the time of writing only one decision - on the EHLASS () system - has been taken on this new basis. This is despite the many initiatives that have been taken in this area by both the Commission and the Council since the Maastricht Treaty was signed on 7 February 1992.

On the contrary, if the principle of subsidiarity is interpreted in a certain way, it could easily make the Commission increasingly apprehensive about, and the Council gradually less interested in, proposing and taking decisions on new Community-level action to protect and defend consumers (). Timely mention of this was made in the Commission's 1994 () Report to the European Council on the application of the subsidiarity principle.

1.1.2. It is clear from the above that this Opinion is both important and pertinent. In it an attempt is made to study if - and to what extent - the Community has responded satisfactorily to the concerns and difficulties highlighted in past ESC Opinions that have addressed this question.

The main unresolved problems still need to be identified and an assessment carried out of the progress made in consumer protection following the inclusion of Article 129a in the EC Treaty. An investigation also has to be made into whether the consumer information and consultation mechanisms match up to requirements, and what improvements can be suggested in the field of consumer protection in the run-up to the revision of the Treaties in 1996.

1.2. Summary of the positions taken by the ESC on the completion of the single market and the protection of consumer interests before the signing of the Maastricht Treaty

1.2.1. On various occasions the ESC has been asked to issue Opinions on specific aspects of the completion of the single market.

The ESC had the opportunity to consider the advantages and disadvantages that the completion of the single market would entail for consumers in two Own-initiative Opinions on Consumer Protection and Completion of the Internal Market, one issued in September 1991 and its 'follow-up' (Additional Opinion) of November 1992 ().

1.2.2. The first of the two Opinions assesses consumer policy up to the Single European Act (SEA). It also analyses the changes that the SEA introduced, particularly the advantages and constraints of Article 100a, and advocates the introduction of a chapter on 'consumers' in the Treaty of Rome.

The main subjects discussed in the Opinion are consumer representation in Europe, and in the Community institutions in particular, the integration of consumer policy into other Community policies, and shortcomings in single market policy regarding consumer protection, with its advantages and disadvantages.

The Committee Opinion ends with a series of recommendations including the following which are of particular topical interest:

- the inclusion in the EU Treaty of a provision devoted specifically to the Community's consumer protection policy and containing a list of basic consumer rights;

- the adoption of a Community budget including a budget line set aside for the requirements of an effective consumer protection and information policy at Community level;

- the introduction of instruments to facilitate the uniform interpretation and direct applicability of Community legislation in the area of consumer rights;

- particular attention to be paid to the need for consumer protection and representation in dealings with public services and public-sector enterprises;

- work to be continued on the integration of consumer policy into other common policies, and the inclusion in all proposals of a statement assessing their impact on consumers;

- better consumer protection in cross-border disputes, and power of representation for consumer organizations in consumer disputes.

1.2.3. The Additional Opinion on the Consumer and the Internal Market welcomed the Maastricht Treaty's introduction of significant amendments to the EC Treaty, principally Article 3(s) and Article 129a.

The Committee Opinion did, however, conclude with a warning against the danger of scaling down consumer policy following the completion of the single market - when the right approach would be a Social and Citizens' Europe () - and spelled out the risks of an excessively restrictive interpretation of the principle of subsidiarity. It also restated its hope that the Commission, after the ratification of the Maastricht Treaty, would initiate a more solid and more dynamic common consumer policy.

2. Since Maastricht

2.1. Changes in post-Maastricht Community consumer policy

2.1.1.

Article 129a

2.1.1.1. Several amendments made by the Maastricht Treaty to the EC Treaty have been rightly interpreted as potential improvements with a view to an integrated Community consumer policy.

Indeed, a new letter (s) was added to the list of Community activities set out in Article 3. It established 'a contribution to the strengthening of consumer protection' as a general Community policy objective.

A new co-decision procedure was also created, which gives reason to hope that the adoption of proposals might be made appreciably easier (Article 189b).

The rewording of Article 75 (transport policy) and the new Article 129 on public health are two further examples of amendments which could be used to the benefit of consumers.

Article K, and Articles K1 and K9 in particular - with the clear new possibility of a 'link' - have created a legitimate hope for fuller collaboration and cooperation between the Member States, with a view to more effective application of consumer justice and the defence of consumer rights.

2.1.1.2. It was, however, the introduction of the new Title XI on consumer protection, with its single Article 129a, that was welcomed by interest groups and others as a decisive step towards establishing the significance of an integrated common consumer policy in its own right.

In the above Opinion CES 878/92 fin, the Committee stated that the new Article 129a 'authorizes the Community to take specific action in the field of consumer policy, thereby placing EC consumer policy on the same footing as the other common policies, in particular the single-market policy' (point 1.3).

Indeed, Article 129a(1)(b) creates the possibility of 'specific action' to be taken by the Community, to support and complement the policy pursued by the Member States to protect the health, safety and economic interests of consumers and to provide them with adequate information.

Article 129a(2) also states that this 'specific action' is to be adopted under the new co-decision procedure set out in Article 189b.

2.1.2.

Subsidiarity

2.1.2.1. The Maastricht Treaty also made first mention of another fundamental principle of general EU policy: the principle of subsidiarity.

The principle is not really new in essence; it is usually to be found in the constitutions of federal Member States. However - and regardless of what some consider to be a debateable, theoretical wording of this principle - if it is interpreted too narrowly when being applied to consumer policy it can be detrimental to the harmonization of binding Community legislation; this seems to have happened, for instance, with a number of conclusions adopted in the Molitor Group report on legislative and administrative simplification (). As the ESC Bureau has just decided, the subsidiarity principle cannot 'merely be a token for identifying decisions or for fettering the autonomy of participants' ().

