Opinion of the European Economic and Social Committee on the ‘Key Actions towards a Single Market Act II’ (exploratory opinion)

On 27 June 2012 the European 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

On 28 June 2012 the President instructed the Section for the Single Market, Production and Consumption to prepare the Committee's work on the subject.

Given the urgent nature of the work, the European Economic and Social Committee appointed Mr VOLEŠ as rapporteur-general at its 482nd plenary session, held on 11 and 12 July 2012 (meeting of 12 July), and adopted the following opinion by 176 votes to five with two abstentions.

1.1 The Commission presented proposals for ten of the Twelve Levers resulting from the Single Market Act by the end of 2011 and the remaining two followed in the first half of 2012. In addition, the Commission has tabled proposals for or completed 28 of the remaining 50 measures announced in the Single Market Act.

1.2 Specific proposals on Single Market governance targeted information of citizens and businesses on the opportunities of the Single Market, on the improvement of the implementation of Single Market rules by Member States and on ensuring their effective enforcement. Little progress has been made in this particular area despite the fact that citizens and businesses consider this to be one of the major shortcomings.

1.3 The focus on Twelve Levers allowed the Commission to make progress faster than otherwise possible. The European Parliament and the Council have been asked to adopt the legislative proposals before the end of 2013 so that they can be implemented by 2014. The fast, full and correct transposition and implementation of adopted legislation will be a major task for the member states.

1.4 The Commission will celebrate the 20th anniversary of the Single Market with a Single Market Week across Europe in October 2012 with events in all 27 Member States. The second Single Market Forum will maintain the political momentum created by the Single Market Act, review progress made on its implementation, and consider future priorities to boost growth and strengthen confidence.

1.5 In a letter of 27 June, Commission's Vice-President Maroš Šefčovič requested the EESC's contribution to the ongoing debate on the grounds that its members represented the diversity of social and economic players providing consensual added value to the work in progress.

2.1 The proposals for a Single Market Act II must not ignore the difficult situation in the EU resulting from the inability of several Member States to remedy their public deficits, prevailing stagnation of GDP and rising unemployment. The proposals should therefore include not only short time measures with immediate effect on growth and employment but also medium and long-term measures that would guarantee a sustainable development and bring benefits for all EU citizens also for the future.

2.2 A revised and updated Europe 2020 Strategy should be the overall guideline for the development of the Single Market as the most precious achievement of European integration and a tool for reaching the goals of the Strategy.

2.3 The preparation of the new set of proposals to enhance the Single Market should take into consideration the views of all stakeholders including civil society organisations and social partners.

2.4 The measures to release the potential of the Single Market for businesses, consumers, citizens and other stakeholders should be taken mainly in the field of services, access to finance, removal of administrative burden for SMEs, e-commerce, digital Single Market and mobility. They should be accompanied by actions aimed at reinforcing consumer protection and confidence on the one hand and taking due account of the social aspects of the Single Market by supporting the social economy and respecting the need for social cohesion as well as citizens' rights and interests, on the other.

2.5 In its previous opinions on the Single Market Act (1) and on the Twelve Levers (2), the EESC had pointed out a number of issues it still considers crucial:

2.6 Later this year, the Committee will draft an own-initiative opinion on the missing measures from the Single Market Act. These included inter alia copyright levies (covered by the Single Market Act II), 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 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 the operation of the Single European Payment Area (SEPA).

2.7 The Committee expects to be involved in any consultation process related to the legislative and non legislative measures of the Commission's rolling programme that will be part of the Single Market Act II and will develop detailed recommendations when the individual actions of the Commission will be turned into proper proposals.

3.1.1 Basic payment accounts available to all citizens are necessary and must be swiftly brought about. The Committee calls for regulatory measures on this, on transparency of fees and on easy switching of accounts.

3.1.2 Parcel delivery especially in e-commerce (4) and cross-border insolvency proceedings are further areas to be considered as priorities.

3.1.3 The EESC proposes also to include measures to consolidate the operation of the Single European Payments Area (SEPA).

