12.11.2013   

EN

Official Journal of the European Union

C 327/1

1.1

The purpose of this EESC exploratory opinion is to shed light on the specific contribution that public undertakings can make to the EU's competitiveness. It aims to pinpoint the specific challenges that exist in this area for EU policy and the European institutions.

1.2

This opinion should be seen against the background of the treaties, which give wide discretion to the Member States as regards the definition, organisation and funding of their services of general interest. Furthermore, the treaties leave it up to the Member States to decide on the undertakings responsible for carrying out their public service tasks and their status (private, public or public-private partnership) (1).

1.3

Public authorities decide on a case-by-case basis whether to use a public undertaking as one of its means of action; this hinges on their analysis of the sector concerned, the defined objectives and tasks and the long-term approach to be promoted.

1.4

According to Commission Directive 80/723/EEC of 25 June 1980 on the transparency of financial relations between Member States and public undertakings, a "public undertaking" means: "any undertaking over which the public authorities may exercise directly or indirectly a dominant influence by virtue of their ownership of it, their financial participation therein, or the rules which govern it.

A dominant influence on the part of the public authorities shall be presumed when these authorities, directly or indirectly, in relation to an undertaking:

1.5

All EU countries have set up public undertakings at some stage in their history, either directly, or by nationalising or "municipalising" private companies. They have done so for a wide variety of reasons:

1.6

Any measurement of the effectiveness, efficiency and, where necessary, the need for reform of public undertakings should not be limited to the usual indicators of economic-activity profitability, but should incorporate all of the objectives and tasks assigned to them by the public authorities.

1.7

According to the official EU definition, competitiveness is the ability of a state to sustainably raise the standard of living for its inhabitants and secure them a high level of employment and social cohesion.

1.8

Every year, the EU loses a bit of ground in terms of productivity. This slowdown is synonymous with deteriorating competitiveness. The telltale signs of this decline include insufficient innovation, and a lack of investment in infrastructure and technologies as well as in human capital.

1.9

The EU's competitiveness and attractiveness thus hinge on investment in infrastructure, education and training, research and development, health and social protection, environmental protection, and so on – all areas in which public authorities can make use of public undertakings as one means of intervention, amongst others.

1.10

However, the state and regional and local authorities are not inherently virtuous and public undertakings sometimes fail, due to:

1.11

The public undertaking may form part of a defensive or offensive strategy on the part of the relevant public authority:

1.12

This implies that the public authority assumes its responsibilities as regards setting the strategic direction, while giving the management a large degree of autonomy to run the undertaking. The public authority should, however, ensure that there is proper public scrutiny and regulation, which requires putting in place a system of governance for its public undertakings, underpinned by the participation of all stakeholders, as well as representatives of the staff of those undertakings.

1.13

The services of general economic interest that Member States deliver through public undertakings involve industrial or commercial activities, often in direct competition with those of other companies.

1.14

Among the public undertakings that are evolving in a deregulated, competitive environment, the most prominent example would be network industries (e.g. electricity, gas, electronic communications, transport, postal services); continuous access to and supply of these services – which must be of a high quality and affordable – is vital for not only the public, but also a large proportion of private companies. They thus play a fundamental role in the domestic economy and global competitiveness of a Member State. The same applies to other areas, such as the audiovisual sector, housing, health and social care, where market failures may prevent people from exercising their fundamental rights in one way or another.

2.1

In its referral letter, the forthcoming Lithuanian presidency specifically asked that the emphasis be placed on enhancing the efficiency of state-owned enterprises and on their importance for national competitiveness. The presidency has requested an analysis of the current situation and good (or bad) practices, which has been lacking at EU level, as has a structural reform as regards assessing the efficiency of such enterprises in the context of economic policy coordination and their impact on the internal market.

2.2

Although EU law applies only to a few specific areas concerning the activities of state-owned enterprises (state aid and services of general economic interest), the forthcoming Lithuanian presidency proposes that EU-level initiatives on the reform of state-owned enterprises be limited to non-legislative measures and that no targets be set for new legal regulation. The privatisation of state-owned enterprises should also remain exclusively a matter for the Member States.

2.3

Finally, the forthcoming Lithuanian presidency regrets that so far, there has been no comprehensive discussion in the existing and planned initiatives and documents of the European Commission of the reform of state-owned enterprises, their governance, boosting their efficiency, and their contribution to competitiveness and achieving the goals of the Europe 2020 strategy. Up to now, action by the Commission and the European Parliament has been limited to two areas: compliance with the rules on state aid and those on the provision of services of general economic interest.