2.1.2.2. Indeed, as a consequence of the introduction of the mandatory system to screen draft proposals, a variety of proposals on consumer protection were rejected following the Edinburgh Council Summit of 11 and 12 December 1992.

Later, in 1994, the draft Directive on the liability of persons providing services () was also rejected, and as the 1994 () Report to the European Council on the application of the subsidiarity principle explains, the following draft Directives, among others, were amended:

- protection of personal data in the context of telecommunications (COM(94) 128 final);

- comparative advertising (COM(91) 147 final and COM(94) 151 final);

- labelling of footwear [Directive 94/11/EC ()];

- time-sharing (COM(92) 220 and COM(94) 363 final);

- internal market in gas and electricity (COM(91) 548 and COM(93) 643).

Furthermore, the Commission has produced a list of over 25 measures to adjust existing legislation, whether to reformulate or to simplify it, on account of subsidiarity. Among them are Directives on food products, pressure equipment and indication of prices.

2.1.2.3. If, as is believed (), the principles of subsidiarity and proportionality are to be kept in the Treaty, what will then be required is a clear definition of their content and interpretation, and in particular the Interinstitutional Agreement on Subsidiarity will need to be added to the Treaty. It must also be made clear that the possibility of asking the Court of Justice to make a definitive pronouncement on differences in interpretation is always open, perhaps even introducing a new, specific means of recourse where individuals, under specified conditions, have a legal right to go to court to query whether the subsidiarity principle has been properly applied in relation to any legislative measure adopted.

2.1.3.

The Ombudsman

2.1.3.1. The Maastricht Treaty introduced the new post of Ombudsman, under the aegis of the European Parliament, with the power to receive complaints from any citizen of the Union concerning instances of maladministration in the activities of Community institutions or bodies. The Ombudsman is also empowered to conduct inquiries on his own initiative.

Only at its July 1995 session did the European Parliament elect the first European Ombudsman. The Committee does, however, consider that the effective entry into force of this new Community institution is extremely important to ensure that consumer rights are exercised properly.

2.2. Progress made in the follow-up to the completion of the single market

2.2.1.

Adoption, transposition and practical application of measures to complete the single market

2.2.1.1. Two important working documents provide regular information on developments in the transposition and application of Community law: the annual Commission Reports to Parliament on monitoring the application of Community law (), and the Commission Reports on the Community Internal Market. The second of these, covering 1994 (), was published in June 1995.

The Commission Report to Parliament includes an explicit reference to consumer policy and product safety, and it is clear from this study that many of the measures that have not been correctly applied or have not even been transposed are precisely those concerning the interests of consumers ().

2.2.1.2. Moreover, in its 1994 Report on the internal market, the Commission reiterates that the single market 'will not function properly without the active and genuine participation of consumers' (point 319). However, the introduction of the same report acknowledges that 'taken as a whole, the single market is working, but there are still problems in several areas' and consequently it should be improved so that it can fulfil its promises.

2.2.1.3. This also summarizes the conclusion that the ESC reached in the Opinion that was submitted following a public hearing on 30 June 1994 ().

The Committee did, however, point out some of the most important aspects affecting the interests of consumers which have not been properly addressed by the single market. These include:

- differences in the application of VAT;

- the absence of information on basic rights and how to assert them;

- unjustified differences and lack of transparency in cross-border payments;

- no uniform mortgage credit system;

- a number of difficulties in mutual recognition of professional qualifications.

2.2.2.

Harmonization and mutual recognition

2.2.2.1. The continuing recourse to Article 100a, introduced by the Single European Act as the legal basis for the majority of measures adopted for consumer protection, has confirmed and even highlighted difficulties in mutual recognition and shortcomings in the harmonization process.

The study of the methods with which Community legislation is applied in practice in different countries has shown that there are enormous differences in interpretation and practical application, which are due to the lack of clear and precise definitions of the basic concepts and legal principles on which they are based.

It is important that Member States bear in mind the principle of minimum harmonization, which permits them, under certain conditions, to enact extra protection for consumers beyond that agreed in EU legislation. Thus subsidiarity should permit some Member States to go further, allowing for the more dynamic development of consumer policy.

2.2.2.2. Neither has the ESC's oft-repeated call for Community institutions generally to recognize the direct horizontal effect of Community consumer policy directives whenever they contain - as is desirable - precise, detailed rights and obligations, met with an adequate response.

2.2.2.3. Moreover, in practice, consumers are increasingly suffering the negative effects of a less-informed approach to applying the principle of mutual recognition, particularly in the area of financial services, where prudential supervision is the responsibility of different authorities working within very varied systems and limits, and where legal systems respond in very different ways.

2.2.2.4. Furthermore, the different national provisions in force in the Member States constitute - despite the principle of mutual recognition - a considerable practical obstacle to goods manufacturers and suppliers of services in the internal market. SMEs are particularly affected, as may be consumers' economic interests.

2.2.3.

The use of non-binding instruments

2.2.3.1. Since the beginning of 1993 there has been no noticeable change in the Commission's policy regarding the use of non-binding instruments - resolutions or recommendations - in areas in which it would be better to use legally binding methods.

The only known case of the announced transformation of a recommendation into a directive concerns Recommendation 90/109/EEC on the transparency of banking services ().

2.2.4.

Codes of conduct and industry-consumer dialogue

2.2.4.1. Progress has been noted in the drafting of codes of conduct in different areas which are recognized and respected by industry and consumers in various Member States.

