COMPLETING THE INTERNAL MARKET: WHITE PAPER FROM THE COMMISSION TO THE EUROPEAN COUNCIL (MILAN, 28-29 JUNE 1985)
Date: 1985-06-14
Institutions: DG III – Industry, European Commission
Subjects: application of EU law, customs union, free movement of capital, free movement of goods, free movement of persons, free movement of workers, freedom to provide services, industrial cooperation, public procurement, single market

ARCHIVES HISTORIQUES 
DE LA COMMISSION 

COLLECTION RELIEE DES 
DOCUMENTS "COM" 

COM (85) 310 

Vol. 1985/0130 

 
 
 
 
 
 
 
 
 
 
 
 
Disclaimer 

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concernant  l'ouverture  au  public  des  archives  historiques  de  la  Communauté  économique 
européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, 
p.  1), tel que modifié  par le règlement (CE,  Euratom) n° 1700/2003  du  22 septembre 2003 
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In  accordance  with  Council  Regulation  (EEC,  Euratom)  No  354/83  of  1  February  1983 
concerning  the  opening  to  the  public  of  the  historical  archives  of  the  European  Economic 
Community  and  the  European  Atomic  Energy  Community  (OJ  L  43,  15.2.1983,  p.  1),  as 
amended  by  Regulation  (EC,  Euratom)  No  1700/2003  of  22  September  2003  (OJ  L  243, 
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In  Übereinstimmung  mit  der  Verordnung  (EWG,  Euratom)  Nr.  354/83  des  Rates  vom  1. 
Februar  1983  über  die  Freigabe  der  historischen  Archive  der  Europäischen 
Wirtschaftsgemeinschaft und der Europäischen Atomgemeinschaft (ABI. L 43 vom 15.2.1983, 
S. 1), geändert durch die Verordnung (EG, Euratom) Nr. 1700/2003 vom 22. September 2003 
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erforderlich,  wurden  die  Verschlusssachen  in  dieser  Datei  in Übereinstimmung mit  Artikel  5 
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COMMISSION  OF  THE  EUROPEAN  COMMUNITIES

C0MC85)  310 final 

Brussels,  14  June  1985

COMPLETING  THE  INTERNAL  MARKET

White  Paper  from  the  Commission 
to  the  European  Council 
(Milan,  28-29  June  1985)

C0MC85)  310  final

CONTENTS

Declarations  by  the  European  Council 
relating  to  the  Internal  Market

INTRODUCTION

PART ONE :  THE REMOVAL OF PHYSICAL BARRIERS

I. 
II. 

Introduction
Control  of  goods

Commercial  and  economic  policy
Health
Transport
Statistics
Conclusion  and  timetable

III.  Control  of  individuals

PART TWO :  THE REMOVAL OF TECHNICAL BARRIERS

I* 

Free  movement  of  goods

The  need  for  a  new  strategy 
The  chosen  strategy 
Harmonisation  -  a  new  approach 
Preventing  creation  of  new  obstacles 
Mutual  recognition 
Nuclear  materials

II. 

Public  procurement

III.  Free  movement  for  labour  and  the  professions  :

a  new  initiative  in  favour  of  Community  Citizens

IV. 

Common  market  for  services
Traditional  Services 
Financial  services 
Transport
New  technologies  and  services

V. 

Capital  movements

VI. 

Creation  of  suitable  conditions  for 
industrial  cooperation

Creation  of  a  Legal  framework  facilitating 
cooperation  between  enterprises 
Intellectual  and  industrial  property 
Taxation

VII.  Application  of  Community  law
Infringements
Transparency
Competition  policy  and  state  aids

  2 

-

-

PART  THREE  :  THE  REMOVAL  OF  FISCAL BARRIERS 

I. 

Introduction 

Commercial  Traffic  and  Value  Added  Tax 
The  Individual  Traveller 
Excises 

II. 

Approximation 

The  Broad  Picture 
Value  Added  Tax 
Excises 

III.  The  Commission's  proposals 

Value  Added  Tax 
Excises 
Enforcement 
Derogations 

CONCLUSION 

ANNEX  :  Timetable  for  completing  the 

Internal  Market  by  1992

41

41
43
44
45

46
47
.48
50

51
51
53
53
54

55

-  3  ~

DECLARATIONS  BT  THE  EUROPEAN  COUNCIL 
RELATING  TO  THE  INTERNAL  KARKET

"The  European  Council...  instructs  the  Council  :

-  to  decide/,  before  the  end  of  March  1983,  on  the  priority 
measures  proposed  by  the  Commission  to  reinforce  the 
internal  market"

Copenhagen,  3/4  December  1982

"It  asks  the  Council  and  the  Member  States  to  put  in  hand  without 
delay  a  study  of  the  measures  which  could  be  taken  to  bring  about 
in  the  near  future...

the  abolition  of  all  police  and  customs  formalities  for 
people  crossing  intra-Community  frontiers..."

Fontainebleau,  25/26  June  1984

"The  European  Council... 
appropriate  formations  :

agreed  that  the  Council, 

in  its 

should  take  steps  to  complete  the  Internal  Market, 

... 
including  implementation  of  European  standards"

the  European  Council  laid 

... 
following...  fields of  action  : 

a)  action  to  achieve  a  single 
creating  a  more  favourable 
enterprise, 
competition  and 
Commission  to  draw  up  a  deta 
timetable  before  its  next  mee

Dublin,  3/4  December  1984

particular  emphasis  cn  the

large  market  by  1992  thereby 
environment  for  stimulating 
trade  'r 
it  called  upon  the 
led  programme  with  a  specific 
ing".

Brussels,  29/30  March  1985

"Unifying  this  market  (of  320  million)  presupposes  that  Member 
States  will  agree  on  the  abolition  of  barriers  of  all  kinds, 
approximation  of  legislation  and  tax 
harmonisation  of  rules, 
structures,  strengthening of  monetary  cooperation  and  the  necessary 
flanking measures  to encourage  European  firms  to work  together.  It 
is  a  goal  that  is  well  within  our  reach  provided  we  draw  the 
lessons  from  the  setbacks  and  delays  of  the  past.  The  Commission 
will  be  asking  the  European  Council  to  pledge  itself  to  completion 
of  a  fully  unified  internal  market  by  1992  and  to  approve  the 
necessary  programme  together  with  a  realistic 
and  binding 
timetable."

In  such  terms  did  the  Commission  define  its  task  in  the  "Programme 
of  the  Commission  for  1985®*  which  was  presented  to  the  European 
Parliament  on  6 March.  On  29  and  30 March,  the  European  Council  in 
Brussels  broadly  endorsed  this  view  and

"laid  particular  emphasis  on  ...  action  to  achieve  a  single 
market  by  1992  thereby  creating a  more  favourable  environment 
for  stimulating  enterprise,  competition  and trade  ;  it  called 
upon  the  Commission  to  draw  up  a  detailed  programme  with  a 
specific  timetable  before  its  next  meeting'5.

This  White  Paper  is  designed  to  spell  out  the  programme  and 
Given  the  European  Council's  clear  and  repeated 
timetable. 
commitment  to  the  completion  of  the  common  market,  the  Commission 
does  not  intend  in  this  Paper  to  rehearse  again  the  economic  and 
political  arguments  that  have  so  often  led  to  that  conclusion. 
Instead  the  Commission,  which  wholeheartedly  shares  the  Council's 
commitment  and  objective,  sets  out  here  the  essential  and  logical 
consequences of  accepting  that  commitment,  together  with  an  action 
programme  for  achieving  the objective.

The  Treaty  clearly  envisaged  from  the  outset  the  creation  of  a 
single  integrated  internal  market  free  of  restrictions  on  the 
movement  of  goods;  the  abolition of obstacles  to the  free  movement 
of  persons,  services  and  capital;  the  institution  of  a  system 
ensuring  that  competition  in  the  common  market  is  not  distorted; 
the approximation of  taws  as  required  for  the proper  functioning of 
the  common  market;  and  the  approximation  o f  indirect  taxation  in 
the  interest  of  the  common  market.

In  the  early  days  attention  concentrated  on  the  common  customs 
tariff,  which  was  established  eighteen  months  ahead of  the  12-year 
programme  set  out  in  the  Treaty.  It was  a  remarkable  achievement  - 
one  that  we  can  look  back  on  with  pride  and  one  from  which  we  can 
derive  inspiration  for  the  future.  That  task  achieved,  attention 
turned  to  indirect  taxes. 
The  high  water  mark  was  perhaps  the 
adoption  - unanimously by the  Council  - of  the  6th  VAT directive  in 
1977.  But  thereafter momentum was  lost  partly  through  the onset  of 
the  recession,  partly  through  a  lack of  confidence and  vision.

-  5  -

6. 

7. 

8. 

of 

but 

also 

States, 

elimination 

measures  having 

The  recession  brought  another  problem. 
The  Treaty  specifically
required  not  simply  the  abolition  of  customs  duties  as  between  the 
quantitative 
the 
Member 
restrictions  and  of  all 
equivalent  effect. 
Originally  it  was  assumed  that  such  "non-tariff  barriers",  as  they 
were  of  limited  importance  compared  with 
are  commonly  called, 
But  during  the  recession  they  multiplied  as  each 
actual  duties. 
Member  State  endeavoured  to  protect  what  it  thought  was  its  short 
term  interests  -  not  only  against  third  countries  but  against 
fellow  Member  States  as  well. 
Member  States  also  increasingly 
sought  to  protect  national  markets  and  industries  through  the  use 
The 
of  public  funds  to  aid  and  maintain  non-viable  companies. 
provision  in  the  EEC  Treaty  that  restrictions  on  the  freedom  to 
provide  services  should  "be  progressively  abolished  during  the 
transitional  period"  not  only  failed  to  be  implemented  during  the 
transitional  period,  but  over  important  areas  failed  to  be
implemented  at  all.  Disgracefully,  that  remains  the  case.

But  the  mood  has  begun  to  change, 
and  the  commitment  to  be
rediscovered  :  gradually  at  first,  but  now  with  increasing  tempo.
The  Heads  of  State  and  Governments  at  the  European  Council  meeting 
in  Copenhagen  in  1982  pledged  themselves  to  the  completion  of  the 
internal  market  as  a  high  priority. 
The  pledge  was  repeated  at 
at  Dublin  in  December  of  that  year; 
Fontainebleau  in  June  1984; 
and,  most  recently,  in  Brussels,  in  March  1985.  The  time  for  talk 
has  now  passed. 
That  is  what  this 
The  time  for  action  has  come. 
White  Paper  is  about.

The  case  for  the  completion  of  the  internal  market  has  been  argued
elsewhere:  and,  as  the  communiqués  at  successive  European  Councils
it  has  been  accepted  by  the  Heads  of  State  and 
have  indicated, 
Governments  of  the  Member  States. 
But  it  is  worth  recalling  that 
the  objective  of  completing  the  internal  market  has  three  aspects  :

-  First, 

the  welding  together  of  the  ten, 

soon  to  be  twelve, 
individual  markets  of  the  Member  States  into  one  single  market  of 
320  million  people  ;

-  Second, 

ensuring  that  this  single  market  is  also  an  expanding 

market  -  not  static  but  growing  ;

-  Third,  to  this  end,  ensuring  that  the  market  is  flexible  so  that 
materials,  and  of  capital  and 

resources,  both  of  people  and 
investment,  flow  into  the  areas  of  greatest  economic  advantage.

9. 

Whilst,  therefore,  the  discussion  in  this  Paper  will  be  directed 
primarily  to  the  first  of  these  objectives  there  will  be  a  need  to 
keep  the  other  two  objectives  constantly  in  mind  and  to  ensure  that 
the  measures  taken  contribute  to  those  ends.

10. 

For  convenience  the  measures  that  need  to  be  taken  have  been 
classified  in  this  Paper  under  three  headings  :

  6 

-

-

-  Part  one  :  the  removal  of  physical  barriers

-  Part  two  :  the  removal  of  technical  barriers

-  Part  three  :  the  removal  of  fiscal  barriers.

11. 

12. 

13. 

The  most  obvious  example  of  the  first  category  are  customs  posts  at 
frontiers. 
Indeed  most  of  our  citizens  would  regard  the  frontier 
posts  as  the  most  visible  example  of  the  continued  division  of  the 
Community  and  their  removal  as  the  clearest  sign  of  the  integration 
of  the  Community  into  a  single  market.  Yet  they  continue  to  exist 
mainly  because  of  the  technical  and  fiscal  divisions  between  Member 
States.  Once  we  have  removed  those  barriers,  and  found  alternative 
ways  of  dealing  with  other  relevant  problems  such  as  public 
the  reasons  for  the 
security, 
existence  of  the  physical  barriers  will  have  been  eliminated.

immigration  and  drug  controls, 

The  reason  for  getting  rid  entirely  of  physical  and  other  controls 
between  Member  States  is  not  one  of  theology  or  appearance,  but  the 
hard  practical  fact  that  the  maintenance  of  any  internal  frontier 
controls  will  perpetuate  the  costs  and  disadvantages  of  a  divided 
market  ;  the  more  the  need  for  such  controls  diminishes  -  short  of 
total  elimination  -  the  more  disproportionate  become  the  costs, 
expenses  and  disadvantages  of  maintaining  the  frontiers  and  a 
divided  market.

While  the  elimination  of  physical  barriers  provides  benefits  for 
traders,  particularly  through  the  disappearance  of  formalities  and 
of  frontier  delays, 
it  is  through  the  elimination  of  technical 
barriers  that  the  Community  will  give  the  large  market  its  economic 
and  industrial  dimension  by  enabling  industries  to  make  economies 
An  example  of 
of  scale  and  therefore  to  become  more  competitive. 
this  second  category  - 
technical  barriers  -  are  the  different 
standards  for  individual  products  adopted  in  different  Member 
States  for  health  or  safety  reasons, 
or  for  environmental  or 
Here  the  Commission  has  recently  launched  a 
consumer  protection. 
major  new  initiative  which  has  been  welcomed  and  endorsed  by  the 
Council. 
The  barriers  to  the  freedom  to  provide  services  could 
perhaps  be  regarded  as  a  separate  category;  but  these  barriers  are 
analogous  to  the  technical  barriers  which  obstruct  the  free 
movement  of  goods,  and  they  are  probably  best  regarded  as  part  of 
the  same  category.  There  is  an  additional  merit  in  such  an  approach 
since  the  traditional  dichotomy  between  "goods"  and  "services"  has 
fostered  an  attitude  in  which  "services"  are  somehow  regarded  as 
Technical 
inferior  and  relegated  to  the  bottom  of  the  queue. 
barriers  are  technical  barriers  whether  they  apply  to  goods  or 
services  and  all  should  be  treated  on  an  equal  footing. 
The 
general  thrust  of  the  Commission's  approach  in  this  area  will  be  to 
move  away  from  the  concept  of  harmonisation  towards  that  of  mutual 
But  there  will  be  a  continuing  role 
recognition  and  equivalence. 
for  the  approximation  of  Member  States'  laws  and  regulations, 
as 
laid  down  in  Article  100  of  the  Treaty. 
Clearly,  action  under 
this  Article  would  be  quicker  and  more  effective  if  the  Council

14. 

15. 

16. 

17. 

18. 

-  7  -

were  to  agree  not  to  allow  the  unanimity  requirement  to  obstruct 
progress  where  it  could  otherwise  be  made.

approximation. 

The  removal  of  fiscal  barriers  may  well  be contentious  and  this
despite  the  fact  that  the  goals  laid  down  in the  Treaty  are  quite
explicit  and  that  important  steps  have  already  been  taken  along  the 
the  reasons  why
road  of 
approximation  of  fiscal  legislation  is  an  essential  and  integral 
element  in  any  programme  for  completing  the  internal  market  are 
explained  in  detail  in  Part  Three  of 
of  indirect  taxation  will  raise  severe  problems  for  some  Member 
States.  It  may,  therefore,  be  necessary  to  provide  for  derogations*

this  Paper.  Approximation

being  so, 

This 

We  recognise  that  many  of  the  changes  we propose  will  present
considerable  difficulties  for  Member  States  and  time  will  be  needed 
for  the  necessary  adjustments  to  be  made.The  benefits  to  an 
integrated  Community  economy  of  the  large,  expanding  and  flexible 
market  are  so  great  that  they  should  not  be  denied  to  its  citizens 
because  of  difficulties  faced  by  individual  Member  States. 
These 
to  some  degree  they  must  be 
difficulties  must  be  recognised, 
but  they  should  not  be  allowed  permanently  to 
accommodated, 
frustrate  the  achievement  of  the  greater  progress, 
the  greater 
prosperity  and  the  higher  level  of  employment  that  economic
integration  can  bring  to  the  Community.

Last  year,  the  Commission  submitted  a  Consolidation  Programme
identifying  a  series  of  proposals  to  be  adopted  by  the  Council  in 
This  White  Paper  pursues  this  effort  in  a  wider 
1984  and  1985. 
perspective  and  with  a  view  to  completing  the  Internal  Market  by 
1992. 
It  therefore  comprises  the  essential  items  of  last  year's 
paper  without  expressly  repeating  the  Consolidation  Programme  which 
stilt  remains  valid.

(1 )

This  White Paper  is  not  intended  to  cover  every  possible  issue
which  affects  the  integration  of  the  economies  of  the  Member  States 
It  focusses  on  the  Internal  Market  and  the 
of  the  Community. 
necessary  to  achieve  a  single 
measures  which 
integrated  market  embracing  the  320m  people  of  the  enlarged
Community.  There  are  many  other  matters  -  all  of  them  important  in
their  own  way  -  which  bear  upon  economic  integration, 
indirectly 
affect  the  achievement  of  the  Internal  Market  and  are  the  subject 
of  other  Community  policies.

are  directly 

For  example,  it  is  a  fact  that  in  order  to  facilitate  the  key  role 
which  the  internal  market  can  play  in  the  policy  for  the  recovery 
of  industrial  structures,  the  suspension  of  internal  borders  must 
be  accompanied  by  actions  which  strengthen  research  and  the 
technological  base  of  the  Community's  industry.  Such  actions  will 
It  is 
allow  firms  to  benefit  from  the  size  of  the  single  market. 
within  this  context  that  the  present  work  of  strengthening  the 
Community's  technological  base  should  be  seen.

C0MC84)  305  final  of  13  June  1984.

  8 

-

-

19. 

20. 

21. 

22. 

Similarly,  the  strengthening  of  coordination  of  economic  policies 
and  the  EMS  will  be  essential  factors  in  the  integration  of 
national  markets. 
However,  any  action  taken  to  ensure  the  free 
movement  of  factors  of  production  must  necessarily  be  accompanied 
by  increased  surveillance  by  the  Commission  in  the  field  of 
competition  rules  to  ensure  that  firms  and  Member  States  adhere  to 
these  rules. 
a  strong  and  coherent  competition 
policy  must  ensure  that  the  partitioning  of  the  internal  market  is 
not  permitted  to  occur  as  a  result  of  protectionist  state  aids  or 
restrictive  practices  by  firms.  Moreover  the  commercial  identity  of 
the  Community  must  be  consolidated  so  that  our  trading  partners 
will  not  be  given  the  benefit  of  a  wider  market  without  themselves 
making  similar  concessions.

In  particular, 

There  are  many  other  areas  of  Community  policy  that  interact  with 
the  Internal  market  in  that  they  both  affect  its  workings  and  will 
benefit  from  the  stimulus  that  will  be  provided  by  its  completion. 
This  is  particularly  true  of  transport,  social, 
environment  and 
consumer  protection  policy.  As  far  as  social  aspects  are  concerned, 
the  Commission  will  pursue  the  dialogue  with  governments  and  social 
partners  to  ensure  that  the  opportunities  afforded  by  completion  of 
the  Internal  Market  will  be  accompanied  by  appropriate  measures 
aimed  at  fulfilling  the  Community's  employment  and  social  security 
objectives.

The  Commission  is  firmly  convinced  that  the  completion  of  the 
Internal  Market  will  provide  an  indispensable  base  for  increasing 
the  prosperity  of  the  Community  as  a  whole. 
The  Commission  is, 
however,  conscious  that  there  may  be  risks  that,  by  increasing  the 
possibilities  for  human,  material  and  financial  services  to  move 
without  obstacle  to  the  areas  of  greatest  economic  advantage, 
existing  discrepancies  between  regions  could  be  exacerbated  and 
therefore  the  objective  of  convergence  jeopardized.  This  means  that 
full  and  imaginative  use  will  need  to  be  made  of  the  resources 
available  through  the  structural  funds.  The  importance  of  the  funds 
will  therefore  be  enhanced.

Although  this  White  Paper  will  touch  on  these  matters  where  they 
have  a  direct  bearing  on  the  working  of  the  Internal  Market, 
it 
wilt  not  attempt  to  cover  them  in  full  and  in  detail  as  they 
represent  considerable  areas  of  study  in  their  own  right  and  merit 
The  existence  of 
separate  and  fuller  consideration  elsewhere. 
these  problems  does  not  mean  that  the  frontiers  and  other  frontier 
controls  should  not  be  abolished.  On  the  contrary  the  task  we  face 
is  to  find  solutions  to  the  problems  on  the  basis  that  the 
frontiers  will  have  been  abolished.

23. 

A  detailed  timetable  for  implementing  the  Commission's  proposed 
programme  of  measures  for  the  removal  of  physical,  technical  and 
fiscal  barriers  is  to  be  found  in  the  Annex  to  this  Paper.

-  9 -

PART ONE :  THE REMOVAL OF PHYSICAL BARRIERS

I. 

INTRODUCTION

24. 

25. 

26. 

27. 

28. 

It  is  the  physical  barriers  at  the  customs  posts,  the  immigration 
controls,  the  passports,  the  occasional  search  of  personal  baggage, 
which  to  the  ordinary  citizen  are  the  obvious  manifestation  of  the 
continued  division  of  the  Community  -  not  the  "broader  and  deeper 
Community"  envisaged  by  the  original  Treaties  but  a  Community  still 
divided. 
These  barriers  are  equally  important  to  trade  and 
industry,  commerce  and  business.  They  impose  an  unnecessary  burden 
on  industry  flowing  from  the  delays,  formalities, 
transport  and 
handling  charges, 
tiveness.

thus  adding  to  costs  and  damaging  competi­

There  is  therefore  a  double  reason  for  removing  the  physical 
barriers  -  an  economic  reason  and  a  political  reason.  The  setting 
up  of  the  ad  hoc  Committee  on  a  People's  Europe  at  the 
Fontainebleau  European  Council  (the  Adonnino  Committee)  is  ample 
testimony  to  the  importance  of  the  political  concept.  There  is  no 
area  in  which  progress,  where  it  can  be  made,  would  be  more  visible 
or  more  directly  relevant  to  the  aims,  ambitions  and  vision  of  the 
Community.

Under  the  Treaty,  customs  duties  and  quantitative  restrictions  in
intra-Community  trade  have  been  abolished. 
Customs  posts  at 
internal  frontiers  have, 
continued  to  exist  as  a 
however, 
convenient  point  at  which  to  check  compliance  with  national 
indirect  taxation  rules.  Use  has  also  been  made  of  this  continued 
official  presence  to  enforce  national  protective  measures  relating 
to  for  example  terrorism, 
other  prohibited  goods  and 
drugs, 
Measures  adopted  by  the  Community  itself  have  led 
immigration. 
Member  States  to use  internal  frontier  posts 
for  controlling
aspects  of  common  policies  (agriculture  and  steel)  and  for  applying 
safeguard  clauses.

Our  objective  is  not  merely  to  simplify  existing  procedures,  but  to 
do  away  with  internal  frontier  controls  in  their  entirety.  In  some 
cases  this  will  be  achieved  by  removing  the  underlying  causes  which 
give  rise  to  the  controls.  In  others  it  will  be  a  matter  of  finding 
ways  and  means  other  than  controls  at  the  internal  frontiers  to 
achieve  comparable  levels  of  protection  and/or  information.

Where  the  underlying  causes  consist  partly  of  national  policies  and
policies  which  are not  yet  fully  developed,
partly  of  common 
achieving  our  objective  will  require  national  policies  either  to  be 
progressively  relaxed  and  ultimately  abandoned  where  they  are  no 
longer  justified,  or  replaced  by  truly common  policies  applicable
Community policies  which  are  not  yet
to  the  Community  as  a  whole. 
fully  developed  and  at  present  give  rise  to  internal  frontier

29. 

30é 

31. 

  10 

-

-

controls  will  have  to  be  amended  so  as  to  obviate  the  need  for 
It  follows  that  once  these  barriers  have  been  removed, 
controls. 
the  reasons  for  the  existence  of  controls  at  internal  frontiers 
will  have  been  eliminated.

pro­

The  Commission  recognises,  however,  that  certain  national 
tective  measures  do  not  in  all  their  aspects  fall  within  the  scope 
of  the  Treaty. 
Two  very  important  examples  are  measures  against 
terrorism  and  the  illicit  trade  in  drugs.  The  Commission  shares  the 
legitimate  concerns  of  the  Member  States  about  the  need  to  control 
drugs  and  terrorism  and  is  well  aware  of  the  role  of  internal 
frontier  posts  in  this  respect.  It  needs  to  be  stressed,  however, 
that  frontier  controls  are  by  no  means  the  only  or  indeed  the  most 
effective  measures  in  this  regard.  If  the  objective  of  abolishing 
all  internal  frontier  controls  is  to  be  met,  alternative  means  of 
protection 
they  exist, 
be  found 
Obvious  examples  are  improving  controls  at  the 
strengthened. 
external  frontiers  of  the  Community  ; 
using  spot-checks  at  the 
and  further  enhancing  cooperation 
internal  frontiers  and  inland 
between  the  national  authorities  concerned.

where 

need 

will 

or, 

to 

Internal  frontier  controls  are  made  on  both  goods  and  individuals 
health, 
and  are  motivated  by  fiscal, 
statistical  and  police  considerations. 
Individuals  and  their 
personal  property  are  usually  checked  by  customs  and  police  or 
immigration  officials, 
and  goods  by  customs  and  sometimes  more 
specialised  authorities.

commercial, 

economic, 

The  customs  authorities'  primary  role  at  internal  frontier  posts  - 
or  within  the  Member  State  where  formalities  and  checks  take  place 
inland  -  is  to  ensure  that  the  indirect  taxation  system  of  the 
Member  State  in  question  (VAT,  excise  duties)  continues  to  operate. 
It  therefore  follows  that,  from  the  customs  viewpoint,  the  problem 
of  removing  physical  controls  is  largely  related  to  that  of 
removing  fiscal  barriers. 
This  latter  problem  is  dealt  with  in 
detail  in  Part  Three  of  this  Paper.

