Source: EURLEX
Language: en
Format: md

### `COMVIISSION OF THE EUROPEAN COMVIUNITIES`

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                          C0M(93) 256 final

                          Brussels, 2 June 1993

         COMMUNICATION FROM THE COMMISSION TO THE COUNCIL

                AND THE EUROPEAN PARLIAMENT

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_**REINFORCING THE EFFECTIVENESS**_ _**OF**_ _**THE INTERNAL MARKET**_

#### **WORKING DOCUMENT OF THE COMMISSION** **ON A STRATEGIC PROGRAMME** **ON THE INTERNAL MARKET**

**Communication from the Commission to the Council and the Parliament**

**REINFORCING THE EFFECTIVENESS OF THE INTERNAL MARKET**

**INTRODUCTION**

1. Article 8a of the Treaty has defined the Community's internal market as a
space without internal frontiers where the free circulation of goods, services, capital
and persons is assured. In June 1985, the Commission submitted to the Milan
Council its White Paper on the completion of the Internal market; it thus launched a
process of European integration which has fundamentally influenced Community
policy in the course of the last 8 years. This result was able to be attained thanks to
the Single Act, the White Paper and the deadline of 31 December 1992. It
constitutes the basis of economic and monetary union and a European citizenship
whose success resides in the Treaty on European Union. In this respect the single
market is the pedestal for the building of the community, its dynamism will underpin
the dynamism of the economic and political integration of the Community.

2. The legislative programme established in 1985 has now been more than 95%
completed; as a result of this, the legislative work of the Community will decrease in
future years. This programme in itself constituted one of the mobilising elements for
economic operators and it has profoundly modified the environment within which
they must henceforth operate. It is now possible for goods, services and capital to
move freely across the entire community. Formalities for crossing frontiers have
been removed, one system of certification has replaced the 12 systems that
previously were obligatory; companies have gained the right to bid for public
procurement contracts in other Member States.Citizens also, even if they have not
benefited entirely from the freedom to cross borders without controls, have the right
to stay for private reasons in another Member State and can have their diplomas
recognised so that they can exercise their profession.

It is true that the domain of the free movement of persons, on the other hand, is one
which has experienced significant delay, in that controls on identity still carried out at
internal frontiers are a constant reminder of their existence.

3. If the assessment of the legislative activity for the last eight years can
therefore be considered positive, the Commission is not underestimating certain
retarding factors in the expected effects of the internal market:

in several sectors, the new community regulation envisages transitional
periods and, once in force, will only produce their economic effects after a certain
period of time has elapsed;

uncertainties concerning a rigorous and homogenous application ot
community legislation by all the Member States seem to compromise its
effectiveness in terms of the protection afforded to citizens and in guaranteeing
competition;

**the adoption of a legislative programme which is so vast, in such a short**
**space of time, may create the impression of bureaucratic interference in the conduct**
**of affairs at national level.**

**For these diverse reasons, the establishment of the internal market should be**
**pursued,** **explained and motivated still more, so that it becomes a reality on the**
**economic front and can be widely accepted on a political level.**

**4.** **This process must develop in a context encompassing three major difficulties**
**to which the Community must propose a response:**

**the maintaining of controls at the frontiers on the identity of persons**
**unquestionably marks a delay with respect to the objectives set out in the**
**Single Act and, in particular Article 8a. This delay sustains the impression**
**that the building of the community is done exclusively for the benefit of**
**enterprises and business circles, even if the citizen, as a consumer or a**
**professional, also benefits from the free movement of persons.** **The**
**Commission, with the support of the European Parliament, will endeavour,**
**within the limits of its competence, to obtain the complete application of**
**Article 8a before the end of this year.**

**the entering into force of the measures envisaged in the White paper**
**programme is developing against a background of a substantial** **slowing-up** **of**
**economic growth, monetary instability and the difficulties encountered in the**
**process of the ratification of the Maastricht Treaty. The process of job**
**creation,** **which got underway in anticipation of the creation of the Internal**
**Market has been reversed. The view is heard that the Internal Market itself**
**contributes to the growing tensions in Community markets, particularly the job**
**market, instead of contributing to the improvement of the economic and social**
**lives of the citizens and the** **competitivity** **of enterprises. Without a new**
**momentum, defensive reflexes risk damaging the unity of the market.**

**the increasingly world-wide nature of trade and the enhanced competition**
**introducing new economic and social phenomena which call for a response,**
**taking into account the Community's own economic interests, and the**
**imperatives of development and growth in the developing countries.**

**5.** **The Commission considers that it is now incumbent upon the political**
**authorities of the Community to respond, on the one hand to the fears and**
**uncertainties of the citizens and European enterprises, as to the real effects of the**
**decisions already taken in the context of the internal market, and to offer on the**
**other hand, perspectives for the future development of this market. The simple**
**management of the acquis cannot impart the dynamism and impulse necessary for**
**the political credibility of this action for integration. The Commission has therefore**
**taken on board the suggestion of the European Parliament for the elaboration of a**
**strategic** **programme which would not only be oriented towards the management of**
**regulations but which would equally maintain a dynamic for the development and**
**deepening of the Internal Market.**

**COLLECTIVELY DEFINING A STRATEGIC PROGRAMME**

6. It is true that the internal market is part of a global Community policy and in
this respect cannot be appreciated independently of the other Community policies
which allow the community space to function without internal frontiers:

the free movement of persons is closely linked to the development of the
concept of European citizenship and to the co-operation on internal and judicial
affairs which is found at the heart of the Treaty on European Union, but also to the
putting into effect the social charter;

the free movement of goods, services and capital are not only linked to the
development of economic and social cohesion and to the putting into effect of
competition policy instruments but also to the establishment of economic and
monetary union;

the internal dimension of the internal market is itself closely linked to the
strengthening of the external personality of the Community and its capacities for
negotiation.

7. It is this global nature of the approach to the work undertaken since 1985
which gives it a political dimension far beyond the technical specifics of each of the
sectors. It is the maintenance of this global aspect which gives the management of
the internal market its political dimension; it is also this global dimension which will
put all the available instruments at the service of management. The Commission
proposes the establishment of a strategic programme for the internal market to
preserve this global approach, to ensure transparency in its action and to associate
the all the operators.

8. This communication represents a first step towards the definition of such a
programme. Its purpose is to launch a debate which will not be limited to the
community institutions but which will also encompass economic and social circles.
The working document accompanying this communication, which takes up in detail
the different elements of a strategic approach to the management and development
of the internal market, will be widely circulated in order to give rise to reactions as to
its content. In the light of these reactions, as well as those from the Community
institutions, the Commission will prepare a strategic programme which will orient the
Community's actions in future years.

9. The Commission has chosen this procedure because it reflects the necessity
to engage all parties concerned in the definition of the objectives and the methods to
achieve them. To ensure for the Community economy the effects of the measures
adopted in the framework of the White paper legislative programme, there must be
organised:

on the one hand, a partnership between the Commission and the Member
States in the application and the effective management of the rules;

on the other, the mobilisation of the economic operators to contribute to
action for the development of the internal market.

This presumes as wide as possible a consensus on the priorities, without however
allowing that the search for this consensus should affect the launching of the most
urgent initiatives concerning particularly transparency in the functioning of the
internal market.

###### **`THE CONTENTS OF THE PROGRAMME`**

**1** ) **Objectives**

10. The objective of the Community remains, obviously, the improvement of the
living conditions of its citizens; the functioning of the internal market can only be
approached from this perspective. A coherent and global strategy for the
management and development of the single market should therefore ensure that the
legislative framework of the Community becomes an integral and favourable part of
the environment for the citizens, the economic operators and the administrations.

**First objective : to respond to the expectations of the citizen**

11. The Internal market should bring advantages for citizens as well as for
enterprises, supporting job creation and economic growth. The citizen needs to be
assured that the opening of the markets will lead to an improved level of social
protection and of working conditions as well as of his health, his safety, his economic
interests and his environment. He should be assured, particularly through credible
information, that the abolition of frontier controls is not going to expose him to new
risks.

**Second objective: to ensure a competitive environment for enterprise**

12. The community must guarantee free movement and the functioning of the
single market, however its legislative interventions must be limited to those domains
in which mutual recognition cannot guarantee the protection of the essential
requirements; it must ensure a surveillance on the operation of these rules and their
adequacy to respond to the objectives.

**Third objective: to ensure in the single market the dynamic for economic and**
**social development.**

13. The Community must not only ensure the coherence of the legislative acquis
in the face of national initiatives which could have the effect of re fragmentation of
the market, but it must also bring an added value to that acquis in acting upon the
factors for dynamism in the market, such as the tax environment for enterprise,
industrial quality and trans-European networks; the objective of this should be the
improvement of social conditions in the Community.

**2)** **The instruments**

14. These three objectives are presented in the working document attached to
this communication, together with precise lines of action for an effective application
of the regulations and a dynamic development of the internal market.

**a) For an effective application**

(i) Better adapted controls: The instruments of control with respect to community
obligations are found in the Treaty and the acts in application; they will be fully
utilised and indeed reinforced to offer the appropriate means for the prevention of
barriers.

The Commission must also take on assisting measures which will allow a convergent
application of the regulations. These assisting measures will principally rely on the
transparency of transposing acts at national level, the common interpretation of
regulations, exchanges of information between the administrations and information
activities.

The national courts should be have a greater capacity for ensuring the respect of
community obligations; this is why actions for the education and training for judges
and the legal professions and the improvement of access to justice constitute the
most appropriate lines of action.

(ii) Overseeing the functioning of the regulations : the Member States must be
assured that surveillance of the functioning of the regulations is carried out. In this
regard, the Commission must equip itself with the means to evaluate the
effectiveness of the regulations; in effect the legislative framework must respond at
once to the objectives of free movement and the respect of the essential
requirements, but also to the objectives of economic and social development.

(iii) The organisation of partnership with the Member States: initiatives are
envisaged in the domain of administrative co-operation between the Member States,
and between the Member States and the Commission, in order to ensure the
effective application of community law. This concerns better definition of the
methods of co-operation by sector and to identify the measures of support necessary
at Community level.

The extension of scientific and technical co-operation should equally be reinforced.
Training actions and the exchange of national civil servants are an indispensable
element for integrating the community dimension in the functioning of the national
administrations.

(iv) Transparency of community actions : the Commission proposes to increase
the transparency of existing legislation (notably through consolidation) and has taken
steps to ensure a better internal co-ordination in order to improve information on the
development of its policies (the annual report on the functioning of the internal
market). It has also adopted means for a better transparency in the preparation of
legislative proposals.

**b) For dynamic development**

15. The dynamic development of the internal market must be placed in the
context of many community initiatives, in particular the initiatives for growth and for
jobs, and policies relating to cohesion between the regions. This development also
relies on the pursuit of certain current actions : the Commission intends for example
to continue the work underway in the domain of intellectual property and data

protection, to develop a much greater use of voluntary European standardisation in
industrial circles as well as to orient support programmes for SME's towards an
improvement of their participation in the opening up of markets.

16. In parallel, new initiatives are envisaged by the Commission, and in particular:

an improvement in the tax environment for enterprises so as to eliminate
obstacles to co-operation and cross-border activities;

the promotion of quality products within European industry;

the external aspect of the internal market;

an integrated approach to the development of trans-European networks in
order to promote private financing and instruments of interoperability.

**Conclusion**

17. The Commission therefore informs the Council, the European Parliament and
the Economic and Social Committee of the orientations contained in this

communication. It invites the economic and social circles, as well as the Member
States to make contributions towards the definition of the strategic programme on
the basis of the working paper attached to this communication. It is in the light of
these contributions that the Commission will establish, for the month of October
1993, the strategic programme.

#### **WORKING DOCUMENT OF THE COMMISSION** **TOWARDS A STRATEGIC PROGRAMME** **FOR THE INTERNAL MARKET**

##### **TABLE OF CONTENTS**

**INTRODUCTION**

**SECTION A: ADMINISTRATION OF THE COMMUNITY AREA**

I. ACHIEVEMENT OF THE SINGLE MARKET

H. MANAGING COMMUNITY RULES

(a) Monitoring transposition

(b) Monitoring application

(i) Monitoring by the Commission

Organisation of controls in the Member States
Handling of complaints
(ii) Monitoring by national administrations
Assistance to the Member States

Control framework
(iii) Access to justice

III. SUPERVISING THE OPERATION OF THE SINGLE MARKET

(a) Preventing obstacles to trade
(i) Goods
(ii) Services
(b) Evaluating the effectiveness of Community rules

IV. ORGANISATION OF PARTNERSHIP WITH THE MEMBER STATES

(a) Scope of partnership

(i) Freedom of movement for persons
(ii) Protection of essential requirements

a) Early-warning systems for dangerous or non-conforming goods
and services

b) Adapting regulations to new risks

(b) Partnership instruments

(i) Administrative co-operation
(ii) The adaptation of authorities to the rules for the operation of the single
market

V. TRANSPARENCY OF COMMUNITY MEASURES

(a) Transparency of Community legislation
(b) Communication and information measures
(i) Annual report on the internal market
(ii) Communication and information initiatives

**SECTION B: DEVELOPING THE SINGLE MARKET**

I. A BARRIER-FREE ENVIRONMENT

(a) Improvement of the regulatory environment for businesses and citizens
(i) Rules on the protection of intellectual property
(ii) Protection of personal data
(c) Company law
(d) Simplifying cross-border payment facilities

(b) Ongoing approximation of tax regimes and the creation of a favourable
tax environment for businesses
(i) Indirect taxation
(ii) Direct taxation

II. AN ACTIVE POLICY ON STANDARDISATION

III. A POLICY IN THE AREA OF QUALITY

IV. MEASURES TO ASSIST SMEs

(a) Creating information packages for SMEs
(b) Helping SMEs to adapt to standardisation and certification procedures
(c) The opening-up of public procurement to SMEs

