Opinion of the Economic and Social Committee on the "Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions 2002 Review of the Internal Market Strategy Delivering the promise" (COM(2002) 171 final)
Date: 2002-07-18
Institutions: European Economic and Social Committee
Subjects: EU action, action programme, national implementing measure, structural adjustment

C 241/180

EN

Official Journal of the European Communities

7.10.2002

Opinion of the Economic and Social Committee on the ‘Communication from the Commission
to the Council, the European Parliament, the Economic and Social Committee and the Committee
of the Regions 2002 Review of the Internal Market Strategy Delivering the promise’

(COM(2002) 171 final)

(2002/C 241/34)

On 11 April 2002, the European Commission decided to consult the Economic and Social Committee,
under Article 262 of the Treaty establishing the European Community, on the above-mentioned
communication.

The Section for the Single Market, Production and Consumption, which was responsible for preparing
the Committee’s work on the subject, adopted its opinion on 26 June 2002. The rapporteur was
Mr Kenneth Walker.

At its 392nd Plenary Session (meeting of 18 July 2002) the Economic and Social Committee adopted the
following opinion by 32 votes in favour and six votes against.

1.

Introduction

message of the Communication, which centres on the same
broad objectives as last year’s review, viz:

1.1.
The Committee has previously published Opinions on
the Commission’s Communication of 24 November 1999
setting out its Internal Market Strategy (1), and on the Com-
mission’s first (2) and second (3) annual reviews of this strategy.
This Opinion addresses the Commission’s third annual review.

The Commission’s third annual review aims to draw
1.2.
together the different strands of Internal Market policy in a
single document and, ‘provide decision-makers with a roadmap
for the next 18 months’. It is based on a thorough analysis —
mainly in the Cardiff report (4) — of the areas where the
Internal Market still needs to be improved. It sets out a series
of target actions aimed at filling these gaps.

1.3.
This Communication also monitors progress since last
year’s review. It reveals a mixed picture. The success rate for
completing target actions stands at just over 50 %, which is
about the same as last year. There have been some notable
achievements but overall progress has not been fast enough.

1.4.
The added impetus from the Barcelona European
Council provides the opportunity to speed up the pace of
delivery. The need for continuity and results is the central

( 1) OJ C 140, 18 May 2000.
( 2) OJ C 14, 16 January 2001.
( 3) OJ C 221, 7 August 2001.
( 4) COM(2001) 736 final, 7 December 2001.

— pressing ahead with the economic reforms agreed at

Lisbon and confirmed at Barcelona;

— gearing up to exploit the opportunities which will soon

be offered by an enlarged Internal Market;

— ensuring that the Internal Market brings tangible benefits
to citizens, especially in their roles as consumers and
businesses, particularly SMEs;

— a continuing emphasis on the ‘fundamentals’ — issues
such as appropriate harmonisation, mutual recognition,
transposition, compliance and enforcement, problem-
solving and standardisation — which are essential to
ensuring that the Internal Market works in practice, not
just in theory.

1.5.
The Committee does not propose to reiterate in this
Opinion the comments that it has previously made on the
earlier Internal Market Reviews; it will confine itself to dealing
with matters which impinge on the future direction of the
Internal Market and the removal of existing lacunae.

2. The Commission’s review of progress

2.1.
It is ten years since the deadline of 1 January 1993 for
the introduction of the Single Market was first set. In that time,
Europe has come a long way but a great deal remains to be
done. The Euro and enlargement will trigger a new dynamic
and Lisbon has added extra impetus.

7.10.2002

EN

Official Journal of the European Communities

C 241/181

2.2.
Structural reform is important and is the key to the
long-term preservation of Europe’s social model. Structural
reform is necessary because Europe’s ability to create sustain-
able growth and better jobs depends on the strength of its
economy; after the introduction of the Euro, strong flexible
economies are all the more crucial in facing external shocks. A
strong economy will enable Europe to sustain its unique social
model, to benefit from its diversity and to enjoy a high quality
of life.

Ministers meeting in different Council formats. This ‘delivery
gap’ must now be closed or the overall credibility of the Lisbon
strategy will be called into question.

2.5.1.
The added value of the Internal Market Strategy is
that the whole is worth more than the sum of the parts. Many
of the proposed actions will naturally reinforce each other
as they trigger a number of changes simultaneously. By
implementing only part of the proposed actions, this multiplier
effect will be seriously diminished.

2.2.1.
The temptation to postpone change needs to be
resisted. Reform can be difficult to implement in practice and
uncomfortable in the short run. It often meets with resistance
from those with narrow sectoral
interests. In the current
economic climate, there may be a temptation to slow down
the pace of reform and resist change; we have already seen
examples of this. Postponing reforms, however, would be a
mistake. It would leave the Union in a poor position to benefit
from the global recovery, the first signs of which are now
becoming visible. Delay would curtail our companies’ ability
to innovate and become stronger and make it less likely that
new enterprises will start up.

