Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions - Internal Market Strategy - Priorities 2003-2006
Date: 2003-05-07
Institutions: European Commission
Subjects: free movement of goods, freedom to provide services, public contract, single market, structural adjustment, tax harmonisation

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 7.5.2003
COM(2003) 238 final

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

Internal Market Strategy

Priorities 2003 - 2006

TABLE OF CONTENTS

Introduction ................................................................................................................................ 3

Part A: Context........................................................................................................................... 3

1.

The role of the Strategy in the EU’s economic reform process ......................................... 3

2. Why a new Strategy now?.................................................................................................. 4

3. A more focused approach................................................................................................... 4

4. A shared agenda ................................................................................................................. 5

Part B: Priorities ......................................................................................................................... 6

1.

2.

3.

Facilitating the free movement of goods............................................................................ 6

Integrating Services Markets............................................................................................ 10

Ensuring high quality network industries......................................................................... 13

4. Reducing the impact of tax obstacles............................................................................... 15

5.

6.

Expanding procurement opportunities ............................................................................. 17

Improving conditions for business ................................................................................... 20

7. Meeting the demographic challenge ................................................................................ 23

8.

9.

Simplifying the regulatory environment .......................................................................... 25

Enforcing the rules ........................................................................................................... 28

10. Providing more and better information ............................................................................ 31

Part C: Getting the best out of the enlarged Internal Market ................................................... 33

Part D: Building the Internal Market in an International Context............................................ 35

Part E: Monitoring.................................................................................................................... 37

Conclusion................................................................................................................................ 38

2

Introduction

This Strategy sets out what the European Union needs to do over the next three  years  to  derive
maximum  benefits  from  the  Internal  Market  after  enlargement.  The  Commission  has  already
described the achievements of the Internal Market over the last decade1. This analysis shows the
significant  benefits  that  a  properly  functioning  Internal  Market  can  and  does  bring,  but  it  also
shows  that  the  Internal  Market  does  not  yet  function  optimally  in  a  number  of  ways  and  that
sizeable benefits are therefore being missed. A fresh impetus  is  required  to eliminate  remaining
weaknesses and allow the Internal Market to deliver its full potential in terms of competitiveness,
growth and employment.

Part A : Context

1.

The role of the Strategy in the EU’s economic reform process

The European Council of 20 and 21 March 2003 recognised the importance of the Internal Market
Strategy as one of the key economic policy co-ordination instruments at EU level, alongside the
Broad Economic Policy Guidelines (BEPG)2 and the Employment Guidelines (EG)3. The actions
set  out  in  the  Internal  Market  Strategy  must  therefore  be  seen  in  conjunction  with  the  actions
suggested  in  the  BEPG  and  the  EG4.  All  three  of  these  instruments  have  been  streamlined  and
given  a  three-year  perspective  in  order  to  ensure  a  more  comprehensive,  efficient  and  coherent
approach to economic reform in the EU5.

The Internal Market Strategy will be an important input into the new Competitiveness Council. In
addition, the Commission is presenting a number of other policy documents which are relevant to
competitiveness, including  the  Communication on  Industrial  Policy  in  an  Enlarged  Europe6,  the
Green Paper on Entrepreneurship7, the Communication on Innovation Policy8, and "Investing in
Research: an Action Plan for Europe."9 This will allow the Competitiveness Council to consider
the  relationship  between  the  different  strands  of  its  work  and  enable  it  to  set  the  overall
framework for competitiveness, as requested by the European Council.

1

2

3

4

5

6

7

8

9

The Commission estimates that the Internal Market has delivered 2.5 million extra jobs and nearly €900
billion in extra wealth. See "The Internal Market – Ten Years without Frontiers", SEC(2002) 1417 of
7.1 2003.
COM (2003) 170 final of 8.4.2003.
COM (2003) 176 final of 8.4.2003.
See  particularly  the  section  in  the  BEPG  on  "Economic  reforms  to  raise  Europe's  growth  potential"
which includes general recommendations aimed at improving the functioning of the Internal Market.
Commission  Communication  on  streamlining  the  annual  economic  and  employment  policy  co-
ordination cycles, COM (2002) 487 final of 3.9.2002.
COM (2002) 714 final of 11.12.2002.
COM (2003) 27 final of 21.1. 2003.
COM (2003) 112 final of 11.3.2003.
COM (2003) 226 of 30.4.2003.

3

                                                
This Strategy should also be seen as a response to the European Parliament's recent report on the
Internal  Market  Strategy10.  This  report  stressed  that  improving  the  functioning  of  the  Internal
Market should be a top priority for the Union and called for a major new initiative to speed up the
delivery of key reforms.

2.

Why a new Strategy now?

The Commission sees three main reasons why the EU needs to make a determined push
now to improve the Internal Market: -

–  The  sub-optimal  performance  of  the  Internal  Market  is  one  of  the  challenges  that  stands
between the EU and the realisation of the ambitious objective it set itself at Lisbon in
2000. It is necessary to take decisive action quickly. We know that it can take several years
before  adopted  measures  produce  real  impacts  on  the  ground.  In  order  for  the  EU  to
become  the  most  competitive  and  dynamic  knowledge  based  economy  in  the  world  by
2010,  the  measures  needed  to  create  a  genuinely  unified  and  integrated  market  must  be
adopted very soon.

–  It  is  urgent  to  develop  an  effective  strategy  to  strengthen  the  Internal  Market,  because
enlargement  is  only  a  year  away.  Enlargement  offers  unprecedented  opportunities  for
both existing  and  new  Member States,  but  it  is  not  without  risks.  The  Internal  Market  is
perpetually vulnerable to fragmentation and enlargement will be a moment of heightened
vulnerability, unless we strengthen all our key policy instruments and concepts so that they
continue to work well, or better, in a Union of 25 countries11. Only then can the potential
gains which enlargement offers be realised.

–  The  EU,  in  common  with  other  parts  of  the  world,  is  currently  facing  a  slowdown  in
economic growth and job creation. This makes it all the more essential to press ahead with
structural  reforms  in  order  to  increase  the  capacity  of  our  economies  to  grow.
Removing the bottlenecks in the Internal Market will put Europe in a much better position
to face up to the ever stiffer competition from emerging economies. It will also leave the
Union better protected against future fluctuations in the economic cycle and provide it with
a stronger economic basis to deal with the huge challenges of an ageing population.

3.

A more focused approach

When adding a few extra floors to a building - which is what enlargement will do to the EU -
it  is  essential  to  ensure  that  its  foundations  are  sufficiently  strong.  The  Strategy,  therefore,
focuses  very  firmly  on  strengthening  the  “basics”  or  “fundamentals”  of  the  Internal
Market;  removing  obstacles  to  trade  in  goods  and  services,  ensuring  that  agreed  rules  are
correctly  implemented  and  effectively  enforced,  cutting  red  tape,  tackling  tax  barriers,
expanding procurement opportunities.

The problems to be tackled are in many cases old ones that have resisted earlier  attempts to
solve  them.  But  covering  familiar  problems  does  not  mean  “business  as  usual”.  The
Commission  is  putting  forward  some  fresh  ideas  and  calling  for  stronger  political
determination to deliver results for both business and consumers.

10

11

Harbour Report, A5-0026/2003.
28 with the EEA countries.

4

                                                
Not all the proposed actions, of course, are new. Much vital work  is  already in the pipeline
and  in  some  cases  already  well  advanced  (for  example,  the  Financial  Services  Action  Plan,
the political agreement on a Community Patent) and this Strategy calls for their early adoption
or  completion.  Other  proposed  actions  are  outlined  here  but  will  need  to  be  the  subject  of
further examination and impact assessment before the Commission is able to make concrete
proposals.  Yet  other  actions  are  for  the  Member  States  themselves  to  implement.  Further
detail on all the proposed actions, including the timetable, can be found in the annex12.

4.

A shared agenda

As the Internal Market's regulatory framework takes shape, the emphasis is shifting towards
the Member States who have to make the Internal Market work in practice – on a daily basis.
The Internal Market belongs to them – not the Commission. It is they who must implement
Internal  Market  law  promptly  and  correctly,  inform  their  citizens  and  businesses  of  their
rights, and resolve problems as and when they occur. It is they who must act according to the
letter  and  the  spirit  of  the  Internal  Market,  refraining  from  putting  in  place  national  laws
which conflict with Internal Market principles. To fulfil their role successfully, they must co-
operate more closely amongst themselves and with the Commission.

In  order  to  be  effective,  therefore,  this  Strategy  must  be  viewed  not  just  as  a  Commission
document,  but  as  a  shared  agenda,  behind  which  the  Council,  the  European  Parliament  and
the Member States (existing and new) can all throw their weight.

The new Constitutional Treaty, which will emerge from the Inter-Governmental Conference,
will define the relationship between the different EU institutions and between the EU and the
Member States. It is essential that this Treaty continues to provide a robust legal basis for the
further development of the Internal Market, so that it can go on serving Europe’s interests and
empowering our citizens and businesses.

12

The actions are classified in the annex according to three types: type 1: early adoption or completion;
type 2: for further examination and discussion; and type 3: for Member States to implement.

5

                                                
Part B: Priorities

1.

FACILITATING THE FREE MOVEMENT OF GOODS

a) Assessment

Trading goods across borders within the EU still remains more costly and complex than doing
business  within  a  Member  State.  When  selling  abroad,  companies  sometimes  have  to  have
their products re-tested or even modified in order to meet local requirements. The intensity of
controls  and  market  surveillance  varies  from  Member  State  to  Member  State.  Substandard
products may slip through the net and be bought by consumers who have the right to expect
high health and safety standards for all products on the market.

Free  movement  of  goods  (and  services)  in  the  Internal  Market  is  above  all  based  on
confidence. Confidence of businesses that they can sell their products on the basis of a clear
and predictable regulatory framework. Confidence of Member States’ administrations that the
rules are respected in practice throughout the EU and that the competent authorities in other
Member  States  will  take  appropriate  action  when  this  is  not  the  case.  And,  of  course,
consumers’ confidence in their rights and that the products they buy are safe and respect the
environment.

With the EU increasing in size and diversity after enlargement, confidence in the operation of
the existing legal framework for the free movement of goods needs to be further strengthened.
This can best be done by putting in place a number of disciplines which will make the rules
more transparent and more predictable and which will encourage national authorities to have
more confidence in each other’s methods and assessments. This is not always glamorous work
–  but  it  must  be  done  to  foster  intra-Community  trade  and  harvest  the  advantages  of
economies of scale and specialisation.

Technical obstacles continue to frustrate cross-border trade in goods:

(cid:1)  Trade with third countries has been growing faster than trade between Member States in recent years and the

convergence of prices between the Member States has more or less ground to a halt.13

(cid:1)  75%  of  businesses  think  that  removing  technical  barriers  to  trade  in  goods  and  services  should  be  a  top

priority for the Union.14

(cid:1)  Almost one in five Swedish companies encounter barriers to trade. 85% choose to get round the problem by

adapting their products to comply with the rules in the receiving country.15

(cid:1)  Technical  regulations  and  conformity  assessment  are  the  biggest  headache  for  Spanish  businesses  –

accounting for half of all problems encountered.16

(cid:1)  The average time needed to adopt European standards increased from 4.5 years in 1995 to about 8 years in
200117. Only 22% of the 600 standards needed to create a genuine Internal Market for construction products
have been adopted more than a decade after the Construction Products Directive entered into force18.

(cid:1)  Non-application of the mutual recognition principle cut trade inside the EU by up to €150 billion in 200019.

13

14

2001  and  2002  Reports  on 
COM (2001) 736 of 7.12.2001 and COM (2002) 743 final of 23.12.2002.
Internal Market Scoreboard No. 11, November 2002.

the  functioning  of  Community  product  and  capital  markets,

6

                                                
b) Actions

1.
Mutual  recognition  is  a  corner  stone  of  the  Internal  Market  It  enables  products  to
circulate freely on the basis of conformity with the national laws in the Member State where
the product is first marketed. The principle is that there are no specific procedural rules and no
extra  paperwork.  This  is  its  strength,  but  at  the  same  time  its  weakness.  When  problems
occur, there is little or no transparency, there is no commonly agreed approach to evaluating
whether levels of protection are equivalent and there is no clear procedure for a company to
challenge a negative decision. As a result, many companies decide to abandon certain markets
or are forced to modify their products to comply with local requirements. Such responses risk
becoming more widespread after enlargement.

The  Commission,  therefore,  takes  the  view  that  specific  rules  are  needed  to  give  mutual
recognition more structure so as to enhance transparency and to encourage national authorities
to act more ‘European’. The Commission believes this could best be achieved by means of a
new  Community  Regulation  establishing  key  principles.  These  could  include  mandatory
notification  in  cases  where  mutual  recognition  is  refused,  the  possibility  for  companies  to
demonstrate  that  the  disputed  product  is  indeed  lawfully  marketed  elsewhere  in  the  EU  by
means  of  a  standard  certificate  and  possibilities  for  appeal.  Before  making  a  proposal,  the
Commission will consult widely with the Member States, industry and other interested parties
on the different options.

2.
In  more  complex  or  sensitive  areas,  mutual  recognition  is  not  enough  and  the  only
way  to  remove  barriers  is  to  harmonise  national  rules  at  EU  level.  While  this  is  sometimes
achieved  through  detailed,  technical  legislation,  in  certain  sectors,  a  simplified  regulatory
alternative is used, known as the "New Approach." Developed in 1985, this limits legislation
to  establishing  the  mandatory  essential  requirements  that  products  must  meet,  leaving
manufacturers free to choose to apply either the appropriate European standard or any other
technical specifications which meet these essential requirements.

The New Approach has been a successful tool for the development of the Internal Market but
some  of  its  features  need  strengthening,  particularly  in  view  of  enlargement.  This  includes
improving  conformity assessment procedures, strengthening  administrative  co-operation and
market  surveillance  to  ensure  that  effective  action  is  taken  when  products  do  not  meet  the
essential requirements and improving understanding of CE-marking. There may also be a case
for  expanding  the  use  of  the  New  Approach  to  sectors  not  yet  covered  as  a  means  of
improving and simplifying legislation.

These ideas are set out in a Commission Communication on “Enhancing the Implementation
of the New Approach Directives”, which is being issued in parallel with the Internal Market
Strategy. One of the options being considered is the introduction of a common base Directive,
including standard articles on horizontal issues common to all New Approach Directives. This

15

16

17

18

19

Swedish  National  Board  of  Trade,  Internal  Market  Division:  Problems  for  free  Movement  on  the
Internal Market 16.9.2002 Dnr 100-111-2002.
"Línea  abierta  para  la  identificación  de  problemas  de  la  empresas  espagñoles  en  el  mercado  único
europeo,  Fase  IV"  2002,  Ministerio  de  Economía  and  Confederación  Espagñola  de  Organizaciones
Empresariales.
Internal Market Scoreboard No. 9, November 2001 (figures only cover CEN).
See footnote 14.
2001 Report on the functioning of Community product and capital markets, COM (2001) 736 of 7.12.2001.

7

                                                                                                                                                        
approach would strengthen consistency between New Approach Directives and  ensure more
effective implementation.

3.
European  standards  play  a  particularly  vital  role  in  the  implementation  of  New
Approach  Directives.  Currently,  it  takes  far  too  long  to  develop  standards.  The  European
standardisation organisations and industry must work together to speed up the process. There
is  also  a  need  to  ensure  quality20  in  the  production  of  standards  and  their  uniform
transposition  into national standards, including in the new Member States. The promotion of
European voluntary marks needs to be reinforced, since nationally controlled marks may have
a fragmentary effect. The Commission will ensure implementation of these aims, in particular
through  partnership  and  performance  contracts  that  it  will  sign  with  the  European
standardisation  organisations  in  2003.  The  aim  is  to  link  Community  financial  support  for
these organisations to clear performance criteria.

4.
In order to ensure that economic development is sustainable, the EU has established
minimum requirements  for the  quality  of air  and  water  and  the  reduction  of  waste.  Clearly,
success  in  meeting  these  requirements  will  depend  on  our  ability  to  limit  the  impact  of
products on the environment – i.e. the impact of both their production and their use. The EU
needs to provide industry with a coherent and flexible regulatory framework which does this
effectively  -  and  which  at  the  same  time  is  not  detrimental  to  competitiveness  and  free
circulation  within  the  Internal  Market.  Otherwise  Member  States  will  seek  to  meet  EU
environmental requirements by adopting their own national technical rules which  can  create
new barriers to trade.

