EN Official Journal of the European Union C 240/43

Opinion of the European Committee of the Regions — Upgrading the Single Market

(2016/C 240/08)

Rapporteur: Alessandro PASTACCI (IT/PES), President of the Province of Mantova Reference document: Communication on Upgrading the Single Market: more opportunities for people and business COM(2015) 550 final

THE EUROPEAN COMMITTEE OF THE REGIONS

General remarks

1. stresses that the Single Market, as the fundament of free movement of goods, services, persons and capital within the European Union (EU), is the EU’s major economic success and has helped to increase prosperity and jobs. For it to work better still more economic and structural reforms are needed to meet the goals set for growth and employment in the Europe 2020 Strategy as well as the objectives set in Article 3 of the Treaty on the EU in relation to sustainable development, a highly competitive social market economy and economic, social and territorial cohesion; also insists that the Single Market, the Schengen Agreement on Free Movement of Persons and the completion of Europe’s Economic and Monetary Union (1) are inextricably linked; considers, therefore, completion and implementation of the Single Market to be of paramount importance for exploiting the Single Market’s full potential;

2. agrees that, to be more effective, the updated Single Market Strategy must be three-pronged so as to: 1) create opportunities for consumers, professionals and businesses; 2) encourage and enable Europe’s modernisation and innovation; 3) ensure its practical delivery so as to improve the everyday life of consumers and businesses. Such a three-pronged and integrated strategy should aim at tackling the challenges raised by the combined effects of fast globalisation and technological change and the only gradual adaptation of schooling and training systems;

3. supports the European Parliament’s call for the inclusion of the Single Market pillar in the European Semester (2), with a system for regular monitoring and evaluation of Single Market’s integration comprising a set of quantitative and qualitative indicators, benchmarking, peer review and exchange of best practices;

4. considers that the Single Market Strategy is intended to complement and be complemented by the EU initiatives on investment, competitiveness and access to finance, the internal market for energy, the Digital Single Market and labour mobility; regrets therefore that the Commission’s communication was not accompanied by the proposal for a review of the posting of workers directive, meant to be one of this Commission’s major initiatives for tackling social dumping and strengthening workers’ rights and guaranteeing collective bargaining as the framework for labour relations. This situation should not lead to a hiatus between the roadmap for deepening the single market and necessary initiatives to improve the conditions for labour mobility and be addressed in the legislative procedure on the European Commission’s proposal amending the Posting of Workers Directive (Directive 96/71/EC) presented on 8 March;

5. emphasises that the Single Market is a cross-cutting policy interacting with many sectoral EU policies. The CoR would therefore have expected the Commission’s Communication on the Single Market Strategy to outline more clearly interactions in particular with trade and competition policy. In relation to trade policy, it would have been legitimate to expect that prior to granting China a Market Economy Status (MES) by the end of 2016 the Communication announces an analysis to be carried out of the economic, social and territorial impact and the impact on the Single Market of such a decision;

6. calls for completion of the Digital Single Market that has the potential to bridge the digital gap between regions, and to further improve access to information, bring efficiency gains, and introduce improved business and administrative models; highlights that e-commerce and e-procurement generates tangible benefits for consumers, e-government facilitates online compliance and access to jobs and business opportunities for both citizens and businesses, thus contributing to the economic growth;

7. draws attention to the specific role of the European Groupings of Territorial Cooperation (EGTC) as cross-border players in the Single Market, as well as of other cross-border structures like the European Groupings of Economic Interest or the European Cooperative Society. These are laboratories for the Single Market and can help identify Single Market barriers, since they are able to identify and address locally issues such as public procurement, cross-border contracts, double taxation of staff, applicable law, consumer protection and cross-border services;

8. regrets the absence of direct references to the craft sector and specific measures for its promotion since there are over 16 million craft enterprises playing an important role in job creation and economic development;