2.2.2.
Success will depend on political will; promises of
action must be kept. Europe has shown that it can pull together
and act — if the political will exists. We now have the
opportunity to build on this success. Our ability to do so will
depend on whether there is enough political will to translate
the commitments made at Barcelona into concrete action.

In reviewing progress since last year, the Commission
2.3.
notes that the overall pace of delivery is still
too slow.
Responsibility for this is shared by the Commission, the
European Parliament and the Council. The Commission has
missed some of its target dates, e.g. on the Better Regulation
Action Plan and the Services Strategy, but in the majority of
cases the delays have been in the Parliament and the Council,
e.g. on the Community Patent, the public procurement legislat-
ive package and the take-over bids Directive.

A scoreboard of targets hit and targets missed is set

2.4.
out in Appendix 2.

3. The next 18 months: The Commission’s Action Plan

Given the slow progress to date, a sustained effort is
3.1.
required to ensure that all
the target actions are finally
completed. There is no need for a wave of fresh ideas at this
stage; nor is there a need to change direction. The job in hand
is only half done. Economic reform, preparing the Internal
Market for enlargement and making it work better in practice
are the three priorities.

3.2.
Only seven Member States have met the transposition
target set at Stockholm. A new target has been set for Member
States to achieve transposition rates of at least 98,5 %, and to
have implemented 100 % of all Directives that are two years
past their transposition date, by the 2003 Spring European
Council.

However, simply transposing Community rules into
3.2.1.
national
law is not enough; the law must also be applied
correctly in practice. The reality is that, in too many cases,
citizens or businesses who are seeking to exercise their Internal
Market rights run into practical problems, such as getting
professional qualifications recognised or seeing their products
taken off the shelves for no good reason. The Commission can
institute formal infringement proceedings but it can take years
to resolve disputes — two years in the majority of cases and
far longer if the case goes to court (1). Legal action should be
avoided when problems can be solved pragmatically; hence,
the importance of the development of the SOLVIT problem-
solving network (2) and the re-launching of
the Citizens’
Signpost Service. The Commission has also set a target for
Member States to reduce their number of
infringements
resulting from misapplication of Community legislation by at
least 10 % no later than June 2003.

2.5.
The added impetus from Barcelona provides the oppor-
tunity to speed up the delivery; this opportunity must be
seized. To date, commitments made at European Councils
have often not been translated into action at the level of

(1) Internal Market scoreboard No. 9, November 2001.
(2) COM(2001) 702 final, 27 November 2001.

C 241/182

EN

Official Journal of the European Communities

7.10.2002

3.3.
Target actions for the next eighteen months have been
selected according to the contribution they can make to
achieving the key priority objectives. The number of actions
has been sharply reduced, from nearly 80 last year to about
30 this year, in order to ensure undivided political attention.
The target actions have been grouped under the four headings
set out in the original Internal Market Strategy Communi-
cation (1). The four headings are:

— modernising markets;

— improving business conditions;

— meeting citizens’ needs;

— anticipating enlargement.

3.3.1. Modernising markets is a primary objective. Major
sectors of the European economy are still not sufficiently
competitive. Key sectors of the Internal Market remain frag-
mented and excessively shielded from competition. The Barce-
lona European Council laid particular emphasis on the inte-
gration of network industries and on the financial sector.
These are the backbone of a fully-functioning Internal Market.
The pace of delivery of the Financial Services Action Plan must
be speeded up. Bold steps are needed to achieve more
integrated services markets. There are huge savings to be had
from more open and competitive public procurement. Mutual
recognition of professional qualifications, product approvals
and financial services must be made to work; problems with
mutual recognition cut
trade in the EU by up to EUR
150 billion in 2000 alone but there are no instant, one-size-
fits-all solutions. The standardisation deficit must be reduced;
although work on standardisation has been stepped up, it can
still take eight years to agree a European Standard.

3.3.2.
Improving business conditions is another high pri-
ority. Action aimed at integrating markets by removing trade
barriers will have its full effect only if Europe supports
creative, dynamic businesses in an environment which fosters
entrepreneurship and innovation. Further progress is required
on a number of fronts. There should be less and better State
aid; the Barcelona European Council called on Member States
to continue to reduce State aid while redirecting it towards
more horizontal objectives. It is also important to improve the
tax environment for businesses across the Union by removing
tax barriers and distortions. The competitiveness of companies
is being damaged by the regulatory burden on business; the
impact on SMEs is particularly negative. Despite all the talk
about the need for better regulation, most companies still fail

to see any discernible effect on their daily operations. The
Commission has presented an Action Plan on better regulation
to the Seville European Council but presenting an Action Plan
is not enough — it must be made to work in practice; the
Member States must play their full part in this. One important
area in which Member States can promote entrepreneurship is
by making it easier and cheaper to set up a new company. The
continuing deadlock over the Community Patent proposal
must be broken if Europe is serious about the significance of
research and development; without strong and affordable
patent protection, Europe will only fall further behind the
USA.

