Opinion of the Committee of the Regions on the "Commission Communication Working together to maintain momentum — 2001 Review of the Internal Market Strategy"
Date: 2001-11-14
Institutions: European Committee of the Regions
Subjects: EU Member State, EU law, national implementing measure, single market

C 107/68

EN

Official Journal of the European Communities

3.5.2002

Opinion of the Committee of the Regions on the ‘Commission Communication Working together
to maintain momentum — 2001 Review of the Internal Market Strategy’

(2002/C 107/21)

THE COMMITTEE OF THE REGIONS,

having regard to the Communication from the Commission Working together to maintain momentum
— 2001 Review of the Internal Market Strategy COM(2001) 198 final;

having regard to the Commission’s decision of 19 April 2001, under the first paragraph of Article 265 of
the Treaty establishing the European Community, to consult it on this matter;

having regard to its president’s decision of 7 June 2001 to draw up an opinion on this matter and to
instruct Commission 6 — 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 its opinion 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 (COM(2000) 257 final — CdR 311/2000 fin) (1);

having regard to its opinion on the Proposal for a European Parliament and Council Directive amending
Directive 97/67/EC with regard to the further opening to competition of Community postal services
(COM(2000) 319 final — 2000/0139 (COD) — CdR 309/2000 fin) (2);

having regard to its opinion on the Proposal for a Directive of the European Parliament and of the
Council on the coordination of procedures for the award of public supply contracts, public service
contracts and public works contracts [COM(2000) 275 final — 2000/0115 (COD)] and the Proposal for
a Directive of the European Parliament and of the Council coordinating the procurement procedures of
entities operating in the water, energy and transport sectors [COM(2000) 276 final — 2000/0117 (COD)]
— (CdR 312/2000 fin) (3);

having regard to the draft opinion (CdR 200/2001 rev. 2) unanimously adopted by Commission 6 on
28 September 2001 (rapporteur: Ms Rodust, D/PSE, chair of the Europe Committee of the Schleswig-
Holstein Landtag),

adopted the following opinion unanimously at its 41st plenary session held on 14 and 15 November
2001 (meeting of 14 November).

1. The Committee of the Regions’ views on the Com-

munication

Internal Market Strategy

1.1.
This is the CoR’s second opinion on the Commission’s
Internal Market Strategy. It has already expressed its views —
which it reaffirms here — on the 2000 Internal Market
Strategy, the overall approach and the strategic objectives.

1.2.
The CoR emphasises that, together with the European
institutions, it still considers completion of the internal market
a central and hitherto unfinished task on the road to European

(1) OJ C 148, 18.5.2001, p. 16.
(2) OJ C 144, 16.5.2001, p. 20.
(3) OJ C 144, 16.5.2001, p. 23.

integration. Without the gradual establishment of a common
market in Europe, the EU would lose its momentum for
integration. Completion of the internal market has a key role
to play given the special challenges currently facing the
European Union — its debate about
its
enlargement policy and the economic impact of globalisation.
The internal market in particular must make the EU tangible
for the people of Europe.

its own future,

1.3.
The overall approach developed by the Commission
since 1999 for completing the internal market project over
the next five years, the strategic objectives, operational objec-
tives and shorter-term target actions established to that end,
and the plan to review these objectives every eighteen months
and update them with the aid of new guidelines, are essential
to any systematic completion of the internal market. This CoR
endorses this overall approach.

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1.4.
The CoR agrees with the Commission on four key
starting points for completing the internal market: (i) enhan-
cing the efficiency of Community product and capital markets;
(ii) improving the business environment; (iii) improving the
quality of life of citizens; and (iv) exploiting the achievements
of the internal market in a changing world.

1.5.
That said, the CoR’s demand that measures designed to
improve internal market performance should focus on moves
to create long-term, competitive jobs also applies to the 2001
Internal Market Strategy. So far, however, the Committee’s
proposals on this front have only partially been taken up in
the work on the internal market.

