Opinion of the European Economic and Social Committee on ‘Developing a new European Strategy for the Internal Market: helping our companies face the technological, social, environmental and competition challenges’ (exploratory opinion)
Date: 2024-01-17
Institutions: European Economic and Social Committee
Subjects: EU competition policy, EU industrial policy, EU strategy, civil society, economic integration, innovation, services of general interest, single market, small and medium-sized enterprises, social economy








C_202402096EN.000101.fmx.xml












Official Journal of the European Union


EN
Series C













C/2024/2096


26.3.2024






Opinion of the European Economic and Social Committee on ‘Developing a new European Strategy for the Internal Market: helping our companies face the technological, social, environmental and competition challenges’
         
(exploratory opinion)
(C/2024/2096)







Rapporteur:



Sandra PARTHIE





Co-rapporteur:



Alain COHEUR











Referral


Belgian Presidency of the Council of the European Union, 10.7.2023




Legal basis


Article 304 of the Treaty on the Functioning of the European Union




Section responsible


Single Market, Production and Consumption




Adopted in section


20.12.2023




Adopted at plenary


17.1.2024




Plenary session No


584




Outcome of vote
(for/against/abstentions)


228/0/3




1.   Conclusions and recommendations









1.1.


A strategy for the future of the internal market should focus on several aspects: a European industrial policy, a favourable framework for businesses and SMEs, social economy enterprises, public support for the European project, properly organised and efficient services of general interest and steps to preserve and develop our social model.




The new industrial strategy must:






—


develop a robust industrial economy which is green and digital, sustainable and fair, limit excessive dependence and guarantee access to safe, sustainable sources of critical raw materials, consolidate the European social model and uphold people’s fundamental rights;










—


promote the development of modern, interoperable and strategic European digital infrastructure, which is key for a smart, competitive, green and resilient industry, including artificial intelligence (AI);










—


combat climate change by ensuring carbon neutrality through energy efficiency, renewable energy use, the circular economy, longer-lasting products, etc.;










—


devise a stable economic policy with clear rules, ensuring legal certainty and providing for sufficient capacity in public finances for innovation;










—


guarantee steady access to green energy at stable, competitive prices to support energy-intensive industries, the backbone of European industry;










—


strengthen the workforce’s adaptive capacity and skills, along with decent working conditions in the industrial sector so as to cope with demographic challenges.












1.2.


The European Economic and Social Committee (EESC) calls for a new analytical framework to guide political decision-making for a changed world with new geopolitical challenges. There are a number of conflicting objectives: requests for subsidies versus calls to limit State aid; local production requirements versus moves to open up markets; access to indispensable raw materials versus supply conditions. A new system of cooperation to find the best solutions is required, and a new spirit of collaboration between Member States is essential to create a genuine sense of European identity. The introduction of a pan-European civic and social service to be carried out by every young European could be one way of improving understanding of what other peoples, countries and cultures need.












1.3.


The EESC believes that in strengthening the internal market, priority should be given to policies that provide a framework for innovation by private companies and foster innovation through access to venture capital, particularly for new entrepreneurs, and the development of links between industry and the scientific sector, particularly universities.












1.4.


The internal market should allow SMEs to grow and their employees to develop. Its value for SMEs lies in the creation of common standards for their services and products, enabling them to operate and work across borders, while at the same time cutting back red tape and streamlining procedures, as well as fighting all forms of corruption.












1.5.


One indispensable condition is that there be consistency between EU legislation and the implementation and enforcement of that legislation in Member States. Rolling out the new industrial strategy will highlight the need to place greater emphasis on incentive/experimentation/assessment dynamics than purely on a prescriptive approach.












1.6.


The EESC is calling for: an assessment of the consequences for economic, social and territorial cohesion of liberalising Services of General Economic Interest (SGEI); a study of the possible need to create European instruments for public intervention in SGEI sectors; and/or the establishment of effective European public services. It is also advocating an ambitious programme of modernisation and framework conditions in strategic SGEI sectors such as: energy and raw materials; mobility and public transport; water, sanitation and water resources; and telecommunications and digital accessibility.












1.7.