32. 

The  considerations  which  apply  to  goods  and  individuals  are  very 
different.  We  therefore  examine  them  separately.

II. 

CONTROL  OF  800BS

33. 

customs 

To  date  Community  action  has  concentrated  on  alleviating  internal 
frontier  formalities  and  facilitating  the  movement  of goods. 
To
this  end  and  in  accordance  with  Articles  12,  30  and  95 of  the EEC-
Treaty,  the  Commission  has  ensured  and  will continue  to ensure that
the 
non­
observe 
discrimination  and  proportionality.  The  Community  transit  procedure 
and  the  single  administrative  document  are  concrete  examples  of  the 
achievements  reached  by  means  of  Community  legislation  ;  they  can 
and  should  be  improved  further  in  the  medium  term  (for  example  by 
Where  appropriate, 
renouncing  the  Community  transit  guarantee). 
there  should  be  increased  use  of  electronic  data  transmission

the principles 

authorities 

of 

  11 

-

-

on  the  basis  of  common  standards.  In  addition, 

systems, 
implementation  of  the  fourteenth  VAT  directive  would  greatly 
simplify  internal  frontier  formalities  by  shifting  the  collection 
of  VAT  to  inland  tax  offices  ;  but  it  will  not  in  itself  eliminate 
the  need  for  customs  checks  at  frontiers  either  on  entry  into  the 
importing  country 
with  greater  reason,  from  the  exporting 
country  in  order  to  provide  proof  of  actual  export.

or, 

the

34. 

35. 

In  order  to  provide  a  suitable  foundation  for  further  progress,  the 
Commission  will  at  an  early  stage  seek  a  commitment  from  the  Member 
States  that  no  new  or  more  stringent  controls  or  formalities 
relating  to  goods  are  introduced. 
With  cooperation  between  Member 
States, 
further  simplification  at  internal  frontiers  might  be 
achieved  by  avoiding  duplication  of  controls  on  both  sides  of  the 
it  might  be 
frontier  (so-called  "banalisation"). 
possible  for  the  exporting  Member  State  to  obtain  proof  of  actual 
export  of  goods  or  statistical  data  on  exports  from  the  customs 
office  of  entry  in  the  importing  Member  State  importation.  But  the 
fact  remains  that  to  shift  from  the  alleviation  to  the  elimination 
of  internal  frontier  controls  requires  a  major  and  qualitatively 
different  approach. 
To  do  this  we  need  to  find  ways  of  abolishing 
the  barriers  which  give  rise  to  the  need  for  the  different  controls 
imposed  on  goods.

For  example, 

Commercial and economic policy

Commission 

Commercial  policy  measures  affecting  Member  States  individually
(residual  import  quotas  maintained  by  some  Member  States  >  import 
measures  taken  by  the  Community  but  limited  to one  or  several
Member  States  only  ;  individual  import  quotas  for  Member  States  as 
part  of  a  Community-wide  measure  or  of  an  agreement  coordinated  by 
the  Community)  may  lead  the  Commission  on  the  basis  of  Article  115 
of  the  EEC  Treaty  to  authorise  a  Member  State to 
exclude  the
product  under  protection  from 
free  movement  within  the  territory 
of  the  Community.  National  measures  stemming  from  authorisation  by 
internal 
the 
frontiers.  It  is  worth  noting  that  it  is  the  absence  of  or  failure 
to  apply  a  common  policy  which  give  rise  to  such  action.  It  follows 
that,  until  the  powers  transferred  by  the  Treaty  to  the  Community 
are  fully  exercised  and  the  common  commercial  policy  has  been 
strengthened  in  such  a  way  that  all  national  protection  measures 
and  all  regional  quotas  set»·.up  by  the  Community  can  be  abolished, 
there  will  be  a  continuing  need  for  some  form  of  control. 
The 
Commission  takes  the  view  that  it  is  not  an  unreasonable  aim  to 
achieve  this  abolition  of  national  and  regional quotas  by  1992.
Nevertheless  we  recognise  that 
there  may  well be  considerable
problems  to  be  overcome.

necessarily 

formalities 

involve 

at 

36. 

any  import 
If  Article  115  were  no  longer  to  be  applicable, 
restrictions  would  have' to  be  applied  on  a  Community-wide  basis. 
The  enforcement  of  such  quotas,  which  relies  to  a  large  extent  on 
the  administrations  of  Member  States, 
would  require  intensive 
cooperation  between  national  administrations  and  the  Commission. 
Should  it  prove  impossible  to  eliminate  all  individual  quotas  for

Member  States  by  1992, 
be  the  instrument  of  their  application. 
applying  quotas  would  need  to  be  found.

internal  frontier  controls  could  no  longer 
Alternative  ways  of 

The  case  is  different  for  the  use  of  clauses  to  cope  with 
imbalances  giving  rise  to  serious  threat  of  balance-of-payments 
difficulties.  It  is  not  possible  realistically  to  set  out  a  precise 
timetable  for  progressive  restriction  of  the  use  of  Article  108,  in 
link  between  this  Article  and  economic 
view  of  the  direct 
situations  of  individual  Member  States. 
But  if  the  aim  of 
eliminating  internal  frontier  controls  by  1992  is  to  be  achieved, 
measures  applicable  at  internal  frontiers  will  need  to  be  renounced 
by  then.

For  example, 

Certain  mechanisms  applying  to  trade  in  agricultural  products  also 
monetary 
require  controls  at  internal  frontiers. 
compensatory  amounts  are  applied  to  trade  in  certain  commodities  on 
export  and  import  ;  countervailing  charges  under  Article  46  can  be 
applied  to  trade  in  commodities  where  no  common  organisation  has 
yet  been  agreed  ;  certain  taxes  and  other  mechanisms  can  be  needed 
in  other  commodity  sectors. 
Clearly  these  requirements  must  be 
abolished  through  the  development  of  the  relevant  parts  of  the 
Common  Agricultural  Policy.  It  would  further  require  the  automatic 
of  monetary 
adjustment  of  agricultural  prices 
realignment,  preferably  within  the  EMS  ;  the  setting-up  of  common 
organisations  for  agricultural  products  not  so  far  covered,  with 
the  aim  of  removing  the  possibility  of  recourse  to  Article  46  ;  and 
adaptation  of  other  market  organisations. 
Trade  in  steel  too  is 
subject  to  additional  controls  stemming  from  the  Common  Steel 
Policy  and  environmental  policy  (control  of  transport  of  dangerous 
and  toxic  wastes).  Steps  will  also  have  to  be  taken  to  cope  with 
the  consequences  for  these  policies  of  the  elimination  of  internal 
frontier  formalities.

the  case 

in 

Health

As  regards  health  protection,  the  internal  frontier  posts  are  often 
used  for  making  veterinary  and  plant  health  checks.  These  controls 
stem  from  differences  in  national  public  health  standards,  which 
give  national  authorities  grounds  for  checking  that  imported 
The  Community  has, 
products  conform  to  national  requirements. 
therefore,  set  out  to  implement  a  programme  for  the  harmonisation 
of  essential  health  requirements, 
a  technically  complex  and 
procedurally  slow  process. 
But  even  where  there  is  harmonisation, 
internal  frontier  controls  have  not  always  been  eliminated  because 
Member  States  still  insist  on  carrying  out  their  own  checks.  Some 
steps  have  been  taken  to  transfer  inland  the  checks  on  veterinary 
and  plant  health  certificates. 
But  there  are  gaps  in  these 
measures:  their  general  adoption  will  depend  upon  mutual  acceptance 
by  Member  States  that  the  checks  on  goods  have  been  properly 
applied  by  the  exporting  State.

As  a  further  early  step  towards  the  objective  of  abolishing 
internal  frontier  controls  by  1992,  all  veterinary  controls  (live

41. 

42. 

43. 

44. 

-  13  -

animats  and  animal  products)  and  plant  health  controls  will  have  to 
be  limited  to  the  places  of  departure,  and  controls  of  veterinary 
and  plant  health  certificates  made  at  the  places  of  destination 
(together  with  control  of  products  if  there  are  reasons  to  assume 
fraudulent  or  negligent  practices).

more  common  standards  will  have  to  be  esta­

To  facilitate  this, 
blished  for  trade  between  Member  States  and  for  imports  from  third 
countries  for  those  live  animals  and  animal  products  where  they  are 
still  lacking.  Animal  products  conforming  to  these  standards  would 
receive  a  Community  mark. 
In  addition  supervising  authorities  in 
the  country  of  origin  would  have  to  check  goods  for  consumption  in 
other 
coordinated 
in 
procedures. 
Mutual  trust  would  be  enhanced  by  the  appointment  of 
Community  inspectors  to  check  that  controls  were  being  correctly 
Member  States  should  cooperate  in 
carried  out. 
fighting  fraudulent  practices  in  the  Community  framework,  and  rules 
of  liability  in  cases  of  damage  resulting  from  fraudulent  or 
negligent  practices  would  need  to  be  established.

Furthermore, 

accordance 

countries, 

Community 

with 

Certain  import  restrictions  and  quarantine  measures  would  still  be 
justified  on  grounds  of  protection  of  plant  and  animal  health,  in 
In  order  to  harmonise  as  far  as 
line  with  common  standards. 
common  policies  designed  to  fight 
possible  such  restrictions, 
disease  would  have  to  be  strengthened.

In  order  to  meet  the  objective  of  1992,  a  major  effort  at  Community 
and  at  Member  States  level  will  be  needed  to  achieve  common  levels 
and  policies  for  veterinary  and  plant  health  and  to  align  national 
standards  to  common  standards  as  much  as  possible.  To  the  extent 
that  this  can  be  achieved,  the  role  of  the  veterinary  and  phyto- 
sanitary  certificate  could  be  drastically  reduced  and  specific 
For  animal 
restrictions  only  needed  for  disease  emergencies. 
products,  use  of  the  health  mark  would  be  sufficient.

Transport

Most  intra-Community  transport  ope­

Other  internal  frontier  controls  are  aimed  at  the  carriage  of  goods 
and  have  to  do  either  with  the  administration  of  transport  policy 
or  with  safety  requirements. 
for  which  vehicles  must  carry 
rations  are  subject  to  quotas, 
transport  authorisations. 
The  authorisations  and  the  books  of 
record  sheets  are  mostly  checked  at  the  frontier.  If  these  controls 
are  to  be  abolished, 
the  transport  quotas  themselves  must  be 
progressively  relaxed  and  abolished.  Goods  -  particularly  dangerous 
Moreover, 
products  -  may  also  be  checked  for  safety  reasons. 
vehicles  are  increasingly  being  checked  at  the  frontier  for 
compliance  with  national  requirements  ;  this  is  particularly  true 
in  the  case  of  motor  coaches. 
Systematic  safety  controls  at 
internal  frontiers  will  need  to  be  eliminated.  Road  vehicles  which 
enter  a  Member  State  would  however  remain  liable  to  check  under  the 
same  conditions  as  apply  nationally  to  road  vehicles.  The  adoption 
and  proper  enforcement  of  common  safety  standards  would  greatly 
facilitate  this  process.

45. 

46. 

-  14  -

Statistics

initially  simplify 

Systematic  formalities  are  carried  out  for  statistical  purposes  ;
the  statistics  are  required  not  only  by  the  Member  States  but  also 
by  the  Community. 
The  introduction  of  the  single  administrative 
but
document will 
the
additional  harmonisation  or  elimination  will  be  needed  if 
different  statistical  data  are  to  be  presented  in  a  uniform  way  by 
1992.  Furthermore,  statistical  data  will  have  to  be  collected  not 
on  the  basis  of  documents  accompanying  goods,  but  from  firms  in  the 
way  that 
present. 
techniques, 
trade  statistics  can  be  compiled.

statistics  on internal  activities  are  collected 
at
Modern  methods of  data  collection,  including  sampling

will  help  to  ensure  that  accurate  and  comprehensive 

formalities, 

frontier 

Conclusion and timetable

task 

major 

legislative 

Given  the  technical  complexities  of  the  measures  to  be  adopted  and
which  will  fall 
the 
the  Commission  intends  that  this  work  should  be 
institutions, 
planned  in  two  stages.  In  the  first  stage,  the  emphasis  should  be 
to  shift, 
where  possible  by  1988,  controls  and  formalities  away 
from  the  internal  frontiers.  In  the  second  stage,  the  aim  would  be 
to  coordinate  policies  and  approximate  legislation  so  that  the 
internal  frontier  barriers  and  controls  are  eliminated  in  their 
entirety  by  1992.

Community

to 

III.  CONTROL OF INDIVIDUALS

47. 

48. 

49. 

50. 

The  formalities  affecting  individual  travellers  are  a  constant  and  . 
concrete  reminder  to  the  ordinary  citizen  that  the  construction  of
a  real  European  Community  is  far  from  complete.

Even  though  these  controls  are  often  no  more  than  spot  checks,  they 
are  seen  as  the  outward  sign  of  an  arbitrary  administrative  power 
over  individuals  and  as  an  affront  to  the  principle  of  freedom  of 
movement  within  a  single  Community.

This  prompted  the  Fontainebleau  European  Council  to  give  the
Adonnino  Committee  the  task  of  examining  the  measures  to  be  taken 
to  bring  about  "the  abolition  of  all  police  and  customs  formalities 
for  people  crossing  intra-Community  borders” .  The  Committee  thought 
this  aspect  to  be  so  important  that  it  presented  an  interim  report 
in  March  of  this  year.

The  formalities in  question  are,  in  normal  circumstances,  of  two
different  kinds : 
police  checks  relating  to  the  identity  of  the
person  concerned  and  the  safety  of  personal  effects  being  carried^ 
We
and  tax  checks  relating  to  personal  effects  being  carried. 
concentrate  here  on  the  police  checks. 
The  removal  of  fiscal 
barriers  and  controls  is  covered  in  Part  Three.

51. 

52. 

53. 

54. 

-  15  -

The  Commission's  efforts  and  initiatives  in  this  area  have  been 
aimed  at  making  checks  at  internal  frontiers  more  flexible,  as  they 
cannot  be  abolished  altogether  until,  in  line  with  the  concerns 
expressed  by  the  European  Council, 
adequate  safeguards  are 
introduced  against  terrorism  and  drugs.

Agreement  has  already  been  reached  on  the  Commission's  proposal  for 
a  common  passport  testifying  to  the  individual's  position  as  a 
citizen  of  a  Member  State.  As  an  additional  step  towards  abolition 
of  physical  controls  the  Commission  has  proposed  the  introduction 
of  a  means  of  self-identification  which  would  enable  the  autho­
rities  to  see  at  a  glance  that  the  individual  is  entitled  to  free 
passage  -  the  Green  Disc. 
This  proposal  is  at  present  before  the 
Council  and  should  be  adopted  forthwith.

As  noted  in  the  introduction  to  this  Part,  police  checks  at  in­
ternal  frontiers  are  bound  up  with  the  legitimate  concerns  of  the 
political  authorities  in  the  fight  against  terrorism, 
drugs  and 
crime. 
Consequently,  they  can  only  be  abolished  as  part  of  a 
legislative  and  administrative  process  whereby  they  are  transferred 
to  the  strengthened  external  frontiers  of  the  Community  and 
cooperation  between  the  relevant  national  authorities  is  further 
enhanced.

The  Commission  will  at  an  early  stage  seek  a  commitment  from  the 
Member  States  that  no  new  or  more  stringent  controls  or  formalities 
affecting  individuals  are  introduced  at  inernal  frontiers. 
The 
Commission  will  as  a  next  step  be  proposing  measures  to  eliminate 
completely  by  1988  checks  on  leaving  one  Member  State  when  entering 
This  type  of  check  has  already  been  virtually  abolished 
another. 
This  step 
in  practice  at  internal  frontier  crossings  by  road. 
police 
between 
would 
authorities  and  the  information  transmission  networks  to  enable  the 
police  in  the  country  of  entry  to  carry  out  checks  an  behalf  of  the 
A  system  of  this  kind  would 
police  in  the  country  of  departure. 
provide  continuing  protection 
in  the  combat  against  terrorism. 
Moreover,  such  a  system  would  not  preclude  security  -  as  opposed  to 
identity  -  checks  being  carried  out  in  airports.

administrative 

cooperation 

entail 

the 

55. 

By  1992, 
the  Commission  wishes  to  arrive  at  the  stage  whereby 
checks  on  entry  are  also  abolished  for  Community  citizens  arriving 
from  another  Community  country. 
To  this  end,  directives  will  be 
proposed  concerning:

The  approximation  of  arms  legislation;  the  absence  of  checks 
must  not  provide  an  incentive  to  buy  arms  in  countries  with 
less  strict  legislation. 
A  proposal  will  be  made  in  1985 
with  the  target  of  approval  in  1988  at  the  latest;

The  approximation  of  drugs  legislation: 
made  in  1987,  for  adoption  in  1989  ;

proposals  will  be

the  abolition  of  checks  at  internal
Non-Community  citizens: 
frontiers  will  make  it  much  easier  for  nationals  of  non-

-  16 -

Community  countries  to  move  from  Member  State  to  another.  As 
a  first  step*,  the  Commission  will  propose  in  1988  at  the 
latest  coordination  of  the  rules  on  residence,  entry  and 
access  to  employment, 
to  nationals  of  non- 
applicable 
Community  countries. 
In  this  regard  problems  may  arise over 
the  question  of  the  change  of  residence  of  non-Community 
citizens  between  the  Member  States,  and these  will  need  to be 
looked  at. 
'Measures  will  be  proposed  also  in  1988  at  the 
latest  on  the  right  of  asylum  and  the  position  of  refugees. 
Decisions  will  be  needed  on  these  matters  by  1990  at  the 
latest^

Visa  policy: 
the  freedom  of  movement  for  non-Community
nationals,  which  visas  provide,  may  undermine the  agreements 
It  will 
which  Member  States  have with  non-member  countries. 
therefore  be  necessary  to  go  further  than  the  existing 
collaboration  in  the  context  of  political  cooperation  and 
develop  a  Community  policy  on  visas. 
This  would  need  to 
strike  the  right  balance  between  national  foreign  policy 
prerogatives  and  preserving  the  effectiveness  of  existing 
bilateral  agreements.·  The  requisite  proposals  should  be made 
There  will  also  be  a  need  to 
in  1988  for  adoption  by  1990. 
fix  common  rules  concerning  extradition  policy,. 
The 
necessary  proposal,  to  be  made  in  1989,  should  be  adopted  by 
1991.

56. 

The  adoption  of  these  measures  by  the  Council,  accompanied  by  a 
redeployment  of  resources  to  strengthen  controls  at  the  external 
frontiers, 
and  enhanced  cooperation  between  police  and  other 
relevant  agencies  within  the  Member  States,  should  enable  police 
checks  at  internal  frontiers  to  be  eliminated  by  1992.

-  17  -

PART TWO : THE REMOVAL OF TECHNICAL BARRIERS

57. 

58. 

59. 

I. 

60. 

The  elimination  of  border  controls, 
important  as  it  is,  does  not 
of  itself  create  a  genuine  common  market.  Goods  and  people  moving 
within  the  Community  should  not  find 
ferent  Member  States  as  opposed  to  meeting  them  at  the  border.

obstacles  inside  the  dif­

if  a  product  is  lawfully  manufactured  and

This  does  not  mean  that  there  should  be  the  same  rules  everywhere,
but  that  goods  as  well  as  citizens  and  companies  should  be  able  to 
Subject  to  certain  important 
move  freely  within  the  Community. 
constraints  (see  paragraph  65  below),  the  general  principle  should 
be  approved  that, 
marketed  in  one  Member  State,  there  is  no  reason  why  it  should  not 
be  sold  freely  throughout  the  Community.  Indeed,  the  objectives  of 
national  legislation,  such  as  the  protection  of  human  health  and 
life  and  of  the  environment,  are  more  often  than  not  identical.  It 
follows  that  the  rules  and  controls  developed  to  achieve  those 
objectives,  although  they  may  take  different  forms,  essentially 
and  so  should  normally  be  accorded 
come  down  to  the  same  thing, 
recognition  in  all  Member  States,  not  forgetting  the  possibilities 
What  is  true  for 
of  cooperation  between  national  authorities. 
goods,  is  also  true  for  services  and  for  people. 
If  a  Community 
citizen  or  a  company  meets  the  requirements  for  its  activity  in  one 
member  State,  there  should  be  no  valid  reason  why  those  citizens  or 
companies  should  not  exercise  their  economic  activities  also  in 
other  parts  of  the  Community.

The  Commission  is  fully  aware  that  this  strategy  implies  a  change 
in  habits  and  in  traditional  ways  of  thinking.  What  is  needed  is  a 
radical  change  of  attitude  which  would  lead  to  new  and  innovative 
solutions  for  problems  -  real  or  apparent  -  which  may  appear  when 
border  controls  no  longer  exist.

FREE MOVEMENT OF GOODS

increase  stock  holding  costs; 

Whilst  the  physical  barriers  dealt  with  in  Part  One  impede  trade 
flows  and  add  unacceptable  administrative  costs  (ultimately  paid  by 
the  consumer), 
barriers  created  by  different  national  product 
regulations  and  standards  have  a  double-edged  effect:  they  not  only 
add  extra  costs,  but  they  also  distort  production  patterns;increase 
unit  costs; 
discourage  business 
cooperation,  and  fundamentally  frustrate  the  creation  of  a  common 
Until  such  barriers  are  removed, 
market  for  industrial  products. 
Community  manufacturers  are  forced  to  focus  on  national  rather  than 
continental  markets  and  are  unable  to  benefit  from  the  economies  of 
scale  which  a  truly  unified  internal  market  offers. 
Failure  to 
achieve  a  genuine  industrial  common  market  becomes  increasingly 
serious  since  the  research,  development  and  commercialisation  costs 
in  order  to  have  a  realistic  prospect  of
of  the  new  technologies, 

being  internationally  competitive,  require  the  background  of  a  home 
market  of  continental  proportions.

The  need  for  a  new  strategy

over  the  years, 

The  harmonisation  approach  has  been  the  cornerstone  of  Community 
action  in  the  first  25  years  and  has  produced  unprecedented 
progress  in  the  creation  of  common  rules  on  a  Community-wide  basis. 
However, 
a  number  of  shortcomings  have  been 
identified  and  it  is  clear  that  a  genuine  common  market  cannot  be 
realised  by  1992  if  the  Community  relies  exclusively  on  Article  100 
of  the  EEC  Treaty. 
There  will  certainly  be  a  continuing  need  for 
but  its  rote  will  be  reduced  as  new 
action  under  Article  100; 
approaches,  resulting  in  quicker  and  less  troublesome  progress,  are 
agreed. 
At  least,  as  far  as  veterinary  and  phytosanitary  controls 
are  concerned,Article  43  makes  possible  qualified  majority  voting  : 
the  Council  however  has  regularly  used  Article  100,  which  requires 
The  Commission  does  not 
unanimity,  as  an  additional  legal  base. 
Where  Article  100  is  still 
think  this  position  is  justified. 
considered  the  only  appropriate  instrument, 
ways  of  making  it 
operate  more  flexibly  will  n e e d #to  be  found.  Clearly,  action  under 
this  Article  would  be  quicker  and  more  effective  if  the  Council 
were  to  agree  not  to  allow  the  unanimity  requirement  to  obstruct 
progress  where  it  could  otherwise  be  made.

The  new  strategy  must  be  coherent  in  that  it  will  need  not  merely 
to  take  into  account  the  objective  of  realizing  a  common  market  per 
but  also  to  serve  the  further  objectives  of  building  an 
se, 
expanding  market  and  a  flexible  market. 
It  must  aim  not  simply  to 
remove  technical  barriers  to  trade,  but  to  do  so  in  a  manner  which 
will 
and 
increasing 
competitiveness,  leading  to  greater  wealth  and  job  creation.

efficiency 

contribute 

industrial 

to 

the 

given 

therefore, 

principle, 

In 
16  July  1984)  of  the  essential 
(Conclusions  on  Standardization, 
equivalence  of  the  objectives  of  national  legislation, 
mutual 
recognition  could  be  an  effective  strategy  for  bringing  about  a 
This  strategy  is  supported  in 
common  market  in  a  trading  sense. 
particular  by  Articles  30  to  36  of  the  EEC  Treaty,  which  prohibit 
national  measures  which  would  have  excessively  and  unjustifiably 
restrictive  effects  on  free  movement.

recognition

Council's 

it 

market, 

barriers  to  trade 

But  while  a  strategy  based  purely  on  mutual  recognition  would 
and  lead  to  the  creation  of  a  genuine 
remove 
common  trading 
might  well  prove  inadequate  for  the 
purposes  of  the  building  up  of  an  expanding  market  based  on  the 
competitiveness  which  a  continental-scale  uniform  market  can 
generate. 
On  the  other  hand  experience  has  shown  that  the 
alternative  of  relying  on  a  strategy  based  totally  on  harmonization 
would  be  over-regulatory, 
would  take  a  long  time  to  implement, 
would  be  inflexible  and  could  stifle  innovation.  What  is  needed  is 
a  strategy  that  combines  the  best  of  both  approaches  but,  above 
all,  allows  for  progress  to  be  made  more  quickly  than  in  the  past.

-  19  -

The chosen strategy

65. 

The  Commission  takes  into  account  the  underlying  reasons  for  the
and  recognises  the  essential
existence  of  barriers  to  trade, 
legislative  objectives  in  the 
equivalence  of  Member  States' 
protection  of  health  and  safety, 
Its 
harmonization  approach  is  based  on  the  following  principles  :

and  of  the  environment. 

-  a  clear  distinction  needs  to  be  drawn  in  future  internal  market 
initiatives  between  what  it  is  essential  to  harmonize,  and  what 
may  be  left  to  mutual  recognition  of  national  regulations  and 
on  the  occasion  of  each 
standards  ; 
harmonisation  initiative,  the  Commission  will  determine  whether 
national  regulations  are  excessive  in  relation  to  the  mandatory 
requirements  pursued  and,  thus,  constitute  unjustified  barriers 
to  trade  according  to  Article  30  to  36  of  the  EEC  Treaty  ·,

this  implies  that, 

-  legislative  harmonisation  (Council  Directives  based  on  Article 
100)  will  in  future  be  restricted  to  laying  down  essential  health 
and  safety  requirements  which  will  be  obligatory  in  all  Member 
product  to  free 
States. 
movement  ;

Conformity  with  this  will  entitle  a 

-  harmonisation  of  industrial  standards  by  the  elaboration  of 
European  standards  will  be  promoted  to  the  maximum  extent,  but 
the  absence  of  European  Standards  should  not  be  allowed  to  be 
During  the  waiting  period 
used  as  a  barrier  to  free  movement. 
while  European  Standards  are  being  developed, 
the  mutual 
acceptance  of  national  standards,  with  agreed  procedures,  should 
be  the  guiding  principle.

