Opinion of the European Economic and Social Committee on the Review of the Single Market
Date: 2007-01-17
Institutions: European Economic and Social Committee
Subjects: application of EU law, institutional cooperation, legislative procedure, single market

27.4.2007

EN

Official Journal of the European Union

C 93/25

Opinion of the European Economic and Social Committee on the Review of the Single Market

(2007/C 93/06)

On 5 October 2006, Ms Margot Wallström, Vice-President of the European Commission, asked the Euro-
pean Economic and Social Committee to draw up an opinion on the: Review of the Single Market.

The EESC Bureau assigned preparation of the Committee's work on the subject to the Section for Single
Market, Production and Consumption.

In view of the urgency of the work, the European Economic and Social Committee decided at its 432nd
plenary session of 17 and 18 January 2007 (meeting of 17 January) to appoint Mr Cassidy as rapporteur-
general, and adopted the following opinion by 136 votes to 42, with 9 abstentions:

1. Conclusions and Recommendations

The EESC would like to see the following measures as

1.1
part of the Commission's Single Market priorities.

In order to overcome remaining obstacles, completion
1.1.1
of the Single Market requires a balance to be struck between
economic momentum,
the social dimension and sustainable
development. It will only be possible to complete the Single
Market if all citizens — employers, employees, consumers, etc.
— perceive it as being in their interest. There should be as
many beneficiaries as possible from the Single Market, with
compensatory measures for those who lose out. Public scepti-
cism vis-à-vis Europe can only be overcome if policies address
citizens' pressing concerns. Communication alone will not
suffice.

climate

requisite

overcoming

infrastructure,

To meet the challenges of globalisation — coping with
1.1.2
global competition, ensuring growth and employment, creating
the
change,
achieving security of energy supplies,
responding to the
increasing influence of financial markets on the economy as a
whole — and take advantage of the resulting opportunities, the
full capacity of the Single Market must be used. Measures to
promote liberalisation and competition must
therefore be
accompanied by flanking employment- and growth-oriented
macroeconomic policies together with measures to build a
the
knowledge-based society, whilst
European Union remains that of
improving the living and
working conditions of its peoples (an objective set out in the
Preamble to the Treaty of Rome and in all the subsequent texts).
This will significantly help to complete the Single Market.

the overall objective of

1.1.3
Europe needs to invest more in education, training and
research at national and European level. Investments in educa-
tion, training and research are a necessity, not a luxury for
Europe. Achieving the European Research Area and lifelong
learning is thus a priority.

1.1.4
The credibility of the EU research policy has been more
than dented by the repeated setbacks over the introduction of
the Community patent. In view of the fact that it has not been
possible to reach agreement within a reasonable timescale on
the formulation of this instrument, which is of key importance

to the knowledge-based economy which the EU is doggedly
pursuing, we should now seriously consider whether it would
be advisable to apply this instrument initially to all the EU
Member States if it continues to be impossible to reach unani-
mous agreement (1).

In this context,

In addition to the important issue of patents and the
1.1.5
related matter of intellectual property, the EESC believes that the
question of economic intelligence should also be addressed at
EU level.
the EESC wonders whether steps
should not be taken to strengthen the role and raise the profile,
amongst economic operators, of the European Network and
Information Security Agency (ENISA) (2), in order to help main-
tain the competitiveness of EU enterprises and to prevent confi-
dential data relating to their production processes and research
and innovation processes from being ‘tapped into’ by competi-
tors from outside the EU.

1.1.6
In the context of transatlantic relations, the Commis-
sion and the Council should be firmer in requiring the United
States to comply with the principle of non-discrimination. Thus,
they should call for the abolition of the Committee on Foreign
Investments in the US (CFIUS), set up more than 30 years ago
to look at and, if necessary, prohibit foreign shareholdings in
American companies on the basis of the sole — and undefined
— criterion of 'national security'. Similarly, commercial court
cases between foreign companies and American ones are biased
in favour of the latter.

