REPORT FROM THE COMMISSION TO THE COUNCIL, THE EUROPEAN PARLIAMENT, THE ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS - Creating an entrepreneurial Europe The activities of the European Union for small and medium-sized enterprises (SMEs)

TABLE OF CONTENTS

summary

summary of aid for smes

Introduction

Objective and Structure of the Report

Definition of an SME

Chapter I: IMPROVING THE FRAMEWORK CONDITIONS FOR smeS

1. Improved knowledge of SMEs

1.1. Statistics

1.2. The European Observatory for SMEs

2. Information on businesses

2.1. The Euro-Info-Centre network

2.2. Dialogue with Business: information, advice and feedback

3. Improving the business environment

3.1. Business Environment Simplification Task Force (BEST)

3.2. Exchange of best practice: Concerted Action

3.3. Transfer of enterprises

3.4. Benchmarking

3.5. The quality of legislative proposals, subsidiarity and proportionality

3.6. Simplification of legislation on the Internal Market: SLIM

3.7. Payment periods in commercial transactions

3.8. Access to the Information Society and to Electronic Commerce

3.9. Promoting innovation

3.10. Improving competitiveness: commerce, the social economy and tourism

3.11. Rules on judicial cooperation in civil and commercial matters

4. Regulatory and legislative environment

4.1. Internal Market

4.2. Competition policy

4.3. Tax and Customs Duties

4.3.1. Business taxation

4.3.2. Indirect taxation: VAT

4.3.3. Customs environment

5. Financial environment

5.1. Preparing SMEs for the introduction of the euro

5.2. Cross-border credit transfers

5.3. Financial Services Action Plan

5.4. 3rd Round Table of Bankers and SMEs

5.5. Business Angels

5.6. Self-assessment guide for SMEs to going public on a stock exchange

5.7. Mutual guarantee schemes

6. Interface between enterprise policy and other policies

6.1. Social environment and employment

6.1.1. The European Employment Strategy and the entrepreneurship pillar

6.1.2. Social Dialogue

6.1.3. Consultation of the business community

6.1.4. Local development and employment

6.2. Environmental legislation and measures

6.2.1. The Fifth Environmental Action Programme

6.2.2. Environmental Management and Audit Scheme

6.2.2.1. Eco-management Guide

6.2.2.2. Results of the pilot project on Euromanagement-Environment

6.2.3. The Community Eco-label Award Scheme

6.3. Energy, transport and telecommunications infrastructures

CHAPTER II: FINANCIAL INSTRUMENTS AND PROGRAMMES IN SUPPORT OF SMEs

7. Access to finance and to credit

7.1. Loans

7.1.1 EIB global loans

7.1.2 The SME Facility: subsidised loans for job-creating SMEs

7.2. Guarantees

7.2.1 Guarantee operations for SMEs based on the EIF's own resources

7.2.2 The "Growth and Environment" pilot project

7.2.3 The SME Guarantee Facility

7.3. Venture capital

7.3.1 The European Technology Facility (ETF)

7.3.2 The ETF Start-up Facility

7.3.3 CREA

7.3.4 Financing innovation: I-TEC

7.3.5 Eurotech Capital action

7.4. Joint European Venture: JEV

8. Support for SMEs through regional policies

8.1. Support for SMEs in the 1994-1999 programmes

8.1.1 National initiative programmes

8.1.1.1 Finance for SMEs in regional objectives

8.1.1.2 Estimated impact of actions and measures

8.1.2 Community Initiatives Programmes

8.1.2.1 The SME initiative

8.1.2.2 Leader II

8.1.3 Pilot projects and innovative actions

8.1.3.1 Pilot projects

8.1.3.2 Territorial employment pacts

8.2. The political future of Cohesion and SMEs (programme 2000-2006)

8.2.1 New rules and budgets

8.2.2 Commission guidelines

9. Measures benefiting agricultural SMEs

10. Inter-enterprise cooperation

10.1. A legal instrument encouraging transnational cooperation: the EEIG

10.2. Europeanising enterprises

10.2.1 Europartenariat and Interprise

10.2.2 Transnational subcontracting

11. Support for enterprise spirit and for target groups

11.1. Craft trades, small enterprises and micro-enterprises

11.2. Women entrepreneurs and co-entrepreneurs

12. Access to Research and Technological Development

12.1. European RTD programmes: tools for innovation and internationalisation

12.2. Specific measures for SMEs in FP 4

12.3. SME participation in EU RTD programmes

12.3.1 A growing participation of SMEs in EU RTD Programmes

12.3.2 SME Specific Measures: newcomers and wider participation

12.3.3 Other measures in FP4 relevant to SMEs

12.4. The impact of EU RTD Policy on SMEs

12.5. The 5th RTD Framework Programme and its SME Specific Measures

12.5.1 Actions implemented by each thematic programme

12.5.2 Supporting the participation of SMEs

12.5.3 SME participation in FP5: first results

12.5.4 Cordis

13. Vocational Training

13.1. European Social Fund

13.1.1 ADAPT and Employment Initiatives

13.2. Leonardo da Vinci Programme

13.3. Business Education Network for Europe (BENE)

14. Other support programmes

ChapTER III: ENLARGement, PRE-ACCESSION AND coopEration WITH NON-MEMBER COUNTRIES

15. Enlargement and pre-accession activities

15.1. Participation in the Third Multiannual Programme for SMEs

15.2. Joint Venture Programme: JOP

15.3. PHARE: Technical Assistance Programme at national level

15.4. The SME Finance Facility

15.5. PHARE Business Support Programme

16. Internationalisation of businesses: cooperation with non-member countries

16.1. Trade policy

16.2. Cooperation with the United States and Canada

16.3. Cooperation with Japan

16.4. Cooperation with the Mediterranean, Latin America and Asia

16.5. Cooperation with the New Independent States

16.6. Development cooperation (ACP countries)

16.7. Cooperation with South Africa

CONCLUSIONS

summary

This report on the activities of the European Union for small and medium-sized enterprises (SMEs) is drawn up in accordance with the Council Decision on the Third Multiannual Programme for SMEs. This Decision provides for the Commission to submit to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions a two-yearly report on the progress achieved in taking SMEs into account in all Community policies and programmes, following its coordination action. This is the fifth report of this type. It reports on the latest developments that have occurred since the adoption of the previous report at the end of 1997 and outlines future prospects.

The report is broken down into three main chapters: the first one deals with improving the framework conditions for SMEs, the second one with programmes and instruments with a particular financial impact on support for SMEs and the third with enlargement, pre-accession and cooperation with non-member countries. The conclusion describes the development of the process of increasingly taking SMEs into account in Community policies and programmes.

This report's value lies in the fact that it presents an overall view of EU activities to assist SMEs. It reflects the objectives of the Integrated Programme for SMEs, which is a structure for coordinating EU measures whether they are carried out under Enterprise policy or through one of the other Community policies likely to affect SMEs.

The report also forms part of the follow-up to the Lisbon European Council (23-24 March 2000) which advocates creating a climate favourable to the creation and development of new businesses, particularly SMEs. The European Council considered it appropriate to apply an open coordination method, making it possible to disseminate best practice and ensure greater convergence with regard to the main objectives of the European Union. It called upon the Commission to submit its proposal for the next multiannual programme for enterprise and entrepreneurship (2001-2005). This multiannual programme was adopted by the Council at the end of 2000. It also asked the Council and the Commission to carry out a benchmarking exercise on business creation (cost, duration) and venture capital, and to report on the re-examination of EIB and EIF instruments in order to redirect funding towards businesses in the start-up phase or those involved in high-technology. The European Charter for Small Enterprises requested by the European Council was adopted by the Council in June 2000 and approved by the Feira European Council in June 2000.

In Lisbon, the fifteen Member States set a strategic objective for the next ten years: to become the most competitive, most dynamic, knowledge-driven economy in the world. To achieve this, Europe has to become more entrepreneurial and innovative. The e-Europe initiative, presented on this occasion, the objective of which is to include each citizen, school and business in the digital age, has resulted in a plan of action which involves measures to develop electronic commerce and use of the Internet in businesses.

This report reflects the priority given to SMEs in the broader political context of the coordination instruments created under the major economic policies, such as the "Luxembourg Process" on European employment strategy and the "Cardiff Process" on developing a regulatory environment more favourable for SMEs, the follow-up to the Best Action Plan, concerted action with the Member States and performance benchmarking exercises.

This report sums up the situation of policies to assist SMEs at the time of the renewal of the multiannual programme for enterprise and entrepreneurship in Europe. It contributes to the transparency and visibility of EU measures to assist SMEs and will be distributed widely in circles.

The focus of EU policies on SMEs has gradually developed over the years, both to improve the business environment and to increase support via various financial instruments and programmes.

Improving the business environment and the framework conditions involves administrative simplification and affects the regulatory, legal, tax, financial and social environment. The BEST action plan implemented by the Commission with the Member States brings together all the measures taken to improve and simplify the environment of businesses. Improving the business environment also involves increasing knowledge about businesses and their development and of their access to Community information. The Euro-Info-Centre network and other Community information networks are in dialogue with business and offer them information and advice on Community regulations and programmes. They also have a feedback system. An example of recent measures taken to improve the business environment can be found in the Directive on late payments of 29 June 2000, the draft regulation for a Community patent of July 2000 and proposals for simplifying legislation on public procurement.

Programmes and financial instruments to support SMEs implemented by the European Union take the form of direct or indirect aid. They are aimed mainly at improving the access of SMEs to financing and credit (loans, guarantees and venture capital), regional aid, cooperation between businesses and research and vocational training.

