Opinion of the Committee of the Regions on the "Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions: 2000 Review of the Internal Market Strategy"
Date: 2001-05-18
Institutions: European Committee of the Regions
Subjects: deepening of the European Union, enlargement of the Union, single market

C 148/16

EN

Official Journal of the European Communities

18.5.2001

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

(2001/C 148/05)

THE COMMITTEE OF THE REGIONS,

having regard to the Communication from the Commission to the European Parliament, the Council, the
Economic and Social Committee and the Committee of the Regions — 2000 Review of the Internal
Market Strategy (COM(2000) 257 final);

having regard to the decision of the Commission of 3 May 2000, under the first paragraph of Article 265
of the Treaty establishing the European Community, to consult it on this matter;

having regard to the decision taken by its President on 30 May 2000, to draw up an opinion on this
matter and to instruct Commission 6 for Employment, Economic Policy, Single Market, Industry and
SMEs to undertake the preparatory work;

having regard to the Communication from the Commission to the European Parliament and the Council
— The strategy for Europe’s internal market (COM(1999) 464 final);

having regard to the Commission Green Paper — Towards fair and efficient pricing in transport policy
— options for internalising the external cost of transport in the European Union (COM(95) 691 final);

having regard to the Communication from the Commission — Public procurement in the European
Union (COM(98) 143 final);

having regard to the draft opinion (CdR 311/2000 rev. 2) adopted unanimously by Commission 6 on
4 December 2000 [rapporteur: Mr Bocklet (D/PPE)],

adopted the following opinion at its 37th plenary session of 14 and 15 February 2001 (meeting of
14 February).

1.
The Committee of the Regions sees the European internal
market as the keystone of economic integration in Europe. Its
smooth operation is the basis for the achievement of the EU’s
and the individual Member States’ main policy objectives. The
internal market strategy sets out to strike a balance between
long-term objectives and the specific implementing measures
and to provide a clear picture of what needs to be improved.
The COR considers it to be a good basis for the shaping of
internal market policy over the next five years. The COR
therefore in principle welcomes the Commission’s Communi-
cations entitled: The strategy for Europe’s internal market and
2000 Review of the internal market strategy.

regions must be strengthened and special aid for structural
adjustments on both sides of this border must be stepped up.

The Committee of the Regions generally endorses the
3.
distinction made between strategic and operational objectives
and target actions, which will make for greater transparency
of internal market policy. The plan to assess measures regularly
in terms of their effectiveness in achieving the objectives and
the system of annual reviews will facilitate the implementation
of objectives and timely adjustments. In assessing effectiveness
in implementing EU directives in national law it must, however,
be ensured that the Member States’ scope for action is not
curtailed.

2. While welcoming the definition of the internal market as
the keystone of economic integration in Europe, the Com-
mittee wishes to state that the internal market’s unification and
liberalisation strategies will also find justification and prove
effective by being dovetailed with regional policy so as to
bridge the gaps between Europe’s regions. Special attention
should also be paid, in the run-up to EU enlargement, to
regions on the EU’s border with the countries of central and
eastern Europe. Cross-border cooperation between cities and

4.
The Committee endorses the Commission’s proactive
approach to internal market policy which will promote the
efficiency and flexibility of the markets. The COR whole-
heartedly supports the strengthening of the internal market,
the application of its principles to international trade agree-
ments and the enlargement of the European Union.

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5.
The Committee stresses that the Commission’s four
strategic objectives cover the main aspects of the internal
market; the COR also approves the operational objectives in
principle. There is, however, a need to clarify many of the
policy descriptions which — even after being redrafted — are
still rather abstract. On the whole the Commission’s position
on the internal market coincides to a great extent with the
COR’s views.

The Committee points out, however, that the identifi-
6.
cation of individual measures as target actions and the approval
of the strategy by the Council and European Council do not
bind the Member States to this specific Commission proposal.
The COR regrets that no reference is made to proven principles
like subsidiarity and mutual recognition.

arrangements for companies, particularly young companies,
and broader access to risk capital are objectives of great
importance to companies.

11.
European efforts to integrate financial markets should
focus on small and medium-sized enterprises which have to
fear structural disadvantages as a result of integration. As the
banks wish to secure their future against a background of
intensifying European competition by means of rising turnover
and mergers, they are losing interest in small and micro-loans
to SMEs. But because of their size and lack of financial security,
it is these very SMEs which are most dependent on low-cost
bank loans.

7.
The Committee considers it important that the Con-
clusions of the Internal Market Council on the Cardiff process
should form the basis for the annual review of target actions.