66. 

The  creation  of  the  internal  market  relies  in  the  first  place  on
the  willingness  of  Member  States  to  respect  the  principle  of  free 
movement  of  goods  as  laid  down  in  the  Treaty.  This  principle  allows 
the  Commission  to  require  the  removal  of  all  unjustified  barriers 
to  trade. 
But  it  is  not  sufficient  when  barriers  are  justified 
under  the  Treaty.  Similarly,  there  will  be  cases  where  the  intro­
duction  of  common  standards,  particularly  in  the  high  technology 
sectors, 
competitivity  of  Community  industries.

international

encourage 

increase 

will 

the 

and 

Harmonisation - a new approach

67. 

Article  100  of  the  Treaty  empowers  the  Council,  acting  unanimously 
on  a  proposal  from  the  Commission,  to  legislate  by  Directive  for 
regulations  and  administrative 
the  approximation  of  the  laws, 
actions  of  Member  States  which  directly  affect  the  establishment  or 
the  functioning  of  the  common  market. 
a  number  of 
shortcomings  have  been  recognized  in  the  procedures  established  for 
the  implementation  of  Article  100.

However, 

68. 

The  practice  of  incorporating  detailed  technical  specifications  in 
Directives  has  given  rise  to  long  delays  because  of  the  unanimity 
required  in  Council  decision  making.  Henceforth,  in  those  sectors

  20 

-

-

where  barriers  to  trade  are  created  by  justified  divergent  national 
regulations  concerning  the  health  and  safety  of  citizens  and 
legislative  harmonization 
consumer  and  environmental  protection, 
will  be  confined  to  laying  down  the  essential  requirements, 
formity  with  which  will  entitle  a  product  to  free  movement  within 
the  Community.  The  task  of  defining  the  technical  specifications  of 
products  which 
legislated 
deemed  to 
requirements,  will  be  entrusted  to  European  Standards  issued  by  the 
Comité  Européen  de  la  Normalisation  (CEN)  or  by  sectoral  European 
Standards  in  the  electrical  and  building  sectors  such  as  CENELEC, 
UEAtc  or  RILEM,  acting  on  qualified  majority  votes.

will  be 

conform 

con­

to 

The  Commission  is  taking  steps  to  strengthen  the  capacity  of  these 
European  Standards  bodies  and  also, 
in  the  telecommunications 
sector,  of  CEPT.  This  is  seen  not  only  as  a  necessary  adjunct  to 
the  "new  approach",  but  as  an  essential  ingredient  in  the  gradual 
replacement  of  national  standards  by  European  Standards  in  all 
areas.

The  Council  generally  should  off-load  technical  matters  by  making 
more  use  of  its  powers  of  delegation  as  recommended  by  the  European 
Council.  Article  155  of  the  EEC  Treaty  makes  express  provision  for 
this  possibility  and  opens  the  way  to  a  simplified  legislative 
This  procedure  has  already  been  used  successfully  in 
procedure. 
customs  matters  and  with  the  adaptation  of  existing  directives  to 
technical  progress. 
The  encouraging  results  suggest  that  this 
procedure  should  be  extended.

This  general  policy  will  put  particular  emphasis  on  certain 
sectors  : 
and
telecommunications,  construction  and  foodstuffs.

information 

technology 

include 

these 

as 

so 

to  ensure 

-  in  the  information  technology  and  telecommunications  sector,  the 
Commission  wants  to  establish  specific  rules  which  take  account 
of  the  requirement  for  much  greater  precision  and  more  rapid 
decision-making 
munication  and  interworking  between  the  users  and  operators 
throughout 
the 
responsibility  of  public  authorities  and  particularly  the  PTT'S. 
In  this  context  it  is  important  that  this  task  be  undertaken  as 
and  that  the  resulting 
much  as  possible  on  a  common  basis, 
certification 
specifications 
(and 
procedures)  be  mutually  recognised  from  the  start. 
Recent 
Commission  proposals  as  well  as  the  agreement  concluded  in  July 
1984  with  CEPT  have  been  in  keeping  with  this  tendency;

compatibility, 

corresponding 

Community. 

intercom­

usually 

sector 

tasks 

This 

the 

and 

is 

-  because  of  the  existence  of  a  wide  range  of  products  in  the  field 
of  construction, 
the  Commission  will  proceed  to  establish 
European  codes  concerning  buildings  in  such  a  way  as  to  ensure 
compatibility  between  components  and  the  structures  in  which  they 
will  be  used.  The  Commission  considers  that  such  action  will  of 
itself  contribute  to  deregulation  efforts;

-   21  -

in  the foodstuffs  sector,  Community  Legislative action  has  been 
concentrated,  and  will  continue to  be concentrated,  on  issuing 
"horizontal"  directives  governing  the  use  of  food  additives, 
labelling  regulations  etc.,  where the  essential need  to protect 
the health  and safety of consumers  is  involved.  In  line with the 
"new approach",  and in  line with the  recommendations of the Dooge 
Committee,  the  Commission will  propose more efficient  procedures 
for  the  implementation  of  Article  100  harmonisation  in  this 
sector. 
This  approach  will  be  based  on  the  principle  of 
delegating to the Commission,  advised by the Scientific  Committee 
for  Food,  the task  of drawing  up and  managing the  more detailed 
and  technical  aspects  of  these  directives,  leaving  the  Council 
free  to  concentrate  on  the  essential  safety  and  health  criteria 
which must  be observed.  To this end,  the Commission will  submit a 
communication  to  the  Council  and  to  the  European  Parliament 
before  the  end  of  1985,  and  it  will  propose  the  extension  of 
Directive 83/189/EEC  to the food sector.

72. 

The  Commission  considers  it  essential  that  in  all  programmes
designed to achieve a unified  internal  market,  the  interests of all 
sections  likely  to  be  affected  e.g.  both  sides  of  industry,
commerce  and  consumers, 
It  further 
considers that  such  interests  should be  incorporated  in  the  policy 
on  the  health  and  safety  of  workers  and  consumers.  That  is  why 
arrangements  have been made to ensure the participation of consumer 
representative  bodies  in  the  work  of  CEN  and  CENELEC  ;  and  the 
Commission,  with  the  assistance  of  the  Consultative  Consumers 
Committee,  will  take 
interests are consulted.

further  steps  to  ensure  that  consumer

are  taken  into  account. 

73. 

Moreover,  the  Commission will  review all pending proposals  in order 
to withdraw such proposals as are considered to be non-essential or 
which are not  in  line with  the new strategy.

Preventing creation of new obstacles

74. 

75. 

Experience  shows that  a  State's  membership of  the  Community  is not 
always  sufficiently  reflected  in  the  attitudes  and  outlook  of  its 
administrations.  When  Member  State  Governments  deem  new  acts  or 
regulations  to  be  necessary  for  national  purposes,  they  do  not 
always  or  automatically,  in  drafting  their  national  instruments, 
take account  of the  Community dimension  or of  the need  to minimise 
the difficulties for  relations between Member  States.  Opportunities 
are thus  lost  for making simple and  inexpensive  improvements.

In  order  to  prevent  the  erection  of  new  barriers.  Directive 
83/189/EEC  now  obliges  Member  States  to  notify  the  Commission  in 
advance of all draft  regulations and standards  concerning technical 
specifications  that  they  intend  to  introduce  on  their  own 
territory.  A standstill on adoption must then be  instituted by the 
notifying Member State, during which the draft  can be considered by 
the  Commission  and  the  other  Member  States  in  order  to  determine 
whether  it  contains any elements  likely to create barriers to trade 
and,  if  so,  to start  remedial  action under Articles 30 or  100.

-   22  -

This  new  "information"  procedure  which  came  fully  into  force  on
1.1.1985,  constitutes  a  major  step  forward  and  has  already  been 
successful  in  pre-empting  a  number  of  potential  obstacles  to  the 
free  movement  of  goods  between  Member  States.  It  is  necessary 
therefore  that  this  procedure,  which  does  not  yet  cover  all 
industrial  products,  be extended to cover for example the food and 
pharmaceutical  sectors.  In the field of environmental protection a 
comparable  improvement  could  easily  be  achieved  by  making 
obligatory  the  gentleman's  agreement  on  notification  which  has 
existed since  1973.

Mutual  recognition

Following  the  rulings  of  the  Court  of  Justice,  both  the  European 
Parliament  and the  Dooge  Committee have  stressed the principle that 
goods  lawfully  manufactured  and  marketed  in  one  Member  State  must 
be  allowed  free  entry  into  other  Member  States.  In  cases  where 
harmonisation  of  regulations  and  standards  is  not  considered 
essential  from  either  a  health/safety  or  an  industrial  point  of 
view, 
immediate  and  full  recognition  of  differing  quality 
standards,  food  composition  rules,  etc.  must  be the  rule.  In  par­
ticular,  sales  bans  cannot  be  based  on  the  sole  argument  that  an 
imported  product  has  been  manufactured according  to specifications 
which differ  from those used  in the  importing country.  There  is no 
obligation  on  the  buyer  to  prove  the  equivalence  of  a  product 
produced according to the  rules of the exporting State.  Similarly, 
he  must  not  be  required  to  submit  such  a  product  to  additional 
technical  tests  nor  to  certification  procedures  in  the  importing 
State.  Any  purchaser,  be  he  wholesaler,  retailer  or  the  final 
consumer,  should have the  right  to choose his  supplier  in any part 
of  the  Community without  restriction.  The  Commission will  use all 
the powers available under the Treaty,  particularly Articles  30-36, 
to reinforce this principle of mutual  recognition.

In  the  specific  area  of  testing  and  certification  procedures,  a 
major  initiative  will  soon  be  launched  to  bring  about  within  the 
Community  mutual  recognition  of  tests  and  certification  so  as  to 
avoid  the  wasteful  duplication  of  tests  which  in  some  sectors  is 
the  rule  rather  than  the  exception.  This  initiative  will  involve 
the  drawing  up  of  common  conditions  and  codes  of  practice  for 
implementation  by  Laboratories  and  certification  bodies.  These 
codes  will  be  based  on  existing  codes  of  Good  Laboratory  Practice 
and Good Manufacturing Practice which are already in wide use.

The  net  long  term  effect  of  adopting  and  implementing  this  new 
strategy  will  be  to  reduce  the  regulatory  burden  on  enterprises 
whishing to operate on a  Community wide basis.  In those  (henceforth 
more  limited)  areas  where  harmonisation  of  regulations  will  still 
be  required,  enterprises  will  only  have  to  meet  a  single  set  of 
harmonised  rules  rather  than  10  or  12  different  sets  in  order  for 
their  products  to  enjoy free  circulation throughout  the  Community. 
Similarly  the  application  of  the  new  approach  to  standardisation 
and  the  move  towards  the  principle  of  mutual  recognition  in  an 
increasing number  of other  areas will  speed up  the  decision-making

-   23  -

process and  avoid  the  need  for  a  further  layer  of  Community  rules 
to be super-imposed on national  rules.

Muclear materials

80. 

Because  of  the  special  nature  of  nuclear  material,  transfers  of 
such  material  between  Member  States  are  subject  to  specific 
conditions.  In November  1984,  the Commission proposed a  revision of 
Chapter VI of the Euratom Treaty.  Inter alia,  this proposal would 
ensure  both  the  unity  of  the  internal  nuclear  market  and  the 
validity of  such  conditions under Community  law.

II. 

PUBLIC PROCUREMENT

81. 

82. 

83. 

84. 

Public  procurement  covers  a  sizeable  part  of  GDP  and  is  still 
marked  by  the  tendency  of  the  authorities  concerned  to  keep  their 
purchases  and  contracts  within  their  own  country.  This  continued 
partitioning  of  individual  national  markets  is  one  of  the  most 
evident barriers to the achievement of a  real  internal market.

The basic  rule,  contained  in Article 30 et  seq.  of the EEC Treaty, 
that goods  should move  freely in  the common  market,  without  being 
subject  to  quantitative  restrictions  between  Member  States  and  of 
all measures having equivalent effect,  fully applies  to the supply 
of goods to public purchasing bodies, as do the basic provisions of 
in  order  to  ensure  the  freedom  to  provide 
Article  59  et  seq. 
services.  Specific  provisions  seeking  to  terminate discriminatory 
practices  in  the  supply  of  goods  were  laid  down  in  Directive 
70/32/EEC,  whilst  Directive 77/62/EEC  intends to open the awarding 
Equally,  as  far  as 
procedures  to  Communitywide  competition. 
public  works  contracts  are  concerned. 
Directive  71/305/EEC 
coordinates  the  awarding  procedures  in  order  to  make  the  awarding 
process  transparent  to  potential  bidders  in  the  whole  of  the 
Community.  Directive  71/3Q4/EEC  concerns  the  freedom  to  provide 
services  in this field.

Statistics  however  indicate  a  minimal  application  of  the  Direc­
tives;  less  than  1  ECU  in  4  of  public  expenditure  in  the  areas 
covered  by  the  co-ordination  Directives  is  the  subject  of 
publication  in the Official Journal  and thus,  even  theoretically, 
of Community-wide competition.

The Commission will open discussions with Member States and through 
them  with  the  awarding  entities  on  the  application  of  the 
Directives.  Such  discussions have  to be  based on  detailed studies 
of  the  Directives'  transposition  and  application  in  each  Member 
State,  concentrating on  a  number  of  key  areas  such  as  procedural 
details  (splitting  of  contracts, 
use  of  single  tendering), 
particular  entities  (Defence,  Health,  Regional  Government),  and 
products  (computers,  vehicles, medical equipment  and supplies).  In 
addition  further  action  will  be  taken  to  improve  the  quality  and 
speed  of  the  publication  of  notices  to  tender  and  especially  to

develop  the  'electronic  publishing  system  TED  (Tenders'' Electronic 
Daily).

In  order  to  stimulate  a  wider  bpening  up  of  tendering  for  public 
contracts,  there  is  a  serious  and  urgent  need  for  improvement  of 
the Directives to increase transparency further.  Priority should be 
given  to  a  system  of  prior  information  ;  to  publication  of  the 
intention  to use  single tender  procedures  ;  to publication  of the 
awards  of  contracts  ;  and  to  improved  quality  and  frequency  of 
statistics.  Moreover,  in  view  of  the  high  volume  of  contracts 
falling  below  the  present  levels  of  the  threshold  where 
the 
Directives  apply,  a  review of these  levels would seem appropriate. 
more  visible  action  by  the  Commission  in  policing 
Besides, 
compliance  with  existing  law  will  increase  the  credibility  of  the 
Community's  efforts  to  break  down  the  psychological  barriers  to 
crossing frontiers.

Four major sectors - energy,  transport,  water and  (in the case of 
supply  contracts)  telecommunications  -  are  at  present  not  covered 
by Directives.  Whi1st  it  is clear that enlargement of coverage must 
be  realised  before  1992,  additional  action  is  required  to  take 
account  of  the  fact  that  some  of  the  awarding  entities  in  these 
sectors  fall  under  public  law,  while  others  are  private  bodies. 
Possible options are an approximation approach by way of  Di rectives 
and/or a  competition  approach  based  on  Articles  85,  86  and  90  of 
more 
the  EEC  Treaty, 
pragmatic  approach,  such  as 
nications  sector.  The  Commission will  submit proposals  before the 
end of  1987.

sometimes  combined  with  an  initially 

has  been  tried  in  the  telecommu­

Community-wide  liberalisation of publie  procurement  in the field of 
public  services  is  vital  for  the  future  of  the  Community  economy. 
Article  58  of the  EEC Treaty  fully applies  but,  at  present,  only 
construction  contracts  are  covered  by  Directive  71/305/EEC  ·,  the 
supply of goods may include  incidental  services  only to the extent 
that  the  value  of  the  latter  does  not  exceed  that of  the products 
themselves.  This  limitation  should  be  removed  so  that  access  to 
publicly financed service contracts such  as the services associated 
with the construction  industry are also opened up to suppliers from 
other  Member  States.  There  are  also  certains  services  in  the  new 
technology area  (see paragraphs  113- 123 below)  which need a  large 
market  of  continental  dimensions  in  order  to  realise  their  full 
potential.  An example would be data processing in all  its  forms,  a 
sector  where  possible  procurement  policies  have  a  major  impact. 
Furthermore,  the  transformation  of  contracts  to  purchase  into 
contracts  for  the  supply  of  services  is  already  having  an impact 
on the  coverage of  the supplies  Directive,  mainly  in the  field of 
computers.  The  Commission  will submit  proposals before  1987 which 
should  lead to  Council action in 1988 by the  latest.

-   25  -

III.  FREE HOVEHENT FOR LABOUR AND THE PROFESSIONS  :  A NEU INITIATIVE IN

FAVOUR OF COMMUNITY CITIZENS

88. 

89. 

90. 

91. 

92. 

93. 

The  Commission  considers  it  crucial  that  the obstacles  which  still 
exist  within  the  Community  to  free  movement  for  the  self-employed 
and  employees  be  removed  by  1992. 
It  considers  that  Community 
citizens  should  be  free  to  engage  in  their  professions  throughout 
the  Community,  if they so wish, without the obligation to adhere to 
formalities which,  in the final analysis,  could  serve to discourage 
such movement.

In  the  case  of  employees,  it  should  be  noted  that  such  free
movement  is  almost  entirely  complete  and  the  rulings  of  the  Court 
of  Justice  restrict  the  right  of  public  authorities  in  Member 
States  to  reserve  posts  for  nationals. 
Certain  problems  still 
exist,  however,  and the  Commission  intends  to make  the necessary 
proposals  which  will  eliminate  the  last  obstacles  standing  in  the 
way  of  the  free  movement  and  residence  of  migrant  Community 
workers.  Furthermore the Commission will  take measures  in order to 
remove  cumbersome  administrative  procedures  relating  to  residence 
permits.  The  Commission has already submitted a proposal  concerning 
the taxation of these workers and their families.  The main problem 
in  this  case  is  the  taxation  of  wage-earners  who  reside  in  one 
Member  State and  earn their  income  in  another  (this  affects mainly 
frontier workers).

The  Commission  will  also  make  further  efforts  to  bring  about  the 
adoption  and  swift  implementation  of  its  proposal  concerning  the 
comparability  of  vocational  training  qualifications  aimed  at 
ensuring  that  vocational  proficiency  certificates  are  more  easily 
comparable. 
In practical  terms, this objective should be achieved 
by 1988 so that  the second phase  can be  launched before  1990.  This 
second  phase  would  involve  the  introduction  of  an  European 
"vocational  training  card",  serving  as  proof  that  the  holder  has 
been awarded a specific qualification.

In  the  field  of  rights  of  establishment  for  the . self-employed,
little  progress  has  been  made,  the  main  reason  being  the
complexities  involved  in  the  endeavour  to  harmonize  professional 
qualifications. 
However  these  endeavours  have  resulted  in  a 
considerable degree of freedom of movement  for those engaged  in the 
owing  to  the  hold-ups 
health  sector. 
previously  experienced  in  this  sphere,  indicated  its  desire  to 
promote  measures  that  would  offer  tangible  improvements  in  the 
everyday  life  of  Community  citizens. 
In  particular,  during  the 
meeting  in  Fontainebleau  it  called  for  the  creation  of  a  general 
system  for  the  mutual  recognition  of  university  degrees.  In  line 
with  the same philosophy,  the  Commission believes that  there should 
be mutual  recognition of apprenticeship courses.

The  European  Council, 

The Adonnino Committee submitted a preliminary  report  in March  this 
year  which  contains  some  guidelines  on  this  subject,  and  the 
Commission has been  requested to put  them  into concrete form.

For this  reason,  with  the aim of  removing obstacles to the  right of 
establishment,  the  Commission  - which  approved the  conclusions of 
the Adonnino  report  -  will  submit  to the  Council  a  draft  framework

-   26  -

94. 

Directive on a general  system of  recognition  in  the course of  this 
year.  The main elements  in this  system will be  :  the principle of
mutual  trust  between  the  Member  States;  the  principle  of  the 
comparability of university  studies between the Member States;  the 
mutual  recognition  of  degrees  and  diplomas  without  prior 
harmonization  of  the  conditions  for  access  to  and  the  exercise  of 
professions  ;  and  the  extension  of  the  general  system  to  salary 
earners. 
Lastly,  any  difference,  notably  as  regards  training, 
between  the  Member  States  would  be  compensated  by  professional 
experience.

be  restricted  to  the  workforce  only. 

Finally,  measures  to ensure  the free  movement of  individuals must 
not 
Consequently,  the 
Commission  intends  to  increase  its  support  for  cooperation 
programmes  between  further  education  establishments  in  different 
Member  States  with  a  view  to  promoting  the  mobility  of  students, 
facilitating the academic  recognition of degrees  and thus diplomas, 
and  helping  young  people,  in  whose  hands  the  future  of  the
Community's economy  lies,  to think  in  European terms.  At  the end of 
this  year,  it  will  make  new  proposals  on  this  subject,  notably 
concerning  a  Community  scholarship  scheme  of  grants  for  students 
wishing  to  pursue  part  of  their  studies  or  the  acquisition  of 
relevant  professional experience  in another Member State.

IV. 

A COMMON MARKET FOR SERVICES

95. 

In  the  Commission's  view,  it  is  no  exaggeration  to  see  the 
establishment  of  a  common  market  in  services  as  one  of  the  main 
Trade  in 
preconditions  for  a  return  to  economic  prosperity. 
The 
services  is  as  important  for  an  economy  as  trade  in  goods. 
diversity  of activities  which  can  be classed  as  "services"  and the 
fact  that  the  providers  of  services  seem  unaware  of  their  common 
interests  in  the  sector  are  two  of  the  reasons  why their  role and 
importance have  been undervalued  for  so  long. 
Another  reason  has 
been  the  fact  that,  in  the  past,  many  services  were  provided by 
industry  itself  whereas  now  there  is  a  trend  to  create  specialist 
companies  or  at  least  specialist  units  for  service  activities. 
Despite  the  provisions  of  Articles  59  and  62  of  the  Treaty, 
progress  on  the  freedom  to  provide  services  across  internal 
frontiers has  been much  slower than  the progress  achieved on  free 
movement  of  goods. 
This  is  particularly  regrettable,  since  in 
recent years  specialisation and  the  rapid  development of  new  types 
of  services  has  done  much  to  demonstrate  the  potential  for  growth 
and job creation  in the  service  sector as a whole.

96. 

Two  examples  should  suffice  to  illustrate  this  potential,  and  to 
point out  the  risk that  the Community might  lose ground to  its main 
trading  competitors  if  it  fails  to  take  sufficiently  far-reaching 
action.

97. 

First,  in  1982  market  services  and  non-market  services  already
accounted for 57% of the value added to the  Community economy while 
industry's  contribution  has dropped  to  less  than 26%.  Secondly,  a

-   27  -

comparison of employment prospects  in the different  sectors between 
1973  and  1982  reveals  that  there  has  been  a  steady  decline  in 
employment  in  industry, 
which  became  even  more  rapid  after 
By contrast, over the same period, more than 5 million 
1979/1980. 
jobs were  created  in  the  Community's  market  services  sector.  This 
figure,  while  impressive  in absolute terms,  looks  less  so  relative 
to  the  equivalent  figures  for  the  USA  (13.4  million)  and  even 
Another  cause  for  concern  is  that  in  the 
Japan  (6.7  million). 
Community,  unlike  in our main competitors,  this trend has tailed 
off  since  1980 as a  result  of the  recession.

98.  Although  freedom  to  provide  services  in  the  Community  has  been
directly applicable since the end of the transitional period as the 
Court of  Justice  recognized  in the Van Binsbergen  judgement,  firms 
and  individuals have  not yet  succeeded in  taking full  advantage of 
this freedom.

99.  For these  reasons,  the  Commission considers  that  swift action should
be  taken  to  open  up  the  whole  market  for  services.  This  applies 
both  to  the  new  service  areas  such  as  information  marketing  and 
audiovisual  services  ;  and  to  the  so-called  traditional  (but 
rapidly evolving)  services  such  as transport, banking and  insurance 
which,  if  properly mobilised,  can play  a key  supporting  role for 
industry and commerce.

"Traditional” Services

100.  Of  prime  importance  -  because  the  Community  has  been  depriving 
itself of  the potential  benefits  for  far too  long -  is the need to 
open  up  the  cross-border  market  in  the  traditional  services, 
notably banking and insurance and transport. 
The  Commission would 
emphasize  here  that  proposals  necessary  to  open  up  these  two 
sectors  have  already been  made but  still  await  Council's  decision. 
The  Council  should,  therefore,  take  the appropriate  decisions  as 
indicated  in the timetable to be completed by  1990.

Financial services

101.  The  liberalisation of  financial  services,  linked to that  of  capital 
movements,  will  represent  a  major step towards  Community financial 
integration and the widening of the Internal Market.

102.  The  accent  is  now  put  increasingly  on  the  free  circulation  of 

"financial  products",  made  ever  easier  by  developments  of 
technology. 
Some  comparison  can  be  made  between  the  approach 
followed  by  the  Commission  after  the  "Cassis  de  Dijon"  judgements 
with  regard  to  industrial  and  agricultural  products  and  what  now 
has  to  be  done  for  insurance  policies, 
home-ownership  savings 
contracts,  consumer  credit/ participation  in  collective  investment 
schemes,  etc.  The  Commission considers  that  it  should be possible 
to  facilitate  the  exchange  of  such  "financial  products"  at  a 
Community  level,  using a minimal  coordination of  rules  (especially 
on  such  matters  as  authorisation, 
financial  supervision  and 
etc)  as  the  basis  for  mutual
reorganisation, 

winding  up, 

-   28  -

recognition  by  Member  States  of  what  each  does  to  safeguard  the 
interests of the public.