Since access to finance is crucial for SMEs, the European Union has in recent years strengthened the measures to support SME financing, particularly through the European Investment Bank and the European Investment Fund, in order to encourage the development of venture capital and guarantees for SMEs. New financial systems have been set up under the special Amsterdam Action Plan, such as the European Technology Facility (ETF) (with a budget of EUR 125 million) and the "growth and employment" initiative resulting from an initiative by the European Parliament and the special European Employment Summit in Luxembourg. As a result, three new programmes have been created, the European Technology Facility start-up (ETF start-up with EUR 168 million), the SME guarantee facility (with EUR 168 million) and the Joint European Venture programme (JEV with EUR 84 million), with the total budget amounting to EUR 420 million. Other initiatives are encouraging seed capital (CREA) and the establishment of networks of unofficial investors (business angels). In the last five years EIB global loans have been granted to 49 000 SMEs, 85 % of which are small enterprises. As for the EIF, the volume of operations providing guarantees for SMEs amounted to 33 % of all of its activities and involved EUR 879 million. The EIB and EIF instruments for SMEs are currently being assessed in order to direct them towards high technology start-ups and other venture capital initiatives.

The Structural Funds, the main financial instruments for regional development and employment, also provide considerable support for SMEs in the eligible regions. An assessment of the impact of the Structural Funds by subject area revealed that EUR 21.3 billion, i.e. 18 % of the Funds' budget, was allocated to over 800 000 SMEs in the 1994-1999 period. In its guidelines to the Member States for the 2000-2006 programmes, the Commission highlighted the importance of SMEs for regional competitiveness and employment in the EU. It considered the creation or development of competitive businesses the prerequisite for the creation of long-term jobs and, hence, regional economic development. The growing role of the services sector was also highlighted.

The participation of SMEs has progressed considerably in research and technical development programmes. In the Fourth Framework Programme, SME participation more than doubled compared with the previous programme. In the 1994-1998 period, 14 754 SMEs participated, compared with 5 424 in the 1990-1994 period. These 14 754 SMEs accounted for 28.5 % of projects and received over 20 % of the total budget. The establishment of a single contact point for SMEs, the simplification of submission procedures for SMEs and the special measures for SMEs (exploratory awards and CRAFT projects) have made it easier for them to participate. It should be even easier in the Fifth Framework Programme currently in force, particularly as a result of the horizontal programme on "innovation and participation of SMEs".

Community support for vocational training in SMEs is provided mainly by the European Social Fund and the Leonardo Programme. Although precise data is not yet available, it appears that the large majority of the projects supported under Objective 4 of the European Social Fund involve SMEs and that the figure varies between 40 % and 90 % in 1994-1999 programmes. In the Adapt initiative, SME participation is estimated at 15 % of projects. In the Leonardo Programme it amounts to an average of 20 %. The "pillar" devoted to the development of entrepreneurship in European employment strategy is a recognition of the crucial role of SMEs in employment policy. However it should lead to more concrete results in national action plans for employment in the Member States.

International cooperation is one of the areas which also affects SMEs. The Commission is preparing for the next enlargement of the European Union by opening the third multiannual programme to the applicant countries as part of the pre-accession strategy. The Commission is also promoting the establishment of joint businesses (JOP) and direct investment, particularly by means of the SME facility in cooperation with the European Bank for Reconstruction and Development. Finally, cooperation with non-member countries should promote the internationalisation of businesses in the global economy. It concerns trade policy and economic cooperation with many countries.

In its conclusions, the report shows that the political priority given to SMEs and the development of an entrepreneurial Europe has been confirmed. The account taken of SMEs and their participation in Community programmes has increased in recent years. However, efforts still have to be made regarding the assessment of the impact of policies on the development of SMEs. SMEs sometimes have difficulty gaining access to the various support programmes. This report will help raise awareness of EU measures amongst SME support bodies. Although the Community makes a considerable contribution to the development of an entrepreneurial Europe, the Member States' efforts are essential to maximise the potential of SMEs regarding competitiveness, growth, innovation and employment. The report shows clearly that in the period covered by the Third multiannual programme for SMEs, enterprise policy, in particular support for SMEs, has become an integral, integrated part of the main policies of the EU. A similar, positive development has been observed in the Member States. Joint efforts by the Commission and the Member States in this field will make it possible to realise the ambition of the European Union announced at the European Council, which is to become the most competitive, dynamic knowledge-driven economy in the world.

summary of aid for smes

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Introduction

Broad consensus is emerging within the European Union on the central role played by small and medium-sized enterprises (SMEs) in growth, competitiveness, innovation and employment. The political will has developed in recent years to promote a more entrepreneurial Europe, as confirmed by the conclusions of the Lisbon European Council of 23 and 24 March 2000, which advocates establishing an environment favourable to the creation and development of innovative businesses, in particular SMEs, and the European Charter for SMEs adopted by the Council on 13 June and welcomed by the European Council at Feira on 19 and 20 June 2000.

Community policies and programmes are contributing, to differing degrees, to the development of a European entrepreneurial drive promoting the creation, growth and development of businesses and their capacity to innovate, access new markets and adapt to the new economy.

This report raises the profile of EU action by providing a panorama of EU measures concerning businesses, in particular SMEs.

This report on the activities of the Union to assist SMEs has been drawn up in accordance with Article 5(2) of the Council Decision on a third multiannual programme for small and medium-sized enterprises in the European Union [1]. Article 5(2) states that "The Commission shall submit to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions a biennial report assessing progress in the inclusion of the SME dimension in all Community policies and programmes, following its coordination activities".

[1] Council Decision 97/15/CE of 9.12.1996, OJ L 6 of 10.1.1997, p. 25.

This is the fifth report, following on from those of 1992, 1994, 1995 and 1997 [2]. The last two were published in a more user-friendly form by the Office for Official Publications of the European Communities, and the 1997 report is available on the Internet [3] in the eleven official languages and over 70 000 copies have been distributed in the economic world. This report will also be published and made available on the Internet once it has been adopted. It summarises recent developments since the end of 1997, covering 1998, 1999 and part of 2000. It is the latest report drawn up in accordance with the Third Multiannual Programme for SMEs [4], which was completed in 2000 and has been succeeded by the Multiannual Programme for Enterprise and Entrepreneurship for the period 2001-2005 [5].

[2] SEC(1992) 704 of 26.5.1992, COM(1994) 221 of 7.9.1994, COM(1995) 362 of 8.9.1995 and COM(1997) 610 final of 25.11.1997.

[3] Publication OPOCE CT-08-97-759-FR-C ISBN 92-828-2854-9. The Internet presentation contains many hyperlinks with other useful sites: http://europa.eu.int/comm/enterprise/entrepreneurship/promoting_entrepreneurship/index.htm

[4] Enterprise DG site http://europa.eu.int/comm/enterprise/index_en.htm

[5] Council Decision 2000/819/EC of 20.12.2000, OJ L 333, 29.12.2000, p. 84 http://europa.eu.int/comm/enterprise/enterprise_policy/index.htm

The Member States' representatives on the Management Committee of the SME Multiannual Programme welcomed the report of November 1997 and recognised both its usefulness and its quality.

The European Parliament demonstrated its interest in the 1997 report by adopting an own-initiative resolution on 5 November 1998 [6]. Although the Parliament welcomed the publication of such a report, it took the opportunity to highlight the areas in which improvements could be made. It called for increased coordination of Community policies to assist SMEs, particularly regarding the Structural Funds. It stressed the need to use the Community definition of SMEs in the programmes concerning them. It also emphasised the need for systematic consultation of the organisations representing SMEs in the drafting of legislation affecting businesses, and the importance of SME representation in the European social dialogue. It called for SME aid to remain a priority in the Structural Fund programmes (2000-2006) and for quantifiable, verifiable objectives to be drawn up concerning SME participation. Finally, it stressed the importance of including the SME dimension in training programmes.

[6] A4-0359/98.

Objective and Structure of the Report

The objective of this report is to present how the SME dimension has been incorporated in Community policies and programmes.

The report's structure corresponds to the main objectives pursued by the Multiannual Programme to assist SMEs (1997-2000), namely improving the framework conditions for SMEs (Chapter I) and support for businesses through various programmes and financial instruments to support SMEs (Chapter II). Chapter III deals with enlargement, pre-accession and cooperation with non-member countries. The report presents the progress achieved to improve accommodation of the specific features of SMEs in Community policies and programmes and recognises that improvements can still be made to increase the participation of SMEs in Community programmes.

Aid for SMEs is set out in a summary table, together with the participation rates of SMEs in the programmes and support measures in terms of both their number and the budgetary amounts involved.

New communication tools such as the Internet are extremely powerful means of providing information in real time and ensuring greater transparency and increased visibility of the activities of the European Union among a larger public. That is why this report includes a large number of Internet sites concerning Community affairs, where the reader may find more detailed data on various specific issues and constantly up-dated information. For instance, in recent years, the Commission has concentrated on using the Internet to disseminate daily information on the latest developments of its policies. Nevertheless, this report will also be published on paper, since use of the Internet is not yet general and the paper version of reference documents is still useful and practical.

Definition of an SME

The abbreviation SME used throughout this report refers to the Community definition of small and medium-sized enterprises (SMEs) given in the Commission Recommendation of 3 April 1996 [7] addressed to the Member States, the European Investment Bank (EIB) and the European Investment Fund (EIF). The definition of an SME is summarised in the table below. It must be applied in all Community or national programmes concerning them. Although use of the definition of an SME is gradually becoming widespread, not all the criteria are yet systematically applied. Consequently, greater discipline is required regarding application of the Community definition of an SME.

[7] OJ L 107 of 30.4.1996, p. 4.

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Chapter I: IMPROVING THE FRAMEWORK CONDITIONS FOR smeS

The main objective of enterprise policy is to establish an environment suited to the creation and development of businesses. Improving the business environment involves the general framework, administrative and regulatory simplification, and the financial, fiscal, social and environmental context in which businesses operate. Better access for SMEs to the information society, in particular e-commerce, and innovation are also conditions for their competitiveness.

