Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Single Market Act — Twelve levers to boost growth and strengthen confidence — “Working together to create new growth” ’

On 13 April 2011 the Commission decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union, on the

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Single Market Act — Twelve levers to boost growth and strengthen confidence — ‘Working together to create new growth’

The Section for the Single Market, Production and Consumption, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 3 October 2011.

At its 475th plenary session, held on 26 and 27 October 2011 (meeting of 27 October), the European Economic and Social Committee adopted the following opinion by 150 votes, with four abstentions.

1.1 The European Economic and Social Committee (EESC) has been closely following the Single Market from the civil society perspective and set up its Single Market Observatory (SMO) in 1994 to this effect. It has contributed to the Commission's initiative to relaunch and revive the Single Market, but regrets that it did not fully take on board the Monti, Lamassoure, Gonzalez, Grech and Herzog Reports and effectively deliver a Single Market at the service of consumers and citizens, as urged by the EP in its Resolution of 20 May 2010.

1.2 In its opinion on the Single Market Act (1), the EESC had identified a number of measures that were missing in the Single Market Act. The missing levers include copyright levies, the revision of the copyright directive, net neutrality, data protection, investor protection, the social progress protocol, European private company statutes, e-procurement, European credit rating agencies, gender equality, micro- and family businesses, measures to support the formation of new companies and the extension of the existing ones, credit and debit cards, e-payments, consumer credit and over indebtedness, interbank transfers, youth, measures to complete the implementation of the Euro and to consolidate the operation of the Single Euro Payments Area (SEPA), etc.

1.3 The Committee had selected a number of priorities for an integrated Single Market, many of which are now mentioned in the list of priority actions called the twelve levers: The Charter of Fundamental Rights as an integral part of the Single Market, Services, Retail financial services, Services of General Interest - SGI, Sustainable development, Small and medium-sized enterprises and other legal forms of entrepreneurship, Competitiveness, Standardisation, Digital Single Market, Corporate Governance and workers involvement, Free movement of workers and the economic freedoms, Public procurement legislation, External dimension and Access to justice/Collective redress.

2.1 The Internal Market has shortcomings, which were highlighted by Mario Monti in his report A New Strategy for the Single Market and by the European Parliament in Louis Grech's report Delivering a single market to consumers and citizens. To remedy these shortcomings a proactive and cross-cutting strategy should be developed. This means putting an end to market fragmentation and eliminating barriers and obstacles to the movement of services, innovation and creativity. It means strengthening citizens' confidence in their internal market and ensuring that its benefits are passed on to consumers.

2.2 In order to tackle these challenges, the Commission put 50 proposals up for debate. These were set out in the Communication Towards a Single Market Act (2). On the basis of the contributions made during the public debate the Commission has identified twelve levers. In order to boost growth and reinforce citizens' confidence, the Commission proposes that the EU should adopt a key action for each lever by the end of 2012.

2.3 For the proposed actions to produce the effects expected in terms of growth and jobs, the conditions for their development and efficient implementation must be met. There are at least four such conditions: (1) a better dialogue with civil society as a whole; (2) a close partnership with the various market participants; (3) efficient provision of information for citizens and enterprises; and (4) closer monitoring of the application of single-market legislation. By the end of 2012, a new stage in the development of the Single Market will be launched. The discussions will draw upon a comprehensive economic study, the results of which should enable the identification of specific areas with untapped growth potential, together with possible new levers for growth. The Commission will also consult civil society and all Single Market actors through its new governance instruments.

3.1 The EESC welcomes the Commission's ambition to boost growth and to strengthen confidence in the Single Market. The Committee recalls that the Single Market is a centrepiece of European integration, with the potential to deliver directly-felt benefits to European stakeholders and to generate sustainable growth for Europe's economies. In the current environment, this makes a functioning, future-oriented Single Market not merely desirable but essential for the political and economic future of the European Union. To deliver these benefits, it is crucial that the Commission's proposals are ambitious and go beyond tackling only low-level, detailed challenges.

