Opinion of the European Economic and Social Committee on Priorities of the Single Market 2005-2010
Date: 2005-04-07
Institutions: European Economic and Social Committee
Subjects: customs regulations, freedom to provide services, knowledge economy, self-regulation, single market

C 255/22

EN

Official Journal of the European Union

14.10.2005

Opinion of the European Economic and Social Committee on Priorities of the Single Market 2005-
2010

(2005/C 255/03)

On 29 June 2004, the European Economic and Social Committee, acting under the second paragraph of
Rule 29 of its Rules of Procedure, decided to draw up an opinion on: Priorities of the Single Market 2005-
2010.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the
Committee's work on the subject, adopted its opinion on 16 March 2005. The rapporteur was Mr Cassidy.

At its 416th plenary session (meeting of 7 April 2005), the European Economic and Social Committee
adopted the following opinion by 97 votes to 58, with 15 abstentions.

1. Introduction

especially for services of general interest, providing more and
better public information, etc.

As per the Single Market Observatory's (SMO (1)) work
1.1
schedule, the section for the Single Market, Production and
Consumption is proposing an additional opinion on The priori-
ties of the single market for the period 2005 to 2010. As in the
past, the SMO is contributing to a review of objectives and
methods to reflect progress towards the single market.

1.2
The achievements of 2004 for the European Union
cannot be underestimated. On the heels of an historic enlarge-
ment bringing in ten new members, citizens of the now 25
Member States elected a new European Parliament, and in late
the new European Commission
2004 the 25 members of
began their five-year term of office.

In the meantime, the Kok report has been published (2)
1.3
as has the Committee's opinion (3) on the implementation of
the Lisbon Strategy, both following the requests expressed in
March 2004 by the European Council. Ideally, the Committee's
own-initiative opinion on single market priorities for precisely
the period of the new Parliament and new Commission would
tie in with this work and provide a practical input from civil
society.

1.4
It is important, therefore, to prepare the groundwork for
the EESC's involvement in the consultations planned by the
new Commission.

1.5
This opinion is a follow up to the Committee's opinion
on the 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 COM(2003)238 final. In this
opinion (4),
the
Committee focused on a number of priority aspects for the
smooth operation of the single market: reducing the impact of
tax barriers,
improving conditions for business, securing a
sound legal system and high and transparent quality standards,

for which Mr Cassidy was the rapporteur,

(1) The Single Market Observatory is a unit within the Section for the
Single Market, Production and consumption (INT). It is composed of
30 members, with one chairman and two vice-chairmen (two years'
terms).

(2) At the 2004 Spring Summit, the Council asked a working group,
chaired by Mr Wim Kok, to draw up the mid-term assessment of
the Lisbon Strategy and to present a report for 1 November 2004.

(3) OJ C 120 of 20.5.2005
(4) OJ C 234/55 of 30.9.2003

1.5.1
In this opinion, the Committee also stressed that addi-
tional welfare benefits cannot be achieved by liberalisation and
enhanced competition alone, but that a supporting macro-
economic policy geared towards growth and employment will
do much to help complete the internal market. In the same
way,
the social
systems must not focus solely on the internal market and
budget requirements but must look at the systems as a whole,
and reflect their objectives.

the discussion about

the future shape of

This opinion also rests on the ‘25 findings’ by the Single
1.6
Market Observatory published on the occasion of the 10th
anniversary of the creation of the Observatory (a brochure
issued in October 2004 and entitled ‘What is the state of the
enlarged Single Market? 25 findings by the Single Market Observa-
tory’). With these various findings, the SMO stressed the persis-
tence, despite very significant progress achieved in recent years,
of far too many delays as well as malfunctioning of the single
market which penalise European users and affect the perfor-
mance of the EU in terms of competitiveness, of growth, of
innovation and of employment vis-a-vis our principal world
partners.

1.7
The multiannual strategic programme prepared by the
Six Presidencies (5) for the period 2004 to 2006 constitutes a
basis for studying this matter and for drawing up recommenda-
tions on the crucial period of 2005 to 2010 which saw, in
addition to the process of integrating the new Member States,
the establishment of a new Commission and a new European
Parliament. The idea is thus to set the EU's priorities in a
broader context, addressing the operational problems that have
long been put on the back burner. The Six Presidencies'
programme represents welcome policy continuity. Too often in
the past, incoming presidencies have sought to impose their
own agendas leading to confusion and the belief that the EU
has no clear policy objectives.