Prerequisites for creating an environment favourable to businesses include improving statistical knowledge of the SME population and providing SMEs with information networks and systems for returning information which can take better account of their needs in the definition of the policies concerning them.

1. Improved knowledge of SMEs

1.1. Statistics

More than 99 % of the 18 million EU enterprises in the non-agricultural market sectors are SMEs. They employ 66 % of the workforce and generate the 55 % of the total turnover.

The fifth edition of the publication "Enterprises in Europe" [8], published in 1999, provides data, from statistics taken in 1994-1995, on European enterprises broken down by size classes (on the basis of their number, employment and turnover) and a more detailed analysis on sectors of activity (31 sectors are examined) and on the country structure (all EU countries plus Norway, Iceland and Switzerland). Moreover, it includes thematic analysis such as the structure of enterprises in the Central European countries, the demography of enterprises (creations and closures), the structure of workforce in small firms (gender, education, type of job), regional analysis of SMEs and comparisons with the USA and Japan. The SME database has been updated in the first half of 2000 and a number of Statistics in Focus on SMEs has been released by Eurostat (theme 4 No 11/2000, 8/2000, 27/1999, 16/1999) [9]. The sixth edition of the "Enterprises in Europe" is planned to be released in spring 2001.

[8] Office for Official Publications of the European Communities, Luxembourg, n° CA-12-98-174-**-C.

[9] Office for Official Publications of the European Communities, Luxembourg, nº CA-NP-00-011-**-C, CA-NP-00-008-**-C, CA-NP-99-027-**-C and CA-NP-99-016-**-C.

The tables below give a picture of European enterprises classified by numbers of employees, sector of activity and of their contribution to employment and turnover in the Union.

Enterprises in the European Union - distribution by employment size class data from 1997

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Enterprises in the European Union - distribution by sector of activity data from 1997

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The Commission (Eurostat) continues its efforts to improve the European Statistical System, in particular on business statistics on SMEs. In limiting the burden on enterprises, Member States produce more and more key data broken down by size classes of employment on the basis of the Council Regulation 58/97 concerning structural business statistics.

The Structural Business Statistics

The structural business statistics have improved in recent years. The Council Regulation 58/97 concerning structural business statistics provides a common framework for the collection, compilation, transmission and evaluation of Community statistics on the structure, activity, competitiveness and performance of business in Member States, with particular reference to SMEs (article 2). Article 6 states that Member States can acquire the information requested in using a number of different sources: obligatory surveys, administrative sources or estimations. This provision takes into account the need to limit the statistical burden on enterprises, in particular on SMEs.

The Commission Regulation 2701/98 concerning the series of data to be produced for structural business statistics breaks down a number of basic variables (number of enterprises, turnover, value added, gross investment in tangible goods, number of persons employed) by sectors and size classes in accordance with the Commission Recommendation on the SME definition [10]. Another Commission Regulation 1618/1999 lays down certain quality standards for the statistics to be produced by Member states.

[10] OJ L 107, 30.4.1996, p. 4.

One of the main objectives of entrepreneurship policies is to enhance the number of business start-ups and the net creation of enterprises. Eurostat is working since years on enterprise demography. A major development project has been started with the Member States in order to obtain harmonised business statistics in this field. The first results on a harmonised base should be available early 2002. Indicators on enterprise demography have been already incorporated into the BEST indicators.

Publications on specific sectors that include data on SMEs

The publication "Services in Europe" [11] was first produced in 1998, along with several issues of the short reports entitled "Statistics in Focus" which concentrate on services.

[11] Office for Official Publications of the European Communities, Luxembourg, n° CA-17-98-742-**-C.

For Commerce and Distribution, the new publications "Retailing in the EEA 1997" [12] and "Wholesale Trade in the EEA 1997" [13] were launched at a seminar in March 1998 [14]. "Distributive Trades in Europe" was also published in 1999 [15]

[12] Office for Official Publications of the European Communities, Luxembourg, n° CA-11-98-738-**-C.

[13] Office for Official Publications of the European Communities, Luxembourg, n° CA-06-97-618-**-C.

[14] The findings are published by the Office for Official Publications of the European Communities catalogue n° CA-16-98-594 -EN-S.

[15] n° CA-24-99-154-**-C

Following the publication of the study "The Co-operative, Mutual and Non-profit Sector in the European Union" [16], a methodology for future reports in the field of social economy has been developed.

[16] Office for Official Publications of the European Communities, Luxembourg, n° CA-82-94-642-**-C.

The BACH database

The Commission has also been involved for a long time in the follow-up of the economic and financial situation of European companies, among them SMEs are a specific matter of interest [17]. A specific database was created in 1987 for that purpose - BACH [18] which contains harmonised annual accounts statistics for 11 European countries, Japan and the United States. It was set up with a view to supplementing the information sources already existing at European level and has been developed in co-operation with the European Committee of Central Balance Sheet Data Offices (ECCB). BACH has been serving as a basis for a number of comparative economic analyses carried out by the Commission and its national data suppliers. The information which it provides is also used by a growing number of researchers, universities and private and public bodies. Some possible uses are comparative sectoral analyses; sectoral reference systems; and performance comparisons between European, US and Japanese firms.

[17] See Financial situation of European enterprises in 1996. EUROPEAN ECONOMY. Supplement A. Economic trends. No. 11/12. November/December 1998. Office for Official Publications of the EC. Luxembourg.

[18] http://europa.eu.int/comm/economy_finance/databases/ bach_en.htm

1.2. The European Observatory for SMEs

The 5th report of the European Observatory for SMEs was published in 1997. It provides both quantitative and qualitative information on SMEs in the European Economic Area and Switzerland. It dealt mainly with the questions of employment and working conditions and the reactions of SMEs to the challenges of internationalisation and increased competition. It also contained detailed thematic studies on SMEs and the environment and SMEs and the tourism sector. The report concluded that micro-enterprises with fewer than ten employees have the greatest growth potential.

The results of the 5th report and also those of the 4th report were presented at two conferences in 1997. These events replaced the Commission Communication on the Observatory report.

The 6th report of the European Observatory for SMEs was published in 2000 [19].

[19] http://www.europa.eu.int/comm/enterprise/enterprise_policy/analysis/observatory.htm

2. Information on businesses

2.1. The Euro-Info-Centre network

Privileged link between Europe and SMEs, the Euro-Info-Centre network consists of 273 members in 38 countries and 14 correspondence centres [20].

[20] http://Europa.eu.int/comm/enterprise/networks/eic/eic.html

In May 1998, the Euro-Info-Centre network was partly restructured in order to increase its performance in terms of quality and quantity. There are now 233 Euro-Info-Centres, including 17 "network heads". "Network heads" are EICs which have their own national network. This new structure ensures that the Euro-Info-Centre network now reaches more businesses.

In 1998, the Commission also signed agreements with 42 national, transnational and European organisations which represent SMEs. These organisations have the status of "associate members", based on the exchange of added value and information.

In September 1999, following a call for tenders, the Euro-Info-Centre received 44 new members in Bulgaria, the Czech Republic, Estonia, Hungary, Poland, Romania and Slovakia. This extension of the network will contribute to the success of the enlargement of the Union by supporting businesses.

There are now 273 EICs in 38 countries, plus 14 Correspondence Centres in the Mediterranean region and Switzerland, Lithuania, Latvia and Slovenia.

The geographical coverage of the EIC network makes it quite unique. It is located in public, private, and semi-public bodies directly related to SMEs (chambers of commerce, local development agencies and banks). Entirely dedicated to businesses, the EICs have many purposes. They inform businesses, initiate them, advise them and help them in all fields concerning Community programmes and policies.

Euro-Info-Centres - the backbone of Community support for SMEs

European SMEs need simple, clear and efficient access to the European Union - its legislation, programmes and opportunities.

EICs serve as a local contact point for SMEs, a place where they can find simple, pragmatic answers to their requests, either directly or indirectly by being directed to the relevant specialists for more details.

This central role requires the development of close cooperation with the other SME intermediaries, including the other Community networks, such as the Innovation Relay Centres, the network of National Contact Points and the European Enterprise and Innovation Centres. The Commission intends to rationalise these networks, in an attempt to achieve synergy between them and to strengthen cooperation with the national networks.

By developing partnerships with other SME intermediaries (e.g. host structures, local, regional, national, professional and sector partners) the EICs are promoting synergy and preventing the duplication of tasks and skills, whilst respecting the principle of subsidiarity.

To guarantee the quality of their services, the EICs are permanently subject to an independent audit.

In 1999, the firm Deloitte & Touche gave the following opinion in an evaluation:

"The Euro-Info-Centres are evaluated positively. They show a strong quantitative and qualitative impact, growing network effect and a development of added value to SMEs beyond their traditional role of EU information service providers. The technical assistance office in Brussels is performing well and systems for monitoring EIC activity levels and maintaining quality control have been improved during the third Multiannual Programme".

The range of services provided by EICs:

The Info-service

As disseminators of information, the EICs make a large number of documents available to businesses. As organisers of seminars and conferences, they actively participate in major events on priority issues in the EU Member States, the CEECs and Mediterranean countries. As part of the 1999-2000 information campaign on the euro, the EICs are organising over 270 measures for SMEs. In 1998, the EICs continued the awareness-raising campaign launched in 1997 on health and safety at work in SMEs. The EICs will be participating in awareness-raising measures under the eEurope "go digital" initiative, which aims to provide access to as many e-commerce SMEs as possible.

Help and advice

The EICs offer support for the various stages of development of a business. They give advice on the European financing schemes for businesses, such as Community research and technological development programmes and the Structural Funds, European policy on quality, standardisation and certification, and environment policy.

The EICs are also providing support for the maintenance and consolidation of new markets. This includes their activities relating to the Europeanisation and internationalisation of businesses by providing them with better information on all the markets of non-member countries and the EU programmes concerning them, and the promotion of cooperation between businesses both within the EU and with non-member countries by using other Community networks and instruments.