3.2 The Committee recognises that the Commission's communication is just the second step in a process, with many more steps needing to follow. This communication presents the choice of the Commission to continue with 12 levers out of the original 50 proposals from its Communication Towards a Single Market Act. The Committee has noted that many of the levers proposed were not new as promised because they have been already included in the Commission's work programmes for 2010 and 2011 (3).

3.3 Besides, the Committee would like to understand the logical thread of the overall political option underlying the achievement of the Single Market ultimately leading to the Commission making their choice of twelve out of many. This very process transpires neither from the Communication nor from the analysis of said measures.

3.4 The EESC calls upon the EC to continue to work with the remaining proposals listed in the initial Communication (COM(2010) 608) but not included in 12 levers. It also recommends the Commission to consider the missing levers (see paragraph 1.2) set out in the Committee's previous opinion on the Single Market Act. The Committee wants to be informed about developments in both areas and reminds the Commission that fast follow-up action is required to ensure that the further development of the Single Market can positively impact on European growth in the near future.

3.5 A number of proposals are already in the pipeline and are scheduled to be tabled before the end of this year. The EESC expects to be consulted by the Commission on these and the other concrete proposals in order to express the views of all relevant stakeholders. The EESC also stands ready to participate in the evaluation of the effects the new legislation would have on the Single Market and is ready to contribute to the comprehensive economic study, the results of which should enable identification of niches where there is untapped growth potential together with possible new levers for growth. The EESC notes that more effort is needed to determine the impact of past and current Single Market legislation, with a focus on determining whether the combination of measures has been successful in delivering a step change in how the Single Market works with regard to benefits felt directly by businesses, workers and consumers.

3.6 The EESC also emphasises that responsibility for the development of the Single Market does not only lie with actions and measures which fall under the responsibility of DG Markt but also concerns many other policy areas. In this context, the Committee notes the importance of initiatives such as the Digital Agenda (4) and the EU Citizenship Report (5) and urges the Commission to ensure progress on delivering a functioning Single Market in the policy areas covered in these communications.

3.7 In the introduction the Commission stresses the importance of sustainable development. The Committee regrets that the ambitious Sustainable Development Strategy, which the Commission adopted in 2008, does not get a follow-up in this communication. The necessity to change towards more sustainable patterns of production and consumption should get the support it deserves.

3.8 Before the Lisbon Treaty the political and economic interest of a reuniting Europe had priority over social issues and sustainability. In the Lisbon Treaty that inequality has arguably been balanced, with the other interests being of equal importance (though the results of this in practice remain to be seen). However, it is mentioned several times in the Communication that there ought not be extra burdens for businesses or extra costs for consumers though there is no reference to the impact on workers and public authorities.

3.9 The EESC wants to reiterate its call for a holistic approach. While it thinks that promoting growth and business potential is essential, the Committee finds however that the proposals should focus more on consumers and citizens as independent players in the creation of the Single Market.

3.10 The EESC calls for zero tolerance of non-implementation of EU legislation by Member States and reminds the Council and the Commission that delayed, inconsistent and incomplete implementation remains a major barrier to a functioning Single Market. It would very much welcome publication of correlation tables by Member States that would contribute to better promotion and understanding of Single Market (6).

4.1.1 The EESC welcomes the proposals that should lead to the solution of some of the problems that SMEs face, especially regarding increased access to cross-border venture capital financing. However, the Committee notes that this will not be sufficient to address the more general restricted access to financing many SMEs face across Europe in the aftermath of the crisis. In addition, more attention must be paid to the needs of micro- and family businesses which are often unable to access existing support mechanisms and whose financial sustainability is often undermined by late and non-payment. The effect of Basel III on the banks' willingness to finance SMEs should be assessed.