The Internal Market should serve the needs of
3.3.3.
Europe’s citizens. Competition is the consumer’s best friend
and has not compromised their safety. Consumer-protection
rules should promote competition and free movement. While
price differentials have narrowed over the past decade, conver-
gence is now slowing down. The Cardiff Report and the Green
Paper on Consumer Protection (2) suggested that differing
regulatory environments might be part of the explanation.
Meeting citizens’ needs also requires further integration of
sustainable development, environmental protection (3) and
social policy aspects with Internal Market policy and
implementation of the Commission’s Action Plan for Skills
and Mobility, which aims to create a more favourable environ-
ment for more open and easily-accessible European labour
markets by 2005 (4).

3.3.4.
The Internal Market is one of the key, highly-visible
areas in which it will become immediately apparent whether
new Member States are fully prepared both in theory and in
practice. With enlargement imminent, the candidate countries
must continue to strengthen their administrative capacity,
particularly in key areas such as intellectual and industrial
property rights, mutual
recognition (particularly of pro-
fessional qualifications), public procurement and money laun-
dering. The Union is supporting their efforts but it is important
to integrate the new Member States into the SOLVIT problem-
solving network as soon as possible.

3.4.
The Commission’s target actions are set out in Appen-
dix 3. The Committee broadly approves these targets and calls
upon the Council, the European Parliament and the Member
States to play their parts in achieving them.

( 1) COM(1999) 624 final, 24 November 1999.

(4) COM(2002) 72, 13 February 2002.

(2) COM(2001) 531, 2 October 2001.
(3) Council strategy on the integration of environmental protection
and sustainable development into Internal Market policy (8970/
01).

7.10.2002

EN

Official Journal of the European Communities

C 241/183

3.5. Measuring the results of public policy is difficult. Some
valuable results are impossible to quantify; others require so
much expense that they are not worth quantifying. However,
some measurement is better than no measurement. It is more
important to measure outcomes than inputs; what matters is
not the number of individual target actions achieved but the
impact they have made. Actions should be accompanied by
indicators; in the next Internal Market Review, the Commission
will seek to make explicit the indicators by which progress on
the ground should be measured.

advocated the same measures and set the same targets with
admirable consistency but the desired results have failed to
materialise. The Committee notes the Commission’s admission
of missed target dates, including that for the Better Regulation
Action Plan,
to which the Committee had already drawn
attention in another Opinion (2). Nevertheless, the Committee
concurs with the Commission’s assessment that the major
portion of the blame for this lack of progress must be laid at
the door of the Member States, the European Parliament and
the Council.

4. General comments on the Commission’s Internal

Market Strategy Review

4.1.
At the Lisbon European Council in 2000, the EU set
out its mission statement of becoming within ten years, the
most competitive and dynamic knowledge-based economy in
the world, capable of sustaining economic growth with more
and better jobs and greater social cohesion. Two years into the
mission, Europe has fallen further behind the United States in
many of the significant indicators by which economic dyna-
mism and competivity are measured.

One of the principal reasons for this is the failure to
4.2.
make more progress towards the completion of the Internal
Market. Like the United States, Europe does the largest part of
its trade with itself; intra-Community trade accounts for about
63 % (1) of the total. As the Commission Communication
attests, the failure to modernise Europe’s markets is restricting
the growth in that trade — by as much as EUR 150 billion per
annum in respect of mutual recognition problems alone. The
Internal Market is so far from being complete that it is often
easier for European businesses to trade with customers outside
the Union than within it; if the EU’s mission is to be fulfilled,
it must make it simpler to trade between Member States than
it is at present. The Committee therefore agrees with the
Commission that modernising Europe’s markets should be a
primary objective.

4.4.
The Committee agrees with the Commission on the
need for structural reform. Despite the commitments entered
into at Lisbon and re-affirmed at Barcelona, the liberalisation
of energy markets is proceeding very slowly; some Member
States appear reluctant to do more than pay lip service to the
idea. It would appear that there is still considerable resistance
to change in some quarters, particularly at the Member State
level; in order to overcome this, it will be necessary, as the
Commission has said (3), to inculcate new habits, to formulate
new working methods and to develop a new administrative
and political culture. This will require a multi-agency approach
in which the Commission must take the lead.

4.4.1.
In its 18-month Action Plan last year, the Com-
mission reduced the number of target actions from the then
current level of 130 to 78. It has now reduced the number
from 78 to about 30. In each of the last two years, the success
rate for completing actions has remained fairly constant at
around 50 %. While it is tolerably certain that the Commission
is right in saying that this further reduction will enable political
energy to be focused more effectively on the reduced number
of targets, this constant lowering of sights does not appear to
have yielded any improvement in the achievement rate. The
Commission seems to expect that reducing the number yet
again will result in a higher proportion of the targets being
met but experience suggests that this causation theory must
not be accepted quantum valeat. It would appear to be less a
question of political energy than of political will.