12.
The internal market in insurance is theoretically com-
plete. In practice, however, national laws, e.g. laws on liability
or laws to promote private pensions, prevent the development
of uniform insurance products which can be offered through-
out the EU.

The Committee of

8.
the Regions would like to see
prominence given to measures for the creation of long-term,
competitive jobs in the course of the annual adjustment of the
target actions, with a view to improving the efficiency of the
internal market. This would at
the same time make an
important contribution to strengthening social cohesion and
underpin public acceptance of the internal market. There is a
special need in this connection for an active labour market
policy in the Member States and regions which focuses more
on skills acquisition and further training, and for targeted
support for the service sector, the promotion of innovation
and technology and the development of centres of excellence.

Under Strategic Objective 2, Enhancing the efficiency of
9.
Community capital and product markets, the Commission
intends that the financial markets should be fully integrated
(Operational Objective 2). The range of competitive and
reliable financial products available to the consumer is to be
broadened. Access to the capital market is to be made easier
for industry, especially small and medium-sized enterprises,
and a single, strong and liquid market for investment capital is
to be created. Financing agreements are to be made cheaper and
more flexible for companies, with investors seeing improved
returns.

10.
The COR wholeheartedly welcomes these plans. They
should enjoy the highest priority. In particular the Commission
should lay the foundations for efficient, low cost cross-border
payments. In particular the cost of mass foreign bank transfers
should be cut and the directives on company flotations and
prospectuses improved. Cheaper and more flexible financing

13.
The Commission’s efforts to maximise the benefits to
the internal market of the digital age (Strategic Objective 2,
Operational Objective 3) should, the COR feels, be given
absolute priority. Delays in this area will hinder the develop-
ment of information and communication technologies and
their acceptance and use by European companies, particularly
SMEs. The opening of a dialogue with industry and consumers,
which has been built into the development of the overall
framework for e-commerce, is welcomed, and a start should
be made on it as soon as possible.

14.
The most urgent need for regulation is in relation to
data protection, uniform, coordinated payment systems and
the application of general business conditions to Internet
transactions. The COR therefore calls on the Commission to
make a special effort to ensure that European companies
offering their services over the Internet are not placed at
a disadvantage vis-à-vis non-European suppliers. The COR
welcomes the Commission’s proposals for a framework direc-
tive on electronic communications and for four specific
directives, as well as the adoption by the European Parliament
and the Council of the directive on electronic commerce.

15.
The COR supports the Commission in its efforts to
encourage creativity and innovation via suitable protection of
industrial and intellectual property rights (Strategic Objective
2, Operational Objective 4). Clear rules are needed on the
protection of industrial and intellectual property. In particular
there is a need for a right to information enabling an injured
party to trace intellectual property theft from the seller back
to the manufacturer, as well as for the introduction of a
Community Patent.

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16.
The Committee is pleased that the Commission is
working for the timely and complete implementation of
Directive 96/92/EC concerning common rules for the internal
market
in electricity and Directive 98/30/EC concerning
common rules for the internal market in natural gas (Strategic
Objective 2, Operational Objective 5). The Commission has
promised a communication on progress on liberalisation of
the energy markets for December 2000.

17.
In the light of the forthcoming communication on the
liberalisation of energy markets, planned for December 2000,
the Committee urges the Commission to review the directives
on the production of oil and natural gas in Europe.

The Committee regrets that implementation of the
18.
internal market directives on electricity and gas has so far not
produced pan-European competition in the energy sector, but
rather parallel competition models. Approximation of these
models is urgently needed in order to prevent imbalances to
the detriment of market participants in fully liberalised Member
States. Apart from significant disparities in the degree of
market openness, competition-distorting rules also exist with
regard to freedom of establishment for electricity and gas
distribution companies. Considerable disparities also exist
with regard to the organisation of the energy sector and
environmental rules.

19.
However, in order to establish a truly viable internal
market in electricity and gas, harmonisation of the legal
framework is essential. Thus, government regulation must be
restricted to the minimum supervision necessary to ensure
functioning competition in the market. At the same time,
effective environmental rules will be needed to ensure that
the
pan-European trade in electricity is not achieved at
expense of the environment as a result of outmoded and
environmentally damaging electricity generation methods,
although certain care will have to be exercised in regions that
rely on limited modes of generating energy. The process of
opening up to competition must be stepped up and accelerated
in all the Member States.