In  response  to  this  challenge,  the  Commission  has  already  adopted  proposals  to  introduce
environmental  requirements  into  some  items  of  Internal  Market  legislation21.  In  addition,  it
will  shortly  adopt  an  innovative  proposal  for  a  framework  Directive  on  the  Eco-design  of
products. These Directives will need to be adopted and implemented. They are in line with the
principles of Integrated Product Policy22 for which the Commission will set out the next steps
shortly.  Standardisation  also  has  a  role  to  play  here.  A  better  integration  of  environmental
requirements  in  technical  standards  can  help  to  reduce  the  impact  on  the  environment  of
products  and  also  reduce  the  development  of  national  environmental  legislation.  A
Communication on this issue is scheduled for adoption by the end of the year.

Consumer  confidence  in  product  safety  relies  on  effective  market  surveillance  and
5.
consistent  enforcement  across  the  EU  by  competent  authorities,  as  well  as  fulfilment  by
producers and distributors of their obligations. The safety of consumer products is regulated
by  sectoral  Directives  and  the  General  Product  Safety  Directive  (GPSD),  which  has  been
recently  revised  and  reinforced.  The  Commission  will  seek  to  ensure  compliance  with  the
requirements of this Directive, through the development and revision of European standards,
and will report on its application by 2006. In addition, the Commission intends  to present a
legislative  proposal  on unfair  commercial  practices  to improve consumer protection and  the
functioning of the Internal Market (for goods and services).

20

21

22

There is also a need to increase the participation of all interested parties, particularly representatives of
SMEs, in the drafting of standards.
See, for example, the Commission proposal for a Directive of the European Parliament and the Council
modifying Directive 94/25/EC on the approximation of laws, regulations and administrative provisions
of  the  Member  States  relating  to  recreational  crafts,  COM  (2000)  639  final,  OJ  C  62E,  27.02.2001,
p.139.
Green Paper on Integrated Product Policy, COM (2001) 68 final of 7.2.2001.

8

                                                
A more coherent European contract law would also facilitate intra-EU trade and will make it
easier for consumers to reap the benefits of the Internal Market. Steps to promote convergence
of  national  contract  laws  will  be  pursued  through  the  Action  Plan  on  European  Contract
Law.23

In  the  automotive  sector,  the  EU  Whole  Vehicle  Type-Approval  system  applies  to
6.
both  passenger  cars  and  motor  cycles  on  a  mandatory  basis.  This  system  has  a  number  of
advantages.  Once  a  car  or  a  motor  cycle  is  type-approved  in  one  Member  State,  it  can  be
registered  and  put  on  the  market  anywhere  in  the  Community  without  further  testing.  This
reduces  costs  for  industry  and  prevents  the  re-emergence  of  barriers  in  the  Internal  Market.
The system now needs to be extended to other types of vehicles, particularly trucks, vans and
lorries.

23

COM (2003) 68 final of 12.2.2003.

9

                                                
2.

INTEGRATING SERVICES MARKETS

a) Assessment

Considerable differences in regulation from one Member State to the next – and the lack of
confidence  in  each  others’  regulatory  systems  -  are  the  main  reason  why  free  movement  of
services has so far been more a legal concept than a practical reality. Because of the complex
and  intangible  nature  of  many  services  -  and  the  importance  of  the  know-how  and
qualifications of the service provider – they are  generally subject to more wide-ranging and
complex legal rules than goods.

The picture is not entirely bleak. In financial services, action is well underway – with 32 of
the  42  measures  foreseen  in  the  Financial  Services  Action  Plan  (FSAP)  already  adopted.
However, structural changes, new business models and constantly evolving risk patterns pose
new  challenges  for  financial  regulators  and  supervisors.  Furthermore,  new  regulatory
bottlenecks have been uncovered, e.g. in the area of clearing and settlement, which constitute
the  arteries  of  the  financial  system.  Particular  attention  will  also  need  be  devoted  to
identifying  regulatory  barriers  which  are  acting  as  a  brake  on  trade  and  competition  in
markets for those retail financial services which are tradable.

Many  other  services  sectors  –  such  as  tourism,  distribution,  construction,  engineering  and
consultancy, certification and testing services or employment agencies - have not been subject
to  a  comprehensive  Internal  Market  policy.  There  are  different  ways  of  providing  these
services.  While  some  can  be  provided  at  a  distance  thanks  to  new  information  and
communication technologies, many still require the permanent or temporary presence  of the
service provider in the Member State where the service is delivered. For some services, such
as  distribution,  establishment  in  the  target  market  remains  the  key  commercial  strategy.
However, these different ways of service provision are all hampered by a variety of legal and
administrative barriers24.

These barriers affect all stages of the business process – from the initial establishment of the
business and  the use of inputs, such as labour and equipment  –  right  through  to  promotion,
distribution,  sales  and  after-sales  activities.  They  result  in  considerable  extra  costs  for
companies  doing  business  between  Member  States.  This  leads  to  a  waste  of  resources,
limiting innovation and differentiation of services. Some companies are deterred from trading
across  borders  at  all  –  particularly  SMEs  –  which  are  prominent  in  service  industries.  This
limits competition and consumer choice and keeps prices higher than they need to be. And it
prevents the full job creation potential of the service industries from being realised.

It is still very difficult to provide services across borders:

(cid:1)  Services account for for just 20% of trade in the Internal Market, which is less than a decade ago.

(cid:1)  There is an enormous growth potential in most of the Accession Countries where services represent between

56% and 70% of the economy25 and 54% of total employment26.

24

25

26

See the report from the Commission to the Council and the European Parliament on the State of the Internal
Market  for  Services  (COM  (2002)  441)  presented  under  the  first  stage  of  the  Internal  Market  Strategy  for
Services (COM (2000) 888).
Data  from  the  Commission's  2002  Regular  Reports  on  the  Candidate  Countries'  progress  towards
accession (the figure for Cyprus is 77%).
Commission Report on “Employment in Europe 2002 – Recent Trends and Prospects”.

10

                                                
(cid:1)  Nearly 90% of all SMEs in the EU are in service industries27.

(cid:1)  40%  of  business  service  providers  say  that  eliminating  barriers  to  cross-border  trade  would  increase  their

sales by up to 20%28.

(cid:1)  There is plenty of anecdotal evidence on the costs of barriers: one software company spent over €6 million
p.a. on the administrative costs associated with moving its staff between Member States; a retail bank paid
€19,000 in legal fees before it could run a promotional campaign in two Member States29.

(cid:1) 

In financial services, recent estimates show that further integration could add €130 billion to EU GDP over
ten years and boost employment by 0.5%.30

b) Actions

1.
The  Council  and  Parliament  should  adopt  the  proposed  Regulation  on  Sales
Promotion,  which  will  facilitate  trans-European  promotional  campaigns,  and  the  Directive
on  the  recognition  of  professional  qualifications.  The  latter  aims  to  promote  mobility  of
skilled professionals, including for temporary provision of services in the ‘host state’ on the
basis  of  compliance  with  ‘home  state’  rules,  thus  enhancing  consumer  choice  and  ensuring
competitive pricing of professional services. Member States must then transpose it correctly
and on time and ensure that it is properly applied and enforced.

2.
The  Commission  will  make  a  proposal  for  a  Directive  on  services  in  the  Internal
Market  before  the  end  of  2003.  This  Directive  will  establish  a  clear  and  balanced  legal
framework  aiming  to  facilitate  the  conditions  for  establishment  and  cross-border  service
provision.  It  will  be  based  on  a  mix  of  mutual  recognition,  administrative  co-operation,
harmonisation  where  strictly  necessary  and  encouragement  of  European  codes  of
conduct/professional rules.

The Commission will also issue a Communication on the competitiveness of business-related
services  and  their  contribution  to  the  performance  of  European  enterprises,  setting  out  non-
legislative  measures  designed  to  complement  the  Directive.  These  will  include  the
development  of  European  standards  and  measures  to  improve  the  statistical  coverage  of
services sectors.

Subject  to  the  results  of  a  feasibility  study,  the  Commission  intends  to  propose  the
3.
extension of the screening mechanism for draft national technical regulations31, to cover
services, besides information society services (already covered). This is intended to act  as a
brake on the creation of new Internal Market barriers in services.

4.
The  Commission  will  ensure  appropriate  follow-up  to  its  report  on  the  safety  of
services for consumers which envisages the introduction of a legislative measure designed to
monitor and support national policies and measures in this area.

27

28

29

30

31

Highlights from the 2001 Survey, Observatory of European SMEs, 2002.
From  a  survey  on  business  services  carried  out  for  the  Commission.  See  the  statistical  and  technical
annex to the 2002 Report on the functioning of Community product and capital markets.
See footnote 24.
“Quantification  of  the  macro-economic  impact  of  the  integration  of  EU  financial  markets”,  London
Economics study for DG Internal Market.
This will require an amendment to Directive 98/34/EC.

11

                                                
5.
The Council and Parliament should adopt the remaining FSAP measures, notably the
Prospectus Directive and the Investment Services Directive, and conclude the first reading
on the Transparency Directive before the end of the current legislature.

The  Commission  will  make  the  final  proposals  provided  for  under  the  FSAP,

6.
including a new Capital Adequacy Directive (in early 2004).

7.
The Commission will also publish a Communication on clearing and settlement in
the  second  half  of  this  year  setting  out  the  steps  needed  to  achieve  a  single  European
payments area and to facilitate cross-border share trading. This Communication will raise the
possibility  of  establishing  an  EU-level  regulatory  framework  underpinned  by  Community
legislation.

8.
The  Commission  will  consult  widely  on  completing  and  further  developing  the
FSAP,  with  particular  focus  on  creating  a  single  market  in  retail  financial  services.  The
Council  and  Parliament  should  adopt  the  Consumer  Credit  Directive  to  enable  progress
towards an effective single credit market.

12

3.

ENSURING HIGH QUALITY NETWORK INDUSTRIES

a) Assessment

The “network industries” are vitally important for our quality of life and the well being of all
EU citizens. They are also key inputs for EU industry and therefore have a determining effect
on our international competitiveness.

Over the past ten years, there has been a significant degree of market opening in these sectors
–  driven  partly  by  Community  legislation  and  partly  by  market  and  technological
developments. This has brought considerable benefits for both business and consumers.

The priority now is to complete the process of market opening by adopting existing proposals
and  making  new  ones  where  necessary.  One  area  where  new  action  may  be  required  is  the
water sector – which remains fragmented and where there are potential gains to be had from
modernisation.  However,  this  will  be  the  subject  of  further  study.  European  policy  on  the
question of ownership of water and water services will continue to be neutral. Further action
is also foreseen to deliver a modern and dynamic postal sector.

All of the “network industries” are subject to specific public service obligations, e.g. relating
to the provision of essential services to vulnerable groups in the population and those living in
geographically  remote  areas.  It  is  vital  that  these  obligations  continue  to  be  met.  The
Commission  will  shortly  publish  a  Green  Paper  looking  at  the  EU’s  role  in  this  area,  which  is
intended to launch a wide-ranging debate on the issues involved.

Over  the  next  few  years,  massive  investment  will  be  needed  to  raise  the  quality  of  our
infrastructure, particularly in the Accession Countries. Given the tough budgetary constraints
on governments, it is unlikely that public money alone will be enough to finance these needs.
The private sector will play an increasingly important role in financing infrastructure  and in
modernising  our  vital  services  and  ensuring  that  they  are  affordable  and  of  the  highest
possible quality.

However, public-private partnerships raise certain legal issues. These issues must be clarified
so as to create a predictable legal framework within which such partnerships can thrive. The
Commission  will  seek  to  do  this  in  two  ways.  First,  it  will  clarify  the  impact  of  EU
competition/state aids policy on services of general economic interest. Secondly, it will clarify
how procurement rules apply to situations in which public-private partnerships are bidding for
the provision of these services.

Market opening has benefited both consumers and business:

(cid:1)  Combined with technological developments, market opening has brought down prices for national telephone

calls by 50% since 1998, and those for international calls by 40%32.

(cid:1)  Prices of promotional airfares fell by 41% between 1992 and 200033. The number of routes linking Member

States has risen by 46% since 1992 – giving passengers more choice.

32

33

Eighth  Report  on  the  Implementation  of  the  Telecommunications  Regulatory  Package,  European
Commission, SEC (2002) 1329.
Updating  and  development  of  economic  and  fares  data  regarding  the  European  Air  Travel  Industry,
2000 Annual Report. Commissioned by DG Transport and Energy.

13

                                                
(cid:1)  Domestic consumers are paying 15% less for their electricity in liberalised markets than in closed markets.

And they are paying 25% less for their gas in the UK where markets are 100% open.34

(cid:1)  Water  is  an  important  sector  in  the  economy,  with  an  estimated  annual  turnover  of  €80  billion,  which  is
larger than the natural gas sector. But annual water charges vary from €350 in Berlin to €50 in Rome (with
no charge at all in Ireland).35

(cid:1) 

Infrastructure  investment  needs  for  the  Accession  Countries  are  estimated  at  €100  billion  for  transport
alone.36

b) Actions

1.
The Council and Parliament should rapidly adopt the “second railway package”, the
proposal on controlled competition for public transport, the package designed to create a
Single European Sky and the proposal on access to port services. The Council should give a
mandate  to  the  Commission  to  negotiate  an  open  skies  agreement  with  the  US.  The
Commission will rapidly bring forward proposals for passenger transport market opening
in order to complete the Internal Market in the railway sector.

2.
The Council should rapidly adopt and effectively implement the “energy package” to
open  gas  and  electricity  markets  completely  for  non-household  customers  by  2004  and  for
household customers by 2007.

3.
While European policy on the question of ownership of water and water services will
remain  neutral,  the  Commission  services  will  undertake  a  review  of  the  legal  and
administrative situation in the water and waste-water sector. This will include an analysis of
the competition aspects, in full respect of Treaty guarantees for services of general economic
interest  and  environmental  provisions.  All  options  will  be  considered,  including  possible
legislative measures.

4.
Member  States  must  ensure  full  and  timely  transposition  of  the  postal  services
Directive  which  will  open  up  substantial  sections  of  the  market  to  competition  in  2003  and
2006.  The  Commission  will  complete,  in  the  course  of  2006,  a  study  assessing,  for  each
Member State, the impact on universal service of full accomplishment of the Internal Market
for  postal  services.  Based  on  the  results  of  this  study,  the  Commission  may  make  further
proposals.

5.
The  Commission  will  continue  its  efforts  to  clarify  the  application  of  the  state  aid
rules to compensation for the costs of providing services of general economic interest, in
the light of forthcoming Court decisions.

6.
The  Commission  will  issue  a  Green  Paper  in  the  course  of  this  year  with  a  view  to
launching a debate on how best to ensure that public-private partnerships for major projects
can  be  undertaken  in  conditions  of  effective  competition  and  full  legal  clarity  under
procurement rules. If necessary, it will propose further (legislative) measures to facilitate such
partnerships.

34

35

36

SEC (2003) 448 of 7.4.2003.
Charges for a family living in a house using 200 cubic metres per year. Study on the application of the
Competition Rules to the Water Sector in the EC. Produced by WRc and Ecologic for DG Competition,
December 2002.
European Commission, DG Transport and Energy.

14

                                                
4.

REDUCING THE IMPACT OF TAX OBSTACLES

a) Assessment

As the Internal Market matures, more and more companies are seeking to organise themselves
at  a  European  level.  However,  operating  with  up  to  15  (and  soon  25)  different  systems  of
corporate taxation adds a whole layer of complexity to doing business.

Companies face a multitude of difficulties, such as the time taken by tax authorities to agree
transfer prices for  cross-border  transactions  between  two  parts  of  the  same  group,  limits  on
cross-border loss relief (which can lead to an enterprise with overall losses having to pay tax!)
and the problems of double taxation.

Moreover, the current VAT system revolves around taxation in the country of consumption.
The result is that many firms doing business across  borders have to  pay VAT  in a Member
State  where  they  have  no  permanent  establishment.  This  is  difficult  and  costly,  since  the
trader  may  not  be  fully  acquainted  with  the  language  and  legislation  in  that  country.  It  is  a
major obstacle to the smooth functioning of the Internal Market, particularly for SMEs. The
current system is also vulnerable to fraud which requires a strong, co-ordinated response by
the Member States and the Commission.