4.3.
Reading the Commission document generates a certain
sense of déjà vu. Many of the same imperatives, the same
objectives, the same exhortations and the same disappointing
lack of progress are manifest in each of the Communications
that it has produced on this subject. The Commission has

In democracies, political will is based on the will of
4.4.1.1.
the majority. The completion of the Internal Market can only
become a reality if a predominant proportion of European
citizens recognises the benefits which they can derive from it.

( 1) European Commission, February 2002.

(2) OJ C 125, 27.5.2002.
(3) COM(2001) 726 final, 5 December 2001.

C 241/184

EN

Official Journal of the European Communities

7.10.2002

As the Commission states,

4.4.2.
‘An effective Internal
Market framework starts with Member States transposing into
their national law agreed Directives’. The Committee endorses
the importance which the Commission attaches to Member
States transposing Community Directives into their national
legislation correctly and within the set deadlines. At present,
the transposition and implementation of Directives in the
Member States are a source of additional complexities, diver-
gences and delays. In order to avoid distortions of competition
and the creation of different legislative regimes, which hamper
and discourage intra-Community trade, there must be a large
degree of harmony between the legislative instruments in force
in different Member States. This cannot be the case where so
many Member States are tardy in transposing Community
legislation and where the transposition is distorted by differing
national interpretations as well as by the widespread currency
of derogations and exemptions. It is simply not acceptable that
Member States should continue to be permitted to effectively
postpone the process of transposition sine die.

4.4.3.
A typical example of the delays that occur is provided
by the Consumer Guarantee Directive (1), which to date has
only been transposed in four Member States. The Commission
has set a target of achieving transposition rates of 98,5 %, and
100 % for all Directives more than two years beyond their
transposition dates, but these desiderata appear, a priori, to be
unattainable.

4.4.4.
Nor is it simply a question of transposition. A
number of discrete conditions has to be fulfilled in order to
complete the process of incorporating European legislation
into national law in such a way as to produce the requisite
degree of harmony to make a reality of the Internal Market.
Cardinal among them are:

— transposition of the legislation in a uniform and timely

manner;

— creation of the necessary administrative capacity to enable

effective implementation;

— exercise of the political will to secure enforcement.

4.5.
The Committee supports the Commission’s contention
that its proposed actions will mutually reinforce one another
and produce a multiplier effect which would be seriously
diminished by partial implementation.

4.6.
The Committee agrees with the Commission that there
is no need of fresh ideas at this stage; nor is there need of a
change in direction. It would be impolitic to attempt to re-
orientate the process at this juncture. There is, however, an
urgent requirement for more substantive progress in achieving
the Commission’s stated objectives. Time is of the essence in
this matter. The Committee broadly approves those objectives
and the priorities that the Commission has assigned to them.

5. Comments on the Commission’s target actions

5.1. Modernising markets

The Committee agrees with the Commission on the
5.1.1.
pressing need for Member States to deliver on the commitment
which they made at Barcelona to provide freedom of choice
of supplier for all European non-household consumers of
electricity and gas as of 2004. The Committee considers that,
if this target were achieved, it would represent a substantial
step forward in the process of liberalisation of services but it
would still leave Member States with the discretion to restrict
the freedom of choice of household consumers and would
leave many other essential services unaffected. As a target, it
therefore appears less than ambitious but is probably at the
limit of what is politically feasible.

As the Commission avers, ‘Financial services are the
5.1.2.
oil
in Europe’s economic engine’. The high-level Mid-term
Review of the Financial Services Action Plan (FSAP) (2) esti-
mated that an integrated financial sector could add as much as
EUR 43 billion annually to the EU’s GDP growth. Consumers
would be among the big winners. Barcelona reaffirmed the
role of the FSAP as the roadmap to claiming this prize. It urged
the Council and the European Parliament to adopt this year
the eight legislative measures currently under discussion. The
Committee adds its voice to this call.

5.1.3.
The Commission estimates that more competition in
business services alone could add up to EUR 350 billion to the
Union’s GDP (3). Services have been by far the most important
engine of employment growth throughout the Community in
the late 1990s and they offer the greatest potential for further
job growth in the future. The gap in employment in services
between the EU and the US is 14 percentage points — or
36 million jobs (3). The Committee agrees with the Com-
mission that in order to unleash this potential it is essential
that the remaining Internal Market barriers to cross-border
provision of services, the take-up by consumers and freedom
of establishment be removed.

( 1) Directive 1999/44/EC of the European Parliament and of the
Council of 25 May 1999 on certain aspects of the sale of
consumer goods and associated guarantees, OJ L 171, 7.6.1999.

(2) Held in Brussels on 22 February 2002.
(3) COM(2000) 78, 1 March 2000.