20. While the COR fully supports the further gradual and
controlled liberalisation of the postal services in the Union, the
COR expressed serious concerns about the impact on excluded
rural and urban communities. The COR supports the Com-
mission in its intention of pushing ahead with completion of
the internal market, including the postal services as agreed at
the Lisbon summit. Intensified competition in this area will
bring advantages for the customer and businesses in terms of
quality and price of services and will strengthen the European
economy. Even with open markets, universal postal services

must be guaranteed. Priority must be given to people living in
upland areas, on islands and in sparsely populated regions,
and specific obligations placed on service providers.

The COR strongly supports the Commission’s intention
21.
of eliminating tax barriers and unfair tax competition in the
internal market (Strategic Objective 3, Operational Objec-
tive 2). As early as December 1997 the European Council
decided to draw up a tax package aimed at preventing harmful
tax competition. This includes:

— a directive on the taxation of savings income

— a directive on the taxation of

interest and royalty

payments and

— a code of conduct on company taxation.

22.
The COR considers competition between systems of
direct taxation in the Member States and vis à vis third
countries to be desirable as a way of preventing excessive
tax burdens and of strengthening the European economy’s
international competitiveness. But, in order to prevent distor-
tions of competition in the internal market and economically
unjustified shifts of capital and investment flows, it is also
necessary to eliminate unfair tax competition. This applies in
particular to measures pinpointed in the code of conduct on
the elimination of unfair tax competition which often benefit
non-resident, but not resident companies. The COR also
supports minimum harmonisation of
taxation of savings
income and the abolition of withholding tax on interest and
royalty payments between companies belonging to the same
group.
the Commission’s tax package
should therefore enjoy the highest priority.

Implementation of

23.
Public procurement is dealt with in the internal market
strategy under Strategic Objective 3, improving the business
environment, and Operational Objective 4, eliminating the
remaining obstacles to cross-border trade. In order to achieve
this goal, public procurement markets are to be further
liberalised. The key measure planned is the public procurement
legislative package which will
in particular codify existing
directives governing the award of contracts.

The COR welcomes the Commission’s efforts to make
24.
the legal framework as clear as possible,
in particular by
bringing together all the relevant provisions in a single text.
The Commission is asked, however, to avoid new rules unless
they would result in simplification or clarification, rather than
in more regulation and bureaucracy with regard to public
procurement.

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25.
The new award procedure (‘competitive negotiated
dialogue’), which is to be added to the open and non-open
procedures, is unnecessarily complicated and is unlikely to
provide any greater flexibility in practice. The Committee of
the Regions believes that existing provisions for the negotiated
procedure should be implemented more flexibly. Nor can the
COR support new measures for the implementation of EC law
on the award of contracts. They would not be compatible with
the subsidiarity principle enshrined in the Treaty of Maastricht
or with the objective of ‘lean government’. The COR therefore
calls on the Commission not to create any new supervisory
bodies.

26.
The Commission intends to work for improved inte-
gration of service markets and to this end has announced a
new strategy for the elimination of obstacles to the trade in
services (Strategic Objective 3, Operational Objective 4).

27. With regard to further strengthening of the European
services sector, the COR considers the main points to be the
following:

— Knowledge-based services lead to a high proportion of
graduate employees and ever higher skill requirements
for the provision of entrepreneurial services.

— New service areas and information and communication
technologies require the vocational training system to
foster flexibility, personal responsibility and adaptability.

— Shortcomings in training and high demand for skilled
staff are increasingly leading to bottlenecks in the services
market.

— As a precondition for the development of a service
culture, workers, companies and the state need to change
their attitudes to service providers; what is needed is a
greater willingness to provide services, greater customer
orientation and the recognition that business services
create value.

— Three factors relating to location are of the highest
importance for information and communication tech-
nology companies: the supply of skilled workers, trans-
port links and local costs, and economic conditions in
the broadest sense.

— The strengthening and liberalisation of the services must
not, however, go ahead at the expense of people living in
areas with a low population density. At all levels therefore,
actions to further the desired strengthening process must
take account of the need to preserve those populations,
by means of appropriate constraints on the service
providers.

The COR notes with regret that, despite the outcome
28.
of the November 2000 conciliation proceedings on the railway
the network access rights provided by Council
package,

Directive 91/440/EEC on the development of the Community’s
railways have so far not produced the desired opening up of
the market in international rail transport; nor has Directive
95/19/EC achieved its objective of harmonising the systems
for the charging of infrastructure fees. The amendment of
these directives proposed by the Commission is therefore
welcomed in principle (Strategic Objective 2, Operational
Objective 5). Particular attention is drawn here to the obli-
gation on the Commission to propose new measures for the
liberalisation of rail passenger transport this year. The aim is
to create more intensive competition through broadened
network access and thus improve the performance of the
railways, as part of the move towards a more sustainable rail
system.