At the same time, the theoretical and practical limits of this kind of regulation and coordination have been confirmed. The Committee referred to these limits in the Opinions which it issued in 1991 and 1992, recommending that the existence and use of codes of conduct, which are still considered extremely important, should not replace legally binding instruments, where deemed necessary, as the most appropriate method of harmonization.

2.2.4.2. Furthermore, the Committee continues to take the view that an institutional framework of reference is required at Community level, in which this dialogue can take place at regular intervals and in which codes of conduct generally applicable throughout the EU can also be discussed and formulated. This has been suggested on various occasions, in particular in the Opinion on access to justice ().

2.2.4.3. Particular mention should also be made of the Commission Recommendation of 7 April 1992 on codes of practice for the protection of consumers in respect of contracts negotiated at a distance (distance selling). This is a good example of how the Commission can define a set of parameters for the drafting of codes of conduct ().

2.3. Evaluation and future prospects from the consumers' point of view

2.3.1.

The Commission's second three-year action plan (1993-95)

2.3.1.1. Since 1993, the Commission's activities in this area have been dictated by the second action plan (1993-95), which is now drawing to a close ().

This is not the right time to make a detailed assessment of the implementation of the second action plan; that is bound to be done by the Commission when it presents its next plan. Now is, however, a suitable time to carry out a general study of whether or not the Commission has attained its stated objectives; such a study cannot fail to conclude that it has not.

2.3.1.2. Indeed, in the area of consumer safety, the specific results of the implementation of Directive 92/59/EEC are still not known, but at the time of writing only a few countries had announced that it had been transposed ().

Equally, the recent evaluation of the application of Directive 85/374/EEC on de facto liability for defective products, drawn up by the Consumer Law Centre of the Catholic University of Louvain-la-Neuve, also came to very negative conclusions.

There is also discouraging news on the safety of childcare products, where no progress has been made.

2.3.1.3. An assessment of the relative priorities that the Commission had chosen for this period would also draw unfavourable conclusions.

2.3.1.3.1. Although cross-border information centres have been set up, some of which are operating adequately, there is still an appreciable shortage of information in this area, which is one of the barriers to completing a single market of benefit to consumers.

A systematic policy backed by media campaigns to alert consumers to their rights and how to assert them is still required.

2.3.1.3.2. Moreover, there has not been any marked progress towards significantly promoting the role of national and regional consumer organizations, guaranteeing them institutional representation at Community level and the means to exercise their responsibilities effectively.

2.3.1.3.3. The Commission has paid particular attention to access to justice and the settling of cross-border consumer disputes, and has published an important Green Paper on this subject ().

The Committee Opinion on this subject has already highlighted the relevant limits and shortcomings of the Green Paper (). The Commission is currently examining a draft Directive based on the Green Paper, and with Article 129a as its legal basis.

2.3.1.3.4. In the area of financial services, none of the measures set out in the action plan has been adopted.

2.3.1.3.5. The Commission has also presented an excellent Green Paper on guarantees for consumer goods and after-sales services (), on which the Committee expressed its views [cf. Opinion 743/94 of 1 June 1994 ()].

It has been announced that the Commission has prepared a proposal for a draft directive in this area; more details are awaited with interest, especially to see to what extent the ESC's recommendations have been taken on board.

2.3.1.4. In the run-up to the drafting of the third action plan, it can be concluded that the actions set out in the second plan have still not been completed.

Rather than a list of piecemeal measures, what is needed is to define a genuine integrated and agreed consumer policy. If this is to happen, all the possibilities opened up by the new legal basis of Title XI of the Treaty need to be exploited. This includes suggesting amendments to the Treaty for the intergovernmental negotiations in 1996, so that this policy is developed and implemented harmoniously throughout the Union.

2.3.1.4.1. The Committee would refer in particular to the impact of the information society on consumer policy. It anticipates that the third action plan will propose specific measures in this area.

2.3.2.

Lack of transparency

2.3.2.1. One of the questions that consumer organizations have repeatedly highlighted is the need for more transparency in the Community's decision-making processes. This is one of the greatest concerns in interinstitutional relations.

The ESC shares this concern, and considers that the legislative process should be made as transparent as possible, and decision-making procedures streamlined.

As far back as its Own-initiative Opinion of 23 September 1992 on the Citizens' Europe, the Committee laid particular emphasis on the need to make Council decision-making transparent ().

2.3.2.2. On the other hand, Community law itself is unclear and lacks transparency, whether due to its excessively technical nature or the fragmentary and unsystematic way that it is conceived. On various occasions the Committee has stressed the need for Community law not only to be worded simply and clearly, but also to be based on uniform and coherent legal concepts and ideas. For instance, it is perfectly feasible to incorporate all consumers' rights in a single comprehensive, coherent, systematic text which draws together all the main existing directives on consumer affairs.

2.3.3.

A Community budget for consumer protection

2.3.3.1. Some time ago, the ESC requested the Council to include resources in the Community budget earmarked for a consumer policy which took account of the inherent requirements of an effective consumer protection policy ().

The increase in funding in 1994 to ECU 20,75 million was due to the position taken by the European Parliament. The opposing view had been taken by the Council, which had intended to reduce the previous package of ECU 16 million.

2.3.3.2. It is all the more essential, with the creation of the new DG XXIV, that consumer protection be given the place it deserves in the Community budget, with funding that will allow an effective, comprehensive and integrated Community consumer protection policy to be implemented. An important addition which should be highlighted is a specific budget line for supporting legal action by consumers' associations in test cases, e.g. in cancelling unfair clauses in contracts.