4.1.2 The EESC would also like to remind that most other key actions will have an impact to a large or smaller extent on the SMEs. The role of Small Business Act should not be underestimated. The principle of ‘think small first’ should therefore be applied in every legislative proposal, whose effects on SMEs and micro/family businesses should be screened ex ante. Implementation and its monitoring should be considered a priority for EU SME policy.

4.1.3 The future linguistic regime of the EU patent must ensure there will be a financial support to the companies from those countries whose official language is not used as an official language of the EU patent to avoid any discrimination.

4.2.1 The proposed key action to achieve increased mobility for citizens is to modernise the system for recognising professional qualifications. Promoting the occupational and geographical mobility of workers could help improve the functioning of European labour markets and the provision of cross-border services. Companies all across Europe are struggling with severe skills shortages in part caused by insufficient vocational education and training. While progress in this area is welcome, the Committee urges the Commission to also tackle a wide range of other barriers which still prevent citizens to move easily across borders within the EU.

4.2.2 Recognition of professional qualifications has been tried before, in the late eighties, with then fewer Member States. The Professional Qualifications Directive adopted in 2005 consolidated the 15 previous directives covering separate categories of regulated professions. Since it did not reach so far its target the EC started in 2010 the revision of the transposition of the Directive.

4.2.3 The EESC wants to underline that any additional legislation to the current directive should be preceded by a thorough diagnosis of how existing legislation can be amended to further support the mutual recognition of professional qualifications. The EESC points out:

4.2.4 The EESC suggests that until a full harmonisation among the 27 Member States is reached a possibility of another approach based on joint activities between a smaller number of Member States should be evaluated, potentially utilising enhanced cooperation, that follows migration patterns and labour market developments; this might bring the success that is needed to improve the mobility of workers. After this first step, it could prove easier to target full harmonisation.

4.2.5 The EESC does not see a need to review the Directive on occupational-pension institutions since it established a sufficient legal framework. It is still necessary to improve the functioning of its cross-border elements.

4.3.1 IPR must work for creators, copyright users and consumers (8). Consumers should have access to copy-righted content and products and services based on copy-righted material regardless of where they are based in the EU. A more pan-European approach to licensing and levies is needed.

4.3.2 For consumers, the current IPR legal framework is bewildering; this is even worse on a pan-European level. The legal framework needs to be clarified and legal sanctions and enforcement need to be proportionate: individual consumers who might infringe IPR inadvertently and/or at a small scale for their personal consumption may have to be treated differently from large/commercial scale criminal activity.

4.4.1 Alternative Dispute Resolution (ADR) can be a useful instrument to help protect consumers and enable them to get their right in a speedy and cheap way. Not only with regard to e-commerce, but in general. Consumers' interests must be at the centre of this non-judicial mechanism and they should also have recourse to legal routes if necessary. The Committee welcomes the legislative proposal for ADR, foreseen in the Commission work programme for 2011, and reminds that the proposal must give high level protection.

4.4.2 In addition to ADR, DG Justice has carried out a consultation on Collective Redress Unfortunately a legislative proposal is not foreseen in November – only another Communication on the results of the consultation this spring which is disappointing. It is now high time to move from consultation to action. The Committee is looking forward to a legislative proposal in the near future. Such a proposal must lead to a collective redress mechanism which operates both nationally and across borders and is accessible to all consumers within the Single Market.

4.4.3 These mechanisms should be available to all who have their rights infringed upon within the Single Market. Not only consumers see their rights violated by providers of goods and services, by unfair contract terms and unfair commercial practices. Also workers whose rights are violated and citizens in general who suffer from discrimination should have access to collective redress systems. SMEs may need similar protection against unfair commercial practices etc.

4.4.4 By-and-large, consumers still do not feel the benefit of a Single Market in the area of retail financial services. While the Committee welcomes the continuation of work on transparency of bank fees and on better protection of borrowers, more needs to be done to encourage cross-border access to retail financial services. Also basic payment accounts should be available to all citizens across the EU.

