Opinion of the Economic and Social Committee on the "Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions - 2000 Review of the Internal Market Strategy"

(2001/C 14/02)

On 3 May 2000, the Commission decided to consult the Economic and Social Committee, under Article 262 of the Treaty establishing the European Community, on the above-mentioned communication.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 27 September 2000. The rapporteur was Mrs Sánchez Miguel.

At its 376th plenary session of 19 October 2000 the Economic and Social Committee adopted the following opinion by with 87 votes in favour and one abstention.

1. Introduction

1.1. The Commission has submitted a review of the Internal Market Strategy on the basis of the Conclusions of the Lisbon European Council, which stressed that, in order to capitalise on Europe's economic situation, the regulatory framework aimed at stimulating innovation, investment and economic efficiency, as adopted by the Helsinki European Council, should be maintained. This is the first in a series of annual reviews of the Internal Market Strategy adopted in 1999.

1.2. The Commission's communication makes no substantial changes to the previous strategic objectives adopted at the end of 1999, the four principal priorities for action remaining the following:

- improving the quality of life of citizens;

- enhancing the efficiency of Community capital and product markets;

- improving the business environment;

- exploiting the achievements of the internal market in a changing world.

1.3. This Communication lays down temporary priorities for existing actions to ensure timely adoption and to monitor the implementation of on-going internal market actions to promote the four objectives listed, with a view to ranking them in order of priority, laying down implementing measures.

1.4. At the same time a distinction is made between legislative and non-legislative actions, highlighting those intended as a follow-up either to the white papers, e.g. the food safety action, which incorporates the views of the sectors consulted, or to actions in favour of European citizens, using as a point of reference the realisation of citizens' rights.

1.5. This update incorporates previous experience gathered from actions undertaken, as well as the result of consultations of associations of employers, trade unions, consumers and environmentalists; but above all account has been taken of the opinions of the European Parliament and the ESC, with some of the proposals they contained having been incorporated into the legislative instruments.

2. General comments

2.1. The brief period which has elapsed since the submission of the previous Commission Communication on the strategy for Europe's internal market(1) prompts us to confirm the general line taken in the Committee's opinion on that communication, insofar as it approved the principles of biannual actions and of annual monitoring but not the publication of two scoreboards each year, which demonstrably is not producing the desired results, given the short space of time involved and the more extensive legislative procedure arising from the system of parliamentary co-decision, as this increases the time needed for legislative adoption of the proposed actions.

2.2. The results presented by the Commission in May 2000 are hardly encouraging; of the 53 actions identified last November only 26 had been completed by the end of June 2000, partly as a result of lack of progress in the Council and the long-drawn-out procedure in the Parliament. This is one reason why the system of classification by priority used in the current communication seems appropriate; such a system was proposed by the ESC in its previous opinion as a way of focusing attention on the achievement of priority objectives.

2.3. The proposed revision appears to have dropped a number of actions which are important for the proper operation of the European internal market, such as:

- public-sector support, which has a major impact on market competitiveness; and

- free movement of persons, to which should be added the problems deriving from large-scale immigration from Eastern Europe and North Africa.

2.4. Notwithstanding the results, in its current communication the Commission presents new actions, in addition to the existing ones, including actions to amend EU law on pharmaceutical and chemical products, boosting consumer confidence by providing health-protection and environmental guarantees.

2.5. The conclusion reached by the Commission in its communication is in many respects positive, but everyday practice in the internal market belies other results, as too many administrative hindrances to the proper operation of European firms, particularly SMEs, continue to exist. Despite the Community actions carried out, cross-border transactions continue to be a source of uncertainty for consumers. Workers, who are part of the market, have no uniform system of participation in corporate management, with the persistence of different national systems.

3. Specific comments on actions

3.1. The ESC considers it appropriate that the actions to ensure the attainment of the four strategic objectives on which the successful operation of the European internal market depends have been graded in importance, with the priority actions, those to which a deadline for application has been assigned, providing the framework for the work of the institutions.

3.2. The quality of life of European citizens

3.2.1. With regard to the priority actions for each of the four strategic objectives, the progress made at the Lisbon summit on improving the quality of life of citizens should be stressed, with the establishment of four points aimed at restoring citizens' confidence in the European internal market.

3.2.2. The internal market forum proposed by the Council and the European Parliament will make it possible to identify the problems encountered by citizens and small firms in exercising their rights vis-à-vis national administrations. The ESC feels that its SMO should be included in view of its capacity for analysis and detecting problems arising in the single market.

3.2.3. The ESC feels that one measure that will boost the efficient operation of the market is the development of out-of-court settlement systems, which will simplify the relationship between consumers and firms, whilst leaving open the option for judicial settlement(2).

3.2.4. The White Paper on Food Safety(3) could be one of the most suitable instruments for restoring the confidence of European consumers, who in recent years have witnessed a series of scandals which have pointed up grave shortcomings in the operation of food-safety monitoring procedures in the internal market. The ESC considers that the proposed actions should be carried out within the deadlines laid down and that the European Food Agency has a vital role to play in their implementation.

3.2.5. On the subject of transport safety, serious accidents involving the transport of crude oil have led to a number of legislative measures being proposed to establish liability for hydrocarbon pollution and to regulate transport in ecologically fragile areas. Priority should at all events be given to adopting the environmental liability measure currently being discussed in the context of a white paper(4), the goal being an objective liability measure applicable to any form of environmental damage, and not just that resulting from transport by sea.