1.1.6.1
If it proved impossible to ensure non-discrimination
in mergers and acquisitions or commercial practices, the EU
should look seriously at the possibility of bringing these matters
before the WTO's dispute settlement system or setting up
mechanisms similar to the CFIUS. These principles should also
apply to relations with the EU's other partners.

1.1.7
The better regulation approach can simplify conditions
for business as well as create greater transparency for citizens
and consumers. However, creating fewer regulations does not
necessarily produce a better regulatory framework. The EESC is
also in favour of using legal
instruments in important areas
such as those covered by minimum health and safety legislation
— where the establishment of national legislation is inadequate.

(1) Cf., for example, OJ C 185, 8.8.2006.
(2) Further information available at www.enisa.europa.eu.

C 93/26

EN

Official Journal of the European Union

27.4.2007

Collective agreements between social partners, which
1.1.8
are a crucial part of political decision-making processes in many
Member States, can also help to shape policies and secure accep-
tance of measures at European level. However,
for this to
happen, both parties to social dialogue must be willing.

1.1.9
The European Commission and Member States have
promised to reduce the administrative burden for companies by
this
25 % by 2012. However,
promise is too broad and needs to be refined. Unless a more
considered approach is adopted,
failure to deliver will only
further undermine credibility.

the EESC is concerned that

1.1.10
create a clearer legal environment and be a factor of coherence.

The use of regulations would also where possible

while putting in place conditions to prevent counter-productive
effects. The EESC would urge the Commission to present, as
soon as possible, its draft legislative provisions aimed at step-
ping up the information provided by institutional investors with
regard to their policies in respect of investment and voting.
Presentation of such draft legislation would be in line with the
Commission's Action Plan on the Modernisation of Company
Law and Corporate Governance.

1.1.16
Tax policy measures — to the extent that they may be
adopted at European level — must further the completion of
the single market, taking due account of the balance between
economic momentum,
the social dimension and sustainable
development mentioned above. This also includes harmonising
the tax basis for company taxation and the avoidance of double
taxation. Double taxation has no place in a Single Market.

1.1.11
The Single Market is based on the mutual recognition
of professional qualifications and diplomas such as that for
midwives, lawyers, etc. who in spite of European directives have
not been able to take advantage of them.

1.1.17
The EESC also asks the Commission to examine
restrictions on the Single Market maintained by Member States,
public bodies or professional groups. (4)

1.1.12
The EESC recalls that upward harmonisation even
over 27 countries, difficult though it may be, is an important
element of the Single Market.

1.1.13
The social partners should be consulted at all stages
to ensure that the required degree of administrative simplifica-
tion and better regulation are achieved within a reasonable time-
frame. It is important that tangible results in this direction are
achieved if the Union is not to further lose credibility with its
citizens.

the European Parliament's

1.1.14
The EESC would like to see faster progress towards
improving the single market in services. Otherwise, the internal
market cannot be said to be complete. The Committee
to the
welcomes
Services Directive, which are broadly in line with its proposals.
Some points still need to be cleared up and improved,
for
example in the field of services of general interest. Now that the
European Parliament has adopted the Services Directive enter-
prises expect to reap real benefits derived from freedom of
establishment of enterprise and to provide cross-border services.

amendments

In the field of

financial services (3), the EESC has
1.1.15
called for dynamic consolidation while avoiding goldplating;
however, it has also pointed out that this must happen in the
spirit of the Lisbon strategy while taking the specific features of
the European social model
into account. This also applies to
cross-border provision of such services (for example, share
trading and the portability of supplementary pensions rights)
and basic financial services such as providing universal access to
a bank account. In view of the growing influence exercised by
financial transactions on the economy and of dynamic and crea-
tive innovations in the field (such as hedge funds and private
equity), regulation of the sector must take into account the
resulting systemic risks and consequences for the real economy,

1.1.18
The key issue is that product design of assurance
products, for example, is heavily influenced by local legal and
tax features. This is the case for compulsory insurance, but also
instance
for many other essential
through divergent solutions to issues such as cover for natural
catastrophes as part of household fire policies or the cover for
acts of terror through common insurance product.

insurance products,

for

One of

the hindrances to the completion of

1.1.19
the
Single Market is the maintenance of significant restrictions on
free movement of workers. The EESC urges those Member
States who do not permit free movement to remove their obsta-
cles to worker mobility. The free movement of people is one of
the fundamental elements of the single market, and mobility
also has its attractions for workers.