Consumer organizations face difficulties in complying with complex accounting requirements and in meeting the 50% co-financing rule. There is a growing need to redefine the basis of Community financing for consumer associations' activities and to streamline procedures.

2.3.4.

The new DG XXIV

2.3.4.1. For some time the Committee has been recommending the creation of a 'separate Directorate-General with responsibility for consumer problems' ().

Consequently, the ESC welcomes the recent creation of the new DG XXIV. It is hoped that the results of this initiative will give a boost to the development of a Community policy for consumers. At the same time, the Committee points to the need for this new DG to be supplied with sufficient human and material resources to carry out its duties properly and assume its responsibilities, especially for monitoring various Community policies in areas such as agriculture, the environment, health and competition.

2.3.5.

The Green Papers

2.3.5.1. The Commission has kept its promise to publish two important Green Papers; one on the access of consumers to justice (), and the other on guarantees for consumer goods and after-sales services ().

The Committee made its views known on both Green Papers () at the time. The content of the Opinions is therefore not repeated here.

2.3.5.2. It is, however, worth recalling that, although the Committee welcomed the Green Papers and highlighted the fine work carried out by the Commission, it also took the view that these initiatives could and should have been crowned with specific proposals and practical action at Community level.

2.3.6.

Enlargement of the Union

2.3.6.1. Since the three new EU Member States are countries where consumer protection is known to be of a high standard, it is natural to hope that this will give a major boost to Community consumer protection policy.

2.3.6.2. Faced with the prospect of the Eastern European countries acceding to the EU, the Union can start right now, even in the pre-accession phase, to help implement a consumer protection policy aimed at gradually eliminating the differences that currently exist; this is essential for developing a market economy in those countries ().

2.3.6.3. In order to facilitate both citizen participation and consumer policy in Central and Eastern Europe, the role of independent consumer organizations needs to be developed. However, the rules governing the current allocation of Phare funds to consumer work make it difficult to support these organizations or to involve them more fully in the programmes of the European and international consumer movement. We would advise the Commission to consider amending these rules and, in future, to consult the Committee at an early stage on how best to use this important budget.

2.3.7.

The single currency

2.3.7.1. The introduction of coins and notes in ecu will be for consumers the most visible sign of the European Union's existence - thus begins a DG XXIV document which contributes to preparations for the Green Paper on the introduction of the ECU ().

This same document analyses the symbolic and cultural importance of a single currency and the highly important repercussions which its adoption will have on financial services in general and more specifically on the use of credit cards as means of payment and on interest rates on loans. The document also warns of various dangers which might ensue and speaks out against too long a period of dual circulation.

2.3.7.2. The ESC feels, notwithstanding the clear benefits for consumers in general which will flow from the introduction of a single currency, that an extensive information campaign must be carried out in advance to ensure that the single currency meets with popular support and so that consumers and in particular the less fortunate groups in society (old, handicapped and less well-educated people and people living in isolated areas, etc.) fully understand all the implications of the transition to the new system, be they economic, legal, social or even psychological.

Consumers' organizations should be consulted at national, regional and community level on the effects and costs of introducing the single currency and specialized study groups should be set up at EU level and in the various Member States with consumer-body participation, particularly to look at the question of setting prices in the two currencies and the actual design of the two faces of the ecu, in addition to setting a timetable for phasing-in and adopting the currency.

3. Horizontal nature of consumer policy

3.1. Concepts and mechanisms

3.1.1.

Basic idea

3.1.1.1. The idea is not new that consumer policy is by its very nature horizontal, in that the demands of consumer protection and defence and consumer views must be taken into account when preparing and implementing decisions liable to affect their interests - whatever the political sector in which the decision is taken ().

However, the two distinct constituent parts of this idea were first defined in the Communication from the Commission to the Council of 24 October 1989 on the integration of consumer policy in other common policies ():

- firstly, consideration of the impact on consumer interests of decisions adopted in implementing specific common policies;

- and secondly, the opportunity for consumers to express their viewpoint, at the appropriate moment, when decisions affecting their interests are prepared and taken.

3.1.1.2. Although well received by the Community institutions (), there has been insufficient follow-up on the means for putting the idea into practice; they are scarcely reflected in the second Commission three-year action plan 1993-1995 ().

The only measure contributing to horizontal approximation adopted to date has been the Directive on general product safety ().

3.1.2.

Institutional links

3.1.2.1.

Between the Community institutions

3.1.2.1.1. Integration of consumer policy in other Community policies necessarily involves more efficient links between the various Community institutions, starting with the Commission and its new DG XXIV, on which hopes are being pinned as a source of dynamism and action in institutional relations, both within and outside the Commission.

3.1.2.1.2. The structure and working methods of the CCC (Consumers' Consultative Council) were recently revised by a Commission Decision of 13 June 1995 (); it is still too early to assess the results of this reform, particularly as regards effective representation of consumers' interests and how the CCC operates as a privileged - although not an exclusive - consultative body of the Commission.

3.1.2.1.3. For its part, the ESC intends to do everything it can, whenever it considers it necessary, to ensure that consumers' interests are unfailingly taken into account in its Opinions on matters within its remit. At the same time, it reaffirms its intention to hold, when necessary, public hearings with all the organizations concerned, particularly those representing consumers.

In addition, in all those cases referred to in the first paragraph of 3.1.1.1, it is absolutely necessary that the Commission and the Council consult the Economic and Social Committee.

3.1.2.1.4. Finally, more radical changes are required to the way in which the Council of Ministers takes decisions affecting consumers, given the relatively scant importance accorded to consumer issues compared with other policy areas.

