Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions - White Paper on commerce
Date: 1999-01-27
Institutions: European Commission
Subjects: EU action, common commercial policy, competitiveness, consumer policy, distribution business, entrepreneurship, single market, small and medium-sized enterprises

COMMISSION OF THE EUROPEAN  COMMUNITIES 

Brussels, 27.01.1999 
COM(1999)6final 

COMMUNICATION  FROM THE  COMMISSION 

TO THE COUNCIL, THE EUROPEAN  PARLIAMENT, 
THE ECONOMIC  AND SOCIAL  COMMITTEE 
AND THE COMMITTEE OF THE REGIONS 

WHITE  PAPER  ON  COMMERCE 

INTRODUCTION 

CONTENTS 

I.  THE CONTEXT AND PURPOSE OF THE PRESENT DOCUMENT 

II.  AN ANALYSIS OF THE SECTOR 

A. 

Importance of the sector 

B.  Trends and structural changes 

, 

, 

III.  DEVELOPING A STRATEGY FOR COMMERCE  : THE KEY ISSUES 

IV.  MAJOR PRIORITIES FOR ACTION 

A. 

Improving the use of policy instruments to assist commerce; 

1.  Better understanding of the sector 

2.  Changes in the structure of commerce: new challenges for policy 

B. 

Improvement of the administrative, legislative and financial  environment 

1.  Simplification  of administrative procedures 

2.  Access to finance 

3. 

Improving the dialogue between commercial enterprises and their partners 

(employees, consumers, credit institutions) 

C.  Strengthening competitiveness and promoting entrepreneurship 

1.  Electronic commerce 

2.  Co-operation between businesses 

3.  Training 

4.  Commerce in rural and less-favoured  urban areas 

5.  Commerce and tourism 

6.  Commerce and the environment 

D.  Encouraging Europeanization  and internationalisation 

1.  The euro 

2. 

International trade 

3.  Enlargement of the European Union 

Annexes:  I. Action Plan with timetable 

II. Financial  information 

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INTRODUCTION 

This  White  Paper  is  about  how  commercial  enterprises  and  their  suppliers  provide  what 
consumers want, in terms of choice, quality, price and service. Commerce (used in this  White 
Paper to mean the same as the term "distributive  trades") employs  some 22 million people in 
the European Union, making it one of the largest sectors of the economy.  The performance  of 
the sector has a major  impact on the lives of the citizens of Europe: 

- 

- 

- 

in making  available  to  them  a very  wide  variety  of  merchandise,  with  a  range  of 
prices to suit all sections of society; 
in contributing  to  the  quality  of  life  in towns  and  cities, where  shopping  facilities 
constitute the focal point of much human activity; 
in the maintenance  of  good  environmental,  ethical  and  social  standards  as  regards 
the products and services which it sells. 

Commercial  enterprises  need  to  be  competitive  to  survive.  A  good  level  of  competitiveness 
means  growth  and  profitability.  This  is  good  not  only  for  the  owners  of  shops  but  also  for 
consumers  in terms of quality and continued provision of services. Increased  competitiveness 
is a way to protect existing jobs and to create new sustainable jobs. 

This White Paper is an expression  of the recognition of the role which commerce plays in the 
economic,  social  and  cultural  life  of the  European  Union.  It  is  a policy  document  with  ideas 
for  shaping  Community  activities  so  as  to  reinforce  its  contribution  towards  improving 
competitiveness in the sector, in. the knowledge that this is the best way to continue to play the 
role described above and to maintain its position as a the second largest employer in Europe. 

The  activities  of  the  European  Union  already  affect  commerce  in  a  great  many  ways. 
Commerce  already takes  indirect advantage of Community  policy  instruments,  in  such  fields 
as  regional  development,  environmental  and  consumer  protection,  research  and  training,  to 
help  to  strengthen  its  competitiveness.  However,  this  can  be  reinforced  by  maximising 
understanding  of  such  opportunities  by  enterprises,  at  both  Community  and  Member  States 
levels .It is necessary to ensure that the circumstances of commerce are fully  understood  in the 
debates on future  Community policy initiatives. 

One  of  the  keys  to  achieving  optimum  use  of  existing  Community  instruments  lies  in 
widening  knowledge  about  commerce  among  decision-makers  at  all  levels.  The  question  of 
recognition of the sector, of spreading knowledge about it, is one of the points which came out 
most  strongly  in  the  reactions  to  the  Green  Paper  on  Commerce,  published  in  1996. 
Commerce  is  not  always  recognised  as  an  important  sector  of  the  economy,  when  policies 
which affect  it are  formulated. 

Acknowledging  the  need  to  reinforce  recognition  of  the  sector  cannot  be  done  by  a  few 
sweeping  legislative  measures  but  rather  through  careful  attention  to  the  interfaces  between 
commerce  and  Community  policies.  Many  actions  of  modest  size  individually  will,  when 
taken  collectively, help in increasing the competitiveness  of the sector both directly  and also, 
by putting commerce  "on the map", help to ensure that maximum value added is taken for  the 
sector from  Community policies. 

The  scenario  may  be  summarised  as  follows:  this  White  Paper  is  a policy  paper,  which  will 
further  develop  the  issues  of  particular  concern  to  the  sector.  The  best  contribution  which 
commerce can make to the large-scale provision of good jobs in the future  is by increasing  its 
competitiveness.  The  Community  can  make  a  contribution  to  this  by  direct  actions  and  by 

raising  the  sector's  profile.  A  summary  of  the  actions  proposed  and  an  implementation 
timetable is annexed. 

I. THE CONTEXT AND PURPOSE OF THE PRESENT DOCUMENT 

The  purpose  of  this  White  Paper  is  to  set  out  the  European  Commission's  follow-up  to  the 
Green Paper on Commerce 1, which it adopted on 20 November  1996. This followed  on  from 
the  Commission  Communication  of  11 March  1991  entitled  "Towards  a  Single  Market  in 
Distribution"^. The  aim of the  Green  Paper  was to provide  food  for  thought  and  to  launch  a 
consultation  procedure  on  the  importance  of  this  sector  of  the  economy,  on  the  challenges 
facing  it  and  on  possible  ways  of  remaining  competitive,  thus  maintaining  its  major 
contribution to employment and social cohesion. 

The  Green  Paper  on  Commerce  was  widely  distributed  among  public  administrations  and 
institutions  at  Community,  national  and  regional  level,  professional  organisations  and 
enterprises.  The  European  Parliament-*,  the  Economic  and  Social  Committee^  and  the 
Committee of the Regions^  and well over a hundred commercial  organisations at European and 
national  level  have  made  substantial  contributions  to  the  debate. The  responses  to  the  Green 
Paper were to some extent predictable and reacted to points raised in the Green Paper itself. 

The  effectiveness  of  the  single  market  and  the  need  to  create  a real  enterprise  environment 
with  a reduction  in the  administrative  burden  placed  on  commerce  by  the  public  authorities 
were  much  referred  to.  Interest  in the  use  of  the  new  technologies  was  considerable.  There 
was 
the  potential 
contributions  to it, which  are in the hands of those responsible  for  land-use planning, in  both 
urban and rural areas and to a lesser extent, to the need to improve personal  security. 

to  greater  competitiveness, 

in  policies 

including 

interest 

leading 

Two  items  were  raised  by  a  large  number  of  respondents,  without  the  Green  Paper  having 
mentioned them as major  challenges. One was the need to remedy the poor recognition  of the 
sector  by  the  public  authorities  at  all  levels,  which  is  said  to  result  in  the  sector's  interests 
being ignored  in debates on a variety  of policies, which nevertheless  have a major  impact  on 
the  sector.  The  other,  not  so  widely  cited  but  raised  with  particular  force  by  those  who  did 
raise  it, concerned  the application  of policies  regulating  competition  which  are  said  by  some 
to  put  independent  SMEs  in commerce  at  a disadvantage  as  compared  to  the  large  retailers. 
These two groups of reactions merit a response by the Commission. 

The  commerce  sector,  like  other  sectors,  is  affected  by  various  public  policies  designed  to 
achieve  a  range  of  policy  objectives,  in  terms  of  economic,  environmental,  social,  cultural, 
regional  development,  training,  research,  consumer  protection  and  other  policies.  These 
policies  sometimes  have the potential  to hamper  commerce  even without  any  intention  to  do 
so.  The  Commission  therefore  considers  it timely  and  necessary  to  insist  that  the  legitimate 
interests  of  the  sector  are  properly  taken  into  account  in  the  formulation  of  policies  which 
affect  it and that the benefits  of those policies, where relevant,  are effectively  made  available 
to the sector. 