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  V. A DYNAMIC AND OPEN EXTERNAL POLICY
```

(a) Strengthening the Community's external competence
(b) Improved trade-policy instruments
(c) Convergence of legal rules and economic systems
(d) Management of the Community's external frontier

(i) Ensuring the external security of the internal market
(ii) Prevention of infractions

**SECTION C: TRANS-EUROPEAN NETWORKS**

I. TRANS-EUROPEAN NETWORKS: OBJECTIVES

II. FRAMEWORK FOR THE WORK TO BE CARRIED OUT

III. PROGRESS REPORT

(a) Network plans
(b) Community financing

IV. THE NEED FOR ÇQ-QRPINATIQN

V. THE MEANS TO ACHIEVE THE END

**INTRODUCTION**

1. The completion of the Internal Market, i.e., the effective application of the four
freedoms of movement set out in the Treaty, has made a fundamental impression on
Community policy over the past eight years. Never has the Community decisionmaking process reached such a level of dynamism; never has Community integration
so attracted the attention of political and economic leaders.

2. The environment constituted by the Community is one of open markets and thus
of free competition. The abolition of all customs, fiscal, veterinary, phytosanitary and
statistical formalities on crossing borders, the substitution of one system of
certification for the 12 systems which were previously obligatory, the right to
participate in public procurement in other Member States, the right to stay for private
reasons in another Member State, and, finally, the recognition of qualifications
permitting the exercise of the right of establishment, gives firms, workers, and, in a
general way, citizens, a new area of freedom. The strengthening of competition
rules strengthens the protection of SMEs, in particular, against the consequences of
agreements and mergers on the operation of the market. The abofition of
discriminatory national measures and the placing of national systems in competition
with one another have resulted in a self-discipline against the abuse of the rules.

3. The Commission has its role to play, firstly because certain proposals must still
be made or certain proposals are still pending before the Council, and then, above
all, because it is the Commission that must promote confidence between the netional
administrations. The priority for the Commission is to ensure that the Internal Market
works and the conditions for its operation are achieved by means of full
implementation of the rules, a set of measures designed to develop the Internal
Market and, finally, a set of trans-European networks giving the rules the support of
infrastructures adapted to their implementation. A "wait-and-see" policy will not do;
simple administrative management of what has already been achieved cannot give
the dynamism and impetus which the credibility of the action demands. Balance in
the operation of the Internal Market can only be found in movement; this movement
is what the preparation of the strategic programme seeks to ensure.

4. This strategic programme wouid indicate the wish of the Commission to improve
the present framework rather than to develop the legislative activity of the
Community. This strategic programe would also indicate the wish of the Commission
to participate in an active partnership with the national administrations and economic
operators for the management of the Internal Market; this is why the publication of
the present document can represent only a first step intended to gather all reactions,
observations and contributions. It is on this basis that the strategic programme
defining the priorities and the means of action will be drawn up in the second half of
this year.

5. The principal aim of the approach proposed is to situate the actions related to
the operation and development of the Internal Market in an overall context, giving
these actions a political, an economic, a social, and an industrial dimension:

**from a political point of view, it is important to make it be apparent that the**
**Internal Market is a whole; an overall approach is the only one capable of**
**responding to the diversity of the problems and of the sectoral interests and to**
**offer a balanced treatment of all of these problems;**

**from an economic point of view, experience with the White Paper has shown**
**that an action on the market can only have a macroeconomic effect if it**
**mobilises all sectors;**

**from a social point of view, it is important to ensure, on the one hand, the social**
**rights of workers following the 1989 social charter and the the Commission's**
**programme of social action, and, on the other, the development of a**
**Community strategy for employment;**

**from an industrial point of view, it must be possible to put into operation**
**horizontal instruments from which all sectors and professional categories will**
**benefit.**

**The objective of this document is to seek the observations and the contributions**
**of all agents and all private and public bodies on the priorities for action to**
**administer and to develop the Internal Market so as to make it an instrument of**
**economic and social development to the benefit of citizens and firms. On the**
**basis of these contributions, the Commission will draw up, for October 1993, a**
**strategic programme on the Internal Market with which all the partners will be**
**called on to associate themselves.**

##### **SECTION A: ADMINISTRATION OF THE COMMUNITY AREA**

**I.** **ACHIEVEMENT OF THE SINGLE MARKET**

7. The process of achieving the single market, as provided for in the White Paper,
has been completed. Even though new aspects have been added to the programme
set out in the White Paper, in particular in the energy field, the Community's activity
has, over the last eight years, not once deviated from the programme, more than
95% of which has been implemented. Admittedly, considerable slippage has
occurred as regards freedom of movement for individuals, since, although tax
controls have been abolished and the right of establishment and residence
recognised, police controls at frontiers remain a fact of life for the general public.
However, firms can now operate in an environment that allows them to trade in
products and services and fosters closer integration of co-operation and hence of the
industrial fabric.

8. Implementation of the White Paper programme has been carried out
progressively:

- Harmonisation of technical rules as provided for in the White Paper has now
been completed; initially confined to specific limited areas, it was extended to
cover entire sectors such as agricultural and food products, pharmaceutical
products and motor vehicles. Harmonisation of essential product safety
requirements, backed up by a policy of certification, and the general provisions
on product safety and liability for defective products mean that all manufactured
products marketed in the Community are now covered.

- The measures have been adopted to permit public contracts to be open to
competition from firms in other Member States, irrespective of whether such
contracts are awarded by public authorities or public services and are intended
for the purchase of supplies, the purchase of services or the carrying-out of
work. The relevant directives include provisions on appeal procedures allowing
national courts to review matters.

- Freedom to provide services will soon become a reality, where this is not the
case already, with the gradual entry into force of the directives and regulations
adopted on transport, financial services, telecommunications, recognition of
diplomas, and the equivalence of professional qualifications. Although final
decisions have yet to be taken on road cabotage because of the link with the
taxation of transport, cabotage has become a practical reality on the basis of the
annual quotas allocated by the Commission.

- Since it is not enough simply to provide for freedom of movement and since
firms must also be in a position to derive full benefit from it through corporate
restructuring and the restructuring of their business strategies, the proposals on
company law, company taxation, and industrial and intellectual property formed
an integral part of the programme. The relevant objectives have been only
partially achieved since, although most of the harmonisation measures relating
to industrial and intellectual property have been adopted and although certain
forms of double taxation have been eliminated, the key proposals are still before
the Council, i.e. those relating to the European company statute, the
establishment of a trade marks office and the complete elimination of taxation at

**source on interest and royalty payments and taking into account of losses**
**suffered abroad.**

**•** **Such measures relating to the opening-up of markets to flows of products,**
**services and capital from other Member States have been made irreversible by**
**the elimination of all administrative checks at intra-Community frontiers. The**
**abolition on 1 January 1993 of the single administrative document in intra-**
**Community trade and the entry into force of a series of provisions reorganising**
**tax, veterinary, plant-health, health, safety and statistical controls have made it**
**possible to do away with checks at frontiers.**

**•** **Freedom of movement for individuals properly speaking has not yet become a**
**reality. Individuals also benefit from the dismantling of customs and tax controls**
**at internal frontiers, and Community nationals may now work in any other**
**Member State thanks to recognition of their diplomas or qualifications and may**
**reside in any other Member State regardless of any economic activity. Despite**
**this,** **checks on persons are still carried out at internal borders although these**
**have already been lightened. The Commission has frequently deplored this**
**situation,** **particularly to the European Parliament. The Commission hopes that**
**substantial progress will be made in 1993, under the Schengen agreement,**
**perhaps in such a way as to spur on the** **other** **Member States, so as to avoid**
**these delays which are particularly noticeable to the general public and which**
**tend to overshadow the considerable achievements which have been made in**

**other fields.**

**9.** **However, the legislative process cannot be allowed to come to a halt with the**
**completion of the White Paper programme since the programme carries within itself**
**a momentum for integration that goes beyond the present framework.**

**•** **Firstly, it is for the Commission or the Council to implement the provisions that**
**have been adopted. This is particularly so with regard to technical rules, for**
**which "framework" provisions have been adopted while the Commission or the**
**Council have been unable to adopt the implementation measures; this is the**
**case in the of foodstuffs, veterinary, and phytosanitary areas and in the area of**
**construction. Thus, in the veterinary field, although all** **the** **measures set out in**
**the White Paper - and therefore essential for the completion of the Internal**
**Market - have been adopted (apart from pets travelling with their owners) a**
**number of important implementing measures still have to be adopted by the**
**Council or the Commission.**

**•** **The removal of frontier checks justifies taking action either in order to organise**
**trade within the Community without affecting national arrangements or in order**
**to harmonise such national arrangements. The most urgent measures have**
**been adopted with regard to cultural goods, explosives and conformity checks at**
**external frontiers; other proposals are awaiting decisions in the following areas:**

**(i)** **Checks on the export of dual use goods (goods or technologies with military**
**and civilian uses): in spite of the commitment made by the Council in**
**December 1992 to try to reach agreement before 31 March 1993, political**
**and technical problems have blocked progress on this dossier.**

**(ii) The measures taken on indirect taxation need to be completed by the**
**adoption of proposals on the taxation of transport of passengers. However,**
**the most important proposal, whose adoption is a matter of urgency, is that**
**on VAT arrangements applying to second-hand goods, works of art,**

**antiques and collectors' items.**

**The removal of frontier checks requires particular vigilance on the part of**
**the Commission and the Member States, with regard to some goods that**
**are not subject to harmonisation requirements, in order to ensure that**
**differences in rules and regulations do not result in fraud or in difficulties for**
**consumers. It is, for example for this reason also, the Commission has**
**stated that it will draw up a proposal on the certification of precious metals**
**and that in the customs area a proposal has been presented to combat**
**fraud in the area of commercial and agricultural trade.**

**(iii) With regard to transport, since the main priorities have been covered,**
**measures should be introduced on freedom to provide special transport**
**services such as the transport of dangerous and perishable goods, taxi**
**services, transport carried out by security firms, transport by ambulance,**
**own-account transport and car hire. The Commission's attention has also**
**been drawn to the administrative complications involved in the transport of**
**bodies; measures should be taken to relieve families of the burden of**
**formalities to be completed in such circumstances.**

**(iv) The environment is a key element in the achievement of the internal**
**market; the adoption of high environmental standards at Community level and**
**their uniform application will strengthen the process of convergence and**
**cohesion and remove the fears of many countries against products of other**
**Member States, allegedly produced under lax environmental conditions. It may**
**also allay different fears of the less environmentally spoiled Member States that**
**they** **may** **be** **invaded** **by** **the** **pressures** **of** **industrialisation** **and**
**commercialisation; we should also emphasise the use of environmental**
**regulations as very subtle means of foiling the internal market, purportedly on**
**very praiseworthy grounds. This is a phenomenon that can particularly be**
**observed with regard to waste and packaging in its broadest sense.**

**There are solutions and various important options in connection with these**
**matters. One would be harmonisation of "environmental " national legislation.**
**Another one would be the application of the principle of "conditional**
**equivalence" which means that the various national systems should be made**
**equivalent from the economic point of view.**

**The development of cross-frontier activities, the need for firms to be able to**
**take advantage of all the management flexibility afforded them by the**
**Community dimension, and the need to preserve the public interest from the**
**effects of disorganised competition have prompted the Commission to extend**
**the rules on the operation of the single market to other spheres not initially**
**covered in the White Paper, notably telecommunications services, postal**
**services and energy.**

**(i)** **With regard to telecommunications services, and alongside its action on the**
**mutual recognition of the approval of telecommunications terminals, the**
**opening-up of public contracts and European standardisation, the**
**Commission is pressing ahead with its work on the opening-up of the**
**markets for services by proposing, in parallel with the implementation of the**
**ONP (Open Network Provisions) framework Directive, that markets be**
**completely opened up by** **1** **January 1998. The Commission's proposal here**
**has been drawn up following wide-ranging consultations with all the parties**
**concerned based on the report presented by the Commission in 1992, as**
**provided for in Council Directive 90/387/EEC (ONP) and Commission**

**10**

**Directive 90/388/EEC (services other than voice telephony).**

**(ii) With regard to postal services, following its Green Paper published in**
**May 1992, the Commission has drawn preliminary conclusions from the**
**wide-ranging consultation process under way.**

**(iii) With regard to energy, the Commission, while applying the Treaty in the normal**
**way to deal with rules and regulations that are incompatible with it and inappropriate**
**conduct on the part of enterprises in the energy sector, has developed a step-by-**
**step approach on electricity, natural gas and hydrocarbons. For instance, it has put**
**forward a proposal on the harmonisation of the conditions for access to exploration**
**for, and extraction of, hydrocarbons. In the case of gas and electricity, the**
**Commission's approach is geared to three objectives: freedom of movement and**
**freedom of establishment; industrial competitiveness; and security of supply. In order**
**to achieve these three objectives, an initial set of measures was adopted on transit**
**and price transparency; a second set of measures on the opening-up of markets for**
**large consumers is still before the Council and Parliament with the objective of**
**abolishing remaining obstacles to strengthen competition, effectiveness and**
**transparency in the Community's energy markets.**

II. MANAGING COMMUNITY RULES

**10.** **The management of Community rules breaks down into three areas:**
**transposition and application of these rules, monitoring compliance with them by**
**businesses or administrations, imposing sanctions. In each case the Commission will**
**be concerned, in exercising its own responsibilities, to:**

**•** **provide the Member States with such assistance as they might need in order to**
**take account of their own particular difficulties and organise exchanges of**
**experiences in specialised committees on a regular basis;**

**•** **ensure transparency of the transposition legislation in the Member States and of**
**application methods so as to prevent difficulties which businesses could**
**encounter, and in particular to ensure mutual confidence between national**
**administrations through improved knowledge of the diversity of national**
**systems.**

(a) Monitoring transposition

**11.** **The Commission has laid great stress on the urgency and importance of**
**transposition. Since** **1989,** **in the fields covered by the White Paper, it has carried out**
**systematic follow-up of the technical and political situation in bilateral and**
**multilateral bodies. This has produced clear results since almost half the directives**
**which required transposition have been transposed in all the Member States and, in**
**May 1993, more than 85% of transposition measures have been taken. Considerable**
**efforts were required on the part of national parliaments and administrations to**
**achieve this result; in a number of sectors, in particular financial services,**
**telecommunications and transport, major structural changes were necessary. The**
**monitoring of transposition is often hindered by the complexity of the systems of**
**transposition and by the lack of consolidation of the national texts.**

**11**

**12.** **Until 1989 transposition was monitored on a strictly bilateral basis, except for**
**certain aspects of information at the reasoned opinion stage, but since that date**
**(information in the Official Journal) each Member State has been able to ascertain its**
**position relative to the others and realise that, as soon as a directive has been**
**transposed in most Member States, the arguments it presents for postponing**
**transposition become irrelevant. Each Member State can also obtain copies of the**
**national transposition legislation on the basis of published references. However, this**
**element of transparency can be improved by making the legislation itself available.**
**This operation would be easy if there were no language constraint. That is why the**
**Commission will evaluate, on the basis of the interest expressed by users of**
**Community rules, the possibility of proceeding in two stages:**

**•** **as a first step, it would publish all the transposition legislation by specific sector,**
**obviously taking account of the potential usefulness of such publication; the**
**narrower the margin of discretion allowed by the directives, the less useful**
**publication of transposition legislation will be;**

**•** **subsequently it would be willing to consider any proposal for co-operation**
**presented by private-sector publishers with the aim of publishing these**
**collections of legislation in the different Community languages. In the context of**
**such an initiative, it could encourage the establishment of a European Economic**
**Interest Grouping to enable analysis, translation and publication facilities to be**
**pooled.**

**13.** **The Commission is also responsible for monitoring the conformity of**
**transposition measures. The heavy workload borne by national administrations in**
**formulating transposition measures is shifting to Commission departments. In the**
**fields covered by the White Paper, more than 2 000 pieces of legislation in the nine**
**official languages of the Community have to be checked. In addition, transposition**
**measures are contained in a succession of texts of different legal hierarchy,**
**sometimes issued by different authorities on the basis of their level of responsibility,**
**as is the case, for example, in the transposition of the Directive on mutual**
**recognition of diplomas or the veterinary Directives. Nor can monitoring of**
**compliance be restricted to a simple comparison of** **texts,** **but must also take account**
**of the overall legal system, such as for company law, or of the administrative**
**framework, in the veterinary sector. In addition, monitoring of transposition is**
**frequently hampered by the complexity of the methods of transposition and the lack**
**of consolidated national texts. The complex nature of monitoring compliance explains**
**the diversity of the methods used:**

**•** **in most areas, the Commission has the draft transposition measures analysed**
**by its services in order to prevent infringement situations and especially to**
**ensure a convergence of interpretation;**

**•** **in a number of highly technical areas, the Commission reacts to complaints from**
**operators and the Member States to establish that the transposition measures**
**are inadequate. This is generally the case in the field of products and veterinary**
**and plant health rules, where in any case the frequency of committee meetings**
**in the fields of veterinary and zootechnical legislation, and legislation on**
**vegetable product and animal feedingstuffs ensures permanent follow-up of the**
**operation of the rules and therefore of the quality of transposition;**

**•** **in other fields, the Commission entrusts the analysis of transposition measures**
**to experts and, where necessary, initiates the resulting infringement**

**12**

**proceedings;**

**•** **in a limited number of fields, detailed, and in certain cases public, reports on the**
**transposition and implementation of directives have been made where the**
**information obtained highlights particular problems. In such cases, the**
**Commission launches investigations, as it did recently into the application of the**
**Directives on hormones, artificial insemination, transport of livestock, veterinary**
**fees,** **etc.;**

**•** **in other areas, Community legislation itself has set up committees with the task**
**of assisting the Commission to monitor transposition (e.g. the VAT Committee,**
**the Committee on Excise Duties, the Standing Committee of Heads of National**
**Revenue Departments). This method was particularly effective for the follow-up**
**to the transposition of the Directives on VAT and excise duties which**
**guaranteed that, despite a number of delays in transposition, it was possible to**
**take the administrative measures to ensure the effective entry into force of the**
**new arrangements on 1 January 1993, even in relation to the simplification**
**measures adopted as late as the end of December;**

**14.** **This does not, however, enable the Commission to guarantee a systematic**
**monitoring** **of** **the** **conformity of transposition measures to give all the Member States**
**and businesses a guarantee that a product or service from another Member State**
**complies with Community legislation. It would be useful to undertake such checking**
**of the conformity of the transposition measures sector by sector, in the framework of**
**bilateral meetings with the Member States, but the development of this approach will**
**depend on the resources devoted to this action.**

**15.** **The current difficulties of monitoring the transposition of directives raises**
**questions about the approach to be taken in future. Of course, the previous**
**proposals for improving transparency of transposition measures will allow mutual**
**supervision of the quality of the measures taken. However, as the Commission has**
**pointed out on a number of occasions, the use in certain circumstances of a**
**regulation in place of a directive should be facilitated. The Commission, while**
**favouring directives, considers, in fact, that regulations could contribute to**
**transparency and the sound application of the rules, without adversely affecting the**
**specific features of national legal or administrative systems, in two cases:**

**•** **first, as proposed by the Sutherland report, when the work of harmonisation has**
**been completed in a particular area and the situation regarding application by**
**the Member States is convergent, directives could be consolidated in the form of**
**a regulation. This could apply to the strictly technical provisions in the areas of**
**tractors, motor vehicles and pharmaceutical products;**

**•** **second, national transposition** **procedures** **could be simplified** **if the**
**implementation measures for directives could take the form of regulations. In**
**these cases, the national systems have been adapted as part of the**
**transposition of the basic directive, the implementing legislation laying down**
**only the procedures for intervention. Where the basic texts allow it, this**
**approach could prove particularly useful in fields requiring many implementing**
**measures such as veterinary and plant health rules.**

**16.** **Tris** **streamlining of transposition procedures would be all the more easy since**
**only a** **lifted** **number of cases pose genuine problems. Without giving an exhaustive**
**list, a few examples are the Directives on the mutual recognition of diplomas, on the**

**13**

opening-up of public procurement, and on the provision of broadcast television