In the context of

the impending revision of

29.
the
guidelines for trans-European transport networks (TEN-T) the
Commission is considering, as well as updating the guidelines,
setting priorities which would, include inter alia the removal
of bottlenecks in the existing network and enlargement of the
EU. The COR would like to see priority go to promoting the
removal of bottlenecks and enlarging the network to include
transport links with the applicant countries.

30.
The forthcoming enlargement has not been sufficiently
taken into account in the existing TEN-T. Transport flows
between the applicant countries and the EU are already
growing strongly and will be given a further strong impetus
by enlargement. Additional links to the applicant countries
should therefore be incorporated into the network.

31.
As the weakest link in the chain, bottlenecks restrict
the capacity of a whole section of the network. Priority should
be given to removing bottlenecks, which can be achieved
reasonably cheaply and within a fairly short time period, in
order to bring about a rapid increase in the efficiency of the
TEN-T. This EU support should, however, be provided within
the framework of existing instruments, i.e. through political
guidance and limited financial aid. The Member States’ primary
responsibility for transport routes should not be prejudiced.

32.
The COR regrets that liberalisation of the European
road haulage market took place without simultaneous full
harmonisation of conditions of competition. As a result
distortions of competition persist in road haulage. The reasons
for this are different national rules or different implementation
of the rules, especially disparities in taxation (e.g. tax on
petroleum and motor vehicles), different social regulations,
different technical standards and different application and
implementation of EU rules (e.g. cost advantages for the illegal
employment of drivers from CEEC countries). The COR
therefore considers it urgently necessary to assess the impact
that harmonisation of the conditions for competition will have
on different regions of the EU before pressing ahead with such
action.

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33.
The COR points out that eastward enlargement of the
EU will have serious implications for road haulage. Current
forecasts suggest that the volume of transport between the EU
and the CEEC states is likely to double or triple over the next
15 years. There will thus be potential for growth in East-West
trade. On the other hand, however, there is also the danger of
further worsening of the competitive situation of the transport
industry. The main reason for this is the existing disparity in
wages and social costs between the central European states
and the CEEC states.

34.
In order to contain the negative impact of eastward
enlargement of the EU, the COR suggests that initially a
Community quota be established for journeys between the
CEEC states and the EU. This quota should gradually be
increased. After full accession, or 3 — 5 years after accession,
short haul cabotage should be gradually introduced for
domestic transport in other Member States. Only then should
full freedom to provide services be introduced.

35.
The liberalisation of road haulage is happening with no
regard for the contributions that ought to be levied for
repairing environmental damage and in payment for using
public structures and infrastructures that are currently free of
charge. This system, which must be put right as a matter of
urgency — seriously distorts competition between road and
rail transport, which is effectively penalised. There is no point
in calling repeatedly for the development of goods transport
by rail unless the existing situation of privilege is addressed.

Brussels, 14 February 2001.

36.
The Committee is critical of the Commission’s plans
for the Europe-wide opening-up of the market in local public
passenger transport. The current draft EC regulation provides
for a Europe-wide tender procedure for public service trans-
port. The tender procedure can be dispensed with only
where the annual value of the transport service is less than
EUR 400 000, EUR 800 000 in the case of networks, or if this
is the only way to ensure that the transport service is provided
safely or efficiently. With regard to commercial transport
services, the draft regulation lays down rules on transparency
requirements, e.g. requiring the date of expiry of concessions
to be published in a particular way.

that

37.
These rules are intended to promote EU-wide compe-
tition in local public passenger transport. The COR considers,
however,
this competition must not be allowed to
prejudice universal, high-quality services, particularly in rural
areas and isolated islands. In many Member States the com-
petent authorities continue to provide high-quality transport
services for reasons of security of supply. To this end they
are already able to enter into public-service contracts with
operators. If the tender procedure is used, authorities must lay
down minimum requirements (e.g. with regard to frequency,
fares for various groups, timetables etc.). In principle the COR
is in favour of liberalisation of local public passenger transport.
But as a precondition for this, the decision on quality standards
must continue to rest with the responsible authorities and it
must be permissible to offer financial compensation for
compliance with these standards. The COR regards EU claims
to wide-ranging regulatory powers with regard to local public
passenger transport as highly problematic.
In future only
detailed arrangements, such as the laying down of certain
minimum requirements, may continue to be delegated to local
authorities.

The President

of the Committee of the Regions

Jos CHABERT