In these various fields, the collective expertise of the network depends on the EIC expert groups, which develop the products and services. The main fields covered by these groups are the environment, the euro, external relations, the information society, public procurement and standardisation.

The flow of information from SMEs

The Commission is aware of the privileged place occupied by the EICs for informing them of the particular problems faced by SMEs in implementing legislation or participating in certain Community programmes. This feedback takes the form of direct consultation of EICs or surveys of SMEs conducted in their region. The EICs are continuing the work on the Single Market begun in 1994 using a now well-established feedback procedure and the compiling of success stories. The EICs have also participated in open consultation panels on a number of Green Papers: in 1999 they contributed this way to the drafting of the Green Paper on Public Sector Information in the Information Society.

2.2. Dialogue with Business: information, advice and feedback

In connection with the Euro Info Centres, the Dialogue with Business has been developed as a two-way communication in order to support SMEs, in a direct and interactive way, to help them benefit from the opportunities provided by the Internal Market, and to enable all operators (businesses, Member States and European Institutions) to learn from practical experiences of businesses operating through the Internal Market.

The Business Dialogue consists of two main elements:

* The Dialogue with Business Website (internet address: http://europa.eu.int/business) is a well established multilingual gateway to data, information and advice from many existing sources. It is a practical and free tool helping enterprises to win new business in the Internal Market and to overcome possible obstacles through a better knowledge of its operating rules. Several thousand companies use it daily to access support services at European, national and local levels.

* The Business Feedback Mechanism (launched in April 2000) will allow Member States and the European Commission to draw policy conclusions to be included inter alia as target priority actions in the annual review of the Internal Market Strategy [21]. This will be done on the basis of an in-depth analysis of large scale feedback of 20 000 business cases a year via 41 representative Euro Info Centres spread over the 15 EU Member States. In the context of the Commission Reform -and with direct relevance also for the subsequent Governance Initiative- the Commission is currently exploring the possibilities of extending the Business Feedback Mechanism's approach to cover a wider range of the Commission's policy areas. The more systematic use of feedback would enable the Commission to be more responsive to people's needs and render policy-making more inclusive.

[21] COM (2000) 257 final of 3.5.2000 and COM (1999) 624 final of 24.11.1999.

3. Improving the business environment of SMEs

3.1. Business Environment Simplification Task Force (BEST)

Recognising the need for further consideration and assessment of the issues affecting entrepreneurship and competitiveness and following a mandate from the Amsterdam European Council, the Commission established the Business Environment Simplification Task Force (BEST) in September 1997. This was a group of entrepreneurs, public administrators and academic experts with a mandate to look at the impact on enterprise of legislation and administrative practices and to make concrete proposals for reducing the burdens which restrict the growth and job creation potential of businesses. The BEST Task Force presented their final report in May 1998 in two volumes [22].

[22] Report of the Business Environment Simplification Task Force, Volumes I and II, 1998, available on the web: http://europa.eu.int/comm/enterprise/enterprise_policy/index.htm.

In response to the priority recommendations of BEST the Commission proposed an Action Plan on "Promoting Entrepreneurship and Competitiveness" [23], which was endorsed by the Industry Council on 29 April 1999 [24]. The Commission has recently launched the implementation process and is working with the Member States to ensure a vigorous follow-up. It presented a first report on implementation of the Action Plan in the second half of 2000.

[23] COM(1998) 550 final du 30.9.1998.

[24] Industry Council Conclusions of 29.4.1999, ref. 7422/99.

This Action Plan, for the first time brought together under one umbrella all policy aspects impacting on enterprises. It tied in with other Community policies, in particular the Luxembourg Employment Process and the structural reforms of product, labour and financial markets as initiated by the Cardiff European Council. The main thrust of the Action Plan is the promotion of enterprise and entrepreneurship as a means of improving competitiveness and sustainable growth. It concentrates on the aspects which are most important to SMEs; that is new approaches in education, training and the workplace, easier access to finance and innovation, and better public administration.

3.2. Exchange of best practice: Concerted Action

The Integrated Programme for SMEs and the Craft Sector [25] was an important step in the development of a European Enterprise policy in that it provided a global framework for all actions to assist SMEs, enhancing both the profile of these actions and their effectiveness. The basis was established, first, for a co-ordination between enterprise policy and other Community policies or programmes affecting SMEs, and then for a co-ordination of the policies of the Member States through a series of Concerted Actions.

[25] COM(1994) 207 final of 3.6.1994 and COM(1996) 329 final du 10.7.1996.

The characteristic feature of the Concerted Actions is that the role of the Commission is to help the Member States to improve their policies and programmes through encouraging the identification and exchange of best practice. The idea is that the efficiency of Member States' actions can be enhanced by a systematic comparison with the practices of other Member States.

When they were first launched, Concerted Actions focussed on the regulatory and administrative environment for businesses. The Commission Recommendation on Improving and Simplifying the Business Environment [26] published in 1997 and the Communication on the Transfer of SMEs [27], published in 1998 incorporated some of the early results. More recently, the emphasis has been on support measures and on improving the visibility and take-up of support services.

[26] OJ L 145 of 5.6.1997, p. 29.

[27] OJ C93 of 28.3.1998, p. 2.

The approach of concerted action is initially to present good practice in a series of fora to which are invited public authorities, business support agencies and other sections of the business community. These fora have taken place at regular intervals since support initiatives for the creation of new enterprises was first considered in Madrid in 1995. A Forum in Baden in 1998 launched the examination of support services for growing enterprises. This was followed by a more intensive examination of support for rapid growth enterprises in Helsinki the following year. The theme of "Increasing the visibility and effectiveness of support services for SMEs" was considered at a Forum in Dublin in 1996.

Follow-up has taken different forms. With support measures, a sustained examination of operational detail is required. A number of follow-up seminars have therefore taken place. These focus on more specific issues than the fora and involve a smaller number of experts who can provide expert guidance in the identification of good practice. The result has been the identification and publication of some 20 good practices in the assistance of start-ups, in the areas of finance, training and in direct support in the form of incubators. Analysis of support for growing firms is proceeding in the same way. The intention now is to carry this debate through the organisation of electronic fora that can eventually involve a much broader range of the professionals that provide support to enterprises in the definition of best practice.

Finally, the Commission has taken a number of other steps to help the process of Concerted Action. Contractors have been engaged to create the "Support" database on assistance measures for SMEs, initially in the start-up phase and to develop Internet tools for centralising information and disseminating good practice. More fundamentally, studies are being conducted on the nature and quality of service provision for SMEs, with the aim of ultimately promoting greater coherence and quality in support for enterprises across Europe.

A report on Concerted Action with the Member States was adopted on 9th November 1999 [28] and was very well received by the Council. All documents related to Concerted Actions and further information are available on the internet site [29].

[28] COM(1999) 569 final of 9.11.1999.

[29] http://europa.eu.int/comm/enterprise/entrepreneurship/concerted_actions/index.htm.

Summary of main activities under the Concerted Action Programme since the previous report

>TABLE POSITION>

3.3. Transfer of enterprises

After the Lille Forum on the transfer of SMEs, the Commission adopted on 28 March 1998 [30] a Communication to present the evaluation of progress made by the Member States in response to the 1994 Recommendation [31].

[30] OJ C 93, 28.3.1998, p. 2.

[31] Recommendation on the transfer of SMEs of 7.12.1994 published in OJ L 385 of 31.12.1994, p. 14 and OJ C 400 of 31.12.1994, p. 1.

The activities of the Commission have raised awareness of all the parties involved on the importance of the transfer of business and there has been progress in terms of concrete measures taken by Member States to facilitate transfer of business. For example, Spain has modified its Inheritance and Gift Tax law. Now it grants a 95 % exemption from the inheritance tax when business is transferred within the family. However, further efforts in this field are still needed, in particular, a lack of effective tax reductions and sufficiently easy access to finance for business transfers can be noted in most Member States.

Under a call for proposals published in 1998 [32], the Commission supported actions aimed at training of entrepreneurs and intermediaries, to provide them with practical skills on the various methods for transferring or taking over businesses, and to encourage support services in the field of business transfer.

[32] OJ C 263 of 20.8.1998, p. 13.

3.4. Benchmarking

Benchmarking provides an instrument for improving performance by learning from best practices. It has been used increasingly in enterprise policy since 1997 [33]. In addition to its application in Concerted actions, benchmarking is currently being used to strengthen the competitive environment for enterprise and in the innovation action plan.

[33] Benchmarking: Implementation of an instrument available to economic actors and public authorities COM(1997) 153 of 16.4.1997.

Strengthening the Competitive Environment for Enterprise

Framework Conditions: in 1997, a pilot initiative was undertaken to benchmark key areas of framework conditions impacting on competitiveness. Four projects, undertaken jointly with Member States and completed in 1998, benchmarked financing of innovation, ICTs and organisational change, skills and logistics. The pilot projects illustrated the potential of benchmarking as an instrument for improving the effectiveness of policy implementation [34].

[34] Benchmarking the competitiveness of European industry: assessment of the initiatives SEC(1999) 523 of 12.4.1999.

The Council welcomed and expressed appreciation for these initiatives [35]. It asked the Commission and the Member States to identify practical steps to ensure the ongoing development of benchmarking and to establish a dedicated Benchmarking Competitiveness Group for this purpose [36]. This Group is currently overseeing the implementation of further benchmarking projects.

[35] Council Conclusions on benchmarking of 16.11.1998.

[36] Council Conclusions on benchmarking and competitiveness of 29.4.1999.

A High Level Group on Benchmarking was established by the Commission in 1997. It included representatives of SMEs, social partners and wider societal interests. It presented its final report in October 1998.