1.1.20
SMEs do not seem to benefit from the Single Market
as much as they might. The existence of significant barriers to
services trade in the EU means that it accounts for only 20 % of
all trade in Europe. The Services Directive should add signifi-
cantly to business and employment opportunities especially
through the proposed screening mechanism and the use of
single contact points for foreign service providers.

1.1.21
Transparency and openness in public procurement is
vital to the functioning of the internal market. As a follow-up to
the procurement legislation package that was adopted in 2004,
it is most important that the present review of the so called
‘remedies’ directives is pursued swiftly. The proposals for reform
made by the Commission ought not to be allowed to be diluted,
especially with regard to a sufficiently long standstill period
between award decision and the signing of a contract, and with
regard to the consequence of a contract becoming ineffective if
certain publication criteria are not met.

(3) Opinion on the White Paper on Financial Services, OJ C 309,

16.12.2006

(4) Directive 2005/36/EC of the European Parliament and the Council of 7
September 2005 on the recognition of professional qualification OJ L
255, 30.9.2005.

27.4.2007

EN

Official Journal of the European Union

C 93/27

Opening the market for public procurement is subject
1.1.22
to intensive consultations among public and private stake-
holders, with substantive differences of views over the approach
to be taken. Opening the public contracting market has to take
into account important dimensions such as employment and
social and environmental considerations which are of equal
significance in this process.

1.1.23
The SOLVIT dispute resolution network is working
satisfactorily and could ideally help overcome legal barriers
(often on the grounds of misapplication due in turn to either a
lack of information, insufficient training of officials and protec-
tionism) but definitely needs more resources and personnel in
national capitals. A structured publicity campaign should be
conducted to create the awareness among SMEs about the exis-
tence and facilities provided by this mechanism.

1.1.24
The EESC has produced a detailed catalogue of obsta-
cles to the Single Market (5) to allow for a realistic understanding
of the regulatory challenges which are still
impeding the full
realisation of a European Internal Market. These are not always
governmental obstacles.

As a follow-up to the Interinstitutional Agreement of
1.1.25
2003, the EESC, in cooperation with the European Commission,
is developing a database (PRISM II) to map EU co-regulation
and self-regulation initiatives (6). The EESC and particularly the
members of its Single Market Observatory (SMO) are a resource
which the Commission and the Member States are welcomed to
exploit. The SMO in particular conducts public hearings in
different Member States each year with particular emphasis on
employment issues in the new Member States.

1.1.26
In view of the expertise which it possesses and its
representative nature, the EESC believes that it could play a role
in the drawing-up of
the impact assessments which the
Commission intends to introduce on a systematic basis. It is
vitally important that draft legislation reflects a plurality of
views and is most scrupulously and objectively well-founded.
Forwarding the impact assessments first of all to the EESC and
giving it the opportunity to comment on these assessments
before they are forwarded to the European Institutions would
make it possible, in the spirit of the Partnership for European
Renewal,
to secure much greater approval of EU legislative
initiatives (7).

Finally, promoting the benefits of the Single Market to
1.1.27
consumers and encouraging them to take advantage of it should
be seen as a priority to drive the completion of the Internal
Market forward.

2. Introduction

2.1
This opinion follows on a request for an exploratory
opinion from Commissioner Wallström, Vice-President of the
European Commission, to the European Economic and Social
Committee, dated 5 October 2006.

(5) The Single Market Observatory (SMO) of the EESC has produced a
detailed catalogue of obstacles which is available via the SMO
website:
http://eesc.europa.eu/smo/news/index_en.asp.

(6) This database will be available on the website of the Single Market

Observatory in the first half of 2007
(http://eesc.europa.eu/smo/index_en.asp).

(7) See, for example, OJ C 221, 8.9.2005.