103.  Such  harmonisation,  particularly  as  regards  the  supervision  of 

ongoing  activities,  should  be  guided  by  the  principle  of  "home
country  control".  This  means  attributing  the  primary  task  of
supervising the  financial  institution  to  the  competent  authorities 
of  its  Member  State  of  origin,  to  which  would  have  to  be  commu­
nicated all  information necessary  for supervision.  The authorities 
of the Member  State which  is the destination of the service, whilst 
not deprived of all power,  would have a  complementary  role.  There 
would have to be a minimum harmonisation  of 
dards,  though  the  need  to  reach  agreement  on  this  must  not  be 
allowed further to delay the necessary and overdue decisions.

surveillance 

stan­

104.  The  implementation  of  these  principles  in  the  field  of  credit 

institutions  (especially banks)  is being pursued actively,  in par­
ticular on the following  lines  :

-  the  standards  of  financial  stability  which  credit  institutions 
must  live  up  to  and  the  management  principles  which  they  must 
apply  (concerning,  for  instance,  their own funds,  the solvency 
and  liquidity  ratios,  the  monitoring  of  large  exposures)  are 
being thoroughly coordinated ;

- the  rules  contained  in the  fourth and  seventh  company  law  Direc­

tives  on  annual  accounts  and  consolidated  accounting  are  being 
adapted to the sector of  credit  institutions  ;

- furthermore,  the  conditions  which  must  be  fulfilled  by  insti­

tutions  seeking  access to  the markets  as well  as the  measures to 
be  taken  at  Community  level  when  it  comes  to  reorganising  or 
winding  up  an  institution  in  case  of  crisis  are  being  coordi­
nated;

- to  name a  more specific  area,  the  Commission  is  working towards
the  mutual  recognition  of  the  financial  techniques  used  by
mortgage  credit  institutions  and  of  the  rules  applying  to  the 
supervision of  such  institutions.

105.  As  regards  insurance  undertakings, 

Moreover, 

directives  adopted  in  1973
(non-life)  and  1979  (life)  to  facilitate the  exercise of  the  right 
of  establishment  already  coordinate  rules  and  practices  for  the 
supervision  of  insurers  and  particularly  of  their  financial 
stability. 
close  cooperation  between  supervisory 
authorities  has  been  in  existence  for  a  long  time.  The  ground  is 
thus  prepared  for freedom  of  services  across  frontiers,  which
should  therefore  not  present  insurmountable  problems,  especially 
since the  Directive of  11  May  1960  liberates  capital movements with 
regard  to  premiums  and  payments  in  respect  of  all  forms  of 
insurance.  It  must 
to  facilitate  the exercise  of  freedom  of  services  in  non-life
insurance  by  spelling  out  the  part  to  be  played  by  the  various 
supervisory  authorities  in  cross-frontier  operations  has  not  yet

nevertheless be noted 

that  a  Directive intended

-   29  -

been  adopted  by  the  Council.  It  will  furthermore  be  necessary  in 
the  near  future  to  examine  closely  those  aspects  of  freedom  of 
services which are peculiar  to  life assurance.

106.  In the  securities  sector,  the coordination  of  rules  applicable  to 
undertakings  for  collective  investment  in  transferable  securities 
(UCITS)  is  aimed  at  providing  equivalent  safeguards  for  investors 
in respect of  the units  issued by UCITS,  irrespective of the Member 
Once  approved  by  the 
State  in  which  the  UCITS  is  situated. 
authorities  in  its home  Member State,  a UCITS  will be  able freely 
to  market  its  units  throughout  the  Community,  without  permitting 
additional  controls to be introduced.  Thus this directive would be 
an  example  of  the  principle  of  "home  country  control".  Mutual 
recognition  will  be  made  possible  by  the  coordination  of  the 
safeguards offered by the financial product  in question.

107.  Apart from the UCITS proposal,  other work  still  remains  to be done 
to ensure that  securities markets operate satisfactorily and  in the 
best  interests of  investors.  Work  currently  in  hand  to  create  a 
European  securities  market  system, 
based  on  Community  stock 
exchanges,  is also  relevant  to the creation of  an internal  market. 
This  work  is  designed  to  break  down  barriers  between  stock 
exchanges  and  to  create  a  Community-wide  trading  system  for 
securities  of  international  interest.  The  aim  is  to  link  stock 
exchanges electronically,  so that their members  can execute orders 
the  best  conditions  to 
on the stock  exchange  market  offering 
their  clients.  Such  an  interlinking  would  substantially  increase 
the  depth  and  liquidity  of  Community  stock  exchange  markets,  and 
would  permit  them  to  compete  more  effectively  not  only  with  stock 
exchanges  outside  the  Community  but  also  with  unofficial  and 
unsupervised markets within  it.

Transport

108.  The  right  to  provide  transport  services  freely  throughout  the 
Community  is  an  important  part  of  the  Common  Transport  Policy  set 
out  in  the Treaty. 
It  should  be noted that  transport  represents 
more than  7 %  of  the  Community's g.d.p.,  and that  the development 
of  a  free  market  in  this  sector  would  have  considerable  economic 
consequences  for  industry  and  trade. 
The  recent  decision  of  the 
Court  in  the  case  brought  by  the  European  Parliament  against  the 
Council  for  failure  to  act  in  the  field  of  the  common  transport 
policy  (Case  13/83)  highlights  the  necessity  of  making  rapid 
progress  in this area.

109.  In addition to the measures already mentioned  in the  context of the 
elimination  of  frontier  checks  in  road  haulage  traffic,  the 
completion of the  internal  market  requires the following actions  in 
the transport  sector  :

-  for  the  transport  of  goods  by  road  between  Member  States,  the 
phasing  out  of  quantitative  restrictions  (quotas)  and  the 
establishment of  conditions under which non-resident  carriers may

-   30  -

operate  transport  services  in  another  Member  State  (cabotage) 
will be  completed by  1988 at  the  latest.

-  for  the  transport  of  passengers  by  road,  freedom  to  provide 

services will be  introduced by  1989.

- for 

the 

transport 

international 

inland
waterway,freedom  to  provide  services  where  this is  not  yet  the
case  will  be  introduced.  Where  necessary,  conditions  will  be 
established  under  which  non-resident  carriers may  operate inland 
navigation  services  in  another  Member  State  (cabotage).  Both 
measures should come  into effect  by  1989.

of goods 

by 

- the  freedom  to  provide  sea  transport  services  between  Member
States  shall  be  established  by  the  end  of  1986 at  the  latest,
though  with  the  possibility  of  a  limited  period for phasing  out
certain types of  restrictions.

-  in the air transport  sector,  it  is  necessary to provide by 1987 
for  greater  freedom  in  air  transport  services 
between  Member 
States.  This  will  involve  in particular  changing the  system  for 
the  setting and  approval  of  tariffs,  and  limiting the  rights of 
Governments  to  restrict  capacity and access to the market.

110.  Implementation of  common policy measures  in the transport  sector by 
the  dates mentioned  above will  require decisions  by the  Council  by 
December  1985  (air fares  and  some  aspects of  maritime transport)  ; 
by  June  1986  (remaining  aspects  in  the  aviation  and  maritime 
sectors)  ;  and by  December  1986  (road haulage,  inland  waterways, 
coach  services).

111.  If  the  Council  fails  to  make  progress  towards  the  adoption  of 
proposed  Regulations  concerning  the  application  of  competition 
rules to  air and  to sea  transport,  the  Commission  intends  to take 
Decisions  recording  existing  infringements  and  authorising  Member 
States  to  take  measures  as  determined  by  the  Commission  according 
to Article  89 of the  EEC  Treaty.

112.  All  these  measures  form  only  part  of  the  common  transport  policy 
which extends  to other measures  (e.g.  state aid policy,  improvement 
of  railway  financing, 
harmonization  in  the  road  sector, 
infrastructure  planning  and  investment)  which  are  not  of  direct 
relevance to the  internal market  but  which are an essential  element 
of this policy.

New technologies and Services

113.  The  development  of  new  technologies  has  led  to  the  creation  and 
development  of  new  cross-border  services  which  are  playing  an 
increasingly  important  role  in  the  economy. 
However,  these 
services  can  develop  their  full  potential  only  when  they  serve  a 
large,  unobstructed  market.  This  applies  equally  to  audiovisual 
services, 
information  and  data  processing  services  and  to 
computerized marketing and distribution services.

-   31  -

114.  In  addition,  the  Commission  would  stress  that  a  market  free  of 
obstacles  at  Community  level  necessitates  the  installation  of 
appropriate telecommunication networks with  common  standards.

115.  In  the  field  of  audiovisual  services,  the  objective  for  the 
Community  should  be  to  seek  to  establish  a  single  Community-wide 
broadcasting  area. 
Broadcasting  is  an  important  part  of  the 
communications  industry  which  is  expected  to  develop  very  rapidly 
into a key sector of the  Community economy and will  have a decisive 
impact on the future  competitiveness of  Community  industries  in the 
internal market.

116.  In accordance with  the Treaty objective of creating a  common market 
for  services,  all  those  who  provide  and  relay  broadcast  services 
and who  receive them should  be able,  if they  wish,  to  do so  on a 
Community-wide  basis. 
This  freedom  goes  hand  in  hand  with  the 
right of freedom of  information  regardless of frontiers.

117.  As  a  result  of  the  development  of  broadcasting  within  essentially 
national  frameworks,  legal obstacles,  actual  and potential,  lie  in 
the path  of those seeking to develop broadcasting activities across 
These obstacles  consist  mainly of 
the borders  of Member  States. 
different  limitations  on  the  extent  to  which  broadcast  programmes 
may contain  advertising ;  as well  as  of  the  rights  of  owners  of 
copyright  and  related  rights  to  authorise  retransmission  by  cable 
On  the  basis  of 
of broadcasts  for  each  Member  State  separately. 
the  Commission's  Green  Paper, 
on  the 
establishment of the common market  for broadcasting,  especially by 
satellite and cable, a number of measures are necessary  to  realise 
a single  Community-wide broadcasting area.  As a  first  step towards 
this objective,  the  Commission will  submit  appropriate proposals  in 
1985.  The  Council  should take a decision before  1987.

adopted  in  May  1984, 

118.  The  information market  is also undergoing far  reaching changes as a 
result  of  the  application  of  new  information  technologies.  These 
changes are mainly due to  :
- the almost  exponential  growth  of  the  amount  of  information 

available  ;

- the growing  speed with which new  information becomes obsolete  ;
- the  strong tendency of  information to flow across borders;  and
- the application of new  information technologies.

119.  Information  itself  and  information  services  are  becoming  more  and 
more widely  traded and  valuable commodities,  and  in  many  respects 
primary  resources  for  industry  and  commerce.  The  opening  of  the 
market  for  it  is therefore of  increasing importance.  Moreover, the 
functioning  of  markets  for  other  commodities  depends  upon  the 
transmission  and  availability  of  information.  As  a  commodity, 
however,  it  has  unique and difficult  properties.

120.  The  information market  has been supported by a  series of programmes 
The 
decided by  the  Council  on  27  July  1981  and  27  November  1984. 
current  one  is  due  for  mid-term  evaluation  in  the  course  of  this 
It
year. 

But  a  satisfactory  internal  market  requires  more. 

-   32  -

requires,  as  the  European  Council  has  recognized,  a common policy 
and  strategy  within  which  a  transparent  regulation  and transparent 
conditions  can  be  built. 
The  Commission  has  issued  a  general 
discussion  paper  on  this  subject  and  intends  to  follow  it  up with 
appropriate proposals and guidelines  in the period  1985-1987.

121.  The European  marketing and  distribution  system  will also  undergo  a 
thorough  technological  transformation. 
Home videotex  will permit 
thus 
the  ordering  of  products  direct  from  the  manufacturer, 
revolutionizing  traditional  distribution  channels,  while  ensuring 
greater  market  transparency.  These  new  technologies,  which  will 
bring  in their wake a need for adequate consumer protection,  could 
lead  to  increased  commercial  activity  within  the  Community, 
particularly  in the mail-order sector.

122.  Electronic  banking  .too  will  promote  information  and  commercial 
The new payment  cards  (memory  cards,  on-line cards) 
transactions. 
will  tend to  replace existing  cheques and  credit  cards. 
Although 
an  agreement  already  exists  on  the  compatibility  of  videotex 
equipment  in the  Community,  there  is no  similar agreement  for the 
production of  the new cards.

123.  The  Commission  intends  to  make  proposals  to  help  define  common 
technical  features of  the machines  used to  produce the  new payment 
cards,  so that  they can be  identical throughout  the  Community.  It 
in  conformity  with  Community 
will  also  seek  to  encourage, 
competition  rules,  the conclusion  of agreements  at  European  level 
between  banks, 
producers  and  consumers  on  the 
compatibility of  systems,  networks  linkage, user  rules and/or  rates 
of  commission.

traders, 

V.  CAPITAL MOVEMENTS

124.  Greater  liberalisation of  capital movements  in the  Community should 

serve three aims.

125.  First,  the completion of a  large  internal market  inevitably  invol­

The  free movement  of goods,  services 
ves a  financial  dimension. 
and  persons  must  also  mean  that  firms  and  private  individuals 
throughout  the  Community  have  access  to  efficient  financial 
services.  The 
effectiveness  of  the  harmonisation  of  national 
provisions governing the activities of financial  intermediaries and 
markets  would  be  greatly  reduced  if  the  corresponding  capital 
movements were  to  remain subject  to  restrictions.

126.  Secondly,  it must  be stressed that  monetary stability,  in the sense 
of the  general  level  of prices  and exchange  rate  relations,  is  an 
essential  precondition  for the  proper operation  and  development  of 
the  internal  market. 
In  this  regard,  action  to  achieve  greater 
freedom  of  capital  movements  would  need  to  move  in  parallel  with
the  steps  taken  to  reinforce  and  develop  the  European 
Monetary System. 
Exchange-rate  stability  and  convergence  of 
economic  policies  help  the gradual  removal of  barriers  to  the free

-   33  -

movement of capital;  conversely,  greater financial  freedom  leads to 
greater discipline  in the conduct  of  economic policies.

127.  Thirdly,  the  decompartmentalisation  of  financial  markets  should 
boost  the  economic  development  of  the  Community  by  promoting  the 
optimum allocation of  European savings. 
The  task  is  to set  up an 
attractive  and  competitive  integrated  financial  system  for  both 
Community and non-Community business  circles.

128.  A  number  of  Member  States  have  had  to  make  use  of  the  protective 
clauses  provided  for  in  the  Treaty  (Articles  73  and  108(3))to 
maintain or  reintroduce  restrictions on capital  movements which  are 
From  now  on  the 
in  principle  liberalised  under  Community  law. 
Commission's  attitude towards the use of  safeguard  clauses  will be 
governed by the following criteria  :

- authorization  to  apply  protective  measures  should  be  for  a 

limited period;

- measures  should  be  continually  reviewed  and  gradually  abolished 

as the difficulties which originally justified them diminish;

- agreement  should  be  reached  not  to  apply  the  protective  clauses 
to capital  movements which  are  so  short  term  as  to  be  classified 
as  speculative  and  which  are  most  directly  Linked  to  the  free 
movement  of goods,  services  and persons.

129.  Generally speaking,  however,  capital now moves more freely  in the
Community than at  the end of the  1970s.  The United Kingdom  removed 
all  exchange  controls  in  1979  and  the  arrangements  applied  in 
Denmark  now  comply  with  the  Community  rules  in  force. 
December  1984,  the Commission authorised  France,  Italy and  Ireland 
to  retain,  according  to  the  above  criteria,  in  varying  degrees, 
restrictions  on  certain  capital  movements.  These  decisions  took 
into account  the measures  taken on  this occasion  by the  French  and 
Italian  authorities  to  relax  such  restrictions.  These derogations 
have been  renewed for a  limited period.

In

130.  Unlike  the  Treaty  provisions  relating  to  free  trade  in  goods  and 
services,  the  principle  of  freedom  of  capital  movements  does  not 
apply  directly. 
All  progress  towards  such  freedom  involves  an 
extension,  by way of  Directives,  of  the  Community obligations  last 
Laid down  in  1960 and 1962.  The following two aims must  be pursued 
in view of  this extension  :

- as  an  accompaniment  to  measures  to  coordinate  the  conditions 
under which  financial  intermediaries  operate  and  thus  to  promote 
the  development  of  a  common  market  in  financial  services. 
To 
this  end, 
a  proposal  for  a  Directive  concerning  the 
liberalisation  of  transactions  in the  units  issued  by collective 
investment  undertakings  for  transferable  securities  is  currently 
A similar  liberalizing proposal 
being discussed by the  Council. 
will  be  necessary  in  due  course  in  the  mortgage  lending  field;

-   34  -

- in  order  to  adapt  Community  obligations  to  changes  in  financial 
techniques  and  so  improve  the  arrangements  for  operations  which 
have  grown substantially  in  importance. 
Action  will  have  to be 
taken  at  Community  level  to  liberalise  operations  such  as  the 
issue,  placing  and  acquisition  of  securities  representing  risk 
transactions  in  securities  issued  by  Community 
capital, 
institutions  and  long-term commercial  credit.

131.  In  addition  to  the  responsibility  which  Community  bodies  have  for 
creating  and  administering  a  legislative  framework  for  the 
liberalisation  of  capital  movements  they  will  have  to  take  action 
with  a  view  to  gradually  liberalizing  all  operations  of  Community 
interest.

132.  The  Commission  intends  to  step  up  its  monitoring  of  any  exchange 
control  measures which,  while not  infringing  Community obligations 
to  liberalise  capital  movements, 
nevertheless  constitute  a 
potential  obstacle  to  payments  relating  to  normally  liberalised 
trade in goods,  services or capital.  Following the "Luisi-Carbone" 
judgement  of  31.1.1984,  the  Commission has  already  informed Member 
States  about  the  limits  to  the  controls  which  Member  States  may 
apply.  From  1992 onwards,  any  residual  currency  control  measures 
should be applied by means other  than border  controls.

VI.  CREATION OF SUITABLE CONDITIONS FOR INDUSTRIAL COOPERATION

133.  The  removal  of  internal  boundaries  and  the  establishment  of  free 
movement  of  goods  and  capital  and  the  freedom  to  provide  services 
are  clearly  fundamental  to  the  creation  of  the  internal  market. 
Nevertheless, 
Community  action  must  go  further  and  create  an 
environment  or  conditions  likely  to  favour  the  development  of 
cooperation between undertakings.  Such  cooperation will  strengthen 
the  industrial  and  commercial  fabric  of  the  internal  market 
especially  in the case of small and medium sized enterprises,  which 
are  particularly  sensitive  to  their  general  environment  precisely 
because of their size.

134.  In  spite  of  the  progress  made  in  creating  such  an  environment, 
cooperation  between  undertakings  of  different  Member  States  is 
still  hampered  by  excessive  legal, 
fiscal  and  administrative 
problems,  to which are added occasional obstacles which are more a 
reflection  of  different  mental  attitudes  and  habits. 
It  is, 
however,  the  Commission’s  function to take  steps  to deal with  any 
distortion  of  competition  arising from  the partitioning  of markets 
by  means  of  agreements  on  business  practices  or  undisclosed  aid 
from  public  funds.  The  Commission  will  also  continue  to  apply 
competition  rules  by  authorizing  cooperation  between  undertakings 
which  can  promote  technical  or  economic  progress  within  the 
framework  of a unified market.

135.  The  Commission  will  also  seek  to  ensure  that  Community  budgetary 
and  financial  facilities  make  their  full  contribution  to  the 
development  of  greater  cooperation  between  firms  in  different

-   35  -

Member  States.  It will  seek to guide future  research programmes  in 
this  direction,  both  at  the  precompetitive  research  stage  and  at 
the stage of pilot or demonstration projects.  The ESPRIT and BRITE 
programmes  now underway  have already  had a  very positive  impact on 
European firms  in terms  of the  opportunities  for  cooperation  which 
they  represent. 
The  Regional  Fund  must  also  be  enabled  to 
contribute  to greater  cooperation between firms.

Creation  of  a  legal  framework  facilitating  cooperation  between 
enterprises.

136.  The  absence  of  a  Community  legal  framework  for  cross-border 
activities  by  enterprises  and  for  cooperation  between  enterprises 
of  different  Member  States  has  led  -  if  only  for  psychological 
reasons  -  to  numerous  potential  joint  projects  failing  to  get  off 
the ground.  The  Community  is now,  for the first time,  setting the 
stage  for  a  new  type  of  association  to  be  known  as  the  "European 
Economic  Interest  Grouping"  that  will  be  governed  by  uniform 
Community  legislation  and will  make  it  easier for  enterprises  from 
different  Member  States  jointly to undertake specific activities.

137.  Also,  it  is worth  noting that  a  Council  decision  is  still awaited 
on the  proposed  statute  for  a  European  Company.  The  Commission  is 
conscious  that the  creation of  an optional  legal  form  at  Community 
level  holds  considerable  attraction  as  an  instrument  for  the 
industrial  cooperation  needed  in  a  unified  Internal  Market.  A 
decision on the proposed statute will  clearly be needed by 1992.  In 
the  interim  period, 
the  Commission  intends  to  concentrate  on 
measures  to  approximate  national  laws  and  does  not  preclude  the 
possibility  of  amending  its  European  Company  proposal  in  order  to 
build on  results achieved  in discussions of approximation measures.

138.  The  small  number  of  one-man  businesses  apart,  enterprises  are 
generally  organised  in  the  form  of  companies  or  firms,  and  the 
Community  rule on non-discriminatory treatment  applies to them when 
formed  in the  Community.  This  rule  is of prime  importance where the 
acquisition of  shareholdings  is  concerned.

139.  There  is  a  case, 

however,  for  making  better  use  of  certain 
procedures  such  as offers of  shares to the public  for  reshaping the 
pattern  of  share  ownership  in  enterprises, 
since  the  rules 
currently  in  force  in  this  sphere  vary  a  great  deal  from  one 
country to another.  Such operations  should be made more attractive. 
This could be done by  requiring minimum guarantees,  particularly on 
the  information  to be  given to  those concerned,  while  it  would be 
left  to  the Member  State to  devise  procedures  for  monitoring such 
operations and  to designate  the authorities  to which  the powers  of 
supervision were to  be assigned. 
A  proposal  will  be made  in  1987 
and the necessary decisions  should be taken by  1989.

140.  As and  when the  internal  market  is developed  further,  enterprises 
incorporated  in the form of  companies or  firms  will become more and 
more  involved  in  all  manner  of  intra-Community  operations, 
resulting  in  an  ever-increasing  number  of  links  with  associated

-   36  -

enterprises,  creditors  and  other  parties  outside  the  country  in 
which  the  registered  office  is  Located. 
To  keep  pace  with  this 
trend,  a  series  of  measures  have  already  been  taken  or  are  under 
discussion  aimed  at  coordinating  Member  States  laws,  especially 
those  governing  limited  companies,  which,  in  economic  terms,
constitute the most  important  category.

141.  Admittedly,  this  approximation of  legislation  is designed to secure 
equivalent  protection for those concerned but  these are,  to a very 
large extent,  enterprises too.  In point of  fact,  by  improving the 
legal  relationship between enterprises,  the coordination of  company 
law has at the same time  improved cooperation between them.

142.  Nevertheless,  a  company  constituted under  a  specific  national  law

as  a  natural  person  when  it

The traditional

up by  companies 

enjoy  the  same  facilities 

does  not 
comes  to moving from one  Member  State to another. 
ways  of  setting  up  in  another  Member  State  involve  the 
for  which  non- 
establishment  of  subsidiaries  or  branches, 
discriminatory  treatment  is  expressly  laid  down  in  the  Treaty  of 
Rome.  As things  stand now,  however,  the  legal position of branches 
set 
from  other Member  States  is  far  from
Thus,  to the  extent  that 
satisfactory  throughout  the  Community. 
certain  matters  affecting  the  corporate  sector  have  already  been 
harmonised,  branches  established  in  the  Community  and  forming  an 
integral  part  of  an  enterprise  should  also  reap  the  benefits  of 
such harmonisation under a  legislative policy of deregulation.  With 
this  in  mind,  the  obligation,  say,  to publish  accounts  relating 
only  to the  activities  of  a  branch established  in  the  Community
should  be  dispensed  with  in  all  cases,  provided  a  copy  of  the 
parent  company's  accounts  is  filed  with  the  registration  body 
responsible  for  the  branch. 
A  proposal  will  be  made  in  1986  to 
permit  a decision by the  Council  in  1988.

143.  If  it  is  to  satisfy  the  needs  of  a  genuine  internal  market,  the
Community  cannot  concentrate  simply  on  the  arrangements  for 
creating  subsidiaries  or  branches  in  order  to  make  it  easier  for 
enterprises  to  set  up  in  other  Member  States. 
Enterprises  must 
also  be  able  to  engage  in  cross-border  mergers  within  the 
could  constitute  the  last  stage  in  a
Community.  This  facility 
process  of  cooperation  beginning, 
with  the 
for  example, 
straightforward acquisition of a shareholding. 
On the face of  it, 
adoption  of  the  Commission's  proposal  for  a  tenth  Di rective  seems 
to pose fewer difficulties  especially as  it  could,  to a very  large 
extent,  settle  the  matter  by  reference  to  the  rules  already  in 
force on  internal mergers.

144.  In  practice,  cooperation  will  result  more  often  than  not  in  the 
creation of  a group of  legally  separate but  associated enterprises. 
This  development  is  already  the  subject  of  coordination  in  the 
field  of  consolidated  accounts. 
However,  is  it  possible  to stop 
there  ? 
The  fact  is that  the transparency of the group is not  the 
A  fair  balance  must  also be  struck between 
only  issue  at  stake. 
the  interests  of the  group as  a whole  and  its  members,  especially 
However,
minority  shareholders  and  creditors  of  subsidiaries. 

-   37  -

there  are  serious  gaps  in  most  Member  States'  Legislation  on  the 
matter,  which  is  still  too closely modelled on the  idea of  company 
autonomy,  an  idea  largely overtaken,  it would  seem,  by the degree 
of  concentration  that  now  exists. 
Depending  on  the  outcome  of 
the  Commission  is  considering  making  a 
current  consultations, 
proposal to this end.

Intellectual and industrial property

145.  Differences  in  intellectual  property  laws  have  a  direct  and 
negative  impact  on  intra-Community  trade  and  on  the  ability  of 
enterprises  to treat  the  common  market  as  a  single  environment  for 
their  economic  activities.