Other  aspects  of  tax  policy  cause  problems  to  both  industry  and  citizens.  Some  Member
States,  for  example,  impose  a  higher  tax  on  cross-border  dividends  than  on  domestic
dividends.  This  kind  of  tax  discrimination  acts  as  a  strong  disincentive  to  the  cross-border
holding of shares and slows the creation of pan-European equity markets.

Furthermore, because of differences in Registration Tax, car  manufacturers have to  produce
different models (e.g. with different engine horse power) for different national markets. This
deprives them of the full benefits of operating within the Internal Market. Moreover, people
who move to another Member State sometimes end up paying Registration Tax twice on the
same car.

Tax obstacles are a major headache for businesses in the Internal Market:

(cid:1)  UNICE  stresses  that  the  existence  of  15  different  tax  administrations  represents  "a  major  burden  to

business and in particular to SMEs. "37

(cid:1) 

77 % of businesses say that national tax systems should be more closely aligned.38Europe's top companies
have called for further harmonisation of tax systems across the EU.39

(cid:1)  Compliance  costs  related  to  company  tax  represent  anywhere  between  2%  and  4%  of  total  corporate

income tax revenues40 - i.e. between €4.3 billion and €8.6 billion for the EU as a whole.41

37

38

39

40

41

UNICE reaction to the Commission Communication and Report on Company Taxation in the Internal
Market.
See footnote 14.
UPS Europe Business Monitor, http://www.ups.com/europe/ebmxi/flash/index.html
European Commission "Company taxation in the Internal Market", COM (2001) 582 final.
CEPS estimate using Commission figures.

15

                                                
b) Actions

On  company  tax,  the  Commission  will  take  the  following  steps  to  remove  key

1.
obstacles:

-  In  the  short  term,  it  will  propose  a  revision  of  the  Parent/Subsidiary  Directive  which  is
designed to eliminate double-taxation within the EU and permit dividends to be paid between
companies  in  the  same  group  without  deduction  of  withholding  tax.  It  will  also  propose  a
revision of the Merger Directive which is designed to assist the re-organisation of companies
by providing for the deferral of certain tax charges and avoiding double taxation. The plan is
to extend the applicability of both Directives by relaxing some of the conditions they set and
allowing more companies to benefit from them.

- In the longer term, it will propose steps to introduce a common consolidated corporate tax
base at EU level. This could be achieved without harmonising corporate tax rates and would
go a long way towards solving the problems faced by companies by reducing the compliance
costs which arise from dealing with  fifteen separate tax systems, providing cross-border  tax
relief and simplifying the existing tax complexities associated with transfer pricing.

On  VAT,  the  Commission  will  issue  a  Communication  setting  out  further  steps  to
2.
modernise and simplify the existing system. These could include the introduction of a single
place  of  compliance  for  all  businesses  trading  in  Member  States  where  they  have  no
establishment.  Such  an  initiative  would  decrease  the  administrative  cost  of  VAT  for
companies  and  make  it  easier  to  do  business  across  borders.  It  would  benefit  SMEs  in
particular.

On  vehicle  taxation,  the  Commission  recommends  that  Registration  Tax  should  be
3.
phased out over a transitional period of five to ten years. Member States should compensate
by switching over to increased annual road taxes and fuel taxes. The latter would benefit the
environment  as  well  as  the  Internal  Market.  The  Commission  will  present  legislative
proposals to remove the obstacles to the free movement of cars in the Internal Market.

4.
On dividends, the Commission will publish a Communication on the effect of the case
law of the European Court of Justice on the  various  types of  dividend taxation  systems and
take  action  to  ensure  non-discriminatory  treatment,  if  necessary  by  launching  infringement
procedures.

16

5.

EXPANDING PROCUREMENT OPPORTUNITIES

a) Assessment

The  European  Union’s  public  procurement  market  is  not  yet  sufficiently  open  and
competitive. Many public purchasers, particularly at local government  level,  are unaware of
the  full  extent  of  the  rules.  Because  of  the  multiplicity  of  rules  and  procedures  at  national
level, many suppliers are reluctant to sell to the government, particularly in another Member
State. With few exceptions, procurement still relies entirely on extensive paperwork, ignoring
the significant benefits of electronic procurement.

All  this  translates  into  limited  cross-border  participation  in  contract  award  procedures,
inefficiencies  in  public  procurement  markets,  lost  business  opportunities  and  a  reduced
likelihood  that  the  taxpayer  will  achieve  value  for  money.  The  costs  of  inefficient
procurement  are  staggering.  Public  procurement  is  simply  too  important  to  the  European
economy to allow this situation to continue. With government budgets under severe pressure,
more efficient procurement is an obvious way of achieving more with less.

The  adoption  and  effective  implementation  of  the  legislative  package  is  essential  for
modernising  Europe’s  public  procurement  systems.  Without  it,  neither  a  Europe-wide
“electronic” procurement market can be achieved, nor will we have a legal framework which
is suited for complex contracts, such as those for Trans-European networks. But there is more
to be done. As  with other  key  areas  in the  Internal Market,  the Member States  will  have  to
play  a  much  bigger  role  in  ensuring  that  rules,  which  they  themselves  have  agreed,  are
effectively applied. They should also simplify their national rules, and standardise procedures
as much as possible across procurement entities to make it easier for companies to participate
in  calls  for  tender.  Steps  should  also  be  taken  to  ensure  that  public-private  partnerships  for
major  projects  can  be  undertaken  in  conditions  of  effective  competition  and  transparency
under procurement rules.42

The Commission takes the view that Member States should appoint a national authority which
would  be  responsible  for  the  surveillance  of  contracting  entities'  compliance  with
procurement law. Some Member States have already done so. These authorities should have
the possibility in the general interest to bring possible infringements before the courts, seeking
the  imposition  of  effective  remedies  against  non-compliant  contracting  authorities.  Stronger
remedies  would  need  to  be  complemented  by  more  intensive  administrative  co-operation
between Member States (based on the recently created European Procurement Network).

Part  of  achieving  better  compliance  is  to  raise  the  professional  standards  of  procurement
officials.  Those  responsible  for  spending  major  sums  of  public  money  should  be  fully
conversant  with  existing  rules  on  competitive  tendering.  Member  States  should,  therefore,
ensure that their own procurement officials have  access to training with a view to acquiring
and developing the professional expertise which the importance of their job demands.

42

See also section B.3.

17

                                                
Governments and taxpayers are not getting value for money:

(cid:1)  Procurement represents 16% of EU GDP in  – i.e. €1.429 billion.43A five percent cost reduction as a result
of more competitive and efficient public procurement markets would therefore save over €70 billion – i.e.
more than four times the education budget for Denmark.44

(cid:1)  Only about 16% (in value) of public procurement was published on an EU-wide scale in 2001.45

(cid:1)  Cross-border  procurement  (including  indirect  procurement  through  affiliates  in  foreign  countries)  rose
from  6%46  in  1987  to  10%47  in  1998  but  has  stagnated  since  then.  This  is  considerably  less  than  in  the
private sector where cross-border purchasing stands at about 20%.

(cid:1)  Electronic procurement in the EU beyond the posting of notices is negligible.

b) Actions

1.
The  Council  and  Parliament  should  adopt  the  legislative  procurement  package,
which consolidates and modernises the current regime, and which creates the conditions  for
electronic  procurement  to  take  off.  Member  States  must  implement  this  legislative  package
into  national  law  correctly  and  on  time.  This  will  provide  an  excellent  opportunity  for
Member States to streamline and simplify their own legislation and standardise procedures.

2.
The  Commission  intends  to  suggest  that  Member  States  confer  onto  an  existing
national  surveillance  authority  (or  onto  another  national  body)  the  power  to  bring  cases
before a national review body or court, seeking effective remedies. Such bodies would have to
be  independent  from  contracting  authorities  and  would  have  to  ensure  that  major  cases  of
non-compliance  are  effectively  sanctioned.  This  could  be  achieved  in  the  context  of  the
revision of the Procurement Remedies Directives which is planned for 2004.

3.
The recently established Public Procurement Network should be extended to include
all Member States, EEA and Accession Countries. It should be adequately resourced by the
Member  States  so  that  it  can  become  the  vehicle  for  resolving  cross-border  problems  (in
conjunction with the SOLVIT network), sharing best practices and improving  SMEs'  access
to  public  procurement.  It  should  also  encourage  Member  States  to  develop  training  and
‘certification’  of  required  competencies,  including  knowledge  of  EU  law,  to  improve
professionalism.

Member States should ensure that all their operational e-procurement systems are in
4.
full  compliance  with  the  requirements  of  the  legislative  package  by  the  time  it  enters  into
force (probably during the second half of 2005). They should aim at conducting a significant
part  of  their  procurement  transactions  (in  value)  on  an  electronic  basis  by  the  end  of  2006.
Generalised e-procurement should be achieved before 2010. The Commission will, next year,
present an Action Plan (which will include both legislative and non-legislative measures) for
a co-ordinated approach across the EU.

43

44

45

46

47

2002 Report on the functioning of Community product and capital markets, COM (2002) 743 final of
23.12.2002 (2001 figure).
2000 figure, Ministry of Education, Denmark.
See footnote 43.
The Single Market Review, sub-series III, Volume 2, Public Procurement, p.221.
This  figure  is  taken  from  an  independent  study  carried  out  for  the  Commission.  See  OJ  C  330  of
21.11.2000.

18

                                                
5.
There  is  considerable  scope  for  achieving  greater  efficiency  in  European  defence
procurement.  This  will  in  turn  lead  to  a  more  competitive  European  defence  equipment
industry48. The European Court of Justice has produced some important rulings on the scope
of  Article  296  of  the  Treaty  which  covers  exceptions  for  essential  security  interests  in
Member States. The Commission will publish an interpretative Communication by the end of
2003 on the implications of these rulings, inter alia for procurement. It also intends to present
a Green Paper in 2004 to looking at any further initiatives in European defence procurement.

48

See the Commission Communication on "European defence – industrial and market issues: towards an
EU defence equipment policy", COM (2003) 113 final of 11.3.2003.

19

                                                
6.

IMPROVING CONDITIONS FOR BUSINESS

a) Assessment

Action aimed at integrating markets by removing technical  and  fiscal  obstacles  to  trade  and
cutting red tape is critical to improving the business environment, but will have its full effect
only if we put in place the framework conditions which support creative, dynamic businesses.
Small  enterprises,  in  particular,  are  very  sensitive  to  changes  in  the  business  environment.
That  is  why  the  Feira  European  Council  of  June  2000  endorsed  the  European  Charter  for
Small Enterprises.

The policy measures required to foster entrepreneurship and innovation are mainly within the
direct control of Member States49. It is up to them to take the necessary action in these areas,
drawing fully on exchanges of experience and best practice elsewhere in the European Union.
This  can  be  done  by  benchmarking  using  the  Best  Procedure  projects50  co-ordinated  by  the
Commission and by making use of the information collected in the course of the reporting on
the implementation of the Charter for Small Enterprises51.

Beyond this, however, there are a number of areas where Internal Market policies are directly
relevant  to  boosting  entrepreneurship  and  innovation  within  what  is  an  increasingly
knowledge based economy. Europe is a rich source of creativity. But more action is needed to
create the appropriate framework conditions in which that creativity can be transformed into
investment and competitive economic activity.

Economic operators need to know that their investment in innovative ideas and products will
be protected across the EU, including against piracy  and  counterfeiting52.  There has already
been  a  significant  degree  of  Community  level  harmonisation  in  this  area.  But  coherent
enforcement  of  intellectual  property  rights  across  the  EU  has  now  become  a  key  issue,
particularly  in  the  digital  era,  as  the  relevant  goods  and  services  can  be  easily  copied  and
moved  from  one  place  to  another.  Enforcement  issues  will  be  even  more  crucial  in  an
enlarged  Internal Market.  In  addition, it is important to facilitate the cross-border  marketing
of copyright protected products, such as print products, films and CDs, so that everyone can
share in the results of innovation.

Moreover, investors need the guarantee that, when making investment choices, they can rely
on company accounts and reports. Firms need to be confident that they can compete on a level
playing field (e.g. free from the distortionary effects of state aids),  that they will be able to
make  cross-border  strategic  alliances  and  mergers  in  confidence,  and  that  appropriate  legal
structures exist to  allow all businesses,  whatever their size,  to  operate  effectively  across the
enlarged EU.

49

50

51

52

See the Green Paper on “Entrepreneurship in Europe” COM (2003) 27 of 21.1.2003 and the Communication
on “Innovation Policy: updating the Union’s approach in the context of the Lisbon Strategy”, COM (2003)
112 final of 11.3.2003.
The Best Procedure was launched in the framework of the Multi-annual programme for enterprise and
entrepreneurship  (Council  Decision  2000/819/EC  of  20  December  2000).  It  provides  a  framework  to
support Member States’ efforts to identify and exchange best practices in areas of particular importance
to enterprises.
“Report on the implementation of the European Charter for Small Enterprises”, COM (2003) 21 final/2
of 13.2.2003.
Efforts to enforce intellecutal property rights could be strengthened by the involvement of Commission
services, especially the European Anti-Fraud Office (OLAF).

20

                                                
The EU must help to create an environment in which businesses can thrive:

(cid:1)  More than 17,000 legitimate jobs are lost annually through piracy and counterfeiting in the EU. 53

(cid:1)  According to industry sources, 37% of software being used in the EU is pirated which represents revenue losses
of €2.9 billion.54 The music industry shows a 7.5% average overall downturn in sales in the EU in 2001.55 22%
of sales of shoes and clothing are in pirated and counterfeit goods.56

(cid:1)  Currently, patent protection covering just 8 European countries costs around five times as much as in the US or
Japan.  The  political  agreement  on  the  Community  Patent  will  halve  these  costs  and  provide  protection  in  25
Member States – still more expensive than the US or Japan but very much better than the current situation.57

(cid:1)  The  contribution  made  by  copyright  protected  goods  and  services  to  EU  GDP  is  significant  (above  5%)  and

growing.58

(cid:1)  The overall volume of state aid for the EU as a whole was €86 billion in 2001 – or 0.99% of EU GDP.59

(cid:1) 

39%  of  mergers  and  acquisitions  are  now  cross-border  –  up  from  26%  ten  years  ago.  Over  40%  of  large
companies have entered into co-operation agreements with companies in other Member States.60

b) Actions

The Council should rapidly finalise the Regulation providing for a legally secure and
1.
affordable Community Patent. Two other steps are also necessary to make the Community
Patent operational: the 1973 Munich Convention must be revised so as to allow the European
Patent Office to issue Community Patents; and a specialised Community Patent Court must be
created.

2.
The Council and  the  Parliament should  rapidly adopt  the  Directive  to  strengthen  the
enforcement  of  intellectual  property  rights  (vital  in  the  fight  against  counterfeiting  and
piracy), and the Directive on the patentability of computer-implemented inventions.

3.
The Commission will submit a Communication on the Management of Copyright
and Related Rights. This Communication will identify measures to create a more favourable
environment for the cross-border marketing and licensing of these rights.

4.
Member States are urged to continue their efforts to further reduce the total amount of
state aid while re-directing aid towards horizontal objectives of Community interest, such as
environmental protection and research and development. Another priority is the final adoption

53

54

55

56

57

58

59

60

Economic Impact of Counterfeiting in Europe, Global Anti-Counterfeiting Group, June 2000.
6th Global Report, Business Software Alliance, June 2002.
IFPI International Federation of the Phonogram Industry figure.
The  Economic  Impact  of  Trademark,  Counterfeiting  and  Infringement,  International  Trademark
Association 1998.
http://europa.eu.int/comm/internal_market/en/indprop/patent/index.htm
The  economic  importance  of  copyright  and  related  rights  protection  in  the  EU  will  be  assessed  and
further specified in a study commissioned by the European Commission. The results of the study will be
available in Autumn 2003.
European Commission, DG Competition.
See footnote 14.

21

                                                
of the proposed reform of the mergers regime61. In addition, the Commission will propose a
new  block  exemption  Regulation  relating  to  technology  transfer  agreements  between
companies.