3.1

The Committee supports the request from the forthcoming Lithuanian presidency for an analysis of the current situation and good (or bad) practices, as well as a structural reform as regards assessing the efficiency of such undertakings in the context of economic policy coordination and their impact on the internal market.

3.2

The treaties now place a stronger obligation on the EU and the Member States to ensure that services of general economic interest operate effectively, notably by evaluating the performance of such services as part of an ongoing process. Until this is done, evaluations of their performance will not help to meet the needs of the public and of the economy at national and EU levels.

3.3

The purpose of such evaluation is to enhance the effectiveness and efficiency of services of general economic interest and their adaptation to the changing needs of the public and of business. It will also equip public authorities to make properly informed decisions. In addition, it will have a key role to play in achieving a balanced trade-off between markets and general interests, and between economic, social and environmental objectives.

3.4

In its opinion entitled An independent evaluation of services of general interest  (2), the Committee put forward practical proposals for laying down at EU level the procedures for exchange, collation, comparison and coordination. It will therefore be up to the EU to stimulate this independent evaluation process, while respecting the subsidiarity principle and the principles set out in the protocol appended to the amended treaties, by defining a harmonised evaluation methodology at EU level. This should be based on common indicators backed by operational provisions, and should be arrived at through dialogue with the representatives of stakeholders.

3.5

As part of its consideration of the way in which public undertakings could contribute more to the EU's economic recovery and competitiveness, the Committee has addressed the issue of Europe's services of general economic interest in a number of opinions.

3.6

A Statute for a European company has been in existence since 8 October 2001. This statute, in use since 8 October 2004, enables companies operating in several Member States to form a single company under EU law and thus apply the same rules: a single system of management and publication of financial information. Companies that adopt this statute thus avoid having to comply with the national legislation of each Member State where they have a subsidiary, thereby reducing their administrative costs.

3.7

Against this backdrop, consideration should be given to introducing a "statute for an EU public enterprise", as proposed by the Commission in 2011 regarding Galileo (3) which is now a "de facto EU public enterprise".

3.8

Specifically, EU public enterprises could be envisaged within the major trans-European infrastructure networks, which are defined as a common policy in the treaties, in the areas of energy or transport. They would cooperate with national or local enterprises in these sectors, in order to implement the new provisions and powers laid down in the Lisbon Treaty, particularly in respect of the EU policy on energy (Article 194 TFEU).

3.9

In its opinion on the Green Paper entitled Towards a secure, sustainable and competitive European energy network  (4), the Committee called for studies to be carried out into the timeliness and feasibility of a European energy service of general interest for the benefit of the public, with a common approach to prices, taxation, financial security rules, continuity, economic development and climate protection.

3.10

In the same Green Paper, the Commission argues for the establishment of a European Transmission System Operator by progressively building an independent company to manage a unified gas transport network throughout the EU.

3.11

Such services at EU level, whatever the status of the service provider (public, private, PPP), could bring added value to essential multinational or transnational areas such as security of energy supply, security of water resources, preservation of biodiversity, maintenance of air quality, internal and external security etc., insofar as these services can be delivered more effectively at EU level than at national or local levels.

3.12

The Committee therefore declares its support for public (EU and Member State) private partnerships to increase the security of energy supply and ensure that interconnected energy networks (gas, electricity, oil) are managed in an integrated way. The Committee also supports the development of wind energy networks at sea and the connection of these wind parks to the terrestrial network – which could significantly reduce operating and investment costs and provide greater incentives to invest in new network projects (5).

3.13

In terms of the powers of each Member State, as regards energy-mix for example, the social and societal questions posed by the management and use of natural resources, nuclear energy, climate change, sustainable management and security cut across traditional national borders and can be more satisfactorily addressed through a European concept of the general interest and appropriate services.

3.14

The issue could also be raised of the economic activities of the EU's executive agencies.

3.15

There are currently six of these agencies (6) which together implement programmes for the period 2007-2013 amounting to approximately EUR 28 billion. Most of these programmes fall within areas in which the EU has competence to support the Member States.

3.16

These executive agencies could be considered as a kind of outsourcing of certain Commission functions, and thus the question arises as to whether they are truly independent, while their tasks and responsibilities lead them to be directly involved in socio-economic activities. Is this so far from the broad definition established by the European Court of Justice of the concepts of economic activity and enterprise?

