Opinion of the European Economic and Social Committee on the Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions - Think Small First : A Small Business Act for Europe
Date: 2009-01-14
Institutions: European Economic and Social Committee
Subjects: ESC opinion, administrative formalities, aid to undertakings, competitiveness, economic growth, entrepreneurship, financing, market access, public awareness campaign, small and medium-sized enterprises








C_2009182EN.01003001.xml










4.8.2009   


EN


Official Journal of the European Union


C 182/30





Opinion of the European Economic and Social Committee on the Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions - ‘Think Small First’: A ‘Small Business Act for Europe’
COM(2008) 394 final
(2009/C 182/06)
Rapporteur: Mr MALOSSE


Co-rapporteur: Mr CAPPELLINI


On 25 June 2008 the Commission decided to consult the European Economic and Social Committee, under Article 262 of the Treaty establishing the European Community, on the:

Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions - ‘Think Small First’: A ‘Small Business Act for Europe’.

COM(2008) 394 final.
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 6 January 2009. The rapporteur was Mr MALOSSE and the co-rapporteur was Mr CAPPELLINI.
At its 450th plenary session, held on 14 and 15 January 2009 (meeting of 14 January), the European Economic and Social Committee adopted the following opinion by 112 votes to ten with nine abstentions.
1.   Summary and conclusions
1.1   In its opinions INT/390 and INT/394 (1), the Committee has already expressed its support for an ambitious European-style Small Business Act that is commensurate with the potential for growth and job creation represented by the EU's existing 23 million small and medium-sized enterprises, as well as those that could be created.
1.2   Although it contains worthy intentions and positive initiatives (e.g. on the European Private Company and payment deadlines), the Committee thinks that the European Commission's proposal falls short of what is required, particularly in these difficult economic and financial times.
1.3   The Committee therefore proposes an ambitious SBAE, including:






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a binding legal instrument to govern application of the Think small first principle, ensuring, by way of maximum compulsion, the effective, practical implementation of these governance principles, at EU level and in the Member States and regions;










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a roadmap accompanied by a precise timetable and suitable means for implementing specific, large-scale SBAE initiatives;










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clear commitments on reducing red tape, particularly as regards the once only principle for all administrative formalities;










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reorganisation of the Commission's services to provide SMEs with a genuine partner and instruments to promote the Europeanisation of companies;










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European tools to act as a lever to promote capitalisation, networking, investment and life-long learning in SMEs;










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a coherent policy framework across all EU policies so that SMEs are considered the rule rather than the exception;










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national interpretation of the SBAE's objectives, including by means of legislation; and










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a return to the practice of permanent consultation of intermediary organisations and the social partners.




2.   Introduction
2.1   The French presidency of the European Union has called on the EU to consider the idea of a European-style Small Business Act, citing the example of the pro-SME legal instrument currently in force in the USA. The idea of the Small Business Act had also been previously raised by the Committee (2) and the European Parliament
2.2   The American Small Business Act set up an administration (the Small Business Administration) charged with providing assistance to American SMEs, via measures in support of small business start-up and development, particularly among ethnic minorities, women and young people. It also includes measures to promote the awarding of public procurement contracts to SMEs by the federal State and government agencies.
2.3   At a time when the EU and the rest of the world are experiencing a serious financial and economic crisis, it is companies and in particular SMEs that are not only the most sensitive but also the most important elements in terms of job creation and recovery capacity. Thus, a revised, much more ambitious SBAE could be a key instrument in a new long-term EU strategy for investment, growth and jobs.
2.4   The Committee has recently commented on this issue on two occasions:






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via an exploratory opinion, at the request of the Slovenian presidency, on The different policy measures, other than suitable financing, that would help SMEs to grow and develop, which contains proposals on an effective SBAE that would be more than just a political declaration (3); and










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via another exploratory opinion, at the request of the French presidency, on the subject of International public procurement with explicit reference to the ongoing negotiations on the revision of the WTO (World Trade Organisation) Agreement on Government Procurement (GPA), which proposed, inter alia, an ambitious roadmap for introducing the SBAE (4).