The Committee was asked to reflect on the priorities set
2.2
up by the European Commission with a view to contributing to
the report due to be tabled at the 2007 Spring Council Summit
and, ultimately, to the final report.

Given the tight timetable to which the Committee has
2.3
had to work,
it has decided to concentrate on a few key
messages and identify a few key areas where further progress is,
in the view of the Committee, desirable.

3. General comments

3.1
The original logic of the Single Market was to replace
different sets of national regulations with one set of EU-wide
regulations, and hence to create a level playing field which
would enable the European economy to realise its full potential.
In reality, EC regulations are too often perceived of as being
additions to, rather than replacements for, national regulations.

3.2
A factor which has increased its importance is ‘Globalisa-
tion’ which is both a challenge and an opportunity. The chal-
lenge can only be met if the full potential of the Single Market
is realised.

In this

context,

the EESC endorses

the European
3.3
Commission's intention of delivering a new policy agenda based
on a new partnership, with the institutions working more effec-
tively together. As part of this shared agenda, national, regional
and local governments should also take responsibility for deli-
vering results and bringing Europe closer to its citizens.

3.4
The view that somehow more legislation means ‘more
Europe’ must be resisted. Are they the most effective means for
achieving the desired end? The promotion of alternatives to
legislation such as best practice in co- and self-regulatory initia-
tives, or Collective Agreements should be given importance and
more widespread use of these practices should be encouraged,
whilst not forgetting the pursuit of the social dialogue — which
the Treaty calls upon the Commission to promote — with a
view to reaching collective agreements.

3.5
However, the effective use and quality of impact assess-
ments, evaluations and public consultations should be better
guaranteed in the legislative and policy-making processes (did
draft legislation deliver as intended? If not, why not?). In this
connection, the Committee will also be issuing an exploratory
opinion on ‘Quality standards for the contents, procedures and
methods of social impact assessments from the point of view of
the social partners and other civil society players’.

The Single Market has been successful

3.6
in certain areas
affecting large numbers of consumers (e.g. product safety or sale
guarantees) while in other areas progress has been slow to mate-
rialise or remains non-existent for the end-user (e.g. financial
services or the Community patent).

C 93/28

EN

Official Journal of the European Union

27.4.2007

Job creation and worker mobility are among the key
3.7
objectives of
the single market, and training and education
programmes need to be directed more towards paving the way
for the ‘knowledge-based economy’. However, on its own, the
setting-up of the single market will not resolve the problems on
the European labour market: additional pro-active measures will
also be required.

3.8
Legislative proposals should be drafted in such a way as
to be easily understandable for the potential end-users, and not
only for the legislative authorities. The same logic should apply
to regulation.

3.9
A higher priority should be accorded to Better Regu-
lation. The EESC has referred to this in a number of opinions (8).
There is abundant evidence both from the Commission's own
consultation and from Member States
that directives are
frequently made more onerous by national administrations
when implementing them into national
law (i.e. gold plating).
This bears more heavily on SMEs than on large companies. SME
owners frequently have to combine all of the tasks which large
organisations can delegate to specialists.

3.10
Better implementation and enforcement is a prerequisite
for a Single Market to exist in the first place. The EESC opinion
on the ‘EU and national administration practices and linkages’ (9)
draws attention to the shortcomings at present:

Brussels, 17 January 2007.

— in some Member States there is little liaison between their
officials negotiating in Brussels and those responsible for
implementing at home,

— in other Member States, confusion arises because a number
of different government departments are negotiating over
different elements of a proposed directive and the govern-
ments concerned do not always have a coherent position as
a result.

3.11
the fragmentation of the Single Market.