12.11.2013   

EN

Official Journal of the European Union

C 327/5

1.1

The EESC welcomes the efforts made by the governments of Serbia over the last decade to reform the country's economy and institutions. It sees the process of Serbia's accession to the EU as an opportunity to consolidate and effectively implement the reforms undertaken. It underlines the importance of civil society involvement in the process of aligning Serbian legislation with the EU acquis. It calls upon the Government of Serbia and the EU institutions to step up their support to civil society organisations (CSOs) and to involve them closely in the upcoming steps leading to EU accession.

1.2

The EESC welcomes the decision of the European Council to open accession negotiations with Serbia no later than January 2014. The EESC congratulates Belgrade and Prishtina on the signing of the First agreement of principles governing the normalisation of relations (Brussels, 19 April 2013) and of its Implementation Plan adopted in May. It now calls on both parties to implement the agreement, assisted by the EU. The EESC stresses that CSOs must be involved in the implementation phase, as they can make a decisive contribution to reconciliation.

1.3

The EESC encourages Serbian public authorities to carry out more public hearings and consultations with CSOs in both the early stages of shaping policies and in the implementation phase. The EESC emphasises the importance of involving them in key areas of the reform process, such as the rule of law, regional cooperation and reconciliation, socio-economic development, the environment, agriculture, minority rights and the fight against discrimination.

1.4

The EESC recommends that the Government pay particular attention to combating trafficking in human beings and corruption and organised crime. It further insists that the safety of human rights defenders and of the CSO activists involved in fighting organised crime must be acknowledged as a need and guaranteed by the Government.

1.5

The EESC points out that, even if significant progress has been made in promoting a more inclusive society, much remains to be done to build a society in which everyone is equal, regardless of their gender, sexual orientation, origin, or religion. The EESC asks the Government to lose no time in implementing the Anti-Discrimination Strategy adopted in June 2013. The EESC recommends that, working closely with CSOs, the European Commission (EC) use its annual progress reports to monitor the strategy's implementation.

1.6

The EESC welcomes the inclusion of the Office for Cooperation with Civil Society (OCCS) in the Prime Minister’s Expert Group of the Coordination Body for EU Accession. The EESC also welcomes the participation of CSOs, including representatives of the social partners, in the Prime Minister's Council for EU Integration. This is a good practice that should be built upon by considering the participation of CSOs, including representatives of the social partners, in Serbia’s future accession negotiation team. Frequent and wide-ranging consultations with CSOs should nevertheless be ensured in order to identify key common opinions and recommendations. It is important that experts from CSOs are invited to join a number of expert sub-groups within this Expert Group of the Coordination Body.

1.7

The EESC calls on the EC to use IPA II to provide greater support for building the capacity of CSOs (including the social partners) and to focus on increasing support for partnerships, not only among CSOs but also between CSOs and public authorities. Funds available under the Civil Society Facility should be increased and target more projects carried out by the social partners as well. Building the capacity of CSOs to engage meaningfully in the EU integration process should be maintained as a priority area, by promoting simplified procedures for the selection and implementation of projects, the use of institutional grants and re-granting. It is not only financial support that is desirable, but also support for mechanisms to improve dialogue between civil society and the public authorities.

1.8

The EESC urges the EU Delegation to Serbia to continue allowing re-granting for smaller CSOs through bigger CSOs as a step forward in making these funds available to the wider CSO community.

1.9

Increasing transparency in public spending must be maintained as a key action in the civil society development strategy, whilst the mechanisms for planning and disbursing co-financing for CSO-implemented EU projects need to be improved and the co-financing increased.

1.10

The EESC calls upon the Serbian Government to increase efforts to implement an institutional and legislative framework conducive to civil society development and sustainability. The EESC recommends considering the introduction of a "percentage law" enabling citizens to earmark a share of their income tax for CSOs to promote individual philanthropy (based on the existing model in Central and East European countries), as well as introducing tax incentives for individual and corporate philanthropy.

1.11

The EESC recommends that the newly adopted Law on Public Procurement, which has created obstacles for CSOs when competing for public tenders, be reviewed. The law introduces mandatory financial guarantees that CSOs cannot have. This might prevent them from competing in public tendering procedures, not only in the area of social services but also of health and educational services.

1.12

The EESC calls upon the Government of Serbia to set up a comprehensive strategy to combat and limit the grey economy. This would improve the country's financial situation, prevent unfair competition and thereby create a better economic environment, while guaranteeing better respect for workers' social rights. This would also help restore confidence in institutions and promote the concept of the rule of law.