1.6. Moreover, the CoR would again highlight the limi-
tations it has identified in a policy of liberalisation, and would
stress that Council approval of the Internal Market Strategy
may signify a voluntary commitment on the part of Member
States, and not an obligation to implement the Commission’s
specific proposals. When the effectiveness of the national
transposition of EU directives is assessed, Member States’ scope
for action must not be curtailed ex post facto.

1.7.
CoR calls for account to be taken of the subsidiarity
principle and regional and local authority interests are not
mere empty words. The CoR acknowledges the obvious efforts
made by the Commission in its Internal Market Strategy to
establish an internal market that is markedly more citizen-
orientated and thus considerably more open to small and
medium-sized enterprises (SMEs). However, the CoR regrets
the strategy’s failure to establish any clear plans for involving
regional and local authorities — with their wide-ranging
opportunities and networks — in implementing the proposed
measures. The CoR again urges that such plans be put in place
least so that
— wherever useful and necessary — not
application of the subsidiarity principle can be managed more
effectively.

2001 Internal Market Strategy

1.10.
There is also still room for improvement in transpos-
ing legislation in the Member States — although it has been
possible to reduce Member States’ transposition deficits. In a
number of Member States, transposition levels are still well
below average. It remains to be seen whether the target of full
transposition called for by the Stockholm European Council
in March 2001 and the reduction in the transposition deficits
to 1,5 % by spring 2002 can in fact be met. In the light of
experience to date, however, the CoR considers this too
ambitious.

1.11.
Completion of the internal market touches a wide
range of sectors. Nonetheless, it is better served if fewer actions
are translated into internal market directives — and put into
effect by the Member States — than if a comprehensive
strategy is not implemented to a satisfactory extent. Hence, the
CoR backs the Commission’s prioritisation approach. The plan
to improve the flow of information concerning transposition
between the Member States and the Commission is also sound.
However, it is essential to secure the active involvement of the
various regional and local information disseminators.

1.12.
Actions under the 2001 Internal Market Strategy
have been selected on the basis of the Commission’s own
studies and observations, which also include feedback from
consultations with businesses and the public. Available stat-
istics on shortcomings in the operation of the internal market
indicate that the main difficulties for SMEs and the public are
in the following areas: the free movement of goods, freedom
of establishment and rules on services, the free movement of
persons, taxation, the environment, difficulties in consumer
protection and problems relating to public procurement and
competition. The CoR proposes focusing the Internal Market
Strategy’s operational and shorter-term target actions more
strongly on these problem areas and laying down priorities
accordingly.

The Internal Market Strategy can only become effective
1.8.
if
the target actions are translated promptly by the EU
institutions into legislation and applied in the Member States.

1.9.
Experience with the 2000 Internal Market Strategy has
shown that a strategy programme that is too comprehensive
and insufficiently focused is difficult to put into practice. The
CoR shares the Commission’s view that, over the past twelve
months, progress made in translating target actions into
legislation has remained unsatisfactory. The CoR welcomes
the Commission’s conclusion that the number of specific
actions under the Internal Market Strategy are to be reduced
to 76, and only 40 are to be given priority status.

1.13.
SMEs and the public frequently find it difficult to
exercise existing rights within the internal market. The internal
market contact points established in the Member States to
investigate complaints of this nature and to resolve any
difficulties that might arise, operate very unevenly. The very
existence of these bodies is not universally known, and their
problem-solving capabilities remain limited. To complete the
internal market, it is essential to expand these contact points
and make them part of an interactive network. The aim must
be to secure a high public profile for these bodies and to
ensure that they are able to resolve individual problems quickly
and without red tape — even across borders. This cannot be
done solely by electronic networking and by providing direct
information on the current state of internal market legislation.