services.

17. The entry into force of the Treaty on European Union will enable the
Commission, on the basis of Article 171, to have fines imposed on Member States
which do not comply with the judgements of the Court of Justice. The criteria on
which the Commission will set the level of fines to be proposed to the Court have yet
to be determined.

18. The operation of the Internal Market depends, not only on Community law, but
also on the inter-governmental conventions which, by facilitating judicial co-operation
and by organising administrative co-operation, should also facilitate free movement
within the Community. Worrying delays, often attributable to ratification procedures,
are evident in the implementation of these instruments. Of the 21 inter-governmental
conventions concluded at Community level, only two are effectively in force, and still
only between ten Member States. The entry into force of the Treaty on European
union, Title IV of which organises co-operation between the Member States in the
areas of justice and internal affairs, should give the Commission the possibility to
play **a** role by providing an impetus in this matter, if necessary by using its right of
initiative where this has been granted to it.

**(b) Monitoring application**

19. In addition to the transposition of rules there is the question of monitoring their
application both by government departments and businesses which must comply
with the obligations laid down by these rules. Monitoring methods are essentially **a**
matter for the Member States even if, in exceptional cases, the Commission has
been entrusted with carrying out individual on-the-spot inspections and checks.

(i) Monitoring by the Commission

20. Under Article 155 of the EEC Treaty, the Commission has a general
responsibility for monitoring compliance with the obligations created by Community
law and, under Article 5, the Member States must give it any assistance necessary.
To make it more effective in this role, it can make on-the-spot inspections in a
number of fields.

- **Organisation of controls in the Member States:** under a series of Council
Directives, there are specific obligations on the Commission to carry out
inspections in a wide range of sectors, for example, fresh meat, meat based
products, poultrymeat, dairy produce, fish products etc in order to ensure that
the public health requirements and the rules on animal health are observed.
Corresponding obligations apply in the phytosanitary sector. These obligations
are linked to the functioning of the Internal Market and take account of the
change in approach towards a system based on controls on production and
marketing requirements carried out at the place of origin or, in the case of goods
imported from third countries, at the external border. In 1992, these new rules
led to the setting-up within the Directorate-General for agriculture of the Office of
Veterinary and Phytosanitary Inspections and Control. The capacity of the

**14**

Commission to discharge its responsibilities in these sectors is a matter of
concern. The Member States have been given recently a full account of the
problems facing the Office in the light of changing animal and public health
requirements, and of the limitations within the Commission on the recruitment of
personnel. The major sectors where little progress can be made in the
foreseeable future have been indicated: these include fish products,
poultrymeat, meat based products and animal welfare. The resources available
to the Office are not consistent with the responsibilities devolved on the
Commission for managing these aspects of the Internal Market. The
Commission is considering how this problem could be overcome.

It has to be stressed that, as far as its activities within the Community are
concerned, the inspection function of the Office does not substitute for controls
carried out by the Member States; the objective is to ensure that controls are
functioning correctly and that confidence is thereby maintained in the single
market. On the other hand, the Commission's inspection function in third
countries is intended to subsume the role of Member States, which; in the new
situation of the single market, cannot maintain different approaches to trade with
third countries. But in dealing with third counties, the approach will be to make
more responsible veterinary and phytosanitary services in the third countries
concerned, with the emphasis on reciprocity and equivalence rather than on
maintaining the more traditional intensive approach to inspection of individual
premises.

This is why the option chosen in a draft directive in the process of being adopted
by the Council in the area of foodstuffs was to provide for the nomination and
mandating of officials to cooperate with the competent authorities of the Member
States for the purpose of monitoring the evaluation of equivalence and efficacity
of official control systems applied by these authorities. It is therefore a power of
audit or evaluation of the operation of the control systems that will be put in
place.

An intermediate solution could be the establishment of a body of inspectors in
each Member State which could be involved in inspections organised in another
specific Member State under arrangements yet to be determined. This method
was introduced in the administrative agreement concluded with Switzerland on
the arrangements for road traffic and would allow the results of the inspections
to be published and ensure mutual confidence in their effectiveness.

**Handling of complaints:** the Commission receives a large number of
complaints which is tending to increase with the development of Community
legislation and its transposition and with the awareness of firms and the
integration of their activities. These complaints mainly concern the free
movement of goods (Article 30 of the EEC Treaty), but those relating to public
procurement are now on the increase. The growing number of complaints and
the difficulties experienced by Commission departments in investigating cases
have led to the Commission to advise complainants to raise the matter with the
national authorities in the first instance, particularly when the complaint refers to
measures taken on the spot. In addition in some areas the Commission uses
the powers of discretion granted to it under Article 169 of the EEC Treaty to act
in the interest of the law.

The Commission has always aimed to strengthen co-operation between its
services and national administrations in order to ensure and improve the
enforcement of the fundamental principles governing free movement. The

**15**

Commission will follow this approach, particularly by continuing to organise
regular meetings with Member States to try to seek consensual solutions to
problems that arise. This is intended to make sure that problems are dealt with
effectively and to foster a climate of confidence.

In the same spirit, with the Member States, it has set up, since 1 January 1993,
within the Advisory Committee for Co-ordination in the Internal Market Field,
rapid procedures for processing cases connected with the abolition of frontier
controls. It would be desirable if these working methods could develop in the
context of mutual assistance between administrations, as has long been the
case in the veterinary and zootechnical fields.

These problems are usually brought to the Commission's attention on an
informal basis, either by businesses themselves or by Commission networks, in
particular the Euro Info Centres, even if a more systematic analysis would
sometimes be desirable.

(ii) Monitoring by national administrations

21. Except in cases such as those of company law and competition law, where the
application of the rules is placed under the direct control of the courts, it is the
national administrations that usually carry out inspections and take action against
infringements of Community rules; it is for them to organise themselves with
reference to their constitutional or administrative system. This decentralisation of
checks must remain the central element of the Community system, but it clearly has
a drawback - the risk of divergences in the exercise of these responsibilities. The
question therefore arises of how and under what conditions this system of checks
can operate without leading to risks of distortion, and especially without
compromising mutual confidence between administrations and businesses. A certain
homogeneity or equivalence of the control structures put in place by the Member
States is an essential condition to avoid risks of distortion and to promote mutual
confidence between administrations and between economic operators and to create
confidence on the part of consumers in the product made available to him. The
Sutherland report proposes a framework for inspections, but more informal methods
are also possible.

- **Assistance to the Member States:** the Commission must provide the Member
States with the assistance they need to ensure consistent application of the
rules. This assistance may take different forms such as joint interpretation of the
rules or a co-operation network between inspection authorities.

(a) To guarantee convergent application of the rules, every administration must
be provided with a similar interpretation of them. Of course, interpretative
documents cannot replace the legal instrument itself, which alone can
guarantee legal certainty for businesses and citizens, even though the
Court of Justice has recently relied on an interpretative document to reject
an action against incorrect transposition. A series of precautions should be
taken so that interpretative communications and documents can have the
desired effects:

they must be prepared in close liaison with the Member States and
both sides of industry so that the diversity of national situations is
taken into account;

**16**

they must be made public to enable everyone to make use of them;

they must be updated regularly with reference to developments in
national legislation, the jurisprudence of the Court, administrative
organisation and experience.

For a long time the Commission has published guidelines for controls on
pharmaceutical products, drawn up in close co-operation with the industry
and the Member States. In 1993 it will publish a guide to applying the new
approach, and one on public procurement. In the customs field, a number
of interpretative communications and other instruments and guides have
been prepared to facilitate uniform application of the legislation. There are
also plans to publish the decisions and opinions of the Customs
Committees. In the field of recognition of diplomas, a guide will be prepared
in 1993 for administrations, contact points and the beneficiaries of the
system of recognition.

(b) As is already the case in the areas of customs and indirect taxation, the
Commission must organise the functioning of networks of information
exchange and co-operation to deal with the inspection problems arising
from freedom of movement. These networks must also support
administrative co-operation. As a result of the free movement of goods,
services, capital and persons, every control administration will be faced with
new situations in which the normal control function will be impossible
without the information held by the home country administration. In the
absence of this information, there is a risk of either subjecting businesses
to disproportionate checks or rendering checks ineffective.

The Commission is facing a new situation since it is now dealing with
different parties in the Member States. Whereas to date those parties were
the departments of central administrations which issue regulations, from
now on they will be mainly in inspection or implementation departments
which have had only sporadic contact with Community institutions and
which are often decentralised.

**Control framework:**

(a) A number of methods of providing a framework for controls have been
tested, from simply identifying the control authorities to laying down
principles governing these controls:

Identification of the control authorities is the approach adopted in the
Directives on public procurement, firearms, television and recognition
of diplomas. It is accompanied by the obligation to report on the
application of the Directives to enable the Commission to compare the
different national measures, assess the effectiveness of the Directives
and identify any special initiatives needed.

In the field of foodstuffs, monitoring departments in the Member States
must be identified and notified, the monitoring arrangements must
comply with the joint principles such as monitoring at the production
stage and not only on the market, and the organisation of co-ordinated
monitoring programmes. These various arrangements are currently
being improved, in particular by the establishment of quality standards
in official control laboratories, the unification of general criteria for
methods of analysis and the fields of training of national inspectors.

**17**

**In** **the field of transport, there are** **rules** **on the level of controls to be**
**carried out on compliance with technical rules and working hours**
**legislation on the roads. These provisions supplement the rules for**
**harmonising controls on the conformity of vehicles, ensuring**
**compliance with the most important technical rules.**

**In the banking sector, the Member States have established, in**
**application of a Commission recommendation, an ombudsman**
**responsible for facilitating the settlement of disputes arising from**
**cross-border transfers.**

**(b) The need for mutual confidence between the Member States justifies the**
**establishment of control arrangements suited to the specific nature of each**
**field,** **based on the following guidelines:**

**unification of a number of principles of control and arrangements for**
**control where this proves necessary to ensure uniform and effective**
**application;**

**use of audits of national control systems to provide better evaluation of**
**the problems and clearer identification of the need for approximation**
**and ways of achieving it.**

**(c) In the field of public procurement, the proposal set out by the Sutherland**
**report is to appoint a mediator** **who,** **under strict confidentiality, would make**
**representations to the awarding authority to correct procedural errors and**
**would also suggest possible remedies in such a case. He should provide**
**complete guarantees of independence and should adhere strictly to the**
**rules of confidentiality. Establishing such a system will require an**
**assessment of national systems to avoid creating an additional layer of**
**bureaucracy and interfering with existing means of redress. The**
**Commission will therefore have to proceed cautiously with such an**
**approach, and will as a first step call on the Member States to designate a**
**contact point in the national administration who would be responsible for**
**informing and advising businesses.**

**ii) Access to justice**

**22.** **It** **is the domestic courts who have to decide at first instance whether a particular**
**enactment or conduct is in accordance with Community law. They have a crucial role**
**to play in ensuring that due regard is had to Community law in litigation and that**
**Community law is applied in an increasingly consistent manner. The subject**
**deserves a cohesive work programme all to itself covering the wide range of other**
**measures aimed at ensuring that Community law is widely known, clearly set out and**
**properly understood. Such a programme would have** **to** **be concerned with more than**
**just the single market since the problems referred to in this paper are equally**
**relevant in such areas as social affairs, customs and the environment. Consideration**
**of this issue should be situated within the wider framework which will be opened by**
**the entry into force of the Treaty on European Union, Title VI of which fully**
**associates the Commission with the judicial co-operation of the Member States, and**
**opens to it a right of initiative in civil matters. Nevertheless, and without prejudice to**
**more general developments which will arise in this context, the requirements for the**
**management and development of the Internal Market enable some avenues of**

**18**

**reflection to be opened up. Private individuals can have difficulty in enforcing**
**maintenance orders or obtaining damages. Businesses, particularly SMEs, may**
**encounter problems in securing timely payment for sales in other Member States**
**and such situations are likely to arise more often given the greater mobility of people**
**and free movement of goods and services.**

**(a) A primary area for consideration is that of the means of redress open to**
**injured parties, the effectiveness of the remedies open to them and the**
**information about them which is available:**

**The only case in which the Community has taken the view that specific**
**remedies were needed to ensure compliance with Community**
**obligations is that of public procurement;**

**There are other areas in which the Community rules expressly provide**
**for judicial review. The Customs Code, for example, entitles any**
**person to appeal against a customs decision which concerns him**
**directly and individually. Similar provision has been made with regard**
**to the mutual recognition of qualifications, where decisions must**
**contain a statement of reasons and may be challenged in the courts;**
**such an approach has also been adopted in the area of cultural** **goods**
**and financial services;**

**in most other areas no special provision appears to be needed, given**
**the ordinary legal remedies which exist in all the Member States. But,**
**as Community rules are concerned with the operation of the market, it**
**ought to be possible for consumers and firms to bring actions before**
**the courts if those rules are to be properly enforced. This may be**
**difficult where, for example, the court has no power to award costs to**
**the successful party or consumer associations cannot act in their own**
**right or on behalf of their members. The Commission will accordingly**
**be examining the entire question in a green paper on access to justice**
**for consumers which it will be publishing in the course of** **1993.**

**(b) The transparency and consolidation of, and information on, the rules of the**
**single market, together the networks for the** **dissemination** **of this**
**information, will help to ensure sound interpretation and application of those**
**rules by the national courts.** **In** **December 1992 the Commission adopted a**
**communication on co-operation between the Commission and national**
**courts in applying Articles 85 and 86 of the EEC Treaty ; the communication**
**is shortly to be supplemented by an explanatory booklet outlining the**
**procedural rules for the application of these provisions by the courts in the**
**Member States. A vital role will be played here by the measures taken to**
**improve the** **Celex** **database following the European Council in Edinburgh**
**and by measures to improve access to Community databases in general.**
**These measures have become even more important with the judgement of**
**the Court of Justice in the Francovich case, the implications of which have**
**been highlighted in the Sutherland report and elsewhere: the Court**
**accepted, within certain limits, that an injured party was entitled to**
**compensation** **for** **non-transposition** **of** **Community** **law..** **Quite**
**independently of the penalties which the Treaty on European Union**
**provides for in the event that a Member State fails to fulfil its obligations, it**
**is important that persons subject to the law should be able to take**
**advantage of the existing possibilities which the Court of Justice has**

**19**

**opened up here; the Commission is awaiting the outcome of two other**
**applications for preliminary rulings currently before the Court of Justice and**
**will then draw up a notice on the interpretation of Francovich. working in** **co-**
**operation with the Member States in order to take account of the specific**
**features of each legal system.**

**(c) Penalties are an integral part of a system of enforcement. There would be**
**no point in bringing the enforcement mechanisms more closely into line if**
**the penalties imposed were inconsistent. The measures taken are very**
**vague in this respect; obviously, they require the department responsible**
**for supervision to take appropriate measures when a product is not in**
**conformity with a directive; in a few isolated cases, notably veterinary**
**policy, insider dealing and money laundering, Member States are required**
**to establish appropriate systems of penalties. But, as consumer**
**associations and the European Parliament have pointed out, there are**
**areas where divergent penalties may damage the collective interest of the**
**Community, examples being the ban on hormones, insider dealing and**
**company law; fines for infringement of the rules on the export of dual-use**
**goods range from no more than ECU 16 000 to an unlimited amount and**
**with** **terms** **of imprisonment ranging from 2 to 7 or even** **15** **years. Generally**
**speaking, the Commission does not propose to try to harmonise penalties**
**as this would involve looking at the specific features of civil and criminal**
**proceedings and the scale of offences and penalties in each Member State.**
**But the flow of information between Member States needs to be made**
**more transparent, and they should be asked to specify the penalties they**
**have provided for when they notify measures to implement Community law.**
**If it proves necessary in the light of that information, the question of**
**systems of penalties could be discussed at a later stage.**

**(d) Once judgements have been delivered they must be enforced. This point is**
**likewise fundamental to any consideration of the question of access to**
**justice because, in an open market, it will more and more frequently happen**
**that infringements committed or damage caused by a firm or individual**
**based in one Member State are registered and prosecuted in another, even**
**though it may be impossible to find in the latter a responsible person**
**against whom the judgement can be enforced. There are numerous**
**intergovernmental conventions on the subject, but they are not working as**
**well as they should. Because they are intergovernmental conventions, the**
**Commission has no right of initiative, at least until the Treaty on European**
**Union enters into force; it can only monitor and encourage the work of**
**ratification and play a part in the relevant working parties:**

**The Convention on Jurisdiction and the Enforcement of Judgements in**
**Civil and Commercial Matters is the principal instrument for the**
**recognition of judgements; its extension to Spain and Portugal awaits**
**ratification in Belgium, Denmark, Germany and Ireland. Its operation**
**has been judged effective in the intergovernmental framework; the**
**Commission plans to seek the views of business here, with particular**
**reference to the rapidity of procedures for the transmission of**
**judgements and to the scope of the Convention. The possibility of**
**extending the Convention to include marriage and family law in general**
**will also be examined in order to take account of the new situations**
**created by the mobility of people, which has been facilitated and in**

**20**

**some cases encouraged by Community legislation.**

**The Rome Convention on Contractual Obligations will have an**
**increasingly important role to play as economic integration and**
**freedom to provide services make cross-border contracts a normal**
**feature of commercial life, giving rise to the problem of which law is**
**applicable. The Convention applies throughout the Community, with**
**the exception of Spain and Portugal due to delays in ratification in all**
**Member States except the Netherlands. Its effectiveness will likewise**
**be analysed, as will the usefulness of extending it to other areas of civil**
**and commercial law.**

**The entry into force of the Treaty of European Union, particularly Title**
**VI,should** **be the opportunity for the Member States to strengthen their**
**judicial co-operation and to give a new impetus to work in this area. The**
**Commission will play its full part in these new developments and, in this**
**context, will see to it that the internal market is extended where necessary**
**by taking, if the case arises, the necessary initiatives.**

**Once the Treaty of European Union is in force, this co-operation, whatever**
**form it takes; will be organised within a framework of common action**
**adopted by the Council in compliance with the terms of title VI of the Treaty,**
**which the Commission will be able to initiate taking inspiration from the**
**experience gained from the various initiatives currently in existence.**

**(e) Lastly, the legal professions must not be excluded from the current or**
**planned measures aimed at improving co-operation between national civil**
**services. Co-operation here could pursue two objectives, namely making**
**Community rules themselves better known and facilitating knowledge and**
**understanding of the Member** **States'** **different legal and judicial systems.**
**Several methods might be envisaged:**

**the organisation of exchanges between training establishments, on the**
**model of the Erasmus or FORCE programmes;**

**encouraging the organisation of training courses for judges and law**
**officers in the Member States; measures of this kind have been taken**
**for these professions in France and Spain, subject to budgetary limits;**
**if further budgetary resources were to be made available, the**
**Commission** **could** **encourage** **such** **initiatives** **in** **suitable**
**establishments (such as the College of Europe in Bruges, the**
**European Institute of Public Administration in Maastricht, and the**
**Universities of Trier and Oxford).**

**the organisation of exchanges of judges and law officers by bringing**
**them into the existing programme for the exchange of officials, which**
**covers** **departments** **responsible** **for** **implementing** **Community**
**legislation on the single market (KAROLUS programme);**

**21**

**III.** **SUPERVISING THE OPERATION OF THE SINGLE MARKET**

**(a) Preventing obstacles to trade**

23. The Commission has a range of tools at its disposal for ensuring that national