The continuing secrecy surrounding the Council's operations hinders consumer access to the information and know-how which they should be able to share. It is also harmful to inter-institutional relations in general, which should be based on greater openness and transparency as a guarantee for the integration of consumer policy in other Community policies.

3.1.2.2.

Between consumer organizations, other associations and Community institutions

3.1.2.2.1. Consumers' and users' organizations are the best qualified consumer representatives and are best placed to interpret and coordinate the interests of consumers and other occupational groups.

It therefore remains essential that Community institutions in general, and the relevant national authorities in particular, should acknowledge the important representative role of consumers' and users' organizations in defining and implementing the policies affecting them ().

3.1.2.2.2. The importance of such organizations is not, however, limited to representing consumers in Community institutions. In practice, they have a highly important part to play in discussing, negotiating and coordinating interests with other associations and organizations representing occupational interests. The Community institutions in particular should create the necessary conditions to facilitate and encourage this dialogue.

3.1.2.2.3. It is also increasingly important that international organizations responsible for sketching out political guidelines at world level - GATT, WTO, OECD, the Council of Europe, etc. - should take account of consumer interests.

3.2. Integrating consumer policy in other Community policies

3.2.1. The consideration of consumer interests in other Community policies goes beyond simple institutional arrangements.

Consumers continue to be directly or indirectly affected by decisions on agricultural, trade, competition, health and safety, environmental, energy, telecommunications, social, external and other policies.

3.2.2. It is worth highlighting, in this connection, the importance accorded to consumer interests in defining all Community policy both in the Sutherland Report 'The Internal Market After 1992: Meeting the Challenge' and the Commission Communication on this Report (), and in the Working Document of the Commission on a strategic programme on the internal market ().

The ESC stated its own views on the subject () in the Opinions drawn up on these documents.

3.2.3. The suggestion made by the ESC in its Opinion of 26 September 1991 (), that Commission initiatives should always be accompanied by statements assessing the impact on consumers, was taken up in the Annex to the Council Resolution of 29 June 1992 on the future priorities for the development of consumer policy, but has not unfortunately been adopted as general, common practice by the Commission.

3.2.4. In particular, the ESC:

- recalls that following the conclusion of the GATT negotiations, both export refunds and the amounts of farm produce which can be exported to third country markets must be considerably reduced within five years of 1 July 1995;

- calls for the on-going liberalization of world trade in farm produce, so as to achieve the objective of maximum reductions in export subsidies.

It also considers that:

- consumer interests should be taken into account in all EU trade policy decisions, in accordance with objective and published criteria;

- the consultation of consumer organizations should be made mandatory under Treaty Articles 85 and 86 before exemptions are granted in respect of agreements between undertakings and before such agreements are authorized, above all in cases involving mergers, since both practices hinder the orderly operation of the market;

- directives should be adopted on unfair competition and unfair advertising and measures taken to avoid social and environmental dumping, also in the interests of consumers;

- the right to consumer safeguards against discriminatory or aggressive sales practices in this sector should be harmonized;

- cooperation policy should be strengthened in the field of safety standards approval and sanctions against dealing in products or services presenting health or safety hazards.

4. Consumer information and education

4.1. Social communication and advertising

4.1.1. One of the most important and effective ways of putting the internal market at the service of consumers is to inform them of the market instruments and how to use them.

This requires above all concerted action by the Community institutions, Member State administrations and perhaps NGOs with a view to mobilizing all forms of social communication in order to inform public opinion.

4.1.2. It also involves effective and systematic application of the existing legal instruments on the veracity of advertising for goods and services and, in particular, advertising by cross-border suppliers of goods and services ().

Fully and accurately informed consumers are in a position to take advantage of all the benefits provided by the creation of a single market.

4.1.3. Consumers are increasingly concerned about the conditions under which their purchases are produced, for example the human rights and the working conditions in third countries, environmental impact and animal welfare. The Committee would welcome labelling and other schemes to provide consumers with information on ethical/social issues.

4.2. Community means

4.2.1.

Cross-border information centres

4.2.1.1. Consumers have specific rights covering information and training, and it should be acknowledged that they 'are entitled to know about their legal rights and where they can find out about new regulations and laws' ().

The creation of the cross-border information centres is therefore of great value, even though they are as yet few and far between and, as far as can be ascertained, do not act in a coordinated or uniform manner.

The way they have been set up and operate should therefore be reconsidered so as to ensure that they are a useful and efficient means of information.

4.2.2.

The Internet

4.2.2.1. In a world where computers dominate communications, the ESC has learned with increasing interest about the possibility of using a) the Internet to inform consumers throughout the Union, and b) the 'European Consumers' Guide' recently introduced on the Internet, compiled by the Commission.

The ESC feels that positive steps should be taken towards expanding the content of this means of information by introducing new applications, particularly those relating to national consumer legislation and court rulings on consumer issues; the ESC awaits the detailed report to be drawn up by the Commission on this IT application, examining the scope and opportunities it offers for consumers in general, and financial incentives for its broad dissemination.

4.2.3.

The EHLASS programme

4.2.3.1. Although it is of limited scope, the EHLASS project on accidents involving consumer products is of major importance to consumers. The ESC welcomes the fact that this project has been turned into a permanent programme and for the first time has been allocated Article 129a and not Article 235 of the Treaty () as its legal basis.

4.2.4.

The REIS project

4.2.4.1. The new system for exchanging information on products presenting a consumer health or safety risk (RAPEX) () completed its experimental phase when Directive 92/95/EEC entered into force on 29 June 1994 and the notification system set up by Article 8 began to apply ().

The ESC feels that the full potential of this project should be explored and that the content of the notifications should be publicized extensively; one means of doing this could be to include it in the Internet.