Better implementation and enforcement ensure against

3.12
There is an obvious lack of coherence within national
administrations while the effectiveness of the European Union is
threatened by Member States not complying with their own
decisions. In some Member States there is little communication
and information policy on Single Market
including
success stories, at national level. Governments, national Parlia-
ments or the media do not feel morally compelled to play their
part. The Social Partners and Civil Society should be more
involved if the citizens of Europe are really to feel that they are
an integral part of developments including the stalled Constitu-
tion. Attention should not, however, focus on communication
problems alone. The first step in winning back the confidence
of citizens in the EU must continue to be finding a solution to
the urgent problems of the Union.

issues,

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

(8) Notably on Better lawmaking, OJ C 318, 23.12.2006, rapporteur Mr
Retureau, Better implementation of EU legislation, CESE 1069/2005,
rapporteur Mr van Iersel, OJ C 24, 31.1.2006, Strategy for simplification,
OJ C 309, 16.12.2006, rapporteur Mr Cassidy, an Information Report
on the Current state of co-regulation and self-regulation in the Single Market
CESE 1182/2004 fin, rapporteur Mr Vever, and the Single Market
Observatory publication on What is the state of the enlarged Single
Market, October 2004, EESC-C-2004-07-EN. Annex I provides a list of
more recent opinions adopted by the EESC.
(9) OJ C 325, 30.12.2006, rapporteur Mr van Iersel.

27.4.2007

EN

Official Journal of the European Union

C 93/29

APPENDIX

to the Opinion of the European Economic and Social Committee

The following text of the Revised Draft Opinion was rejected in favour of an amendment adopted by the assembly but
obtained at least one-quarter of the votes cast:

‘1.1.11 The EESC recalls that in-depth harmonisation even over 27 countries, difficult though it may be, is an

important element of the Single Market. This underlines the importance of mutual recognition.’

Outcome:

89 for amending the point,

72 against and

24 abstentions.

The following amendments, which received at least a quarter of the votes cast, were rejected in the course of the debate:

Delete point 1.1.16

‘The EESC also asks the Commission, Member States (or public bodies) to examine restrictions on the Single Market
maintained by professional groups. (1)’

Outcome:

67 for deleting the point,

93 against and

33 abstentions.

Delete point 1.1.17

‘The key issue is that product design of assurance products, for example, is heavily influenced by local legal and tax
features. This is the case for compulsory insurance, but also for many other essential insurance products, for instance
through divergent solutions to issues such as cover for natural catastrophes as part of household fire policies or the
cover for acts of terror through common insurance product.’

Outcome:

82 for deleting the point,

94 against and

20 abstentions.

Amend point 1.1.18 as follows

‘One of the hindrances to the completion of the Single Market is the maintenance of significant restrictions on free
movement of workers. The EESC urges those Member States who do not permit free movement to remove their
obstacles to worker mobility. The free movement of people is one of the fundamental elements of the single market,
and mobility also has its attractions for workers. However, as a result of differences in standards and rules between
the Member States, a Single Market for workers is starting to emerge that fails in every respect to meet the require-
ments of a level playing field consistently called for in so many other single market fields. Cases such as Laval ( 2) —
which was before the European Court of Justice on 9 January 2007 — or Viking Line clearly demonstrate the need
for action on this front. Moreover, instead of asking people to go where the jobs are, it would be more effective and
also more compatible with people's needs to create the jobs where people are. (3) This would necessitate an appro-
priate locational, regional and structural policy as an adjunct to the single market. Such a policy would also signifi-
cantly enhance the public's acceptance of Europe.’

(1) Directive 2005/36/EC of the European Parliament and the Council of 7 September 2005 on the recognition of professional qualification OJ

No L 255.

(2) This is a dispute between a Latvian construction company and the Swedish trade unions about the working conditions of Latvian workers
building a school in the Swedish town of Vaxholm. This case is crucial for the future of employer-worker relations and is the result of differing
standards between Latvia and Sweden. Such differences also exist between other Member States as well.

(3) OJ C 234, 30.9.2003

C 93/30

EN

Official Journal of the European Union

27.4.2007

Outcome:

79 for amending the point,

99 against and

17 abstentions.

Delete last sentence of point 3.1

‘The original logic of the Single Market was to replace different sets of national regulations with one set of EU-wide
regulations, and hence to create a level playing field which would enable the European economy to realise its full
potential. In reality, EC regulations are too often perceived of as being additions to, rather than replacements for,
national regulations.’

Outcome:

85 for amending the point,

86 against and

23 abstentions.