rules comply with the Treaty and for promoting mutual recognition and to eliminate
barriers justified by the Treaty by legislative action. If the single market is to work
properly, it is vital that the Commission should go on performing this preventive
function, which it exercises in the first instance by applying the provisions of the
Treaty, because there is a natural tendency in all Member States to introduce new
rules and regulations, for quite legitimate reasons, without necessarily considering
their impact on trade and because supervision of national rules and regulations
enables the Commission to identify any areas where additional Community
legislation is needed. Competition policy plays a central role in the prevention of
obstacles to trade by preventing some markets from being distorted by cartels,
abuses of dominant position, state aids or exclusive rights.

**(i) Goods**

24. Directive 83/189/EEC, which has applied to all goods since 1988, requires
Member States to notify the Commission and the other Member States of any
planned rules or regulations. It has become a useful instrument for preventing
obstacles to trade. Notification initiates the vetting process, and the transparency it
establishes launches a process of dialogue and co-operation between the Member
States and the Commission. Gaps have been identified in the coverage of the
Directive and in the procedures which it sets up. A proposal aimed at overcoming
these is currently before the Council and Parliament.

25. There is another measure which could make for greater transparency of mutual
recognition procedures. Mutual recognition is not automatic; the natural tendency is
for the national department responsible to check that a product entering the domestic
market complies with its own rules, unless it can be shown that it complies with the
rules of another Member State providing equivalent protection. It has to be shown in
every case that there is equivalent protection, and the situation may change as the
rules themselves change. It should be possible to ask Member States to declare all
refusals to recognise the rules of other Member States. The Commission would then
be able publicly to announce the cases where rules were not recognised by one or
more Member States. This multilateral method of assessing equivalence would draw
attention to any instance in which one Member State challenged national rules that
were recognised by all the others. The Commission will be making an appropriate
proposal shortly.

26. Finally, particular attention must be given to problems in the veterinary and
phytosanitary sectors, where the risk of national measures affecting trade in animals
and animal products is ever present. Since January 1993, we have been witnessing
a very unfavourable evolution of the animal health situation in the Community. This
has given rise to tensions amongst the Member States and has prompted the
adoption of unilateral national measures with the declared intention of preventing the

**22**

**spread of serious diseases from other Member States and third countries. The**
**Commission has succeeded in applying the necessary Community measures,**
**compatible with the abolition of border controls; it should however be noted that the**
**Member States have had a tendency to apply unilateral national measures. To**
**guarantee maximum security from a health point of view there is a pressing need to**
**provide resources and procedures which will allow the Community to react rapidly to**
**disease outbreaks and to support disease eradication programmes effectively in the**
**interest of achieving and maintaining the highest possible health standards. Without**
**this,** **the single market in animals, and in animal and plant products, will not develop**
**and prosper.**

###### **(ii) Services**

**27.** **The prevention of obstacles to trade in services is less well organised. Since**
**1962 there has admittedly been a prior examination and consultation procedure for**
**measures which Member States are planning to adopt in the field of transport. But a**
**procedure of this kind is an exception in the services sector, and the Commission**
**could envisage, outside the harmonised sectors, extending to the services sector the**
**procedure followed for technical rules and regulations.**

**28.** **More than the free movement of goods, the growing freedom to supply services**
**places tax and social security systems in competition with one another. This is fully in**
**line with the principles governing the single market, under which the law applicable is**
**to be that of the country from which the service is supplied. The Commission must,**
**though,** **seek to ensure that differences between social security and tax**
**arrangements** **do** **not lead to situations which would be legally or politically**
**unacceptable. To prevent the supply of services from becoming a means of**
**sidestepping the social security requirements of the country in which the service is**
**supplied,** **the Commission, acting in accordance with the Social Charter, has put**
**forward a proposal on the posting of workers, which defines the conditions under**
**which the law of the country in which the service is supplied is to apply. In the tax**
**sphere the Court itself has drawn the Commission's attention to the need for**
**Community action. The Commission is currently studying the question.**

###### **(b) Evaluating the effectiveness of Community rules**

**29.** **The Commission is sensitive to the concerns expressed by some Member**
**States and industries are concerned about the availability of statistical information on**
**intra-Community trade. The former method of collection based on customs**
**declarations has given way to a new system based on direct declarations made each**
**month by firms. The first results obtained from certain Member States lend support**
**to the view that that the difficulties inherent in the launching of this system are**
**transitory in nature and that the statistics provided will be of a kind and quality**
**comparable with those which existed up to 1993. The Commission will therefore be**
**in a position carry out, in similar conditions, the monitoring of the evolution of intra-**
**Community trade flows required to accompany any necessary policy decisions in the**
**trade area.**

**30.** **The effect of the single market on business, industries and the economy in**

**23**

**general has been descried in the Cecchini report and other academic studies. The**
**next step will be to verify the analyses made in these publications, but that can be**
**done when all the measures called for have entered into force. The bulk of the**
**measures on the manufacture of goods are now in place and border controls have**
**indeed disappeared, but a manufacturing firm remains dependent on the range of**
**services it buys in order to organise the production and marketing of its products.**
**Most of the measures concerning services particularly in the insurance,**
**telecommunications, energy and transport fields, will enter into force only gradually.**
**In its resolution of 7 December, therefore, the Council asked that such an**
**assessment be carried out by** **1996.**

**31.** **The assessment of the economic and social impact of the single market has to**
**overcome three types of difficulty:**

**•** **In the first place, there will have to be information available that will make it**
**possible to gauge the effects of the dismantling of frontier controls on the**
**activities of firms and hence on the structures of their markets and their**
**strategies: the "observatoire des** **entreprises"** **could provide information in this**
**regard.** **Large firms provide clear illustrations of such changing markets and**
**strategies, but it is more difficult to assemble information on business services**
**and especially SMEs;**

**•** **An assessment will also have to be made of the effects of the conduct of**
**businesses, public administrations, consumers and workers, who themselves**
**react to the effects of the single market and influence the level of knowledge**
**and the conduct of** **firms,** **either amplifying or attenuating the consequences the**
**single market would otherwise have had;**

**•** **The study will also have to take proper account of the time it takes to respond to**
**Community rules.**

**Assessing the impact of the internal market is thus a long-term task. But it can**
**be started at once, and the Commission proposes to launch this work at the**
**beginning** **of** **1994,** **subject to the budgetary resources available, on the basis of**
**the preparatory work already under way; the exercise should last about three**

**years.**

**32.** **It is also necessary to ensure that the operation of the single market matches**
**the needs and expectations of business and of the general public. But proper**
**supervision is difficult because there is no general yardstick against which the**
**working of the single market can be measured. A large number of committees have**
**been set up to carry out assessments of** **this** **kind often on the basis of reports which**
**the Commission is obliged to present to the Council and the Parliament.. These**
**committees can be a useful channel for establishing whether the rules in force are**
**what are needed. However, it is difficult to assess the economic, social and industrial**
**impact of rules from the vantage point of a single sector because the environment of**
**firms is determined by the totality of rules which determine the** **competitivity** **of this**
**environment. The question arises as to how the Member States and economic**
**operators concerned could organise themselves to monitor and assess the overall**
**impact of the rules.**

**33.** **It is not enough to assess the economic consequences of the single market as**
**such;** **it must also be verified whether each of the rules adopted meets the**

**24**

expectations of businesses, consumers and the general public. The Commission has
at its disposal for this purpose the various working parties and committees bringing
together government representatives, business people, consumers or
representatives of those working in the field, one example being the veterinary and
foodstuffs advisory committees, made up of representatives of the occupational
categories involved and of consumers. For broader supervision of the operation of
the single market, the Commission turns to the Advisory Committee on Co-ordination
in the Internal Market Field to pass on any information, studies or observations on
the working of the market; if necessary, therefore, this committee will be able to
make up any shortcomings in communication between the Commission and
Member States. As regards contacts with the economic and social groups
concerned, the Commission, in line with Parliament's resolution of
18 December 1993, is prepared to work through the Economic and Social
Committee, which consists of representatives of all of these groups and thus
combines technical knowledge with the political sensitivity needed for an assessment
of this kind.

**IV. ORGANISATION** **O f** **PARTNERSHIP WITH** **THE** **MEMBER**

**STATES**

**(a) Scope of partnership**

(i) Freedom of movement for persons

34. Freedom of movement for persons is governed by its own rules, which will
change with the entry into force of the Treaty on European Union. But it is accepted
that the Community has jurisdiction over capital or sensitive goods such as drugs
destined for the licit market (medical and pharmaceutical), privately held weapons
and capital. It is important in these areas that the Commission should preserve the
contacts that exist between the Member States. It is likewise important that the
Commission should provide a channel for the exchange of information in areas which
are not regulated at Community level, such as psychotropic substances or the
protection of public morals; it was in this context, and to this end, that the Council of
8 February 1993 adopted a regulation to set up the European observatory on drugs
and drug addiction. Leaving aside the question of co-operation between
administrative departments in the application of Community rules, an exchange of
information and experience is needed in order to build confidence between national
administrations. The Commission will accordingly arrange regular seminars to
facilitate convergence of national systems, without necessarily having recourse to
Community legislation or international conventions in order to forestall any difficulties
and to lead to the laying down of guidelines by the Council.

(ii) Protection of essential requirements

35. Solidarity between Member States in the management of the single market
demands co-operation between administrations in order to ensure that consumers
are protected against dangerous products or ones not in compliance with the rules

**25**

moving from one Member State to another. It also means that the Commission must
be able to secure changes in Community rules in order to respond to new needs and
must therefore have the necessary scientific information at its disposal. Lastly,
solidarity in the fight against fraud is needed.

**a)** **Early-warning systems for dangerous or** **non-conforming** **goods and**
**services:** taking into account the several instruments establishing particular
early-warning networks in specific directives and the entry into force in 1994 of
the general product safety directive all consumer goods moving within the
Community are covered.

The first question is whether these different existing systems can work
effectively and, if so, how. Experience to date shows that they are poorly
understood by national administrations and applied inconsistently in the different
Member States. The challenge facing the Commission and the Member States
is to ensure that these emergency systems can operate on a routine basis. But
with a large number of networks and contacts even inside the Commission,
there is a danger that the system will not be transparent and will be rendered
ineffective. A series of measures could be envisaged to improve the situation:

acceleration of the speed of transmission of information

stricter limitation of the use of the procedure to truly urgent cases;

at least in certain sectors, more precision regarding the information to be
supplied by national authorities;

a more equal use by the Member States of the emergency systems;

greater transparency regarding the reaction of the national authorities to the
cases notified;

greater Community co-ordination regarding the treatment of information
(confidentiality/ publicity);

more systematic organisation of the discussions at Community level
regarding the treatment of the cases notified.

The second question is whether such systems would be useful in the field of
services, something which should be looked at together with the
Member States. Such systems are devised on a pragmatic basis for the
professions in cases where serious and specific situations arise which may have
consequences for the practice of the profession. These methods are however
still an exception in the case of services; but the growth of cabotage in the
various forms of transport, for example, might justify informing all
Member States of measures taken against a firm which might have
consequences in the other Member States. The Commission will therefore be
considering the usefulness of establishing early-warning networks for services
too.

**b) Adapting regulations to new risks:** the Commission must also have the
means of ensuring that rules can respond effectively and rapidly to new
demands. This flexibility must come into play not only when rules are drawn up
or amended but also when they are applied in the Member States. These two
levels are closely bound up with one another and interact, but the tasks and
functions involved are different.

**26**

The drafting and amendment of regulations requires a capacity for technical
or scientific evaluation and the establishment of legislative processes which
are sufficiently streamlined to meet any needs that arise. It goes without
saying that problems crop up with degrees of urgency that vary from one
industry to another and from one type of risk to another. The more critical
the risk, the greater are the demands placed on the Community machinery
and the more structured co-operation between the Member States and the
Commission has to be. This is the case with the different scientific
committees in the veterinary, plant-health and food sectors, on which the
leading independent European experts sit. The objective of these
committees is to supply the Community with scientific analyses which are
as incontestable as possible so that they can serve as a basis for drafting
and amending Community legislation. Similar needs exist in other areas
such as car safety, the safety of chemicals and consumer product safety.

The performance of the Community machinery should be considered
overall, taking in the entire decision-making process, which can last from
three to five years depending on the type of legislation and the procedure to
be followed. Such long periods may be incompatible with the seriousness of
the danger and may justify considering the implementation in the meantime
of national legislation which has the effect of fragmenting the market once
again. The Commission thus needs procedures that are adapted to the
Community's requirements and will enable it to take emergency measures
in emergency situations; such a procedure is provided for under certain
conditions in the directive on general product safety.

Generally speaking, the Commission does not itself possess the technical
and scientific capacity needed to evaluate the need for regulation. New
working methods will therefore have to be devised under which particular
tasks would be entrusted to groups of experts or laboratories designated by
the Commission in agreement with the Member States. There is wide
experience of such an arrangement in the pharmaceutical sector.

**(b) Partnership instruments**

(i) Administrative co-operation

36. Administrative co-operation, in application of the principle of subsidiarity, is also
justified for a diversity of reasons: to ensure a comparable level of protection of
health and safety, to ensure mutual confidence and to guarantee competition. The
abolition of administrative checks at the Community's internal borders highlights the
additional risk of fraud where Community rules allow different national arrangements
to coexist and make the crossing of borders subject to special procedures or
conditions. There may also be a risk of fraud if controls are not carried out to the
same level, as was shown by the Commission report on hormones. In such cases
the intervention of authorities will have implications on the territory of other Member
States. Owing to the abolition of customs checks, various authorities may be
involved in the same case.

37. Combating fraud is a well-known problem in relation to the Community budget.
Fraud against the Community rules has always existed but each Member State has

**27**

**claimed up to now to be able to keep it under control through its administrative**
**procedures. Administrative co-operation instruments now need to be introduced in**
**order to meet this threat. The development of informal initiatives gives rise to fears of**
**a lack of transparency in the exchange of information and of an unequal treatment of**
**cases.** **There would therefore be a number of advantages in introducing formal**
**control machinery, in accordance with the proposals in the Sutherland report. It is in**
**the interests of consumers and the public at large for mutual assistance between**
**national authorities to be as efficient as that which exists within Member States.**

**38.** **Co-operation between authorities may also be aimed simply at administering**
**Community** **acts,** **which** **often** **requires** **information** **gathered** **in** **another**
**Member State. This is the case with the majority of directives and is generally the**
**function of committees at the Commission and of networks of responsible authorities.**
**It is generally departments in the Member States administering internal rules which**
**take part in the network but it may also be departments set up especially to**
**administer directives, as in the case of the system for the general recognition of**
**diplomas.**

**39.** **The arrangements for** **co-operation** **may take various forms:**

**(a)** **In** **certain fields the arrangements for mutual assistance are governed by**
**detailed procedures managed by committees: this is the case, for example, in**
**the foodstuffs, pharmaceutical and veterinary fields. The abolition of tax frontiers**
**has led to the setting-up of bodies for co-operation between authorities within**
**the Standing Committee for Administrative Co-operation and by the designation**
**of liaison offices in each Member** **State;** **this structure will permit mutual**
**assistance in carrying out checks in one Member State on behalf of another; the**
**procedures for this mutual** **assistance** **are laid down in Regulation** **218/92** **on**
**administrative co-operation particularly in relation to VAT; besides this, there**
**exist provisions regarding mutual assistance in Directive** **77/799/EEC** **which**
**have been extended to the field of** **excise.** **In the area of foodstuffs, co-operation**
**procedures establishing a contact point in each Member State and an obligation**
**to cooperate are in the process of adoption in the context of a draft directive**
**completing the directive on official control. Furthermore, a directive establishing**
**scientific co-operation between the Member States and the Commission has**
**been adopted.**

**(b) In most other fields, Community texts restrict themselves to obliging Member**
**States to ensure implementation without indicating the missions entrusted to the**
**responsible authorities.**

**40.** **Experience to date suggests an approach based on the following lines which will**
**be developed in a specific communication:**

**(a) notification by Member States of implementing measures in respect of**
**Community acts, i.e.** **not** **just transposition measures which are generally notified**
**once and for all, but also administrative implementing rules;**

**(b) definition before the end of the year of objectives and procedures for**
**administrative co-operation at the implementation stage for each area of**
**Community legislation;** **these** **matters will be considered in each relevant group**
**and committee; the aim will be to identify clearly the authorities responsible for**
**implementing the legislation, to determine the objectives, needs and procedures**

**28**

**for administrative co-operation, assess the effectiveness of existing procedures**
**in fields in which administrative co-operation has been introduced and, finally,**
**identify ways in which the Commission can usefully contribute;**

**(c) drawing up of guidelines for administrative co-operation possibly on the basis of**
**a Commission proposal; the aim of this proposal would be, in fields where no**
**specific provision exists, to introduce the basic elements of co-operation**
**between authorities in a bid to avoid bureaucracy and duplication of bodies and**
**to introduce a sufficiently flexible structure which can be adapted to the needs**
**and specific nature of each field;**

**(d) preparation by the Commission of a support programme for administrative** **co-**
**operation;**

**(e) a report to the Council and Parliament in early** **1994** **on the position with regard**
**to co-operation between authorities, accompanied by supplementary proposals**
**as required.**

**(ii) The adaptation of authorities to the rules for the operation of the single**

**market.**

**41.** **In** **order for co-operation between authorities to work and, more generally, for**
**the rules to be fully observed in the interests of the security of both transactions and**
**consumers, administrative structures must be brought into line with the commitments**
**entered into.** **In** **order for the appropriate information to flow between authorities and**
**for dialogue between the various bodies to be possible, national authorities at all**
**levels need to have integrated the Community dimension into their operational rules**
**and their organisation. The efficiency of administration is just as much a determining**
**factor for the business environment as the content of regulation.**

**(a) Changing the administrative infrastructure: freedom of movement within the**
**Community has shown the importance of the control structure at its external**
**borders. It is in the interests of the** **whole Community that the police, customs**
**and health authorities have available at border posts the equipment they need**
**for their task, because they are** **acting** **on behalf of the whole Community.