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2001 Internal Market Strategy: target actions

2. The Committee of the Regions’ recommendations

1.14.
The CoR considers that the target actions proposed
by the Commission under the 2001 Internal Market Strategy
will facilitate further completion of the internal market. The
following suggestions should, in its view, be particularly borne
in mind:

Horizontal priorities

The planned online, interactive problem-solving net-
1.15.
work and interactive policy-making initiative can result in the
speedier, problem-oriented completion of the internal market
provided the Commission ensures the active involvement of
regional and local players in this dialogue. Such tools will only
be successful in practice, however, if the recommendations and
initiatives are actually taken up in the ongoing development of
the Internal Market Strategy.

1.16.
The CoR endorses in principle the intention to further
open up individual market sectors, including, for instance, the
internal market in rail freight and international passenger
transport. European liberalisation policy must not, however,
result in the development opportunities of individual regions
or local authorities being curtailed or even blocked all together.
Public authorities must retain the possibility to take action,
especially where it is needed but no private-sector alternative
is warranted or available.

1.17.
The CoR shares in principle the Commission’s con-
cern to free companies from red tape and to facilitate
market access through further product standards. It expressly
welcomes the Commission’s plan to devise a strategy to
simplify the regulatory environment, and trusts that such a
strategy will be applied above all at EU level.

The CoR also feels that

1.18.
the establishment of a
framework for state aid for research and development is a
worthwhile venture, if it results in a level playing field. This
also implies an EU research policy that does not exclude
support
for medium-sized research projects and permits
differentiated national — and, where appropriate, regional —
aid for research.

1.19. Moves to open up new European labour markets
must be at the forefront of the target actions to secure a
citizen-centred internal market. The actions relating to the
integration of environmental considerations into internal
market activities, food safety, the elimination of obstacles in
the social sphere, and education and training must in particular
foster this objective. The proposed action plan must not only
remove cross-border barriers in order to promote mobility,
but must also give regional and local authorities scope to tap
these new European labour markets effectively. The CoR
welcomes the Commission’s plan to take candidate countries
into consideration in the internal market’s external dimension
even at this stage.

2.1.
So that the actions provided for under the Internal
Market Strategy can be promptly translated by the EU insti-
tutions into legislative measures, the CoR recommends that
particular importance be attached to the priority target actions
and that the Council presidency of the day be encouraged to
include these ‘priority actions’ in its work programme.

2.2.
For its dialogue with grassroots market players, the
Commission can use various websites as well as national co-
ordination centres and contact points, including the consumer
information centres (Euroguichets) and the Euro Info Centres
(EICs). In order to improve the flow of information between
the Member States and the Commission on the internal market,
the CoR proposes that greater use be made of mutual
consultation in completing the internal market than has been
the case so far. It proposes not only expanding the EICs as
contact points — possibly with the involvement of
the
Euroguichets — but also establishing ‘single-market working
parties’ within these contact points which bring together
representatives of trade associations, trade unions, chambers,
regional and local authorities etc. This will enable the Com-
mission to consult these information disseminators on the
implementation of the Internal Market Strategy and its impact
on regional and local markets. Other instances show that the
Commission is quite able to launch and promote such
processes.

The CoR shares the Commission’s view that meaningful
2.3.
indicators must be developed to measure progress in the
various internal market fields. It expects the Commission to
come up with indicators that cover the development and
impact of the new internal market rules, particularly at regional
and local level. This not only includes indicators relating to the
free movement of goods and services, freedom of establish-
ment, prices and progress made in standardisation, but also
indicators concerning the expansion of the European labour
market and employment trends, the compatibility of social
systems and the harnessing of the ‘entrepreneurial spirit’.

Operational and shorter-term target actions for the key strategic areas
of the internal market (markets, business, citizens, external aspects)

2.4.
The Internal Market Strategy review should also include
an examination of both the shortcomings and achievements
of the operational and shorter-term target actions which
come to light from the Commission’s own networking, from
dialogue with SMEs and the public and from the planned
interactive policy-making initiative.

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2.5.
Introduction of the euro as the European currency is
the next decisive step to be taken in order to establish and
strengthen the internal market. It is widely feared — whether
justifiably or not — that the introduction of the new currency
will bring about a further upward movement of prices. The
CoR asks the Commission to take additional measures in order
to give public confidence in the new currency a further boost
and vet the impact on the trend in prices. In particular, the
charges for non-cash payment transactions between Member
States should be reduced and aligned.