146.  It  will be necessary,  as a  first  step,  to  reach a decision on the 
Community  Trademark  proposal  and  on  the  proposal  approximating 
national  trade mark  laws. 
Considerable advantages will  flow from 
this  which  will  enable  undertakings  to  adapt  their  activities  to 
the full  scale of  the  Community  by making  it  possible  for them  to 
obtain  on  a  single  application  one  trade  mark  covering  all  the 
Member States.  In order to allow the  Community trade mark system to 
be  adopted by  the  Council,  the  Commission  will  make  the necessary 
supplementary  proposals 
lation  ·,  the fees  regulation ;  the siting  of the  Community Trade 
Mark office  and- its  working  language  ;  the  rules  of  procedure  of 
The  Council  should decide on these matters 
the Boards of Appeal). 
by 1987.

(i.e.  the  rules  implementing  the  regu­

147.  The  picture  has  recently  been  further  complicated  by  the  need  to 
adapt  existing  trademark  systems  to  technological  change  in  a 
number  of  areas  including  computer  software,  microcircuits  and 
biotechnology.  In  order  to  create  a  firm  legal  foundation  for 
investment  in  new  techniques,  the  systems  must  be  adapted  in  a 
convergent  manner  so  that  these  changes will  not weaken  an already 
imperfect  intellectual property market.

148.  In  the  patent  field,  the  Luxembourg  Convention  on  the  Community 
Patent  signed  in  1975  which  will  offer  important  advantages  to 
industry,  has not yet  entered  into force.  The  Commission favours a 
solution  whereby  the  Convention enters  into force  immediately,  at 
least  amongst  those  Member  States  who  are  in  a  position  to  ratify 
it.  .

patent 

concerning 

149.  The  Commission  accordingly  intends  to  propose  to  the  Council 
measures 
biotechnological 
inventions and the  legal  protection of microcircuits,  the  latter as 
a matter of urgency,  in  1985.  In addition,  problems  in the field of 
copyright  and  related  rights  will  be  examined  in  a  consultative 
document  to  be  published  in  1985  with  a  view  to  establishing 
priorities. 
In  this  context,  the  introduction  of  a  Community 
framework  for  the  legal  protection  of  software  will  be  given 
particular attention.

protection 

of 

-   38  -

Taxation

150.  The  Commission  intends  to  publi sh,  by  the  end  of  1985,  a  White
Paper  on  the  taxation  of  enterprises  in  the  Community.  This  will 
serve the  purpose of  fitting the  various proposals  already  pending 
before  Council  into  a  general  framework;  It  will  also  be  an
opportunity  for  assessing  the  need  for  further  common  action  in 
this  field.  There  is,  indeed,  a  widespread  feeling  in  private 
enterprise  in  Europe  that  our  fiscal  environment  for  risk  capital 
and  for  innovation  compares  badly  with  that  of  our  major 
competitors.

151.  In  the  meantime  the  Commission  will  urge  the  Council  to  complete 
ongoing  work  on  a  group  of  proposals  which  aim  at  removing 
obstacles  to  cooperation  between  European  firms  (on  tax  treatment 
on  taxation  of  mergers  and  on 
of  parents  and  subsidiaries, 
avoidance  of  double  taxation), 
and  to  give  high  priority  to 
harmonizing  indirect  taxes on transactions  in  securities  as well  as 
to  the  proposal  which  will  allow  wider  use  of  carry  forward  and 
backward of  losses  in all  Member  States.

V H .   APPLICATION OF COMMUNITY LAW 

Infringements

152.  The  Community's  political  and  legislative  efforts  to  create  an 
expanded  home  market  for  the  people  and  the  industries  of  the 
Community,  will  be  in vain  if the  correct  application of the agreed 
rules  is  not  ensured. 
under  the  pressure  of 
Unfortunately, 
Member  States  have  not  always  withstood  the 
economic  crisis, 
temptation  to yield to protectionist  measures,  and the  large volume 
of  complaints  that  the  Commission  has  received  has  prevented  it 
from  dealing  with  them  within  a  reasonable  period.  There  is  no 
reason why  Member  States,  whose  Heads  of  State  and Government  are 
committed  to  the  completion  of  the  Internal  Market,  should  not 
expect  and welcome the knowledge that  the  Commission will  carry out 
its  duties  of  enforcing  the  rules  that  make  such  a  completion 
possible,  even  if  such  enforcement  is  likely  sometimes  to  affect 
them directly  and  individually.

153.  Of the total number of  complaints  received by the  Commission,  some 
60 %,  i.e.  on average 255  each year,  relate to Articles  30-36 of 
the Treaty, but  because of the  lack of  resources  it  can,  in a given 
year,  settle  only  one  hundred  cases. 
The  resulting  delays  and 
backlogs benefit  the  infringing  States,  impede  systematic action, 
lead  to  political  and  economic  disequilibria  of  infringement 
proceedings,  and frustrate  the confidence  of  industry as  well  as 
that  of the man  in the street.  Measures have  to be taken to  remedy 
the situation.

154.  Moreover,  the  Commission  will  continue  its  general  action  of  im­

proving  and  rationalising  its  internal  procedures  in  order  to 
correct violations  rapidly and effectively.  It will  closely combine

-   39  -

its  actions  of  prevention  and  cure,  and  it  will  consider  the 
possible  introduction  of  sanctions 
and  will  explore  all
possibilities  for  interim  measures  to  suspend  the  enforcement  of 
any national  legislation which manifestly  infringes  Community  law.

Transparency

155.  Elimination  of  unjustified  trade barriers  is traditionally  done on 
a  case-by  case basis by  individual  infringement  proceedings.  Given 
the practical  shortcomings of piecemeal  proceedings,  the Commission 
wilt  have  to  take  more  systematic  action,  by  publishing  general 
communications  setting  out  the  legal  situation  particularly  in 
regard to  Articles  30  to 36  for the  whole of  an economic  sector or 
in  relation  to a  particular type  of barrier.  These communications 
would  serve  as  a  guide  for  public  authorities  regarding  their 
obligations,  as well  as for  Community  citizens  regarding the  rights 
which they enjoy.

The  Commission  will gradually  establish 

156.  The  Commission  intends  to  publish  before  1988  communications  on
motor-cars,  foodstuffs,  pharmaceuticals,  and chemical products as 
a
priority  sectors. 
definite  link  between  its  proposals  for  harmonisation  of  laws  and 
its  communications  setting out  the  impact of  Articles 30 to 36.  In 
any  case,  it  is  understood  that,  in  the  event  of  approximation 
lagging behind the agreed schedules,  the  Council's  inaction cannot 
relieve  the  Commission of  its obligation  to take  whatever measures 
are necessary to ensure free movement of goods within the  Community 
under  conditions  which  are  consistent  with  the  aims  of  the  Treaty 
and the deadline of  1992.

Competition policy and state aids

157.  A  strong competition  policy  will  play 

role  in
a  fundamental 
It  will 
maintaining  and  strengthening  the  internal  market. 
contribute  to  an 
and  to
improved  allocation of  resources 
reinforcement  of  the  efficiency  and  competitiveness  of  European 
companies.  As the Community moves to complete the  Internal Market, 
it  will  be  necessary  to  ensure  that  anti-competitive  practices  do 
not  engender new forms of  local protectionism which would only  lead 
to a  re-partitioning of the market.

158.  In  this  context, it  will  be  particularly  important  that  the

Community  discipline  on  state  aids  be  rigorously  enforced.  There 
are tendencies to spend  large  amounts of public  funds on  state aids 
to uncompetitive industries  and enterprises.  Often,  they not only 
distort  competition  but  also  in  the  long  run  undermine  efforts  to 
increase  European competitiveness.  They  represent  a drain on scarce 
public  resources  and  they  threaten  to  defeat  efforts  to  build  the 
internal  market.  As the physical  and technical  barriers  inside the 
Community  are  removed, 
the  Commission  will  see  to  it  that  a 
rigorous policy  is  pursued  in  regard  to  state  aids  so  that  public 
resources are not used to confer artificial  advantage to some firms 
over  others. 
An  effective  Community  discipline  will  make  it 
possible  to  ensure that  available  resources  are directed  away from

-   40 -

non-viable  activities  towards  competititive  and  job  creating 
industries of the future.

The  Commission  is  drawing  up  an  inventory  of  state  aids  and  will 
publish  by  1986  a  report  setting  out  the  implications  for  future 
state aids policy.

-   41  -

PART III  -  THE REMOVAL OF  FISCAL BARRIERS

I. 

INTRODUCTION

160.  Fiscal  checks  feature prominently among the functions  carried  out

at  the  Community's  internal  frontiers.  Consequently^ the  removal of 
frontier  controls  is bound to have  inescapable  implications  for the 
Member  States  as  far  as  indirect  taxes  are  concerned.  The
adjustments  that  will  be  needed  to  solve  these  practical  problems 
are  also  very  much in  line  with  the  terms  of  the  commitment
undertaken  by  those  who  signed  the  Treaties  and  with  historical 
developments  since then.

161.  When  the  Customs  Union  was achieved  in  1968, 

it  was  already
apparent  that  the  mere  removal  of  tariffs  would  not  enable  a true 
and  that  differences  in 
common  internal  market  to  be  created; 
turnover  taxes  in particular  were the  source of  serious distortion 
and  hence  a  serious obstacle to  the  completion  of  the  Internal
That  such a  situation  might  arise  was  foreseen  in  the
Market. 
Article  99  specifically  provided  that  the 
Treaty  itself. 
Commission  should  make  proposals  for  the approximation  of  indirect 
taxation  when  this  was  needed  for  the  completion  of  the  internal 
market;  and Article  100 provided the  legal means  for  so doing.

162.  Accordingly,  in  1967,  the Member  States decided that  the existing 
turnover  taxes  must  be  replaced  by  a  Value  Added  Tax  levied  on  a 
common  basis. 
It  was  recognized  from  the  outset  that  the 
imposition  of  such  a  tax  on  a  common  basis  would  raise  many 
difficulties  for  Member States  and would  have to  be phased  in over 
a  period  of  years. 
But  it  is  clear  from  both  the  First  and  the 
Second  VAT  Directives  which  gave  effect  to  this  decision  that  a 
common basis was not only  intended but  was  regarded as essential.

163.  The adoption  of  a  harmonized  VAT  was  given  further  impetus  by  the 
Council  Decision  in  1970  that  the  Community  should  be  financed 
through  "own  resources". 
A  significant  element  in  this  new  "own 
resources"  regime was  the allocation  to the  Community of  the yield 
of part  (not  to exceed a  rate of  1  per  cent)  of  the harmonized VAT. 
It  is  clear  from  the  Directives  that  what  was  in  mind  was  not  a 
notional  calculation  but  the  allocation  of  a  specific  share  of  an 
actual  harmonized tax. 
The following year  (1971)  saw the adoption 
of a  Council  Resolution  confirming  its  intention to  create an  area 
within which  goods,  services and capital  could circulate freely and 
without distortions of  competition.  Not only was a  common tax  base 
regarded as essential to achieve this end,  but  common tax  rates as 
In the words of the  Resolution  :  "Before 
well were  contemplated. 
the  end  of  the  first  stage,  the  Council  will  deliberate  on  the 
studies undertaken,  and on  the proposals  made,  by  the  Commission 
concerning  the  approximation  of  rates  of  value  added  tax  and  of 
excise duties."

164.  The broad principles of the harmonized  common tax  base for VAT were 
laid  down  in  outline  in  the  Second  VAT  Directive  dated  11  April 
This  was  followed after a period of  intensive consideration 
1967. 
and discussion,·  by the Sixth VAT Directive,  adopted  in  1977 which 
set  out  in great detail  the provisions of  the common base.  Because

-   42  -

reaching  agreement  on  a  number  of 
of  the  problems  involved  in 
difficult  and  contentious  issues,,  the  Sixth  Directive  contains  a 
number  of  lacunae  as  well  as  special  schemes,  derogations  and 
transitional  provisions. 
At  the  same  time,  Article  35  of  the 
Directive specifically provided that  these derogations and special 
arrangements  should  ultimately  be  brought  to  an  end. 
Nowhere  is 
the general philosophy set out more succinctly than  in the preamble 
to the Directive.  This declares  :

"Whereas  account  should  be  taken  of  the  objective  of 
abolishing  the  imposition  of  tax  on  the  importation  and  the 
remission  of  tax  on  exportation  in  trade  between  Member 
States; 
whereas  it  should  be ensured  that  the  common system 
of turnover  taxes  is  non-discriminatory as  regards  the  origin 
of goods and services,  so that  a  common market  permitting fair 
competition  and  resembling  a  real  internal  market  may 
ultimately be achieved".

Since  1977  a  number  of  supplementary  Directives  have  been  adopted 
and a number await  the  Council's decision.

165.  Soon  after the  first  steps  were taken  to harmonize  turnover taxes, 
the  Community  turned  its  attention  to  excise  duties.  As  a  first 
alcoholic  drinks  and 
step  the  Commission  identified  tobacco, 
hydrocarbon oils  as the  products on  which  excises  should be  levied 
- a  choice which  coincides with  the coverage adopted by most  Member 
States.

166.  In  the  case  of  tobacco,  a  limited  degree  of  harmonization  has 
already been achieved.  The basic  directive adopted  in  1972 defined 
the  structures  of  excise  duty  on  cigarettes; 
provided  for 
harmonization  in  successive  stages; 
and  defined  a  range  of 
relationships between the specific duty and the total  duty.  In the 
case of  alcoholic drinks and hydrocarbon oils,  little progress has 
been  made  despite  the  presentation  by  the  Commission  of  a  whole 
range of directives. 
At  the same time,  however,  a  limited degree 
of progress  has  been made as a  result  of judgements  by the European 
Court  which  have  compelled  Member  States  to  abandon  tax 
arrangements  which benefited domestic  producers  to the detriment of 
producers  in other Member  States.

167.  It  is  clear  from what  has been  said above that  the harmonization of 
indirect  taxation  has  always  been  regarded  as  an  essential  and 
integral  part of achieving a true common market.  Momentum has been 
lost  in  recent years  but  this  was due  essentially  to  the  impact  of 
the  recession  on  the  economic  policies  of  Member  States  and 
preoccupation with  other problems. 
But  progress  is  being  resumed 
and now we  must  proceed  vigorously  if  we are  to achieve  the target 
date of  1992 for the completion of  the  Internal  Market.

168.  If  goods and  services and people are to move freely from one member 
State  to  another  in  just  the  same  way  as  they  can  move  within  a 
member  State,  it  is essential  that  frontier  controls be abolished. 
are  primarily  designed  to  ensure  that  each  member 
Since  these 
State can  collect  the  revenue  in  the  form  of  indirect  taxation  to 
which  it  feels  entitled,  there  are  clear  implications  for  the 
indirect  taxation policies of  individual  Member  States. 
Let us be 
quite  clear  that  we  are  talking  here  not  in  terms  of  frontier 
facilitation,  i.e.  simplifying frontier procedures  in the way that

-   43  -

the  Directive  on  the  Harmonization  of  Frontier  Procedures  and  the 
Single Administrative  Document  aim to do,  but  in terms of  removing 
the  frontiers  altogether  as  only  in  this  way  is  it  possible  to 
achieve  the  stated  objective  of  free  movement  of  goods  and  of 
people.

169.  Indirect  taxes,  whether  in the form of VAT or excises,  enter more
or  less  directly  into  the  final  price  of  the  goods or  services on 
which they are  imposed.  Different  levels of  taxation are therefore 
reflected  in different  price  levels. 
are  substantial,  the  differences  in  final  prices  will  also  be 
substantial,  though  small  differences  can often be absorbed either 
Given  the  relationship 
in  margins  or  by  consumer  indifference. 
between prices  and  levels of  taxation,  we need to consider whether 
or not  it  would be practically possible,  in the absence of  frontier 
controls, 
for 
Levels of  indirect  taxation.

Member States  to charge  significantly  different

If  the differences  in  level

170.  The  considerations  which  apply  to  commercial  traffic  and  to  the
individual traveller are not  the same. 
They  are therefore treated 
separately  in  the  following  paragraphs  :  the  VAT  dimension  is
the analysis  is  then widened  to  include  the
examined  first 
excises.

Cowercjal Traffic and Value Added Tax

171.  The starting point  must  be the 14th VAT Directive and the system of
postponed  accounting  which  shifts  the  accountancy  procedures  for 
VAT from  frontiers to  inland tax  offices. 
The strongest  point  in 
favour  of  the  14th  VAT  Directive  is  that  it  embodies  a  tried  and 
proven  system,  operated by Belgium,  the Netherlands and Luxemburg, 
and previously by Ireland and the United Kingdom.  For a variety of 
reasons,  none  of  them convincing in  the  Commission's  view, 
the
Directive has not yet  been adopted by the  Council,  and this despite 
the fact  that  the  system  it  incorporates  has  the  solid  backing  of 
practical  experience behind  it.  Adoption of  the  14th VAT Directive 
would  unquestionably  represent  a  valuable  step  forward 
in
simplifying procedures  and speeding the flow of  commercial  traffic. 
It would not,  however,  result  in the  complete abolition of frontier 
controls since documentation would still have to be provided at  the 
frontier and  Member  States  would still  wish  to  retain the  power to 
check  movements  of  goods  as  a  protection  against  fraudulent 
transactions  which would deprive them of  revenue.

172.  If,  therefore,  frontiers and with  them frontier  controls are to be 
abolished,  a satisfactory Community procedure will need to be found 
by  which  sales  and  purchases  across  borders  would  be  treated  in 
exactly  the  same  way  as  similar  sales  and  purchases  within  the 
borders of  the  Member  States.  In  other  words,  the  sale  would  be 
taxable  in  the  hands  of  the  vendor  and  the  VAT  incurred  by  the 
purchaser  would  be  deductible  irrespective  of  the  Member  State  in 
It would then be necessary, to set up a 
which  it  has been charged. 
Community  "Clearing  House  System"  to  ensure  that  VAT  collected  in 
the  exporting  Member  State  and  deducted  in  the  importing  Member 
State was  reimbursed to  the  latter.  Computerisation  of  procedures 
will play  an  important  role  in this context.

-   44  -

173.  In principle the  Clearing House  System described above would create
a situation for taxable persons within the borders of the  Community 
identical  to that which exists within the borders  of  the  individual 
Member  States.  But  in practice the present  widely divergent  rates 
and  coverage  of  VAT  would  expose  the  system  to  the  risk  of  heavy 
and  systematic  fraud  and  evasion. 
Apart  from  other  devices  it 
would  be  all  too  easy  for  traders  in  high  rate  Member  States  to 
obtain  supplies  from  low  rate  Member  States  and  omit  them  from 
their  records. 
practices  would  result  in  serious  distortion  of  trade  between  low 
rate and  high  rate  Member  States.  No one  would pretend  that  fraud 
and evasion do  not occur  at  present  and would  not  continue  even  if 
tax  rates  and coverage were approximated.  But  the  scale on which  it 
could  occur  after the  abolition  of  frontier  controls  without
approximation would be unacceptably  large.

Not only would this be a  loss of  revenue,  but  such

174.  Furthermore, 

the  Clearing House  System  could  not  deal  with  the
problem  of  the  small  trader  not  registered  for  VAT  who  could 
legitimately 
do  so  where
shop  across the  border  and  would 
significant  differences  in  taxation  and  corresponding  differences 
in prices existed.

175.  The only conclusion that  can be drawn from this  analysis  is  that  no
means  exists 
and  thus  the
of  removing the  frontier  controls 
frontiers  if  there  are  significant  tax  and  corresponding  price 
differences between the Member States.

The Individual Traveller

176.  The  fact  that  tax  levels  vary  greatly  from  one  member  State  to 
another  results  in considerable differences  in prices  and  creates a 
powerful  incentive for people  living in high  tax  countries to cross 
the  border  and  shop  in  low-tax  countries. 
It  needs  to  be 
remembered  that  many  land'frontiers  in  the  Community  cross  heavily 
The  Benelux  countries,  France and  Germany  come 
populated areas. 
together  in a  geographical  knot where cross-border  shopping  is  easy 
and increasingly  customary. 
Similar  active  cross-border  shopping 
trade  is  found between  Denmark and Germany and between the adjacent 
areas of  Ireland and Northern  Ireland.

177.  It would  not  be possible without  the  introduction of a whole  range
of  new  and  offensive  controls  to  discriminate  between  "genuine" 
travellers  and  those who  crossed frontiers  to go  shopping.  It  has 
equally  already  been  recognised  that  it  is unacceptable  to attempt 
to  collect  tax  from  every  individual  traveller  carrying  dutiable 
goods  in  however  small  quantities. 
For  these  reasons,  and  to 
facilitate  travel  within  the  Community,  a  system  of  "travellers' 
First  adopted  in  1969,  they now 
allowances"  has  been  developed. 
stand  at  goods  worth  280  ECU  plus  modest  prescribed  quantities  of 
cigarettes  and alcoholic drink. 
Because of the problems of  cross- 
border  shopping,  increasing  difficulty  has  been  experienced  in
obtaining  the agreement  of Member  States  to  even  modest  increases 
in the travellers'  allowances.  While an  increase  to 350 ECU may be 
agreed  shortly, 
cumstances the  Commission and  the Parliament  would  consider to  be 
reasonable.

below  what  even  in  the  present  cir­

this  is 

-   45  -

178.  The very existence of travellers®  allowances,  their modest  amounts 
and  the 
disproportionate  difficulty  in  obtaining  agreement  to 
limited  increases  all demonstrate  that  it  would be  impossible  to 
dismantle  the  fiscal  frontiers  unless  there  were  a  considerable 
measure of  approximation of  indirect  taxation.

Excises

179.  As  far  as  the  individual  traveller  is  concerned,  the  position  in 
relation  to  excises  does  not  greatly  differ  from  that  relating  to 
VAT. 
This  analysis  concentrates  therefore  on  the  considerations 
affecting  commercial traffic.

180.  At  present,  so  far  as  the  trade  is  concerned,  goods  subject  to
excise  duties  are  usually  kept  in  bonded  warehouses  under  control 
of  the  authorities,  the  tax  being  suspended. 
The  tax  is  then 
charged  when  goods  are  taken  from  the  bonded  warehouse  for 
consumption,  that  is,  delivered to a distributor,  or direct  to a 
customer. 
When goods are exported,  they are usually exported "in 
bond"  i.e.  duty  is  suspended and cancelled after proof of export. 
This  in  itself  requires a check  at  the frontier. 
Correspondingly, 
checks  are made  and the  potential  liability  is duly  established at 
the point  of  entry  into  the  importing  country. 
are  imported  into bond,  duty then has to be paid. 
Alternatively, 
the goods  may be  received  into  a bonded  warehouse and  duty  is then 
charged  in  the  importing  country  only  when  the  goods  are  about  to 
go  into consumption,  i.e.  when they are delivered from the bonded 
warehouse to  a distributor  or direct  to the  customer. 
While this 
system  ensures  that  tax  is  charged  only  in  the  country  where  the 
goods  are ultimately  consumed,  and  at  the  rates of  tax  chargeable 
in  that  country,  it  presupposes  the  maintenance  of  existing
thorough  frontier formalities.

Unless  the  goods

181.  It  already open  to the  Council  to  produce the  first  simplification
of  existing  frontier  procedures  by  adopting  the  directives  on 
common structures  for the  excises which  are already  before  it. 
A 
further  streamlining  could be  achieved by  linking  national  systems 
of  excise  suspension. 
Goods  could  then  go  from  their  place  of 
production or from a bonded warehouse  in the exporting country and, 
with a minimum of  control,  cross the frontier to a bonded warehouse 
in the  importing country. 
The  excise due  would not  be calculated 
and charged until  the goods were taken out of "bond"  in the country 
But  though  this  system  would  indeed  simplify
of  destination. 
controls  at  the  frontiers,  it  would  not  in  itself  mean  that they 
could be  abolished.

182.  If  frontier  controls  were  dismantled  while  the  present  wide 
differences  in  excise  taxation  persisted,  the  system  would  be
exposed to  fraud and  evasion. 
This  situation  would allow  excised 
goods  to  be  routed  through  a  bonded  warehouse  in  a  low  rate 
country,  taken  out of  "bond" there  and shipped  on for  consumption 
in a high  rate  country.  There would also be a  strong  incentive for 
those  traders  in  high  rate  countries  who  were  not  covered  by  the 
bonded  warehouse  system  to  obtain  their  goods  in  low  rate 
countries.  The only way of dealing with these problems would be to 
impose frontier  controls,  the very thing we are  seeking to abolish.

* 

-   46  -

183.  We conclude  that  there  is no  way of  removing frontier  controls  for 
goods  subject  to  excise  duties  whilst  the  present  significant 
differentials  in coverage and  rates continue to exist.

184.  Whether  from  the  point  of  view  of  commercial  traffic  or  of  the 
individual  traveller,  we  conclude  that  the  removal  of  frontiers 
together  with  the  associated  controls  will  require  for  practical 
reasons  not  only  the  setting  up  of  a  Community  Clearing  House 
System  for  VAT  and  a  linkage  system  for  bonded  warehouses  for 
excised products,  but  also a  considerable measure of approximation 
of  indirect  taxes. 
monization,  which  has  come  to  imply  absolute  identity  in  every 
respect,  is not  essential  and for this  reason we  should now use the 
term "approximation".

We  wish  to  make  it  clear  that  complete  har­

11 * 

APPROXIMATION

185.  The  first  question  that  has  to  be  answered  is  how  close  does 
approximation  have  to  be. 
The  short  answer  is  that  it  must  be 
sufficiently  close  that  the  operation  of  the  common  market  is  not 
affected  through  distortions  of  trade,  diversion  of  trade  and 
effects on  competition,  in this  connection,  American experience  is 
instructive.  In the United  States there are no fiscal  frontiers  as 
such,  nor  is  there  complete  harmonisation  of  retail  taxes  as 
American  evidence  therefore 
between  the  individual  states. 
suggests  that  some variations  can be accommodated;  but,  in order to 
take account  of  market  forces,  these  need to  be  limited  in  scale, 
with  differences  of  upto  5%  even  between  neighbouring  states  co­
existing without  undue adverse effects.  Transposing this experience 
into the  Community context  would suggest  a margin  of +/-  21/2 per 
cent either  side of whatever Target  Rate or Norm  is chosen.  In the 
this  would  be  a  very  significant  degree  of 
case  of 
flexibility. 
Thus,  for example,  if  the Norm for the standard  rate 
were  16  1/2 per  cent,  actual  rates adopted  by Member  States  could 
be  in the  range of  14  per  cent  to  19  per  cent. 
These  figures  are 
inserted purely as an  illustration although  as a matter of  interest 
the  range  of  14  per  cent  to  19  per  cent  encompasses  the  standard 
In  the 
rates  imposed  by six  of  the  nine  Member  States  with  VAT. 
case of  excises,  the  indicative  range of  +/- 2  1/2 per  cent would 
be  less  significant  as  excises  frequently  account  for  a  large 
proportion of the  retail  price.