2.5   While welcoming the positive initiatives contained in the Small Business Act, the Committee regrets the form that the Commission has opted for (a simple communication) which entails no obligations in terms of deadlines or means of implementation, or any proposal guaranteeing the effective implementation of Think small first.
2.6   The Committee thus regrets that there is no specific legislative measure to ensure the systematic implementation of the Think small first principle in the legislative process and its application. It considers that the binding dimension is particularly important in terms of implementing pro-SME governance. The practical application of this principle and its interpretation at each stage of the legislative and policy process at EU, national and regional levels should therefore be enshrined in an appropriate legal instrument.
2.7   The Committee greatly regrets that its earlier proposal for a binding roadmap was not acted upon as regards the work programme and priorities; these do not need to go through the legislative process as they are already part of existing programmes or could be added later at the mid-term review stage. Also, many of the specific measures proposed are either already in the pipeline or were announced some time ago. The major, useful proposals, such as the statute for a European Private Company, the Directives on late payments and reduced VAT, and the block exemption on State aid are fairly symptomatic of this situation.
2.8   The Small Business Act must draw a clear distinction between, on the one hand, small family-run or craft-based local companies – which make up the vast bulk of SMEs and for the most part do not want to expand in order to retain control – and, on the other, medium-sized or small companies with strong development potential that could be referred to as precursors. Particular attention should be given here to SMEs in regions with structural handicaps, especially island and mountainous regions and areas of low population density.
2.9   Against this backdrop, the Committee has been consulted on the Commission communication. In conjunction with the Assemblée Permanente des Chambres de Métiers [French trade body], it held a hearing in Paris on 7 October 2008 to better frame its response.
3.   Committee recommendation 1: a binding legal instrument governing the application of Think small first
3.1   The SBAE should not be limited to merely providing additional political recognition; it must be enshrined in legislation that makes its implementation mandatory.
With regard to the Think Small First principle, the Committee reaffirms its previous position (opinion INT/390) and calls for it to be made a binding rule in a form yet to be determined (e.g. code of conduct, interinstitutional agreement or Council decision) but which would be binding on the European Parliament, Commission and Council. An interinstitutional agreement on the same legal basis as the Better regulation agreement of 2003 would seem one interesting avenue, among others, that the Committee could explore. Very specifically, this binding instrument should:
3.2.1   ensure that legislation at all levels is designed with a view to the specific situation and needs of the various types of SME; all new EU legislation on companies should be subject to the prior consultation of the relevant intermediary organisations, including the social partners and social economy organisations, with a response time of at least twelve weeks (and not eight, as proposed by the Commission);
3.2.2   ensure that legislation on companies is not amended too frequently (minimum interval of six years). It should also be proposed that the date of entry into force for all new legislation with binding provisions should be 1 January each year, while all legislation aimed at reducing or easing the burden should be applicable with immediate effect at any time;
3.2.3   ensure that legislation at all levels complies with four fundamental principles:






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a systematic SME impact assessment should be mandatory for all new legislation, so that no legislation can be adopted without a prior assessment of its impact on the various types of business in the relevant sector;










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the proportionality principle – to be applied systematically to the various types of company;










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the once only principle – to be applied to all formalities required of businesses; and










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the safeguard or precautionary principle – to guard against additional restrictive legislation;