1  COM (96) 530 final 
2  COM  1991/0041 final 
3  Report  N°(A4-0254/97)  discussed  by  the  European  Parliament's  Economic  and  Monetary  Committee  and 

approved on 23 July  1997 

4  Opinion of the Economic and Social Committee of 28/29 May  1997 
5  Opinion of the Committee of the Regions of  10 July 1997 

The  White Paper proposes  means  by which public policies, at national  and regional  levels  as 
well  as at European  level, can help to maximise efficiency  in the sector. This means  ensuring 
that public strategies which affect  the sector are established in the light of a full  understanding 
of the consequences  of such policies  and of the importance  of improving  the  competitiveness 
of the sector and generating  employment. 

II.  AN ANALYSIS  OF THE SECTOR 

A. 

Importance  of the sector 

The  most  recent  figures  published  by  Eurostat  illustrate  the  importance  of commerce,  which 
accounted  for  30% of  businesses,  16% of employment  and more than  13% of the  GDP  of the 
European  Union  in  the  mid-1990s;  around  five  million  businesses  were  generating  ECU  640 
billion  and  21.5  million  jobs  for  retailers,  wholesalers  and  middlemen.  The  sector  is  also 
important  for  its  economic  role  as  a  vital  link  between  the  producer  and  the  consumer,  since 
traders  provide  the  channels  for  the  physical  and  monetary  exchanges.  Commerce  offers  an 
increasingly  wide  selection  of goods  and  services  and  is the vital  channel  for  the  exchange  of 
information between the final user and the producer on trends in tastes and the demand structure. 
Finally, commercial  enterprises are an essential element for the proper functioning  of the single 
market and for trading with non-member countries. 

'o 

Commerce  has  particular  structural  and  operational  characteristics  that  set  it  apart  from  other 
areas of business. These particular characteristics, which are discussed in the following  chapters, 
justify  specific action. 

B.  Trends  and structural  changes 

The development  of the market has meant upheavals in the commercial  environment;  increased 
competition  and  concentration,  developments  in  consumption  and  the  upsurge  of  the  new 
technologies have put increasing pressure on the sector to develop radically. 

The  concentration  of retailing,  particularly  in the  food  sector,  is  a striking  current  trend,  and 
one  that  could  lead  to  restriction  of  choice,  higher  prices  and  reduced  accessibility.  In 
addition, this  can cause the closure  of small  shops; these  are situations  that  create  difficulties 
for people who have only limited access to transport. 

Insofar  as competitiveness  depends  on selling prices, economies  of  scale bring  advantages  to 
large traders  in obtaining  wholesale  supplies. The power of negotiation  of a distributor  of any 
size  is  based  on  a  critical' mass  big  enough  to  enable  him  to  gain  direct  access  on  the  best 
possible  terms  to  producers'  sales  networks  which  sometimes  cover  the  global  market.  In 
order to achieve this critical mass, which the large-scale distributors already have, commercial 
SMEs need to form buying groups. 

Another  means  to  improve  the  competitiveness  of  small  shops  is to  provide  better  access  to 
finance,  better training both of owners  and managers, and better access to transport  and  better 
recognition by local, regional  and national  authorities of the social  and economic roles  which 
small shops play in the communities they serve. 

Competitiveness  demands  efficient  logistics  and  swift  supply  -  two  vital  requirements  that 
will  increasingly  be  met  by  means  of  the  new  technologies.  A  number  of  procedures  and 
technologies  have  been  grouped  together  to  form  a  strategic  initiative  helping  to  overcome 
barriers  through  the  entire  supply  chain  in"ECR"  (Efficient  Consumer  Response).  At  present 
these are primarily applied by the big companies, but are increasingly being used in co-operation 
between  SMEs. This factor  is of increasing importance because of the globalisation of markets, 

which will have an effect  on employment in that new skilled jobs will arise in Europe while less 
skilled jobs are exported. 

Distance  selling  to  consumers,  including  electronic  shopping  via  networks  such  as  the 
Internet,  are  growing  rapidly.  The  tools  and  opportunities  offered  by  this  new  medium  will 
form  the  basis  of  a  considerable  restructuring  of  the  sector,  which  will  require  major 
investment in equipment and training. 

Finally, consumers themselves are also changing rapidly. They have become more demanding 
and want an-integrated set of services-at-their disposal-(including'tourism,  culture,'information 
technology,  personal  security  and  transport  as  well  as  commerce  itself).  This  ever  more 
complex  pattern  of demand  raises the  question  of the  synergy  needed  between  these  various 
services at the various places where people live. 

III.  DEVELOPING  A STRATEGY FOR COMMERCE  : THE KEY ISSUES 

The need for better recognition of the sector is justified  by the fact that the commerce  sector is 
the  second  largest  employer  in the  European  Community  and  that  it has  been  able, over  the 
last decade, to create jobs where other sectors have been shedding labour. This has been made 
possible by its flexibility  in adapting to changes in demand. 

Employment  in  commerce  will  be  subject,  in  the  coming  years,  to  both  gains  and  losses. 
Gains  will  come  from  new  forms  of  retailing  with  increased  emphasis  on  customer  service. 
Losses  will  come  from  greater  mechanisation,  computerisation  and  increased  size  of 
operations  in the  fields  of  logistics  and  the  management  of  stocks. Also,  as  globalisation  of 
markets  continues  to  grow,  new  challenges  and  opportunities  in  developing  areas  such  as 
electronic  commerce  will  have  an impact  on jobs. The value  added  of  Community  action  in 
this area is to  seek to  improve the competitiveness  of commerce  enterprises  in the  European 
Union and through this to enhance their chances of creating new jobs. 

The  importance  of  the  contribution  of  the  sector  to  the  well  being  of  the  citizen  makes  it 
sometimes  necessary  for  the  public  authorities  to  take  action  so  that  opportunities  for 
improvement  do not  go by default.  This is a matter  of maintaining  a network  of  shops  which 
is diversified,  competitive and sustainable. 

The  competitiveness  of the  sector  is not just  a matter  of  achieving  lowest  market  prices  and 
lowest  costs.  Consumers  increasingly  seek  high  quality  products  and  a  satisfactory  range  of 
services at price levels which are acceptable to them, without being necessarily  the lowest. A 
successful  enterprise is therefore  one which operates with a blend of all these  factors. 

At the present time, the big stores offer  a large selection of merchandise at attractive prices. 
Small stores are generally local, in relation to the homes of their customers, and offer  personal 
service.  There  are  strengths  and weaknesses  in both  of  these  situations.  The  great  challenge 
for  commerce  in  Europe  is  to  maximise  its  strengths,  offering  both  quality  and  attractive 
prices,  while  continuing  to  be  a  major  employer.  The  structural  changes  that  European 
commerce is undergoing will require more skilled labour and part-time jobs. 

Paradoxically,  commerce  is a sector  with which  the  citizen  is very  familiar  but  which  is  not 
fully  taken into account by the public authorities, the decision-makers. The reason for this lies 
in  the  extremely  diversified  nature  of  the  enterprises  within  it,  with  their  different  market 
segments,  business  cultures  and  types  of  location,  all  of  which  make  public  presentation  of 

their  case  difficult  at  Community  level  despite  the  intensive  work  of  EuroCommerce,  the 
European  umbrella  organisation.  The  other  organisations  which  represent  the  enterprises  in 
the  sector  are  fragmented,  particularly  at  national  level,  hampering  the  effectiveness  of  the 
dialogue  with  the  public  authorities.  The  sector  is  affected  by  a  large  number  of  horizontal, 
national  and European policies but often  without its particular  characteristics and needs  being 
taken into account in the formulation  of these policies. 

What contribution  can the European  Community  make to this? On all these matters  affecting 
commerce, it has a role to play in making the sector and its strong points better understood  in 
policy  formulation:  It-can  improve  consultation  between the parties-involved,  that  is  to  say, 
between the trade organisations  and the national, regional  and local authorities. This  dialogue 
can,  among  other  things,  give  rise  to  the  identification  and  dissemination  of  Best  Practices 
which  will  contribute  to  improving  competitiveness  and  the  provision  of  sustainable  jobs. 
Disseminating  these  Best  Practices  requires  incorporation  of the needs  of the  commerce  into 
relevant  policies.  The  European  Commission  is  favourably  placed  to  lead  an  exercise  to 
spread knowledge of these Best Practices. 