VAT, 

186.  Retail  markets  are  often tolerant  of quite  significant differences 
in  retail  prices.  Distance,  convenience,  service,  image and a host 
of  other  factors  enter  into  consumer  choice; 
price  is  only one. 
But where  competition  is  severe,  prices do tend to move to a  common 
In such  circumstances minor differences  in tax  levels tend 
level. 
to be  absorbed by  the trade,  leaving the  ultimate  retail  price to 
The  pressures  thus  exerted  on  the 
the  consumer  little  affected. 
trade will  be transmitted  to government. 
Thus  market  forces  will 
themselves  create  pressures  to  achieve  a  degree  of  approximation 
and  in one  case have already done  so  in the  Community.

-   47  -

The Broad Picture

187.  It  will  require  a  great  deal  of  statistical  and  econometric  work 
before  specific  proposals  can  be  put  forward. 
Much  of  this work 
can  only  be  done  by  or  in  association  with  Member  State 
administrations. 
Indeed  it  would  be  surprising  if  many  Member 
States had not,  as a matter of  routine,  already made such  studies. 
This  White  Paper  therefore  confines  itself  to  a  general  analysis 
which  will  enable  the  broad  picture  to  be  seen  and  leave  the 
detailed  studies  to  be  undertaken  as  part  of  the  preparatory  work 
on the draft directives which will be  required.

188.  Table  1  sets out  the total  yield of  indirect  taxation,  subdivided 
into  VAT and  Excises,  as a proportion of GDP in each of the 
Member States  in  1982.

189.  The point  which  emerges  immediately  is  that  for  most  Member  States 
there  are  no  very  significant  differences  from  the  average  in  the 
total yield of  indirect  taxation.

TABLE 1  - Indirect  taxation as percentage of the GDP  (1982)

Per cent 

Belgium
Denmark
Germany
France
Ireland
Italy
Luxembourg
Netherlands
United  Kingdom

Weighted  EC
Average  (2)

VAT 

7.67
9.84
6.34
9. 19
8.22
5.48
6.04
6. 83
5.22

EXCISES 

total 

Big five(1) 

2.39
5.87
2.70
2.22
8.91
2.84
4.24
2.36
4.58

2.29
3. 27
2.58
2. 12
7.63
2. 72
3. 75
1.92
4.35

7.05

3.63

3.37

VAT AND
EXCISES

10..06
15..71
9..04
11..41
17..13
8..32
10..28
9..19
9..79

10,.68

(1)  Tobacco products,  beer,  wine,  spirits and mineral oil  products
(2)  Excluding Greece, where the necessary  statistics were not  avai­

lable

190.  Looked at  in this way approximation presents a manageable budgetary 
problem  for  most  Member  States  and  it  would  not  seriously  disturb 
the  existing  relationship  between  direct  and  indirect  taxation. 
The  exceptions  are  Denmark  and  Ireland  both  of  which  rely  heavily 
on  indirect  taxation  and  where  the  present  level  measured  as  a 
percentage  of  GDP  is  50  per  cent  or  more  above  the  Community 
average.

-   48  -

191.  When  one  Looks  at  the  yield  of  the  VAT  and  of  the  excises 
separately,  bigger  differences  appear. 
In  the case  of the  VAT a 
preponderance  of  Member  States  have  a  yield  around  6  per  cent  of 
GDP  (i.e.  within  the  range  6  per  cent  +/-  1  per  cent)  but  four 
States  have  yields  higher  than  this,  of  which  two  exceed  9  per 
cent. 
In  the  case  of  the  excises,  there  are  five  Member  States 
with yields between  2 per  cent  and 3 per  cent  of GDP,  three Member 
States  with  yields  of  around  5  per  cent  and  one  member  State, 
Ireland,  with  a yield of no  less  than 8.9 per  cent.

192.  To  sum  up,  the  problem  in  most  Member  States  is  not  so  much  the 
total  yield of  indirect  taxation  but  the  composition of  that yield 
- the  division  between  VAT  and  the  excises  and  within  the  excises 
the  differences  in  tax  burden  between  different  sectors  and 
But  given adequate  time and  flexibility  for 
different  products. 
spreading  the  change  over  a  period  of  years, 
and  given  the 
necessary political  will,  the  approximation  could  be  realized  and 
it  could  be  handled  with  no  greater  difficulty  than  many  Member 
States have encountered  in determining their domestic  tax  policy.

Value Added Tax

193.  There are three questions  to be addressed  in the  case of VAT  :

(1)  the  common base or coverage;
(2)  the number of  rates;  and
(3)  the  level of the  rate or  rates, and particularly of the main or 

standard  rate.

All  these  issues  are  interlocking  :  the extent  of  the coverage has
an  important  bearing  on  the  number  of  rates; 
and  the  level  of 
rates  is  linked both  to the number and to the coverage.

194.  The  2nd  VAT  Directive  introduced  the  main  principles  and  the  6th 
VAT Directive went  a  long way to fill  in the necessary details of a 
common  VAT  base  in  the  European  Community. 
In  some areas  it was 
not  possible,  however,  to achieve unanimity.  As a  result  certain 
gaps were  left  to be covered by subsequent  directives,  and a number 
of derogations were  included.

195.  Three  of  the  supplementary  directives stemming  from 

the  6th
Directive  have  already  been  adopted  by 
(the  8th
Directive  concerning  arrangements  for  the  refund  of VAT  to  taxable 
a  directive  on  VAT 
persons  established  in  another  member  State; 
exemptions  for  final  importation  of  certain  goods; 
and  the  10th 
Directive on VAT on the hiring out  of movable tangible property).

the Council 

196.  Eight  other  draft  Directives  are  still  pending before  the  Council.
Together  with  three  forthcoming  proposals  they  aim  at  carrying 
forward  the  work  of  achieving  the  common  VAT  base. 
After  their 
approval  the  main  outstanding  problem  in  this area  will  be  the
remaining derogations. 
They will  have to be tackled by  subsequent 
The  principal  areas  where  substantial  differences  in 
proposals. 
coverage  still  exist  are:  food;  second-hand  goods; 
fuel  and
transport;  and the treatment  of  small  traders  and farmers.  Some of 
the  most  important  derogations  are  connected  with  zero-rating  of 
This  is  why
food and other goods and services  in  Ireland and  UK. 

-   49  -

VAT  coverage  is  as  Low  as  35  per  cent  of  private  consumption  in 
Ireland  and  44  per  cent  in  the  United  Kingdom  whereas  most  Member 
States  cover  about  90  per  cent. 
The  high  rates  of tax  imposed  in 
Ireland  and  the  comparatively  low  yield  in  the  United  Kingdom  are 
both  a  reflection  of  this  restricted  coverage. 
A  move  towards  a 
more  uniform  basis  would  therefore  be  helpful  in  both  these 
respects.

197.  Table  2 shows the  rates of VAT  in force  in the Member  States as at 

31  March  1985.

198.  As far as the  number of  rates  is  concerned,  seven  out of  the nine 
Member States  at present  impose  VAT at  a  reduced  rate or  rates  in 
addition  to  the  standard  rate  and  three  of  these  also  impose  a 
This  would  suggest  that  a  common  system  would  be 
higher  rate. 
likely  to  have  more  than  one  rate. 
Nevertheless,  despite  the 
present  predominance  of  multiple  rate  systems,  there  are  strong
arguments  in favour of a  single  rate.

• 

TABLE 2  - POSITIVE  RATES OF  VAT IN  MEMBER STATES  (1):  As at March
1985..

VAT Rates

lower 

standard 

higher 

VAT as per­
centage of 
GDP

-

6 and  17

Belgium
Denmark
7
Germany
5.5 and  7
France
10
Ireland  (3)
2 and 9
Italy
3 and 6
Luxembourg
5
Netherlands
United Kingdom(3) -

19
22
14
18.6
23
18
12
19
15

25  (2)

-

-

33.3
-
38

-

-

-

7.67
9.84
6.34
9.19
8.22
5,48
6.04
6.83
5.22

(1)  Greece has not yet  introduced VAT.
(2)  An  additional  luxury  tax  of  8  per  cent  is  charged  on  certain 

(3)  Ireland and the United Kingdom apply zero  rates to a wide  range 

products.

of goods  and services.

199.  As  regards the  level of  rates,  it  is of more than passing  interest 
that  approximation within a  range of  14 per  cent  to  19 per  cent  for 
the  standard  rate  (i.e.  a  Norm  of  16  1/2  per  cent  + 1 - 2   1/2  per 
cent)  would  encompass  six  of  the  nine  Member  States  which  have  a 
A  range  of  15  per  cent  to  20  per  cent  (a norm of  17 1/2 per
VAT. 

-   5 o -

cent  +/-  21/2  per  cent)  would encompass  five Member  States out  of 
the  nine. 
It  must  be  stressed  that  these  are  only  illustrative 
examples  :  specific proposals must  await more detailed study.  The
Commission  will  in  due  course  publish  the  results of  these studies 
as a basis  for  further discussions.

Excises

200.  In  the  case  of  the  excises,  Member  States  have  fairly  common
coverage  as  regards  the  excise  duties  on  manufactured  tobacco, 
alcoholic  beverages  and  hydrocarbon  oils. 
The  main  exception  is 
wine.  No duty  is  charged on wine  in Italy or Greece,  it  is  charged 
only  on  sparkling  wine  in  Germany  and  only  on  imported  wine  in 
Luxembourg.  Likewise certain hydrocarbon oil  products  are exempted 
from duty  in  some  Member  States:  for  example,  heavy  fuel  oil  in
Belgium, 
domestic  heating  oil  in  Belgium  and  Luxemburg,  and 
lubricants  in Belgium,  France and the Netherlands.

201.  In view  of  the  large  number  of  excisable  products  (for  example  28 
alcoholic  beverages,  7 mineral oils)  it  is not  practicable to show 
all  the  rates  for the Member States.  Table 3 does,  however,  give a 
representative  picture  of  comparative  excise  duty  levels  in  the 
Community.

TABLE 3 - EXAMPLES  OF  EXCISE  DUTIES IN  MEMBER  STATES  - AS  AT MARCH 
- - - --- — — - - - - - - - - - - - - - - - - - -
T985 

ECU per 

20 cigar-  1  litre 
of beer 
ettes 

1  litre 
of wine 

0.75  lit  1  lit of  Revenue
premium 
of 40% 
petrol 
spirits 

from
these
excises 
in per 
cent  of 
GDP  (1)

Belgium
Denmark
Germany
France
Greece
Ireland
Italy
Luxembourg
Netherlands
United K.

0 .73
1.96
1.02
0.31
0.28
1.14
0 .57
0.54
0 .74
1,.25

0.13
0.65
0.07
0.03
0.22
1.14
0.18
0.06
0.23
0.70

11)  1982 figures 
(2)  estimated average

0 .,33
1. 35
0 . 00
0 . 03
0 . 00
2.74
0 . 00
0 . 13
0 . 33
1.60

3. 78
9. 58(2)
3.43
3.37
0 . 16
7.84
0 . 75
2. 54
3. 79
7.70

0.25
0.28
0.23
0.36
0.29
0.36
0.49
0.20
0.28
0.29

2.29
3.27
2.58
2.12
n.a
7.63
2.72
3.75
1.92
4.35

202. 

For  cigarettes  the  rates  vary  from  0.28  ECU  per  packet  of  20 
The  striking  feature  of  the 
(Greece)  to  1.96  ECU  (Denmark). 
figures  for  beer, 
wine  and  spirits  is  that  in  each  case  the
heaviest  taxation  is  to be found  in  Denmark,  Ireland and the United

-   51  -

Kingdom. 
Since  the  excise  duties  represent  an  extremely  high 
proportion  of  the  retail  price  (up  to  69  per  cent  for cigarettes, 
52 per cent  for petrol),  such wide discrepancies  in excise taxation 
are bound to have significant  effects on market  prices and hence on 
the markets themselves.

III.  THE COMMISSION'S PROPOSALS

203.  The  broad  approach  must  now  be  for  the  Council  to agree  that ways 
must be  found  to  ensure  that  the  adjustment  that  will  be  required 
when  internal  frontier  controls  are  abolished  in  1992  is  not  too 
abrupt  and that  the interim period be put  to the best  possible use. 
A  good  start  would  be  provided  by  Council  agreement  to  intensify 
efforts  at  completing  work  on  the  VAT  base  and  the  structure  of 
the excises,  mainly on the basis of proposals  already presented by 
Simultaneously  the  Commission  will  put  forward  a 
the  Commission. 
standstill  proposal  to  ensure  that  existing  differences  with
.  respect  to  the number  of VAT  rates and  the  coverage  of excises  are 

not  widened.

204.  A next  step which we would hope could  be taken  in 1986 will  be for 
the  Commission  to  present  Target  Rates  or  Norms  together  with 
proposed  ranges  of  variation.  Member  States  will  then  have  the 
option of moving a given  indirect  tax  immediately or  in a  series of 
shifts  towards  the  common  rate  band. 
During  the  same  period 
further consideration will need to be given to existing derogations 
which  have distorting effects on the  Internal  Market  to  see whether 
they  need  to  be  continued. 
The  administrative  arrangements 
necessitated by the new proposals will  need to be put  into place.

205.  The  following  paragraphs  set  out  the  specific  measures  the 
Commission proposes  should be taken together with  reasonable target 
dates.  VAT and excises are examined  separately  and  in turn.

Value Added Tax

206.  Work  on  the  common  VAT  base  should  now  be  taken  forward  by  the 
approval  of  proposals  already  presented  by  the  Commission  to  the 
They cover subjects  like works of art,  antiques  and used 
Council. 
goods,  the  import  of 
final  consumers 
second  hand  goods 
(including  the  problem  of  double  taxation)  and  the  temporary 
importation  of  goods  other  than  motor  cars  etc;  and  some  Limited 
moves  towards abolition  of derogations  provided for  in the  6th VAT 
Directive.

by 

There  are  eight  draft  directives  involved.  Considerable  work  has 
already  been  done  by  the  Council  on  a  number  of  the  draft 
directives and they  should all be approved by the end of  1986.

207.  Three  proposals  will  be  presented  by  the  Commission  in  1985,

dealing  with  the  special  schemes  for  small  businesses,  for  flat- 
rate  farmers  and  for  passenger  transport.  These  should  then  be 
approved  in the  course of  1986.

-   52  -

208.  While this  work  is proceeding  in the  Council,  the  Commission will, 
put  forward  proposals  for  a 
in  the  course  of  this  year, 
"standstill". 
It  will  not  be  possible  at  this  stage  to  define 
this  in  terms  of  rates,  but  provisions  should  be  adopted  which 
will  exclude  the  proliferation  of  VAT  rates  in  Member  States,  or 
the  widening  of  the  gap  between  VAT  rates,  since  this  would make 
subsequent  adjustment  more difficult.

209.  Work on the next decisive stage,  the approximation of  rates, would 
commence  after  the  Commission  had  presented  the  proposals.  These 
will  cover  :

- the  rate structure,  i.e.  whether the common VAT system has one, 
two or even more  rates; 
if  more than  one  rate  is to  be adopted 
the  proposals  must  indicate  which  goods  and  services  should  be 
charged at  each  of the  rates;

- the  Target  Rate(s)  or Norm(s),  i.e.  the  central  rate  or  rates, 

together with  the permitted ranges of variation around them.

The proposals  for the  rate band or bands  should be accompanied by a 
standstill  provision,  under which Member  States would undertake not 
to move away from,  but only towards, the common goal.

210.  On the basis of these proposals,  the necessary adjustment  of  rates 
can  then  go  forward. 
Member  States  would  have  a  period  of  some 
years,  following  the  adoption  of  the  directives,  in  which  to 
complete approximation by the end of  1992.

211.  During  the same  period outstanding  problems on  the coverage  of VAT
They  include  VAT  derogations  with

will  need  to  be  resolved. 
distortive  effects,  such  as  significant  differences  in  taxation 
between  Member  States 
services.  The 
Commission  will  put  forward  the  necessary  proposals  as  soon  as  it 
is  clear  what  the  future objectives  for  rates  will  be  as these are 
decisive factors  in assessing the  risk or extent  of distortion.

of  the  same  goods  or 

212.  The final  element on the VAT side will  be the new arrangements  for 
treating  sales  and  purchases  across  borders  in  the  same  way  as 
those within  Member  States,  with  the  sale taxable  in the  hands of 
the  vendor  and  the  VAT  incurred  by  the  purchaser  deductible 
irrespective of the Member  State  in which  it  had been charged.  The 
only  formality  which  would  be  required  of  the  taxable  purchaser 
would be to  include the deductible VAT in the box  in his tax  return 
which  corresponds  to  his  supplier's  Member  State. 
A  Clearing 
House  System  would  have  to  be  set  up  between  the Member  States  so 
that  the  VAT  collected  in  the  exporting  Member  State  and  deducted 
in  the  country  of  import  could  be  credited  to  the  latter.  With 
modern  information  technology  such  a  Clearing  House  System  would 
not  demand heavy  resources.  But  it  would  require mutual  confidence 
The  Clearing 
between  Member  States'  VAT  collecting  authorities. 
House  System  could  be  brought  into  operation  before  the process 
of  rate  approximation  had  been  completed.  This  would  achieve  a 
decisive  simplification  for 
commercial  transactions  before  the 
full  new  tax  structure  came  into  force by the end of  1992.

-   5 3 -

Excises

213.  In the  case of  the excises,  Council negotiations  on the  structure 
of  the  duties  on  alcoholic  drinks  are  now  far  advanced,  and  a 
Next 
package solution should  be achieved before the end of  1985. 
in  line,  for  approval before the end of  1986,  will  be the excise 
structure  for  mineral  oil  products,  and  the  third  stage  of  the 
common  cigarette  duty  structure. 
The  relevant  proposals  are 
The  next  step  will  be  for  the 
already  before  the  Council. 
Commission to table proposals  for the final  stage of  the  cigarette 
duty  structure  and  for  a  common 
structure  for  the  excises  on 
other  manufactured  tobacco. 
These proposals  should  in  their turn 
be approved  in the course of  1987.

214.  In  framing  proposals  for  common  rates  it  is  necessary  to  look  at 
the  VAT  and  excises  together.  The  reason  for  this  is  that  high 
yields  from VAT often tend to be counterbalanced by  low yields from 
the excises  and vice versa.  In short  the figures  to be adopted for 
the excise  rates are  dependent  to  some extent  on the  rates adopted 
for VAT.  The two sets of proposals must  be presented together.  The 
Commission  proposals  for  excise  rate  bands  will  therefore  be 
There 
presented  alongside  the  similar  VAT  proposal  during  1986. 
will  be  a  proposal  for  a  rate  band  for  each  of  the  excises  to  be 
retained  (tobacco  products,  beer,  wine,  intermediary  products, 
These  will  need  to  be 
spirits  and  mineral  oil  products). 
whereby  Member  States  would 
accompanied  by  a  "standstill", 
undertake to avoid moving away from the  common bands.

215.  During the  subsequent  period  up to  the end  of  1992,  Member  States
will need  to carry  out  the  adjustments  required  to the  coverage of 
their  excises  and  the  approximation  of  rates. 
coverage  will  include  the  extension  or  introduction  of  a  wine 
excise  in  some Member  States  and the abolition or  reduction of all 
excises  other  than  the  common  ones,  where  these 
would  create 
distortions  in  the  operations  of  the  Common  Market.  Examples  are 
excises on tradeable goods,  such  as  coffee or tea.

The  changes  in

216.  Finally, 

it  will  be  necessary  to  introduce  a  system  to  link 
together  the  bonded  warehouse  systems  in  individual  Member  States 
in  order  to allow  intra-Community transactions  in excised  goods to 
take place without  frontier controls. 
Proposals  for such  a  linked 
system  will  be  tabled  as  the  approximation  of  rates  goes  forward. 
It will  be possible  for  this  to  be  done  separately  for  each  group 
of  excises,  probably  with mineral  oils,  where  present deviations 
are  smallest,  as the forerunner.

Enforcement

217.  It  is not,  of  course,  enough  simply to pass  Community  legislation. 
One  must  also  ensure  that  the  rules  of  the  Treaty  and  of  the 
derived  legislation  adopted under  it  are  implemented  and  enforced. 
In the fiscal  as  in the other  spheres,  pursuit  of  infringements of 
the  existing  Community  law  must  go  hand  in  hand  with  positive 
legislative measures.  The  Commission  has a duty not only  to propose 
legislation  under  Article  99  of  the  Treaty,  but  also  to  seek 
respect  of  the  principles  of  non-discrimination  laid  down  in 
Article 95.  It  will  continue to carry out  that  duty as an essential

-   54  -

element of the drive to eliminate all  barriers  to the  completion of 
the  Internal  Market.

Derogations

218.  It  has  already  been  made  clear  in  the  Introduction  to  this  White 
Paper  that  the  Commission  recognises  that  the  approximation  of 
indirect  taxation  will  give  rise to  considerable problems  for some 
Member  States  ;  and  that  as  a  consequence  it  may  be  necessary  to 
provide for derogations.  There are areas of  considerable political 
sensitivity  which  may  have  to  be  accommodated  in  this  way. 
Nevertheless  it  is  in  the  general  interests  of  the  Community  that 
such derogations  should be  kept  to the minimum.

-   55  -

CONCLUSION

219.  Europe  stands  at  the  crossroads. 

We  either  go  ahead  -  with 
resolution and determination - or we drop back  into mediocrity.  We 
can now either  resolve to complete the  integration of the economies 
of  Europe; or,  through a  lack of political will  to face the  immense 
problems  involved,  we  can  simply  allow  Europe  to  develop  into  no 
more than a  free trade area.

220.  The difference  is  crucial.  A well developed free trade area offers
significant  advantages  :  it  is  something  much  better  than  that
which  existed  before  the  Treaty  of  Rome;  better  even  than  that 
which exists today.  But  it would fail  and fail dismally to  release 
the  energies  of  the  people  of  Europe;  it  would  fail  to  deploy 
Europe's  immense  economic  resources  to the  maximum  advantage;  and 
it  would fail  to satisfy the aspirations of the people of  Europe.

221.  The  free movement  of goods  is  an  important,  valuable  and possibly 
indispensable  step  which  has  to  be  taken  before  economic 
integration  can  be achieved.  But  it  is not  the ultimate  goal;  at 
best  it  is the  indispensable precursor.  This philosophy  is clearly 
reflected  in  the  Treaties  themselves.  The  Customs  Union  was  the 
first objective of the Treaty of  Rome.  But  that  it was by no means 
intended as  the  last  is  clearly  demonstrated by  the fact  that what 
the  Treaty  established  was  the  European  Economic  Community.  The 
preamble to the Treaty starts with  the declaration  :

-  "Determined  to  lay  the  foundations  of  an  ever  closer  union 
among  the  peoples  of  Europe,  resolved  to  ensure  the  eco­
nomic  and  social  progress  of  their  countries  by  common 
action to eliminate the barriers which divide  Europe".

222.  Just  as  the  Customs  Union had  to precede  Economic  Integration,  so 
Economic  Integration has to precede  European Unity.  What  this White 
Paper  proposes  therefore  is  that  the  Community  should  now  take  a 
further  step along  the  road  so  clearly  delineated  in  the Treaties. 
To do  less would  be to  fall  short  of the  ambitions of the founders 
of  the  Community,  incorporated  in  the  Treaties;  it  would  be  to 
betray  the  trust  invested  in  us;  and  it  would  be  to  offer  the 
peoples  of  Europe a  narrower,  less  rewarding,  less  secure,  less 
prosperous  future  than  they  could  otherwise  enjoy.  That  is  the 
measure of  the challenge which  faces us.  Let  it  never be said that 
we were  incapable of  rising to  it.

Annex to the White Paper

TIME TABLE FOR COMPLETING 
THE INTERNAL MARKET BY 1992

CONTENTS

INTRODUCTION

PART ONE  :  THE REMOVAL OF PHYSICAL BARRIERS

2.  Veterinary and phytosanitary controls 

I.  CONTROL OF GOODS 

1.  Various  controls

i.  Period  1985-1986
ii.  Period  1987-1992

i.  Period  1985-1986
ii.  Period  1987-1992
II.  CONTROL OF INDIVIDUALS 
i.  Period 1985-1986 
ii.  Period  1987-1992

PART TWO  :  REMOVAL OF TECHNICAL BARRIERS

I.  FREE MOVEMENT OF GOODS

1.  New approach  in  standards  policy 

i.  Period  1985-1986 
ii.  Period  1987-1992
2.  Sectoral proposals  : 

2.1.  Motor  vehicles 

2.2.  Tractors  and Agricultural  machines 

i.  Period  1985-1986
ii.  Period 1987-1992

i.  Period 1985-1986
ii.  Period 1987-1992

, 

2.3.  Food Law 

i.  Period  1985-1986
ii.  Period 1987-1992
2.4.  Pharmaceuticals and high-tech-

medicines 
i.  Period  1985-1986
ii.  Period 1987-1992

2.5.  Chemical  products 

i.  Period 1985-1986
ii.  Period  1987-1992
2.6.  Construction and construction 

products

i.  Period  1985-1986
ii.  Period  1987-1992

2.7.  Other  items 

i.  Period 1985-1986
ii.  Period 1987-1992

II.  PUBLIC PROCUREMENT 

i.  Period  1985-1986
ii.  Period  1987-1992

P- i *H

P-  5

p.  6

P-  12

P-  14

P* 15
p. 15

p.  15

P- 16

P- 17

p. 18

p. 19

P- 20

P- 21

III.  FREE MOVEMENT FOR LABOUR AND  THE PROFESSIONS

p.  23

i .   Period  1985-1986
i i .   Period  1987-1992

IV*  COMMON MARKET FOR SERVICES
T.  Financial  Services 

1.1.  Banks

i.  Period  1985-1986 
ii.  Period 1987-1992

1.2.  Insurance

i.  Period 1985-1986 
ii.  Period  1987-1992

1.3.  Transactions  in  securities
i.  Period 1985-1986 
ii.  Period  1987-1992

2.  Transport

i.  Period 1985-1986 
ii.  Period  1987-1992
3.  New technologies and services 
i.  Period 1985-1986

p.  25 
p.  25

p.  26

p.  26

p.  27

p.  28

V.  CAPITAL MOVEMENTS

i.  Period  1985-1986 
ii.  Period  1987-1992

VI.  CREATION OF SUITABLE CONDITIONS  FOR INDUSTRIAL 

- - - - - - - - - - - - — - - - - - -

COOPERATION 
1.  Company Law

2.  Intellectual  and industrial property

i.  Period  1985-1986 
ii.  Period  1987-1992

i.  Period  1985-1986 
ii.  Period  1987-1992

i.  Period  1985-1986

3.  Taxation

VII.  APPLICATION OF COMMUNITY LAW

1.  Transparency

i.  Period  1985-1986 
ii.  Period  1987-1992
2.  Competition policy and state  aids
i.  Period  1985-1986

PART THREE  :  REMOVAL OF FISCAL BARRIERS

I.  V.A.T.

i.  Period  1985-1986 
ii.  Period  1987-1992

p.  33

EXCISE DUTIES

i.  Period  1985-1986 
ii.  Period  1987-1992

INTRODUCTION

I .

