WRITTEN QUESTION E-0251/00

by Daniel Hannan (PPE-DE) to the Commission

(7 February 2000)

Subject: Statement by Commissioner Liikanen

In the 4 October 1999 edition of Cordis Focus, Commissioner Liikanen is on record as stating, It is not acceptable that it costs three times as much and takes seven times as long to start a new business in the European Union as in the US.

What causes does the Commission identify as creating this cost differential? What measures is it intending to take to sweep away those business burdens? Is it intending, consequently, to stop introducing Social Chapter legislation?

Answer given by Mr Liikanen on behalf of the Commission

(31 March 2000)

It is clear that the differences between the time necessary and the cost involved in establishing a new enterprise in the Community and those that arise for an equivalent operation in the United States are not acceptable.

The extent of this differential does, in fact, vary between Member States and depends on differing administrative traditions and differing responses to problems that have arisen from time to time in unregulated commercial activity. However, the overwhelming view in all of the Member States is that procedures need to be simplified and costs reduced. The Commission has assisted the Member States to address the problem in a number of ways. The report of the business environment simplification task force (BEST)(1) focuses on this particular issue in its fourth recommendation, where it calls on Member States to take initiatives to facilitate the creation of enterprises. In the follow-up to this report, under the Action Plan to promote Entrepreneurship and Competitiveness(2), the Commission is required to monitor and evaluate progress on implementation of the business start-ups recommendation(3) and to share information about best practice.

In the framework of the concerted actions, where the Commission assists the Member States to identify and exchange best practice on matters central to enterprise policy, considerable attention has been paid to the question of business start-ups. The Commission recommendation on improving and simplifying the business environment for start-ups, referred to in the BEST report, summarised the good practice identified during the first concerted action that was directly concerned with this theme. As outlined in the recent report on concerted action(4), there is evidence of progress in this area. The French Centres de formalités d'entreprises, for instance, have radically simplified procedures for start-ups. Moreover, there is encouraging evidence of Member States learning from each others' experience. The Portuguese Centro de Formalidades das Empresas network, for example, has been consciously based on the French model.

The concerted actions have also identified good practice in the areas of finance, training and support services for start-ups.

Moreover, the Commission is reinforcing the evaluation of the impact of proposed Community legislation on small and medium-sized enterprises (SMEs) through its business impact assessment system.

The Commission is also launching a benchmarking initiative in the field of entrepreneurship and innovation. First discussions will take place at the Industry Council in May, first results are expected under the French Presidency.

In the green paper on innovation(5), specific problems for the start-up of innovative companies were highlighted. A variety of measures under the innovation action plan(6) describe existing measures, namely for new technology based companies. A pilot action was launched in early 1999 with the specific

objective to identify economic areas which provide the best environment for successful launch and growth of start-up and spin-off companies. This pilot action will also promote the validation and transfer of novel strategies demonstrating best practices from the regions of the Community for the creation of innovative companies. As far as the question refers to Social Chapter legislation, the Commission would refer the Honourable Member to Article 137(2) (ex Article 118) of the EC Treaty.

To this end, the Intergovernmental Conference adopted Declaration no 26, which states that: The High Contracting Parties note that in the discussions on Article 118(2) (now 137(2)) of the Treaty establishing the European Community it was agreed that the Community does not intend, in laying down minimum requirements for the protection of the safety and health of employees, to discriminate in a manner unjustified by the circumstances against employees in small and medium-sized undertakings.

(1) European Communities (1998). Report of the Business Environment Simplification Task Force Office for Official Publications of the European Communities, Luxembourg. ISBN 92-828-3418-2.

(2) Council Conclusions on the Action Plan to Promote Entrepreneurship and Competitiveness 29.4.1999.

(3) Commission Recommendation 97/344/EC of 22 April 1997, on improving and simplifying the business environment for business start-ups, OJ L 145, 5.6.1997.

(4) Report from the Commission to the Council and the Parliament on Concerted Action with the Member States in the field of Enterprise Policy. COM(1999) 569 final.

(5) COM(95) 688 final.

(6) COM(96) 589 final.