Long-term  prospects 

The  aim  of  this  White Paper  is  not  to  launch  a  major  initiative  nor  to  introduce  radical 
changes of policy.  The commerce and distribution sector needs a strategy essentially based on 
improving  competitive conditions  in the market in which competitiveness  is the best response 
to  consumer  demand.  The  White Paper  therefore  sets  out  specific  problems  and  practices 
calling for  action at Community level in order to ensure the smooth running of the market and 
thereby guarantee that the sector can best contribute to consumer welfare. 

Some  of  the  chapters  in the  White Paper  outline  the possible  medium-  or  long-term  outlook 
the  sector.  These  are  not  concrete  measures  but  topics  warranting  broad  and 
for 
thoroughgoing  discussion  in the future.  Certain factors  need  to  be realised  in the  commerce 
sector before  it is too late. Some priorities for  action are discussed below. It should  be borne 
in  mind  that  solutions  to  these  problems  may  well  go  beyond  the  competency  of  the 
Community  (taking  into  account  the principle  of  subsidiarity)  even  though  the problems  in 
question often manifest themselves in the same way in all the Member States and the  solutions 
often require cross-border co-operation. 

This Paper proposes a number of actions designed to create a coherent  strategy  for  promoting 
the sector in the coming years; these actions fall into four priority groups: 

•  Improving the use of policy instruments to assist commerce; 

•  Improving the administrative, legislative and financial  environment; 

•  Strengthening competitiveness  and promoting entrepreneurship; 

•  Encouraging europeanization and internationalisation. 

IV.  MAJOR PRIORITIES FOR ACTION 

A.  Improving  the use of policy  instruments to assist commerce; 

Market trends  need to be identified,  and a clearer picture  obtained,  of the web of  commercial 
activities  making  up  this  sector  in  the  European  Union.  There  will  first  be  a  thorough 

proposals  were  made  with  a view  to  simplifying  the  rules  of  the  single  market,  particularly 
regarding VAT and the Combined Nomenclature. 

Administrative  burdens  have  a much  higher  impact  on  SMEs  than  on  large  companies.  This 
applies  particularly  to  very  small  retail  outlets.  Most  legislative  and  administrative  burdens 
imposed  on  enterprises  stem  from  Member  State  and  not  European  Union  regulations.  The 
Commission  has  been  involved  in  concerted  actions  exchanging  information  about  best 
practice,  both  with  Member  States,  representatives  of  business  organisations  and  with 
individual  entrepreneurs.  This  work  has  been  carried  out  with  the  assistance  of  a  Group  of 
Experts  on Improving  and  Simplifying  the Business Environment  made up of  representatives 
from the Member  States and from  the European  SME business organisations. The first  part of 
this work  resulted  in the  Commission  Recommendation  of April  1997 addressed  to  Member 
States on Business  Start-ups9.  It  should  be stressed that  commerce  provides  a good  field  for 
entrepreneurial  activities for those willing to take risks, despite the  strong  competition  in this 
sector.  Business  start-ups  are primarily  to be  found  in the  area  of  sales  of  new products  and 
services and advice-oriented services. 

The  Amsterdam  European  Council  invited  the  Commission  to  set  up  the  Business 
Environment  Simplification  Task  Force  (BEST).  BEST  was  given  the  mandate  to  simplify 
existing  and  new  legal  and  administrative  regulations  and  reduce  their  burden  on  European 
businesses, particularly  SMEs. It was also to review major  policy  areas  of concern for  SMEs 
development  in  the  EU.  The  Commission's  response  to  the  BEST  Report  was  given  in  its 
Communication  "Promoting  Entrepreneurship  and  competitiveness"  of  30  September  1998, 
including  an  action  plan  which  was  submitted  for  approval  to  the  Council10.  It  contains 
measures to be taken by the Commission  and the Member  States to enhance  competitiveness 
and the enterprise  culture, which plays a key role in commerce. Several aspects of this policy 
framework  such as training and access to finance are examined elsewhere in this White Paper. 

Actions 

•  The Commission will organise meetings of CCD and national  government experts in order 
to  draw  up  and  publish  actions  for  commerce  which  would  be  taken  in  the  light  of  the 
BEST report. 

2.  Access to finance 

Just  like  other  businesses,  commercial  enterprises  need  access to  finance  for  investments  in 
sales  infrastructure  and  especially  in  the  new  technologies.  Regarding  sources  of  finance, 
these enterprises  especially  need  easy  access to overdrafts  and  short-term  loans  at  acceptable 
interest rates. In fact,  SMEs have to pay on the average between  1.5%  and  5% higher  interest 
rates than  big  enterprises  because  of the higher  risk  (cf.  Commission  Communication  on  the 
financial  problems  experienced  by  small  and  medium-sized  companies11).  This  reduces  the 
competitiveness of SMEs. 

Access to finance  may be limited because small commercial enterprises  often  do not have real 
estate  or  machinery  to  offer  as  security  but  only  goodwill  which  is  normally  not  taken  into 
account  by  the  banks.  In  addition,  the  equity  of  smaller  commercial  businesses  is  very  low 
and amounts to approximately  20% of the total available capital. 

9  OJ L  145 of  5 June 97 pages 29-51 
10  Commission  Communication  to  the  Council  "Promoting  Entrepreneurship  and  Competitiveness"  The 
Commission's Response to the BEST Task Force Report and its Recommendations, COM (1998) 550. 

11  COM (1993) 528 

Thus access to these financial  sources depends upon good relations with the banks. In 
particular, commercial SMEs suffer  from  difficult  access to risk capital, venture capital etc. 

Venture  capital  is  greatly  underdeveloped  in  Europe.  In  particular,  certain  fast  growing 
markets  such as franchising  still need better access to venture capital in order to finance  rapid 
growth12. However,  several information  and telecommunication retailers recently  successfully 
went public using  the new  electronic  stock  exchanges  such  as Easdaq  and  EURO-NM.  They 
were  able  to  raise  substantial  new  financial  resources  in  order  for  their  growth  and 
internationalization  strategy. 
The Commission, together with a high-level expert group from  financial  institutions  of the 2nd 
Round  Table  of Bankers  and  SMEs, came to the conclusion that  better  co-operation  between 
banks and SMEs and training of staff in banks would substantially benefit  SMEs. 

A  new  initiative  was  proposed  by  the  Commission  in  order  to  support  the  creation  of joint 
ventures  in the EU:  JEV  - Joint  European  Venture  (Council  Decision  98/347/EC  of  19 May 
199813),  part  of  the  "growth  and  employment  initiative"  launched  in  November  1997.  An 
amount  of ECU  80 -  100 million is available for the period  from  1998 to 2000 to  support  the 
creation of transnational joint ventures including the commerce sector. 

In  several  countries,  special  institutions  offer  leasing,  which  may  be  particularly  interesting 
for  commercial  enterprises. Leasing can make a major  contribution to the well being of small 
and  medium-sized  commercial  enterprises,  through  helping  them  to  have  the  use  of  modern 
buildings and equipment. 

Actions 
•  Facilitation  of access to finance  for the establishment  of new companies through the 
third  Round  Table  of  Banks  and  SMEs  and  by  implementing  the  "growth  and 
employment"  initiative for commerce. 

•  Identification  of  possibilities  for  businesses  to  gain  access  to  financing  and 

encouraging mutual guarantee systems for commerce. 

•  Implementation  of  a  second  seed  capital  initiative,  for  innovative  enterprises  and 

transfer  of commercial businesses.14 

•  Identification  of  good  practices  in  the  Member  States  as  regards  financing, 
establishment and transfer, by means of concerted actions, conferences  and studies. 
•  Organisation  of a conference  to create awareness in the banking  sector of the  special 
situation of commercial enterprises and to obtain better access to finance  for them. 

Improving  the  dialogue  between  commercial  enterprises  and  their 

3. 
partners (employees, consumers, credit institutions) 

Commerce  has  a  number  of  partners  with  whom  dialogue  must  be  stepped  up  or  renewed, 
with  a  view  to  avoiding  conflicts,  highlighting  problems  common  to  both  parties  and 
implementing equitable solutions. 

a)  Social Dialogue 

Commerce  must be able to play  its part  in the  Social dialogue  in Europe.  For  15 years  now, 
there  has  been  productive  dialogue  at  sectoral  level  between  the  bodies  representing 

12  Commission  Communication  "Risk Capital: A Key to Job Creation in the E U", SEC (1988) 552 
13  OJL  1998/155 p. 43 
14  OJC  363 of 9.11.98 

management  and  employees  in the commerce  sector  - EuroCommerce for  the employers  and 
Euro-Fiet  for  the  employees.  This  dialogue,  which  has  been  supported  by  the  Commission, 
has  led  to  several joint  initiatives. Nevertheless, the tertiary  sector, which includes commerce, 
complains that it is under-represented, particularly at inter-branch level. 