(5) Ireland, Netherlands, Luxembourg, United Kingdom, Austria and

Finland

14.10.2005

EN

Official Journal of the European Union

C 255/23

2. A long overdue simplification of the regulations

3. Self-regulation and co-regulation for a participatory

Single Market

2.1
As regards the single market, the priorities of the Six
Presidencies are based on the Lisbon Strategy. The aim of the
strategy is to make Europe ‘the most competitive and dynamic
knowledge-based economy in the world, capable of sustainable
economic growth with more and better jobs and greater social
cohesion.’ The Commission has drawn up an action plan
entitled Simplifying and improving the regulatory environment (6).
Since 1 May 2004, this operation has involved a large market
in
composed of 25 States. The Committee again notes that,
connection with the Lisbon Strategy, careful attention must
also be paid to the difference between, on the one hand, an
unnecessary regulatory and administrative burden and, on the
other, the standards and regulations required to ensure that
living and working conditions are maintained and developed in
accordance with the common goals of the EU.

Important sources of concern arise from the way in
2.2
which certain Member States add unnecessary complications at
the time of the Community directive transposition in their
national legislation. Stakeholders are frustrated by the opaque
‘Comitology’ procedure whereby the detailed regulations to
implement framework directives are discussed behind closed
doors without even scrutiny by the European Parliament or
national parliaments.

One of

2.3
the most serious difficulties is the time lag
between a directive receiving Council and Parliament approval
and its transposition into national law.

2.4 Member States often fail to transpose Community direc-
tives into national legislation, thereby creating a set of barriers,
which cause economic disadvantages. The removal of barriers
requires a carefully-judged mix of harmonisation, mutual recog-
nition and simplification.

2.5
The complexity of the conditions governing activities in
the single market is a handicap that has been singled out by
operators. Although simplification is largely a matter of good
practice and of implementation, essential simplifying provisions
are still lacking, in particular as regards the Community patent,
abolition of double taxation, a European law statute open to
SMEs, standard European rules on mergers and simplified intra-
Community VAT rules.

2.6
The Commission itself is not blameless. Some initiatives
for Community legislation are not always sufficiently justified
by preliminary impact analyses, which sometimes lack rigour
and transparency such as for example the proposal
for a
second Directive on Port Services (7). European directives are
often the result of complex political compromises between
States or between the Council and the European Parliament,
which do not make life easy for the users of such rules.

3.1
It is precisely in order to simplify the regulatory envir-
onment that the actors in the single market should be allowed
to have their say. Self-regulation and co-regulation within the
European single market thus developed initially in two areas:
reference to standards, to flesh out the directives on technical
barriers, and autonomy of the social dialogue recognised by the
Maastricht Treaty.

3.2
Such an approach was gradually extended to other fields
through codes of conduct and voluntary agreements: consu-
mers' rights, especially in e-commerce (e.g. information, label-
ling, labels, security of payments), services, including financial
services (e.g. mutual recognition of qualifications), and environ-
mental protection (e.g. compliance with standards).

An inter-institutional agreement (8) concluded on 16
3.3
December 2003 between the European Parliament, the Council
and the Commission defined and organised self-regulation and
co-regulation within the single market for the first time. The
Committee is astonished that the social partners, who play a
substantial part in framing legal rules, were not consulted in
this process.

3.4
Over the past ten to fifteen years the use of self-regu-
lation and co-regulation on a European scale by the parties
the EESC's
concerned has experienced strong growth, as
PRISM (9) database has shown. Among such initiatives,
the
SMO has noted:

— self-regulation in the advertising, restaurant and tourism

sectors;

— codes of ethics for engineers,

lawyers, consultants, solici-

tors, asset managers and estate agents;

— inter-professional

labour agreements on parental

leave,

part-time work, temporary work and teleworking;

— labour initiatives and agreements in the building, hotel,
hairdressing, farming, sugar and civil aviation industries;

— the management of pension funds in the social economy;

— consumer codes concerning the security of e-commerce,
service providers, web-based insurance, cross-

internet
border mail-order sales and housing loans;

— environmental agreements on reducing emissions and

energy consumption;

— alternative methods of

settling disputes, especially for

consumers.

The success of self-regulation and co-regulation depends

3.5
in particular on the following:

— sufficient freedom for business and civil society circles;

— the public authorities having an open attitude, or even one

of partnership;

— the representativeness of those involved in self-regulation;

(6) COM(2002) 278 final
(7) COM(2004) 654 final

(8) OJ C 321 of 31.12.2003
(9) PRISM (Progress Report on Initiatives in the Single Market)

C 255/24

EN

Official Journal of the European Union

14.10.2005

— transparent procedures and effective implementation;

— rigorous checks on impact and follow-up, with sanctions if

necessary.