5.
A  recently  adopted  Regulation  requires  all  EU-listed  companies  to  prepare  their
consolidated accounts in accordance with International Accounting Standards (IAS) from
2005.  This  will  bring  transparency  and  greater  comparability  between  the  consolidated
financial  statements  of  EU  listed  companies,  hence  better  capital  allocation  and  possibly  a
reduction in the cost of capital. IAS are established by the International Accounting Standards
Board,  an  independent  international  accounting  standard-setting  organisation.  In  order  to
ensure appropriate political oversight, the Regulation stipulates that IAS to be applied in the
EU will also have to be endorsed into Community law. Existing IAS will be endorsed during
2003, provided that, for some of them, the appropriate modifications are made.

In addition, it is important to consider the impact of the Regulation on SMEs. Since these are
mainly non-listed companies,  they  are not  obliged to  switch  to  IAS.  However,  it  may  be  in
their interest to do so, in order to  facilitate their access to capital  markets. This  will require
certain steps on the part of Member States.

The Commission will soon issue a Communication setting out priorities for 2003 and beyond
aimed  at  improving  the  quality  of  statutory  audit  in  the  EU.  These  will  include:  the
modernisation and strengthening of the 8th Company Law Directive (which deals with access
to  and  regulation  of  the  audit  profession);  the  creation  of  a  European  co-ordination
mechanism  for  public  oversight  of  the  audit  profession  (which  will  aim  to  ensure  proper
oversight of the audit profession at national level and appropriate co-ordination at EU level);
and the adoption of International Standards on Auditing in the EU from 2005.

The  Commission  will  shortly  adopt  an  action  plan  on  company  law  and  corporate
6.
governance  in  the  EU  setting  out  actions  for  the  short  term  (2003-2005),  the  medium  term
(2006-2008) and  the long  term (2009  onwards).  Shorter  term  actions  will  include  proposals
for  a  10th  Company  Law  Directive  on  cross-border  mergers  and  a  14th  Company  Law
Directive on cross-border transfers of seat. The Take-over Bids Directive should  also  be
adopted  without  delay.  These  Directives  will  make  it  easier  for  companies  to  organise
themselves more efficiently within the Internal Market.

7.
The Commission intends to propose a Regulation on a European Private Company
Statute  for  SMEs  subject  to  the  results  of  a  feasibility  study.  This  will  allow  SMEs  to
organise themselves  more  efficiently at  European  level  (i.e.  it  will  give  them    opportunities
similar  to  those  which  the  European  Company  Statute  gives  to  bigger  companies  as  from
2004).

61

Proposal  for  a  Council  Regulation  on  the  control  of  concentrations  between  undertakings,
COM (2002) 711 final.

22

                                                
7.

MEETING THE DEMOGRAPHIC CHALLENGE

a) Assessment

The ageing of the population will present major challenges for pension systems. The primary
responsibility  for  meeting  these  challenges  lies  with  the  Member  States.  They  will  have  to
take some fundamental political decisions on the reform of public pensions.

However, the Internal Market can help by generating extra growth which should contribute to
an improvement in public finances. It can also help to generate extra jobs, which is vital if the
Union  is  to  raise  its  employment  rate  (including  by  encouraging  greater  labour  market
participation by people over 55) and maintain a sustainable dependency ratio and the financial
sustainability of pension systems.

There  are  also a  number of very specific  Internal Market  measures which  can play  a  useful
role as regards occupational (or private) pensions which, in most Member States, will become
more important in the future. The establishment of a prudential framework allowing pension
funds to operate efficiently in the Internal Market while securing a high level of protection for
pensions  and  the  abolition  of  any  sort  of  discriminatory  tax  treatment  of  cross-border
occupational pension provision are important issues which need to be tackled urgently.

Over and above the pension problem, the ageing of the population will also have an impact on
health services.62 Member States are responsible for managing their health systems and so it
falls  primarily  to  them  to  meet  this  challenge.  However,  the  Internal  Market  impacts  on
national health policies in a number of ways, particularly as regards cross-border provision of
and access to treatments63. The only limitation is that this should not unduly impair Member
States' ability to ensure sufficient access to high quality hospital treatment on their territory, to
control  expenditure  and  maintain  high  public  standards.  A  well  managed  application  of
Internal  Market  rules  to  the  health  care  sector  has  the  potential  to  help  both  patients  and
providers  by  allowing  the  most  efficient  possible  use  of  resources  across  the  EU.  What  is
needed now is a shared vision for health systems at a European level so that this potential can
be fully exploited.

Ageing means fewer people of working age and more people above pensionable age::

(cid:1)  The number of people over 65 is expected to rise from 61 million in 2000 to 103 million by 2050 and those over 80

from 14 million to 38 million.64

(cid:1)  The ratio of people of working age to people above retirement ages (65+) will decline from 4 to 1 to less than 2 to

1 by 2050.65

(cid:1)  Only about half of Europeans aged 55-59 are still in employment and less than a quarter of people aged 60-64.66

62

63

64

65

66

See the Commission's Communication on "Supporting  national  strategies for the future of health  care
and care for the elderly", COM (2001) 723 final of 5.12.2001.
See  European  Court  of  Justice  Decisions  in  Kohll  (C-158/96),  Decker  (C-120/95),  Smits  and
Peerbooms (C-157/99) and Vanbraekel (C-368/98).
Commission  Report  to  the  Spring  European  Council  “Choosing  to  grow:  knowledge,  innovation  and
jobs in a cohesive society”, COM (2003) 5.
"Budgetary challenges posed by ageing populations: the impact on public spending on pensions, health
and  long-term  care  for  the  elderly  and  possible  indicators  of  the  long-term  sustainability  of  public
finances", Economic Policy Committee/ECFIN/665/01-EN final, 2001.
European Commission, Eurostat, Labour Force Survey 2001.

23

                                                
(cid:1) 

If unfunded pension liabilities were budgetised, in some Member States this would represent a debt of over 200%
of GDP.

(cid:1)  Spending  on  public  pension  schemes  will  increase  by  between  3%  and  5%  of  GDP  in  most  countries  over  the

coming decades.67

b) Actions

Member  States  should  implement  fully  and  on  time  the  Pension  Funds  Directive
1.
which  will  increase  both  the  security  and  the  affordability  of  occupational  pensions.  It  will
also  allow  multi-national  companies  to  run  single  EU-wide  pension  funds,  thus  facilitating
intra-firm mobility across borders.

2.
The Commission will launch the second stage  consultation of the Social  Partners  on
measures to ensure that people who change employment between Member States (including
those  who  change  jobs  between  different  firms)  do  not  suffer  undue  losses  of  occupational
pension entitlements.  Depending  on  the  final  outcome  of  this  consultation,  the  Commission
would  examine  the  desirability  of  proposing  a  Directive  on  portability  of  occupational
pensions..

The  Commission  will  continue  its  determined  action  to  tackle  tax  discrimination
3.
against pension funds established in other Member States: this is essential if we are to create a
genuine Internal Market for occupational pensions.

4.
In the area of health services, the Commission will work closely with Member States
– particularly in the High Level Reflection Group on Patient Mobility – to develop a shared
vision  of  the  ways  in  which  the  Internal  Market  can  support  national  health  systems  in  full
compliance with the relevant jurisprudence of the European Court of Justice. The consultation
process, launched in July 2002, will be completed and the results presented to Member States
as a basis for further discussion.

67

See footnote 64.

24

                                                
8.

SIMPLIFYING THE REGULATORY ENVIRONMENT

a) Assessment

A  high  quality  regulatory  environment  is  essential  for  competitiveness.  That  is  why  the
Lisbon European Council put better and simpler regulation at the top of the Union’s political
agenda. To translate  this  political  commitment  into  action,  the  Commission  has  presented  a
Better Regulation Action Plan68 and a Simplification Rolling Programme69 that address both
the  preparatory  phases  of  new  legislation  and  the  improvement  of  the  existing  Community
‘acquis’.  The  recent  Brussels  European  Council  once  again  emphasised  the  importance  of
improving the regulatory framework.

However, presenting an Action Plan is not enough – it must be made to work in practice. The
Commission is beginning to impose new disciplines on itself (particularly in the area of ex-
ante impact assessment and simplification of the EU’s existing legal acts). It is now up to the
Council  and  Parliament  to  do  likewise,  particularly  when  they  introduce  major  changes  to
Commission  proposals  during  the  negotiations.  Better  regulation  and  simplification  at  EU
level will always need to be accompanied by commensurate activity at Member State level, in
particular  during  the  sensitive  phases  of  transposing  Community  legislation  into  national
administrative provisions.

The quality of rules depends not only on making sure that the impacts of a measure have been
checked  before  it  is  proposed  and  that  it  is  well  drafted,  clear  and  proportionate  to  its
objectives.  Within  the  Internal  Market,  it  also  depends  on  choosing  the  right  legislative
technique or instrument – i.e. the one which will most effectively eliminate barriers to cross-
border  trade  while  serving  public  interests,  such  as  health  and  safety  and  sustainable
development, and respecting national diversity as far as possible.

This  involves  complex  issues,  such  as  the  role  of  mutual  recognition  as  opposed  to
harmonisation,  and  where  harmonisation  is  necessary,  the  use  of  Regulations  or  Directives
and the appropriate level of harmonisation. It is also necessary to establish the right balance
between  regulation  by  the  public  authorities  and  the  co-regulation  or  self-regulation  by  the
private sector through the elaboration of European standards and codes of conduct.

The Commission believes that this question of legislative technique or legislative architecture
is an important part of the debate on better regulation and one which has not  yet  been  fully
explored.  It  will  therefore  enter  into  a  wide-ranging  consultation  during  2003,  taking  into
account developments in the Convention on the Future of Europe and ongoing discussions on
a future  Inter-Institutional Agreement on  Better Regulation, with a view to making  clear  its
views on these complex issues during the course of 2004.

Finally,  the  European  Parliament  has  suggested70  the  introduction  of  an  Internal  Market
“compatibility test” to be applied to all legislation adopted at national level. The Commission
believes this to be an interesting proposal. Member States often adopt and implement rules as
they  see  fit  without  considering  the  implications  for  the  Internal  Market.  A  “compatibility
test” could be a very useful self-imposed discipline.

68

69

70

COM (2002) 278 final of 5.6.2002.
COM (2003) 71 final of 11.2.2003.
Harbour Report, A5-0026/2003.

25

                                                
Business needs better rules – at national and EU level:

(cid:1)  Poor quality regulation costs European business at least €50 billion per year71. The total cost of regulation

to society is in the region of 4 to 6% of GDP per year, or between €360 and €540 billion.72

(cid:1)  Member  States  are  responsible  for  between  50%  and  90%  of  rule-making73.  A  Swedish  study  estimated
Brussels  to  be  responsible  for  only  about  10%  of  the  regulatory  burden74.  A  recent  study  in  the  UK
estimated that about 60% of rules are made at national level75.

(cid:1)  No  fewer  than  6,000  draft  national  technical  regulations  have  been  notified  to  the  Commission  since
199276. While this shows that a screening at EU level is useful, the amount of rules in itself constitutes a
serious threat to Europe’s competitiveness.

(cid:1) 

87% of companies say that the most important priority is to have ONE set of rules, instead of 15 – soon to
be 25.77

b) Actions

1.
The  Commission  will  launch  a  wide-ranging  reflection  and  consultation  on  the
legislative architecture of the Internal Market and issue its conclusions in 2004 taking into
account developments in the Inter-Governmental Conference. The Commission could define
certain criteria, which it will take into account, e.g. when deciding whether to pursue mutual
recognition, “new” approach or more detailed harmonisation, as well as the conditions under
which “home country” control should be applied. It will also address the involvement of the
private  sector  and  civil  society  in  co-regulation  or  self-regulation  initiatives,  such  as  the
elaboration and implementation of European standards and voluntary codes of conduct.

The  Commission  will  work  together  with  the  European  Parliament,  the  Council  and
2.
the  Member  States  to  develop  the  idea  of  an  Internal  Market  “compatibility  test”.  The
purpose of this test would be to offer guidance to legislators at national level as to how best to
reconcile the interests of free movement in a border-free Europe with other legitimate public
policy  objectives.  If  such  a  test  were  applied  at  an  early  stage  –  and  at  all  levels  of
government – the risk of fragmentation could be considerably reduced. Together with existing
preventive mechanisms, such as the notification of technical rules and regulations, such self-
imposed discipline could prove a powerful tool to ensure that lawmakers take wider European
interests into account when considering new measures.

3.
The Council is invited to establish a horizontal working group on “better regulation”
with  whom  the  Commission  can  interact  on  a  regular  basis.  This  group  could  work  on  the
implementation of the Better Regulation Action Plan, including on the implementation of the
parts  for  which  Member  States  are  responsible.  The  Commission  will  also  open  a  web  site

71

72

73

74

75

76

77

Survey  on  the  quality  of  the  regulatory  environment,  Internal  Market  Scoreboard  No.  9,  November
2001.
Doorn Report A 50351/2000.
Walker Opinion, ESC 304/2002.
Swedish study : Confederation of Swedish Enterprise, Prof. Fredrik Sterzel: Simplifying EU
Regulations – Lessons from Swedish  Regulatory Experiences May 2001.
"Do Regulators Play by the Rules? An audit of UK regulatory impact assessments." Report published
by the British Chambers of Commerce, February 2003.
Under the provisions of Directive 98/34/EC.
See footnote 14.

26

                                                
where  interested  parties can  bring  to  its  attention  examples  of  particularly  complex  rules  or
rules which may conflict with the Internal Market “compatibility test”.

4.
The Commission will develop, in close co-operation with Member States, appropriate
indicators  to  measure  progress  towards  a  higher-quality  regulatory  framework  and  lower
administrative burdens, starting with the Internal Market. Monitoring of results is essential to
keep the better regulation process on track and show to Europe’s businesses and citizens that
their governments are serious about this.

27

9.

ENFORCING THE RULES

a) Assessment

When  Internal  Market  Directives  are  not  implemented  on  time  or  not  applied  correctly  in
practice,  EU  citizens  and  businesses  can  be  effectively  deprived  of  their  Internal  Market
rights. Many rights flow directly from the Treaty: if its provisions are ignored, this can also
lead to failure and frustration. This self-inflicted damage causes wholly unnecessary harm to
the European economy, and undermines the confidence citizens have in the European Union.

Ultimately, effective application and enforcement can only be achieved if Member States are
prepared  to  play  a  much  more  active  role  in  the  day-to-day  management  of  the  Internal
Market. It is up to them to ensure that the rules which they themselves have adopted are made
to work in practice.

When things do go wrong, citizens and businesses currently have a choice between lodging a
complaint  with  the  Commission  or  going  before  a  national  Court.  This  is  not  entirely
satisfactory. Litigation at national level can be slow and expensive and is therefore not always
a  viable  option.  Complaints  lodged  with  the  Commission  can  result  in  infringement
procedures against the Member State concerned but these take a long time to resolve and do
not  offer  the  individual  complainant  the  opportunity  to  seek  damages.  Moreover,  the
Commission  cannot  possibly  intervene  in  each  and  every  individual  case  of  misapplication,
particularly in an enlarged  Union. Action is needed now to avoid a drift towards a situation
where  breaches  of  Community  law  go  unchallenged  and  confidence  in  the  operation  of  the
Internal Market is undermined.

There  are  a  number  of  possible  solutions  to  these  problems.  Many  are  set  out  in  the
Commission's  recent  Communication  on  "better  monitoring  of  Community  law."78  Possible
ways  forward  could  include  a  speeding  up  of  the  Commission's  handling  of  infringement
procedures and greater use of initiatives such as "package meetings"79 to resolve more cases
without the need for further legal action.

Beyond  this,  the  Commission  believes  that  it  is  important  to  develop  alternative  means  of
redress other than national litigation or infringement procedures. It will, of course, continue to
pursue infringement procedures where this is the most effective way to achieve a solution or
where important legal precedents are likely  to  be established. But  for the majority  of  cases,
alternative means of problems solving may be more effective and proportionate.