4.2.5.

The Coline network

4.2.5.1. On 19 May 1994 the first phase of the Coline project was inaugurated. This network currently provides information on consumer rights in just five centres - Barcelona, Lisbon, Duesseldorf, Lille and Luxembourg - but is to be extended to include Vienna, Dublin, Brussels, Athens and Rome.

The ESC feels that a major step has been taken in providing consumers with legal information, but considers that the system is not open enough in terms of user possibilities and recommends that the possibility be discussed of connecting the network to the Internet, so that the broad consumer public can have access to the information.

4.3. Transparency in the price structure of goods and services

4.3.1. One of the most important aspects of consumer information concerns the structure and indication of prices for goods and services. Consumers' concerns in this regard have been well known for some time now: it quite rightly constitutes one of their basic demands. Consequently, the ESC notes with interest the Commission's proposal for a directive on a simplified system of indicating prices for consumer products (), with Article 129a as the legal basis. The ESC is drawing up an Opinion on the draft Directive.

4.3.2. Nevertheless, no tangible progress appears to have been made towards greater transparency in the price structure of certain services, particularly in the financial sector (banking, insurance, stock exchange, etc.) and the liberal professions.

The seriousness of this shortcoming in the Community system is highlighted by the fact that if a single market is to be achieved, cross-border transactions of goods and services must be readily available: this requires a full knowledge of prices and how they have been structured.

4.3.3. In general, the public service sector requires special attention in view of its usual monopoly or quasi-monopoly position, as in the cases of gas, water, electricity, transport and telecommunications. A quality universal service - accessible to all consumers throughout the EU - should be maintained.

4.4. Specific training programmes

4.4.1. Consumer protection in an open, wide-reaching market like the single market increasingly depends on basic education.

This should begin at the pre-school and primary level and accompany individuals throughout their school and university education.

4.4.2. The introduction of incentives and other measures aimed at preparing specific school training programmes on consumer rights and practices is a priority area on which the Commission should focus its attention.

However, since the schools consumer training pilot project launched in Denmark in 1978 (referred to in the second Commission programme) and completed in 1984, there have been no further integrated Community-level school training projects, although the final project report recommended that serious thought be given to repeating similar programmes ().

4.4.3. Special mention should be made of the specific consumer law programmes for legal practitioners (judges, lawyers, university professors) or representatives of consumer organizations, information centres, social centres, etc., to which the Commission has not yet given sufficient prominence.

These programmes should comprise on-going training courses, specific consumer law modules within university courses, specialist publications, data banks, etc.

5. Consumer participation and representation

5.1. Defining fundamental consumer rights

5.1.1. First of all, it is essential that consumers' rights should be included as a category under the heading of fundamental social rights in the general definition of the rights of citizens of the European Union - which should provide the basic principles for a European constitution.

The right to participation and representation should figure prominently among such social rights.

5.1.2. Although defence and protection of economic rights or rights covering health, information or access to law are essential, it is even more important that consumers should be considered in their own right in the dialogue with occupational organizations and with Community, national or regional institutions.

One of the most serious failings of the second Commission action plan is precisely the lack of emphasis on this fundamental aspect of any consumer policy. It is hoped that the next plan will take due account of this.

5.2. Institutional aspects

5.2.1. The ESC considers that consumer representation within the Community institutions should be intensified. To this end, it urges that:

- the revamped CCC must ensure more effective representation of consumers' interests, with the Commission being required to produce reports in response to its suggestions;

- the EP intergroup for consumer affairs continue to receive support;

- the agricultural advisory committees be restructured so as to ensure more active consumer participation;

- the food product committee be granted an adequate budget, allowing it real influence over the CAP;

- consumers be represented more equitably in the link group with means of payment users.

6. The Maastricht Treaty review

6.1. Consumer policy beyond the single market

6.1.1.

The contribution of single market policy to the protection of consumer interests

6.1.1.1. As the ESC has indicated on a number of occasions, the single market - even though not designed with consumers in mind - is undoubtedly capable of offering them a range of benefits.

With the single market, consumers should generally benefit from greater choice as a result of a wider supply of goods and services, the abolition of tax and other barriers and more advantageous prices.

6.1.1.2. Nevertheless, 1 January 1993 did not usher in the rights which consumers quite legitimately expected.

Consumers cannot in fact buy freely in the single market with a reasonable margin of safety, quality, information, standardization and with machinery to provide protection and guarantees.

6.1.2.

Shortcomings in consumer policy since Maastricht

6.1.2.1. As already indicated, the changes brought in by the Maastricht Treaty generated hopes for a new impetus in consumer policy, due principally to the new Article 129a.

This legal basis has not, however, in practice yet been used, constituting a major gap in the development of Community law.

6.1.2.2. Its use would have allowed the emergence of a consumer policy going beyond the completion of the single market, bearing in mind the limitations of this market where consumer affairs are concerned.

It was hoped that consumer protection legislation, applicable throughout the Union, would specify the highest possible level of protection and safety rather than 'a high level', which is a relative and imprecise concept.

There were also hopes for positive developments on liability for damage and guarantees, as well as for significant progress in access to justice (special legal assistance services for consumers, a consumer ombudsman, streamlined procedures to resolve consumer disputes, mutual recognition of consumer organizations, general interest actions, etc.).

These hopes have not been borne out during the first phase of the application of the Maastricht Treaty.

6.2. Proposals and suggestions: a contribution to the Treaty review

6.2.1. The ESC will, at the appropriate time, have the opportunity to put forward its view as an institution on the forthcoming revision of the Maastricht Treaty.