4.4.5 The EESC welcomes the revision of the General Product Safety Directive with a greater focus on the consumer perspective and is looking forward to commenting on the concrete proposals. Equally, a higher degree of both national and pan-European market surveillance is to be welcomed.

4.4.6 Direct rights of consumers and citizens deriving from the Single Market are a key building block of market integration and provide a directly accessible benefit of European economic integration, be it in the area of passenger rights, with respect to roaming charges or in e-commerce. Consumers/passengers must have quick and easy recourse to mechanisms which can provide them with help in achieving their rights, especially when they are in a distressing situation, for example when caught abroad without means to return to their home country. In addition, uniform application is crucial since passengers are not treated equally in the EU as enforcement varies considerably; as does the interpretation of present rules and regulations.

4.5.1 The Committee supports the proposal for the extension of the standards on services, but points out that the specific character of services should be taken into account and the model of standardisation of goods cannot be copied automatically. Further development of standards in the field of services has to take into consideration market and societal needs as well as consumer safety.

4.5.2 The EESC welcomes the proposal regarding the High Level Group on business services to identify the main obstacles and bottlenecks on the market.

4.5.3 The Committee welcomes the initiative to modernise public administrations by setting up ‘points of single contact’, and can only applaud the development of administrative cooperation in cross-border matters. This cooperation also needs to be extended to policy areas where compliance with obligations is at stake. The EESC considers the Commission's conclusions on the impact of the Services Directive and on the functioning of the services sector to be premature as the directive has been in force for only a few years (9).

4.6.1 In the field of energy networks (10) the Committee is of the opinion that Member States must retain freedom of choice as to the type of energy they opt for. Promoting general interest means securing good networks, good quality service and everything which ensures universal access, security and continuity at affordable prices. The Union should speak with one voice in the international arena on matters pertaining to energy and energy transportation networks; it should tackle these questions, in particular the security of energy supplies as an integral part of the Union's diplomacy (ENP) and propose governance standards in transit countries. Together with the Union as a whole, Member States should advocate energy solidarity throughout the world and respect the principle of general public interest within the Union. Furthermore, the EESC calls for a European consultative committee on energy and climate change to be set up.

4.6.2 On transport issues (11), the EESC calls for a better connection of the west and east, as well as the north and south of the EU. It also wants to see explicit consideration given to so-called neighbourhood policy with further connections to the eastern and southern neighbours of the EU. The Commission and the Member States should focus above all on the network rather than on individual infrastructure projects. This also promotes solidarity between the Member States. The Committee would like to stress, that if the purpose of the EU is to create a real integrated single transport market in Europe and to continue cohesion policy, a radical change is necessary in the choice of the networks. In this regard, the EESC approves the recent revision of the TEN-T policy. As well the EESC recommends careful and selective use of Public Private Partnerships (PPP) in the funding of TEN-T projects. The different level of experiences among the Member States should be taken into account and a consistent funding strategy is needed to mobilise all relevant EU and national financial instruments as part of a ‘better funding’ approach.

4.7.1 Electronic commerce seems to be one of the big victims of the fragmentation of the Single Market. Absence of harmonised rules, lack of interoperability of information systems (12), unsolved problems with IPR, lack of payment security and uncertainty of consumer rights especially regarding product safety hinder the full exploitation of the large potential of on-line cross-border trade for both providers and consumers. While the actions proposed in the Commission's communication address some of the barriers to the Digital Single Market, the Committee recalls that much more is needed to prepare the Single Market for the knowledge age, including, for example, uniformly high data protection rules for example in the area of e-signatures. In this context, the EESC reiterates its request to have net neutrality recognised as one of major principles in the digital single market.

4.7.2 The solution of the problems mentioned with regard to e-commerce in the Communication can increase consumer confidence in the Single Market. However, so far, little concrete action is proposed. The Committee urges the Commission to develop an ambitious Action Plan for the development of e-commerce with the consumer at its heart. The outcome must be an online EU market place where consumers can feel protected and safe, knowing how to access support for their rights if infringements occur.