The EESC asks that the Commission draft an interpretative communication on Article 54 of the TFEU and on the Treaty articles relating to competition law, in order to clarify the concept of ‘not-for-profit’ in EU law. It believes that a protocol on diversity in types of enterprise should be appended to the TFEU, along the same lines as Protocol No 26 on SGIs, and calls on the Member States to include this revision in the upcoming reform agenda.












1.8.


European standards played a key role in the initial design of the internal market. Standards do not only aim to simplify access to the internal market for businesses, they also play an important role for consumers. The objective of these standards is to protect European consumers’ health and safety, as well as their economic and legal interests, wherever they live, travel and shop in the EU. Their creation meant that around 150 000 different national standards in 1985 were reduced to around 13 000 harmonised European standards by 2007. Such dynamics are needed to further develop the internal market.




2.   General comments









2.1.


The EU has demonstrated a genuine capacity for resilience, stemming: from the construction of an active internal market of 450 million people; from institutions which have shown an unexpected degree of responsiveness through joint purchases of vaccines, joint action by social partners on part-time work, joint loans, solidarity-based recovery plans and support for Ukraine; and from an active civil society. This resilience is also based on a web of key, complementary businesses, consisting of firms providing capital, state-owned enterprises and social economy enterprises.












2.2.


The EU is, in a number of areas, dependant on other countries, e.g. as regards fossil fuels and raw materials. It does not have a common industrial policy able to face up to foreign competition, and it has a limited fiscal and monetary union — all of which threaten the functioning and long-term existence of the internal market. It has therefore become absolutely necessary to modernise the internal market.












2.3.


In keeping with recent EESC proposals (1), the EESC calls for a new, active European industrial strategy that secures Europe’s industrial base and not only encourages business initiatives, particularly those undertaken by SMEs, but also stipulates public policies which provide incentives for business and for innovation. It must also stipulate effective, good quality services of general interest which genuinely meet individual and collective needs and guarantee universal access and fundamental and social rights for all, mobilisation of the various forms of the social and solidarity economy and civil society, the promotion of stable, inclusive and long-term jobs and democratic participation by all members of society.












2.4.


It is imperative that all stakeholders (consumers, businesses, workers, public authorities and civil society) are organised and move together in the same direction of transformation. It is also vital to foster the development and management of scientific, technological, managerial and social innovation, which is the key to the EU’s competitiveness.












2.5.


The dynamic of transformation calls for businesses and public authorities to be able to respond and adapt quickly. Ongoing dialogue on the challenges and barriers with those involved in this transformation is crucial at this stage in structural change, in order to guarantee that industrial policy is a lasting success. Ongoing dialogue is a way to approach transformation as a constant process of research and innovation, where neither the final results nor success can ever be taken for granted.




3.   Specific comments

3.1.   
Strengthening the EU’s internal market










3.1.1.


The internal market still falls short of its real potential for, and role in, improving the resilience of EU economies. It is increasingly a digital market. Therefore, all the reforms that contribute to fairer competition in the Digital Single Market must be deemed to be positive.












3.1.2.


The completion of the EU capital market is crucial for deepening the internal market. The capital market should be focused on financing the production, purchase and flow of goods and services, in particular by supporting businesses’ R&D&I and services of general interest, and by encouraging entrepreneurship.












3.1.3.


The EESC believes that in strengthening the internal market, priority should be given to policies that provide a framework for innovation by private companies and favour innovation through access to venture capital (particularly for new entrepreneurs) and the development of links between industry and the scientific sector (particularly universities).












3.1.4.


The level of productivity is a fundamental factor in determining competitiveness. Higher productivity, for instance through new technology, raises supply, decreases prices and increases real wages. Investments in increasing productivity are thus crucial if an economy is to grow.












3.1.5.


The rule of law must be upheld. The EU is based on a comprehensive set of rules (acquis) and will only function if these rules are transposed and enforced equally across the Member States. In fact, many of these rules have not been transposed into national law, are being implemented very differently, or are being applied to very different degrees. This is a serious and substantial obstacle to the smooth functioning of the internal market and to public confidence in it. Therefore, enforcement of the acquis should be a priority for strengthening the internal market and boosting people’s trust therein.












3.1.6.


It is important that the EU take a clear stand against protectionist tendencies and unfair trading practices, in cooperation with like-minded partners and in international organisations. Trade defence instruments must be used quickly and effectively by the European Commission to review State aid granted to businesses by the authorities of non-EU Member States and, where appropriate, to prevent those businesses and their products from benefiting from unfair preferential treatment when entering the EU’s internal market.