**
**Furthermore, the Commission has launched a survey among the Member**
**States on the management of checks on persons at external borders.**

**A comparable situation exists within the Community: authorisations for**
**placement on the market and checks carried out on the market are made for the**
**benefit of all consumers. This is particularly true in fields covered by the**
**harmonisation** **of essential** **requirements for products, which requires**
**laboratories and efficient testing departments. The Commission is currently**
**carrying out a study on all testing, inspection and certification departments in the**
**Community in order to assess the situation and, in the light of the** **findings,** **draw**
**up a programme to strengthen these infrastructures in co-operation with the**
**Member States. The credibility of certification bodies and mutual trust between**
**national control systems inevitably presuppose a** **levelling-up** **of the skills of**
**testing and certification bodies; it also entails the introduction of networks of**
**mutual accreditation agreements with the full support of national and Community**
**public authorities.**

**There may well be scope, in particular under the Prisma programme, in force**
**until 31/12/93, for the Community to give financial support to the establishment**

**29**

**of infrastructures of test and calibration laboratories and testing and certification**
**bodies.**

**(b) Training of national authorities: national authorities are faced with new rules**
**which they must administer in the light of the Community dimension. When**
**carrying out checks on the market they must be able to understand the meaning**
**of product markings and accompanying documentation in order to react in a**
**manner consistent with Community rules. Similarly, in order to carry out an**
**efficient and appropriate check on the load of a lorry from another Member State**
**the police have to know which special documents the driver must produce. The**
**problem of** **training,** **which has been highlighted with regard to access to justice,**
**concerns** **all** **national** **authorities** **and** **particularly** **those** **involved** **in**
**implementation. While measures have been taken to promote greater**
**awareness of the Community dimension on the part of national authorities,**
**these remain insufficient in relation to the needs.**

**exchanges of officials constitute an essential instrument for co-operation**
**and mutual trust between authorities. The scope for exchanges in relation**
**to the administration of the internal market remains limited, but is**
**expanding progressively. Exchanges** **have** **been** **undertaken** **in the**
**veterinary field since** **199-1,** **and are now possible in all fields** **governed** **by**
**internal Community rules, under the Karolus programme, which has been in**
**operation since 1 January 1993. Over five years the programme is intended**
**to permit exchanges by 1 900 officials in fields to be determined annually in**
**the light of experience. The scope for exchanges already exists in the**
**customs area and has been extended on an experimental basis to the area**
**of taxation which will be covered by a specific programme (MATTHAEUS-**
**TAX) which is under discussion in the Council.**

**While these exchange programmes are accompanied by training schemes**
**for participants, there is no systematic programme of training for national**
**officials. Only in the veterinary field is there provision for courses of further**
**training for veterinary inspectors; in the customs and tax areas the**
**exchanges will be complemented by a significant programme of training**
**seminars and by the development of common training programmes. It**
**would be beneficial, as proposed in the field of training for judges, to**
**promote exchanges of students and instructors in establishments for the**
**training of officials.**

**Finally, the Commission is studying the feasibility of a documentary and**
**contact periodical aimed at national administrations.**

**(c) Data-transmission networks between Member** **States:** **co-operation between**
**authorities can work effectively only if it is based on data-transmission**
**infrastructures. These needs were identified in 1991 by the Commission in**
**various fields as a result of freedom of movement within the Community. Since**
**then,** **besides the initiatives related to the management of the external borders**
**(SID,** **TARIC),** **for the management of the Internal Market itself several initiatives**
**have been taken in order to set up networks covering indirect taxation (Vies),**
**veterinary control** **(Animo** **and Shift), plant health (Physan) drugs and drug**
**abuse (REITOX) and** **intra-Community** **trade** **(Comedi);** **the reason for setting up**
**these networks was the abolition of border checks. Other needs are now evident**
**for example with regard the administration of export controls on dual use goods,**
**Community type approval for cars, the opening up of public procurement, the**

**30**

**dissemination** **of job offers and requests, social security, the administration of**
**authorisations for the marketing of pharmaceutical products and controls on the**
**marketing of foodstuffs. As new directives enter into force new needs will arise.**

**In** **order to avoid a scattering of initiatives, the Commission has presented to the**
**Council the** **TNA-IDA** **programme, which aims to suggest guideline programmes**
**for computer networks which would govern all transnational network projects,**
**even those not involving Community funding, and introduces an instrument for**
**funding network feasibility and implementation studies.**

**Initial studies show that needs centre on three types of network: electronic mail**
**networks, data file transfer networks and networks for consulting and updating**
**databases. Each of these networks must operate in accordance with security**
**and reliability requirements. All data-transmission networks require a consistent**
**and integrated approach, both at institutional and national level, which must not**
**be limited to the Community but must also cover the systems relating to the**
**other pillars of the Treaty on European Union.** **In** **order to carry out a consistent**
**and planned expansion of these networks over the next few years, a**
**programme will be launched to draw up rules for a common architecture for an**
**electronic mail service between the Community institutions and Member States,**
**on the one hand, and between the Community institutions, on the** **other,** **this**
**service will initially permit the exchange of documents relating, for example, to**
**the conduct of meetings; in a subsequent phase, applications specific to**
**particular fields will be added to the electronic mail service.**

**(d) The Commission intends to pilot the operation of computer networks between**
**authorities with the assistance of two bodies: the Advisory Committee for** **Co-**
**ordination within the Internal Market Field should be in a position to identify**
**needs and priorities and assess the effectiveness of networks; the Telematics**
**for Administrations Group (TAG) should permit management of the setting-up of**
**the networks, including any technical, organisational and financial problems**
**involved,** **while respecting the remits of sectoral committees.**

**V. TRANSPARENCY OF COMMUNITY MEASURES**

**42.** **The transparency of measures has become a major challenge for the**
**Community for its image both internally and externally. This explains the emphasis**
**which the European Council, at its Edinburgh meeting, placed on legislative**
**consolidation, by requesting the establishment of an accelerated working method**
**acceptable to all the Community institutions, to adopt proposals on legislative**
**consolidation quickly and effectively. Transparency is not just a requirement for the**
**political and social acceptability of rules adopted; it is also a requirement for their**
**proper implementation in the Member States.** **Member** **States of course clearly have**
**their part to play, though their effectiveness will depend on their ability to optimise**
**their initiatives within the framework of joint measures undertaken with the**
**Commission and other Member States. But the prerequisite for all communication**
**and information activity lies in the transparency of Community legislation. These two**
**themes have been the subject of Commission communications, two on transparency,**
**of 2 December 1992 and 2 June 1992, and another on access to information, of 5**
**May 1993.**

**31**

**(a) Transparency of Community legislation**

43. As announced in its communication of 2 December 1992 on the follow-up to the
Sutherland report, the Commission will publish codification requirements in the light
of the current position with regard to legislation and likely developments. Already, the
1993 legislative programme provides for codification of a large number of acts in the
internal market area. At the same time, it will make legislation available to the public
in consolidated form on the Info 92 database; legislation on pharmaceuticals,
foodstuffs and company law is currently available. This project will be progressively
extended to cover all legislation. It should perhaps be stressed that these
consolidated texts are available in the nine Community languages. Furthermore,
informal consolidation will be developed thanks to the programme established by the
Office of Publications from 1 January 1993.

44. Concurrently the Commission will publish, also in the nine languages,
compilations of legal texts by subject matter. The first publication of this type will be
on foodstuffs and will include all legislation relating directly or indirectly to that field. A
further one will be on pharmaceuticals.

45. As stated earlier, the Commission is prepared to undertake joint publication
which would enable not only Community legislation but also implementing legislation
to be made available to specialists. Proposals to this effect are currently being
examined at the Commission, but in order for the initiatives to meet the needs arising
in each of the Community languages it is prepared to promote the establishment of a
European economic interest grouping with publishers covering the nine languages
and pooling their translation, research and publishing resources.

**(b) Communication and information measures**

(i) Annual report on the internal market

46. The Commission has announced the publication of an annual report on the
internal market. This report, without duplicating the Commission's general reports or
the report to Parliament on the implementation of Community law, should permit
policy-makers in the Community to determine priorities and businesses to obtain
information on the current operation of the internal market. The purpose of the report
will not be merely to give information on the stage reached in the decision-making
process which are already given in the annual report, nor to examine the problems of
transposition and implementation of legislation, which are dealt with in the report on
the implementation of Community law, but to describe all aspects of the
administration of the single market as set out in this paper. Consequently, the report
will have to be drawn up in co-operation with Member States so that it can include
information on the implementation of legislation there. Consideration could also be
given to subsuming in this report all the other reports which the Commission has to
make in compliance with specific directives, together with the reports which
Member States have to drawn up.

**32**

**(ii) Communication and information initiatives**

**47.** **The Commission has adopted an approach to strengthen and reinforce**
**information and communication actions for the single market which is in line with**
**the conclusions of the Sutherland Report. In this context, the Commission, is**
**establishing an inventory of its current activities by means of an interservice**
**working group. This group will also make the necessary complementary**
**proposals. Furthermore the group will make constructive recommendations in**
**order to improve co-ordination between the services and with outside**
**organisations and relays. This will permit clearer messages with greater impact**
**to be passed to the general public and specific audiences. Some of the**
**guidelines will include:**

**(a) use of more modern and more high-powered communication media;**

**(b) organisation of partnership with the Member States, Community institutions, and**
**outside organisations and relays ;**

**(c) review of publications and exploration of new opportunities**

**(d) improvement of the dissemination of the** **INFO.** **92 data base which will be**
**available on a European general public network and which provides basic**
**information on the operational rules of the Internal Market; it constitutes the**
**basic instrument of Community information actions.**

**(e) better targeting of actions**

**33**

###### **SECTION B: DEVELOPING THE SINGLE MARKET** **I. A BARRIER-FREE ENVIRONMENT**

**48.** **Assuming that all the measures taken are correctly transposed and enforced by**
**the Member States, we must ensure that they are in line with what is necessary for**
**the operation of the single market. With the completion of the legislative programme**
**set out in the White Paper, the basic structure of the Community legislation on which**
**operation of the single market is based has been put in place. This does not mean**
**that new needs will not continue to arise, in connection with the protection of health,**
**safety, the environment or consumers, which will require either existing rules to be**
**adapted or new rules to be prepared. While Article 8a confers on the Community**
**clear and exclusive responsibilities for ensuring that the single market functions**
**satisfactorily, this does not prevent the Community institutions from seeing to it that**
**the** **principle** **of proportionality is** **complied** **with** **in** **a context of greater transparency.**
**The fact that the principle of subsidiarity has been enshrined in the Treaty on**
**European Union creates an even stronger obligation to ensure transparency as**
**regards both the grounds for any initiative and the ways in which subsidiarity is to**
**apply.** **In** **order to achieve such transparency, a methodology and an analytical**
**framework must be established and used during the preparatory work, and there**
**must be an information and consultation procedure which is open to all the parties**
**concerned.**

**49.** **The development of a methodology and an analytical framework makes it**
**necessary first and foremost to define the criteria to be applied in assessing any new**
**need for legislation, in terms of both the need for legislation itself and the choice of**
**solutions that will achieve the greatest possible practical impact (effectiveness) while**
**exerting the smallest possible constraint in relation to the objective pursued**
**(proportionality). These criteria should serve several purposes: identifying the**
**Community objectives at stake (removal of barriers to free movement or of**
**distortions of competition, social objectives, technological harmonisation objectives,**
**etc.),** **spelling them out with due regard notably to the way in which they interact (this**
**will throw light in particular on the choice of legal basis), and defining the needs for**
**action to fulfil these Community objectives. They should also relate to the method of**
**assessing the economic importance of the legislative need and the cost of the future**
**rules.** **Lastly, they should make it possible to define the type and content of the**
**measure in the light of the needs and objectives identified, in particular by presenting**
**a range of possible solutions suggested by experience in the Community.**

**50.** **In applying this method of assessment and analysis when drafting its proposals,**
**the Commission will be aiming for maximum coherence in the Community's**
**legislative policy and for consistency between certain types of measure that pursue**
**different Community objectives. Such consistency must be sought in the**
**Commission's internal co-ordination, in the other Community institutions and even**
**within national administrations. The transparency of the process of preparing**
**Commission proposals should provide a tool for ensuring such co-ordination. As a**
**first step, transparency has been improved through sounder preparation of**

**34**

explanatory memoranda, through publication of the Commission's legislative
programme and through the use of white and green papers; several green papers
are currently being prepared by the Commission services on, for example, business
communication or access for consumers to judicial review. Elsewhere, discussion is
underway on the basis of green papers concerning media concentration and
pluralism, as well as on the single market for postal services.

- by giving notice in the Official Journal of the intention to prepare fresh
proposals. The Commission will thus have to take a decision on the desirability
of a measure in advance of any discussion on a specific proposal;

- wherever appropriate, by framing an overall policy which should make it
possible to ensure maximum consistency between certain types of measure
pursuing particular objectives. Green papers are such general policy
statements, and their publication can constitute an essential counterpart to any
initiative to promote the transparency and consistency of the Community's
legislative action.

51. The results achieved to date leave some obstacles to trade that the Community
must try to eliminate following the working methods described earlier and according
to the priorities identified in the present document. Open consultation will enable the
relevance of these priorities to be established.

**a) Improvement of the regulatory environment for businesses and citizens**

(i) Rules on the protection of intellectual property

52. On the basis of the White Paper, many disparities between national rules which
affected the free movement of goods or services have been eliminated. This action
must continue with the aim of promoting innovation within the limits of the
competition rules:

- the free movement of goods must be encouraged through harmonisation of the
rules on the protection of biotechnological inventions and new plant varieties (for
which a proposal is before the Council) and industrial designs;

- the freedom to provide services and the free circulation of goods should be
facilitated by harmonisation of the rules on broadcasting by satellite and
retransmission by cable, on the length of copyright protection and neighbouring
rights and on the legal protection of data bases.

53. However, in addition to the rules on harmonisation, new facilities should be
introduced for enterprises offering them arrangements for protecting patents,
trademarks, new plant varieties and industrial designs that are based on a single
registration procedure and a Community system of protection. Proposals on
trademarks and new plant varieties are already before the Council; a convention on
the Community patent is on the point of being ratified; and a proposal on industrial
designs will shortly be put forward by the Commission.

**35**

**(ii) Protection of personal data**

**54.** **A series of proposals is currently before the Council, including a proposal for a**
**directive (modified in October 1992 following the opinion of the European Parliament)**
**concerning the protection of individuals in relation to the processing of personal data**
**and the free circulation of data. Flows of personal data (within and between firms, in**
**the context of mutual assistance between administrations, between research**
**centres, notably in the medical and epidemiological fields) are on the increase as**
**integration and free movement proceed. The protection of citizens requires that their**
**private lives be safeguarded from uses which might be made of data concerning**
**them.**

**(iii) Company law**

**55.** **Adoption of the statute for a European company would provide an extra legal**
**option for businesses wishing to take it up.** **It** **would also overcome a difficulty that**
**has no place in the Community today: businesses based in different Member States**
**cannot always merge without having to set** **up** **complex, costly legal arrangements.**
**The situation is all the more anomalous in that the** **tax** **treatment of such mergers**
**was dealt with by a Council Directive adopted in July** **1990.** **The European company**
**would thus be an extra option and would simplify matters for businesses. It would**
**also be a strong symbol. Adoption of the statute would furthermore break the**
**deadlock on other measures, such as the European cooperative statute and the**
**tenth Directive on cross-border mergers on which the Parliament has suspended its**
**opinion in order to attempt to find a solution to worker participation.**

**(iv) Simplifying cross-border payment facilities**

**56.** **Consumers and businesses are still baffled by the cost of cross-border**
**payments, which can be disproportionate and non-transparent, particularly where**
**small amounts are being transferred. While large firms generally find ways round the**
**problem,** **for SMEs it is one of the factors penalising cross-border business most**
**heavily.**

**57.** **The Commission focused on this question among others in a communication**
**dated March 1992, urging banks to take voluntary action aimed chiefly at improving**
**the efficiency of the transfer systems and their interconnection, but also, for example,**
**at making the cost of cross-border payments more transparent for their customers,**
**thereby allowing comparisons to be made between financial institutions and**
**stimulating competition between them.**

**58.** **The Commission stated in that communication that it would review the situation**
**in the first half of 1993 and that, if no progress had been made, it would draw the**
**necessary conclusions, where appropriate in terms of legislative action; Parliament**
**supports the approach of the Commission, whilst wishing to see more restrictive**
**measures in some respects.**

**36**

59. The hoped-for progress will, however, take time, time that will vary according to
the complexity of the different problems to be overcome. The banks often argue that
the amounts of cross-border payments are too small to justify automating the
system, which is the only way to cut costs. The number of complaints remains high,
and Parliament has enthusiastically taken up the problem. According to the
Parliament, a new initiative, backed up by the threat of sanctions and, where
necessary, including legislative action, should lay down an obligation to achieve
results.

**(b) Ongoing approximation of tax regimes and the creation of a favourable tax**
**environment for businesses**

(i) Indirect taxation

60. The abolition of tax frontiers and the introduction of minimum rates for VAT and
excise duties throughout the Community from 1 January 1993 has laid the
foundations for the new developments that are expected in the internal market over
the next few years. These developments involve the changeover to the payment of
VAT in the country of origin, which is planned to take place on 1 January 1997. The
opening-up of frontiers and market forces are pushing VAT rates closer together:
this approximation has been tangible in recent years and must continue in the
interests of consumers and economic growth.

61. The minimum Community rates of excise duties on alcoholic drinks, tobacco and
petroleum products can be revised every two years, and for the first time on
1 January 1995, in order to pursue public health and environmental protection
objectives in particular.

62. As regards preparations for the changeover to the payment of VAT in the
country of origin, a precise timetable was set by Directive 91/680/EEC (OJ No L 376
of 31 December 1991). In line with this timetable, the Commission will present by
the end of 1994 a report and proposals on which the Council is to act by the end of
1995 so that the definitive VAT system can enter into force as planned on
1 January 1997. The aim of the definitive system is to do away with any difference
in tax treatment for VAT purposes between transactions carried out at purely
domestic level and transactions involving two or more Member States.

(ii) Direct taxation

63. Strengthening of the internal market makes it necessary to create a tax
environment conducive to business initiative. On direct company taxation, the
Commission spelt out its approach in a communication it published in June 1992 in
response to the report by the independent expert group chaired by MrRuding.
These policy guidelines now have to be actively implemented in close co-operation
with the Member States. Continuing regular meetings of the heads of the direct
taxation administrations would be an appropriate tool for co-operation and could also
be used to set in motion genuine co-ordination of national tax policies. Co-ordination
in the direct taxation field is seen as all the more desirable when it is borne in mind
that taxation is becoming a means of aiding businesses that is detrimental to the