3.2.4   ensure the establishment of a quantity-based obligation to ease the administrative burden for companies on the internal market – an obligation that requires EU-legislation red tape to be cut by 25 % by 2012.
4.   Committee recommendation 2: A precise roadmap with deadlines, means and funding (where necessary)
4.1   The Committee advocates a precise roadmap setting out priority actions, specific measures, implementation deadlines, and the means and funding (where necessary) required to implement them. It should be ensured that all proposed measures are implemented by 2013 and accompanied by monitoring and assessment.
4.2   The operational aspect takes the form of a package of 92 measures which the Committee supports; it would like to see them rapidly implemented at both EU and Member State levels. However, as with the four legislative proposals, it views these measures as the implementation or continuation of ongoing or previously agreed initiatives. These measures are not sufficiently attuned to the expectations and needs of the various types of SME; the Committee calls for a more ambitious plan, commensurate to the actual role of small companies and the current global economic climate. It therefore calls on the Commission, Council and European Parliament to launch a truly European project to support SMEs and micro companies, based not only on high-growth enterprises but also on local- and social-economy businesses and on traditional activities. The project should also be based on better governance to enable enhanced dialogue between public authorities, the economic and social partners and organisations representing the different types of SME, while taking proper account of the different situations pertaining to each type.
4.3   Among the proposed measures at EU level, the Committee particularly supports:






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the draft Regulation establishing a European Private Company
 (5) – an initiative proposed by the Committee in 2001 in an own-initiative opinion, aimed at creating euro-companies capable of capitalising on the growth opportunities offered by the single market and thus reducing the formalities and costs linked to setting-up in the various Member States. The Committee calls for this project to be swiftly adopted, finding a formula that does not in any way distort competition or erode social rights;










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the proposed amendment to the Directive on late payments
 (6), which should provide stricter obligations and penalties for public authorities in the event of payments exceeding the 30-day limit.




4.4   The Committee calls for ambitious, practical measures to be added, such as:






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pilot measures on energy efficiency for SMEs in the construction sector, given their dominance in this sector (80 % of companies) and their potential for making a considerable contribution to cutting CO2 emissions (40 % of emissions coming from housing);










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provisions adapted to the different sectors of industry and gradual processes of phased environmental management for small companies so as to ensure that the environmental and energy objectives do not exclude small businesses;










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specific EU measures to Europeanise companies, in the form of programmes fostering closer links and cooperation (cf. the former INTERPRISE and EUROPARTENARIAT programmes, wrongly axed by the Commission in the 2000s);










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closer involvement of companies in EU training and education schemes, which could take the form of a new initiative to foster closer links between companies and educational establishments. The Committee calls again for more substantial programmes to promote the mobility of apprentices and young people in initial vocational training;










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facilitating and encouraging business transfer; the Committee reaffirms the importance of the transfer of business ownership, especially for small production and service-based businesses in urban and rural areas whose anticipated disappearance will have a huge negative impact. It advocates systems for bringing together buyers and sellers as well as tax and capitalisation incentives and public-private partnerships;










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developing more evenly the Enterprise Europe network to make it a genuine European network for information and cooperation.





4.5   Faced with the challenge of a global recession, the Committee would particularly advocate strengthened financial mechanisms via the EIB and EIF to facilitate access to short-term funding and to support companies in difficulty when still worthwhile. It thus calls for current initiatives and those proposed under the SBAE to be considerably expanded given the current economic climate. Above all, marginal pilot projects should be jettisoned and genuine efforts made to open up and strengthen local finance networks (risk capital, business angels, mutual guarantees, etc.) and to support the creation of funds to assist European and cross-border projects.
4.6   Furthermore, as requested in its previous opinion 390/2008, the Committee calls for the SBAE to include new initiatives that meet the requirements of the organisations concerned as voiced at a number of EU conferences and by the EESC itself and the European Parliament, i.e. to:






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integrate the SME dimension into all Community policies: the Committee points out that, beyond political discourse, it is still the large company model that too often predominates in the legislative process;










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continue the policy of simplified administration, whilst ensuring perfect coordination with the sectoral intermediary organisations concerned; the Commission must ensure closer cooperation with these organisations and the Committee, to prevent this simplification being counter-productive. The Committee reiterates its scepticism as to the merits and effectiveness of systematically exempting small companies from the scope of certain legislation; it prefers proportionality in the implementation of legislation;