9. reiterates that in order to determine the effects of EU policies, the Member States and the European Union need to implement Territorial Impact Assessments as a standard practice in the policy-making process and when programming and implementing sectoral policies (3);

In relation to the development of the collaborative economy

10. welcomes the Commission’s announced initiative on the European agenda for the collaborative/sharing economy, including the guidance on how EU law applies to this new sector, its ambition to support its potential in terms of sustainable growth and job creation and as well as its intention to examine the extent to which the provisions of the Services Directive, the e-Commerce Directive and the EU consumer protection acquis are applicable to the collaborative/sharing economy and if there is need for further regulation in particular in relation to social security and employment rights of workers, health and safety norms, taxation and licensing; reiterates the CoR’s conviction that any hard regulatory initiative should have a sectoral approach and take into account the scale of the sharing economy initiative as a criterion for drawing regulatory lines;

11. points out that ex ante urban and territorial impact assessments could be run and developed in close partnership with all levels of government so as to identify methodological protocols. Notes that assessments should be designed so as not to unnecessarily burden the promotion and development of new activities, or to further burden the daily activities of existing businesses, irrespective of their size;

In relation to how to help SMEs and Start-ups to grow

12. supports the Commission’s intention to present initiatives aimed at reducing the heavy burden that VAT registration and reporting obligations put on start-ups and SMEs, particularly when operating cross border; points out that the simplification of VAT reporting requirements for SMEs and micro-enterprises has also been identified as an opportunity for further action in the consultation of the European Entrepreneurial Regions (EER) conducted by the CoR in April 2014. This is of particular relevance for retail trade, hotels and restaurants, where the interest of small-sized operators to operate across borders may be obstructed by a too heavy bureaucracy, with prejudice to the diverse categories of consumers;

13. recognises that the SME Supporting Factor has played a crucial role in enabling SMEs to access financing and hopes that it will be extended for the next few years;

14. welcomes the Commission’s intention to put forward a legislative proposal on business insolvency in order to ensure that entrepreneurs have a second chance. This approach is likely to foster entrepreneurship and innovation in Europe, as entrepreneurs operating in an environment that does not stigmatise failure will be more inclined to take on more innovative projects; notes that the legal framework for insolvency must, however, ensure that only responsible risk-taking is encouraged and provide certainty and fairness to creditors;

15. calls on the Commission to monitor thoroughly the effective application by Member States and relevant subnational authorities of the transposition measures of Directive 2011/7/EU on combating late payments in commercial transactions and to initiate swift infringement procedures in case the directive is not properly applied as SMEs are often not in a position to enforce their rights under this directive against a dominant company or public authority;

16. urges the Commission to apply the ‘Think Small First’ principle, meaning drafting legislation only when it is necessary and with the smallest enterprises in mind. Calls on the Commission to monitor the effective application and introduction of the ‘once only’ principle by the Member States in order to reduce unnecessary administrative burdens for SMEs and citizens;

17. asks the Commission to promote direct participation in business risk and access to innovative instruments for raising venture capital such as crowdfunding;

18. calls on the Commission to provide better information for SMEs in a more accessible way through the representative SME organisations;

In relation to the liberalisation of professional services

19. underlines the importance of further opening up services’ markets in Europe in view of the relatively low level of cross-border trade in services, the growing importance of services as a share of GDP and employment in Europe’s regions and cities and the trend towards more integration of services in the value offer of industry; acknowledges the Commission’s efforts to open up services’ markets within the parameters of the Services Directive, and stresses that moves to further open up services markets should safeguard the legal and quality standards already achieved;

20. agrees on the need to assess and tackle on the one hand the regulatory gaps and on the other hand the problem of overlapping or conflicting regulation in certain areas of the Single Market and remove the persistent obstacles to free movement, which prevent European businesses and consumers from exploiting the Single Market’s full potential;