The use of complementary measures to infringement procedures is now beginning to take off.
The  SOLVIT  initiative,80  for  example,  is  an  attempt  –  through  administrative  co-operation
between  Member  States  -  to  make  it  easier  to  obtain  redress  in  cases  where  the  Internal
Market  rules  are  misapplied  in  practice.  Another  possible  solution  –  which  could  even  be
integrated with SOLVIT – might be the designation of some kind of a mechanism in each of
the  Member  States  which  would  help  to  ensure  the  correct  application  of  Internal  Market
legislation and relevant Treaty articles.

78

79

80

COM (2002) 725 final of 11.12.2002.
These meetings involve experts from Member States and the Commission coming together in order to
discuss a "package" of cases being examined by the Commission for violation of Community law. Their
purpose is to solve cases without the need for further legal action.
COM (2001) 702 of 27.11.2001, Commission Recommendation of 7.12.2001 OJ L331/79 15.12.2001,
http://europa.eu.int/solvit/

28

                                                
Such  mechanisms  could  provide  citizens  and  businesses  with  a  means  of  redress  located  in
their  home  Member  State.  This  would  be  a  tangible  step  towards  bringing  the  enlarged
European  Union  closer  to  the  citizen.  They  could  deal  with  problems  which,  although
technically breaches of Community law, are really administrative or technical in nature, rather
than legal. This would allow the Commission to  concentrate on the  most serious cases with
the  most  far-reaching  implications.  Clearly,  this  suggestion  raises  a  number  of  important
questions to which the Commission would have to find satisfactory answers before taking any
initiative.

Better  enforcement  is  equally  important  as  far  as  consumer  interests  are  concerned.  Each
Member  State  has  developed  an  enforcement  system  adapted  to  its  own  national  situation.
These systems are, however, not always sufficiently adapted to the challenges of cross-border
shopping within the Internal Market. Consumers need to be confident that governments have
the ability to deal effectively with cross-border fraud or other fly-by-night operations, if they
are not to be reluctant to buy from suppliers in another Member State.

Late transposition and ineffective enforcement remains a serious problem:

(cid:1)  The average transposition deficit stands at 2.4%. In other words, Member States are late in notifying over 550

national legislative measures transposing EU Directives81.

(cid:1)  The number of open infringement cases has gone up from 700 in 1992 to nearly 1600 today82. This indicates
that large numbers of Directives are not being correctly implemented and properly applied at national level.

(cid:1)  Two thirds of infringement cases which go to the Court of Justice take longer than four years to resolve.83

(cid:1)  Assuming  that  the  new  Member  States  behave  in  the  same  way  as  the  existing  ones,  the  number  of

infringement cases will rise by more than 40% by 2007, unless there is a change of policy.

(cid:1)  Only about half of companies say that  they can easily get help from their national authorities when they run

into an Internal Market problem84.

b) Actions

1.
Member  States  should  commit  themselves  to  setting  and  respecting  more  ambitious
transposition targets at each Spring European Council. This has already happened over the
past few years but it should now be put on a permanent footing85. It is vital to maintain the
political pressure on transposition in order to avoid fragmentation of the Internal Market in a
Union of 25 countries.

The  Commission  will  issue  a  Recommendation  setting  out  a  number  of  “best
2.
practices”  which  should  be  applied  consistently  throughout  the  Union  to  ensure  better  and
faster transposition, e.g. the development of transposition "timetables" and the need to discuss
the  transposition  performance  regularly  with  national  and  regional  parliaments.  It  will  also
intensify  its  work  with  Member  States  during  the  transposition  phase  (“preventive
dialogue”).  This  dialogue  will  focus  particularly  on  measures  of  greatest  economic
importance and those which, because of their nature, may be more difficult to transpose.

81

82

83

84

85

Internal Market Scoreboard No. 12, May 2003.
See footnote 1.
Internal Market Scoreboard No. 8, May 2001.
Internal Market business survey, Flash Eurobarometre 106, September 2001.
This year's Spring European Council reaffirmed the existing target of a 1.5% deficit overall and a zero
deficit for Directives more than two years past their transposition date.

29

                                                
 3.
The Commission believes that there may be a case for introducing a legal instrument
to  make  certain  implementation  aspects  mandatory.  These  could  include  the  obligation  to
notify  measures  electronically  and  the  requirement  to  provide  the  Commission  with
“concordance”  tables  clarifying  where  provisions  have  been  implemented  in  national  law.
Without these tables, checking that the transposition measures adopted in 25 Member States
fully conform to the requirements of the particular Directive will become a real paper chase.
This instrument could also provide a legal underpinning for SOLVIT.

The  Commission  invites  Member  States  and  the  Parliament  to  define  a  standard
4.
transposition period (2 years), from which departures should only be possible when they can
be  justified  by  the  volume  or  complexity  of  the  measure  to  be  transposed.  Similarly,  the
Commission wishes to hear views about inserting standard sanctions clauses into Directives
as well as standard clauses to put administrative co-operation on a stronger footing.

5.
Member States are invited to maximise their efforts to “clean up” their infringements,
so  that  as  many  as  possible  of  the  outstanding  cases  can  be  resolved.  The  Commission
believes that many of the currently active cases can be easily resolved if the will to do so is
there. The aim should be for each Member State to reduce the number of Internal Market
infringements by at least 50% by 2006. The Commission will also promote better follow-up
to Court judgements, particularly by Member States who are not directly targeted by the case
at hand.

6.
The  Commission  will  undertake  a  study  examining  the  different  options  for
improving  the  enforcement  of  Internal  Market  law.  This  would  look,  inter  alia,  at  the
desirability and feasibility of designating enforcement mechanisms in the Member States.

7.
The Commission will set up a special section on the home page of the EUROPA web
site  describing  the  various  procedures  available  to  citizens  and  businesses  seeking  to
defend  their  rights  under  Community  legislation.  Essentially,  it  will  describe  the  most
effective ways of obtaining relief, which will most often involve alternative ways of settling
problems, such as through the SOLVIT network. The aim is to solve problems more quickly
and limit resort to infringement procedures to the most serious breaches of Community law.
In all cases, estimations of the time and costs involved will be provided.

To  ensure  more  uniform  enforcement  of  consumer  protection 

legislation
8.
throughout the Union, the Commission will propose a Regulation (at around the same time as
the Internal Market Strategy) which will establish a network of public enforcement authorities
throughout  the  European  Union.  In  contrast  to  "Internal  Market  Authorities",  which  would
monitor  the  behaviour  and  decisions  of  national  and  local  administrations,  the  focus  in
consumer protection would be on behaviour in the private sector.

30

10.

PROVIDING MORE AND BETTER INFORMATION

a) Assessment

For the Internal Market to deliver its full potential, it is not enough to put a legal framework
in  place  and  to  enforce  the  rules.  Citizens  and  businesses  also  need  to  know  about  their
Internal Market rights and opportunities and some will need practical information on how to
exercise  these  rights  in  practice.  This  is  in  addition  to  the  general  need  to  explain  Internal
Market  policies  to  the  public  and  stakeholders  as  part  of  building  the  public  and  political
support needed to take the Internal Market forward.

Information policy is thus not just an optional extra or an opportunity to generate publicity for
the  EU’s  activities.  It  is  an  integral  part  of  the  efforts  to  create  a  fully  functioning  Internal
Market.

There  is  still  a  great  deal  to  do.  General  awareness  of  Internal  Market  rights  remains  low.
Those who run into problems when trying to exercise their rights often do not know where to
find  a  solution.  Service  providers  face  particular  problems,  since  services  are  subject  to  a
wider range  of more  complex  rules and authorisation regimes  than  exporters  of  goods.  And
citizens  need  to  be  informed  about  their  rights  as  consumers,  particularly  as  consumers  of
services.  The  information  deficit  in  the  Accession  Countries  is  even  greater  than  in  the
existing Member States.

If we are to close this gap, we need a step change in the scale of the information effort. In the
first  place,  the  Member  States  and  the  Accession  Countries  must  fully  assume  their
responsibility for informing their citizens and invest the necessary resources.

EU citizens and businesses still do not know about their Internal Market rights:

(cid:1)  A recent Commission survey revealed that less than half of EU citizens consider themselves to be well informed
about the Internal Market. When asked, for example, 49% thought that they needed a work permit when working
abroad and only 29% were aware that they were entitled to vote in local and EP elections when living in another
Member State.86

(cid:1)  Less than half of the businesses questioned said that they felt well informed about their company’s rights in the

Internal Market. The figure fell to 41% for small and medium-sized companies.

(cid:1)  Nearly  20%  of  businesses  who  are  not  currently  exporting  said  that  they  might  do  so  if  more  and  better

information were available.

(cid:1)  A 2002 survey showed that less than 10% of companies in Slovenia feel fully informed about the obligations and

benefits of the Internal Market87.

b) Actions

1.
Member States should develop national plans to raise general awareness of Internal
Market opportunities among their own citizens and businesses. Progress will be monitored in
the  Internal  Market  Scoreboard  and  by  the  Internal  Market  Advisory  Committee  (IMAC)
meeting at Director General level.

86

87

See footnote 14.
Electronic survey carried out by Eurochambres and the Slovenian Business and Research Association.

31

                                                
2.
The needs of business and consumers in the new Member States for information on
the EU and its Internal Market will require special attention and the development of an overall
Communication Strategy in those Member States. The Commission will take account of these
needs  in  the  2005  review  of  its  Communication  Strategy,  following  the  conclusion  of  the
current  PHARE-funded  strategy  for  the  Accession  Countries  at  the  end  of  2004.  It  should
build  on  existing  and  planned  initiatives  and  make  effective  use  of  the  media  and  of
appropriate relay organisations, particularly those which have already played a role in the lead
up to accession

3.
Commission  initiatives,  such  as  the  Dialogue  with  Citizens  and  Business  and  the
Citizens  Signpost  Service,  will  be  progressively  extended  to  the  new  Member  States.  The
Commission  will  improve the Dialogue  web  site  so  that  citizens  and  businesses  have  better
access  to  practical  and  useable  information.  In  addition,  Member  States  should  take  more
responsibility for the quality of the information which is made available through the Dialogue.

4.
The  Commission  will  establish  a  top  class  information  portal  bringing  together
existing initiatives, including the Dialogue with Citizens and Business88, the Citizens Signpost
Service89,  SOLVIT90,  European  Consumer  Centres91,  Fin-net92  and  EEJ-Net93,  and  giving
citizens and business access to a wide range of practical  information and advice on  Internal
Market rights and opportunities94. Citizens and businesses can also contact Europe Direct – a
service  with  a  single  number  across  Europe  (00800 67891011)  which  provides  answers  to
questions on all aspects of the EU and can direct people to the site/information source most
suited to their needs. Clearly, both the portal and the Europe Direct number must be widely
promoted.

5.
Within  the  ongoing  initiative  to  make  the  EUROPA  web  site  clearer  and  more
accessible,  the  more  specialised  audience  (journalists  etc)  will  be  catered  for  by  a  new
Internal  Market  portal  bringing  together  information  about  policy  and  legislative
developments  relating  to  the  Internal  Market,  irrespective  of  the  Commission  department
responsible.

6.
The Euroguichet network needs to be extended so that there is at least one European
Consumer  Centre  in  each  Member  State.  The  main  task  of  these  centres  is  to  provide
information to consumers on their rights in the Internal Market and to assist and advise them
on dispute resolution mechanisms and legal aid when a problem arises.

88

89

90

91

92

93

94

http://citizens.eu.int/
http://europa.eu.int/citizensrights/signpost/front_end/signpost_en.htm
See footnote 75.
http://europa.eu.int/comm/consumers/redress/compl/euroguichet/index_en.htm
http://europa.eu.int/comm/internal_market/en/finances/consumer/adr.htm
http://www.eejnet.org/
Advice on ways of solving the problems they have encountered will  be made available via the special
section on the home page of the EUROPA web site referred to in section B9.

32

                                                
Part C: Getting the Best out of the Enlarged Internal Market

a) Assessment

The  Accession  Countries  have  taken  important  strides  forward  in  recent  years.  However,
incorporating the Community acquis and progressively building up their institutions to apply
and enforce  Internal  Market  rules  is  no  small  task.  Naturally,  there is much  work  left  to  do
and efforts to support these countries should continue up to accession and beyond.

Existing Member States will also have to adapt to the new situation after enlargement. Above
all,  they  must  ensure  that  all  of  their  competent  authorities  are  well  informed  and  ready  to
accord full Internal Market rights to the new Member States.

There  will  inevitably  be  some  teething  problems  in  the  initial  post-accession  period.  In
particular, more work is needed in those areas which are covered by Treaty provisions alone95
– i.e. those areas where there is no EU secondary legislation. More generally, there are bound
to  be  problems  with  compliance  and  enforcement96.  Market  surveillance  authorities,  in
particular, need to be further strengthened. It is important to solve these problems at an early
stage  so  that  the  integrity  of  the  Internal  Market  is  maintained  and  the  need  to  invoke  the
Internal Market safeguard clause97 can be avoided.

In  the  end,  success  in  an  Internal  Market  of  25  countries  will  depend  on  mutual  trust  and
confidence.  The  key  is  administrative  co-operation  and  understanding  between  officials  in
competent  authorities  leading  to  ways  of  finding  practical  solutions  to  problems.  This  can
only develop over time – there is no magic solution. But there are a number of actions, which
taken together, can produce positive results.

b) Actions

Support  for  institution-building  activities  will  continue  over  the  period  2004-2006
1.
through the Transition Facilitiy98. This will provide appropriate resources for further building
up  the  capacity  of  the  new  Member  States  to  enforce  Internal  Market  legislation.  The
Commission  will  step  up  the  monitoring  process  and  produce  a  comprehensive  monitoring
report six months before accession.

2.
The  Commission  will  make  it  possible  for  Accession  Countries  formally  to  notify
their implementing measures before accession. These will then of course not have to be re-
notified  after  accession.  This  will  make  for  a  more  orderly  process  of  notification  and
checking  of  conformity  with  Community  law.  The  Commission  will  also  establish  pre-
notification agreements with regard to draft national technical regulations 99

95

96

97

98

99

Treaty  articles  28-30  (goods),  39  (workers),  43  (establishment),  49  (services)  and  56  (capital  and
payments).
See also section B9.
The safeguard clause can be used by the Commission until 1 May 2007 if it establishes that a new Member
State,  by  not  meeting  its  negotiation  commitments,  has  caused  a  serious  breach  of  the  functioning  of  the
Internal Market. In that case, the Commission can take appropriate measures. The clause can also be invoked
in cases where there is an imminent risk of such a breach.
See COM (2002) 700 final of 9.10.2002.
These are notified in accordance with Directive 98/34/EC.

33

                                                
3.
In order to eliminate barriers to free movement of goods and services, the Accession
Countries  are  urged  quickly  to  complete  the  screening  of  their  legislation  in  the  light  of
Articles  28,  43  and  49  of  the  Treaty  and  to  repeal  any  national,  regional  or  local  rules  and
regulations which discriminate against citizens or companies from other Member States.

The  process  of  negotiating,  concluding  and  implementing  Protocols  to  the  Europe
4.
Agreements on Conformity Assessment and Acceptance of Industrial Products (PECAs)
will continue insofar as they can operate for a reasonable period before the date of accession
(2007  in  the  case  of  Bulgaria  and  Romania).  PECAs  are  a  particular  form  of  agreement
covering the reciprocal recognition of conformity assessment of industrial products based on
the adoption by the Accession Countries of Community legislation on such products and the
creation  of  the  appropriate  implementing  infrastructure.  They  are  useful  instruments  for
integrating these countries into the Internal Market.

5.
Accession  Countries  and  Member  States  administrations  will  be  requested  to
demonstrate that they have  taken  steps  to  inform  competent  authorities  and  enforcement
officials of the implications of enlargement, so that full rights are conferred on citizens and
business consistent with Membership, subject to any transitional arrangements.

Many of the existing Member States are prepared to offer short-term traineeships to
6.
Internal  Market  officials  from  the  Accession  Countries.  The  Commission  will  set  up  a
database  to  facilitate  this  type  of  exchange.  Multi-country  co-operation  (including  joint
training,  resource  sharing,  common  problem  solving  and  benchmarking)  could  also  be
envisaged.