7.10.2002

EN

Official Journal of the European Communities

C 241/185

5.1.3.1.
The Committee considers that it would be useful
to conduct an evaluation of the costs to the European taxpayer
when consumers are not able to avail themselves of services
provided on a secure basis with universal access and with a
wide choice of service providers. There is a need for adequate
legislation and/or codes of conduct to regulate the companies
providing such services and, in order to improve the operation
of the Internal Market, to avoid distortions of competition,
and ensure that these services are provided continuously and
to a consistently high quality, these rules should be harmonised
across the Community. It would also be instructive to evaluate
the costs of the present situation in the services sector in terms
of unemployment. These evaluations would be particularly
illuminating in the context of enlargement.

5.1.4.
Public procurement is another area where reform
needs to be accelerated. The percentage of public procurement
that is openly advertised has increased — but only to 15 %.
Meanwhile, the percentage of public procurement contracts
going to other Member States remains well below 2%. This
compares to approximately 20 % in the private sector. The
Commission has estimated that more open public procurement
could result in annual savings to the European taxpayer in
excess of EUR 50 billion. It is difficult to escape the conclusion
that this is simply another manifestation of protectionism by
the Member States; as such, it is not in keeping with the spirit
of Europe neither is it calculated to advance the fulfilment of
Europe’s mission statement. The Committee agrees with the
Commission that progress on its legislative package proposal
is essential and that any attempts to water it down, e.g. by
increasing the thresholds, should be firmly resisted.

5.1.5.
The Committee shares the Commission’s view on the
need to ensure wider acceptance of the principle of mutual
recognition. The Commission states that,
‘In many sectors,
this principle works reasonably well and avoids unnecessary
regulation’. O si sic omnes!

5.1.6.
The Committee deplores the fact that it can take up
to eight years to agree a European Standard and considers that
some way of streamlining this process must be found as a
matter of urgency. It cannot accept that this should be a
problem which admits of no solution. The Committee also
shares the Commission’s view that the situation in some key
industry sectors, such as construction products and machinery
remains worrying. As the Commission acknowledges, ‘No real
Internal Market exists in these sectors’.

5.2.

Improving business conditions

5.2.1.
The Committee endorses the Commission’s view that
the Union must support creative, dynamic businesses. This
will require the creation of an enterprise culture in which
businesses can thrive, free of unnecessary bureaucratic con-
straints. Legislation must be orientated towards facilitating
business rather than restricting it. The Committee regards this
as a sine qua non for the achievement of sustainable economic
growth.

One of the most damaging of those constraints is the
5.2.2.
regulatory burden on business, which, as the Commission
says, must be reduced. The Committee has recently issued two
Opinions (1) on simplification and the improvement of the
regulatory environment. In these Opinions, it drew attention
to the need for better quality regulations, which must involve
a reduction in the volume of regulation. The Committee does
not equate this process with de-regulation. The piecemeal
fashion in which European legislation has evolved has resulted
in legislative texts which are convoluted and obfuscate; there
is a clear need for re-drafting on a massive scale to produce
concise and coherent documents rather than the mingled
palimpsests which currently exist. The Committee also pointed
to the fact that simplification required greater harmonisation
of legislation in the EU and called for more widespread use of
Regulations instead of Directives, thus presenting Member
States with a fait accompli rather than an opportunity for
creating greater diversity.

5.2.2.1.
In the second of these two Opinions, the Com-
mittee alluded to the fact that poor quality regulation is
currently costing European businesses more than EUR
330 billion per annum and that, if one includes the costs to
public administrations and the economic inefficiencies arising
from poor quality regulation, the total cost to society is in the
region of 10 % of GDP. In this Opinion, the Committee set
out an Action Plan for regulatory improvement and called
upon all
the actors concerned to play their full part in
implementing it. The Committee now repeats this exhortation.
Details of the Committee’s proposed Action Plan are set out in
Appendix 4.

5.2.3.
The Committee notes the publication of the Action
Plan on better regulation which the Commission has presented
to the Seville European Council. The Committee is currently
preparing an opinion on this document. It trusts that the
Council, the European Parliament and the Member States will

(1) OJ C 48, 21.2.2002 and OJ C 125, 27.5.2002.

C 241/186

EN

Official Journal of the European Communities

7.10.2002

act promptly and decisively to give effect to the Commission’s
proposals. As the Commission says, ‘... we want our companies
to be competitive but we tie one arm behind their backs’. The
Committee calls upon the Commission to give a strong lead in
this matter, which lies very much within its remit; although, in
the final analysis, the completion of the project must depend
on others, the Commission exerts an influence which goes
beyond the formal ambit of its authority. The maintenance of
the status quo is not a viable option.

The Committee takes note of the fact that the
5.2.3.1.
Commission plans to establish with the Member States a
Standing European Business Test Panel, comprising some
4 000 companies, to assist in assessing the potential impact of
key regulatory proposals on businesses of all sizes and to
obtain timely and representative feedback. The Committee
welcomes the initiative but hopes that it will operate more
effectively than previous attempts at this exercise.