4.7.3 A functioning Digital Single Market must entail that consumers and business experience a removal of those barriers based on nationality/residence. This must mean that consumers can order digital products such as music freely from other countries within the EU, which is especially important to make the Single Market relevant for the next generations of Europeans.

4.8.1 The EESC welcomes the promotion of social entrepreneurship and the Commission's initiative for a political framework aimed at realising its potential. Initiatives aimed at social entrepreneurship should follow the basic principles of Single Market legislation, such as competition and State aid rules, and take account of the work done by the EESC in this area (13).

4.8.2 The EESC has supported the establishment of a European Foundation Statute but invites the Commission to consider whether a legislative intervention to facilitate cross-border operations of existing Foundations may be a complementary avenue to pursue, given the low uptake of the existing precedents such as the Statute for a European Cooperative Society and the Statute for a European Company.

4.8.3 The Commission has to strengthen EU commitment to enhance corporate governance to further develop employee involvement and improve transparency of information provided by businesses. Employee right to information, consultation and participation has been integrated as a fundamental right under the treaty in different forms of workers' involvement: TFEU Art. 151.1 Dialogue between management and labour and 153.1 where it says in f) that the Union shall support and complement the activities of the Member States in the following fields: representation and collective defence of the interests of workers and employers, including co-determination. Public consultation should therefore look into how to improve the transparency of information provided by business on social and environmental matters and human rights. A Social Business Initiative will be critically assessed by the EESC, including the possibility to keep upright the voluntary basis of CSR, when a concrete request for an opinion reaches the Committee.

4.9.1 Regarding the review of Energy Tax Directive the EESC underlines that the concept of introducing a carbon tax should complement the Emission Trading System (ETS) and the Energy Efficiency Plan (EEP) (14). The carbon tax should provide the funding support necessary to accelerate R&D efforts for low carbon based processes and innovative technologies, with its proceeds dedicated exclusively to these goals. This tax must be set to not endanger growth or cause political or public opposition and its implementation should not lead to higher rates of energy poverty.

4.9.2 The carbon tax ought to be based on consumption rather than on production. The Commission should develop a set of general guidelines for levying this carbon tax, leaving its details otherwise at the discretion of individual EU Member States. They would be free to levy this tax according to their respective manufacturing and energy-producing industrial structures.

4.9.3 The Committee welcomes actions which will address some of the inconsistencies of taxation, in areas such as VAT, energy taxes and the corporate tax base. While care needs to be taken to safeguard the ability of individual Member States to finance their public services in line with the principle of subsidiarity, a focus on the difficulties faced by citizens and SMEs in the day-to-day experience of the Single Market that are caused by differential tax regimes and their implementation is also necessary to ensure that the Single Market can work more effectively. The proposed financial transaction tax should also help to address some of the unsustainable risk-taking in that sector.

4.10.1 The EESC supports the ideas the Commission presents under the lever of Social Cohesion. It goes beyond simply better implementation of the Posting of Workers Directive, as the Commission initially proposed in its communication Towards a Single Market Act. The Commission plans to adopt a legislative proposal to improve the implementation of the Posting of Workers Directive, which is to include or be supplemented by a clarification of the exercise of fundamental social rights within the context of the economic freedoms of the Single Market. This does not propose a revision but suggests another legal act on the improved implementation of the directive. Contradictions in the applications of the directive should be clarified and Member States' competence to enforce their labour standards and industrial relations systems, including the crucial role of collective bargaining in the different forms, should be properly defined. The result of this clarification should show if a revision of the Posting of Workers directive is needed. This should not come at the expense of competition rules and the principle of non-discrimination on ground of nationality. Any review of the existing legislation or any new legislative act should be based on consultation with the social partners and on the balance between high labour standards and economic freedoms, as well as addressing problems caused by black labour markets.