34

Part D: Building the Internal Market in an International Context

a) Assessment

Following  enlargement,  a  major  challenge  for  the  EU  is  to  start  developing  closer
relationships  with  our  “new  neighbours”  –  Russia,  Ukraine,  Moldova,  Belarus  and  the
Southern  Mediterranean  countries.  In  exchange  for  better  access  to  our  markets,  these
countries will be asked first to align progressively their regulations as closely as possible with
ours. This has a number of benefits: it will make trading between the EU and these countries
significantly easier, thus benefiting both sides. It will also provide the "new neighbours" with
a “ready to use” regulatory framework, suited to the needs of a market economy.

In today’s highly globalised economy, the impact of legislation/regulation adopted thousands
of miles away is increasingly felt in the EU. We have already seen evidence of this in policy
areas ranging from financial reporting to electronic commerce and the protection of personal
data. The result is that our regulators have to be much more systematic about talking to their
counterparts in our major trading partners so that problems can be avoided as far as possible.

In some cases, discussions between regulators can best take place in global fora, such as the
World Trade Organisation (WTO), the OECD,  the World  Intellectual  Property Organisation
(WIPO), the Basle Committee for banking capital standards or the  International Accounting
Standards  Board.100  In  the  automotive  sector,  the  EU  is  a  contracting  party  to  two
international  agreements  concluded  under  the  auspices  of  the  United  Nations  Economic
Commission for Europe (UN/ECE). Global regulatory  convergence  is  particularly important
in this sector where commercial relations are becoming increasingly international.

In  other  cases,  bilateral  dialogues  may  be  more  appropriate.  For  example,  last  year  the
Commission services developed a set of overall Guidelines for Regulatory Co-operation and
Transparency  with  services  of  the  US  Government  for  product  regulations.  There  are  also
sector-specific bilateral dialogues, such as those with US financial regulators and supervisors
in the context of the EU-US financial markets dialogue or the EU-Japan Regulatory Reform
Dialogue. The aim of these dialogues is not just to defuse existing problems. They should also
help  to  make  future  conflicts  less  likely.  Exchanging  information  and  both  sides  providing
each other with an opportunity to comment on rules before they are adopted are essential to
ensure that dialogues are productive.

The globalised economy also presents major challenges for customs services. They are being
asked  to  maintain  the  impermeability  of  the  EU’s  external  frontier  while  the  volume  of
international trade is increasing all the time. Following enlargement, much of the burden will
fall on the new Member States. Action is needed to ensure that measures to protect European
citizens,  the  consumer  and  the  environment  from  dangerous  or  unsafe  products  from  third
countries  continue  to  be  applied  equally  effectively  at  all  points  along  the  EU's  external
frontier.  A  well-managed  external  frontier  is  essential  for  confidence  within  the  Internal
Market.

100

See section B6.

35

                                                
b) Actions

1.
To implement the “new neighbours" concept, the aim is to conclude new agreements
supplementing,  where  necessary,  the  Partnership  and  Co-operation  Agreements  and
Association  agreements  which  the  EU  already  has  with  these  countries.  These  new
agreements  can  only  be  concluded  once  they  have  aligned  their  rules  with  ours  and  shown
themselves to be capable of enforcing the rules effectively.

The  Commission  will  continue  to  promote  and  defend  the  EU's  regulatory  approach
2.
within  international  bodies,  such  as  the  WTO  and  WIPO.  In  the  automotive  sector,
convergence between EU legislation and UN/ECE Regulations will be encouraged  as far
as possible.

3.
The  Commission  will  strengthen  ongoing  regulatory  dialogues,  notably  the  EU-US
financial  markets  dialogue.  It  will  also  assess  whether  it  would  be  in  the  EU’s  interest  to
initiate  new  dialogues  in  other  policy  areas  or  with  other  countries  and  report  about  this  to
Council and Parliament.

4.
The  Commission  will  seek  to  improve  controls  at  the  external  frontier  via  a
common risk management approach. It also proposes creating teams of customs experts in the
Member States to provide rapid specialised support at the external frontier. These issues will
be covered in a Commission Communication on “the role of customs at the external frontier”
which  will  be  launched  soon.  A  second  Communication  on  a  "simple  and  paperless
environment  for  customs  and  trade”  will  look  at  ways  of  laying  down  the  basis  for  a
computerised exchange of information needed for customs purposes.

36

Part E: Monitoring

Systematic  monitoring  and  evaluation  will  be  crucial  to  the  success  of  the  Internal  Market
Strategy. There is little point in setting out policy priorities and leaving the rest to chance. It is
vital  to  check  that  the  proposed  actions  are  actually  being  implemented  and  that  they  are
producing the desired effects.

The Strategy will therefore be monitored on three levels. The first task will be to make sure
that the proposed measures have been adopted on time. This will allow pressure to be exerted
on  decision  makers  whenever  delays  occur.  The  second  task  will  be  to  ensure  that  the
measures are being properly enforced. Once again, remedial action can be taken if problems
are detected. Finally, the impact of the measures on the ground must be measured, i.e. their
effect on markets, businesses and other economic operators.

Monitoring the impacts on the ground is particularly challenging. It requires the development
of a comprehensive set of indicators which in turn depends of the availability of the relevant
statistics for all Member States. It is important to start developing these indicators as soon as
possible,  even  though  monitoring  itself  can  only  be  carried  out  once  a  particular  action  has
been  fully  implemented  and  has  had  time  to  produce  its  effects.  Fortunately,  we  are  not
starting  from  zero.  The  Commission  has  already  developed  indicators  to  measure  the
effectiveness  of  its  policies  in  specific  sectors,  such  as  telecommunications  and  energy.  In
procurement, two panels have been set up - one made up of business representatives, the other
of  public  authorities  -  as  a  means  of  monitoring  levels  of  cross-border  tendering  and  its
impact  on  prices.  The  Commission  has  also  developed  the  Internal  Market  Index  -  a
composite indicator tracking the ‘real world’ benefits of the Internal Market in general101.

Thought  must  also  be  given  to  the  form  in  which  indicators  are  presented  and  the  vehicles
used  to  do  it.  The  Commission  currently  produces  a  number  of  monitoring  instruments,
including  the  Implementation  Report  on  the  Internal  Market  Strategy,  the  report  on  the
functioning of product and capital markets (Cardiff Report), the Competitiveness Report and
the different Commission Scoreboards. The  relationship between these different instruments
now needs to be considered. There is undoubtedly scope for a degree of rationalisation.

101

The index score has been published in the November Internal Market Scoreboard since 2001.

37

                                                
Conclusion

This  Internal  Market  Strategy  represents  a  comprehensive  package  of  actions  designed  to
improve the performance of the Internal Market in an enlarged Union.

Some  of  these  actions  are  already  well  advanced  as  proposals  make  their  way  through  the
legislative process. Others will need to be further  examined and developed  over the  coming
months before the Commission can make proposals. A number of actions are for the Member
States themselves to implement.

In  light  of  the  stage  of  preparation  of  the  different  actions,  Council  (in  the  form  of  a
Resolution prepared by the Competitiveness Council) and Parliament are requested to:

(cid:1)  Endorse the general orientation set out in the Internal Market Strategy;

(cid:1)  Commit themselves to adopting existing (or forthcoming)  proposals within  the suggested

deadlines102;

(cid:1)  Support the Commission’s intention to explore the different options for tackling particular

obstacles with a view to making proposals at a later stage103;

(cid:1)  Call on the Member States to play their full part in improving the operation of the Internal

Market in areas under their own control104.

102

103

104

These actions are classified as type 1 in the annex.
These actions are classified as type 2 in the annex.
These actions are classified as type 3 in the annex .

38

                                                
Type 1: early adoption or completion
Type 2: for further examination and discussion
Type 3: for Member States to implement

ANNEX

1.

FACILITATING THE FREE MOVEMENT OF GOODS

ACTION

TYPE DESCRIPTION

1

2

1

1

2

2

3

1

to  facilitate 

The Commission to make a proposal for a Regulation
on  mutual  recognition 
its  correct
application. This will take account of the results of a
wide  consultation  with  Member  States,  industry  and
consumer organisations on possible options. Council
Decision  3052/95,  which  requires  Member  States  to
inform  the  Commission  of  any  cases  where    mutual
recognition  has  been  refused,  and  which  is  not
achieving  its  objectives,  will  either  need  to  be
amended or incorporated into the Regulation.

The  Commission  to  adopt  a  Communication  on  the
correct  implementation  of  the  mutual  recognition
principle.  Its  aim  is  to  clarify,  in  anticipation  of  the
Regulation,  the  current  rights  and  obligations  of
economic  operators  and  national  administrations
when products are to be marketed in a Member State
where  its  legislation  imposes  different  technical
rules.

The  Commission  may  propose  a  Common  Base
Directive,  taking  into  account  the  discussions  and
possible Council conclusions on the Communication
on the New Approach. Such a Directive could cover
a  number  of  horizontal  issues  common  to  all  New
Approach  Directives,  including  measures  needed  to
support  administrative  co-operation  and  ‘standard’
articles that would provide for a more  homogeneous
implementation of these Directives.

to 

sign 

partnership 

to  speed  up 

The  Commission 
and
performance contracts with European standardisation
organisations 
the  production  of
standards, particularly in fields where standardisation
has proceeded at a too slow pace,  and  improve their
quality.  One  major  standardisation  body  (CEN)  has
already committed itself to reducing the average time
needed to prepare standards from eight to three years.

39

TIMING

12/2004

06/2003

12/2004

12/2003

3

4

1

1

4

1

4

1

5

1

06/2004

06/2003

06/2004

12/2003

06/2004

The Commission to undertake a comprehensive study
on voluntary marking at national and European level.
In the light of the results, the Commission to consider
ways of enhancing their positive effects and reducing
the  risk  of  market  fragmentation  and  confusion  on
the part of consumers.

The  Commission  to  issue  a  Communication  setting
out  the  next  steps  for  the  application  of  Integrated
Product  Policy  (IPP).  IPP  focuses  on  the  different
phases  of  products’  life-cycles  with  a  view  to
improving  their  overall  environmental  performance.
Doing  this  at  Community  level  should  reduce  the
pressure  to  adopt  national  measures,  which  because
of  their  divergence  may  lead  to  the  erection  of  new
barriers to the free movement of goods.

the 

The  Council  and  European  Parliament  to  adopt  the
framework  Directive  on 
integration  of
environmental  aspects  into  product  design.  This
initiative  is  based  on  New  Approach  principles,  i.e.
the  basic  elements  and  design  parameters  with
respect  to the  environmental aspects are specified in
the framework directive, while  specific product  eco-
design  requirements  will  be  established  through
Commission  implementing  measures  supported  by
voluntary  standards.  While  this  is  good  for  the
environment,  it  should  also  considerably  facilitate
trade in these products within the Internal Market.

The  Commission  to  issue  a  Communication  on  the
the
integration  of  environmental  aspects 
standardisation  process,  inviting  the  standardisation
organisations, national authorities and stakeholders to
take greater account of environmental considerations
at  all  stages  of  the  standardisation  process  at  both
national and European levels.

into 

The  Commission  to  give  mandates  to  European
standardisation  bodies  for  the  development  of  new
standards  or  the  revision  of  existing  ones  to  ensure
compliance  with  the  requirements  of  the  General
Product  Safety  Directive.  The  references  of  the
relevant  standards  will  also  be  published  in  the
Official  Journal.  The  Commission 
to  monitor
implementation  of  the  Directive  over  the  period  of
the  Strategy  and  prepare  a  report  on  its  application,
including  an  assessment  of  market  surveillance  and
enforcement in the Member States, by 2006.

40

5

1

6

1

06/2003

09/2003

The  Commission  to  propose  a  Directive  on  unfair
business to consumer commercial practices. This will
be a framework Directive harmonising national rules
governing  unfair  business-to-consumer  commercial
practices.  It  will  be  based  on  mutual  recognition  in
order  to  allow  a  fully  functioning  Internal  Market,
while delivering a high level of consumer protection
in order to promote consumer confidence.

The  Commission  to  propose  a  recasting  of  the
framework  Directive  on  motor  vehicles  and  their
trailers  (Directive  70/156/EEC).  One  of  the    main
aims  will  be  to  extend  EC  whole  vehicle  type
approval  to  vans  (optional  for  new  types  within  12
months  of  the  entry into  force  of  the  new  Directive,
compulsory  for  new  types  from  1  January  2007  and
compulsory  for  existing  types  from  1  January  2009)
and trucks and lorries (optional for new types within
12  months  of  the  entry  into  force  of  the  new
Directive, compulsory for new types from 1 January
2008  and  compulsory  for  existing  types  from  1
January 2010).

41

TIMING

12/2003

03/2004

12/2003

2.

INTEGRATING SERVICES MARKETS

ACTION

TYPE DESCRIPTION

1

1

1

2

1

1

The  Council  and  European  Parliament  to  adopt  the
draft  Regulation  on  Sales  Promotion  in  the  Internal
Market which will allow  SMEs, in  particular, to use
sales  promotions  to  draw  attention  to  their  products
in  new  markets.  Large  firms  will  be  able  to  offer  a
single  EU-wide  promotion  instead  of  15  (or  25)
different  campaigns.  Consumers  will  benefit  from
increased 
of
information about sales promotions offered.

transparency 

competition 

and 

The  Council  and  European  Parliament  to  adopt  the
draft  Directive  on  the  recognition  of  professional
qualifications.  The  proposed  Directive  seeks  to
clarify and simplify the rules in order to facilitate the
free movement of qualified people between Member
States, particularly in view of an enlarged Europe.

legal 

The Commission to make a proposal for  a  Directive
on Services in the Internal Market. The proposal will
to  remove  barriers  and  reduce  costs  for
seek 
companies  arising  from  red  tape  while  maintaining
high  levels  of  consumer  protection.  This  would
benefit  all  services  which,  as  soon  as  they  cross  a
Member  State  border,  are  affected  by  multiple
application  of  different 
regimes  and  a
duplication  of  administrative  requirements.  The
Commission will also issue a Communication on the
competitiveness  of  business-related  services  setting
out non-legislative measures designed to complement
the Directive. These will include the development of
European  standards  and  measures  to  improve  the
statistical  coverage  of  service  sectors  (this  is  very
important  since  these  statistics  are  currently  almost
entirely lacking and, without them, it very difficult to
analyse  what 
in  service
industries).

is  actually  going  on 

3

1

to 

the  results  of  a
The  Commission,  subject 
feasibility study, to propose an extension of Directive
98/34/EC,  which  concerns  notification  by  Member
States  of  national  technical  rules  and  regulations,  to
services  (besides  information  society  services).  The
results  of  the  feasibility  study  will  be  published  by
the end of the year.

12/2004

42

4

2

5

5

1

1

5

1

12/2004

09/2003

06/2004

06/2004

In  light  of  the  Council  and  European  Parliament’s
response to the Commission’s report on the safety of
services  for  consumers,  the  Commission  to  decide
whether 
legislative
to  make  a  proposal  for  a 
framework  aimed  at  monitoring  and  supporting
national  policies  and  measures  in  this  area.  This
could, for example, cover the systematic collection of
data  on  accidents,  injuries  and  risks  (currently
available  data  is  inadequate),  procedures  for  the
exchange  of  information  on  national  policy  and
regulatory  developments  and  procedures  for  the
establishment 
standards  where
necessary.

of  European 

The  Council  and  European  Parliament  to  adopt  the
Prospectuses  Directive  which  should  make  it  easier
for  companies  to  raise  money  on  an  EU-wide  basis
while at the same time providing adequate provision
for investors.

The  Council  and  European  Parliament  to  adopt  the
Investment  Service  Directive.  The  proposed
Directive  will  replace  the  existing  one  which  has
been  in  place  since  1993  and  is  being  proposed
against the background of major structural changes in
EU  financial  markets  over  the  past  five  years.  The
proposal  will  offer  investment  firms  an  effective
"single passport" which would allow them to operate
across  the  EU  while  at  the  same  time  providing
investors with a high level of protection when  using
the services of investment firms.

The Council and European Parliament to conclude 1st
reading  on 
the  Transparency  Directive.  This
Directive has been proposed in order  to increase the
quantity  of  information  (e.g.  on  shareholding  and
changes  of  shareholding) 
investors  have  about
publicly quoted companies. Apart from safeguarding
investors'  interests,  the  proposal  should  help  to
further  integrate  Europe's  securities  markets  and
increase the availability of funds for investment.