5.2.4.
The Committee has frequently drawn attention to
the way in which differences between the tax regimes of the
various Member States are fragmenting the Internal Market.
Nowhere is this more evident than in the case of VAT,
where a tortuous and convoluted text imposes complex
and burdensome obligations, differing substantially from one
country to another, which act as a major disincentive to cross-
border trade, especially for small businesses. The wide variety
of rules and the lack of uniformity in the way in which they
are applied means that the Internal Market is effectively
segmented into fifteen different tax areas. As long as VAT is
collected by fifteen different tax authorities in Member States
with different legal and regulatory traditions, interpretations,
processes, systems, languages, customs, practices and working
methods, it is idle to pretend that cross-border transactions
can be treated identically to domestic transactions, which is
the hallmark of a true Internal Market. From the present
perspective, this is merely a pipe-dream. In fact, the present
VAT arrangements are incompatible with the principles of an
in a previous Opinion, (1) the Committee
Internal Market;
pointed out that the concept of intra-Community transactions
is an anachronism
being treated as ‘imports’ and ‘exports’
which defeats the object of the Internal Market. Similar
considerations apply to many other aspects of taxation. The
Committee is currently in the process of drawing up an
Opinion on this topic.

5.2.5.
The Committee agrees with the Commission that an
essential element of promoting entrepreneurship is to make it
easier and cheaper to set up a new company and it approves
the Commission’s intention to set specific quantitative targets
on other aspects of entrepreneurship before the end of the
year.

The Committee again supports the Commission’s
5.2.6.
call
for reductions in the levels of State aid, which are
creating distortions of competition. A situation in which these
exhortations continued to fall on deaf ears would be untenable.

5.3. Meeting citizens’ needs

5.3.1.
The Committee agrees with the Commission’s assess-
ment that the benefits of wider choice, better service and
reduced prices, which stem from competition between sup-
pliers, have generally not compromised the safety or welfare
of consumers. The Committee notes that the forthcoming
Consumer Policy Strategy 2002-2006 will set out further the
Commission’s consumer plans and would wish to be consulted
on this document when it is published.

5.3.2.
Outside the network industries, where Community
legislation has not been introduced, Member States determine
the arrangements for meeting public-sector obligations and
the Commission limits itself to ensuring compatibility with
competition and Internal Market rules. This contrasts with
the position where Community legislation is in force. The
Committee does not regard the two situations as being
equally good one as another and welcomes the Commission’s
announcement (2) of concrete actions to ensure greater legal
certainty and predictability in the application of these rules.

5.3.3.
The Committee agrees with the Commission that the
current informal arrangements for cooperation between public
authorities responsible for the enforcement of consumer
protection rules are inadequate and need to be strengthened.
The Committee also concurs with the need to ensure that free
movement can take place without hindrance in order to avoid
the situation where companies simply decide to forego the
possibility of selling across the Union because they find it
too burdensome to comply with fourteen different sets of
regulatory requirements. As the Commission says, ‘When this
happens it is ultimately the consumer who loses out’. The
prevalence of disparate regulatory environments across the

( 1) OJ C 193, 10.7.2001.

17 October 2001.

(2) Commission Report to the Laeken Council, COM(2001) 598,

7.10.2002

EN

Official Journal of the European Communities

C 241/187

Union is acting as a constraint on intra-Community trade. This
situation would be exacerbated if the process of enlargement
merely resulted in ten new regulatory regimes being added to
the existing ones.

5.3.4.
The Committee joins the Commission in attaching a
high priority to the development of cross-border alternative
dispute mechanisms (1). This is not a tangential issue; it is
integral to the effective operation of the Internal Market.

In its Opinion (2) on the Commission’s Communi-
5.3.5.
cation of 24 November 1999, which set out a proposed
strategy for the Internal Market for the next five years, the
Committee commented on the objective,
‘to improve the
quality of life of citizens’ in the following terms, ‘The Single
Market itself cannot deliver on that point for, even if oppor-
tunities become available, citizens may choose not to take
advantage of them’. The Opinion went on to question whether
such an objective could ever provide a measurable target. The
Committee notes that this objective has now been modified to
‘meeting citizens’ needs’; it considers this to be an improvement
on the somewhat sweeping wording of the original but doubts
whether even this modified goal is susceptible to objective
measurement. There is no common consensus on what is
comprised in the term ‘citizens’ needs’; they are frequently in
conflict with each other and the judgement on whether or not
they have been met is often largely subjective.

5.3.5.1.
The Committee endorses the principle of improv-
ing the lives of citizens but would point out that citizens are
not an homogenous group with identical needs. The costs and
the Internal Market are distributed differently
benefits of
and on different time-scales to various groups of citizens
(industrialists, employees, consumers, etc.) as well as to
separate geographical regions and sectors of the economy.
Moreover,
individual citizens can exercise several different
roles simultaneously. It would, therefore, be appropriate to
measure the results on the basis of the consequences for
individual groups of citizens. Differentiated statements for
discrete groups are certainly possible but measurable results
for the citizens of Europe en masse would be difficult to
ascertain.