Price comparisons are an effective indicator of econ-
2.6.
omic integration and market performance. Price differences in
the EU are as high as 40 % in the case of, for example,
consumer electronics products and are even higher for fresh
food products. These price differences cannot be put down
solely to differing rates of VAT; brand image also accounts for
up to a third of the price differences in Europe. The differences
are probably also due to obstacles to competition, sales and
marketing in the service sector. Legal provisions and difficulties
in the field of technical harmonisation are also matters of the
utmost concern to enterprises. The only way to bring about a
constant downward pressure on prices is by having efficient
markets which are geared to competition and on which goods
can be freely traded. The CoR calls for studies to be carried out
with a view to elucidating these problems and putting
forward solutions and demands that work be continued on
implementing the comprehensive strategy for the internal
market in services.

2.7.
In the CoR’s view, the current civil dialogue aimed at
achieving a citizen-orientated and viable consumer policy
provides an opportunity for making necessary corrections to
agricultural policy, the policy which pioneered the way for the
common market. The primary objective is to produce, process
and market healthy, top-quality food whilst, at the same time,
improving animal welfare and protection of the environment.
EU Member States are bound by intra-Community trade rules
and international rules governing imports and exports. This
has enormous consequences for consumer protection. The
CoR calls for a permanent EU-wide ban on the use of feed
containing meat- and bone-meal and animal fats, compulsory
BSE testing of cattle aged 24 months and over and an extension
of the tests to sheep and goats. The protection of animals
needs to be improved by tightening up EU and national rules
governing livestock farming. Subsidies in respect of the export
of live animals for slaughter should be abolished and there
should be strict limits on journey times for live animals. The
CoR calls on the Commission to change the current system of
aid for agriculture. EU payments for expenditure linked to
production should in future be switched more to promoting
‘second-pillar’ measures, such as nature conservation, the
promotion of quality-assurance schemes and the energy use of
biomass. The CoR calls for consideration to be given to a
possible increase in the level of EU co-financing for second-
pillar measures.

2.8.
Liberalisation in the fields of transport, energy, com-
munications, postal services and financial services has gener-
ated a market dynamism from which all EU Member States
have so far benefited. However, market liberalisation is also
having an increasingly adverse effect on the provision of
amenities in structurally-weak rural areas in particular. The

CoR therefore calls on the Commission to pay greater attention
to the territorial impact of liberalisation policy in future. When
liberalisation measures are proposed in future (e.g. rail freight
liberalisation package, due to be published in December 2001)
a separate chapter should always be included in which this
territorial impact is described and assessed. This also applies
to proposals which would place SMEs and structurally-weak
areas under more severe competitive pressure and, not least,
to the implementation of the ‘Basel II’ recommendations.

The CoR calls for the establishment of an EU compe-
2.9.
tition and aid policy which takes account of regional-policy
objectives and guarantees fair competition. This also applies,
in particular, to public infrastructure and other measures
designed to optimise regional
location factors. The CoR
trusts that the Commission will create a clear and positively
formulated legal framework for public infrastructure policy
and for measures in respect of public services based on public-
private partnerships (PPP).

2.10.
SMEs find it much more difficult than larger business-
es to withstand competition. The Commission has recently
started to ask for bank guarantees from aid recipients for the
advance payments made at the beginning of a project. These
guarantees not only give rise to costs but also reduce an
enterprise’s credit line in respect of other projects, thereby
sharply restricting SMEs’ scope for action. The CoR calls on
the Commission to impose severe penalties on aid recipients
in the case of misconduct in order to prevent irregularities. It
also urges the Commission to examine whether it would be
possible to grant derogations for SMEs in respect of the
guarantees to be provided for advance payments.