**37**

**conditions of competition.**

**64.** **From a general standpoint, if the internal market is to work smoothly and**
**effectively for businesses in the tax field, three aims must be fulfilled: The first**
**objective is the elimination of double taxation on cross-border income flows. The**
**second is the improvement of the tax environment for small and medium-sized**
**enterprises (SMEs). The third has to be seen against the background of competition**
**in the world economy; as far as at all possible, the overall tax burden on firms has to**
**be lightened, and one way of doing this is to provide appropriate tax incentives.**

**Eliminating double taxation of cross-border flows In July 1990 the Council**
**adopted two directives, one on mergers and one on the abolition of**
**withholding taxes on dividends paid by a subsidiary to its parent company in**
**another Member State, along with a convention on transfer pricing; the**
**Commission has since submitted two further proposals whose adoption is**
**eagerly awaited by industry and is urgently needed in order to complete the**
**single market.**

**The first of the two new proposals is aimed at abolishing withholding**
**taxes on interest and royalty payments made by a subsidiary to its parent**
**company in another Member State.**

**The second concerns the possibility for firms to take into account**
**losses incurred by their permanent establishments and subsidiaries in other**
**Member States.**

**Other measures to underpin the single market are envisaged in the short**
**term.** **Some are more especially concerned with SMEs (see below). Two**
**others which are worth mentioning here follow on from the Ruding report:**
**one would broaden the scope of the Mergers Directive and the Parent and**
**Subsidiaries Directive in order further to reduce certain remaining cases of**
**double taxation, and the other would simplify the procedures for the**
**application of clauses in bilateral taxation agreements which provide for the**
**reduction or elimination of withholding taxes.**

**Tax environment of small and medium-sized enterprises : After the**
**Ruding report, the Commission took the policy decision that firms which are**
**not in limited liability form should be entitled to opt for taxation as companies.**
**This would offer firms tax neutrality, regardless of their legal form. In most**
**Member States company tax rates are lower than the marginal rate of**
**personal income tax so that this option would facilitate the growth of**
**self-financing capacity in all SMEs which do not have company status. The**
**Commission is drawing up a proposal to this effect.**

**The Commission is currently exploring two further avenues in the field of**
**taxation and SMEs.**

**The first is the tax treatment of transfers of undertakings, with**
**particular reference to cross-border aspects. At a time when a**
**generation of businessmen is due to retire and when the restructuring**
**of firms is gathering pace, the transfer of firms is beset by serious tax**
**obstacles which may result in the firm simply going under.**

**38**

**Another avenue to be explored is the abolition of tax obstacles to the**
**development of venture capital.** **In most Member States, venture**
**capital funds are obliged to resort to complex arrangements (or to**
**seek establishment outside the Community) in order to avoid double**
**taxation of the income generated (i.e. at the level of the fund and then**
**in the hands of the investor himself). The difficulties are even greater**
**in the case of transnational fund operations.**

**Tax incentives : The problems of tax incentives are not straightforward.**
**Since tax incentives are measures derogating from ordinary law, it is**
**necessary to impose a set of access conditions which are restrictive enough**
**to avoid abuses but not too difficult to apply. Lastly, it is often very difficult to**
**assess the actual economic impact of a system of tax incentives, e.g.**
**incentives for promoting investment. On the other hand, the large size of the**
**overall tax burden on firms (i.e. taxes plus social security contributions) in**
**certain Member States and, on average, in the Community, compared with**
**most other countries in the world, is sufficient justification to examine possible**
**incentives, especially those linked to job creation. Three areas in particular**
**are being looked at by the Commission in the context of tax incentives: the**
**creation and expansion of SMEs, which are the main source of new jobs,**
**research and environmental protection.**

**65.** **The taxation of persons residing in a Member State other than that in**
**which they work, and in particular the tax status of frontier workers, has long posed**
**problems. The opening-up of frontiers and the increasing mobility of workers are**
**making discrimination in the income tax field, which bilateral tax conventions are not**
**managing to eliminate, increasingly intolerable to citizens.** **Such discrimination,**
**which currently affects several hundred thousand people, is a direct impediment to**
**the freedom of movement. Discriminatory tax treatments can affect both employed**
**persons and the professions. The Commission will endeavour, by appropriate**
**means,** **to do away with existing discrimination and avoid the risk of new ones**
**arising.**

###### **II. AN ACTIVE POLICY ON STANDARDISATION**

**66.** **European standardisation has been one of the cornerstones of work to build a**
**single market in industrial products and a strong incentive for businesses to take part**
**in the exercise.**

**67.** **There is now a broad consensus on the importance of developing and**
**strengthening this activity, both in the interests of the effective implementation of**
**Community legislation (directives making reference to standards, and public**
**procurement directives) and with a view to promoting an integrated technical**
**environment to foster industrial activity.**

**68.** **Nevertheless, despite this political consensus (confirmed by the Council**
**resolution of June** **1992,** **which was in response to the Green Paper on European**
**standardisation) and although considerable progress has been made over the last**

**39**

**eight years, the fact remains that it is still too slow for the magnitude of the task and**
**for the number of standards necessary if the single market is to function**
**satisfactorily.**

**69.** **In the Green Paper, the Commission already voiced the fear that the**
**standardisation process might not prove able to deliver all the results expected of it**
**within the time scales imposed by the completion and operation of the internal**
**market. It stressed in particular the importance of strengthening the European**
**standards bodies so that they could programme their resources on a** **multiannual**
**basis,** **streamline their procedures for preparing and adopting standards, and benefit**
**from the involvement and direct support of industry at European level under the**
**impetus of those businesses which have already adapted their strategies to the**
**single market dimension.**

**70.** **Without reopening the discussion that followed publication of the Green Paper,**
**notably on the practical scope for readjusting the balance between structures at**
**national and European level, it is important to look into the political impact that could**
**be achieved by Commission action aimed at:**

**•** **ensuring that the European standards bodies are financed in a way that is**
**commensurate with the scale of their task, without being over dependent on the**
**Community budget or the contributions they receive from their national member**
**bodies, one route to explore would be to base the financing on the sale of**
**European standards,**

**•** **examining, as the Council has requested, the possibility of making greater use**
**of standardisation in Community legislative work;**

**•** **making sure that the work programmes of the European standards bodies are**
**more closely attuned to the needs and priorities of the single market, in terms of**
**both the demand for standards for legislation and the general activities of**
**businesses;**

**•** **promoting gradual approximation of the** **quality-oriented** **policies pursued on the**
**different domestic markets, by assigning an increasing role to European**
**standardisation and certification structures and enhancing their impact on the**
**behaviour of operators on the supply and the demand side alike.**

**III.** **A POLICY IN THE AREA OF QUALITY**

**71.** **For more than ten years the Commission, in parallel with the carrying out of its**
**policy on standardisation, has been pursuing the implementation of a policy on the**
**evaluation of conformity, in order to develop at Community level the use of**
**instruments of quality (certification of products, certification of manufacturing**
**processes, tests, metrological checks, accreditation systems for certification and**
**testing authorities, etc.) both in the regulated and the voluntary areas.**
**Standardisation policy and quality policy are, in fact, inseparable,** **since** **they both**
**participate in the establishment of conditions which should facilitate the proper and**
**effective functioning of the Internal Market and the promotion of industrial**
**competitivity.** **The idea of "quality" should be taken here in its widest sense covering**
**the whole of the characteristics and performance of a product, a service or a**

**40**

**production system, fulfilling requirements which may be regulatory and voluntary in**

**nature.**

**72.** **The strengthening of instruments of quality at Community level, the promotion**
**of their use by firms and the dissemination of techniques of quality control throughout**
**the whole of the Community's industrial production, therefore represent priorities**
**which should find their expression in the definition of a concrete action programme to**
**be drawn up in co-operation with the economic partners and the competent**
**European authorities.**

**73.** **Without pre-judging what the content of this programme should be, it appears**
**that it should revolve around the following objectives:**

**•** **the achievement of a greater coherence between Community legislative policy,**
**including the operation of the systems for the reciprocal recognition of national**
**regulations, and the procedures and instruments for the control of conformity**
**which have been defined and put in place at Community level;**

**•** **the promotion of convergence on national markets towards high quality**
**objectives, to reduce the existing divergences which can result in difficulties of**
**access of products originating in other Member States and which can be an**
**obstacle to a consumer policy;**

**•** **the reconciliation and rationalisation, within the competent European bodies,**
**on a voluntary basis of the systems of branding, certification, labels etc; which**
**are found side-by-side on the Community market, with meanings and scopes**
**which are often difficult to compare, thereby creating an element of distortion**
**both of competition and of the state of consumer information;**

**•** **the development of a culture of quality on the Community market both on the**
**supply and on the demand sides, as a factor of economic integration and of**
**internal and external industrial** **competitivity.**

**IV. MEASURES TO ASSIST SMEs**

**74.** **Completion of the internal market has meant that enterprises have had to adjust**
**to** **a new legal environment and increased competition. We should not underestimate**
**the effort which the large majority of enterprises have been required to make, an**
**effort which brings a cost to bear before any benefit can be drawn. This cost is all the**
**greater in a period of declining economic activity. Thus, while the opportunities**
**created by the single market are often stressed, SMEs, and in particular the very**
**smallest of them, have remained a too far behind the European integration process.**
**The complexity of this process has not allowed them to adapt their production**
**facilities to the new requirements determined by competition or laid down by rules,**
**because of financial restrictions or inadequacies of management.**

**75.** **Restoring the confidence of SMEs in their ability to adjust to the single market**
**should also form an integral part of the management and development of the internal**
**market, and the Community must develop the instruments established in particular in**
**the area of information, of co-operation and assistance to companies. It is moreover**
**essential to emphasise the sound basis for the integration of SME policy in the**
**framework of the Community growth initiative decided at the European Council in**
**Edinburgh on 11 and 12 December. Since then, the Industry Council of 4 May 1993**

**41**

**has approved the content of the proposals presented by the Commission, intended**
**in particular to strengthen the priority axis of the Community enterprise policy, whilst**
**ensuring its continuity and its consolidation. This new programme has to enter into**
**force from 1 July 1993 and thus to allow not only the achievement of an objective of**
**support for the recovery of economic activity as well as all its positive effects on**
**employment, but also to be an important contribution in terms of bringing to fruition**
**the Internal Market. The totality of the measures foreseen in this programme will**
**serve to strengthen the role of SMEs in the Internal Market. Without wishing to go**
**into detail on them in this document, it is appropriate to emphasise that, within this**
**programme, complementary measures can be developed to accompany certain lines**
**of action mentioned above. But the Community does not have sole competence in**
**this regard: it must, by its own initiatives, make full use of the Member** **States'**
**measures, but it cannot and should not take their place. Thus for example, SMEs,**
**generally partnerships, need to be protected from the risks, largely influenced by the**
**relevant tax regime, involved in transfer of businesses; this situation would justify a**
**Commission analysis with regard to taxation of the treatment of transfers of**
**businesses including the cross- border aspects.**

###### **(a) Creating information packages for SMEs**

**76.** **Managers of SMEs still find it difficult to obtain information on the changes**
**brought about by the single market and to adjust their strategy accordingly. This**
**being the case, the new SME programme foresees a priority action for the** **EICs**
**aiming to put at their disposal information adapted to their needs. Information**
**products could be developed to cover in particular:**

**•** **standards, tests, certification and CE conformity marking,**

**•** **innovation and intellectual property,**

**•** **participation in public-procurement procedures,**

**•** **trade practices and competition law.**

###### **(b) Helping SMEs to adapt to standardisation and certification** **procedures**

**77.** **The requirements of Community directives and the European standards on**
**which they are based make certification procedures particularly cumbersome for**
**SMEs,** **sometimes even when they merely wish to remain on the national market. To**
**help SMEs integrate effectively into the single market and to make it easier for them**
**to take account of European standards, the following measures might be envisaged,**
**some of** **which** **should be discussed with the standardisation bodies:**

**•** **the guarantee, at the European level, that SMEs are represented in working**
**parties responsible for drawing up standards within** **CEN/CENELEC/ETSI;**

**•** **the improvement of information provided to SMEs on European standardisation**
**policy, in particular by granting assistance to chambers of commerce, trade**
**organisations and the Euro Info Centres;**

**42**

###### **(c) The opening-up of public procurement to SMEs**

**78.** **As the Commission highlighted in its 1992 communication on SME participation**
**in public procurement, SMEs are not on an equal footing with large enterprises when**
**it comes to access to public procurement. It must be possible using existing**
**procedures to make the Euro** **Info** **Centres and BC-Net play a role in identifying the**
**difficulties specifically affecting SMEs.** **It** **should be possible for these structures, as**
**is already sometimes the case, to report on cases notified to them where difficulties**
**have been experienced in taking part in these procedures. Such reporting would**
**allow account to be taken of the specific problems of SMEs when adapting**
**Community rules, as is currently being done with the problems of calculating**
**time-limits.** **Wider availability of the TED database would give SMEs new facilities.**

**79.** **On a more basic level, SMEs find it difficult to devote time to training and,**
**consequently, to reply to calls for tender, which often require skilled staff capable of**
**analysing and understanding them. The Commission might consider launching a pilot**
**project to encourage the development in the Member States of training courses for**
**SME managers.**

###### **V. A DYNAMIC AND OPEN EXTERNAL POLICY**

**80.** **An important part of the external effects of the internal market, those favourable**
**to the expansion of world trade, is being discussed in the Uruguay Round. A**
**reasonable balance must be maintained between the constituent parts of the Internal**
**Market and the exercise of the Community's external competencies. This is**
**particularly true in some areas, such as services and more particularly transport or**
**that of direct taxation.**

###### **(a) Strengthening the Community's external competence**

**81.** **The incompleteness of the commercial policy, as far as goods and services are**
**concerned, whether as regards the elimination of quantitative restrictions or the**
**limitation of bilateral agreements concluded by the Member States in the area of the**
**recognition of certificates and the provision of services, could create difficulties for**
**the functioning of the internal market. A solution can be found in strengthening the**
**common commercial policy and in the area competition policy, in the case of States**
**having such rules..** **In** **this regard the Commission is trying, in bilateral and**
**multilateral** **(OECD,** **GATT) fora to strengthen the approach known as "positive**
**comity". This approach, which seeks to overcome obstacles raised by private**
**enterprise to trade with third countries, allows those countries whose exporters are**
**the victims of anti-competitive practices in a third country to request that the latter**
**properly enforce their own competition rules to re-establish a level playing field. In**
**this regard, the widespread development of effective systems of competition policy**
**must be encouraged by all bilateral and multilateral means.**

**82.** **The Community should therefore establish a genuine policy in these areas**
**which is more coherent and effective. This policy will essentially be based on article**
**113.** **Without prejudice to the discussion on the scope of article** **113,** **it is evident that**

**43**

the negotiation of all these external agreements falls exclusively within the
competence of the Community. This implies, in the implementation of the common
commercial policy, a close co-operation between the Commission and the Member
States, as foreseen in the Treaty of Rome, in these very special cases, even a
partnership. In the areas not covered by the common commercial policy, but for
which the Community has acquired an external competence by virtue of the
jurisprudence AETR, an identical route has to be chosen.

(i) **The exercise of the Community's negotiating powers.** All the legislation
adopted in the areas of certification of product conformity and the freedom to
provide financial or transport services or services in the area of public
procurement give the Community new powers intended to safeguard the internal
"acquis" and the homogeneous functioning of the internal market.

The need to open this market up must lead the Commission to enter into
negotiations with the Community's main external partners with a view to
guaranteeing equality of access. This is a particular problem in the area of
product certification and transport.

In its negotiations concerning the Single Market or in other negations, the
Community has to maintain a coherent strategy according to its industrial,
commercial and geographical objectives. The Commission has already
proposed some guidelines for such a policy.

(ii) **Representation of the Community in international bodies.** Many Community
rules are the result of negotiations conducted within the context of international
organisations. The Commission already represents the Community in a number
of bodies (European Pharmacopoeia, FAO, OMS-WHO, Codes, OIE, IPPO,
etc.); in other international circles the proper functioning of the Single Market
requires a more active participation by the Commission, which co-operates in
them often on the sidelines and in co-operation with the Member States.
Following the entry into force of the banking and insurance directives the
Commission must exercise its responsibilities within the competent international
bodies.

(iii) **The management of bilateral and multilateral agreements.** The Community,
as signatory of certain agreements, has a responsibility in its own right to
manage these agreements. In this respect, the entry into force of the Agreement
on the European Economic Area will require a constant process of negotiation
on the integration and management of the Community's internal rules in the
EEA context; this Agreement alone is a challenge for the Commission since, in
managing it, the Commission will have to ensure that the Community's internal
functioning is not affected. Apart from this specific example, the cases in which
the Commission is responsible for the management of agreements are limited,
but may in certain areas be significant: for example, the Commission has sole
responsibility for determining the health conditions which meat and animal
products must meet to enter the Community. The draft agreement with the
United States on public procurement will give rise to a considerable workload for
the Commission in monitoring implementation of the agreement and conducting
negotiations for its extension.

**44**

**(b) Improved trade-policy instruments**

83. In a period of economic difficulty, Europe is not spared the temptation of
protectionism: this spiral must be avoided at all costs. However, these recurrent
urges are all the more easily overcome if the Community is ensuring the introduction
for its enterprises of effective mechanisms for monitoring the fairness of trade. Such
mechanisms also reinforce the rigorous competition policy pursued by the
Community, and their main objective is a corresponding opening-up of third-country
markets wherever unjustified barriers are maintained.

84. The Community is facing a real problem as far as putting in place its
trade-defence mechanisms is concerned: the general expectation is that it should
fight with weapons equivalent to those of its main competitors.

85 Firms complain of the burdens and delays imposed by anti-dumping procedures
and under the new trade-policy instrument. They wonder about the consistency
between a strong competition policy within the single market and what they perceive
as a weak mechanism vis-à-vis dumping and unfair trade practices by third
countries. It is essential that the Community's position be clarified in this area despite
the dogmatic divisions which weigh down the debate in the Council..

86. The various proposals currently being discussed within the Council form a
balanced "package": a radical opening-up to the outside world through the abolition
of several thousands of quantitative restrictions following the opening of the single
market, and a reform of the decision-making procedure in the area of trade-defence
measures to make it more effective (time-limits, decision-making mechanism).
Given the present blockage in the Council the risk of refragmentation exists through
the re-emergence of applications for national quotas submitted on the basis of
Article 115 EEC).

87. In short.above all, we must restore effectiveness to the Community instruments
of commercial policy.

###### **(c) Convergence of legal rules and economic systems**

88. The Community has an interest in promoting developments in third counties
which parallel the single market. For the Community authorities, the benefits which
will flow from the single market will be all the greater if there is a convergence
between Community rules and those applied in third countries. The Community is
already actively pursuing this convergence in the context of its contacts with the
countries of North America, Japan, and with other Asian countries (e.g. China).The
present approach, consisting of the creation of a convergence zone grouping the
countries which are geographically proximate to the Community would be a
particularly worthwhile investment in the long term to multiply the initiatives and links
between the Community's and the Member States' institutions to promote our legal
and economic standards in these countries.

**45**

**(d) Management of the Community's external frontier**

89. Management of the Community's external frontier should be based on common
instruments and permanent co-operation between the competent administrations,
primarily the police and customs.

(i) Ensuring the external security of the internal market

90. The abolition of internal borders was accompanied by a strengthening of the
efficiency of controls at the external borders of the Community. Provisions have thus
been made by the Community and it Member States so that the Single Market is an
area efficiently protected against fraud and international trafficking (drugs,
terrorism...). This action, which is foreign to any idea of protectionism, has been
given shape in particular by the adoption of a single customs code for the whole
Community.

91. The development of administrative co-operation between the Member States'
customs authorities and with the Commission has led to the setting up of a new
computerised network for information exchange, the Customs Information System
(CIS). This system which has been operational since 1992 ensures close contacts, in
the due time scale, by a computerised network between different customs offices in