5.4. Anticipating enlargement

5.4.1.
Commenting on the Commission’s Internal Market
Strategy (2), the Committee stated that, ‘The Committee’s main
criticism of the broad strategy is that it considers the aspect of
enlargement is not sufficiently developed. To seek to ensure
that the Single Market contributes to a successful enlargement
is a valid objective but that is not sufficient’. Would that it
were. The Committee went on to argue that the most pressing
need was to ensure that the candidate countries would be in a

position to adopt the rules of the Single Market prior to
accession. Two years later,
this remains a concern. The
Commission has stated that, ‘Candidate Countries’ (sic) admin-
istrative capacity, including on compliance and enforcement,
remains rather weak’. Post-enlargement, the Internal Market
will certainly be enlarged but will it still be internal? Will it, in
other words, still be a Single Market, even to the somewhat
limited extent that it is today?

5.4.1.1.
The Committee would view with concern a situ-
ation in which the process of enlargement introduced still
further divergency into the Internal Market by consequence of
the augmentation of different regulatory regimes through
delays in transposing Community legislation, the proliferation
of national interpretations and the imposition of national laws,
customs, traditions and established business practices in the
new Member States. It would not be acceptable that the
process of enlargement should adversely affect the operation
of the Internal Market. From a prudential aspect, it is imperative
that the subsisting Internal Market rules should apply mutatis
mutandis to the new Member States.

The Committee is, however, conscious of the fact
5.4.1.2.
that, in some cases, transposition of the Internal Market rules
will require a certain period of time. This is particularly true of
accession countries which have been under the yoke of
repressive,
In these
totalitarian regimes for many years.
instances, granting transition periods constitutes a helpful
alternative, both for the existing and the future Member States,
but transition periods have restrictive consequences for the
four basic freedoms of the Internal Market. However socially
and economically acceptable they may be, and requisite to the
enlargement process, it is preferable that their duration should
be curtailed to the minimum necessary period.

5.4.1.3.
The Committee considers that the simplification of
regulations is also an enlargement issue. In its Opinion on EU
enlargement (Rapporteur: Mr Vever) (3) it stated that,
‘The
applicant countries’ incorporation of the acquis into national
legislation is complicated by the great complexity of Com-
munity rules and regulations. Although the European Union
ought to lead to simpler regulations in Europe, nowadays it
continues to introduce provisions which are too complicated
for users, too uncoordinated — if not actually inconsistent —
to form a generally coherent whole and too close to existing
national laws to genuinely harmonise them’. The Committee

( 1) COM(2002) 196 final, 19.4.2002.
( 2) OJ C 140, 18.5.2000.

(3) OJ C 193, 10.7.2001.

C 241/188

EN

Official Journal of the European Communities

7.10.2002

reiterates this position and once more draws attention to the
paucity of time left in which to address it. This is an issue
which needs to be addressed with celerity.

be measured. In order to achieve credibility, it is crucial that
their validity should be substantiated. It also welcomes the
Internal Market Watch, which will regularly assess prices for a
standard basket of goods in all Member States.

5.4.2.
The Committee endorses the importance which the
Commission attaches to integrating the new Member States
into the SOLVIT problem-solving network as soon as possible.
It also considers that
the candidate countries should be
encouraged to participate in the PRISM (Progress Report on
Initiatives in the Single Market) (1) database, set up on the
the Committee’s Single Market Observatory.
initiative of
Certain of them have already done so.

Indeed, the Committee feels that greater use should
5.4.2.1.
be made of the Internet in promoting integration of the
Internal Market. For instance, it would greatly facilitate intra-
Community trade, particularly for small businesses, if there
were a web-site which could serve as a vade mecum for
businesses to obtain information on the legal requirements
and tax regulations in other Member States. There is also a
need to develop A2B, A2C, B2A and C2A capabilities on a
wider scale at the European level. At present, this process is
still largely inchoate.

5.4.3.
The Committee welcomes the ‘peer reviews’ which
are being carried out, involving visits to the candidate countries
by experts from equivalent authorities in the Member States
and the Commission. It agrees that cooperation and under-
standing between officials in competent authorities is the
essence of extending the Internal Market to the candidate
countries.

5.5. Measuring progress

The Committee agrees with the Commission that
5.5.1.
some measurement is better than no measurement and that it
is important
to combine quantitative measurement with
qualitative evaluation but it counsels against allowing the
process to become too subjective. It will be difficult to convince
citizens that real progress is being made if that progress is not
measurable and those measurements must be largely empirical.
The Committee accepts that the most important factor is the
impact which is made on the real economy. The situation
where, ‘most companies still fail to see any impact on their
daily operations’ must be remedied.

5.5.2.
The Committee welcomes the fact that, in its next
Internal Market Review, the Commission will seek to make
explicit the indicators by which progress on the ground should

( 1) www.esc.eu.int/omu–smo/prism.