3.1.4 The Committee reiterates its support for the extension of the standards on services taking into consideration at the same time their specific character and market and societal needs.

3.2.1 The Committee considers that the completion of the digital Single Market will be a key plank in the relaunch of the Single Market. In its previous opinion the Committee stated that electronic commerce is one of the victims of the fragmentation of the Single Market, which hinders the full exploitation of the potential of on-line cross-border trade for both providers and consumers. To solve these problems actions have to be taken to complement the measures already prepared by the Commission, namely high data protection, open internet, net neutrality, the removal of barriers based on nationality/residence, e-signature, e-payment, broadband investment, universal access, accessibility of hardware and software for everybody and legislation for online services accompanied by a consistent consumer policy.

3.2.2 The EESC considers it essential to ensure administrative cooperation between Member States and to open e-government services, which could be facilitated through the generalised use of IMI.

3.2.3 The EESC stresses the need to take particular account of the advantages of the widespread dissemination of electronic invoicing but it believes it should remain optional with equal treatment of paper while any additional burden for SMEs should be avoided.

3.3.1 The EESC pays special attention to networks (transport, energy, communications) that play a substantial role in connecting Europe. Regarding railways the EESC supports the idea of creating a Single Railway Area that would be able to compete with other modes of transport. It recommends exploring the option of setting up a compensation fund similar to those existing already in various network industries. Absolute priority should be given to the general implementation of the European signalling and traffic management system in conjunction with the European Train Control System.

3.3.2 Regarding air transport the creation of a Single European Sky is essential to ensure the competitiveness of the EU aviation industry in the global market place. The development of SESAR needs to be addressed: a) ensure the synchronised deployment of airborne and ground infrastructure upgrades; b) secure timely and adequate financial resources for SESAR deployment; c) establish the right governance for the deployment of SESAR. It should also be open to SMEs.

3.3.3 The Committee calls for a swift revision of Regulation (EC) No 261/2004 (5) to modernise passenger rights in respect to overbooking, delays and also to package holidays.

3.3.5 A European policy for seaports does not necessarily imply producing new legislation. "Soft law" in particular may be a valuable alternative to legislation on the one hand and a case-by-case approach on the other.

3.3.6 Regarding Energy networks, the Committee endorses the Commission's recent initiatives aimed at pressing ahead with interconnection and completing the internal market in energy.

3.3.7 The Committee supports the principle of creating a European Energy Community (EEC) and endorses the interim steps that this would entail, including regional European energy networks, a renewable energy development fund and a gas-purchasing group.

3.3.8 The Committee is of the opinion that time is ripe for a critical assessment of the liberalisation of the energy market, as the results for citizens and business have not brought the foreseen lower prices.

3.4.1 Due to financial crisis, access to credit can be difficult for companies especially SMEs in many Member States, with negative repercussions on their business activity. To enable the private sector and especially SMEs and social enterprises to generate growth and jobs access to capital is crucial. However, banks are increasingly unwilling to lend to businesses, notably innovative enterprises and start-ups that present both the greatest risks and the greatest potential for growth.

3.4.2 For this reason the EESC invites the Commission to support SMEs to tap debt capital markets directly, develop SME-targeted bond platforms, and explore ways to improve mezzanine finance and look into new mezzanine products, such as a guarantee for mezzanine loans. In this regard, the Commission should provide guidance to all stakeholders on good practice in combining and leveraging financial instruments from different sources.

3.4.3 The EESC recommends that negotiations with Member States on the future structural funds take into consideration the need for the creation of financial instruments supporting guarantees for SME loans.

3.5.1 The Committee calls for actions that would address the divergent tax rules and administrative complications, which are one of the major obstacles for SMEs preventing them from expanding within the Single Market.

3.5.2 Even without harmonisation of taxes many obstacles in this field can be removed, among others double taxation, which is a serious obstacle to cross-border activities with negative economic implications on investment and employment. The present complicated VAT recovery systems in cross-border trade and services can lead to tax evasion and fraud, which must be fought more effectively. A standard EU VAT declaration would contribute to administrative simplification.