3.6
Self-regulation and co-regulation can only provide case-
by-case solutions to complement the work of the legislator,
who will still assume essential prerogatives in their public
interest mission. To help simplify the regulatory environment
in certain spheres it would be desirable if self-regulation were
more widespread in European professional organisations.

3.7
An information report on the current state of co-regu-
lation and self-regulation in the Single Market, adopted by the
EESC on 10 February 2005, develops these analyses and find-
ings (CESE 1182/2004) (10).

4. Customs arrangements for an enlarged Europe

Indeed,

4.1
The Commission proposal on amending the Community
customs code aims to simplify existing legislation and to
achieve greater harmonisation and integration. Enlargement
will result in changes in both EU legislation and customs prac-
from one Member State to another, customs
tices.
management at the EU's external borders varies greatly, espe-
cially as regards manpower and resources, if not thoroughness.
This raises the issue, with a relevance that is heightened further
by enlargement, of how effective customs checks are at Euro-
pean level, and therefore how safe the single market is from
unfair competition, trafficking and counterfeiting. It could be
worth exploring the possibility of a Customs equivalent of
OLAF to safeguard the revenue from external tariffs and agri-
levies. One risk is that a loss of mutual confidence
cultural
between the customs authorities of different Member States
might
lead to intra-Community checks being re-imposed,
which would jeopardise the unity and freedoms of the single
internal market.

The EU's customs services must be organised more effi-
4.2
ciently and in a more homogeneous manner if
the single
market is to function properly. The ideal might be to set up an
EU Customs Service but the governments of Member States
have so far shown little enthusiasm for this step largely because
they do not have sufficient confidence in the efficiency of each
others' customs services. To this end, the EESC wants to see the
progressive establishment of enhanced cooperation between
the 25 national authorities. More joint training schemes and
exchanges of customs officers are needed to move towards this
objective but there is little evidence of the political will on the
part of Member States.

5. Barriers to the Single Market

5.1
There should be clearer identification of the barriers that
violate the principle of a single market, and should therefore be
eliminated (such as the blocking of the Community patent,
double taxation, public purchasing contracts drawn up in such
a way as to favour ‘national champions’ or the compartmentali-
sation of rules applying to intellectual property) as a matter of

priority, and those that will remain because of the peculiarities
of the different Member States, and which operators will just
have to adapt to (such as cultural diversity, language peculiari-
ties and tax differentials). The Commission SOLVIT network is
not yet sufficiently well known but it has begun to show some
results and should be developed.

6. Companies and the Single Market

6.1
Small firms are particularly handicapped by red tape and
the persistence of trade barriers. Many want to have easier
access to the single market, especially in border regions. They
have no possibility of access to a simplified legal statute of
European scope.

6.2
The EESC has called for a simplified European company
statute (11) open to companies of all sizes to facilitate their
activities within the single market. At present a feasibility study
is being conducted, on the basis of which the Commission will
decide whether and what kind of proposal for achieving this
would be appropriate.
to have
completed the study by June 2005).

(The Commission expects

The EESC also awaits the results of the Commission
6.3
investigation into the wide range of double taxation agreements
between Member States and between them and non-member
countries (12). At present an investigation is being undertaken,
the outcome of this investigation together with possible solu-
tions will be presented later this year.

7. Consumers — and workers — the beneficiaries of the

Single Market

7.1
In all EU countries, it is recognised that the progress of
the single market has enabled consumers to have a much wider
choice, especially of goods (range offered, price-quality ratio).
As well as the various EU rules to protect consumers' interests,
voluntary or contractual self-regulation has developed in recent
years, particularly for e-commerce, and covering the security of
and alternative
after-sales
payments,
methods of settling disputes. Among the priorities for improve-
ment, particular reference should be made to analyses on the
impact of planned regulations, realistic but not onerous imple-
mentation of the precautionary principle, effective protection
of consumers' rights across borders and effective alternative
machinery for helping to settle disputes.

guarantees,

service

7.2
It should be remembered that the Single Market has
another purpose: job creation. This will only be possible if deci-
sive action is taken to remove existing barriers. Now that enlar-
gement has just taken place, the EESC considers it is more
important than ever, in order to achieve a genuine multiplier
effect, to have a proactive information policy that requires the
participation of the Member States' national authorities and to
ensure that States are held accountable. The information
networks such as EURES and problem solving services such as
SOLVIT in particular are in place but remain underused, as a
result of a lack of support and information.