Enterprises: The European Benchmarking Network (consisting of benchmarking practitioners), was established in 1997 with Commission support to promote the adoption of benchmarking by SMEs. It has currently over 400 member organisations, drawn from across the 15 Member States. The Network has also facilitated the establishment of national benchmarking focal points, the publication of a benchmarking manual and CD-Rom for SMEs and the organisation of four European Benchmarking Conferences.

An initiative under the SME Initiative of the Structural Funds to establish an transnational benchmarking database for SMEs is currently underway.

Sectors: A number of projects have been completed to benchmark sector specific competitiveness issues. These include energy efficiency in the chemicals sector, work practices in the automobile industry and procurement in the ICTs industry. Projects are currently being undertaken in relation to innovation in the biotechnology sector, quality procedures in the construction industry, procurement practices in the defence sector and procedures for standardisation bodies.

Trend chart of innovation

A trend chart of innovation is being developed as a basis for benchmarking. The objective is to achieve a common reference framework for analysing innovation performance and policies. In this way, it is intended to promote dissemination and application of good practices. The trend chart will concentrate on four priority fields: innovation finance, development of innovative businesses, protection of technology and promotion of technology transfer. Four benchmarking projects are being launched, relating to each of these fields. As a first step, a network of correspondents has collected and processed information on more than 250 innovation policy measures in all Member States and identified relevant organisations and individuals.

3.5. The quality of legislative proposals, subsidiarity and proportionality

The European Commission holds a continuous commitment to improve existing Community legislation and to ensure that new legislation is efficient yet simple and transparent. The Commission publishes an Annual Report on the principles to be followed and the measures taken when considering legislative proposals. This includes the need to take account of and meet subsidiarity and proportionality tests, to improve the quality of drafting, to introduce simplification measures, to consolidate and codify existing legislation, and to ensure all interested parties have access to information. The most recent report, "Better Law Making 1999" [37], was considered at the Helsinki European Council where Heads of State and Government confirmed their commitment to better regulation. Besides, most legislative proposals are preceded by a period of informal consultation within interested actors. This is often done through a process of Green or White papers, the publication in real time of the responses received to the consultations on the Europa web server and a Commission report on the results of the consultations and orientations for future action.

[37] COM(1999) 562 final of 3.11.1999.

Further to the Lisbon summit of 23-24 March 2000, the Commission was asked to set out a strategy for coordination and simplification of the regulatory environment by 2001.

Assessing the impact of Community legislation on business

When a legislative proposal is likely to have a significant impact on business, the Directorates General responsible for drafting a proposal are required to complete a business impact assessment report. The aim of the Commission's business impact assessment system is to strike an appropriate balance between new requirements and compliance costs and other administrative burdens on business.

In 1997, 12 business impact assessments were completed. These included the proposal for a Directive on combating late payments in commercial transactions [38], copyright and related rights in the Information Society, taxation of energy products [39], a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States [40], liability for defective products [41], and the framework agreement on part-time work negotiated by the Social Partners [42].

[38] COM(1998) 126 final of 25.3.1998.

[39] COM(1997) 30 final of 12.3.1997.

[40] COM(1998) 67 final of 4.3.1998.

[41] COM(1997) 478 final of 1.10.1997.

[42] COM(1997) 392 final of 23.7.1997.

In 1998, 21 business impact assessments were completed. These included proposals on such issues as establishing a general framework for the information and consultation of workers in the European Community [43], the organisation of working time for mobile workers performing road transport activities and for self-employed drivers [44], limit values for benzene and carbon monoxide in ambient air [45], laying down the regulatory framework for electronic commerce [46] and a proposal for introducing an effective minimum taxation of interest payments on savings income within the Community [47].

[43] COM(1998) 612 final of 11.11.1998.

[44] COM(1998) 662 final of 24.11.1998.

[45] COM(1998) 591 final of 20.1.1999.

[46] COM(1999) 427 final of 17.8.1999.

[47] COM(1998) 295 final of 20.5.1998.

Furthermore, in 1998 the Commission produced a Report on the Business Impact Assessment System [48] as part of the Commission's commitment towards openness and transparency, and to help in discussion about the need for further improvements to the system as part of the drive to improve the quality of legislation for the benefit of the businesses, particularly SMEs, who have to implement it.

[48] Evaluating the Impact on Business - the European Commission's Impact Assessment System, 1998.

In 1999, 12 business impact assessments were completed. These included proposals on such issues as energy efficiency requirements for ballasts for fluorescent lighting, national emission ceilings for certain atmospheric pollutants, ozone in ambient air, structural statistics on labour costs, Directive on batteries and accumulators, and sub-indices of the harmonised indices of consumer prices.

However, in response to calls from the Council and the European Parliament for further improvements of the business impact assessment, particularly with respect of the need for more comprehensive regulatory impact assessment, including cost-benefit analysis, an internal pilot project will be launched by the Commission to run in parallel to the normal system. A first evaluation report on the project is planned before the end of 2001.

Business Test Panel: an innovative additional consultation process

The Action Plan for the Single Market envisaged the creation of a panel of European companies to be consulted in addition to the consultations usually carried out by the Commission in the preparation of its legislative proposals. The Communication on "the Business Test Panel - A Pilot Project" [49] was adopted at the Internal Market Council on 30 March 1998. The work of the panel concentrates on the compliance costs and likely administrative implications for businesses of proposed new legislation.

[49] COM(1998) 197 final of 30.3.1998.

The Test Panel has so far been consulted three times. The arrangements put in place by the Member States and the Commission have worked satisfactorily. On the third consultation concerning the proposal for a Directive on Waste from Electrical and Electronic Equipment 10 Member States participated . Parallel to the consultations in the Member States the Commission carried out a consultation on-line via the Dialogue with Business web-site. The use of this innovative procedure for consulting of businesses on draft Commission proposals has ensured that a wide range of enterprises have submitted their observations, which in some cases, resulted in changes to the draft legislation. The pilot project will be subject to an in-depth evaluation which will be carried out in association with the review of the Commission's Business Impact Assessment system.

3.6. Simplification of legislation on the Internal Market: SLIM

The SLIM (Simpler Legislation for the Internal Market) exercise launched in 1996, whose goal is to reduce the constraints that Internal Market rules impose on businesses, has brought tangible results. The conciliation procedure on the Intrastat proposal aimed at reducing the data elements collected for intra-EU trade statistics [50] was successfully concluded. Two Commission Regulations on the declaration of net mass and statistical value have been issued [51]. A Council Regulation to simplify the product nomenclature [52] was adopted on 31 January 2000 [53]. The revised Directive on ornamental plants, clarifying its scope and reducing the administrative burden on both suppliers and administrations, has been adopted. In the third phase of SLIM, concluded in late 1998, SLIM teams made proposals on social-security co-ordination rules, electromagnetic compatibility and insurance. In the case of social-security the relevant amendments have already been prepared by the Commission in a proposal adopted in December 1998 [54].

[50] Regulation No 1182/1999 of the European Parliament and of the Council of 10.5.1999, OJ L 144, 9.6.1999 based on the Commission proposal COM(1997) 252 final of 30.5.1997.

[51] Commission Regulation (EC) No 2385/96 of 16.12.1996, OJ L 326, 17.12.1996 and Commission Regulation (EC) No 860/97 of 14.5.1997, OJ L 123, 15.5.1997.

[52] COM(1997) 275 final of 4.6.1997.

[53] OJ L 28 of 3.2.2000, p. 16-18.

[54] COM(1998) 779, OJ C 38, 12.2.1999, p. 10.

A complete list of all the recommendations issued by the three teams and the Commission's proposed follow up were published [55].

[55] COM (1999) 88 final of 25.2.1999.

The fourth phase of SLIM started in January 1999. Three sectors were reviewed: dangerous substances, company law and pre-packaging [56]. The teams have issued their recommendations and the Commission has published a report to the Council and European Parliament on the outcome [57].

[56] Simpler Legislation for the Single Market: Extension to a Fourth Phase. SEC(1998) 1944.

[57] COM(2000) 56 final of 4.2.2000.

The Commission assessed the SLIM exercise and adopted a Communication on 28 February 2000 [58] which contains measures to improve the implementation of SLIM.

[58] COM(2000) 104 of 28.2.2000.

3.7. Payment periods in commercial transactions

Late payments are the cause of one in four bankruptcies. This leads to 450 000 job losses each year and the loss of EUR 23.6 billion in unpaid debts. The effect of this is to considerably limit commercial transactions between the Member States, contrary to Article 14 of the EC Treaty on the functioning of the Internal Market. Surveys show that over 20 % of European businesses would export more if they could obtain shorter payment periods from their foreign customers. SMEs are particularly affected by late payments (since they are more vulnerable to variations in cash flow). The Commission has found it necessary to legislate to improve the situation. First it tried to redress the situation by means of a Recommendation to the Member States in May 1995 [59]. Since the Recommendation was ineffective [60], in March 1998 the Commission proposed a Directive to combat the problem [61].

[59] OJ L 127 of 10.6.1995, p.19 and OJ C 144 of 10.6.1995, p.3. http://europa.eu.int/comm/enterprise/regulation/late_payments/index.htm

[60] cf. Evaluation of the Recommendation contained in the Commission Communication of July 1997, OJ C 216 of 17.7.1997, p. 10.

[61] OJ C 168 of 3.6.1998, p. 13 and COM(1998) 126 final of 25.3.1998.

The proposed Directive has been through the codecision procedure of the European Parliament and the Council (Art. 251 of the EC Treaty). The Council approved the Directive on 18 May 2000 and it was finally adopted by the European Parliament on 15 June 2000. It is Directive 2000/35/EC of 29 June 2000 [62].

[62] OJ L 200 of 8.8.2000, p. 35.