21. recommends that the ‘analytical framework for Member States to use when reviewing existing regulations or proposing additional ones’ include criteria for classifying a sector as a ‘priority sector’. Indeed no explanation is given in the Communication as to why certain services should be given priority (4);

Schengen Agreement

22. As borne out by a recent European Parliament study presented to the Committee on the Internal Market and Consumer Protection, recognises that a lasting suspension of the Schengen Agreement would significantly harm as many as seven economic areas: GDP, trade, foreign direct investment, employment, mobility, consumption and SMEs. Therefore, with a view to safeguarding the single market and the achievements attained over the years, it is crucial that these standards be maintained (5);

In relation to the strengthening of the Single Market for goods

23. supports the Commission’s commitment to modernising the standards’ system in collaboration with the standardisation community, as standards have proven to be very effective in supporting market integration, through their impact on industry costs, interoperability, access to markets and exports; any reform of standards needs to take into account the needs of small and medium-sized producers;

24. welcomes that on 16 March 2016 the Commission has presented a ‘Communication on the challenges faced by the steel industry’ even if the CoR would have expected the Commission communication on the Single Market to already address the follow-up to the ‘Action Plan for a competitive and sustainable steel industry in Europe’ of June 2013, as the challenges faced by the steel industry relate to many aspects of the Single Market Strategy; draws attention to the fact that the CoR will dedicate a specific opinion to the challenges faced by the steel industry which will in particular build on the European Parliament resolution of 16 December 2015 on developing a sustainable European industry of base metals (6);

25. As it has already pointed out in a recent opinion (1), reiterates its call on the Commission to present a legislative proposal for the protection of geographical indications for non-agricultural products in the EU; this would help strengthen the internal market by making products more recognisable and guaranteeing quality;

26. acknowledges that the mutual recognition principle is crucial for products not covered by EU standards but that its application is uneven and needs to be improved in order to provide a more predictable regulatory framework for the free movement of products. At the same time, however, accurate consumer information on these products should be guaranteed, high-quality products should be properly recognised and the products’ origin should be indicated;

27. underlines its support for measures to keep illegal and non-compliant products off the EU market in view of the increasing incidence of such trade, which distorts competition and puts consumers at risk. A stricter monitoring of counterfeiting activities would give a practical content to the goal of ‘creating opportunities to consumers, professionals and businesses’, in particular for SMEs;

In relation to public procurement

28. welcomes the general approach set out in the Communication in relation to public procurement; supports more specifically networking between first-instance review bodies, technical assistance for Member States and improved monitoring tools, which should also help local and regional authorities in implementing public procurement rules; in this regard points out the possible role of knowledge centres in the field of public procurement as sources of help, advice and information;

29. also agrees with the principle of launching a voluntary ex ante public procurement mechanism for large-scale infrastructure projects but wonders why the Commission has set such a high ceiling of EUR 700 million. suggests therefore that the ceiling be significantly lowered in particular against the backdrop of the European Court of Auditors’ special report 10/2015 on ‘Efforts to address problems with public procurement in EU Cohesion expenditure should be intensified’;

30. does however urge that the contract registers and data analytics tools planned by the Commission for transparency purposes be designed in such a way that they do not generate any further costs for public purchasers. The European Commission already has a considerable amount of data on this, because whatever procurement lies above the threshold has to be EU-wide, so further-reaching EU-wide information and statistics requirements would be superfluous;

In relation to the Services and the Services Directive

31. welcomes the Commission’s efforts to continuously assess EU countries’ implementation of the Services Directive and carry out a number of evaluation exercises (‘peer reviews’) in order to remove remaining barriers to the cross-border trade of services in the EU, with particular focus on the issue of geo-blocking of digital services; considers, however, that the outcome of these exercises should not be precluded by the Commission stating that there are no plans to review or amend the Services Directive;