2.11.
The CoR shares the Commission’s view that the
European Economic Area suffers from over-regulation with
the result that SMEs, in particular, are permanently hampered
in their scope for development. The CoR deplores the fact that
the EU itself has contributed in no small measure to this trend.
It
therefore warmly welcomes the Commission’s plan to
present a comprehensive strategy for simplifying regulation at
both EU and national level by the end of 2001. The CoR asks
the Commission to adhere strictly to the subsidiarity principle
and to concentrate on framework provisions when drawing
up this strategy.

2.12.
The CoR deplores the fact that the effectiveness of
many of the attempts by the EU to promote economic
development in the internal market has suffered as a result of
the complex nature of the requirements and the lack of
transparency in the decision-making processes. This also
applies to the administration of Structural Fund aid with the
aid of rules which frequently conflict with the working
practices of efficient institutions already in place in the Member
States,
thereby resulting in the establishment of parallel
administrative structures. The CoR asks the Commission to
pay particular attention to this aspect in its interim review and
to present a report setting out proposals for streamlining
administrative procedures, based on the working practices of
existing regional and national administrations.

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2.13.
The CoR agrees with the Commission that particular
attention should be paid to the challenge of enabling SMEs
and the public to exercise their rights in the internal market
and finding solutions as soon as possible to the problems
which arise. With a view to giving a human face to anonymous
networks for dialogue, and solving concrete problems more
rapidly in individual cases too, the CoR proposes that an
‘Internal Market Ombudsman’ be appointed at EU level whom
members of the public and enterprises can contact directly and
who would liaise with the contact bodies and governments in
the Member States to ensure that internal market laws are
enforced.

2.14.
The completion of the internal market means that
there is now no stopping the process of achieving freedom of
movement,
freedom of establishment, competition and
growth. Cross-border activities of SMEs can, however, be
jeopardised by ‘hard’ and ‘soft’ barriers, as the examples set out
below illustrate.

Every enterprise operating across a border has to
2.15.
expect to be called upon to conclude a wage agreement which
is valid in the neighbouring country. Furthermore, trade unions
in the neighbouring country expect posted workers to join the
relevant specialised trade union even in cases when the posting
enterprise has no place of business in the neighbouring
country. This creates a legal uncertainty for the posting
enterprise, particularly as there are frequently no codified
minimum wage provisions (e.g. in the case of wage agreements
in respect of construction sites) and wage and salary conditions
in neighbouring countries also cannot readily be compared.
The reason for this is that the structure of ancillary wage costs
differs, with the result that in some cases these payments are

Brussels, 14 November 2001.

not recognised under the minimum hourly wage provisions.
The COR calls on the Commission to draw up a brief overview,
setting out practical proposals, in order to provide enterprises
with at least a methodology for rough comparability.

2.16.
The CoR shares the Commission’s view that worker
mobility in the internal market is still being curbed by a large
number of factors and that removal of these barriers to
mobility has to be a key task in the implementation of the
internal market strategy. Achievement of this objective does
not necessarily have to involve harmonising Member State’s
tax and social security systems. Instead it is vital to introduce
general rules designed to make different institutional systems
compatible for individual workers. In this respect the CoR
welcomes the action plan for opening up new European labour
markets which the Commission is due to present in early 2002
further proposals for recognising
and also welcomes all
vocational qualifications. The CoR would, however, draw
attention to the fact that these measures must promote and
increase the mobility of every type of skilled worker and not
just highly qualified workers.

2.17.
Following on from the benefits which have accrued
so far for frontier regions, the CoR would ask the Commission
to also include in its aid programmes,
(e.g. EURES or
INTERREG) more measures for eliminating ‘soft’ barriers to
mobility. Priority must be given to language learning, above
all in frontier areas, in order to promote mobility in the EU
and the completion of the internal market. In this context the
CoR welcomes, for example, the information and publicity
campaign for the European Year of Languages 2001. With a
view to promoting mobility, the CoR asks the Commission
and the Council of Europe to make continued use of this
instrument in the form of specific actions.

The President

of the Committee of the Regions

Jos CHABERT