Quite  apart  from  the  old,  familiar  problems  which  would  justify  a  smaller  number  of 
representatives  (in the interests  of efficiency  and representativeness)  and which continue to  fall 
outside  the  Commission's  remit,  participation  by  representatives  who  could  bring  the 
peculiarities  of  commerce  to  bear  could  still  be  improved.  EuroCommerce  and  Euro-Fiet  are 
already  involved  in  the  four  main  areas  of  the  dialogue,  i.e.  information,  consultation, 
concertation and joint action. 

In  its  recent  Communication  on  "adapting  and  promoting  social  dialogue  at  Community 
level"15, the Commission  described  the means  it intends to use and the measures that need  to 
be taken to strengthen dialogue between management and employees at European level. 

The  Commission  proposes  a reform  of the  Standing  Committee  on  Employment  to  improve 
the contribution of employees and management to the development and implementation  of the 
guidelines  for  employment  and  the  general  thrust  of  economic  policy.  According  to  the 
Commission's proposal, EuroCommerce  should be represented  on the Standing Committee on 
Employment.  Euro-Fiet  will  also  be  represented  through  its  membership  of the  ETUC.  The 
sectoral  level  dialogue  is very  important  for joint  action and negotiation.  The Commission  is 
establishing  a  new  framework  for  sectoral  dialogue,  in  the  form  of  sectoral  dialogue 
committees, which will apply to all the interested sectors including commerce. 

Actions 
•  Improvement  of  the  representation  of  the  commerce  sector  in  the  existing  and  new 

structures such as the employment committee. 

•  Creation  of  a  co-operation  mechanism  between  entrepreneurs  of  the  commerce  sector 

(CCD) and the social dialogue committees. 

b)  Consumers 

An  acceptable  balance  must  be  struck  between  consumers'  and  traders'  points  of  views. 
Consumers  must  support  the  development  of  the  commerce  sector,  since  the  choice  of 
merchandise, prices, and the  quality  of services and merchandise  depends  on the  profitability 
of the business. 

The  implementation  of  the  internal  market  programme  and  the  development  of  the 
information  society have made Europe's consumers more sensitive and more demanding. 

They  want  access  to  a  market  that  is  more  than  just  local  or  national  -  in  other  words,  a 
Community  market  in the true  sense, of which they  and their  families  can take  advantage  on 
their  travels.  This  development  will  be  enhanced  by  the  introduction  of  the  Euro.  It  is 
important therefore  to promote dialogue between the commerce sector and consumers. 

Consumers  are becoming  more  educated,  have wider  horizons  in terms  of what  they  want  to 
buy  and how they wish to make their purchases. They also have new expectations  in terms of 
respect  for  the environment  and  ethical  standards  and new life-styles,  such as home  working. 
Through  electronic  trading  methods,  including  the Internet, consumers  are  coming  to  have  a 
vastly increased choice of products and suppliers. 

Moreover,  consumers'  wishes  as  regards  the  type  of  service  they  are  offered  are  constantly 
changing.  Different  ways  of  selling  (fixed  location  or  mobile  trading,  direct  sale  and  mail 
order,  distance  selling  and  electronic  shopping)  combine  with  different  types  of  sales  outlets 

15  COM(98)322of20May  1998 

10 

(small and large shops, specialist or general dealers, groups of shops such as shopping  centres 
or  arcades  in  city  centres, wholesalers  or  factory  outlets)  to  offer  the  consumer  a  very  wide 
choice. Fiercer  competition  is also  constantly  increasing  the  importance  of ancillary  services 
(after-sales  service, customer care etc.). 

As  regards  the  changeover  to  the  Euro,  this  dialogue  has  been  embodied  in  an  agreement, 
signed  on 30 June  1998, between the representatives  of the consumers  and those  of the  main 
professional  organisations  in the  distribution,  tourism,  craft  and  SME  sectors  on  a  voluntary 
code of conduct for the transitional period. 

Action 
•  Organise an annual joint meeting  of CCD and the Consumers Committee to debate current 

issues and seek joint solutions. A report of these meetings will be published. 

c)  Credit Institutions 

Commerce is very much affected  by all the various means of payment,  in view of the scale of 
the financial  flows to producers and from  consumers. It will make increasing use of electronic 
means  of  payment,  particularly  payment  cards, provided  the  price  of  these  services  permits 
this. 

The  payment-cards  system  involves  four  operators:  the  cardholder  (consumer),  the  issuing 
body  (financial  institution), the  acceptor  (trader)  and the  acquirer  (financial  institution).  This 
system  works  as  follows:  the  cardholder  pays  a  contribution  to  the  issuing  body  (financial 
institution)  for  the card  and the right to use it. At the  same time, traders  support  membership 
of the system and in turn pay a contribution to their bank (the acquirer) every time they accept 
a payment by card. This is known as the "merchant fee". 

Traders think that the charges made for the use of the system  afford  no scope for  competitive 
negotiation  of membership.  With the  introduction  of the Euro there  will  also be the  question 
of  charges  payable  by  cardholders  in  the  case  of  transactions  in  Euro  made  abroad  using 
payment  cards.  In  a  recommendation  of  April  199816, the  Commission  calls  on  banks  and 
other operators to clearly identify  the transaction charges as from  1 January  1999, after  which 
date the fixed  conversion rates will be strictly applied. 

Greater visibility of the transaction charges and rates applied by payment-card  operators could 
lead to better competition between the acquirers of card transactions and a better  investigation 
and understanding  of the cost structures involved. Under the  1998 recommendation,  financial 
operators  must  clearly  show  the  fixed  conversion  rates  and  any  charges  other  than  on 
conversions. 
The  Commission  recommendation  of  30  July  199717  aims  to  ensure  a  minimum  level  of 
transparency  of  the  conditions  of  use,  to  explain  the  rights  and  obligations  of  the  parties 
concerned  and to establish mechanisms  for the settlement of disputes. There is also the  recent 
proposal for  a directive on electronic money, which concerns monitoring of electronic  money 
institutions, and the fifth  Communication on the prevention of fraud  of  1  July  1998. 

The main aim of the European Union must be to maintain competition through transparency  in 
the  sharing  of transaction  costs between the parties. Otherwise, traders  - particularly  SMEs  -
will be obliged to increase their prices uniformly, regardless of the means of payment used, in 

16  No 98/286/EC, Commission Recommendation  of 23 April  1998 concerning banking charges for  conversion 

to the Euro; OJ LI30 of  1  May  1998 p.22 

17  ^o  97/489/EEC,  Commission  Recommendation  97/489/EC  of  30  July  1997  concerning  transactions  by 

electronic payment  instruments and in particular the relationship between issuer and holder 

11 

order to cover these extra charges. On the other hand, consumers are not aware of the costs of 
the services they receive. The debate on the sharing of transaction costs is still open. 

Actions 
•  The  Commission  will  prepare  a  report  by  carrying  out  a  thorough  examination  of  the 
problems  of  means  of  payment,  in  particular  the  application  of  recommendation  n° 
87/598/CEE  with  a  view  to  obtaining  full  transparency,  in  competitive  conditions, 
regarding  the  allocation  of  charges  for  use  of  such  cards  between  financial  institutions, 
•--••• 
consumers-and traders. 

• 

•  Evaluation  of  the  impact  of  the  introduction  of  the  Euro  on  the  use  of  the  methods  of 
payment,  the  operation  of  the  payment  systems,  and  regulatory  solutions  such  as  the 
necessary follow-up to Recommendations Nos 97/489 and 98/286. 

C.  Strengthening  competitiveness and promoting  entrepreneurship 

1.  Electronic  commerce 

In  this  White  Paper,  electronic  commerce  is  viewed  as  a  new  factor  in  strengthening 
competitiveness  which,  if  properly  developed,  may  benefit  all  commercial  enterprises. 
Electronic  commerce  is  also  a  major  opportunity  to  foster  new  activities,  in  particular  new 
intermediaries, on-line business and logistic services. 

Electronic  commerce  covers  any  form  of business,  administrative  transaction  or  information 
exchange carried out using any information  and communication technology. From the point of 
view  of  businesses,  it  encompasses  simple  shopping  systems  and  complex  solutions  that 
integrate the whole commerce cycle. From an organisational perspective, electronic  commerce 
enables  the  seamless  operation  of  existing  flows  between  businesses  and  consumers, 
businesses and businesses and between businesses and the public sector. Moreover,  electronic 
commerce  encourages  the  emergence  of  new,  innovative  ways  of  co-operation  among 
enterprises that will help them to successfully  face the challenges of globalisation. 