At this stage, the ESC feels it should restrict itself to briefly considering a number of modifications and improvements to the Treaty in the area of consumer rights, focusing particularly on Article 129a.

6.2.2. The key position of consumers as social partners should be reflected in Treaty Article 3(s), by amending it to refer to 'promotion of consumer interests' rather than 'consumer protection'.

Article 129(1) should be amended along the same lines.

6.2.3. Similarly, Article 129a as a whole should be revised so as (i) to clarify that the policy and measures to be adopted by the Community in this area fall within its own competence and not that of the Member States in accordance with the subsidiarity principle, and (ii) explicitly to reaffirm its 'horizontal' nature, by referring to its integration in other Community policies, as is currently the case with Article 129 on public health.

The ESC believes that Article 129a should specify the types of measures which should form part of a consumer policy.

6.2.4. Lastly, the ESC considers that Treaty Article 193 should also be revised so as to provide explicitly for representation of consumers. Explicit reference should also be made to the maintenance of a quality universal service accessible to all consumers in the text of the new EU Treaty to be signed at the forthcoming IGC ().

7. Conclusions

7.1. The ESC has had various opportunities to voice its views on the consequences of pursuing a single market policy which does not take sufficient account of consumer interests.

7.2. Taking stock of the single market today, the consumer sees little positive progress; although some headway has been made, practical action still needs to be taken in several key areas of consumer protection and defence.

7.3. Among those areas where some positive progress has been made to the benefit of the consumer, the following may be noted:

- the creation of some cross-border information centres;

- the creation of the new DG XXIV;

- the revamping of the CCC;

- the adoption of some important directives, such as that on unfair terms in consumer contracts;

- the preparation of two Green Papers on (i) access to justice and the settlement of trans-frontier disputes and (ii) guarantees for consumer goods and after-sales services;

- the first steps towards computerized information (Internet) in limited sectors (EHLASS programme, REIS project, Coline network);

- the interest shown by the Commission, in the context of the Phare programme, in the protection of consumers in the countries of Central and Eastern Europe.

7.4. Nevertheless, tangible progress is still needed in certain areas of fundamental importance to consumers, such as:

- the delays, mistakes and shortcomings in the transposition of directives and the differences in the interpretation and application of secondary legislation, and the failure to apply consumer protection legislation;

- the lack of effective information on basic consumer rights and how to exercise them in the internal market;

- the lack of general recognition of the direct horizontal effect of directives on consumer matters;

- the lack of integrated training programmes for consumers in general and for persons responsible for interpreting and applying consumer law in particular;

- the lack of a genuine single market in insurance and financial services in general;

- the lack of a uniform mortgage credit system;

- inequalities in the application of VAT;

- the difficulties in mutual recognition of professional qualifications;

- the lack of concrete results in respect of general consumer safety, safety of services and defective products liability;

- the lack of binding rules on unfair advertising;

- the lack of rules for public services in general (postal services, telecommunications, energy, water, etc.).

7.5. Furthermore, the opportunities provided by the Maastricht Treaty to make the best possible use of Community consumer policy have not been followed up. These include:

- more extensive use of the new legal basis contained in Article 129a(1)(b);

- application of the subsidiarity principle in such a way that certain proposals for directives are not emasculated in the name of legislative simplification, however desirable, but without preventing the adoption of separate, and perhaps even contradictory, policies in the Member States;

- greater transparency in the process of drawing up and interpreting Community law at Council and monitoring-committee level and greater simplicity in its drafting;

- greater openness in the interpretation and application of Articles K1 and K9 of the Maastricht Treaty as regards access to justice and greater protection in cross-border disputes;

- recognition of a general power of representation for consumer organizations in national or Community-level consumer legal disputes (group or class actions) before the Court of Justice;

- the Ombudsman to take up his duties sooner.

7.6. The forthcoming revision of the Maastricht Treaty should be used to incorporate in the Treaty some basic provisions to improve consumer protection and promote their participation and representation at all levels of decision-making. To this end:

- the wording of Article 129a should be revised to recognize an integrated common consumer policy and the promotion of all consumer interests;

- the rights of consumers should be clearly listed as basic economic and social rights of European citizenship;

- the horizontal nature of consumer policy should be defined in general terms;

- mutual recognition of consumer organizations as parties to consumer class actions should be firmly established;

- a special new appeal procedure should be introduced for the final decision on the adjustment of the practical application of the subsidiarity principle.

Done at Brussels, 22 November 1995.

The President

of the Economic and Social Committee

Carlos FERRER

() OJ No L 331, 21. 12. 1994.

() OJ No C 19, 25. 1. 1993 point 3.6.

() COM(94) 533 final of 25. 11. 1994.

() OJ No C 339, 31. 12. 1991, OJ No C 19, 25. 1. 1993.

() OJ No C 313, 30. 11. 1992.

() COM(95) 288 final.

() ESC Bureau report of 26. 4. 1995 (CES 273/95 fin.) on the 1996 Intergovernmental Conference: the role of the Economic and Social Committee.

() OJ No C 12, 18. 1. 1991, OJ No C 269, 14. 10. 1991.

() COM(94) 533 final of 25. 11. 1994.

() OJ No L 100, 19. 4. 1994.

() Cf. the recent EP Resolution of May 1995 on the functioning of the Treaty on European Union with a view to the 1996 Intergovernmental Conference, paragraph 12, point (1) (Bourlanges and Martin Report, PE 190.449).

() OJ No C 154, 6. 7. 1994.

() COM(95) 238 final of 15. 6. 1995.