3.5.3 The Committee is of the opinion that taxation in the Member States should not lead to the creation of tax havens with negative impacts on economy and public budgets.

3.5.4 Attention should be paid to the VAT regime for financial services, and certainly if a new financial sector tax based on cash flows or similar factors were to be introduced, the Commission should assess the merits of designing it within the VAT framework.

3.5.5 The EESC also calls for an introduction of general rules to pay the VAT only when an invoice has been paid by the customer. This system, already applied in some Member States for small companies known as cash accounting avoids that the VAT is charged on sales whether or not the customer has paid. In the current economic downturn it could prevent the insolvency especially of SMEs.

3.6.1 The EESC stresses the need to pay special attention to the issues that are not sufficiently covered by EU legislation and by support programmes such as self-employed people.

3.6.2 The Committee 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.

3.7.1 The Social Business Initiative will be reviewed in 2014. In close cooperation with the Expert group on Social Business, the Commission will take stock of what it has delivered and determine what must still be done. The EESC urges that the comments made in the opinions it has recently adopted on social enterprise be taken into proper account (6).

3.7.2 The Committee stresses the need to increase the level of knowledge about the role and spread of social businesses in order to enhance their actual impact on the community. This will require the development of a methodology for the measurement of this impact. Such a measurement will also be required to implement the European Social Entrepreneurship Fund.

3.7.3 The Committee is of the opinion that the proposal of the European Foundation and all other European Corporate forms has to be assessed against the background of the consultation on the renewal of European company law.

3.8.1 The Committee is looking forward to a legislative proposal on collective redress 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. 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.

3.8.2 The EESC calls for regulatory measures to achieve an integrated Single Market for cards, Internet and mobile payments.

3.8.3 With regards to product safety rules, the Committee calls for the application of two basic principles:

3.9.1 The Committee reiterates the need to achieve increased mobility for citizens by modernising 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. The debate on the recognition is not always meaningful at the level of 27 Member States. More emphasis has to be placed on the actual need (in cross-border situations and between neighbouring countries), based on an analysis of the mobility patterns. The EU should stimulate regional cooperation in this field and promote joint cross border vocational training.

3.9.2 Regarding the portability of pension rights, the White Paper (7) is too much focusing on improvement of individual third pillar pensions. First and second pillar schemes need to be improved in order to guarantee structural benefits also for people moving throughout Europe.

3.9.3 The Committee is also concerned about the recent Council decision to renationalise the Schengen Agreement, allowing the establishment of new obstacles to the free movement of citizens within the Union and reintroducing border controls in places where they had been abolished. This is a flagrant breach of the fundamental principles of the Treaty and creates more difficulties for the completion of the Single Market.

3.10.1 The Committee is of the opinion that there is a need to clarify the enforcement rules and the reference to article 3.3 of the Lisbon Treaty where it is said that the internal market is not a goal in itself, but an instrument to achieve social progress and a sustainable society for the European citizens.

3.11.1 Public procurement has to be established by rules that not only refer to the best price; other criteria related to the social benefits and the impact on sustainability must be weighted on an equal footing.

3.11.2 It should be considered to which extent EU public procurement markets could 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.

3.11.3 More could be achieved through e-procurement to speed up administrative procedures.

3.12.1 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.

Brussels, 12 July 2012.

The President of the European Economic and Social Committee

Staffan NILSSON

(3) SOLVIT, Enterprise Europe Network, European Consumer Centres, Eurocentres, etc.

(4) As illustrated by one of the video clips of the "Tell us your story" competition organised by DG MARKT. The Single Market Observatory’s public hearing in Tallinn on 1 June 2012 touched upon the follow-up to the issues raised in these videos by citizens.

(5) Regulation (EC) No 261/2004 of the European Parliament and of the Council of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights, and repealing Regulation (EEC) No 295/91.

(7) White paper "An agenda for adequate, safe and sustainable pensions", COM(2012) 55 final.