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support the assistance and advisory activities of intermediary organisations; the Committee attaches great importance to matters of governance, particularly the issue of consultation and monitoring. It regrets that the Commission does not accord greater importance to the role of intermediary organisations, which are key to any dialogue with the millions of companies concerned, their managers and staff. The Committee reiterates its view that these organisations are a key element in the success of EU policies and that they play a vital role in providing SMEs – particularly the smallest companies – with both information and support;










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put in place a broader and consistent policy of innovation to support not only companies already known to be innovative but also day-to-day innovations in marketing and low and medium technology and non-technical innovation, especially in smaller businesses;










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broaden access to Community programmes by easing legal, financial and administrative constraints that discourage SMEs and by facilitating group projects proposed by intermediary organisations. The Committee calls again on the Commission to launch a consultation with the European SME representative organisations in order to simplify the programme access procedures and lay down new conditions for organising and participating in programmes at various regional levels. In terms of SMEs' access to EU funding, the access procedures need to be simplified as much as possible. A first step here could be to coordinate the various EU programmes (Structural Funds, CIP, 7th FPRD, etc.), given that the procedures for each one are different. Similarly, if framework documents were written in clearer language most SMEs would find it easier to utilise the various development tools available under these programmes. Finally, concerted action is needed by EU and national institutions to simplify procedures: SMEs, whose skills do not generally lie in administration, are still overly burdened by red tape.




4.7   As regards public procurement, each Member State should establish its own personalised system for supporting SMEs that wish to access national or EU procurement markets. This aid would help SMEs to get to grips with the procedures involved in putting together a tender, and with the specific jargon of procurement. (SMEs' difficulty in accessing procurement is partly due to a lack of understanding of the terminology used.)
5.   Committee recommendation 3: Specific proposals for EU-level action
5.1   For the SBAE to be effective, the Committee advocates a visible and ambitious policy at EU level, which is currently lacking. It recommends in particular:






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assigning to a European Commissioner full responsibility for implementation of the European Small Business Act;










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reorganising the Commission's services so that, as happened with the SME Task Force, SMEs will have access to a visible and accessible political partner dedicated solely to SMEs and to protecting their interests within the EU institutions, particularly during the decision-making process;










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establishing a European SBA committee to act as a management committee, involving not only representatives of the Member States, but also delegates from the relevant European representative bodies, including the social partners. This management committee should be given extensive powers to control implementation of the SBA, monitor the action plan and coordinate the plans implemented by the Member States. To coincide with the introduction of the SBA, the Committee also calls for:










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the appointment of an SME envoy at each Commission DG, responsible for ensuring that the legislative measures and programmes managed by the DG take sufficient account of the priorities and expectations of SMEs and micro-enterprises; and that










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the enterprise culture that is crucial to the practical application of 
Think small first
 be created both in society and in the institutions. Ensuring that ‘the rules laid down respect the majority of those to whom they apply’, in this case SMEs, presupposes certain knowledge of the SME world. For this reason, the Commission should encourage the Member States to follow the example it has set with its Enterprise Experience programme, which gives many EU officials an insight into the world of SMEs. This kind of initiative should inspire the individual Member States, or at least those that have not yet taken such an approach.




6.   Committee recommendation 4: Specific measures at national level
6.1   As regards national competence, the Committee recommends that each Member State:






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adopt national legislation to give binding effect to the Think small first principle;










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draw up a Small Business Act national plan
 in close partnership with the relevant socio-economic players. Each year a report – separate to the NRP (National Reform Programme) report – would be presented outlining the achievements under each national plan. An annual conference could highlight examples of good practice and success stories. The close involvement of the relevant European organisations and the Committee would give recognition to this exercise;










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support common actions to develop initiatives in areas such as: business transfer (legal and taxation issues); bankruptcy law, with the aim of always giving companies and entrepreneurs a second chance; the development of one-stop shops across the EU and the application of the once only principle to formalities; and










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appoint a national SME envoy, charged with both managing implementation of the SBAE in the Member State and also with ensuring that national laws transposing EU legislation comply with the fundamental principles of Think small first.