() e.g. Directive 90/314/EEC on package travel, package holidays and package tours; 2nd Directive on consumer credit (90/88/EEC), including 1st Directive (Spain and Ireland); Directive 85/577/EEC on contracts negotiated away from business premises; Directive 84/540/EEC on misleading advertising; Directive 76/768/EEC on cosmetics (cf. COM(94) 500 final, point 2.5).

() OJ No C 393, 31. 12. 1994.

() Cf. the Community Internal Market - 1993 Report (COM(94) 55 final of 14. 3. 1994).

() OJ No C 295, 22. 10. 1994.

() OJ No L 156, 10. 6. 1992.

() COM(93) 378 final of 28. 7. 1993.

() COM(94) 55 final, Annex 2.

() COM(93) 576 final of 11. 11. 1993.

() OJ No C 295, 22. 10. 1994.

() COM(93) 509 final.

() OJ No C 295, 22. 10. 1994.

() OJ No C 313, 30. 11. 1992.

() OJ No C 339, 31. 12. 1991, point 6.1.2.

() OJ No C 339, 31. 12. 1991, point 3.1.1.1.1.

() COM(93) 576 final.

() COM(93) 509 final.

() OJ No C 295, 22. 10. 1994.

() In this connection, note the Commission's programme on the institutions and consumer policy established in 1994 and recently extended for another two years as part of the Phare programme, for which eleven countries of Central and Eastern Europe are already eligible.

() COM(95) 333 of 31. 5. 1995.

() OJ No C 92, 25. 4. 1975, p. 2; OJ No C 133, 3. 6. 1981, p. 1.

() COM(86) 540 final.

() OJ No C 339, 31. 12. 1991, paragraph 3.1.

() COM(93)378 final of 28. 7. 1993.

() OJ No C 96, 17. 4. 1990, p. 283; OJ No L 228, 11. 8. 1992.

() OJ No L 162, 13. 7. 1995.

() See point 5 of this document on consumer representation and participation.

() SEC(92) 2277 final of 2. 12. 1992.

() COM(93) 256 final of 2. 6. 1993.

() OJ No C 201, 26. 7. 1993 and OJ No C 304, 10. 11. 1993.

() OJ No C 339, 31. 12. 1991, paragraph 4.5.

() This is why as well as penalizing misleading advertising, there needs to be a directive on unfair advertising.

() Cf. the Sutherland Report, 'The Internal Market After 1992: Meeting the Challenge', p. 23.

() OJ No L 331, 21. 12. 1994; COM(95) 005 final of 13. 1. 1995.

() OJ No L 278, 11. 11. 1993.

() OJ No L 228, 11. 8. 1992.

() COM(95) 276 final.

() Cf. 'L'éducation des consommateurs à l'école, Rapport établi sur la demande du service de la Protection de l'Environnement et des Consommateurs, Commission de la CEE, concernant les résultats d'un projet pilote d'éducation du consommateur à l'école' by Hans Rask Jensen, Institut for Markedsokonomi, Arhus, 1983.

() In this connection, DG XXIV should make a study of the working of the single market and its impact on consumers in 1998.

APPENDIX to the Opinion of the Economic and Social Committee

Amendments rejected

During the discussion, the following amendments, which received more than 25% of the votes cast, were rejected:

Point 2.3.1.3.2

Delete whole point.

Reason

This criticism does not seem to be justified: consumer organizations can already benefit from a forum of their own: the Consumers' Consultative Committee, plus an adequate representation in the ESC and a specific forum in the EP Intergroup for consumer affairs - a presence that no other interest group can equal.

Result of the vote

For: 32, against: 61, abstentions: 10.

Point 3.1.2.2.2

Amend second sentence so to read:

'... highly important part to play within the CCC and in discussing, negotiating and coordinating interests, within the Economic and Social Committee, representing ...'.

Reason

Outside the normal and totally legitimate lobbying action, it is necessary to specify where consumers have a part to play.

Result of the vote

For: 36, against: 47, abstentions: 23.

Point 3.2.4

Delete the second indent of this point.

Reasons

The money spent by the EU to promote exports to third countries goes essentially on food aid and export refunds. Food aid is an expression of international solidarity which has a negligible impact on production policies. Export refunds are now regulated and limited both quantitatively and qualitatively by the GATT agreement. Expenditure on food exports has been falling appreciably since the CAP reform. Moreover, this instrument is a pillar of the CAP which has kept food prices relatively stable in the post-war period.

It should also be noted that imports from third countries, many of which lack the means to carry out proper controls, pose a greater risk for the European consumer.

The CAP already takes account of health protection. However, there are specific horizontal regulations on this subject, and it is therefore pointless and inappropriate to include them as a structural part of the CAP.

Result of the vote

For: 35, against: 85, abstentions: 12.

Point 3.2.4

Insert before the third indent:

'- The EU should adopt a prompt and firm stance in GATT on health issues which it considers potentially harmful to EU consumers (e.g. the use of hormones).

It is also important, in order to protect the health and well-being of European consumers, the multilateral international trade agreements provide clarification of health regulations forthwith and also embrace environmental aspects.'

Reasons

See above.

Result of the vote

For: 41, against: 58, abstentions: 19.

Point 7.4

Add to third paragraph of 7.4.

'and the need to use the principle of minimum harmonization.'

Reason

More use needs to be made of the kind of provision in Council Directive 84/450/EEC. 'This Directive shall not preclude Member States from retaining or adopting provisions with a view to ensuring more extensive protection for consumers, persons carrying on a trade, business, craft or profession, and the general public.'

Result of the vote

For: 42, against: 61, abstentions: 10.