the ports and airports of the Community and at the external land borders. These
direct links facilitate greatly the customs actions in the fight against fraud. In 1993,
the CIS system will be the subject of further developments: a significant increase in
the number of terminals linked to the system, the setting up of common data bases
to be added to the accessible base in each Member State.

92 Several other instruments in the management of the external border have been
established for the application of quantitative restrictions in the areas of plant and
animal health, dangerous and non-conforming products, drug precursors and drugs,
and the export of cultural goods. Other measures will have to be developed with
regard to the export of dual-purpose products. All these measures complete the
customs rules which have recently been consolidated by the Council. Checks on
persons will also be governed by common rules concerning asylum, visas and
identity on the basis of the asylum convention and the convention on the external
frontiers, once they have been signed and ratified.

93. All of these rules relating to the management of the external frontier require the
adaptation of control infrastructures and the training of officials.

- In the area of infrastructures, besides the assistance that has been given under
the INTERREG programme to improve telecommunications networks in external
border regions the Commission has established a whole range of computerised
instruments, e.g.

the TARIC system giving up-to-date information on customs duties and
agricultural levies,

the "Binding tariff notice" system concerning goods-classification decisions,

the QUOTA system on ceilings and quotas

**46**

**the** **SIGL** **system (Integrated System for Centralised Management of**
**Licences) to ensure an efficient monitoring of Community import restrictions and**
**in particular the quantitative restrictions agreed in the framework of the textiles**
**agreements; this system should be operational in the second half of** **1993.**

**In** **the area of training, the MATTHAEUS programme allows exchanges to take**
**place between customs officials. This programme, in place since 1991,** **will,** **by**
**the end of this year, have enabled more than 1 200 such exchanges to be**
**organised. It also enables training seminars to be held at which experience and**
**know-how can be pooled with a view to greater convergence between customs**
**practices. Finally, joint training programmes have been organised since 1991 in**
**national training centres. The creation of a joint training centre, intended to**
**ensure co-ordination between the activities of customs colleges, is currently**
**being examined.**

**(ii) Prevention of infringements**

**94.** **Prevention of infringements is now becoming a fundamental aspect of customs**
**policy; it must be based on close contacts between Member States' competent**
**national administrations, the professional organisations and with the main trading**
**partners.**

**•** **The Commission intends to strengthen the effectiveness of fraud prevention, in**
**particular through a widening of mutual assistance. A proposal is currently**
**before the Council.**

**•** **Proper organisation of fraud prevention presupposes that co-operation is not**
**obstructed by discussions on the limits of Community powers. Consequently,**
**the Commission and the Member States have established mechanisms within**
**the Mutual Assistance Group to combat drug trafficking based primarily on the**
**Council Regulation introducing a compulsory export authorisation system for the**
**list of substances drawn up** **in** **the G7 context. This co-operation has enabled**
**data on the application of Community and other rules to be** **integrated** **into a**
**single computerised system (SID). Some 130 terminals are currently in service**
**in the Member States.**

**•** **The efficiency of the fight against fraud calls for action vis-a-vis third countries.**
**Such is the aim of the customs co-operation agreements concluded with the**
**Community's main trading partners. Such agreements have been concluded in**
**the framework of the European Economic Agreement and with the countries of**
**Central and Eastern Europe. In 1993 negotiations are going to start in particular**
**with the United States, Canada, Japan, Korea and Hong Kong.**

**•** **There is now a need to improve Community arrangements concerning**
**measures taken at borders to prevent infringements of intellectual property**
**rights,** **such as trademarks, patents, and copyright (including designs and**
**models). To do this, the Commission will propose an amendment to the**
**regulation on combatting counterfeiting to strengthen its effectiveness. It should**
**also be established how the Member States punish the production of counterfeit**
**goods to ensure convergence of penalties in this area.**

**•** **The Commission intends to strengthen the fight against fraud in the field of**

**47**

**imports of textiles subject to restriction.** **In** **the framework of a programme** **(TAFI:**
**Anti-Fraud Initiative) of co-ordinated measures with the Member States and with**
**the European textile industry, the Commission intends to undertake anti-fraud**
**inquiries in six geographical zones where a strong presumption of** **fraud** **exists.**

**In** **the context of GATT, the Community must ensure the existence of general**
**measures to combat counterfeiting.**

**48**

**I.** **OBJECTIVES OF TRANS-EUROPEAN NETWORKS:**

**95.** **The concept of trans-european networks in the fields of energy, transport and**
**telecommunications is central to a number of key Community policies: the single**
**market, economic and industrial growth, cohesion and integration of the European**

**area.**

**•** **The creation of trans-european networks is intimately connected to the**
**completion of the single market.** **It** **is not surprising, therefore, that such a**
**concept should have evolved from work done at the Council meetings on the**
**internal market, for what would be the point public procurement rules if their**
**enforcement was prevented by technical incompatibility? Or of creating a**
**frontier-free** **area if obstacles are put in the way of the circulation of trains**
**because** **of interoperability problems, as is currently the case with high-speed**
**trains?** **In** **this sense, the networks are a logical development of the Single**
**Market: having removed barriers from between Member** **States;** **the aim must be**
**to build new links or improve existing ones as well as allowing for their extension**
**to other European countries.**

**•** **The setting-up of such co-ordinated networks is also of vital importance to**
**competitiveness: by reducing inefficiency, by minimising transport times and**
**overheads, by making business dealings faster and easier and by maximising**
**the capacity of infrastructures, the networks will make an important contribution**
**to industrial competitiveness. Moreover, by providing data banks and making**
**services available on compatible databases, they will also make a contribution**
**to common Community tasks without undermining subsidiarity.**

**•** **The networks will also serve Community cohesion and regional policy. Helping**
**to improve communications between remote or insular regions and the rest of**
**the Community** **is probably the best way of reducing** **geographical**
**disadvantages.**

**•** **Establishing such co-ordinated networks will also mean taking on board certain**
**planning options for the Community which** **will** **determine developments for**
**decades to come. Environmental concerns will also constitute a key parameter**
**here.**

**II.** **FRAMEWORK FOR THE WORK TO BE CARRIED OUT**

**96.** **The need to develop a trans-European network policy emerged from the**
**Council's discussions on the internal market, in so far as it was felt that the setting up**
**of the networks should be complementary to the introduction of rules on the**
**operation of the single market. The importance of the networks was underscored at**
**the European Council meetings held in Strasbourg (1989) and Dublin (1990)** **[1]** **.**

1 Council Resolution of 22 January 1990, OJ No 27, 6.2.1990.

**49**

**Accordingly, in December 1990, the Commission put forward an action programme** **[2 ]**

**accompanied by a draft Resolution on trans-European networks.**

**97.** **The preparatory work done by the Council (internal market) failed to bring about**
**its adoption, however, difficulties with regard to the** **financing** **of the infrastructure by**
**the Community having proved a stumbling block. None the less, decisive progress**
**was made at the European Council meetings in Maastricht and Edinburgh with the**
**inclusion,** **in the Treaty on European Union, of a title (Title XII) dealing with**
**trans-European networks, the enhancement of the value of the networks in the**
**Delors II package (Cohesion) in the context of the structural measures, and the**
**underpinning of the Community's industrial competitiveness in the context of internal**
**policies. The networks were also central to the Community component of the**
**initiative for growth which was also adopted at Edinburgh.**

**98.** **The construction of trans-European networks should henceforth form part of the**
**process of European union. The draft Treaty on European Union provides the legal**
**instruments for setting up the networks, whereas the new financial prospects provide**
**the necessary financial instruments.**

**99.** **Such objectives can be achieved only gradually, in terms of a medium and**
**long-term outlook. Accordingly following the signing of the Maastricht Treaty, the**
**internal market Council, on 31 March** **1992** **adopted conclusions inviting:**

**•** **"the Member States and the Commission to co-ordinate such actions as may**
**have a significant impact on the establishment and development of trans-**
**european networks;**

**•** **the Commission to submit to the Council guidelines concerning trans-European**
**networks which can serve as a reference point for preparing, as soon as**
**possible, the implementation of Title XII of the Treaty on Union**

**•** **the Commission to submit regularly to the Internal Market Council a progress**
**report which the Council undertakes to examine".**

**100.** **This** **Communication is in response to the Council's wishes. Its purpose is to**
**take stock of the situation as regards the work carried out and to underline the links**
**that exist between the building of the trans-European networks and the operation of**
**the single market and those that exist between the building of those networks and**
**the economic growth strategy.**

**III.** **PROGRESS REPORT**

**101.** **As early as** **1992,** **in line with the Council's wishes** **[3]** **and Parliament's resolution,** **[4 ]**

2 See previous discussion papers on the trans-European networks (doc. SEC(89)1670, doc. COM(89)643 final and
doc. COM(90)310 of 19.7.1990) and the Communication from the Commission to the Council and the European
Parliament 'Towards Trans-European Networks - For a Community Action Programme" (doc. COM(90)585 final).

3 Conclusions of the Council meeting on the internal market held on 31 March 1992.

4 OJ No C 125, 18.5.1992, p. 87.

**50**

the Commission presented a first series of proposals on trans-European networks.

102. The application of the network concept is already being discussed by the
Community's Transport Ministers, on the basis of the proposed master plans for the
high-speed train, road transport, combined transport and inland-waterway transport.
It has also been discussed at informal meetings of the ministers responsible for
regional development. Proposals were recently put forward regarding
data-transmission networks between administrations and a declaration of European
interest.

**(a) Network plans**

103. Guidelines produced in close co-operation with the Member States, Parliament
and the economic operators concerned are a key element in helping to ensure the
cohesion and transparency of Community action. Identifying investment projects
geared towards trans-European networks is the clearest possible expression of the
common interest. The mobilisation of firms in the sector concerned, of network
operators and of equipment suppliers is a precondition for the revival of economic
activity.

**(i)** **Transport infrastructure:** on 10 June 1992, the Commission adopted master
plans in three fields: roads, inland waterways and combined transport (see doc.
COM(92) 231 final and doc. COM(92) 230 final), supplementing the existing
network plan on high-speed trains. On 15 March 1993, the Council meeting on
transport emphasised the importance of the network plans and expressed a
favourable view of the work already done in the combined-transport,
road-transport and inland-waterways fields. Work is proceeding on the
drawing-up of master plans for air transport infrastructure, maritime
infrastructure and conventional rail infrastructure.

The network plans are accompanied by a proposal for a Regulation on the
financing of transport infrastructure. In essence, it provides for an extension for
the period 1993/94 of the validity of Regulation (EEC) No 3359/90, which
expired at the end of 1992 and which is expected to be replaced when the
Treaty on European Union enters into force.

**(ii) Energy infrastructure:** the Commission adopted a communication on
infrastructures for electricity and natural gas (COM(91) 548 final), which was
used as a basis for discussions with the Member States and the various
interests concerned. The draft proposal on the Commission guidelines
concerned is being finalised and could well be presented to the Commission
before the summer. The purpose of the guidelines is to ensure that the growth
of the networks is orderly, so as to contribute to the completion of the single
market, underpin economic and social cohesion and strengthen the security of
the Community's energy supplies.

(iii) **Telecommunications infrastructures:** in the field of telecommunications,
the primary objective of the Community's policy is to set up trans-European
networks of general application and of basic services. In a system of open and

**51**

competitive markets, action undertaken by the Commission should promote
interconnection, interoperability of national networks, as well as access to these
networks.

With regard to these applications, in March 1993 the Commission adopted a
communication to Parliament and to the Council, which was accompanied by a
proposal for a Council Decision on a series of guidelines for trans-European
data communications networks between administrations and a proposal for a
Council Decision adopting a multiannual Community programme to support the
implementation of trans-European networks for the interchange of data
between administrations (IDA). Elsewhere, on the basis of the communications
on the community strategy in the field of education and training (COM(93)183),
the Commission considers that the modern telecommunications networks
should be used for training, in particular for distance teaching applications.

With regard to the telecommunications networks, a draft communication is being
finalised which deals with the integrated services digital network (ISDN), its
purpose being the development, throughout the Community, of a
trans-European ISDN network featuring a set of services which is fully
compatible with harmonised European EURO-ISDN standards. Consideration is
also being given to a set of guidelines relating to the development of a
broadband network.

(b) Community Financing

**(i)** **Cohesion and structural measures**

104. The Community contributes substantially, via the Structural Funds (in particular
the ERDF) - and will continue to contribute via the new Community Support
Frameworks and the Community Initiatives from 1994 onwards- towards the
financing of infrastructure, part of which will be eligible in the context of the
Community's network plans or in the context of related initiatives allowing the regions
covered to increase the impact of the infrastructure.

In Member States which are eligible for aid from the Cohesion Fund, the Community
can, with effect from 1 April 1993, help to finance specific transport infrastructure
projects in the context of the Cohesion financial instrument and the Cohesion Fund
once the Treaty on European Union enters into force.

**(ii) Loan and guarantee instruments**

105. The European Investment Bank provides long-term capital for financing
infrastructure projects in the field of transport, energy and telecommunications. In the
field of transport alone, in 1987-91 the EIB allocated no less than ECU 8 billion for
the construction of trans-European networks, including ECU 3.8 billion in assisted
regions.

106. The role played by the EIB in the financing of networks is expected to be
strengthened as a result of the growth initiative and the new financing instruments
adopted in Edinburgh:

**52**

- the temporary loan mechanism for 1993-94, which totals ECU 5 billion; of this
amount, ECU 2.2 billion has already been committed since the beginning of the

programme;

- the European Investment Fund, which has a total of ECU 2 billion, and whose
purpose is to provide loan guarantees on a commercial basis.

107. To a lesser extent, ECSC loans can be used to finance infrastructure in which
steel is used, viz. in the case of the Rhine-Main-Danube canal, the "TGV
Atlantique", natural gas in Greece, etc.

**(iii) Internal policies**

108. There are already numerous instances in which aid from the Community budget
is allocated to trans-European networks by way of feasibility studies and pilot
projects, interest rate subsidies and loan guarantees (European Investment Fund)
under "network" budget headings (ECU 221.5 million in 1993). This applies mainly to
the multiannual programme covering transport infrastructure and data
communications networks between administrations.

**(iv) Other sources of financing**

109. Quite apart from those instruments, which relate to transport, the Agreement on
the European Economic Area provides for financial assistance to promote cohesion
(EEA Financial Mechanism), i.e. ECU 1.5 billion in loans with a 2% interest rate
subsidy and ECU 500 million in subsidies financed by the contracting parties to the
Agreement and implemented by the EIB.

110.The Community also helps to finance individual network projects via EIB loans
to central and eastern Europe (ECU 1 700 million in 1993) and the Action plan for coordinated aid to Poland and Hungary (ECU 20 million in 1993).

**(v) Declaration of European interest**

I I I . Moreover, on 16 April 1993, in order to attract private investment, the
Commission adopted a draft amendment to the proposal for a Regulation introducing
a declaration of European interest to facilitate the establishment of trans-European
networks in the transport, energy and telecommunications domains. The proposed
amendment establishes among other things a link between the granting of the
declaration of European interest and the possibility of financing from the Community.

###### **IV. THE NEED FOR CO-ORDINATION**

112. The setting-up of the trans-European networks depends largely on the adoption
of the network plans by the Council and on their being put in place within a
reasonable time scale, making these plans the equivalent of a medium-term
infrastructure programme. The adoption of these plans is the strongest signal that

**53**

**can be given to economic operators and the financial markets.**

**113.** **However, each network is set up along its own lines and in its own time frame -**
**a compartmentalised approach which provides no guarantee that the different**
**initiatives are sufficiently politicised or integrated into a global strategy under the**
**heading of the maximum development of the European area, the functioning of the**
**Internal Market and the development of economic activity. An attempt to develop the**
**networks should respect the particularities of the three sectors as well as the**
**decisional structures governing them; in this way the global strategy should**
**complement new initiatives that have been agreed or** **will** **shortly be so.**

**114.** **The approach followed hitherto has favoured network interconnection. However,**
**there are limits to this approach, as the plans are not specific enough to guarantee**
**efficient and effective communication systems, environmental and consumer**
**protection throughout the network, or a legal framework for the development of** **co-**
**operation between the undertakings involved in building and operating the network.**

**115.** **Development of the trans-European networks presupposes an integrated**
**approach extending both to the different sectors concerned and to the instruments**
**used.**

**(i)** **There is a need not only for interconnection but also for interoperability, this**
**being achieved by harmonisation of the technical standards for equipment and**
**systems, which in turn will ensure operating efficiency and reduce equipment**
**costs.**

**For example, it has been estimated that the Paris/Brussels/Cologne/**
**Amsterdam high-speed rail network, which is having to be designed to**
**accommodate several different types of power supply and control-command**
**systems and to comply with different rules on safety, noise, electromagnetic**
**compatibility and so on, has involved an increase of 60% per seat over the**
**standard high-speed train running on the French network.**

**In** **parallel to a harmonisation programme underway in certain sectors (TGV and**
**air traffic equipment), a global strategy must therefore be implemented and new**
**efforts made to overcome all the technical, regulatory and operational**
**constraints impeding network interoperability and standing in the way of the**
**development of a genuine internal market in services.**

**(ii) There is also a need for co-operation between the undertakings involved in**
**building,** **financing and managing the networks; co-operation between private**
**enterprise and public authorities is vital in view of the scale of the investment** _**to**_
**be agreed and the uncertainty linked to the materialisation of this sort of**
**operation. Examples of such co-operation include:**

**the development of combined transport based on equitable tariff**
**agreements providing stability conducive to operator investment;** **[5 ]**

**the Community-wide operation of mobile telephone networks based on the**
**existence of cross-frontier operator agreements making possible network**

5 It is in this spirit that the Commission made financial undertakings towards pilot projects for
combined transport drawn up and developed by the private sector in many Member States. Cf
Commission Decision 93/45 of 22.12.1992 (JO L 16/55 of 25.1.1993)

**54**

**interconnection, the sharing of the proceeds from subscriptions and a**
**coherent system for invoicing the services provided in cross-frontier**
**communications;**

**the development of electronic data-transmission networks requiring inter**
**alia the implementation of compatible administrative methodology and**
**machinery, the formulation of common technical specifications and the**
**harmonisation of standards.**

**Co-operation of this nature will clearly be facilitated if Community rules, and**
**in particular the procedures for implementing them in the Member States,**
**are made more transparent, thus providing economic operators with a**
**guarantee that Community law is being properly applied.**

**Moreover, the adoption by the Council of various proposals on matters**
**such as the European company statute, Community trade marks and**
**patents, and the elimination of double taxation on business co-operation,**
**may well have a positive mobilising effect. However, only a global approach**
**covering interconnection, interoperability and market access will create the**
**conditions conducive to emergence of the trans-European networks.**

**(iii) A medium-term approach must be followed, for there are numerous obstacles**
**to the emergence of Community-wide networks. The difficulties can be summed**
**up under five headings:**

**difficulties involved in establishing priorities and determining projects of**
**common interest as a result of divergent national interests and priorities**
**and the absence of an all-embracing vision for the future);**

**time-consuming** **and complex decision-making** **and** **implementation**
**procedures, due to the large number of parties concerned and the legal**
**problems** **involved** **(regional** **planning** **policy,** **local** **particularities,**
**expropriation, planning permission, litigation, and so on);**

**financing problems resulting from attempts to achieve short-term**
**profitability, a frequently negative rate of financial return, constraints on**
**public finance, end-goals too remote to motivate political commitment,**
**difficulty in mobilising private capital on a large scale because of the high**
**degree of uncertainty, the clarity of the regulatory environment as a factor**
**in investment security;**

**short and uneven supply of financial and human resources at**
**Member-State level as a result of differences in the respective situations**
**and of the obstacles to cross-border co-operation; all this compounded by**
**the absence of an overall vision for setting up the necessary Community**
**instruments;**

**absence of cross-border interoperability, due to differing standards and to**
**the multiplicity and diversity of administrative structures and management**
**rules,** **resulting in market fragmentation.**

**116.** **Such are the difficulties that there is quite clearly a need to promote** **co-**
**ordinated action.** **If** **the trans-European network initiative is to make a contribution to**
**economic growth transcending projects themselves and having an endogenous**
**effect on industrial growth and competitiveness, a strategy must be adopted which**
**supplements short-term macroeconomic incentives.**