The  wider  prospects  of  electronic  commerce  were  analysed  in  the  Commission's  recent 
Communication "A European Initiative on Electronic Commerce"18 and are further  referred  to 
in the draft  directive on "certain legal aspects on electronic commerce19. 

Electronic  commerce  can  make  companies  more  competitive.  It  enhances  the  contacts 
between producers/suppliers  and consumers. It enables enterprises to federate  in order to pool 
their purchasing  power,  reach  new  and  distant  markets  at  low  costs, obtain  access  to  market 
information,  improve their logistics and develop co-operative R&D  facilities. 

Nevertheless,  SMEs  lack  awareness  and  skills  and  suffer  from  insufficient  consumer 
acceptance of and trust in electronic commerce. In addition, small companies need a clear and 
simple  regulatory  environment  as  well  as telecommunications  tariff  schemes  adapted  to  the 
specific  features  of electronic commerce. Electronic commerce will have a full  impact  on the 
competitiveness  of  enterprises  only  when  the  Internet  becomes  effectively  accessible  and 
affordable  by  everybody  to  the  same  extent  as  other  utilities  are.  Lack  of  awareness  and 
training, high telecommunications  costs and uncertainty  about legal  implications  are the main 
inhibitors  for  quick  take-off  of  mass-market  electronic  commerce,  as  they  prevent  the 
incorporation of a critical mass of business users to the electronic market. 

18  COM (1997)  157 final 
19  COM (1998) 586/2 of 3 November  1998 

12 

SMEs must be supported in developing co-operative structures based on best practices. Public 
support  is necessary  for  networks  and  associations  representing  end-users  and  enterprises  to 
help them to reach the critical mass necessary to convey their views as regards tariff  schemes 
for  access  to  electronic  commerce.  Public  action  is  essential  to  help  end  users  and  small 
companies  to  have  bargaining  power  and  political  weight.  It  is  also  important  to  encourage 
training  and  the  improvement  of  knowledge  dissemination  and  learning  methods  -  both  for 
citizens and for businesses, especially SMEs. 

Business  services,  such  as  commercial-e-mail,  advertising,  certification,  quality  label  and 
payment  schemes  are  essential  for  the  success of  small  and medium  companies  in their  Web 
ventures.  For  enterprises  to  take  advantage  of  these  services  they  must  be  reliable,  fully 
interoperable  and  affordable.  Moreover,  because  of  economies  of  scale  and  external  factors, 
these  services  can  only  be  offered  efficiently  on  a  large  scale.  Therefore,  the  Commission 
should  identify  best  practices  and  promote  the  delivery  of  these  services  on  a  mass-market 
basis in Europe. 
Actions 
•  Creation  of  a  web  site  inventorying  awareness,  training  and  operational  tools  for 

enterprises to take advantage of electronic commerce. 

•  Preparation and publication of a study identifying  best business sites on the Internet. 
•  A  pilot  project  to  enable  the  commercial  viability  of  the  supply  of  basic  electronic 

commerce services to a large number of small companies. 

•  A pilot project  to promote the use of quality labels and systems to certify  compliance  with 

a code of conduct. 

•  Creation of a task force  within the CCD to study and provide feedback  to the  Commission 
in  a  number  of  matters:  the  barriers  which  enterprises  meet  in  developing  electronic 
commerce  practices,  the  impact  of  the  different  regulatory 
issues  related  to  the 
development of electronic commerce among SMEs and the possible measures that could be 
envisaged by the Commission in this  field. 

2.  Co-operation between businesses 

Many contributions to the Green Paper debate stressed the importance of co-operation  between 
commercial  SMEs, which will have little chance of becoming  or remaining  competitive  unless 
they pool some or all of their functions.  Businesses have to reach a critical mass before they can 
buy and sell on best terms. 

Traders'  co-operatives,  buying  associations,  voluntary  chains  and  franchise  networks  alike 
enable  information  from  the  consumer  to  get  back  to  the  producer  more  quickly,  particularly 
thanks to the use of the new technologies, which help sales outlets to build up and replenish their 
stocks  in  real  time.  They  also  provide  a  channel  for  information  from  the  sales  outlet  to  the 
producer,  enabling  production  to  be  geared  to  consumer  demand  (Efficient  Consumer 
Response). Organised  commerce provides the flexibility  and service which is characteristic  of 
small shops together with the logistics of big organisations  and may enable  small operators to 
modernise by increasing their sales area and by training managers. 

The  Commission  has  already  identified  and  taken  account  of  the  specific  problem  of 
agreements  between  small  businesses,  particularly 
in  its  Communication  concerning 
agreements,  decisions  and  concerted  practices  in the  field  of  the  association  of  independent 
retailers20 and especially  in its Communication on agreements of minor importance21. 

20  OJ N°C75, 29 July  1968, p.3 
21  OJN°C372,  9 December  1997 

13 

In  the  application  of the  competition  rules, the  Commission  takes  into  account  developments 
which are occurring in the distribution sector. Thus, in particular, the Commission welcomes co 
operation  between  small  and  medium  size  enterprises  when  this  co-operation  allows  them  to 
increase their efficiency  and to expand their productivity and competitiveness in the very largest 
markets  and  to  guarantee  competition  on  fair  terms  with  other  economic  entities  such  as 
integrated commerce sector. 

There  is  a  long-term  risk  of  extreme  concentration  of  distribution  in  Europe,  resulting  in  a 
mere handful  of big chains dominating the entire retail market. This would be the end of small 
and medium-scale  trading and the number of sales points would consequently'be reduced.  In 
the  distribution  sector,  concentration  of this  kind  could  ultimately  lead  to  a reduction  in  the 
range  of  products  on  offer,  the  variety  of  selling  systems  and  the  number  of  shops  -
particularly  in  city  centres  and  rural  areas  and  it  would  alter  the  relationship  between  small 
producers and retailers. 

The  Commission's  Green  Paper  on vertical  restraints22  and the  Communication  that  followed 
it23 have demonstrated the need for a more market oriented approach to the matter. 

Without  denying  the justification  of  the  legislation  on  restrictive  agreements,  further  thought 
should  be given to ways  of enabling  small, legal units to conduct joint  commercial  operations. 
The  draft  regulation  on  exemption  from  the  provisions  on  vertical  restraints  on  which  the 
Commission is currently working represents considerable progress in this area. 

Actions 

•  The  Commission  will  prepare  a  proposal  for  an  exemption  regulation  especially  taking 
account  of  the  particular  circumstances  of  associations  of  independent  retailers,  on  the 
basis of the mandate which the Council will give to it. 

•  The  Commission  will  hold  all  the  consultations  formally  required  for  the  preparation  of 
the  block  exemption  regulation  and  will  hold  in addition  all  the  consultations  considered 
useful,  and in particular, will request the opinion of the national government  experts in the 
field of commerce. 

3.  Training 

Training  improves  the  competitiveness  of  commercial  businesses  by  providing  stability  and 
opportunities for  growth. Big companies have shown that they are fully  aware of this and take 
appropriate  measures. The  situation  is quite  different  in the  case  of  SMEs, even though  their 
need for training is obvious. 

The  business  environment  is becoming  increasingly  complex,  making  it particularly  difficult 
for  SME managers to cope with the situation; the speed  and extent of changes in the  business 
world will be greater and less predictable than they have ever been in the past. 

Many  small  business  entrepreneurs  realise  their  shortcomings  compared  with  their  leading 
competitors  in  important  areas  such  as  business  strategy,  sales  policy  and  leadership.  These 
shortcomings explain why many businesses fail, but the majority  of these business managers 

22  COM (96) 721 final,  adopted by the Commission on 22 January 97 
23  Communication  from  the  Commission  on  the  application  of  the  Community  competition  rules  to  vertical 

restraints - Follow-up to the Green  Paper on vertical restraints (COM/98/0544  final) 

14 

are  not  convinced  of  the  need  to  spend  time  and  money  on  training.  The development  of 
entrepreneurship is a key matter  for the future  of commerce  and training, the major  factor  in 
promoting the entrepreneurial spirit in Europe. 