The  Commission's  White Paper  sets out  the  essential  and  logical 
consequences of  accepting  the European  Council's  repeated  commitment 
to  completing  the  Internal  Market by  1992,  together with  an action 
programme of  the measures  needed  to meet  that objective.  This Annex 
to  the Paper  sets  out  the detailed timetable  for  implementing the 
Commission's  proposed programme.

The  timetable  is  set out  in tabular form and  is  divided  into Parts 
which  correspond  to the  Parts of the main body of  the Paper.  Within 
each  Part of the  timetable,  the  specific measures proposed by the 
Commission are  separated  into two periods,  1985  to  1986 and  1987 to  1992, 
according to the year  in which  the  Commission's proposal  will be made. 
However,  the timetable  for the period  1985  to  1986 also  includes 
measures  which,  though  not  necessarily mentioned  in the body of  the 
Paper,  have already been proposed to  the  Council  and  .remain an essential 
part of  the  Commission's  Programme  for  completing the  Internal  Market.

The  specific  measures  set  out  in the timetable aim to eliminate barriers 
of all  kinds  (physical,  technical  and  fiscal).  They would have an  impact 
directly or  indirectly,  on the  lives  of  all  Community  citizens  and on 
the  functions of  Community enterprises  of all  kinds.  By  1992,  Community 
citizens  would  for the first  time be  free to move within the  Community 
without  systematic  checks on their  identity or personal belongings; 
goods would be  freed of all  controls  at  internal  frontiers;  Community 
manufacturers  would be able  to market  freely their goods on  the basis 
of mutually agreed standards  throughout  the  Community;  and enterprises 
would be  relieved of  the  current  obstacles  to providing  cross-border 
services.

Clearly,  the  Internal  Market  cannot  be  completed at  a  stroke.  The 
interim period  leading up  to  1992 must be put  to the best possible use to 
ensure that  the adjustments  needed  to  cope with  the  final dismantling of 
internal  frontiers are not  too abrupt.  Progress  towards  the objective 
needs  to be discernible at  an early stage,  and will be  so,provided that 
the proposed  timetable  is  respected.

When will  Community  citizens  and enterprises  see  tangible  evidence  of  the 
effect of  the measures  proposed?  The  following milestones  along  the path 
to  completion of the  Internal Market  give  some  indication of  the progress 
and benefits  the Commission would wish  to see.

Fpr  Community  citizens,  and  in particular,  travellers,  the first  evidence 
would be the  further easing of border  controls  and  the  introduction of 
increased duty free allowances by  1986;  by 1988,  checks  on  individuals 
leaving one Member  State  for another would be eliminated;  and by 1992, 
all  systematic  checks on the movement  of  citizens  within the  Community 
would disappear.

As  far as  the  control  of  goods  is  concerned,  controls  on the amount of 
fuel  carried by  commercial  road vehicles would be abolished by 198S; 
controls on transport  authorisations wil-l- be eliminated by 1986;  by 1988 
veterinary  controls  will  be  limited  to places of departure and  controls 
on veterinary and plant  health  certificates  to  the places of destination;

I I .

also  by  1988  controls  of  road  transport  quotas  would  be  abolished; 
by  1992,  further  harmonisation  of  veterinary  and  plant  health  standards 
and  the  use  of  the  Community  health  mark  for  animal  products  would 
eliminate  the  need  for  fr o n tie r  controls.

Community  manufacturers  would  benefit  progressively  between  now  and 
1992  from  the  Commission's  proposed  new  approach  to  technical  harmonisation 
and  standards  policy  and  from  the  approximation  of  national  laws.  The 
Commission's  specific  proposals  will  cover  a  very  wide  range  of  products, 
such  as  motor  vehicles,  tra c to rs  and  a g ricultural  machines,  food,  chemical,

'  l  and  pharmaceutical  products.  Progress 
towards  the  elimination  of  barriers  to  trade  will  vary  from  sector  to 
sector,  but  in  the  pharmaceutical  sector,  for  example,  a l l   obstacles  to 
the  free  circulation  of  pharmaceutical  products  would  be  removed  by  1990.

Further  benefits  to  Community  manufacturers  and  suppliers  will  accrue 
from  the  opening  up  of  tendering  for  public  contracts.  By  1988,  four 
transpo rt,  water  and  telecommunications)  would 
major  sectors  (energy, 
be  included  in  the  system  of  prior  information  and  publicity.

In  the  financial  services  f i e l d ,   greater  freedom  to  provide  services  in 
insurance.other  than  li f e   insurance  would  be  achieved  as  early  as  1986; 
by  1989,  there  would  be  freedom  to  supply  services  in  the  motor  l i a b i l i t y  
insurance 
and  by  1991,  obstacles  to  the  supply  of  li f e   insurance 
would  be  eliminated.

sector; 

Early  evidence  of  progress  would  be  seen  in  the  transport  sector.  The 
freedom  to  provide  sea  transport  services  between  the  Member  States  would 
be  established  by  the  end  of  1986; 
in  the  a irtr ansport  sector  by  1987  and  in  the  road  transport  of  goods 
sector  by  1988.  The  transport  of  passengers  by  road  would  be 
liberalised  by  1989.

there  would  be  similar  achievements 

Significant  landmarks  in  harmonising  i n t e l l e c t u a l   and  industrial  property 
laws  would  be  the  creation  in  1987  of  a  Community  Trade  Mark  and  the  entry 
into  force  in  the  same  year  of  the  Luxembourg  Convention  on  the  Community 
Patent.

TIMETABLE FOR COMPLETING

THE INTERNAL MARKET BY 1

-  The  present  time  table  has  been  drawn  up  in  such  a  way  as  to  allow  at 

least  one  year  for  the  Member  States  to  implement  the  measures 
concerned.

-  Asterix  denotes  existing  proposals  mentioned  in  last  years 

consolidation  programme  C0M(84)305  final  of  13.6.1984.

-   Two  asterixs  denote  proposals  made  a f t e r   presentation  of  consolidation 

programme.

PART ONE : THE REMOVAL OF PHYSICAL BARRIERS

I.  CONTROL OF GOODS

Subject

Doc  nu

Date  of 
Commis­
sion's 
proposal

Expected 
date  for 
adoption 
by  Council

1. Various controls 
PERIOD 1985-1986

Simplification  of  Community  t r a n s i t  
procedure  :  discontinuance  of  presen­
tation  of  t r a n s i t   advice  note  and 
guarantee*

Duty  free  admission  of  fuel  contained 
in  the  fuel  tanks  of  commercial  motor 
vehicles*

Road  transport  :  Abolition  of  control 
of  quotas  at  border  crossings

Transport  of  t r a v e lle r s   :  aboli­
tion  of  border  controls  related  to 
transport  authorisations

C0M(79)456

1979

1986

"COM (84) 171

1984

1985

1985

1985

1986

1986

Period  1985-86  l i s t s   existing  proposals  (one  or  two  asteri xs)  to  be 

adopted  by  the  Council  within  this  period  and  new  proposals  to  be 
presented 

in  1985  and  1986. 

“

-  6  -

SUBJECT 

Doc.n“

Date  of
Commis-
sion's
proposal

Expected
date  for
adoption
by  Council

♦Accession  of  Spain  and  Portugal  :
technical  adaptation

Act  of
legislation
85-86

♦Single  Administrative  Document  (SAD) 
follow  up

C0M(82)  401

1985

Introduction  of  common
border  posts  ("banalisation")

Abolition  of  customs  presentation
charges

PERIOD  1987-1992

Completion  of  work  leading  to
f u l l   abolition  of  a l l   remaining
import  formalities  and  controls
on  goods  between  Member  States  :
-  s t a t i s t i c a l   harmonisation
-  elimination  of  a l l   national
protective  measures  and  a l l
regional  quotas,  in  line  with
the  Community's  commercial  policy

-   Tax  approximation  on

V.A.T.  and  excise  duties  (see
Part  Three).

2.  Veterinary  and  phytosanitary  controls

PERIOD  1985-1986

-   live  animals  of  the  bovine  species:

amended  eradication  directives  to  provide 
for  final  eradication  of  tuberculosis, 
brucellosis  and  leukosis  in  a l l   Member 
States  including  Portugal  and  Spain

-   live  animals  of  the  porcine  species  : 

modify,  intensify  and  prolong  Directives
on  eradication  of  classical  swine 
fever  in  the  Community  as  a  whole  and  of 
African  swine  fever  in  Sardinia,  Spain  and 
Portugal

-  creation  of  a  special  veterinary  fund  to 
finance  the  above  mentioned  eradication
programmes  and  provide  financial  assistance 
in  relation  to  control  and  eradication 
of  other  diseases  which  may  arise

1985

1986

1986

1985

1986

1987

1990

1989

1987-
1989

1989

1988-
1990

1985

1986

1986 

1987

1986 

1987

♦
SUBJECT

-  7  -

Doc.n°

Date  of 
Commis­
sion's 
proposal

Expected 
date  for 
adoption 
by  Counci l

-  production  and  trade  in  milk*

-  production  and  trade  in  medicated 

feeding  stuffs*

-  hormone  growth  promoters

-   microbiological  controls  (meats 

poultry,  red  meat)*

-  boar  meat*

COM(71)64+ 
C0M(71)1012+ 
COM(72)884

1971

1985

C0M(81)795

COM(84)295

1981

1984

1985

1985

1981

1985

COM(81)500+ 
C0M(84)439

COM(83)655

-   medical  examination  of  personnel*

COM(84)337

-   personnel  responsible  for  inspection* COM(81)504

-  minced  meat  and  similar

-   a n tibiotic  residues*

“  control  of  residues**

COM(81)

C0M(85)192

-  pedigree  of  bovine  animals*

COM(79)649

"T979

-   pedigree  of  porcine  animals

-   imports  of  meat  products  from 

th ir d   countries  (animal  and  public 
hea1th)

-  swine  fever

~  control  of  foot  and  mouth  disease

C0M(84)530

COM(84)900

1984

1984

COM(82)
+  C0M(83)584

-   Aujesky  disease  and  swine 

vesicular  disease

-   semen  of  animals

-  modification  of  Directives 
72/461/EEC  and  72/462/EEC

C0M(82)529

COM(83)512

C0M(84)500

-  modification  of  Directive  77/99/EEC 

on  meat  products

-   f i r s t   revision  of  the  safeguard

clause  concerning  the  veterinary  sector: 
the  exporting  Member  State  takes
the  appropriate  measures  subject 
to  Community  decision

1983

1984

1981

1981

1985

1983

1984

1985

1985

1985

1985

~ m s --------- -

1985

1985
~ m ë ------------
1986

1986

1985

1985

1985

1985

1986

1986

1987

  8 

-

-

SUBJECT 

~ 

Doc.nB 

Date  of 
Commis- 
sion's 
proposal 

Expected
date  for
adoption
bÿ  Council

-  formulation  of  directives  concerning 
animal  health  problems  relating  to 
trade  in  :
.  live  poultry,  poultry  meat  and 

hatching  eggs 
.  dogs  and  cats

-   live  animals  of  the  bovine  and  porcine 
species  :  amend  Directive  64/432  to  pro­
vide  for  inspection  and  c e r t i f i c a t i o n   in 
herd  of  origin  and,  when  necessary,  re­
inspection  at  place  of  destination

-   products  of  animals  of  the  bovine  and 
porcine  species  and  of  poultry;  amend 
Directives  72/461/EEC,  80/215/EEC  and 
71/118/EEC  to  provide  for  inspection 
and 
c e r t i f i c a t i o n   at  the  place 
of  production 
in  the  case  of  suspicion  of 
fraud  at  the  place  of  destination

and  re-inspection, 

-  reinforcement  of  Community  checks  of 

application  by  on-the-spot  Commission 
inspectors;  budget  proposal

-   reinforcement  of  arb itr ati o n   of 

di sputes

-   application  of  a  Community  veterinary 

action  programme  to  control 
i r r e g u l a r i t i e s   and  fraud  in  the 
movement  of  animals  and  animal 
products

-   modification  of  the  rules  of  fr ontier 

controls  relating  to  welfare  of 
animals  in  international  transport  in 
order  to  realise  the  free  circulation

Proposal  to  amend  Directive  77/93
(plant  health)* 

Definition  of  role  of  Community 
plant  health  inspectorate 
(amending  Directive  77/83)

Amendments  to  Art.  15  of  Directive 
77/93  (improvements  to  the 
operation  of  safeguard  provisions)

1986

1987

1986

1987

1986

1987

1986

1987

1986

1986

1987

1987

1986

1987

C0M(84)288

1984

1985

1985

1986

1985

1986

SUBJECT

t

9  -

Doc.n°

Date  of 
Commis­
sion' s 
proposal

Expected 
date  for 
adoption 
by  Council

Further  alignment  of  additional 
plant  health  standards  set  up 
by  Member  States  in  respect 
of  third  country
products  (amending  Directive  77/93)

Budget  proposal  enabling  establishment 
of  Community  plant  health  inspecto­
rate

Proposal  for  a  Directive  concerning 
the  fixing  of  guidelines  for  the 
evaluation  of  additives  used  in 
animal  foodstuffs

Proposal  for  fixing  maximum  levels 
for  pesticide  residues  in  foodstuffs 
of  animal  origin*

Proposal  for  fixing  maximum  levels 
for  pesticide  residues  in  feeding- 
stu ff s*

Proposal  for  the  modification  of 
directive  76/895/EEC  (maximum 
levels  for  pesticide  residue  in 
f r u i t   and  vegetable)

Proposal  to  amend  the  annex  of 
directive   76/895/EEC  concerning 
residues  of  pesticides  in  and  on 
f r u i t   and  vegetables  (ethoxyquin 
and  diphenylamine)*

Proposal  to  amend  directive  79/117 
on  the  prohibition  of  certain 
plant  protection  products  (ethylene 
oxide)*

Proposal  for  the  placing  of  plant 
protection  products  on  the  market*

Proposal  for  the  improvement  of 
Community  systems  of  c e r t i f i c a t i o n  
of  seeds

Proposal  for  a  system  of  c er t i f i c a t i o n  
of  reproductive  materials  in  f r u i t  
plants

Proposal  for  4  years  research  programme 
into  effective  methods  of  controlling 
certain  harmful  organisms

1985

1986

1986

1987  Budget

1986

1987

COM(80)14

1980

1985

C0M(77)377

1977

1986

1986

1987

COM(82)883

1983

1985

COM(82)712

1982

COM(76)427

1976

1985

1986

1985

1986

1986

1988

1986

1987

-   10 

-

SUBJECT 

Doc.n"

Date  of 
Commis­
sion's 
proposal

Expected 
date  for 
adoption 
by  Council

PERIOD  1987-1992

-  live  animals  of  the  bovine  species 
formulate  directives  for  eradiction 
of  contagious  bovine  pleuro­
pneumonia  in  Portugal  and  Spain 
and  for  Blue  Tongue 
on  Greek  Islands

-   embryos  of  farm  animals  :  Directive 

for  trade

-   formulation  of  Directives  concerning 

animal  health  problems  relating 
to  trade  in:
.  live  animals  of  equine  species 
.  live  animals  of  bovine  and 

caprine  species 

.  live  fish  and  fish  products

Proposals  limiting  inspections  to 
places  of  departure  and  proposals 
concerning  the  checking  of  plant  health 
c e r t i f i c a t e s   at  the  places  of 
destination

-   establishment  of  certain  rules 

of  l i a b i l i t y   in  respect  of  plant 
health

-   brucellosis  in  small  ruminants

-   echninocolissis

-  formulation  of  directives

concerning  veterinary  inspection 
problems  relating  to  trade  in 
animals  and  animal  products 
not  covered  by  existing 
Directives

-   harmonised  health  conditions 
for  production  and  trade  in  :
.  sh ell fis h   and  crustaceare  and 

preparation

.  fish  and  fish  products 
.  game  meat,  products  and  preparations

-   pedigree  animals  not  covered  by 

existing  Directives

1987

1988

1987

1987

1988

1988

1987

1988

1987

1988

1988

1988

1988

1989

1989

1989

1988 
1988 
1988 

1989 
1990 
1990

1988 

1989

-   11

SUBJECT 

Doc.n0 

-  simplification  of  annexes  in  Directive

77/93  (plant  health) 

-   alignment  of  national  standards  and

intra-Community  standards  in  plant  health 

-  reduction  in  role  of

phytosanitary  c e r t i f i c a t e  
in  intra-Community  trade

-   proposal  for  a  system  of  c e r t i f i c a t i o n  

in  reproduction  materials  for
decorative  plants 

harmful  organisms  especially 
in  seed  potatoes  and  in  f r u i t  
plant  reproductive  material

Revision  of  labelling  rules  for 
food,  drawn  up  in  view  of  a  uniform
EEC  label 

Guidelines  for  checking  requirements 
in  connection  with  the  approval  of 
plant  protection  production

-   extension  of  application 
Directives  66/401/EEC,
70/437/EEC  and  70/458/EEC  seedlings 

-  proposal  for  creation  of  a 

European  law  on  plant  breeders

-  harmonisation  of  control  of 

foot  and  mouth  disease 

-   harmonised  health  conditions  for 

production  and  trade  in  food  products
of  animal  origin  not  covered  by 
existing  legislation  e.g.

-  second  revision  of  the  safeguard 

clause  concerning  the
veterinary  sector:
the  exporting  Member  State
takes  the  appropriate  measures  in
order  to  avoid  specific  measures  in
intra-Community  trade.

Date  of 
Commis- 
sion's 
proposal 

Expected
date  for
adoption
by  Council

1989 

1990

1989 

1990

1990 

1991

1989 

1987 

1990

1989

1987 

1987 

1988

1988

— —

1987 

~ 

1987 

~

1990 

~~ 

Ï99Ô 

1988

1877

1992

Ï992T

1991 

1992

-  pathogens  in  feedingstuffs

1991 

1992

  12 

-

-

SUBJECT

Doc.nu

-  application  of  health  standards  to 

national  products

-  suppression  of  veterinary  c e r t i f i c a t e s  
of  animal  products  and  simplification 
of  c e r t i f i c a t e s   for  live  animals.

-  suppression  of  plant  health  c e r t i f i c a t e s

Date  of 
Commis­
sion's 
proposal

Expected 
date  for 
adoption 
by  Council

1991

1992

1991

1991

1992

1992

II. CONTROL OF INDIVIDUALS

PERIOD 1985-1986

Sixth  Directive  relative  
to  exemptions  in  international 
trave l  :  increase  to  400  ECU*

Seventh  Directive  relating  to 
exemptions  in  international  travel  : 
tax-free  sales*

Tax  r e l i e f s   to  be  allowed  on  the 
importation  of  goods  in  small 
consignments  of  a  non-commercial 
character*

Directive  on  the  easing  of 
controls  at  intra-Community 
Borders**

Directive  on  the  approximation 
of  arms  legislation

Directive  concerning  abolition  of 
police  controls  when  leaving  one 
Member  State  to  enter 
another  (intermediary  stage)

PERIOD 1987-1992

Directive  on  the  approximation 
of  drugs  legislation

Directive  on  the  coordination 
of  rules  concerning  the  status  of 
th ir d   country  nationals.

Directive  on  the  coordination 
of  rules  concerning  the  right 
of  asylum  and  the  status  of
refugees

COM(83)117

1983

1985

C0M(83)166

1983

1986

COM(83)730

1983

1985

COM(85)224 
COM(85)749

1985

1985

1985

1988

1986

1988

1987

1989

1988

1990

1988

1990

-   13  -

SUBJECT 

Doc.n° 

Directive  on  the  coordination
of  national  visa  policies 

Directive  on  the  coordination 
of  rules  concerning  extradition

Date  of 
Commis- 
sion's  
proposal 

Expected
date  for
adoption
by  Council

1988 

1990

1989 

1991

'SÜË'Xe CT 

-  14  -

Doc.nu 

Date  '0? 
Commis- 
si on's 
proposal 

Expected
date  for
adoption
by  Council

PART TWO : THE REMOVAL OF TECHNICAL BARRIERS 

I.  FREE MOVEMENT OF GOODS

1. New approach in technical harmonisation and standards policy 

PERIOD 1985-1986

Proposal  for  the  extension 
of  information  procedures 
on  standards  and  technical  rules  (amendment 
of  directive  83/189/EEC)

Standardisation  in  the
advanced  manufacturing  equipment
sector

Cer tification  :  index  of  bodies

Recognition  of  t e s t s   and  c e r t i f i c a t e s

Construction  sector  :

-  specific  index  of  bodies 
-  Eurocodes  :  adoption  of  EC1, 

EC2,  EC3  and  EC8 

-  Recognition  of  t e s t s   and 

decisions 

PERIOD 1987-1992

Proposals  to  be  made  for  machine 
safety,   pressure  vessels,  road 
making  equipment, 
e l e c t r i c a l   interferences,  l i f t i n g  
equipment  in  order  to  implement
the  new  approach 

Electromedical  equipment

1986

1987

1986

1986

1986 

1986 

No  formal
decision
needed

No  formal 
decision 
of  the 
Council 
needed

In  principle
no  formal 
decision 
of  the  Council 
needed

No  formal
decision
of  the
Council
needed

1987 

1988 

1987-1988

1989

-   15  -

SUBJECT 

Doc.n"

Date  of 
Commis­
sion's 
proposal

Expected 
date  for 
adoption 
by  Counc i l

2.  Sectoral  proposals  concerning  approxistation  of laws

2.1.  Motor  vehicles

PERIOD  1985-1986

-   gaseous  emissions  passenger

cars

-   gaseous  emissions
-  diesel  particulates
-  speed  limits
-  revision  of  framework 
Directive  70/156/EEC

-  revision  of  breaking  Directive

PERIOD 1987-1992

Revision  of  European  t e s t   procedure 
for  gaseous  emissions

Revision  of  limit  values  for  gaseous 
emissions  of  cars  below  1400  cc

Global  assessment  of  protective 
cha racteristics  of  passenger  cars 
in  frontal  and  lateral  impact

Implementation  of  EEC  type  approval 
scheme  for  other  motor  vehicles  (buses 
and  coaches,  motorcycles)

Adaptation  of  existing  Community 
Regulations

2.2  Tractors  and  Agricultural  machines

PERIOD  1985  to  1986

Implementation  Directive  74/150/EEC 
(weight  and  dimensions,  driveshaft, 
engine  stopping  device,  windscreen  wipers 
foot  rest)

1985

1985
1985
1985
1986

1986

1987

1987

1987

1985

1986 
1986
1986
1987

no  decision 
needed

1987

1987

1988

1989

1990

.  1987-90

No  decision 
needed

1986

1987

-   16  -

SUBJECT

Doc.n0

Date  of 
Commis­
sion's 
proposal

Expected 
date  for 
adopt i on 
by  Council

PERIOD  1987-1992

Adaptation  of  existing  Community 
Regulations

1987-90

No  decision 
needed

2.3.  Food  law

PERIOD  1985-1986

General  Directive  on  food  additives 
(in  part  modification  of  existing 
di rectives)

General  Directive  on  materials  and 
a r t i c l e s   in  contact  with  food  (amendment)

General  Directive  on  food  for  p articu lar 
nutri tio n al  uses  (amendment)

General  Directive  on  food  labelling 
(amendment)

1985

1986

1985

1986

1985

1986

T985

1986

General  Directive  on  food  inspection

1986

1987

General  Directive  sampling  and  methods 
of  analysis

COM(84)39

1984

General  Directive  on  quick  frozen  food

Management  of  existing  vertic a l 
Directives  (procedure)

Flavourings*

Extraction  solvents*

Preservatives* 
(modi fi cati on)

Emulsifiers  (modification)

Infant  formulae  and  follow-up  milk 
(die te tic   foods)*

C0M(84)489

C0M(80)286 
C0M(82)166

C0M(83)626
C0M(85)79

1984

1985

1980

1983

C0M(81)712

1981

COM(84)4

COM(84)703

1984

1984

1985

1985

1986

1985

1986

1985

1985

1986

Cocoa  and  chocolate  consolidation*

TÜMT53T787

T984------- ---- T935-------

SUBJECT

-   17  -

Doc.n0

Date  of 
Commis­
sion's 
proposal

Expected 
date  for 
adoption 
by  Council

1985

1985

1985

1985

1986

1986

1986

1985

Coffee  extracts  chicory  extracts 
(modification)

C0M(84)138

1984

Obligation  to  indicate  ingredients 
and  alcoholic  strength*

C0M(82)626

1982

Claims  in  the  labelling  of  foodstuffs* COM(81)159

Simulants  (plastic  materials  in  contact 
with  foodstuffs)*

COM(84)152

Modified  starches*

COM(84)733

1981

T984

1984

1985

1985

COM(84)  23

1984

l-ruit  Juices  e t c . . .   (modification)

Jams  etc  (Modification)

Proposal  for  a  Directive  amending 
Directive  79/581/EEC 
on  consumer  protection  in  the 
indication  of  the  prices 
of  foodstuffs

PERIOD  1987-1992

uenerai  Directive  on  irradiation 
of  foodstuffs

General  Directive  on  new  foodstuffs 
obtained  by  a  biotechnological  process

Additional  labelling  requirements 
(Nutrition  labelling)

1987

1987

1989

1988

1988

1990

Adaptation  of  directives  on  technical  progress

1987-1989

1988-1990

2.4.  Pharmaceuticals  and  high-technology  medicines 

PERIOD  1985-1986

rroposais  Tor  Directive  concerning 
the  placing  on  the  market  of  high- 
technology  medicinal  products  incl. 
those  derived  from  biotechnology*