3.1.7.


Common European standards can open up business opportunities and facilitate economic cooperation with partners and customers in the EU and worldwide. The EESC is nevertheless concerned about apparent trends in the politicisation of standardisation and in moves to enshrine technical provisions in legislation by means of delegated acts. Key norms and standards developed in this way often lead to delays and do not filter through to the business world. This creates legal uncertainty. The resulting delay must be addressed as a matter of urgency, and support must be given to involving businesses in the development of these norms and standards.




3.2.   
A new European industrial strategy










3.2.1.


The EU needs an industrial policy which focuses both on the quality of supply side economic factors (e.g. infrastructure, rule of law, education system) and on the capacity to manage change itself. Industrial policy must therefore create the conditions for structural change in competitive markets, while guaranteeing that value creation remains competitive. This entails placing greater emphasis on incentive/experimentation/assessment dynamics rather than on legal provisions, administrative measures or red tape.












3.2.2.


For the twin transitions, the EU’s internal market and industrial policy must foster inclusive and sustainable competitiveness that maintains a high level of social and environmental protection, good quality jobs, and fair and solidarity-based conditions that preserve the model of a highly competitive social market economy.












3.2.3.


Stakeholders’ capacity to adapt through innovation and investment is instrumental in ensuring that change is successful. Industry is particularly well placed to drive progress in terms of productivity: it is more active in research and development than other parts of the economy and, by tapping joint R&D capacities, it has great potential for innovation and a significant impact on the service sector.












3.2.4.


The EESC stresses that care must be taken to make a clear distinction between individual economic dependence and European and national economic dependence. Businesses organise their supply chains and purchase raw materials and intermediate goods on the basis of an assessment of the costs and economic risks. The reliability of a company’s relationships with its trade partners is dependent on the contractual terms secured by the company in light of the market situation and its negotiating power. At the same time, European politicians and economic players must act together to ensure security of supply for critical raw materials. The EESC supports efforts by the EU and its Member States to play a more active role in ensuring a sustainable, long-term supply of raw materials, from expanding the circular economy and recycling to substituting critical raw materials, storing raw materials and promoting strategic mining of raw materials.












3.2.5.


Public authorities also need to check whether economic policy provides the economy with enough incentives and ways and means to reduce critical dependence to an acceptable level. Where this is not the case, additional public mechanisms must be found which are a good match for this objective.












3.2.6.


Based on EU data, there are 2 950 regional industrial clusters which account for around a quarter of European jobs (61,8 million, 23,4 % of the European total) (2). This is a key element of the real economy and so a new European industrial strategy must optimise the activity of and conditions for these clusters and their workers.












3.2.7.


In order to provide the necessary capital for innovation, completing the banking union and capital markets union is of the utmost importance for raising capital for SMEs, making cross-border investments and rendering the financial system more resilient. In addition, standards for classifying sustainable investments must be manageable, understandable and consistent. Moreover, it is essential to finance the real economy as a matter of priority and to ensure that no sector is left behind.












3.2.8.


A strong internal market entails removing persistent barriers, actively supporting innovation and research, targeting and directing investments by adapting European rules on State aid in line with these objectives. Against this background, it is important to check whether existing competition law is still fit for purpose and whether more account should be taken of the public policy goals of the EU and its Member States. This strong internal market must be underpinned by a territorial approach, involving the regions and all local authorities. It must help implement the Charter of Fundamental Rights and the European Pillar of Social Rights, incorporate the development of human capital and promote properly-paid, good quality jobs so as to associate employees in the necessary transitions.












3.2.9.


Important Projects of Common European Interest (IPCEI) aim to facilitate the green and digital transformations in the EU. Launching these complex projects requires major investments that not all Member States can finance. In order to ensure that these investments have a positive impact across the internal market, steps must be taken to ensure effective coordination between Member States, better dissemination of results, inclusion of SMEs and the allocation of additional financial resources.












3.2.10.