```
                   55

#### **`V. THE MEANS TO ACHIEVE THE END`**

```

**117.** **With** **regard to financing, there is an incompatibility between the long-term**
**recoupment of investments in this infrastructure and attempts to achieve short term**
**profitability, a factor which does not generally promote the creation of networks.**
**Initial sector by sector estimates, based on the network plans proposed or under**
**way, put investment costs at ECU 20 billion a year. In order to encourage such**
**investment, it will certainly be necessary to ensure, on projects of common interest,**
**the co-ordination of national, community and private financing. It will also be**
**necessary to develop the tools, as set out in article** **129,** **of title XII of the Treaty of**
**Union;** **with respect to feasibility studies, interest payments and loan guarantees as**
**the Community is currently doing with the European Investment Fund.**

**118.** **At** **the same time, the drawing up of standards for the transport and**
**telecommunications sectors has been seriously delayed, impeding network**
**interoperability. For example the growth of air-traffic, together with the liberalisation**
**in that sector, has come up against a lack of compatibility of air traffic control**
**systems. Moreover, proposals on the achievement of a single market in the field of**
**energy and transport are at a standstill at various stages in the procedure. For**
**example the growth of air-traffic, together with the liberalisation in that sector, has**
**come up against a lack of compatibility of air traffic control systems.**

**119.** **Hence the need for the adoption of a new strategy geared not only to providing**
**the instruments to carry out the projects but also to creating a climate of confidence**
**among all the parties involved, public authorities, industrialists, bankers and network**
**operators alike:**

**•** **in the initial stage, there must be an approach putting the "sectoral" initiatives**
**into perspective and making it possible to incorporate the investments in the**
**network plans, thereby providing a greater degree of security; a presentation of**
**these plans in their entirety will maximise their contribution to a regional**
**planning policy. A political commitment on the part of the European Council in**
**respect of the network plans in the various sectors would provide a clear signal**
**to investors and the financial markets, possibly followed by the formal adoption**
**of the different plans by the Council in its different compositions by a given date**
**(say, the end of the year). In accordance with article 129 of the Treaty, and**
**taking account of the particular importance of the master plans for regional**
**development, the requisite actions will be taken following consultation with the**
**Committee of Regions.**

**•** **A second stage, which should be spread over a longer period, should consist of**
**the creation of:**

**(i)** **better conditions for the development of international cooperation between**
**project promoters, network operators, investors and other economic**
**operators concerned, with a view to the setting up, the financing, and the**
**management of trans-European projects;**

**(ii) the most effective conditions to ensure the** **inter-operability** **of the networks.**

###### ISSN 0254-1475

### COM(93) 256 final

# **DOCUMENTS**

## E N 10 Catalogue number : CB-CO-93-289-EN-C ISBN 92-77-56495-4

###### Office for Official Publications of the European Communities L-2985 Luxembourg