3.2.6. The use of modern technologies, particularly the Internet, is seen as a suitable way of promoting the dialogue between citizens and firms. Whilst recognising that this is a good way of bringing about this dialogue, it should be borne in mind that, if this approach is to be effective, a good system of training will also be needed, with use of the technologies being taught in schools; financial assistance with acquisition costs will also be needed to ensure access to the technologies, not only for all firms, but also for less affluent citizens, and especially those living in rural areas.

3.3. Improving the business environment

3.3.1. The introduction of the euro will be a decisive factor in improving the business environment. The ESC supports the actions designed to eliminate tax-related distortions; in this context the Committee reiterates the proposals put forward in its previous opinion(5), to the effect that before enlargement progress needs to have been made on the development of a VAT system based on the state of origin principle which is capable of controlling tax fraud in the internal market. The Committee strongly recommends in this context that, with a view to combating unemployment more effectively, the taxation of the output of labour as a factor of production also be studied. The ESC hopes that the tax package adopted by the European Council at the Feira (Portugal) summit will take account of the Committee's proposals aimed at promoting the smooth operation of the internal market.

3.3.2. With regard to the simplification of the internal market rules, attention is drawn to the content of an own-initiative opinion on this subject(6), and the proposals it contains, especially:

- consultation of the ESC on the SLIM project priority actions;

- prior impact analysis for every draft regulation, to be carried out by independent bodies;

- recognition of the code of conduct drawn up by the ESC as a contribution to simplification.

3.3.3. Within the context of this objective, it should be pointed out that the European Company Statute, which after long years of debate and many amendments both to the Statute itself and to the related Directive on worker participation has still not been approved, needs to be implemented rapidly.

3.3.3.1. The lack of company-law standards regulating mergers, particularly cross-border mergers, is creating distortions among European firms, with a resulting impact on the governments of the Member States and at great cost to the parties concerned, particularly the shareholders and workers of European firms.

3.3.3.2. The only existing standards at present are those relating to competition and, especially, those contained in the Mergers Regulation.

3.4. Enhancing the efficiency of Community capital and product markets

3.4.1. The measures being used to achieve this objective are the most effective. The liberalisation of the service sectors is proceeding apace, although some Member States still retain holdings in these sectors.

3.4.2. Notwithstanding the positive assessment of the liberalisation of services, this must not result in the creation of oligopolies, which are prejudicial to free competition and to services which are of fundamental importance to all European citizens, where quality and competitive pricing must be maintained.

3.4.3. The financial market is crucial to the full effectiveness of the internal market, and the adaptation of the directives amending the rules on the accounting standards of commercial companies, and particularly financial companies, will, by harmonising these standards, open up access to international securities markets. The implementation of the risk capital action plan will also make for greater flexibility in the securities markets and promote progress towards a uniform system allowing the establishment of a pan-European securities market able to accommodate new high-technology securities, which are strategically important for economic development and employment in the EU.

3.4.4. From the point of view of promoting innovation, high priority must be assigned to the protection of industrial and intellectual property rights. The ESC is pleased that the Commission recently submitted a proposal for a Regulation on the Community Patent. In so doing it is responding to the ESC's long-standing call for an instrument to protect patents in Europe.

3.4.5. The need should also be stressed for the adoption of standards governing the transport and energy markets, particularly directives laying down common rules for the internal markets in electricity and natural gas. Reference should also be made here to the amendment of the Directive on the liberalisation of postal services, which is necessary for the efficient operation of the universal service.

4. Conclusions

4.1. The ESC welcomes the annual submission of a review of the Internal Market Strategy, particularly with regard to the establishment of priorities for actions undertaken. Account should, however, be taken of the legislative procedures required if the deadlines for implementation of measures to facilitate the operation of the internal market are to be met.

4.2. In the light of the strategic objectives referred to, which affect people's quality of life, it is necessary to develop the actions provided for in the White Paper on Food Safety and to establish the Food Agency in order to restore European consumers' confidence in the European market.

4.3. Tax harmonisation, and the package of measures adopted to that effect by the European Council in Feira (Portugal), is one of the priority areas for action which the ESC would like to stress as a way of ending tax fraud.

4.4. Also with a view to improving the business environment, it is necessary to simplify internal market rules to ensure that the standards can be met by all companies, especially SMEs.

4.5. The Committee considers the adoption of the European Company Statute to be one of the most important preconditions for the smooth operation of the internal market, as a suitable vehicle not only for mergers but also for the systems for the participation of workers in the development of their companies.

Brussels, 19 October 2000.

The President

of the Economic and Social Committee

Göke Frerichs

(1) Strategy for Europe's Internal Market and Recommendations for the Review of Target Actions - OJ C 140, 18.5.2000, p. 36.

(2) Proposal for a Council Regulation (EC) on jurisdiction and the recognition and enforcement of judgements in civil and commercial matters, OJ C 117, 26.4.2000, p. 6.

(3) White Paper on Food Safety - OJ C 204, 18.7.2000.

(4) ESC Opinion, CES 803/2000

(5) Strategy for Europe's Internal Market and Recommendations for the Review of Target Actions - OJ C 140, 18.5.2000, p. 36.

(6) ESC Opinion CES 1174/2000 - Simplifying rules in the single market.