(11) OJ C 125/100 of 27.5.2002, Opinion on European Company Statute

for SMEs, rapporteur Mr Henri Malosse

(10) Rapporteur: Mr Bruno Vever

(12) OJ C 117/10 of 30.4.2004

14.10.2005

EN

Official Journal of the European Union

C 255/25

7.3
Job creation and worker mobility are also objectives of
the single market and training and education programmes need
to be more orientated to preparing for the ‘knowledge based
economy’. However, as it made clear in the opinion mentioned
in point 1.5 above, the Committee would again point out that,
on its own, the setting-up of the internal market will not
resolve the problems on the European labour market but that
additional pro-active measures will also be required.

The EESC will

7.4
the Commission in
fully support
achieving progress in these important policy areas and hopes
that national governments will cooperate by doing all that they
should be doing to speed up the adoption and implementation
of their pledges. The EESC deplores the restrictions placed by
some ‘old’ Member States on the free movement of workers
from ‘new’ Members States, and urges a review of ‘transitional
periods’.

8. A services market that is lagging behind

8.1
The removal of barriers requires a dynamic balance
between market pressure, mutual recognition and harmonisa-
tion.
It means a new partnership between EU institutions,
States, service providers and users, so as to better assess
existing barriers, prevent new ones, coordinate approaches,
simplify rules, provide for possible transitions and take account
of trade globalisation.

services

remains

The market potential of

largely
8.2
untapped due to national requirements that are incompatible
with the free provision of services. Completion of the single
market in services has become essential because of: a) the inter-
nationalisation of trade, with the current WTO negotiations on
services, b) the euro, which has increased competition and the
need for a single market in services.

8.3
In the particular case of financial services such as insur-
ance and banking, the slow progress in realising the Financial
Services Action Plan and the slow implementation of it in
pursuit of the Lisbon agenda are due to foot-dragging by some
Member States. Too often, some heads of government agree
policy pronouncements at a European Council instructing the
Commission to take action and then forget all about it when
they return to their national capitals.

Brussels, 7 April 2005.

8.4 With regard to the financial services,
the legislative
phase of the Financial Services Action Plan is now drawing to a
close, crucial is now the consistent implementation at national
level of the legislative measures.

8.5
The revival strategy proposed by the Commission is
necessary. However, this involves taking into account the diver-
sity of the sectors concerned. One way of coping with this
diversity is to make more use of professional co-regulation and
self-regulation at European level. The socio-economic interests
concerned should take new initiatives so they can play a full
part in this opening-up process.

An opinion adopted on 10 February 2005 sets out the
8.6
comments of the Committee on the Proposal for a Directive of
the European Parliament and of the Council on services in the
internal market (CESE 137/2005) (13).

9. Conclusions

9.1
The Single Market, and with it the labour market, are
under constant development. How to manage change is an
important challenge to the European Commission and espe-
cially to the social partners.

9.1.1
The Commission should concentrate its work in order
to simplify, consolidate and improve the consistency of existing
European legislation so that both service providers and consu-
mers can fully exploit the potential of the Single Market.

The EESC also urges Member State governments to
for closer

9.2
show political will by setting up mechanisms
customs cooperation.

In the view of the EESC the main obstacles to the
9.3
achievement of the Single Market are the Member States. Some
are dilatory in implementation, others implement in an over
detailed way, creating antagonism towards the Single Market
and to the EU. Others obstruct e.g. by passing national legisla-
tion prohibiting cross-border takeovers of financial institutions
such as banks. Others allow their nationalised industries to
make cross-border takeovers without permitting reciprocity.
The availability of unlimited funds to some countries' nationa-
lised industries represents a distortion of competition and is
one which the Commission has so far been reluctant to tackle.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

(13) Rapporteurs: Mr Arno Metzler and Mr Ernst Erik Ehnmark

C 255/26

EN

Official Journal of the European Union

14.10.2005

APPENDIX

to the opinion of the European Economic and Social Committee

A. The following amendments were rejected by the plenary session but received at least one-quarter of the votes cast:

New point 7.4

Add the following new point, and at the same time delete the last sentence of the former point 7.4 (new point 7.5):

‘With regard to the free movement of workers, the Committee would again point out that the agreed transi-
tional arrangements must be backed up by pro-active measures to raise economic and social standards in the
new Member States so as to achieve a single labour market that is effective for all Member States. All EU poli-
cies must come into play here to eliminate existing differences through progressive action and to quickly put in
place the necessary conditions for the free movement of workers.’

Reason

Priority must be given to eliminating economic and social differences so that the single market can develop for the
benefit of ordinary citizens — thus including workers — and social dumping can be avoided.