The Directive deals with late payments between all businesses, including those in the public sector. The main provisions deal essentially with a legal right to charge interest on late payments and effective procedures for redress to recover the payments due throughout the Union and the EEA countries. It provides for a penalty interest rate seven percentage points higher than the rate applied by the European Central Bank or equivalent rates for the Member States not in the euro zone and the EEA countries. It fixes a period of 30 days as a reference for late payments, against which it will be possible to judge the deadlines fixed in contracts. The Directive should have an immediate impact on the way contracts are negotiated and entered into. It should have a positive effect by shortening payment periods, improving cash flow, particularly for SMEs, and, in the long run, making jobs more stable in Europe.

3.8. Access to the Information Society and to Electronic Commerce

It is essential for SMEs to take advantage from the growth potential offered by digital technologies. However, evidence suggests that Europe is not benefiting to the same extent as international partners from the positive effects generated by the "new economy". This concerns not only SMEs, but companies at large, citizens, administrations, schools etc.

Against this situation, the eEurope initiative [63], launched by the Commission on the 8th December 1999 [64], aims to bring everyone in Europe - every citizen, every school, every company - into the digital age as quickly as possible. eEurope has received a strong support from Member States and the industry. The special European Council held the 23-24th March 2000 in Lisbon gave a commitment to key targets of the eEurope initiative and invited the Commission and the Council to prepare an Action Plan for the European Council of Feira, 19-20th June 2000.

[63] http://europa.eu.int/comm/information_society/policy/index_en.htm

[64] COM(1999) 687.

The eEurope Action Plan [65] identifies 11 action lines. Three of these are particularly relevant for SMEs:

[65] COM(2000)330 du 24.5.2000, http://europa.eu.int/comm/information_society/eeurope/actionplan/index_en.htm

- e-commerce: improve legal certainty for SMEs offering e-commerce services across the Union; strengthen consumer confidence in e-commerce; accelerate the adoption of the legal and regulatory framework for e-commerce and its transposition and application in the Member States.

- Faster and Cheaper Internet: accelerate the adoption, transposition and application of the new regulatory framework for electronic communication services in order to boost the development of new fixed and wireless broadband infrastructures and to bring tariffs down.

- Working in the knowledge-based economy: enhance the digital literacy of workers and develop new skills adapted to market needs; take advantage of new possibilities offered by digital technologies, e.g. teleworking, to increase the flexibility of work organisation.

Multiannual Community Programme to stimulate the establishment of the Information Society in Europe: Promise

Promise [66] is a programme (1998-2002, budget: 25 MEUR) which provides awareness and encourages citizens to take advantage of the information technology services. At present, only a small number of people have access to and use network connections daily for their individual activities (e-mail, e-commerce or world-wide web). Only 15 % of the European SMEs use the new information technologies to improve their standards and compete in the global market. In Promise, many activities are relevant for SMEs notably: the ESIS inventory and the Eurobarometer surveys identifying the situation of SMEs versus the Information Society, the European Internet Fiestas and the ISPO information services. Also, European Information Society Awareness Weeks (EISAW) were organised in 1997 with the network of Euro Info Centres resulting in 27 events throughout the 15 Member States and the participation of 2 061 SMEs from various industry sectors. In 1998, a call for proposals was launched on "Optimisation of the socio-economic benefits of the Information Society in Europe" with a strong SME emphasis (Epsilon initiative). In 1999, a workshop on IS dissemination for SMEs brought together SMEs and relevant intermediaries/multipliers to provide a forum for discussion of best practice in dissemination and promotion of the IS for SMEs and to improve co-ordination and synergy between the main actors in this field.

[66] http://www.ispo.cec.be/promotion/i_promise_wp_2000_en.html

Present priorities include the co-ordination of the various Community initiatives contributing to the establishment and the promotion of the Information Society. Focus is now more on identifying, giving visibility and promoting the implementation of IS best practices in specific areas to stimulate take-up and spreading of high quality applications, services and methodologies rather than on funding some new projects.

Promoting the information society in regions assisted by the EU

Measures concerning the information society in the regions assisted by the EU (RISI) are divided into two sections: RISI 1, which encourages partnership between the key players in the region for drawing up a regional action plan on the information society and RISI 2, which supports multi-regional pilot projects. In total, 31 projects have been selected, 21 of which have been financed by the ERDF and ten by the ESF. The multi-regional measures, such as Enterskillsnet, aim at developing a network of SMEs in rural areas in Tarn and Haute-Garonne (F), Andalousia (E), Etelä-Savo (FIN), Dublin and Lanford (IRL) and Scotland. Another measure, "Tourist", concerns the parties involved in regional tourism in Madeira (P), Burgenland (A), Lappi (FIN), Val d'Aoste (I), and Hampshire (UK).

Electronic commerce

Electronic commerce (e-commerce) is a new factor of competitiveness which, if properly developed, may be of benefit to all SMEs although it represents a major challenge, especially those from more traditional and labour intensive sectors. Electronic commerce can also foster entirely new activities, in particular new intermediaries, on-line business and logistic services.

The e-commerce concept covers any form of business, administrative transaction or information exchange executed using any information and communication technology. From the point of view of businesses, this concept encompasses relatively simple shopping systems as well as complex solutions that integrate the whole commerce cycle. From an organisational perspective, electronic commerce is acting as a powerful integrator as it enables the seamless operation of existing flows between businesses and consumers, businesses and businesses and finally the exchange of data between companies and the public sector. Moreover, electronic commerce is propitiating the emergence of new, innovative ways of co-operation among SMEs that will help them to successfully face the challenges of globalisation.

Within the eEurope action plan adopted by the Commission on May 24th 2000 [67], accelerating e-commerce is one of the targets, the so-called "go digital" initiative. It will encourage SMEs to go digital through co-ordinated networking activities for the exchange of knowledge on best practices, e-commerce readiness and benchmarking (e.g. though "Researchers to SMEs fellowship schemes").

[67] http://europa.eu.int/comm/information_society/eeurope/actionplan/index_en.htm

Electronic commerce has the potential of making companies more efficient and competitive. It enhances the opportunity to expand and refine the dialogue between producers/suppliers and consumers, thereby improving the quality of products and services. It enables SMEs to federate in order to pool their purchase capacity, reach new and distant markets at low costs, get access to market information, improve their logistics and develop co-operative R&D facilities.

Nevertheless, SMEs lack awareness and skills and suffer from insufficient consumer acceptance of and trust in electronic commerce (especially as they do not have readily recognised brand status). In addition, small companies need a clear and simple regulatory environment as well as telecommunications tariff schemes adapted to the peculiarities of electronic commerce. There are, moreover, asymmetries of information, bargaining power and representation between the technology providers and small companies. Electronic commerce will have a full, positive impact on the competitiveness of European SMEs only when the Internet becomes effectively accessible and affordable by everybody to the same extent as electricity, gas and water utilities. Lack of awareness and training, high telecommunications costs and uncertainty about legal implications are very often identified as the main inhibitors for quick take-off of mass-market electronic commerce in Europe as they prevent the incorporation of a critical mass of business users to the electronic market.

The following actions are being implemented in 1999 and continuing into 2000:

* Promoting awareness: since 99 % of all businesses in Europe are SMEs, awareness actions for SMEs are of key-importance for the success of e-commerce. Therefore, an information campaign aimed at small and medium size traders will be carried on during the year 2000 in five Member States. This information campaign will encompass a number of different issues and hot topics related to e-commerce.

The use of electronic commerce among SMEs is being stimulated through the current initiatives:

* Establishment of a number of permanent on-line non-profit business services to stimulate the competitiveness of small businesses in e-commerce. The services developed will foster the creation of co-operative structures based on identified best practice. Partnership agreements between business users, regional and local authorities, professional organisations and technology providers will be promoted to help SMEs gain a competitive edge on e-commerce.

* Establishment of an on-line business certification and arbitration scheme for SMEs. This service, to be developed with the private sector, aims at providing SMEs business services like commercial advertising, certification, and quality label or payment schemes. The availability of these services on an affordable and reliable basis is essential for the success of SMEs in their Web ventures.

3.9. Promoting innovation

The promotion of innovation within SMEs is a crucial issue, which the European Union is treating as a priority. Action consists of the following:

* pilot measures and studies under the special programme for the "Promotion of innovation and encouragement of SME participation" as part of the Fifth RTD Framework Programme;

* instruments for the assisted regions of the Union, and

* the financing of innovative enterprises.

The financing of innovative enterprises is dealt with at the beginning of Chapter II in the part concerning financial instruments, and practical information is available on the Cordis site [68].

[68] http://www.cordis.lu/finance/src/acc-fin.htm.

Pilot Action "Mechanisms to facilitate the setting-up and development of innovative firms"

On the basis of the conclusions of the first European forum for innovative enterprises, held in Vienna in November 1998, the Commission decided to launch a pilot scheme to stimulate the support mechanisms to facilitate the creation and development of innovative firms.

This pilot action aims to identify, analyse and validate regional (or infra-regional) initiatives of excellence contributing to the creation and development of innovative firms.

The added value of the initiative lies, in particular in the exchange of information, experience, skills and good practices, and in highlighting "success stories". It is expected from this process to have a "European showcase" of innovation, which could have a large impact and knock-on effect for all the EU regions, encouraging economic areas to implement similar initiatives adapted to their local environment.

By its own pilot nature, this action should be achieved in a relatively short time (less than 2 years) in order to enable lessons to be drawn and to implement subsequent actions during the Fifth Framework Programme period.

A first Call for Proposals was published on June 15th 1999 [69], with an indicative budget of 12 MEUR, inviting proposals for three types of actions: thematic networks, projects and accompanying measures.

[69] OJ C 167 du 15.6.1999, p. 11.

* Thematic networks of areas of excellence, aiming to identify and to network European economic areas which can demonstrate successful schemes and conditions for the creation of innovative companies and which intend to share information, experience and methods.

A European label of excellence will be granted to distinguish and valorise accepted proposals representing individual economic areas which fulfil the criteria of excellence defined by the Commission.