Developments  in  technology  and management  necessitate  the  acquisition  of  basic  skills  in 
accounting,  finance,  sales  techniques,  use of multimedia,  human  resource  management  and 
networking.  If  SMEs  do not have  these  basic  skills,  which  are already  widespread  in  large 
companies, there is an increased risk of their being caught unawares and falling behind. 

integrated 

training  policy  for  enterprises 

therefore  essential  and  a 
A  genuine 
Communication-on this question is-under-preparation. Thispoliey,4o be directly applicable to 
commercial  SMEs, will require a more  sectoral approach,  since the development  prospects in 
the commerce sector exhibit specific  features which must be taken into account. 

is 

Big  companies  need  to  make  new choices  as regards  the management  of  their  staff.  These 
choices imply various training  strategies. New jobs should emerge from  the subcontracting of 
activities  hitherto  performed  by  the  manufacturer  (e.g.  maintaining  stocks),  service  and 
advice,  exploitation  of  new  information  and  management  techniques,  communication  and 
marketing.  Some  of  these  jobs  will  require  a  high  level  of  qualification.  New  forms  of 
organisation  are  emerging  which  permit  improved  management  of  the  different  phases  in 
activities (versatility, use of downtime for training at the place of work). 

If SMEs are to develop, they will have to group together to form  buying and selling  networks 
on  an appropriate  scale  with  the aid of information  technology.  This  will  require  sustained 
efforts  on the part of the heads of companies to learn about these new techniques. 

Actions 
•  A Communication  on training for SMEs will be published  shortly,  outlining  best  practices 

and future  actions. 

•  The  Commission  will  assess  the  needs  in  commerce  for  training  and  publish  a  set  of 

guidelines and best practices, including risk management. 

•  Simulations  of  pricing  in  Euro  at  points  of  sale  in  order  to  ascertain  the  training 

requirements for sales  staff. 

•  A pilot project  for studying the management  of downtime  (personalised  distance  learning, 

versatility). 

4.  Commerce in rural and less-favoured  urban areas 

The  local  village  shop  is  a  place  where  you can buy  almost  anything  needed  by  someone 
living  in  the  countryside.  The  centre  of  social  life,  of  contacts,  of  conversation,  of  the 
exchange  of  news  and  information!  It  has been  said  that  a  village  with  no  local  shop  is a 
village with no heart. 

Certain types  of trading  are intrinsically  on a small  scale -  in highly  specialised  sectors, for 
example. Shops of this kind are under no threat from the big chains. Small  shops, particularly 
food  shops,  in  rural  and  less-favoured  areas  of  big  cities  on  the  other  hand  often  find 
themselves in difficult,  or even have to struggle just to survive. 

The development of large-scale  distribution makes it possible to improve the  professionalism 
of the  commerce  sector  and to keep prices  down, but in some  cases it is a threat to the very 
existence  of traditional  trading,  and the less-favoured  areas  are no exception.  If  it  does not 
manage to provide good coverage in these rural and urban areas, there is the risk of decline or 
marginalisation. 

15 

From  the  consumer's  point  of  view,  the  disadvantages  of  businesses  in  less-favoured  areas 
(narrow range of products, high prices) are offset  by the fact  that the shops are fairly  close to 
where they  live. Their management  methods  and the lack of suitable premises and  equipment 
often  limit  profitability. 

Nevertheless,  local  shops perform  an important  function  in  supplying  the population,  adding 
to  the  quality  of  life  of  the  area  and  providing  a  focus  for  social  contacts,  rooting  the 
populations  more  firmly  in  the  area  and  providing  a  basis  for  the  development  of  other 
diversifying  activities. 

The  primary  aim  is .to  encourage  local shops-in.less-favoured~areas  to  modernise,  so  as  to 
become more competitive  and extend their life expectancy. The second  is to target the  means 
for Community action more specifically  on activities with great job-creation potential. 

The  structural  funds  (ERDF  and  ESF, particularly  under  the  URBAN  initiative)  can  help  in 
achieving these aims as part of the policy for reducing regional and social disparities. 
Actions 
In the  field  of  local  development,  the  Commission  intends  to  identify  best practices, both  so 
that they can be disseminated and replicated by others at community level and so that they can 
be used  where  appropriate  in the  application  of the  structural  funds.  The  following  activities 
are planned: 
•  Identification  of the problems encountered in the field by conducting a survey; 
•  By  setting  up  specialised  working  groups,  identification  of  good  practices  to  assist  the 

businesses concerned to modernise; 

•  Dissemination  of  these  good  practices  among  national  and  regional  decision-makers  by 

conferences  and a mobile exhibition; 

•  Recommendation  on improving  access  of  SMEs to  other  Community  Programmes  and  in 

particular  Structural Funds. 

•  Publication  of  good  practices  in  commerce  to  assist  in  the  application  of  the  structural 

funds. 

5.  Commerce and tourism 

Shopping  and  tourism  (including  day  trips  for  leisure  purposes)  have  common  ground.  In 
tourist  areas,  shops  and  tourism  feed  off  each  other.  Successful  tourism  provides  potential 
customers  for  retailers,  which  in  turn  creates  new  jobs  in  the  shops.  Well-organised  and 
interesting  shopping facilities  attract tourists and add to their satisfaction  thereby  encouraging 
return  visits.  Locally  made  products,  especially  craft  products  and  food  specialities,  are 
attractive purchases for tourists. 

Additionally,  commerce  and  tourism  are  potentially  two  of  the  biggest  users  of  electronic 
commerce  both  between  enterprises  and  in  the  interface  between  enterprises  and  their 
customers.  There  is  therefore  scope  for  co-operation  between  tourism  and  commerce 
enterprises  in  standardising  electronic  means  of payment,  providing  packages  of  services  for 
tourists  and  in providing  information.  A  successful  tourism  strategy  defines  a  market  sector 
and  seeks  to  satisfy  its  particular  demands.  On the  one  hand,  satisfaction  of  these  demands 
may include the availability  of certain types of shops to meet the consumer demand of tourists 
who  come to  certain  locations because  of their  museums, beaches  or  festivals.  On  the  other 
hand, in certain other  locations, shopping  is as much of a tourist  attraction  as museums, rural 
tourism, beaches or festivals  and is often  complementary to them. 

The enterprises and public authorities concerned with the promotion of tourism  cannot  oblige 
shops  to  trade  in  particular  areas  or  enforce  methods  of  operation  upon  them  but  they  can 

16 

Apart  from  the  regulatory  aspect  of  environmental  questions,  large  distribution  companies 
have  for  some  years  been  studying  the  possibility  of  reconciling  ecological  and  social 
considerations  with  competitiveness.  Other  studies  have  compared  the  costs  and  benefits  of 
certain modes of transport.  Systems have been developed enabling competent  staff  to  identify 
immediately both the direct transport costs and the impact on the environment. 

Although  only  large  companies  at  present  have  the  means  to  study  the  possibility  of 
reconciling  ecological  considerations  with competitiveness, the results could be transferred  to 
the commercial  SME sector through various channels. 
Action 
•  Creation of a working  group in the CCD to identify  areas  of environmental  policy  which 
are  likely  to  be  affected  by  changes  in circumstances  and  new  objectives  with  a view  to 
enabling  the  commerce  sector  to  collaborate  with  the  community  authorities  from  the 
earliest stage on any new voluntary agreements and legislation proposals. 

D.  Encouraging Europeanization and internationalization. 

1.  The Euro 

The Euro will have many advantages for both businesses and the economy  as a whole. At the 
same time it will be a source of major challenges for the commerce sector. Right from  January 
1999 traders will in practice have to get used to accepting cheques made out in Euro and bank 
cards  for  accounts  in  Euro,  even  if they  are not  legally  obliged  to. As  from  1  January  2002, 
traders  should be fully  prepared to  lay in adequate  stocks of Euro coins and notes to  start  the 
year24. 

The Commission has already  conducted  a number of studies on the dual display  of prices but 
has not adopted any provisions making this compulsory and systematic25. 

There  needs  to  be  a  large-scale  information  campaign  on  national  level  for  all  parts  of  the 
commerce  sector  on  the  question  of  rounding  and  conversions  etc.  aimed  at  traders  and  the 
general public. 

The Commission must therefore  monitor commerce for the first  three years of the  changeover 
to  the  practical  use  of  the  Euro,  guaranteeing,  in  line  with  the  need  for  flexibility  in 
commerce, a maximum of transparency  and simplicity for  consumers. The main problems  for 
the  commerce  sector  are  the  cost  of  providing  information  (dual  display  of  prices),  the 
necessary  investment  in  computerised  tools,  staff  training  and  the  constraints  of  the  phase 
during which both kinds of coins and notes will be in circulation. 

The  representatives  of  the  commerce,  tourism  and  craft  sector  together  with  those  of  the 
consumers  have, with the  support  of the  Commission,  concluded  an  agreement,  which  is  set 
out in a code of  conduct26.  The aim is to ensure an understanding  of the Euro mechanism  on 
terms that  are favourable  to both parties. In  signing the  agreement,  businesses  have  accepted 
certain obligations, such as the obligation  to provide a certain minimum  of information,  staff 
training or dual price indication. A simple European label will be made available to those who 
undertake to respect these rules. This label should be managed by impartial bodies at national 
or local level, in close contact with consumers. 