Voting:

For: 67

Against: 68

Abstentions: 9

Point 8.2

Amend as follows:

‘The market potential of services remains largely untapped due to national requirements that are incompatible
with the free provision of services. Completion of the single market in services can bring out this potential. In
its opinion (1) on the Services Directive (2), however, the Committee calls for a comprehensive overhaul of the
current draft and rejects any blanket introduction of the country-of-origin principle since the resultant competi-
tion between different systems would lead to the downward harmonisation of employment, environmental, and
consumer protection standards. has become essential because of: a) the internationalisation of trade, with the
current WTO negotiations on services, b) the euro, which has increased competition and the need for a single
market in services.’

Reason

The reasons given here for completing the European single market — internationalisation and more competition as
a result of the euro and enlargement — are illogical, and were not even an issue in the discussions surrounding the
EESC opinion on the proposal for a directive on services in the single market as described here. In its original form,
point 8.2 would give a very misleading picture of the wide-ranging discussions within the EESC on EU services.
Downward harmonisation also runs counter to the EU's objectives as laid down in the treaties and the draft constitu-
tion.

Voting:

For: 76

Against: 77

Abstentions: 9

(1) CESE 137/2005
(2) Proposal for a Directive of the European Parliament and of the Council on services in the internal market (COM(2004) 2 final)

14.10.2005

EN

Official Journal of the European Union

C 255/27

Point 8.7

Add a further sentence as follows:

‘An opinion adopted on 10 February 2005 sets out the comments of the Committee on the Proposal for a Directive of the
European Parliament and of the Council on services in the internal market (CESE137/2005) (3). Appendix I of the
opinion reproduces the many amendments that were rejected, but had received at least a quarter of the votes cast.’

Reason

An opinion on so complex and controversial a directive could not have been as unanimous as would appear from
point 8.7. It would only be right, therefore, to point out that it also has an appendix of amendments which were
not adopted, but did receive more than 25 % of the vote.

Voting:

For: 58

Against: 114

Abstentions: 4

Add new paragraph 9.4

‘While genuine environmental or consumer protection concerns must be respected and fully supported, the
Committee would like to draw attention to the way those considerations can be wrongly advanced by some
Member States to resist implementation of community legislation or to persist with national legislation which is
contrary to the principles of the Single Market.’

Reason

Member States are entitled to resist proposals, which impact adversely on environmental or consumer protection
issues. However, there are examples of the misuse of these issues to resist changes where the real grounds for oppo-
sition reflect the protection of national interests.

Voting:

For: 80

Against: 83

Abstentions: 10

B. The following Section Opinion texts were rejected in favour of amendments adopted by the assembly but obtained

at least one-quarter of the votes cast:

2.1 As regards the single market, the priorities of the Six Presidencies are based on the Lisbon Strategy. In order to
make achieving the Lisbon objectives easier, and more generally to boost the European economy, the Commis-
sion has drawn up an action plan entitled Simplifying and improving the regulatory environment (4). Since 1 May
2004, this operation has involved a large market composed of 25 States.

Voting:

For: 53

Against: 72

Abstentions: 3

(3) Rapporteurs: Mr Arno Metzler and Mr Ernst Erik Ehnmark
(4) COM(2002) 278 final

C 255/28

EN

Official Journal of the European Union

14.10.2005

3.3 An inter-institutional agreement (5) concluded on 16 December 2003 between the European Parliament, the
Council and the Commission defined and organised self-regulation and co-regulation within the single market
for the first time.

Voting:

For: 50

Against: 83

Abstentions: 3

8.6 The completion of the single market remains a primary objective with the welcome addition of a move to
open up the EU market to international competition in the context of the Doha WTO round. These will
require greater flexibility and improved competitiveness if the EU is to achieve its full potential. The 10 new
Member States will be anxious to make sure that this is the result — they have most to gain from liberalisa-
tion.

Voting:

For: 68

Against: 85

Abstentions: 10

9.1.1 In the EESC's view, the European Commission should take a break from introducing new legislation to give
the Member States sufficient time in particular to transpose the measures under the Financial Services Action
Plan into national law and to check their effectiveness. The Commission could use this pause for breath to
simplify, consolidate and improve the consistency of existing European legislation so that both service provi-
ders and consumers can fully exploit the potential of the Single Market. New initiatives, on the other hand,
should only be taken in exceptional cases and after a stringent cost-benefit analysis has proved the need for
new legislation.

Voting:

For: 76

Against: 94

Abstentions: 5

(5) OJ C 321 of 31.12.2003