* Projects having as objective to validate original instruments and approaches being used in the EU and Associated States to support the creation and development of innovative firms and to encourage private investment in these enterprises, as well as to test the transferability of those instruments and approaches to other contexts.

The following priorities are specifically targeted:

- interlinking and exchange of local financing mechanisms (such as regional funds or business angel networks) and/or mentoring schemes for innovative start-ups.

- integrated actions on training and support to innovative start-ups and on good practices in the preparation of business plans (e.g. business plans competitions).

- new services for innovative start-ups in technology parks, incubators or science parks.

- mechanisms to stimulate the transfer of knowledge and the creation of innovative start-ups (spin-out) by higher education (universities, etc.) and research institutes, in interaction with industry and investors.

- initiatives supporting the development of and access to international markets for innovative firms (e.g. investment fora, brokerage or partnering events, etc.).

This action is mainly addressed to universities, research organisations, public sector management organisations, at local, regional or national level.

* Accompanying measures seeking to prepare for, or to support, other actions like the network or the projects and contribute to the achievement of strategic objectives, such as the definition of EU innovation policy. Two types of accompanying measures are included in the call:

- support measures to facilitate networks interaction (e.g. workshops, website, etc.) and management, including exchange of information, transfer of best practices and organisation of promotional events (e.g. an annual European forum of innovative companies)

- an "Innovation policy interface" in co-ordination with other relevant EU policies, to extract lessons from the activities of thematic networks and projects, by establishing an interface with expert panels, visiting schemes, workshops, benchmarking exercises, etc.

* Studies and good practices on innovation

In 1999, 14 research-studies were launched to effectively support the analysis and benchmarking of innovation performances in Europe. The results of these studies, which will be available in 2000, will contribute to the dissemination of good practices towards enterprises and policy-makers. The studies cover those issues recommended as priority for action by the European Action Plan for Innovation, such as:

- innovative enterprises;

- financing of New Technology Based Firms;

- patent defence in Europe;

- technology transfer from large public research institutes.

In co-operation with Eurostat, the Commission Directorate responsible for Innovation also launched in 1999 a series of studies to exploit the results of the Community Innovation Survey - II, covering the innovative performance of European firms in the period 1997-1998. The topics addressed are:

- numbering (and percentage) of innovative enterprises by size-class;

- innovative enterprises by type of innovation;

- innovation intensity (percentage of expenditure on innovation activities against the firm's turnover);

- objectives for innovation;

- sources of information for innovation projects;

- hampering factors for innovation projects in firms.

The research and analysis on innovation performances and policies in Europe was pursued in 2000. A call for tenders was issued on 23 September 1999 [70] to select the contractors for the carrying out of a new series of studies.

[70] OJ C 269, 23.9.1999, p. 12.

* Innovation projects and accompanying measures

In 1999, the Commission launched a call for proposals [71] for Innovation Projects and Accompanying Measures (including cluster support measures, common promotional structures and innovation policy interface), receiving total funding of 15.6 MEUR. 42 % of the participants in these actions are SMEs. Due to the nature of the work involved most of the beneficiaries when disseminating the results of these actions are also expected to be SMEs.

[71] OJ C 80 of 23.3.1999, p. 12.

* Innovation Relay Centre Network

The Innovation Relay Centre Network has 53 members [72]. Its total budget amounts to EUR 100 million, of which the Community is contributing EUR 54 million for a period of 30 months under the Innovation Programme. The Innovation Relay Centres advise businesses on technological and innovation issues, in particular for transnational technology transfers.

[72] http://www.cordis.lu/irc/home.html.

The network's performance regarding SMEs in the period end-1997 to mid-1999 can be summarised as follows:

- number of contacts with clients (SMEs): 47 694

- number of SMEs assisted: 38 632

- number of negotiated technology transfers: 1 686

- number of signed technology transfer agreements: 222

- proposed RTD projects submitted: 1 870

- proposed RTD projects approved: 877.

* Promoting innovation in the assisted regions of the EU [73]

[73] http://www.inforegio.cec.eu.int/wbpro/prord/prordi/pdia3 %5Fen.htm.

RIS-RITTS: regional innovation strategies (RIS) and regional innovation and technology transfer strategies (RITTS)

Although the regional innovation strategies (RIS) are cofinanced by DG REGIO, and the regional innovation and technology transfer strategies (RITTS) are financed by the Innovation programme, these two initiatives are managed jointly.

Since 1994, over 100 regions have received funding for the creation of RIS and RITTS (EUR 500 000 financed to the extent of 50 % by the European Commission and 50 % by the region).

The main objective is to establish an efficient regional innovation system by improving existing regional innovation capacity. The RIS are not limited to the high-technology sectors, but also cover the traditional sectors and the services sector (e.g. tourism), which are important in less-favoured regions and particularly concern SMEs.

The RIS have made it possible to identify new innovation projects in businesses, particularly in SMEs. They have also led to the creation of new regional partnerships for economic development and the promotion of cooperation between businesses and the public and private sectors. For instance, the steering committees of several RIS projects (including Belgian Limburg, Yorkshire & Humberside, Strathclyde, and Shannon) are chaired by businessmen, thus allowing these management bodies to maintain a strictly entrepreneurial vision. They also include politicians.

Over 5 000 SMEs have been subject to technological audits and/or interviews.

A database (RINNO) is being set up to deal with regional innovation projects. It will provide an "intelligent" register, making it easier to identify good practices and disseminate them to regional decision-makers.

In addition, a network for RITTS-RIS [74] was set up to assist the regions to facilitate the exchange between regions involved in innovation strategies, to help networking between participating regions by creating a common platform between regions and to disseminate the resulting output to parties outside the Network.

[74] http://www.innovating-regions.org

TRIP (Trans Regional Innovation Projects)

TRIP projects aim at fostering cooperation in the practical development and implementation of measures, which reflect the outcomes of RITTS and RIS. The essence of TRIPs projects is to jointly develop new methods and not just to transfer experiences. It is expected that these projects will add value to the RITTS or RIS in each region by implementing concrete innovation actions, reinforcing the exchange and cooperation with other regions in innovation projects. Eleven TRIP projects with an overall budget of 4.5 MEUR are being developed in the fields of Industry-Research links, integration of SMEs into the supply chain, regional economic intelligence and supporting innovation in the services sector.

The RTT projects (multiregional technology transfer projects), of which seven were selected, are intended to reduce imbalances between regions and encourage interregional cooperation on research and development and innovation. For example, the Footwear project is intended to adapt and demonstrate an Italian technology for the design and automated production of moulds and transfer it to SMEs in the footwear sector in the Objective 1 regions of Spain, Portugal and Greece. In another sector, the Esteem project concerns the transfer of environmental production technologies to small firms in the United Kingdom, Greece, Germany and Finland.

Promoting the creation of innovative SMEs in the EU assisted areas: European Business and Innovation Centres BICs

In order to support the development and innovation of SMEs and the creation of innovative businesses, a network of 150 Business and Innovation Centres - BICs - was promoted, mostly in the assisted areas of the Union, within an experimental programme carried out by the Community regional policy. These are support centres, whose mission is to assist the development and creation of innovative enterprises, through a system of integrated guidance and coaching services to firms.

Following a positive assessment of the programme, in terms of business and jobs creation and development, the Commission formally acknowledged the BICs in the new Guidelines for structural funds 2000-2006 [75] as a successful model of organisation of integrated services to SMEs and their role of instruments of regional policy. They recommended the national authorities a more intensive use of these instruments, both creating them in new areas and making more use of their services where they exist, for the implementation of public measures for SMEs.

[75] OJ C 267, 22.9.1999.

New BICs are being launched, with regional aids, in areas assisted by structural funds, or without, outside those areas. In both cases, such Centres may join the European BICs Network - EBN [76], which develops its services of technical assistance to the members.

[76] http://www.ebn.be

BICs are linked by cooperation agreements to the Euro Info Centres and Innovation Relay Centres, which allows all these bodies to combine their services to SMEs and enrich one another.

Patents to stimulate innovation by SMEs

The Communication of the Commission of 5 February 1999 on promoting innovation through patents [77] takes stock of the extensive consultation process on the Green Paper on the Community patent and the patent system in Europe of 1997 [78]. The Communication suggests among other things that a pilot action should be launched to back the efforts of national patent offices to promote innovation, in particular by SMEs and that the patent system should be made more attractive for SMEs. Furthermore, the conditions for the patentability of software-related inventions should be harmonised and made more transparent. Software patents can be essential for SMEs to attracting venture capital.

[77] Communication to the Council, Parliament and the Economic and Social Committee: Promoting innovation through patents - The follow-up to the Green Paper on the Community Patent and the Patent System in Europe, COM(1999) 42 final, 5.2.1999.

[78] COM(1997) 314 final, 24.6.1997.

Community patent

The Commission presented on 1 August 2000 a proposal for a Regulation on the Community patent [79], which is a key priority in the field of intellectual property. A unitary patent covering the entire territory of the Community is essential to eliminate the distortion of competition which may result from the territorial nature of national protection rights. It will enable European companies, including SMEs, to adapt their production and distribution activities to the Community dimension and take up the challenges on the innovation and competitiveness fronts with respect to the United States and Japan. The Community patent should be affordable in terms of cost and should guarantee legal certainty adapted to the needs of companies, especially of SMEs.

[79] COM(2000) 412 of 5.7.2000.

National patent offices promoting innovation

The consultation on the Green Paper showed that the national patent offices should play an active role in disseminating and promoting the system of industrial property and of accumulated know-how, in particular by greater cooperation with SME representative bodies, the craft enterprises, the professional associations and independent inventors, as well as with universities. The Commission has arranged three round table meetings with national patent offices to facilitate the sharing of best practice amongst national patent offices in the area of innovation promotion. Further initiatives involving national patent offices, including a pilot action under the 5th Framework Programme for RTD, are planned in this area. This pilot action should strengthen the current role of patent information, provide an initial evaluation of the invention to be protected and define a protection strategy, provide information on the procedures and deadlines required to succeed with this protection strategy and provide basic economic information regarding industrial property.