6.2   In terms of areas of action that fall under national competence, the Committee recommends that the Member States consult each other more frequently and plan common measures, possibly via enhanced cooperation, to jointly develop initiatives in areas such as: business transfer (legal and taxation issues); and bankruptcy law, with the aim of always giving companies and entrepreneurs a second chance.
6.3   At national and cross-border levels, the Committee stresses the need for the development and interoperability of one-stop shops across the EU. Member States could be encouraged to open up and develop the interoperability of their national offices for administrative formalities (physical or virtual). On the latter issue, initiatives have been taken under the Services Directive and also under the Regulation to improve the functioning of the mutual recognition principle. The establishment of one-stop shops should be followed up by a communication to SMEs, upon start-up and throughout their life, informing them of the existence of such services.
7.   Committee recommendation 5: Consistency, participation and assessment
7.1   In the face of major international challenges, the current economic climate and the objective of revising the Lisbon process, the Committee feels that the Small Business Act should:






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provide for structured initiatives to enforce intellectual property rights, i.e.: the Community patent and an EU-wide patent jurisdiction, but also a European observatory on counterfeiting and piracy (originally called for by the Committee in 2001);










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foster an integrated approach to SME policy that embraces all sectoral policies at EU, national and regional levels;










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foster governance, partnership and cooperation between public authorities, local government, the economic and social partners, and organisations representing the different types of SME at all levels of the EU; and










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support the development and competitiveness of all SMEs, including those operating in local markets; the positive actions of the Small Business Act must draw a clear distinction between, on the one hand, local companies – which make up the vast bulk of SMEs and, on the other, companies with strong technological or extra-territorial development potential. The former must have a favourable environment for their business; the latter need the means of accelerating their growth and Europeanising, or even internationalising, bearing in mind that many local businesses may have an opportunity to develop in bigger markets or to be involved in groupings and clusters so as to reach the critical mass needed for successful Europeanisation or internationalisation.




7.2   The Committee feels that, besides the political will of public authorities at EU, national and local levels to work to promote SMEs and particularly small companies, the success of the SBAE will depend hugely on the role of intermediary representative organisations. It calls on the authorities concerned to put in place all necessary measures and support to promote the work of these organisations, and for them to be involved in the post-Lisbon EU process.
7.3   The Committee reiterates its explicit request for annual assessment of the implementation of the SBAE, in terms of both the action programme and application of the Think small first principle and all SME policies at EU and national levels, and calls again for an annual report of progress made, inter alia in cooperation with intermediary organisations. This report should be a separate initiative under the Lisbon strategy; it should give rise to recommendations from the Commission to the Member States and the regions, enable adaptation or revision of the SBAE, and be submitted to the European Parliament, the Committee of the Regions and the EESC.

Brussels, 14 January 2009.


The President of the European Economic and Social Committee

Mario SEPI





(1)  EESC opinions on The different policy measures, other than suitable financing, that would help SMEs to grow and develop (OJ C 27, 3.2.2009, p. 7) and on International public procurement (OJ C 224, 30.8.2008, p. 32).

(2)  See the Committee's opinion CESE (rapporteur: Ms Faes – OJ C 256, 27.10.2007, p. 8).

(3)  EESC opinion on ‘The different policy measures, other than suitable financing, that would help SMEs to grow and develop’ (OJ C 27, 3.2.2009, p. 7).

(4)  EESC exploratory opinion on International public procurement (OJ C 224, 30.8.2008, p. 32).

(5)  COM(2008) 394 final.

(6)  Directive 2000/EC/35 (OJ L 200, 8.8.2000, p. 35). EESC opinion: OJ C 407, 28.12.1998, p. 50.