43

6

1

7

1

The Commission to propose a new Capital Adequacy
Directive. This Directive will provide a more modern
and  flexible  capital  requirements  framework  for
banks and investment firms. The  overall aims are  to
maximise  the  effectiveness  of  capital  requirement
rules,  ensure  continuing  financial  stability,  maintain
investment  and  protect
confidence 
consumers.  The  new  regime  is  also  designed  to
ensure that capital  requirements  for  lending to small
and  medium-sized  enterprises  are  appropriate  and
proportionate.

in  financial 

The  Commission  to  publish  a  Communication  on
clearing  and  settlement.  This  Communication  will
provide a firm indication of the Commission’s views
as  regards  the  need  for  and  content  of  legislative
actions  to  facilitate  inter-connected  and  efficient
cross-border  clearing  and  settlement  as  a  basis  for
discussion with authorities and market participants.

03/2004

09/2003

8

8

1

1

The  Commission  to  consult  widely  on  completing
and  further  developing  the  FSAP,  with  a  particular
focus  on  creating  a  single  market  in  retail  financial
services.

12/2003

The  Council  and  Parliament  should  adopt 
Consumer  Credit  Directive 
towards an effective single credit market.

the
to  enable  progress

03/2004

44

3.

ENSURING HIGH QUALITY NETWORK INDUSTRIES

ACTION

TYPE DESCRIPTION

1

1

1

1

1

1

2

1

The  Council  and  European  Parliament  to  adopt
proposals on: the Single European Sky for air traffic
control  management  (this  should  help  to  reduce
airport delays which currently cost around €3 billion
p.a.); and access to port services.

The  Council  and  European  Parliament  to  adopt  the
second  package  of  measures  to  revitalise  European
railways.  This  includes  a  number  of  proposals,
particularly  on  safety,  interoperability,  the  European
Railway  Agency  and  freight  market  opening.  It
should  result  in  more  competition  and  better  quality
services for business. The Council and the European
Parliament  to  adopt  the  proposal  on  controlled
competition  for  public  transport.  The  Commission
will also come forward with proposals for passenger
transport  market  opening  to  complete  the  Internal
Market in the railway sector.

The Council to give a mandate to the Commission to
negotiate  an  open  skies  agreement  with  the  United
States.  The  current  system,  based  on  bilateral
agreements  between  individual  Member  States  and
the  US,  which  the  Court  of  Justice  has  ruled  are
incompatible  with  Community 
law,  places  a
significant  brake  on  restructuring  in  the  EU  air
transport industry  and hinders the  functioning  of  the
Internal Market.

The  Council  and  European  Parliament  to  adopt  the
“energy package” which will completely open up gas
and electricity  markets  for  non-household  customers
by  2004  and  for  household  customers  by  2007.
Business,  particularly  SMEs,  and  consumers  will
benefit  from  lower  prices,  as  their  counterparts
already  do  in  those  Member  States  which  have
liberalised autonomously.

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2

4

1

5

1

6

1

12/2004

12/2006

12/2003

12/2003

A study on the water sector has already been carried
out for the Commission by external contractors. The
Commission  intends  to  build  on  this  by  gathering
further  information  from  Member  States,  industry
and consumers. At a later stage and depending on the
results  of  the  information  gathering  exercise,  the
Commission services could produce a working paper
reviewing the legal and administrative situation in the
sector,  including  the  competition  aspects,  in  full
respect  of  Treaty  guarantees  for  services  of  general
economic  interest  and  environmental  provisions.
Interested  parties  would  be  invited  to  comment  on
this paper. Based on their reactions, the Commission
would decide on appropriate follow-up measures. All
options  will  be  considered, 
including  possible
legislative  initiatives.  This  work  will  take  full
account  of  the  Green  Paper  on  Services  of  General
Economic  Interest  and  the  Green  Paper  on  Public-
Private Partnerships.

The Commission will complete a study assessing, for
each  Member  State,  the  impact  on  universal  service
of  full  accomplishment  of  the  Internal  Market  for
postal  services.  Depending  on  the  results  of  this
study,  the  Commission  may  make  proposals  to
achieve  full  market  opening.  The target date for  full
market opening is 2009.

The Commission to continue its efforts to clarify the
application of the state aid rules to compensation for
the  costs  of  providing  services  of  general  economic
interest,  in  the  light  of  forthcoming  Court  decisions.
These  will  decide  whether  compensation  paid
providers  of  services  of  general  economic  interest
should be treated as state aid.

The  Commission  to  issue  a  Green  Paper  on  public-
private  partnerships,  which  should  trigger  a  wide-
ranging  debate  on  the  best  ways  of  ensuring  that
partnerships  for  major projects can  be undertaken in
conditions  of  effective  competition  and  full  clarity
under procurement rules. Subject to the results of the
propose
consultation, 
(legislative  or  non-legislative)  initiatives  to  enhance
legal  certainty  and  remove  unjustified  obstacles  to
public-private partnerships.

the  Commission  will 

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4.

REDUCING THE IMPACT OF TAX OBSTACLES

ACTION

TYPE DESCRIPTION

1

1

1

1

1

1

to  propose  revisions  of 

the
The  Commission 
Parent/Subsidy  Directive.  The  main  aim  of  the
Directive  is  to  eliminate  double  taxation  within  the
EU  by  permitting  dividends  to  be  paid  between
certain  groups  of  companies  (subject  to  certain
conditions)  without  deduction  of  withholding  tax.
Revision  will  focus  on  extending  the  scope  of  the
Directive  so  that  more  companies  can  avail  of  its
provisions  thus  paving  the  way  towards  reducing
double taxation risks and compliance costs.

The Commission to propose a revision of the Merger
Directive.  Currently,  this  Directive  helps  companies
to  organise  their  operations  on  a  cross-border  basis
by  deferring  payment  of  certain  tax  charges  subject
to  certain  conditions.  As  more  and  more  companies
re-organise  their  activities  (on  a  cross-border  basis)
to  increase  efficiency  and  to  take  advantage  of
Internal  Market  trading  opportunities,  the  scope  of
the provisions of the Directive need to be extended.

The  Commission  to  issue  a  Communication  setting
out  the  results  of  its  technical  discussions  with
Member States and stakeholders concerning different
options for providing companies with a consolidated
tax base for their EU-wide activities. A consolidated
tax  base  would  inter  alia  reduce  compliance  costs
and 
The
Communication will report on progress on two issues
in  particular:  the  “Home  State  Taxation”  pilot
scheme 
the  possible  use  of
International  Accounting  Standards  as  a  starting
point for a common EU tax base.

for  SMEs;  and 

complexities. 

simplify 

existing 

2

1

12/2003

The  Commission  to  issue  a  Communication  setting
out further steps to modernise and simplify the VAT
system.  A  crucial  point  to  be  developed  in  the
Communication  will  relate  to  a  modification  of  the
rules  governing  the  place  of  supply  of  services,
whereby 
the  reverse  charge  mechanism  would
become  the  general  rule  for  trade  between  taxable
persons established in different Member States.

47

2

2

3

4

2

1

12/2004

the  administrative  cost  of  VAT 

The  Commission  is  actively  considering  making  a
proposal  to  introduce  a  single  place  of  compliance
for  all  businesses  trading  in  Member  States  where
they have no establishment. Such an initiative would
decrease 
for
companies. It would benefit SMEs in particular. This
will  be  one  of  the  initiatives  announced  in  the
Communication on VAT (see above). A consultation
of  European  companies  is  on-going  on  this  issue  on
the  web-site  “Your  Voice  in  Europe.”  Discussions
with tax administrations are also being carried out.

The  Commission  to  present  legislative  proposals  to
remove the obstacles to the free movement of cars in
the Internal Market.

12/2004

12/2003

The Commission to publish a Communication on the
effect of the case law of the ECJ on the various types
of  dividend  taxation  systems.  An  analysis  of  ECJ
case  law  will  help  towards  the  design  of  non-
discriminatory  dividend  taxation  systems  and  allow
the  Commission  to  take  action,  possibly  through
infringement 
non-
discriminatory 
cross-border
dividends.

proceedings, 
tax 

treatment  of 

ensure 

to 

48

5.

EXPANDING PROCUREMENT OPPORTUNITIES

ACTION

TYPE DESCRIPTION

1

1

1

2

3

3

2

3

The  Council  and  European  Parliament  should  adopt
the  legislative  procurement  package  in  both  the
classic  and  utilities  sectors.  The  legislative  package
has two broad objectives. The first is to simplify and
clarify  the  existing  Community  Directives,  and  the
second  is  to  adapt  them  to  modern  administrative
needs  in  a  changing  economic  environment.  The
three  existing  Directives  are  being  consolidated  into
one  measure  which  also  contains  a  number  of
provisions  facilitating  the  use,  by  public  authorities,
of information technologies in public procurement.

implement 

The  Member  States 
the  public
to 
procurement  package  by  the  agreed  deadline  and,
while  doing  so,  streamline/simplify 
their  own
legislation  and  standardise  their  procedures.  They
should report on progress to the Commission.

to  propose  amendments 

The  Commission 
to
strengthen  the  Procurement  Remedies  Directive,
possibly including the strengthening of the powers of
national  surveillance  authorities  on  which  it  will
conduct a prior consultation.

to 

in  order 

The Member States should strengthen  administrative
co-operation 
resolve  cross-border
procurement  problems,  notably  through  the  further
development  of 
the  fledgling  European  Public
Procurement  Network  (EPPN)  established  on  the
initiative  of  the  Danish  authorities.  The  network
needs to be expanded to all existing and new Member
States. Member States should ensure that the EPPN is
sufficiently  well  funded  so  as  to  be  able  to  meet  its
ambitions.

TIMING

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12/2004

06/2004

3

3

The  Member  States  should  stimulate  and  develop
procurement  training  (possibly  using  the  Internet),
particularly to raise the awareness of European rules
amongst  procurement  officials  at  all 
levels  of
government.  Best  practices  could  be  exchanged
through the EPPN.

12/2004

49

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2

5

5

1

2

The  Commission  to  develop  an  Action  Plan  on  e-
procurement  with  a  view  to  allowing  a  substantial
part  of  procurement    to  be  carried  out  electronically
by  2006.  The  first  step  will  be  to  translate  the  legal
provisions  of  the  public  procurement  package  into
functional  requirements.  The  Commission  will  also
give  mandates  to  European  standards  organisations,
where  necessary,  to  develop  technical  standards  for
e-procurement.

to  publish 

The  Commission 
interpretive
Communication setting out the implications of recent
Court judgements regarding the scope of Article 296
the  Treaty  (which  concerns  exceptions  for
of 
essential security interests of Member States).

an 

06/2004

12/2003

The Commission to publish a Green Paper looking at
in  European  defence
further 
any 
procurement.

initiatives 

12/2004

50

6.

IMPROVING CONDITIONS FOR BUSINESS

ACTION

TYPE DESCRIPTION

1

1

2

2

3

4

4

4

1

1

1

1

2

1

1

3

TIMING

06/2003

to  adopt 

the
The  Council 
Community Patent (based on the political agreement
reached  in  the  Competitiveness  Council  of  March
2003).

the  Regulation  on 

The  Council  to  adopt  the  proposal  to  create  a
Community  Patent  Court  and  to  take  the  necessary
steps  to  allow  the  European  Union  to  accede  to  the
European Patent Convention.

12/2006

12/2003

12/2003

09/2004

06/2004

06/2004

ongoing

The  Council  and  European  Parliament  to  adopt  the
Directive on the enforcement of intellectual property
rights  which  will  bolster 
fight  against
counterfeiting and piracy.

the 

the  patentability  of 
inventions  which  will 

The  Council  and  European  Parliament  to  adopt  the
computer-
Directive  on 
implemented 
stimulate
innovation and benefit both software developers  and
the  users  of  patentable
suppliers  as  well  as 
technology.

The  Commission  to  adopt  a  Communication  on  the
management  of  copyright  and  related  rights  in  the
Internal  Market  which  will  identify  the  measures
necessary  to  create  a  more  favourable  environment
for the cross-border marketing and licensing of these
rights.

The  Council  to  adopt  the  proposed  reform  of  the
merger regime to ensure the continuing effectiveness
of merger control in the context of globalisation and
enlargement.  The  reform  proposal  focuses  on  a
revision of the turnover thresholds and jurisdictional
and procedural issues.

The  Commission  to  adopt  a  new  block  exemption
transfer
to 
Regulation 
agreements between companies.

technology 

facilitate 

The Member States to continue their efforts to further
reduce  the  total  amount  of  state  aid  while  re-
towards  horizontal  objectives  of
directing  aid 
Community 
the  environment,
and  SMEs.  The
research 
Commission  will  continue  to  monitor  and  publish
results in the State Aid Scoreboard.

and  development 

interest,  such  as 

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existing 

endorsement 

International
of 
Legal 
Accounting Standards (IAS), provided that, for some
of  them,  the  appropriate  modifications  are  made.  A
recently  adopted  Regulation  requires  all  EU-listed
companies  to  prepare  their  consolidated  accounts  in
accordance with IAS from 2005. IAS are established
by  the  International  Accounting  Standards  Board
(IASB),  an  independent  international  accounting
standard-setting  organisation.  To  ensure  appropriate
political  oversight,  the  IAS  Regulation  establishes  a
new  EU  mechanism  to  endorse  IAS  for  use  within
the  EU.  Decisions  will  be  taken  by  the  Commission
on  the  basis  of  the  opinion  of  the  Accounting
Regulatory  Committee  –  which  is  composed  of
representatives  of 
the  Member  States  –  and
considering  the  advice  of  the  European  Financial
Reporting  Advisory  Group  -  which  is  composed  of
accounting experts from the private sector in several
Member States.

5

5

5

5

5

5

1

2

1

1

1

2

ongoing

06/2004

06/2003

12/2003

03/2004

03/2005

Legal endorsement of new IAS

The  Commission  to  offer  a  platform  (or  forum)  to
Member  States  to  allow  them  to  discuss  ways  of
facilitating 
IAS  by  non-listed
companies,  including  SMEs  (e.g.  by  uncoupling  tax
reporting  and  financial  reporting 
in  respect  of
individual accounts).

the  uptake  of 

The  Commission  to  issue  a  Communication  setting
out  priorities  for  2003  and  beyond  aimed  at
improving the quality of statutory audit in the EU.

The  Commission  to  make  a  proposal  to  modernise
the  8th  Company  Law  Directive  (access  to  and
regulation of the audit profession).

The Commission to set up a European co-ordination
mechanism 
the  audit
for  public  oversight  of 
profession.  This  will  aim  to  ensure  proper  oversight
of 
level  and
appropriate co-ordination at EU level.

the  audit  profession  at  national 

Adoption  of  International  Standards  on  Auditing  for
all  audits  conducted  in  respect  of  EU  companies.
Auditing  standards  are  crucial  to  providing  high
quality audits. At present there are no agreed auditing
standards in the EU. There is general agreement that
any  initiative  in  the  field  of  standards  should  be
based  on  the  International  Standards  on  Auditing
(ISA). Over the next two years, the Commission and
Member  States  will  work  towards  the  creation  of  a
supervisory framework based on the ISA.

52

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6

7

1

1

2

The  Council  and  European  Parliament  to  adopt  the
Take-over  bids  Directive  which  will  help  business
development  and  restructuring  while  maintaining
essential protection for shareholders.

12/2003

12/2003

12/2006

The  Commission  to  propose  a  10th  Company  Law
Directive  on  cross-border  mergers  and  a  14th
Company Law Directive on cross-border transfers of
the registered office.

The Commission is undertaking a feasibility study in
order  to  assess  the  practical  need  for  and  possible
obstacles  associated with  the creation  of  a  European
Private  Company  Statute.  This  legal  form  would
serve  the  needs  of  SMES  carrying  out  business  in
more  than  one  Member  State.  If  the  results  of  the
study  are  positive,  the  Commission  will  propose  a
Regulation.

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ongoing

06/2005

12/2003

7.

MEETING THE DEMOGRAPHIC CHALLENGE

ACTION

TYPE DESCRIPTION

1

2

3

3

4

3

2

1

3

1

The  Member  States  to  implement  and  enforce  the
Pension Funds Directive which proposes a prudential
framework to provide security of pensions and a high
level of protection  for  future  pensioners.  It  will  also
provide  institutions  with  the  flexibility  to  develop
effective investment policies.