24  Council Regulation No 974/98 
25  Commission  Recommendation  on  dialogue,  monitoring  and  information  to  facilitate  the  transition  to  the 

Euro, Commission Recommendation  concerning dual display of prices and other monetary  amounts. 
Signed on 30 June 98 

26 

18 

The  changeover  to  the Euro  will  take place  at  a time  when  more  and  more  new  methods  of 
payment  are being  introduced.  We  are  at the  dawn  of  a  society  without  coins  or  banknotes. 
The other methods can only be successful  in they can interwork in all the Member States. 
Actions 

•  Meeting  of  national  governmental  experts  and  the  CCD  to  explore  the  progress  of 
preparations by public authorities with regard to the introduction of the Euro in commerce. 
•  Joint  meetings  within  the  framework  of  the  CCD,  in  order  to  clarify  important  practical 
issues  such  as  frontloading,  insurance  etc.  and  to  encourage  preparatory  activities  for 
operators in the sector on the practical aspects of the introduction of the Euro. 

•  Support the promotion of sales in Euro at points of sale. 
•  Publication  of a Recommendation  to foster  the implementation  of the code of conduct  and 

the label mentioned above if this proves necessary 

•  Following the Euro familiarisation  campaign to be mounted by certain Euro Info  Centres in 
1999, a similar campaign  focused  on commerce and in particular  on the use of Euro  coins 
and bank notes, will be mounted nearer the date of the introduction of the Euro 

2.  International trade 

European  Commerce  plays  a crucial  and  active  role  in  international  trade.  The  Community 
policy  aims to  ensure  that  European  producers  face  fair  competition  when  they  export  their 
products  to  other  continents.  Over  and  above  direct  sales,  European  distributors  wish  to 
establish  themselves  as traders  in  foreign  markets.  Such  enterprises  make  profits,  are  more 
likely  than  foreign-owned  distributors  to  sell  merchandise  produced  in  Europe  and  can  be 
important  outlets  for  European  production.  A  European  shop  in  another  continent  will, 
through  its  understanding  of  local  tastes  and  marketing  initiatives,  generate  business  for 
European  producers,  which  the  latter  could  not  hope  to  generate  for  them.  In  the  coming 
years, European enterprises will step up their strategy of internationalisation  in order to access 
new markets with their successful  store format and product ranges. 

The  new  dimensions  for  trade  in  a  globalising  world  economy  will  affect  the  commercial 
sector  in  its  operations  in  overseas  markets  as  well  as  linkages  and  forms  of  co-operation 
between commerce and industry. 

Five  aspects  must  be  considered  in  particular:  trade  related  aspects  of  Foreign  Direct 
Investment  (FDI) concerning  market  access and new export  bases, the  internationalisation  of 
production  and  Outward  Processing  Trade  (OPT),  the  role  of  trading-houses,  technology 
issues in the international trading system and, finally, costs of communications. 

Barriers to European exports still exist in many countries. The GATS (General Agreement  on 
Trade  in  Services)  offers  a  framework  to  negotiate  improvements  of  the  conditions  of 
establishment  for  foreign  companies.  The  GATS  also  deals  with  aspects  of  domestic 
regulation,  with  the  aim  of  banning  discrimination  and  promoting  transparency.  All  these 
aspects  will  be  dealt  with  in  the  forthcoming  round  of  services  negotiations,  due  to  start  in 
year 2000. 

The benefits of free importing should be taken into account alongside the arguments in  favour 
of  restricting  imports.  The  European  commerce  sector's  importing  and  sourcing  activity 
broadens  the  supply  of  goods  and  services  in terms  of variety  and  price.  Obstacles  to  trade, 
even though they may sometimes be necessary, reduce these benefits. 

With regard to import trade the post-clearance  collection  of duties can pose  serious  problems 
for  SMEs  who  have  to  pay  their  duties  long  after  the  goods  have  been  imported.  The 

19 

importing  traders  are also asking to apply a principle  of good  faith  with regard  to  certificates 
of origin. The Commission has defined  its position in its Communication of 23.7.199727. 

Another  issue  is  the  respect  of  internationally  agreed  social  and  environmental  standards 
particularly  in less  and  least  developed  countries.  Codes  of  conduct  are  currently  established 
at various levels from private initiatives to ILO, WTO and UNCTAD. 

It  is  also  important  to  take  into  consideration  development  needs,  especially  in  the  ACP 
region. 

Actions 
•  Study of the potential and the problems of European commercial enterprises which seek to 

develop distributive operations in other continents. 

•  Organisation  of the participation  of  commerce  enterprises  and  sectoral  federations  in  the 
European  Services  Network,  in  order  to  involve  this  sector  in  the  preparation  of 
international negotiations in the GATS framework  foreseen  for the year 2000. 

3.  Enlargement of the European Union 

The Commission  is conducting negotiations with ten candidate  Central and Eastern  European 
countries  (CEEC)  and  Cyprus,  with  a  view  to  their  accession  to  the  European  Union. 
Commerce  in  those  countries  should  therefore  adapt  to  the  conditions  prevailing  in  the 
European  Union  and  to  this  end  the  Commission  should  study  measures  which  will  permit 
greater market cohesion. 
A number of problems need to be highlighted: 

- 

- 

- 

- 

- 

- 

the need to modernise management and logistical systems; 

the quality of the financial  structures; 

lack of acceptance of professional  co-operation bodies; 

the weakness  of  intermediary  structures  (involving professionals)  which  would  permit  the 
implementation of collective modernisation tools; 

inadequate recognition of commerce by local authorities; 

low rate of utilisation of financial  aid for modernising the sector. 

Actions 

•  Action to bring local legislation into line with Community  legislation. 

•  Panel  missions  to  identify  local  problems  and  joint  study  groups  of  representatives  of 
administrations,  enterprises  and  professional  organisations  from  the  EU  and  the  countries 
concerned. 

•  Involvement  of operators  from  the CEEC  and Cyprus  in Community  activities to  promote 

commerce, particularly under the Third Multiannual Programme for SMEs. 

•  Establishment  of  good  practices  for  more targeted  use  of the  funds  made  available  to  the 

local authorities (Phare, Tacis). 

•  Identification  of  local  problems  and  suitable  solutions  by  setting  up  joint  study  groups 
comprising  representatives  of  administrations,  businesses  and  professional  organisations 
from the EU and the countries concerned by means of on-the-spot studies. 

27  COM (97) 402 final 

20 

•  Conferences  will  be  held  in  each  of  the  candidate  countries,  in part  based  on  the  mobile 
exhibition  which  is due to tour  the  Member  States, and  in part  to  debate  with  officials  of 
the  countries  concerned  the  adaptation  to  their  laws  and  administrative  practices  which 
may become necessary. 

21 

1. 

ANNEX I: ACTION PLAN28 

General understanding of the sector and relevant  information 
•  There will be a major  information  campaign visiting  some forty  locations 
in  the  Union  to  publicise  this  White  Paper  and  the  work  of  the 
Commission  affecting  commerce  and 
from 
interested parties. 

to  generate  feed-back 

•  Further  improvements  to  the  European  statistical  system  on  commerce 
will  be-eonthiued.-An annual  report  will  be published  and  a  conference 
held to disseminate  information  about  changes  and trends  in the  structure 
of commerce. 

Changes in the structure of commerce: new challenges for policy 
•  The Commission will carry out and publish studies on  future 

developments in the fields of multilevel selling, commercial agents and 
wholesaling. This will include consideration of benchmarking. Meetings 
will be organised with the professional  organisations in the branches 
concerned before initiating these studies and then again later to discuss the 
final reports in order to identify  areas for Community actions. 

Simplification  of administrative  procedures 
•  The Commission will organise meetings of CCD and national  government 
experts  in  order  to  draw  up  and  publish  actions  for  commerce,  which 
would be taken in the light of the BEST report. 

Access to finance 
•  Facilitation  of  access  to  finance  for  the  establishment  of  new  companies 
through the third Round  Table of Banks and  SMEs  and by  implementing 
the "growth and employment" initiative for commerce. 

•  Identification  of  possibilities  for  businesses  to  gain  access  to  financing 

1999-2001 

1999-2003 

2000-2001 

1999 

1999 

2000 

and encouraging mutual guarantee systems for commerce. 
•  Implementation  of  a  second  seed  capital  initiative,  for 

enterprises and transfer  of commercial businesses29. 

innovative 

2000 

•  Identification  of good practices in the Member States as regards  financing, 
establishment  and  transfer,  by  means  of  concerted  actions,  conferences 
and studies. 