6. Conclusions

The conclusion which must be drawn from the Com-
6.1.
mission’s 2002 Review of the Internal Market Strategy is that
a great deal remains to be done and progress to date has been
disappointing.

6.2.
Nor is time on Europe’s side in this matter. The 18-
month period covered by this review will take Europe to the
eve of enlargement and nearly halfway towards the target date
set at Lisbon. The imminence of enlargement gives added
urgency to the project of completing the Internal Market; if
the process of enlargement is to be successful, then both the
workings of the Internal Market must be improved to provide
a platform for the accelerated economic growth which enlarge-
ment should generate and the candidate countries must be
brought up to speed on existing Internal Market legislation in
order not to create new distortions and inefficiencies in its
operation.

6.3.
To a large extent, the fact that Europe has signally
failed to achieve more substantive progress towards what is
generally accepted as a common goal is an indictment not of
the Commission, which has acted in the main as a catalyst for
change, but of the other European institutions and the Member
States. Without strong and real political support from all the
actors involved, and particularly from the Member States, the
vision of a true Internal Market will remain a chimera and the
obtention of Europe’s strategic objectives will remain a distant
dream.

6.4.
Such political support can only stem from a broad
political acceptance of the European Union on the part of its
citizens. This, in turn, can only be achieved if the advantages
of the Internal Market are conveyed to them more effectively.
There is a need for a concerted publicity campaign to convince
Europe’s citizens of the advantages that can accrue to them
from completing the realisation of the Single Market and to
allay their concerns about possible untoward consequences.

6.5.
The fulfilment of the Union’s mission statement is
predicated upon the unqualified commitment of all the actors
involved. The Committee invites the Commission to reflect on
a longer-term agenda for the Internal Market in order that it
can make a full contribution to the realisation of the goal. It
also considers that the scope of the Internal Market Scoreboard
should be extended to include factors on which it does not
currently report, focusing particularly on those elements which
constitute remaining barriers to the completion of the Single
Market.

7.10.2002

EN

Official Journal of the European Communities

C 241/189

The Commission is correct

6.6.
to be
effective, the Internal Market Strategy must be a ‘shared agenda’
for the Commission, the Council, the European Parliament and

in saying that,

Brussels, 18 July 2002.

the Member States. It is also correct in saying that, ‘Europe’s
collective leadership must deliver on its promises’. It remains
to be seen whether the political will exists to achieve this.

The President

of the Economic and Social Committee

Göke FRERICHS

APPENDIX

to the opinion of the Economic and Social Committee

The following amendments, which received at least one quarter of the votes cast, were rejected during the discussions:

Point 4.4

After the first sentence, amend as follows:

‘The Committee agrees with the Commission on the need for structural reform. Despite the commitments entered
into at Lisbon and re-affirmed at Barcelona, the liberalisation of energy markets is proceeding very slowly; some
Member States appear reluctant to do more than pay lip service to the idea. It would appear that there is still
considerable resistance to change in some quarters, particularly at the Member State level; in order to overcome this,
At the Lisbon and Barcelona summits, commitments were made to liberalise energy markets. At the Barcelona
summit, some Member States gave a specific commitment to open up their markets (by 2004), taking account of the
specific characteristics of services of general interest. In order to implement the agreed reforms successfully, it will be
necessary, as the Commission has said ...’.

Reason

Pillorying individual Member States is not conducive either to the political debate or to the ongoing development of
the markets in services of general interest. This is all the more true given that the debate on the specific characteristics
of services of general interest, their importance for economic development and people’s living conditions and the
resultant requirements for basic conditions on the markets in which these services are provided, is far from closed.
Moreover, initial experiences from various countries indicate that basing any approach too precipitously and one-
sidedly on the forces of free competition often brings undesired results.

Result of the vote

For: 8, against: 19, abstentions: 1.

C 241/190

EN

Official Journal of the European Communities

7.10.2002

Point 5.1.1

Amend the second sentence and delete the third as follows:

‘The Committee considers that, if this target were achieved, it would represent a substantial step forward in the
process of liberalisation of services but it would still leave Member States with the discretion to restrict the freedom
of choice of household consumers and would leave many other essential services unaffected while at the same time
taking account of the specific characteristics of services of general interest. As a target, it therefore appears less than
ambitious but is probably at the limit of what is politically feasible.’

Reason

See point 4.4.

Result of the vote

For: 10, against: 26, abstentions: 0.

Point 6.4

Replace the third sentence by the following:

‘At the same time, however, it will be vital to take seriously the concerns and criticisms expressed in connection with
virtually full competition, especially with regard to services of general interest. Public discontent must not be
dismissed as “unwarranted emotion” since it often stems from specific disadvantages that may indeed be related to
economic liberalisation. Thus, the completion of the single market will only be successful if, alongside establishing
the market itself, the objective of developing the EU into a social union is recognised as equally important and
pursued with just as much vigour.’

Reason

Self-explanatory. See also many countries’ experience of liberalising services of general interest.

Result of the vote

For: 16, against: 21, abstentions: 0.