4.11.1 Regulation cannot be labelled as a barrier or a burden when it equals safeguarding societal interests, including consumers and workers rights. The proposed simplification of the accounting directive that would reduce the administrative burden to the businesses especially SMEs seems a right contribution to the business friendly environment but it should be only one part of a comprehensive review of unnecessary regulatory burden that the European enterprises have to face making them less competitive on the global market.

4.11.2 The EESC welcomes and supports the proposed actions such as interconnection of business registers, a Statute of the European Private Company which matches societal requirements, more coherent implementation of the Small Business Act by the EU and Member States but stresses the need to reduce the unnecessary administrative burden further and expects that the Commission will propose the targets after 2012 when the administrative burden should have been reduced by 25%. The Committee notes that a reduction of unnecessary burden is always desirable be it for businesses, consumers or public authorities but that there needs to be a careful assessment to ensure that the original purpose of the legislation is not compromised. The Committee recalls that a common EU approach can also reduce administrative burden if it replaces 27 differing national approaches.

4.12.1 The EESC welcomes the initiative to develop a balanced procurement policy which fosters demand for environmentally sustainable, innovative and socially responsible development. Attention must also be paid to ensuring that corruption and misuse of public funds in procurement processes is addressed across the EU. But public procurement is in danger of becoming too complex to be applied consistently (15). At the very least, more should be done to build capacity in public administration to apply public procurement rules in a consistent way, while at the same time enabling them to build the new demands public procurement needs to fulfil into their specifications. The Commission should also promote more widespread use of the code of conduct by public authorities to make procurement more SME friendly (16).

4.12.2 Since the start of the Single Market project in the mid 1980s, the integration of a fundamental social clause in the rules has been discussed. These demands have been partially met during the revision of the procurement rules in 2005. The review of the EU public procurement directives should allow for full exploitation of the current framework for the integration of social and environmental criteria into public contracts, also to be applied by third country services providers, provided that such criteria are in balance with the fundamental principles of EU law as enshrined in the Lisbon Treaty.

4.12.3 The Commission's initiative in the area of public procurement should pay more attention to the persistent imbalance in openness of public procurement markets between the EU and its main trading partners. It should be considered to which extent EU public procurement markets can sustainably remain open whilst third countries maintain an unlevelled playing field. In this respect, ratified ILO conventions and Human Rights have to be respected by all players, Member States and third countries alike. The EU should actively promote this policy at global level.

5.1 The Committee welcomes the recognition in the Commission's Communication of the importance and willingness of civil society to be involved in the development of the Single Market. It recalls that the Committee's role is to act as a bridge between Europe and organised civil society and is thus in a unique position to help the Commission to develop the Single Market further. In this context, the Committee reminds the Commission that it is not sufficient to simply consult but to demonstrate how the consultations and consultative opinions have shaped the proposals.

5.2 The Single Market Forum should become an effective platform for the interaction of the EU and national/regional administrations responsible for the smooth functioning of the SM with the key players. The Committee strongly supports the concept of a Single Market Week, set out by Commissioner Barnier, associating the public authorities and the civil society organisations of individual Member States.

5.3 The Internal Market Information system (17) (IMI) is the main technical tool for the cooperation between the national administrations and has additional potential as an interface for Single Market users.

5.4 The weakening support of the European citizens to European integration requires an intensive and targeted communication strategy including the mobilisation of all tools providing the necessary support to businesses, workers and citizens alike such as Solvit, EURES, European Enterprise Network, European consumer centres, RAPEX etc. The development of a single entry point (‘Your Europe’) for businesses and citizens can be helpful but only if the information is complete, relevant, authoritative and accessible. There is a need to recognise that citizens and businesses also have to be able to pose their questions directly to a person, rather than only relying on electronic material.

Brussels, 27 October 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

(4) http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0245:FIN:EN:PDF

(16) European Code of Best Practices facilitating access by SMEs to public procurement contracts, SEC(2008) 2193.

(17) For more information http://ec.europa.eu/internal_market/imi-net/index.html