•  Organisation  of a conference  to create awareness  in the banking  sector of 
the special  situation of commercial enterprises  and to obtain better  access 
to finance  for them. 

Social Dialogue 
•  Improvement  of the representation  of the commerce  sector  in the  existing 

and new structures such as the employment committee. 

2000 

2001 

1999-2001 

•  Creation  of  a  co-operation  mechanism  between  entrepreneurs  of  the 

commerce sector (CCD) and the social dialogue committees. 

1999-2001 

Consumers 

Organise  an annual joint  meeting  of CCD and the Consumers  Committee 
to  debate  current  issues  and  seek  joint  solutions.  A  report  of  these 
meetings will be published. 

1999-2003 

28 

29 

For financial  implications  See Annex II 
OJLC363of9.11.98 

22 

Credit institutions 

The  Commission  will  prepare  a  report  by  carrying  out  a  thorough 
examination  of  the  problems  of  means  of  payment,  in  particular,  the 
application of recommendation n° 87/598/CEE, with  a view to  obtaining 
full  transparency,  in  competitive  conditions,  regarding  the  allocation  of 
charges  for  use  of  such  cards  between  financial  institutions,  consumers 
and traders. 
Evaluation of the impact of the introduction of the Euro on the use of the 
methods  of  payment,  the'  operation  of  the  payment  systems,  and 
regulatory 
to 
the 
Recommendations Nos 97/489 and 98/286. 

follow-up 

necessary 

solutions 

such 

as 

Commerce and the new technologies 

Creation  of  a  web  site  inventorying  awareness,  training  and  operational 
tools for enterprises to take advantage of electronic commerce. 
Preparation  and  publication  of  a  study  identifying  best  business  sites  on 
the Internet. 
A  pilot  project  to  enable the  commercial  viability  of  the  supply  of  basic 
electronic commerce services to a large number of small companies. 
A pilot project  to promote the use of quality  labels and  systems to  certify 
compliance with a code of conduct. 
Creation of a task force  within the CCD to study  and provide feedback  to 
the  Commission  in  a  number  of  matters:  the  barriers  which  enterprises 
meet  in  developing  electronic  commerce  practices,  the  impact  of  the 
different  regulatory  issues  related  to  the  development  of  electronic 
commerce  among  SMEs  and  the  possible  measures  that  could  be 
envisaged by the Commission in this  field. 

1999-2004 

1999-2001 

1999-2001 

1999-2000 

2000-2001 

1999-2001 

1999-2003 

Co-operation between businesses 
•  On  the  authority  already  given  by  the  Council,  the  Commission  is 
preparing  proposals  for  an  exemption  regulation  on  vertical  restraints, 
which  will  take  into  account  the particular  circumstances  of  associations 
of independent retailers. 

•  The Commission will hold meetings with national  government experts in 
the  fields  of  trade  and  competition  policy  to  ensure  that  its  position  on 
vertical restraints is fully  understood. 

1999-2001 

1999-2001 

10. 

Training 

A  Communication  on  training  for  SMEs  will  be  published  shortly 
outlining best practice and future  actions. 
The  Commission  will  assess  the  needs  in  commerce  for  training  and 
publish a set of guidelines and best practices, including risk management. 
Simulations  of pricing  in  Euro  at points  of  sale  in  order  to  ascertain  the 
training requirements for sales staff. 
A  pilot  project  for  studying  the  management  of  down-time  (personalised 
distance learning, versatility). 

1999 

2000 

2000-2001 

2001 

11. 

Commerce in  rural and less-favoured  urban areas 
In  the  field  of  local  development,  the  Commission  intends  to  identify  best 
practices,  both  so that  they  can  be  disseminated  and  replicated  by  others  at 
community  level  and  so  that  they  can  be  used  where  appropriate  in  the 
application of the structural funds. The following  activities are planned: 

23 

Identification  of  the  problems  encountered  in  the  field  by  conducting  a 
survey; 
By setting up specialised working  groups, identification  of good  practices 
to assist the businesses concerned to modernise; 
Dissemination  of  these  good  practices  among  national  and  regional 
decision-makers by conferences  and a mobile exhibition; 
Recommendation  on  improving  access  of  SMEs  to  other  Community 
Programmes and in particular Structural Funds. 
Publication  of  good  practices  in commerce  to  assist  in the  application  of 
the structural  funds. 
Commerce and tourism 
The Commission will organise a competition with a prize, in co-operation 
with all interested parties, of the interaction of tourism with the distributive 
trades. It will also hold a conference to present the report of the study on 
Commerce and Tourism, which will be published widely in the Member 
States. 
Commerce and the environment 

Creation  of  a  working  group  in  the  CCD  to  identify  areas  of 
environmental  policy  which  are  likely  to  be  affected  by  changes  in 
circumstances and new objectives, with a view to enabling the commerce 
sector  to  collaborate  with  the  community  authorities  from  the  earliest 
stage on any new voluntary  agreements and legislation proposals. 

The Euro 
•  Meeting  of  national  governmental  experts  and  the  CCD  to  explore  the 
progress  of  preparations  by  public  authorities  with  regard  to  the 
introduction of the Euro in commerce. 

•  Joint meetings in the framework  of the CCD in order to clarify  important 
practical  issues  such  as  frontloading,  insurance  etc.and  to  encourage 
preparatory  activities for operators in the sector on the practical  aspects of 
the introduction of the Euro. 

•  Support for simulations of sales in Euro at points of sale. 
•  Publication  of  a  Recommendation  to  foster  the  implementation  of  the 
code of conduct and the label mentioned above if this proves necessary 
•  Following  the  Euro  familiarisation  campaign  to  be  mounted  by  certain 
Euro Info  Centres in  1999, a similar  campaign focused  on commerce  and 
in  particular  on  the  use  of  Euro  coins  and  bank  notes  will  be  mounted 
nearer the date of the introduction of the Euro 

International trade 

1999 

1999-2000 

1999-2000 

1999 

2000 

2000 

1999-2003 

1999 

1999-2001 

2001 
2000 

2001 

Study  of  the  potential  and  the  problems  of  European  commercial 
enterprises  which  seek  to  develop  distributive  operations  in  other 
continents; 
Organisation  of  the  participation  of  commerce  enterprises  and  sectoral 
federations  in  the  European  Services  Network,  in  order  to  involve  this 
sector  in  the  preparation  of  international  negotiations  in  the  GATS 
framework  foreseen for the year 2000. 

2001 

1999-2001 

12. 

13. 

14. 

15. 

Enlargement of the European Union 

16. 

Action to bring local legislation into line with Community  legislation. 

Panel  missions  to  identify  local  problems  and  joint  study  groups  of 
professional 
representatives 

administrations, 

enterprises 

and 

of 

1999-2003 
1999-2003 

24 

organisations from the EU and the countries concerned. 

•  Involvement  of  operators  from  the  CEEC  and  Cyprus  in  Community 
activities to promote  commerce, particularly  under the Third  Multiannual 
Programme for SMEs. 

1999-2003 

•  Establishment  of good  practices  for  more targeted  use  of the funds  made 

available to the local authorities (Phare, Tacis). 

•  Identification  of local problems  and  suitable  solutions  by  setting up joint 
study  groups  comprising  representatives  of  administrations,  businesses 
and  professional  organisations  from  the  EtJ  and  the  countries  concerned 
by means of on-the-spot studies. 

•  Conferences  will be held  in each of the candidate  countries,  in part  based 
on the mobile  exhibition  which  is due to  tour  the  Member  States,  and  in 
part  to  debate  with  officials  of the countries  concerned  the  adaptation  to 
their laws and administrative practices which may become necessary. 

2001 

1999-2003 

1999-2003 

ANNEX II: FINANCIAL  INFORMATION 

As far  as  1999 and  2000  are concerned,  the actions proposed  in this White Paper  and  Action 
Plan  do  not  imply  the  provision  of  a new  budget  line,  but  will  be  entirely  covered  by  line 
B5.5120  of  the  3rd Multiannual  Programme  to  assist  SME's.  Thereafter  the  actions  will  fall 
within  the  fourth  multiannual  programme,  a proposal  for  which  will  be  made  by  the  end  of 
1999 on the basis of the evaluation of the 3rd multiannual programme. 

25 

ISSN 0254-1475 

COM(99)  6 final 

DOCUMENTS 

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08  04  10  16 

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