The development of AI should be one of the priorities of industrial policy and of steps to strengthen the internal market. There is a need for principles and criteria that can guide its use by the businesses concerned, so that it is in keeping with European values. This is all the more important both for businesses that produce artificial intelligence — i.e. software and forecasting systems that make massive use of data which must be acquired and processed in line with representativeness, reliability, data protection and transparency criteria — and for businesses that use AI in their processes, so as to ensure that it is used properly and does not infringe users’, customers’ and workers’ rights.












3.2.11.


AI is an opportunity for technological innovations that have a major impact on the production, marketing and distribution processes of goods and services, as well as on the way businesses are organised internally. In order to realise its full potential, it is important to anticipate the impact it will have on society as a whole and on the world of work in particular and to develop the necessary skills.




3.3.   
The development of business and SME initiatives










3.3.1.


SMEs play a key role in innovation and approaches geared to the diversity of situations and needs. In this connection it is crucial that the financial system efficiently provide them with the financial resources they need to invest.












3.3.2.


The role of the European single market is to ensure SMEs’ access to future markets and value chains. Excessive red tape in terms of notification requirements, documentation and evidence is making the core business of SMEs increasingly difficult. The ‘think small first’ principle must once again take precedence.












3.3.3.


Equal access to data is needed for all sectors and is crucial for business models, such as in the motor vehicle, agricultural machinery and construction, smart home infrastructure sectors, as well as for the use of platforms in general. At national and European level, the EESC believes that this requires a legal framework that guarantees fair, technically feasible and secure access to data for businesses.












3.3.4.


Clear rules and pragmatic procedures are important for SMEs, especially when they operate abroad. Thus, in order to allow for simple notification in keeping with the rules on the posting of workers, reporting and verification obligations must be kept to the minimum necessary, simplified and made transparent and understandable. A standardised digital reporting portal, such as electronic reporting, is one solution for dealing with posting requirements more quickly and involving less red tape.












3.3.5.


In cross-border business, the development of a digital European Social Security Pass (ESSPASS) and the obligation to carry it would help businesses and their employees reduce requirements for documentation and proof. In the long term, the functions of the EU eID and Digital Identity Wallet, which can merge information and documents electronically and allow for interactions on an equal footing, should be extended. The EESC would like to emphasise the need for national and regional authorities to work better together, including by means of digital and interoperable administrative procedures.




3.4.   
Services of general interest










3.4.1.


In addition to the development of business initiatives and public policies, services of general interest (SGIs) aim to: guarantee the right of every inhabitant to access essential goods and services; put mutual support into effect; ensure economic, social and territorial cohesion; and take account of the long-term view and the interests of future generations (3). The internal market needs SGIs all across the European Union. They represent 25 % of EU GDP and 20 % of total employment and provide transport, energy, communication, water access and sanitation infrastructure; a research-led education system; a health system based on prevention and universal access to care; and an environment guaranteeing security, justice and decent living, housing and subsistence conditions.












3.4.2.


SGIs are recognised in education, culture, housing and assistance for homeless people, long-term care, the inclusion of people with disabilities and healthcare. Member States' authorities have general responsibility for defining, ‘providing, commissioning and organising’ SGIs. They have discretion when it comes to choosing the type of in-house or delegated management and the statute of the companies carrying out these public service missions.












3.4.3.


As regards the vital role played by the hospital sector in everyday life and during periods of acute public health problems (COVID-19), it is essential that competition policy and State aid rules be applied with due regard for both Member States’ prerogatives to set national public health objectives and for the range of socio-economic models governing the hospital sector, without impeding the proper functioning of the internal market. The application of EU competition rules (particularly those on State aid) to healthcare services must allow for the fact that they provide a service which is in the general interest of society. Due regard must be given to the principles of cohesion and solidarity as these services are instrumental in enacting them.












3.4.4.


Fifteen years after the entry into force of the new Treaty, no legislative initiative has been proposed by the Commission on the basis of Article 14 TFEU. The time has therefore come to take stock of EU action in the field of SG(E)I and to give proper effect to Article 14 and Protocol No 26 of the TFEU.












3.4.5.


The EESC urges the European Commission to carry out a thorough assessment of the way in which SG(E)I operate and their impact, looking at:






—


the consequences of the liberalisation of SGEI for economic, social and territorial cohesion in terms of quality, accessibility, adaptability and price/service;










—


the potential need to create European instruments for public intervention in SGEI sectors and/or the establishment of effective European public services (4);










—


the possible identification of an autonomous category of social services of general interest (SSGI) with a broader scope than substantive law in terms of solidarity and social justice.
