The  Commission  to  examine  the  desirability  of
proposing  a  Directive  on  portability  of  occupational
pensions,  subject to the outcome of the second stage
of  the  consultation  of  the  Social  Partners  which  is
about to be launched.

The  Commission  to  continue  its  action  to  tackle  tax
discrimination  against  pension  funds  established  in
other  Member  States.  The  Commission  will
vigorously  pursue  any  cases  which  come  to  its
attention  and  ensure 
relevant  ECJ
jurisprudence is complied with throughout the EU.

that 

the 

Prior  to  the  entery  into  force  of  the  Pension  Funds
Directive, the Member States to adjust their national
rules  to  ensure  non-discriminatory  treatment  of
pension funds established in other Member States.

The  Commission  to  ensure  full  compliance  with  the
jurisprudence  of  the  Court  of  Justice,  in  order  to
realise the potential of the Internal Market in helping
to  tackle  the  challenge  faced  by  Member  States'
Health Systems. In this connection, discussions with
including
Member  States  have  been 
through  the  High  Level Reflection Group on Patient
Mobility.  As  a  basis  for  these  discussions,  the
its
Commission  will  present 
consultation process on patient mobility.

results  of 

launched, 

the 

54

8.

SIMPLIFYING THE REGULATORY ENVIRONMENT

ACTION

TYPE DESCRIPTION

1

2

2

1

3

3

1

1

The  Commission  to  develop  a  coherent  approach  to
the  question  of  legislative  technique  and  the  choice
of  legal  instrument  in  the  Internal  Market.  This
concerns  issues  such  as  when  to  rely  on  mutual
recognition,  the  “New  Approach”,  co-regulation  or
voluntary agreements; the level of harmonisation and
the possible insertion of Internal Market clauses; and
when  Regulations  should  be  given  priority.  The
Commission  will  consult  Council,  the  European
Parliament,  industry  and  other  stakeholders.  The
approach  to  be  adopted  could  be  set  out  in  a  short
the
Communication 
Commission 
Commission’s 
Initiative/Better
Governance 
Regulation Initiative.

under 

The  Commission  to  draw  up  an  “Internal  Market
compatibility  test”  following  consultations  with  the
European  Parliament  and  Member  States.  The  test
would  act  as  guidance  for  national  legislators  at  all
levels  of  government  to  ensure  that  their  actions  do
not  inadvertently  impinge  on  the  free  movement
principles of the Treaty. This test could be endorsed
by  means  of  a  Council  resolution.  The  Commission
also  recommends  that  Member  States  involve  non-
nationals  more  in  the  development  of  any  measures
and  that,  once  measures  have  been  adopted,  they
should be made easily available to non-nationals (e.g.
by putting them online).

to  set  up  a  web-site  where
The  Commission 
interested  parties  can  report  on  particularly  complex
rules  or  rules  which  may  fail  the  “Internal  Market
compatibility test”.

The  (Competitiveness)  Council  is  invited  to  to
establish  a  working  group  on  “better  regulation.”
This  group  could  draw  up  national  simplification
plans,  which  would  mirror  activity  at  Community
level.

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06/2003

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4

2

06/2004

Commission  to  develop  with  the  Member  States
indicators  to  measure  progress  towards  a  higher
quality regulatory framework for the Internal Market,
particularly,  but  not  exclusively,  as  a  result  of  the
Commission’s Better Regulation Action Plan of June
2002.  These  indicators  should  consist  of  both  input
indicators  (e.g.  have  the  announced  measures  been
taken on time?) and impact indicators (e.g. have they
resulted  in  lower  administrative  burdens?).  The
results of  the  Commission’s  project  on  Indicators  of
Regulatory  Quality,  undertaken  in  the  framework  of
the  Multi-annual  Programme  for  Enterprise  and
Entrepreneurship, will provide a basis for this work.

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9.

ENFORCING THE RULES

ACTION

TYPE DESCRIPTION

1

3

The  Member  States  to  commit  themselves  to  setting
and  respecting  more  ambitious  transposition  targets
at each Spring European Council.

to  a  request  from 

the  European
In  response 
the  Commission  will  undertake  a
Parliament, 
feasibility 
is
to  examine  whether 
study 
methodologically  and  practically  possible  to  put  a
figure  on  the  cost  of  late  transposition.  Existing
instruments,  such  as  the  Inter-active  Policy  Making
feedback  mechanism,  can  also  be  used  to  gauge  the
costs  to  business  of  both  late  transposition  and
misapplication of EU Directives.

it 

2

2

2

1

The Commission to issue a Recommendation setting
out  “best  practices”  to  speed  up  and  improve  the
quality of transposition of Internal Market Directives.
These could include: a) ensuring that the expertise of
officials’  built  up  during  negotiations  can  be  fully
used  during  the  transposition  phase;  b)  planning
ahead by developing transposition “time tables”  (i.e.
with  target  dates  for  first  draft  implementing  text,
the  competent
envisaged  date  for  approval  by 
minister(s),  starting  date  of 
the  parliamentary
process, etc.); c) limiting the transposition to what is
absolutely  necessary  without  adding  other  elements
which only complicate the law or its implementation
(this  is  usually  referred  to  as  "gold  plating");  d)
urgent  intervention  by  the  “state”  in  cases  where
deadlines risk being missed (i.e. because of delays at
level 
federal/decentralised
regional/provincial 
Member  States); 
of
submission 
e) 
transposition  progress 
to  national  and
regional parliaments to keep up the pressure.

in 
regular 
reports 

identify 

The  Commission  will  regularly 
those
Directives  which  should  be  subject  to  “preventive
dialogue”  –  i.e.  ongoing  dialogue  between  the
Commission  and 
the  Member  States,  starting
immediately  after  the  Directive  is  adopted,  with  the
aim  of  ensuring  better  and  faster  transposition.  The
Directives  chosen  will  be  measures  of  particular
economic  importance  and/or  those  which  by  their
nature may be more difficult to transpose.

In  addition,  the  Commission  will:  a)  systematically
write  to  all  Member  States  one  month  after  the
adoption  of  a  Directive  to  inquire  inter  alia  about

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4

1

2

2

5

3

their  planning  schedules;  b)  organise  bilateral
to  discuss  any
meetings  with  Member  States 
transposition  problems;  c)  whenever  appropriate,
raise transposition at expert meetings with a view  to
detecting  problems  at  an  early  stage;  d)  prepare
guidance 
the
transposition  of  particularly  complex  pieces  of
legislation.

the  Member  States 

to  assist 

in 

The Commission to produce statistics on the average
time  taken  to  implement  Directives,  which  it  will
report  on 
Internal  Market
in 
Scoreboard.

regularly 

the 

The  Commission  to  propose  a  legal  instrument  to
implementation  aspects,  such  as
make  certain 
electronic notification of implementing measures and
the  use  of  concordance  tables,  mandatory.  This  will
help  to  improve  the  transparency  and  efficiency  of
the checking of conformity.

The  Commission  proposes  that  a  standard  or  a
transposition  period  should  be  set  within  the  Inter-
Institutional  Agreement  on  Better  Regulation,  from
which  departures  are  only  permitted  if  this  can  be
justified  by  the  complexity  of  the  measure.  The
Commission will also seek the views of the Member
States  and  the  European  Parliament  on:  a)  the
inclusion  of  standard  sanctions  clauses  in  Directives
(i.e.  a  clause  to  provide  for  effective,  proportionate
and  dissuasive  sanctions  in  case  of  violations  of  the
obligations  flowing  from  the  Directive);  and  b)  a
standard  clause  to  provide  a  stronger  legal  base  for
the promotion of active administrative co-operation.

Member  States  to  maximise  their  efforts  to  reduce
the number of their infringements by at least 50% by
2006. This can be achieved by a combination of early
settlement  of  disputes,  the  use  of  alternatives  to
formal infringement  proceedings  (e.g.  SOLVIT)  and
preventive  action.  This  needs  to  be  implemented
progressively  on  a  year  by  year  basis.  The
Commission will report on progress made by existing
Member  States  in  the  Internal  Market  Scoreboard.
The  Commission  would  welcome 
this
"infringements  reduction"  target  were  confirmed  by
the  Spring  European  Council  alongside 
the
transposition targets.

if 

it 

06/2003

09/2004

12/2004

12/2006

58

6

1

7

1

8

1

12/2004

12/2003

06/2003

The Commission to publish the results of a study on
the  different  options  for  improving  the  enforcement
of  Internal  Market  law.  This  study  will  look,  inter
alia, at the desirability  and  feasibility  of  designating
some  kind  of  a  mechanism  in  each  of  the  Member
States  which  would  help  to  ensure  the  correct
application  of  Internal  Market  legislation  and  the
relevant Treaty articles.

The  Commission  to  set  up  a  special  section  on  the
home page  of the  EUROPA web  site setting  out  the
various  procedures  available 
to  citizens  and
businesses  seeking  to  defend  their  rights  under
(including 
the  SOLVIT
Community 
network  and,  as  a 
infringement
resort, 
last 
procedures). In all cases, estimations of the time and
costs involved will be provided.

legislation 

The  Commission  to  propose  a  Regulation  on  co-
operation between national authorities responsible for
the enforcement of  consumer  protection laws. These
authorities  should  be  given  a  minimum  of  common
investigation 
powers.  The
Regulation  will  provide  for  a  framework  of  mutual
assistance  rights  and  obligations  for  enforcement
authorities  to  use  when  dealing  with  rogue  traders
committing cross-border infringements.

enforcement 

and 

59

10.

PROVIDING MORE AND BETTER INFORMATION

ACTION

TYPE DESCRIPTION

1

1

1

2

3

3

3

3

4

5

6

3

2

2

1

2

2

2

3

2

2

2

Member  States  to  produce  national  plans  to  raise
general  awareness  of  Internal  Market  opportunities
among their own citizens and businesses.

The  Commission  to  organise  discussions  on  the
preparation  and  implementation  of  national  plans  in
the  Internal  Market  Advisory  Committee  (IMAC)
meeting at Director General level to ensure that there
is adequate commitment at the highest level.

TIMING

03/2004

12/2003

The  Commission  to  monitor  the  implementation  of
national  plans  and  to  report  on  it  in  the  Internal
Market Scoreboard.

12/2004

The  Commission 
overall
Communication Strategy, taking account of needs in
the new Member States.

review 

its 

to 

12/2005

The  Commission  to  improve  the  Dialogue  web-sites
to provide better access to practical information.

03/2004

The  Commission  to  extend  the  Citizens  Signpost
Service to the new Member States.

06/2004

The  Commission 
the
Dialogue with Citizens and Business to new Member
States.

to  extend  progressively 

12/2005

Member  States  to  adopt  a  more  pro-active  approach
and  take  full  responsibility  for  the  quality  of  the
national-level  information  made  available  through
the Dialogue.

The  Commission  to  set  up  a  top-class  information
the
portal  bringing 
Signpost  Service  with  other  related  initiatives,  such
as  SOLVIT,  European  Consumer  Centres,  Fin-Net
and EEJ-Net.

the  Dialogue  and 

together 

The  Commission  to  create  a  new  Internal  Market
portal bringing together information about policy and
legislative  developments  relating  to  the  Internal
Market,  irrespective  of  the  Commission  department
responsible.

12/2003

12/2004

12/2005

The  Commission  and  Member  States  to  extend  the
(the  European  Consumer
Euroguichet  network 
Centres).  The  aim  is  to  have  at  least  one  European
Consumer Centre in all Member States.

12/2004

60

GETTING THE BEST OUT OF THE ENLARGED INTERNAL MARKET

TIMING

12/2003

06/2003

12/2003

06/2004

12/2003

ACTION

TYPE DESCRIPTION

1

1

2

2

1

1

3

3

4

1

to  produce  a  comprehensive
The  Commission 
monitoring  report  on  each  Accession  Country  six
months  before  accession.  These  reports  will  focus,
inter alia, on the capacity of the country concerned to
implement all commitments and requirements arising
from  accession  negotiations.  The  conclusions  of  the
reports  will  identify  any  problem  areas,  delays  and
remedial action which needs to be taken.

The  Commission  to  make  it  possible  for  Accession
Countries  to  notify  their  implementing  measures
before  accession  by  establishing  a  system  for  prior
notification.

The  Commission  to  negotiate  a  series  of  bilateral
agreements with Accession Countries to facilitate the
notification  of  their  draft  technical  measures  within
the scope  of Directive 98/34/EC. Proposed technical
measures  will  be  examined  by  the  Commission  and
Accession  Countries  will  be  notified  as  to  whether
such measures conform to Community rules.

to  produce  screening
The  Accession  Countries 
reports of their legislation in the light of Articles 28,
43  and  49  of  the  Treaty  -  free  movement  of  goods,
right  of  establishment  and  the  free  provision  of
services. These reports will help to  establish if  there
are any potential obstacles to the full implementation
of  these  articles  and,  where  necessary,  will  propose
the removal of these obstacles.

Extension, implementation and conclusion of PECAs
(Protocols to the Europe Agreements on Conformity
Assessment  and  Acceptance  of  Industrial  Products)
with  Accession  Countries.  PECA  agreements  are  a
particular  form  of  mutual  recognition  based  on  the
adoption  of  Community  legislation  on  industrial
the  appropriate
the  creation  of 
products  and 
administrative infrastructure in  Accession  Countries.
This facilitates trade between these countries and the
EU. PECA agreements are already in force with four
Accession  Countries.  Two  others  have  signed
agreements  and  negotiations  are  underway  with  a
further three.

61

4

5

6

1

3

1

Conclusion  of  PECAs  with  Romania  and  Bulgaria.
PECA  negotiations  with  Romania  and  Bulgaria  will
and
continue  with 
implementing  agreements  covering  the  maximum
number  of  sectors  well  in  advance  of  the  expected
accession date of 2007.

concluding 

aim  of 

the 

they  have 

The  Accession  Countries  and  the  Member  States  to
report  back  to  the  Commission  on  the  specific  steps
inform  competent
taken 
which 
authorities  and  enforcement  officials  of 
the
consequences arising from the full implementation of
the Internal Market following enlargement.

to 

06/2006

06/2004

The  Commission  to  set  up  a  database  to  facilitate
targeted exchanges for Candidate Countries’ Internal
Market officials.

06/2004

62

BUILDING THE INTERNAL MARKET IN AN INTERNATIONAL CONTEXT

TIMING

ongoing

ongoing

12/2004

06/2003

ACTION

TYPE DESCRIPTION

1

2

2

2

3

4

2

1

The  Commission  to  work  towards  the  conclusion  of
new  agreements  with 
the  “new  neighbours.”
Negotiation of these agreements can only begin once
these  countries  have  made  sufficient  progress  in
the
terms  of 
development of enforcement capacity. Annual action
plans  will  therefore  be  developed  for  each  country.
These  plans  will  contain  benchmarks  which  will  be
used  to  determine  whether  or  not  the  country
concerned has implemented the plan satisfactorily.

approximation 

legislative 

and 

towards 

to  work 

the  EU  and 

regulatory
The  Commission 
convergence  between 
international
bodies  in  the  automotive  sector.  In  parallel  with  the
codification of the three EU framework Directives in
the automotive sector, the Commission to continue to
be  involved  in  codification  exercises  of  UN/ECE
Regulations. EU Directives should increasingly make
use  of  the  technical  prescriptions  included  in  the
UN/ECE Regulations.

The  Commission 
the  desirability  of
to  assess 
extending  regulatory  dialogues  to  other  policy  areas
and  countries  and  to  report  on  the  outcome  of  this
review to the Council and European Parliament.

The  Commission  to  publish  a  Communication  on
“the  role  of  customs  at  the  external  frontier.”  This
will  focus  on  ways  of  ensuring  protection  against
unsafe  products  and  the  merits  of  introducing  a
modern risk-based customs control system. The latter
would  involve  agreeing,  with  Member  States,  the
priorities  to  be  pursued  by  customs  services  and  the
means  of  addressing  the  related  risks  and  would  be
supported  by 
the  computerised  exchange  of
information between customs services.

4

1

The Commission to publish a Communication on “a
simple  and  paperless  environment  for  customs  and
trade.” The main thrust here is to make it possible for
businesses 
the  proposed  computerised
information  exchange  system  thereby  reducing  their
costs and accelerating customs procedures.

to  use 

06/2003

63