32. recalls that Points of Single Contact (PSC) are an essential element of the Services Directive. However, several aspects that are closely related to the provision of services are not covered by the directive (e.g. posting of workers, tax issues, social security provisions, professional qualifications). These aspects should nevertheless be included in the information service of the PSC in order to provide one-stop-shops with real added value. Furthermore, it would be important to provide the information at least in English in addition to the national language;

33. considers that the services passport initiative should be limited to services regulated by Directive 2006/123/EC on services in the internal market, i.e. not be applicable to public service operators as long as they do not carry out commercial activities or to services which do not have cross-border impact and are subject to regulation at national, regional or local level;

34. welcomes the Commission’s initiative to prevent discrimination against users and firms in cross-border trade, particularly online trade; insists however that certain advantages, namely lower prices, which are not relevant for the single market, can be reserved for certain service beneficiaries, if this is based on legitimate, objective criteria;

In relation to the Social Economy and Services of General Economic Interest (SGEI)

35. regrets that the Commission’s Communication does not announce any proposal in relation to the social economy although it plays a key role in the EU’s social and economic development, accounting for two million enterprises including associations, cooperatives and mutual societies and providing 11 million jobs, i.e. 10 % of all businesses in Europe and 6 % of the employed population; recalls against this background that the CoR has ‘(urged) the European Commission to present, a legal framework, which would encompass a body of common definitions applying to the different forms of social economy in Europe, i.e. cooperatives, foundations, mutual societies and associations in order to enable social economy enterprises to operate on a legally certain basis and thus enjoy the advantages of the internal market and free movement (…)’ (2);

36. considers that the social economy should be supported by means of a general legal framework at European level as well as by developing appropriate financing programmes;

37. regrets that the Commission’s Communication does not put forward any proposal relating to SGEI, e.g. in relation to quality requirements notably with regard to social and territorial cohesion, although Article 14 of the Treaty on the Functioning of the EU would provide the legal basis for it; expresses concern that, with regard to SGEI, the Commission has a focus that is restricted to state aid issues only although these services play a key role in the internal market. Insists that in the provision of SGEI, it is of paramount importance that the public service obligations are based on transparent guidelines and effective controls and aim at delivering high-quality and cost-effective services; therefore, in accordance with the distribution of competences between the EU, the Member States, the regions and the local and regional authorities, calls on the Commission to step up its efforts to spur on SGEI within the EU, so as to improve Europeans’ quality of life at every level;

38. notes that the implementation as of April 2016 of the common framework for the provision of concessions is particularly sensitive in the field of infrastructural services (ports, railways, highways) and key to completing the Single Market as fair competition is a prerequisite to better guarantee consumer rights and maximise the benefits for consumers, the mandated undertakings and the conceding authority;

39. calls for the insular or remote nature of regions to be borne in mind with regard to commercial disadvantages, especially in terms of the additional transport costs.

Brussels, 8 April 2016. The President of the European Committee of the Regions Markku MARKKULA

(1) See CoR opinion of 7-8 April 2016 on the Follow-Up to the Five Presidents’ report: Completing Europe’s Economic and Monetary Union.

(2) See European Parliament resolution on the Single Market governance within the European Semester 2016 (2015/2256(INI)).

(3) CoR opinion on Territorial Vision 2050, what future? CDR-2015-4285 of 3 December 2015.

(4) The list of priority sectors/professions is reported in footnote 26: ‘civil engineers, architects, accountants, lawyers, real estate agents, tourist guides and patent agents’.

(5) As underscored in CoR resolution COR-2016-00726-RES.

(6) http://www.europarl.europa.eu/sides/getDoc.do?pubRef=/EP//TEXT+TA+P8-TA-2015-0460+0+DOC+XML+V0//EN&language=

(1) Committee of the Regions opinion ECOS-V-064 on Extending geographical indication protection to non-agricultural products (COR-2014-05386-AC), adopted on 11 February 2015.

(2) See CoR Opinion on the role of the social economy in restoring economic growth and combating unemployment, 3-4 December 2015, point 12.