COM(84)437

1984

1986

Proposal  amending  Directive  75/318/EEC 
concerning  the  test ing 
of  medical  s p e c i a l i t i e s

Idem

1984

1986

  18 

-

-

SUBJECT

Doc.nu

Date  of 
Commis­
sion's 
proposal

Expected 
date  for 
adoption 
by  Council

Proposal  amending  Directive  81/852/EEC 
concerning  veterinary  medicinal 
products

Proposal  for  a  Council  Recommendation 
concerning  t e s t s   relating  to  the  pla­
cing  on  the  market  of  medical 
s p e c i a l i t i e s

Proposal  for  a  Council  Directive 
amending  Directive  65/65/EEC 
concerning  medical  s p e c i a l i t i e s

Price  transparency  in  prices  of 
medicines  and  social  security  refunds

Membership  of  the  European  Pharmaco­
peia

PERIOD  1987-1992

Extension  of  Directives  to  medicinal 
products  not  already  included

Amendment  to  the  Directive  on 
veterinary  medicines

Pharmaceutical  products  :
-   completion  of  work  eliminating 

obstacles  to  free  circulation  of 
pharmaceutical  products

Harmonisation  of  condition 
of  distrib u ti o n   to  patients

Information  of  doctors  and  patients

2.5.  Chemical  products

PERIOD  1985-1986

Council  Directive  relating  to 
r e s tr ic tio n s   on  the  marketing 
and  use  of  PCBs  (polychlorinated 
biphenyls)

Council  Directive  relating  to 
"Restrictions  on  the  marketing  and 
use  of  asbestos"

Idem

1984

1986

Idem

1984

1986

Idem

1984

1986

1986

1988

1986

1987

1987

1987

1989

1989

1989

1990

1990

1990

1991

1991

COM(84)513

“ COMI 79) 419 

C0M(83)556

1984

1979

1983

1985

1985

COM(85)217

1985

1986

-  19  -

SUBJECT

Doc.n°

Commission  Directive  adapting  the 
Directive  67/548/EEC  "Dangerous 
substances"

Commission  Directive  relating 
to  "Ammonium  n itr ate"

Non-ionic  detergents  (modification 
of  the  existing  directive)

Classification,   packaging  and 
Labelling  of  dangerous  preparations

Membership  of  the  European 
Agreement  on  detergents

COM(85)63

Liquid  f e r t i l i z e r s

PERIOD  1987-1992

Secondary  f e r t i l i z e r s

-   Oligo-elements  in  f e r t i l i z e r s

-   Method  of  analysis  for  secondary 
f e r t i l i z e r s   and  oligo-elements

2.6.  Construction  and  construction  products

PERIOD  1985-1986

Directive  on  safety  of  buildings 
(resistance  to  earthquakes,  other 
accidental  damage,  prevention  of 
progressive  collapse)

Directive  on  r e l i a b i l i t y   (fitne ss   for 
purpose)  and  durability  of  buildings 
(res ponsibility  of  designers,  builders)

Directive  on  t e s t   methods  for 
reaction  to  f i r e   and  resistance 
to  f i r e   of  building  materials 
and  components

Date  of 
Commis­
sion's 
proposal

Expected 
date  for 
adoption 
by  Council

1985

1985

No
decision
needed

No
decision
needed

1985

1985

1986

1987

1988

1986-1987

1986

1988

1989

1990

1989

1991

1985

1986

1985

1986

1986

1986

  20 

-

-

SUBJECT

Doc.n"

Date  of 
Commis­
sion's 
proposal

Expected 
date  for 
adoption 
by  Council

Directive  to  prohibit  the  introduction 
of  new  or  modified  building  regulations 
at  local  government  levels  for  a  period 
of  5  years

Revolving  cranes

PERIOD  1987-1992

Revision  of  Directives  on  safety 
r e l i a b i l i t y   and  durability  of 
buildings  in  light  of  new  Eurocodes 
EC  4,  5,  6,  7

Directive  on  f i r e   safety  in  public 
buildings  and  hotels

Directive  on  insulation  products 
(protection  of  health  of  building 
workers  and  occupants).

Development  and  introduction  of  a  Model 
Code  for  building  regulations  (based  on 
UN-EC  models)

Directive  on  safety  and  r e l i a b i l i t y   of 
special  structures  (masts,  towers,  long 
bridges,  d r i l l i n g   platforms,  water- 
retaining  structures)

2.7  Other  iteas

PERIOD  1985-1986

1985

1978

1986

1986

-

1988

1978

1989

1988

1987

1988

1990

1992

1990

1992

Household  appliances  :  airborne  noise* C0M(81)811

Safety  of  toys*

Measuring  instruments  and  methods  of 
metrological  control  :  electronic 
devices  (amending  71/316/EEC)
-   tyre  pressure  gauge
-   carbon  monoxide  measurement

Chemical  properties  of  toys

Proposal  for  a  Council  directive 
on  e l e c t r i c a l   toys

COM(83)323

COM(78)766

COM(80)850
COM(80)850

Hydraulic  diggers  (noise)

5.10.81

1981

1983

1978

1980
1980

1985

1986

1981

1985

1985

1986

1985
1986

1986

1987

~ i m ---------

- 2 1 -

SUBJECT

Doc.n°

Date  of 
Commis­
sion's 
proposal

Expected 
date  for 
adoption 
by  Council

Protection  of  hotels  against 
f i r e   (proposal  for  a  recommen­
dation)

Metrology  c er tif ic a tio n

Individual  protective  devices 
equipment:
.  helmets  for  motorcycle 
drivers  (result  of  notifica tion 
on  the  basis  of  189/83  directive) 
.  safety  boots  and  shoes  (idem)

Proposal  for  a  revision  of  Chapter 
6  of  the  Euratom  Treaty  concerning 
nuclear  materials

Proposal  for  a  Directive  on 
consumer  protection  in 
respect  of  the  indication  of 
pri ces
for  non-food  products

General  Council  Directives  on  cos­
metics  (amendment)

PERIOD  1987-1992

Proposal  for  general  Directive 
in  t e x t i les

Proposal  for  a  Directive  on 
flammability

Individual  protective  devices  :
-   eye  protective  devices
-   respiratory  protective  devices
-   indu strial  safety  belts
-   protective  clothing

Metrology  completion  of  work

II. PUBLIC PROCUREMENT 

PERIOD 1985-1986

Improvement  of  Directives 
on  public  procurement

21.2.84

1984

T986

1986

1988

1986

1987

1986

1987

COM(84)606

1984

1987

C0M(83)754

1983

1985

1986

1988

1987

1988

1988

1989

1987
1988
1988
1989

1987

1988
1990
1990
1991

1989

1985 

1987

  22 

-

-

SUBJECT 

Doc.nu

PERIOD  1987-1992

Improvement  of  Directives  on  public 
procurement

Extension  of  Directives  to  excluded 
sectors  -  telecommunications  and  energy

Public  procurement  in  the  fie ld   of 
services  ;  opening  up  of  markets  for 
p rio r ity   sectors

Public  work  procurement  :  additional 
harmonisation  of  procedures

Public  procurement  of  services  : 
other  sectors

Extension  of  Directives  to  excluded  sectors: 
e l e c t r i c i t y   or  water

Implementation  of  Directives 
1990-1992

Date  of 
Commis­
sion's 
proposal

Expected 
date  for 
adopt i on 
by  Council

1987

1987

1987

1989

1989

1989

1988

1988

1989

1990

1991

1990

-23.  -

SUBJECT  -------------------------- 

‘W ^ ’· 

Commis- 
sio n 's  
proposal 

Expected
date  for
adoption 
by  Council

I I I .   free   movement

  for

  labour

  and   the   professions

PERIOD  1985-1986

Proposal  allowing  the 
elimination  of  remaining 
obstacles  related  to  the 
movement  and  residence  of  migrant 
Community  workers**

Proposal  concerning  the 
harmonization  of  income  taxation 
provisions  with  respect  to 
freedom  of  movement  for  workers 
within  the  Community

Proposal  concerning  the 
comparability  of  vocational 
traini ng- qu al ificat ions

Proposals  for  promoting 
student  mobility  and  coopera­
tion  between  further  education 
establishments  in  different 
Member  States

Proposal  for  the  development  of 
cooperation  programmes  between 
Member  States  for  apprentices 
undergoing  vocational  training

Proposal  for  the  development
of  youth  exchanges  in
the  Community  including
young  people  in  vocational  training  and
voluntary  work  abroad.

Proposals  for  cooperation  between 
higher  education  and  industry 
for  advanced  training  relating  to 
new  technologies  (COMETT)

Proposal  for  a  Directive 
concerning  t r a n s itio n a l  measures 
for  access  to  a c t i v i t i e s   in  the 
technical  fie ld   and 
for  t h e i r   exercise*

Proposal  for  a  Directive 
concerning  the  coordination 
of  provisions  in  respect  of 
training  of  engineers*

COM(85)48 
Final

1985

1987

C0M(79)737
Final

1979

1985

COM(83)482 
C0M(84)406

1983
1984

1985

1985 

T986 

1986

ÎW T

1985

1986

1985

1986

C0M(69)934

1969

1985

COM(69)934

1969

1985

SUBJECT

-  24  -

Doc-n°

Date  of 
Commis­
sion's 
proposal

Expected 
date  for 
adoption 
by  Council

Proposal  for  a  Directive 
on  the  coordination  relating  to 
commercial  agents*

C0M(76)670 
COM(78)773

1976
1978

1985

Proposal  for  a  Directive 
concerning  the  coordination 
of  provisions  in  respect  of 
certain  a c t i v i t i e s   in  the 
field  of  pharmacy*

Amended  proposal  for  a 
Directive  concerning  the 
mutual  recognition  of 
diplomas  in  pharmacy**

Proposal  for  a  Council 
Directive  on  specific  training 
in  general  medical  practice**

Right  of  Establishment:
Proposal  for  a  Directive  setting 
up  a  general  system  of  mutual 
recognition  of  higher 
education  diplomas

Right  of  residence  for  nationals 
of  Member  States  not  yet 
or  no  longer  employed*

COM(81)4

1981

1985

COM(84)15

1984

1985

C0M(84)654

1984

1986

1985

1987

COM(79)215 
C0M(8Q)358 
COM(80)649

1979

1985

PERIOD  1987-1992

Proposal  concerning  the  elimination 
of  cumbersome  administrative  pro­
cedures  relating  to  residence  permits

Proposal  concerning  the  introduction 
of  a  European  "vocational  training 
card"  proving  the  qualification  of  i t s  
holder

Assessment  on  the  functioning  of 
the  general  system  of  mutual  reco­
gnition  and  eventual  proposal  in  order 
improve  i t

to

1987

1988

1989

1990

1990

1991

"SUBJECT 

-   -25  ~

Doc.n0 

Date  of 
Commis- 
sion's  
proposal 

Expected
date  for
adoption
by  Council

IV. C0B80M MARKET FOR  SERVICES

1.  FINANCIAL SERVICES

1.1. Banks

PERIOD 1985-1986

Proposal  for  a  Directive 
on  the  accounts  of  banks

Proposal  for  a  Directive 
on  the  accounts  of  foreign 
branches  of  banks

Proposal  for  a  Directive 
on  the  freedom  of  establishment 
and  the  freedom  to  supply 
services  in  the  field  of 
mortgage  credit

Proposal  for  a  Directive  on 
reorganisation  and  winding-up  of 
credit  i n s titu ti o n s

Proposed  Recommendation  on 
the  harmonization  of 
the  concept  of  own  funds

Proposed  Recommendation  on  the 
establishment  of  a  guarantee 
system  of  deposit  within  the 
Community

Proposed  Recommendation  on  the 
control  of  large  exposures  by 
credit  i n s titu ti o n s

PERIOD 1987-1992

COM(81)84 
C0MC84)124

1984

1987

1985

1987

COM(84)730

1985

1988

1985

1987

1985

1986

1986

1987

1986

1988

Proposal  for  a  Second  Directive 
on  coordination  of  credit  i n s titu ti o n s

1987 

1989

SUBJECT

-   26  -

Doc.n“

Date  of 
Commis­
sion's 
proposal

Expected 
date  for 
adoption 
by  Council

1.2.  Insurance 

PERIOD  1985-1986

proposal  tor  a  Directive 
to  f a c i l i t a t e   freedom  to  provide 
services  in  insurance  other  than 
l i f e   insurance

Proposal  for  a  Directive  on 
coordination  of  laws  relating  to 
legal  expenses  insurance

Proposal  for  a  Directive 
concerning  credit  insurance

Proposal  for  a  Directive 
on  insurance  contracts

Proposal  tor  a  Directive  concerning 
the  winding-up  of  insurance  companies

Proposal  for  a  Directive  on  the 
accounts  of  insurance 
undertakings

Proposal  for  a  3rd  Directive 
concerning  motor  l i a b i l i t y   insurance

PERIOD  1987-1992

rroposai  tor  a  Directive  on 
freedom  to  supply  services 
in  the  motor  l i a b i l i t y  
insurance  sector

Proposal  for  a  Directive  for 
freedom  to  supply  services 
in  the  fie ld   of  lif e   insurance

1.3.  Transactions  in  s ecurit ies

PERIOD  1985-1986

Proposal  for  a  Directive  for  the 
coordination  of  laws,  regulations, 
and  administrative  provisions 
regarding  collective  investment 
undertakings  for 
transferable  secur ities

C0M(75)516 
COM(78)63

C0MC79J396 
COM(82)43

C0M(79)459
C0M(82)255

COM(79)355
modified
C0M(80)854

1978

1986

1979

1979

1979

1986

1986

1987

1988

1988

1989

1989

1986

1989

1987

1989

1987

1991

C0M(76)152 
C0M(77)227

1976

1985

Date  of 
Commis­
sion' s 
proposal

Expected 
date  for 
adoption 
by  Council

1985

1988

SUBJECT

-   27  -

Doc.n0

Proposal  for  a  Directive 
concerning  information  to  be 
published  when  major  holdings 
in  the  capital  of  a  listed 
company  are  acquired  or  disposed  of

Proposal  for  a  Directive  coordinating 
the  requirements  for  the  drawing  up, 
scrutiny  and  d is tribution  of  the 
prospectus  to  be  published 
when  s ecurities  are  offered  for 
subscription  or  sale  to  the  public

PERIOD  1987-1992

Proposal  for  a  Directive 
concerning  investment  advisors

2.  TRANSPORT

PERIOD  1985-1986

(see  control 
of  goods)
Road  transport,  abolition 
of  border  controls  related 
to  transport  authorisations.

★Air  transport  :  fares

★Air  transport  :  b i l a t e r a l   agreements, 
arrangements  and  memoranda  of  under­
standing  between  Member  States

★Air  transport  :  application  of 
Article  85  EEC

★Community  quota  for  the  carriage  of 
goods  by  road  between  Member  States  : 
final  stage

COM(80)893 
modified 
COM(82)441

1981

1988

1987

1989

COM(81)396 
C0M(84)72

1981

1985

COM(84)72

1984

C0M(84)72

COM(83)340 
REG  3621/84

1984

1983

1986

1987

1986
1988

★Access  to  the  inland  waterway  freight  C0M(67)722 
market

1967 

1989

★Non-resident  car riers  :  national 
transport  services

C0M(82)816 

1982 

1988

-28  -

SUBJECT

Doc.na

Date  of 
Commis­
sion's 
proposal

Expected 
date  for 
adoption 
by  Council

COM(85) 90

1985

T$85

1986

---------

♦Maritime  transport  (freedom  to 
provide  services  in  the 
sea  transport  sector)

Liberalisation  of  coach  services

3.  NEW  TECHNOLOGIES  AND  SERVICES

PERIOD  1985-1986

Proposal  for  a  Directive  in 
order  to  coordinate  certain 
aspects  of  the  national  laws 
regulating  advertising  on  radio 
and  television

Proposal  for  a  Directive  in 
order  to  coordinate  certain  aspects 
of  the  national  laws  regulating  copy­
rights  in  simultaneous  cable  transmission 
of  programmes

Proposals  concerning  the  gradual 
opening  up  of  the  market  in 
information  services

Proposal  concerning  the  definition 
of  common  technical  features  of 
the  machines  used  to  produce  the  new 
payment  cards

Proposals  encouraging  the 
conclusion  of  agreements  between 
banks,  traders,  producers  and 
consumers  on  the  compatibility  of 
system  networks,  linkage  user 
rules  and/or  rates  of  commission

V.  CAPITAL  MOVEMENTS

PERIOD  1985-1986

1985

1987

1985

1987

1986

1987

1986

1987

1986

1987

Liberalisation  of  units  in  collective 
investment  undertakings  for 
transferable  securities

COM(78)63 
COM(79)  328

1979

1985

Proposal  for  a  Directive
concerning  the  liberalisation 
of  transactions  concerning 
mortgages

1986

1987

-   29  -

SU8JECT 

Doc.nu 

Proposals  for  the  lib e ra lis a tio n  
of  operations  such  as  the  issue, 
placing  and  acquisition  of 
s ecurities  representing  risk 
c ap i tal ,   transactions  in 
sec u rit ies  issues  by  Community 
in s t i t u t i o n s   and  long-term
commercial  credit

Date  oi 
Commis- 
sion's  
proposal 

Expected
date  for
adoption
by  Council

1986

1987

VI.  CREATION  OF  SUITABLE  CONDITIONS FOR  INDUSTRIAL COOPERATION

1.  Company  law

PERIOD  1985-1986

Proposals  for  a  Regulation 
for  an  European  Economic 
Interest  Grouping

Proposal  for  a  Fifth  Company 
Law  Directive  (structure 
of  public  limited  companies)

Proposal  for  a  Tenth  Directive 
concerning  cross-border  mergers

Proposal  for  an  Eleventh 
Company  Law  Directive  to 
dispense  branches  of 
from 
companies 
publishing  separate  accounts

PERIOD  1987-1992

Proposal  tor  a  Directive  on  the 
liquidation  of  companies

Proposals  for  a  Directive  on 
take  over  bids

Proposal  for  a  Directive
on  the  relationship  of  undertakings
in  a  group

COM(73)2046 
C0M(78)139

1973
1978

COM(72)887 
C0M(83)185

1973
1983

C0M(84)727

1985

1985

1988

1987

1986

1988

1987

1987

1988

1989

1989

1990

- 3 0   -

“SÜBjTcT" 

~~ 

Dcc~na 

Date  of 
Commis- 
si on's 
proposal 

Expected
date  for
adoption
by  Council

Amendment  to  proposal  for 
a  Regulation  on  the  Statute  for 
a  European  Company

COM(70)600 
COM C 75 >150

1970

1975
1988

1990

2.  I n tellectu al  and  industrial  property 

PERIOD  1985-1986

Amended  proposal  for  a
Regulation  on  Community 
trade  marks 

Amended  proposal  for  a  First 
Directive  to  approxi­
mate  the  laws  of  the  Member 
States  relating  to  trade  marks 

Proposal  for  a  Regulation  on  the 
rules  needed  for  implementing 
the  Community  trade  mark
regulation 

Proposal  on  the  s i t e   of  the 
Community  trade  mark  office
and  i t s   working  language 

Proposal  for  a  Regulation  on 
the  rules  of  procedure  for  the 
Boards  of  Appeal  of  the  Community
trade  mark's  Office 

Proposal  for  a  Regulation 
on  the  fees  to  be  paid 
to  the  Community  Trade
Mark  Office 

Proposal  for  a  Directive  on 
legal  protection  of  micro-
c i r c u i t s  

Amended  Convention  on
the  Community  Patent

Creation  of  a  Community
Pa tent's   Appeal  Court  (C0PAC)

C0M(8Q)635 
C0M(84)470 

1980
1984 

1987

CQM(80)635 

1980
1985 

1987

1985 

1987

1986 

1987

1986 

1987

1986 

1987

1985 

1987

Signature Entry
by  Member
States  in
1986

into
force  in
1987

Signature Entry
by  Member
States
in  1986

into  force
in  1987

-   31  -

SUBJECT

Doc-nu

PERIOD  1987-1992

Proposal  for  a  Directive  on  legal 
protection  of  biotechnological 
inventions

Proposal  for  a  Directive  to  protect 
computer  programs

Date  of 
Commis­
sion's 
proposal

Expected 
date  for 
adoption 
by  Council

1987

1989

1987

1989

3.  Taxation  (Removing  tax  obstacles  to 
diff er ent  Member  States:)

cooperation between enterprises  in

PERIOD  1985-1986

Arbitration  procedure  concerning 
the  elimination  of  double  taxation*

C0M(76)611

1976

COM(69)6

1969

1985

1985

Common  system  of  taxation  applicable 
to  parent  companies  and  th e ir  
subsidiaries*

Common  system  of  taxation  of  mergers, 
divisions  and  contributions  of 
assets*

Harmonization  of  taxes  on 
transactions  in  secur ities

VII.  APPLICATION  OF  COMMUNITY  LAW

1.  Transparency 

PERIOD  1985-1986

C0M(69)5

1969

1985

C0M(76)124

1976

1986

Communication  of  the  Commission  in 
relation  to  Article  30  of  the  Treaty 
on  price  fixing  and  on  sickness 
insurance  concerning  pharmaceuticals

1985

No
decision
needed

PERIOD  1987-1992

communication  ot  the  Commission 
in  relation  to  Article  30  of  the  Treaty 
on  the  conditions  of  allowing  on  the 
market  of  foodstuffs

1987

No ·
decision
needed

_  32  „

SUBJECT

Doc.n"

Communication  of  the  Commission  in
relation  to  Article  30  of  the  Treaty
on  the  elimination  of  controls  and
formalities  on  goods

2.  Competition  policy  and  s t a t e   aids 

PERIOD  1985-1986

Date  of
Commis-
sion's
proposal

Expected
date  for
adoption
by  Council

1989

No
decision
needed

Inventory  of  State  aids  and  report 
setting   out  the  implications  of 
future  stat e  aids  policy

1986 

No
decision
needed

-   33  -

SUBJECT 

Doc ,n° 

Date  of 
Commis- 
sion's  
proposal 

Expected
date  for
adoption
by  Council

PART  THREE:  REMOVAL  OF  FISCAL  BARRIERS

I .   V.A.T.

PERIOD  1985-1986

Proposal  for  a  Council  Decision 
providing  for  a  s t a n d s t i l l  
ensuring:
-  no  proliferation  of  VAT  rates 

in  Member  States

-   no  widening  of  the  gap  between
VAT  rates  in  each  Member  State

14th  V.A.T.  Directive  concerning 
deferred  payment  on  importation*

COM(82)402

Proposal  on  f l a t   rate  farmers

Proposal  on  passenger  transport

Proposal  on  special  schemes  for 
small  business

/th  V.A.T.  Directive  works  of  a r t ,  
c o lle ct o rs'  items,  antiques  and 
used  goods*

lüth  V.A.T.  Directive  concerning 
expenditure  on  which  tax  is  not 
deductible*

,13th  V.A.T.  Directive  concerning 
tax  refunds  to  persons  not  esta­
blished  in  the  Community*

16th  V.A.T.  Directive  concerning 
imports  by  final  consumers  of 
goods  which  have  already  borne 
tax  in  another  Member  State*

1/th  V.A.T.  Directive  concerning 
the  temporary  importation  of  goods 
other  than  means  of  transport*

iiith  V.A.T.  Directive  concerning 
the  abolition  of  certain  derogations 
(Article  28(3)  of  Directive  77/388/CEE

Ivth  V.A.T.  Directive  :  miscellaneous
supplementary  and  amending  provisions 
of  Directive  77/388/EEC

1985

1986

1982

1985

1985

1985

1986

Ï986

1985

1986

1978

1986

1983

1986

1982

1986

COM(77)735 
C0M(79)249

COM(82)870 
C0M(84)84

COM(82)443 
C0M(83)413

COM(84)318

1984

1986

COM(84)412

1984

COM(84)649

1984

1985

1986

COM(84)643

1984

1986

-   34  -

SUBJECT

Doc.n“

Date  of 
Commis­
sion's 
proposal

Expected 
date  for 
adoption 
by  Council

Directive  on  the  stores  of  ships, 
a i r c r a f t   and  international  trains*

COM(79)794

1980

1986

Proposal  concerning  the  rate 
structure  (number  of  rates)

Proposal  fixing  the  common  rate(s) 
and  corresponding  s t a n d s t i l l  
arrangement

PERIOD  1987-1992

Proposal  concerning  abolition 
of  derogations  with  d is to rtiv e  
effects

Proposal  concerning  the  establishment 
of  a  V.A.T.  Clearing  House  System

I I .   EXCISE  DUTIES

PERIOD  1985-1986

Proposal  for  a  Council  Decision  providing 
for  a  s t a n d s t i l l   ensuring  no  introduction 
of  new  excise  duties  which  give  rise  to 
border  formalities

Proposals  concerning  harmonization 
of  the  structure  of  excise  duties  on 
alcoholic  drinks*

Proposal  for  an  excise  duty  on  wine

Proposal  concerning  the  introduction 
of  a  th ird  stage  concerning  the 
harmonization  of  the  structure 
of  cigarette  duty*

Proposal  concerning  the  harmoni­
zation  of  the  structure  of  excises 
on  mineral  oiIs

1986

1987

1986

1987

1987

1988

1989

1990

1985

1972

1982

1985

1985

1986

1985

1985

1985

1985

1972

1986

C0M(72)225
Final
COM(82)153 
Final
C0M(85)150 
Final
CQM(85)151
Final

C0M(72)225
Final

COM(80)69

1980

1986

COM(73)1234

1973

1986

-   35  -

SUBJECT 

—“  

Doc.rT 

Proposal  concerning  the  harmonization 
of  the  structures  of  excise  duties
on  other  manufactured  tobacco 

Proposal  concerning  the
final  stage  of  the  harmonization
of  the  structure  of  cigarette  duty 

Proposals  on  common  rate  bands  for 
a l l   harmonized  excise  duties  and 
corresponding  s t a n d s t i l l
arrangement 

PERIOD 1987-1992

Proposals  concerning  the  gradual 
abolition  or  reduction  of  excises 
not  covered  by  the  Common  system 
and  giving  rise  to  border  formalities

Proposal  concerning  the  introduction 
of  a  linkage  between  national  bonded 
warehouses  for  excise  goods

Date  of 
Commis- 
sion's  
proposal 

Expected
date  for
adoption
by  Council

1986 

1987

1986 

1987

1986 

1987

1987-1989

1988-■1989-
1990

1989

1990