3.4.6.


The quest for open strategic autonomy requires that an ambitious programme of modernisation and framework conditions be launched in SGEI strategic sectors such as energy and raw materials; mobility and public transport; water, sanitation and water resources; telecommunications and digital accessibility.












3.4.7.


Specific recommendations for SGEI
The EESC is calling for:






—


a 2024-2029 European plan for strategic SGEI sectors to be launched as part of the establishment of the EU’s open strategic autonomy;










—


the next College of Commissioners to include a commissioner responsible for the 2024-2029 strategic plan for secure, good-quality and sustainable SGEI and a European agency to be entrusted with monitoring developments in public service obligations and the universal service of SGEI;










—


a European operator for the extra-high-voltage transmission and cross-border interconnection network;










—


a study on the establishment of European operators for high speed trans-European rail transport networks;










—


a clear definition of Galileo’s public service tasks and obligations; and










—


all relevant stakeholders to be given access to the results of publicly funded research.








3.5.   
The social and solidarity economy and civil society










3.5.1.


There is no legal framework for the social economy or social services of general interest (SSGI). They do, however, constitute a fully-fledged part of the new European industrial strategy, on an equal footing with and complementary to business initiatives, public intervention and services of general interest. Their implementation is often based on the mobilisation of civil society, volunteering and multiple forms of social economy enterprise (cooperatives, mutual societies, social enterprises and associations). Their purpose is to respond to the social and societal needs of each inhabitant, player, community and territory.












3.5.2.


Under TFEU Article 54, EU law recognises two types of entities: non-profit-making ones, exclusively organisations with financially altruistic activities, and businesses, mainly commercial enterprises. However, social economy enterprises (SEEs) do not pursue the objective of maximising profits or return on capital; they pursue a social objective instead (5). On several occasions, the EESC has expressed its views on the need to take proper account in EU legislation of the diverse forms of enterprise in Europe.












3.5.3.


It is necessary to formalise a European legal framework for social services of general interest (SSGI) which respects Member States’ discretion as regards organising and financing SSGI, and to adopt a specific legal framework recognising the role of social economy enterprises as service providers.












3.5.4.


While functioning SSGI are key for building people’s trust in their government’s capacity to act, it is crucial to create a genuine sense of European identity in order to increase support for European integration overall. The introduction of a pan-European civic and social service to be carried out by every young European could be one way of improving understanding of what other peoples, countries and cultures need.




3.6.   
The impact of EU enlargement on the internal market










3.6.1.


The future of the internal market will most likely be linked to an enlargement of the EU. That process needs to be well managed, without placing too heavy a burden on the integration capacities of the candidate countries and their adoption of the acquis. The EESC proposes adopting a gradual, country-by-country approach, for example by focusing on economic integration and common EU values, which would open up the internal market to potential new Member States.












3.6.2.


It is necessary for all parties involved to manage expectations by clearly communicating the obligations and the rights to the countries concerned, as well as to the existing EU Member States. Countries should, for example, aim to contribute to and benefit from the European Economic Area (market access), its civic space (European citizenship) and its social space (workers’ rights, consumer protection).






Brussels, 17 January 2024.


The President of the European Economic and Social Committee

Oliver RÖPKE
            





(1)  Particularly EESC opinion on Competitiveness and Industry OJ C, C/2024/875, 6.2.2024, http://data.europa.eu/eli/C/2024/875/oj; OJ C 349, 29.9.2023, p. 179; OJ C 105, 4.3.2022, p. 63; OJ C 56, 16.2.2021, p. 10; OJ C 282, 20.8.2019, p. 1.

(2)  European Commission, 2020, European Panorama of Clusters and Industrial Change.

(3)  The many EESC opinions and contributions on this point include one entitled Co-creation of services of general interest as a contribution to a more participative democracy in the EU, OJ C 486, 21.12.2022, p. 76.

(4)  Along the lines of what could be a European supply agency for certain health, energy and other products.

(5)  
            OJ C 282, 20.8.2019, p. 1.


ELI: http://data.europa.eu/eli/C/2024/2096/oj
ISSN 1977-091X (electronic edition)