The pilot action would cover assistance to businesses over the entire field of industrial property: patents, but also trade marks, designs and utility models and thus provide real "innovation protection". This new role, to be fulfilled by those patent offices wishing to participate in the initiative, could involve setting up a small specialised team, at national, multi-disciplinary level, which could be sensitive to enterprises' needs as regards innovation protection and provide and adequate response to those needs. Possible initiatives for these teams might include the publication of brochures covering the entire field of innovation protection, the preparation of websites with the same content, the organisation of exhibitions on innovation and conferences on the Chambers of Commerce and Industry, in regional organisations and in universities and technical institutes, etc.

Making the patent system more attractive for SMEs

The Commission identified the cost of the patent in Europe as one of the major obstacles to the optimum use of the system, in particular for SMEs. The Commission therefore welcomed the decision of the European Patent Office to further reduce its fees. This decision does not however exclude specific provisions being made for SMEs and universities.

The innovation capacity of SMEs could also be supported and strengthened by creating posts for specially trained advisors in representative organisations (Chambers of Commerce or Trades, professional associations), with the task of providing direct information to enterprises and assisting them in their representations from the moment of innovation right up to the award of the patent and its commercial management.

Finally, the Commission has adopted a modified proposal for a Directive on utility models, a form of protection which is particularly suited to the technical inventions of which SMEs are a fertile source [80].

[80] Amended proposal for a European Parliament and Council Directive approximating the legal arrangements for the protection of inventions by utility model, COM(1999) 309 final, 25.6.1999.

3.10. Improving competitiveness: commerce, the social economy and tourism

Retail businesses and the distributive trades

Eurostat most recent statistics show that it represents 30 % of businesses, 16 % of employment and more than 13 % of the GDP of the European Union, i.e. around 5 million businesses producing 640 billion euros and 21.5 million jobs split between retailers, wholesalers and intermediaries. The majority of the enterprises in the sector are SMEs but a very significant part of the sales volume of the sector is by large companies. The share of the female workforce averages over 50 % (54.8 %). The highest figures are found in the countries with the highest levels of turnover per person employed. As in the case of services overall, it is in retailing sector that female employment has recorded the highest rates, reaching 57.6 % of total employment in this sector.

A White Paper on Commerce [81] was published in January 1999 as a follow-up to the Commission's Green Paper on Commerce [82], adopted in November 1996 which launched a consultation process on the sector, on its challenges and on possible ways of remaining competitive, thus maintaining its major contribution to employment and social cohesion.

[81] COM(1999) 6 final of 27.1.1999.

[82] COM(1996) 530 final of 20.11.1996.

A major attention will be brought to a better integration of the needs of the sector into Community policies and programmes. This implies a close follow up of the evolution of the sector especially e-commerce and concentrations, the establishment of statistics in cooperation with Eurostat and a strengthening of the relations with all the actors of the sector, Member States, officials and professional organisations at European level.

A campaign "European Days of Commerce" was decided in 1999 and will be launched to raise awareness on the challenges and consequences of electronic commerce and the euro for the sector.

The Commission's work to identify best practices for small shops in rural areas was published on the Europa web site [83].

[83] http://europa.eu.int/comm/enterprise/services/commerce/index.htm.

A conference was held in Malaga in May 1999 about the problems of neighbourhood shops in urban areas; work on identification of problems and practical solutions are underway with the Member States.

Social economy: cooperatives, mutual societies, foundations and associations

In June 1997, the Commission adopted a communication on "Promoting the role of voluntary organisations and foundations in Europe" [84], with the aim of drawing decision-makers' attention to the growing importance of associations and foundations to Europe and the problems and challenges they face. It presented specific measures for the development of the sector at Community, national and sector levels.

[84] COM(1997)241 final of 6.6.1997.

Since then, a series of internal consultations, seven national conferences and nine experts' meetings have been held on the subject of communication. A follow-up report will present the results, which deal in particular with the needs regarding professionalism and training.

Two European Conferences were held in this period. First, the Sixth European Conference on the social economy was held in Birmingham in June 1998. Apart from job creation, it stressed the ability of the social economy to reform the welfare state, its role in the development of European citizenship and its contribution to entrepreneurship and life-long training.

Finally, the Conference on Cooperative entrepreneurship in the Europe of 2000 was held in Bologna in December 1998 with over 500 participants.

Tourism

Tourism is a fast growing industry. Although the Commission proposal on the Philoxenia programme did not reach an agreement in the Council, activity is carried out on issues such as the euro, the contribution of tourism to job creation or new technologies.

Data collected in the frame of the Council Directive 95/57/EC [85] on the collection of statistical information in the field of tourism has been regularly disseminated since 1997. In particular, "Tourism in Europe - Key figures" has been published on a yearly basis (in May or June) including data from the previous three years on the capacity of collective tourist accommodation, utilisation of bed-places, resident and non-resident guest flows and travel receipts and expenditure [86].The particular challenges faced by tourism SMEs were the subject of recommendations presented to the Commission following a conference held in May 1998 supported by both the Commission and the UK Presidency [87]. Another conference, held by the Commission in October 1998, examined the practical implications for tourism SMEs for the introduction of the euro [88]. This conference was prepared by the Euro-Tourism Working Group whose role was to help the tourism sector in succeeding its transition to the euro. The report of the High Level Group on Employment and Tourism, presented to the Commission on 22 October 1998, stressed the importance of activities for tourism SMEs at European, national and regional levels [89].

[85] OJ L 291, 6.12.1995, p. 32

[86] "Tourism in Europe - Key figures 1997-1998", (1999), Eurostat. "Tourism in Europe - Key figures 1996-1997", (1998), Eurostat "Tourism in Europe - Key figures 1995-1996", (1997), Eurostat

[87] "Agenda 2010 for Small Businesses in the World's Largest Industry", Llandudno/Wales, 20-22.5.1998, Final Communiqué, 30.6.1998.

[88] "Conference on the euro and tourism: opportunities and strategies for businesses", Brussels, 16.10.1998, Final Report.

[89] "European Tourism - New Partnership for Jobs", October 1998.

Further to the Commission's Communication on Enhancing Tourism's Potential for Employment [90] and the Conclusions of the Council meeting on the Internal Market, 21 June 1999, an Internet Roadmap for the Tourism Sector [91] is available to provide information on Community programmes for tourism SMEs.

[90] COM(1999) 205 final of 28.4.1999.

[91] http://europa.eu.int/comm/enterprise/services/tourism/index_en.htm

The Council's conclusions invited the Commission and the Member States to co-operate closely on other issues relevant to tourism SMEs such as dissemination of information, training, quality as well as environmental protection and sustainable development. Consequently, the Commission has established 4 Working Groups on these issues that are composed of experts nominated by the Member states. It will present a Progress Report to the Council in late 2000.

Since 1990, the European Social Partners meet to develop common opinions on issues relevant to tourism. In 1999, these meetings have been institutionalised in the form of the Sectoral Social Dialogue Committee Horeca [92]/tourism. They are presently discussing issues like: feasibility of a qualification passport in the Horeca sector, recommendations on how to promote employment in the European Horeca sector such as labour time flexibility, and the possibility of putting the sectoral social dialogue on a contractual basis.

[92] HORECA: HOtel, REstaurants and Cafés.

On information society technology the Commission's services undertook joint actions on issues such as tourism SMEs' needs in new technologies or impact of electronic commerce on tourism SMEs. This also led to the inclusion of a specific research action line on tourism in the 5th Framework Programme on RTD. On 12 November 1999 a conference on Tourism in the Information Society was held in Brussels. In view of the increasing role of information technology, tourism businesses will have to rethink their products, their entire internal procedures and structures, the marketing of their products, their co-operation with business partners and their relations with their customers in order to remain competitive.

3.11. Rules on judicial cooperation in civil and commercial matters

A number of texts and initiatives in the field of judicial cooperation in civil and commercial matters will be of direct benefit to SMEs:

* Common rules regarding jurisdiction, recognition and the enforcement of judgments in civil and commercial matters were drawn up in the Brussels Convention of 27 September 1968 [93]. This Convention will be replaced (except for Denmark) as from 1 March 2002 by the Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [94]. This Regulation updates the rules on private international law of the Member States regarding jurisdiction and improves and accelerates the recognition and enforcement of judgments in civil and commercial matters.

[93] Consolidated version published in OJ C 27 of 26.1.1998.

[94] OJ L 12 of 16.1.2001, p. 1.

* As regards the law applicable, the Convention on the law applicable to contractual obligations establishes rules on the matter. [95]

[95] Consolidated version published in OJ C 27 of 26.1.1998.

* As regards the transmission of documents in civil procedures, on 29 May 2000, the Council adopted Regulation (EC) No 1348/2000 [96] on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters. This Regulation, which governs the arrangements for the transmission of judicial and extrajudicial documents between the Member States, will improve and accelerate the process.

[96] OJ L 160 of 30.6.2000.

* Finally, on the question of bankruptcy, on 29 May 2000, the Justice and Home Affairs Council adopted Regulation EC 1346/2000 [97]on insolvency proceedings. The Regulation aims to improve and accelerate insolvency proceedings with cross-border effects by establishing common rules on the question of jurisdiction, recognition and applicable law in this field.

[97] OJ L 160 of 30.6.2000.

4. Regulatory and legislative environment

4.1. Internal Market

Internal Market Strategy

Regular reports on implementing the Action Plan for the Single Market have been provided in the twice-yearly Single Market Scoreboard. The Action Plan is succeeded by the Strategy for Europe's Internal Market [98] which sets four