1.13

The EESC underlines the importance of social dialogue and calls upon all stakeholders to make the best use of the existing institutions, especially the Social and Economic Council (SEC). It calls upon the Government to further promote the SEC and to consult it more systematically on all policies in which employers and workers have a legitimate interest. The EESC considers that social dialogue should be regular and structural in nature and not ad hoc, and that it should also be more effective and result-driven.

1.14

The EESC asks that the promotion of social dialogue be included among the key priorities of the EU institutions as regards Serbia, and that it should therefore be reflected in all EC programmes available to the country. This would require greater involvement of the SEC, which should also be formally involved and consulted at each stage of the accession negotiations and involved in monitoring the implementation of the EU-Serbia Stabilisation and Association Agreement. The SEC should be able to submit comments and opinions for the attention of the EU institutions when they assess Serbia's progress towards EU accession.

1.15

The EESC considers that social dialogue should be further encouraged at regional and local level, building on the SEC's regional structures. It should also be more systematically developed at sectoral level, particularly in the private sector. The signing – and enforcement - of as many branch collective agreements as possible would stabilise industrial relations in Serbia. Local and national authorities should be constantly reminded of the advantages and importance of social dialogue.

1.16

The EESC notes that a tripartite working group has been set up to review labour legislation, including the laws on striking, trade union registration and the law on the representativeness of social partners. The EESC calls on the International Labour Organization (ILO) and the EC to support this ongoing work in order to bring Serbian legislation and practice fully into line with international and European standards.

1.17

The EESC considers that strengthening the social partners’ capacity to participate actively in social dialogue should be included in the priorities of EU assistance programmes. Assistance is needed to develop their ability to participate effectively in all economic, social and legal issues, including in EU accession negotiations. Their organisational structures, internal communication and capacity to serve their members should be strengthened.

1.18

The EESC points out that the fundamental rights of workers are still regularly violated in Serbia and that the mechanisms for preventing and sanctioning those violations are not sufficiently effective. The EESC calls upon the Serbian Government to review the functioning of the Agency for the Peaceful Settlement of Labour Disputes. The EESC suggests considering the possibility of establishing specialised courts for labour disputes. Moreover, the EESC asks the EC to include in its annual reports a chapter on trade union rights and fundamental workers’ rights in close consultation with national and European trade unions and the ILO.

1.19

Serbian female entrepreneurs play an important role across the Balkan region and have effective networks. A cohesive regional approach is now taking shape to further develop female entrepreneurship at the local level. The EESC recommends that support from the European, regional and national levels be increased to significantly speed up the economic and social benefits. Additionally, recognition is needed of the economic and social imperative of supporting female entrepreneurship in Serbia.

1.20

The EESC recommends that an EU-Serbia Civil Society Joint Consultative Committee (JCC) be established between the EESC and Serbian CSOs. This joint civil society body should be established once the negotiations on Serbia's accession to the EU have been formally opened. The JCC will enable CSOs from both sides to pursue more in-depth dialogue and to provide input to the political authorities on the chapters of the accession negotiations.

2.1

Over the last decade, Serbia has made a huge effort to reform its institutions, legal framework and economic regulations, in order to comply with international and European standards and to promote an open and efficient market economy.

2.2

In 2008, the signing of the Stabilisation and Association Agreement (SAA) between Serbia and the EU clearly expressed the choice of the Serbian Government in favour of EU accession and gave new impetus to the reform process. In 2010, an Interim Agreement on Trade and Trade-related issues (part of the SAA) entered into force.

2.3

The new Government, which took office in 2012, has confirmed Serbia's commitment to EU accession. It has taken practical steps to pursue the reforms undertaken so far, focusing in particular on the fight against corruption, the consolidation of the rule of law, the protection of minority rights and economic recovery. It has also pursued efforts to improve regional cooperation.

2.4

In December 2012, the Council asked the EC to draft a report by Spring 2013 assessing the progress made by Belgrade in its dialogue with Prishtina and in its EU-oriented reforms. On the basis of this report, which issued a positive recommendation, the European Council decided on 28 June 2013 that conditions have been met to open EU accession negotiations with Serbia.

2.5

On 19 April 2013, Belgrade and Prishtina finally agreed on the future of Serb-run North Kosovo in the tenth round of EU-led talks, signing the First agreement of principles governing the normalisation of relations. In May, an Implementation Plan was adopted by the two sides. An implementation committee has been established by the two sides, assisted by the EU.

3.1

Serbia is still a country in transition. There has been some privatisation, but a large part of the economy still consists of public companies, often in dire need of restructuring. Unemployment has increased significantly (24 % of the workforce in 2012). Young people are trying to emigrate. The population is growing older. A large part of the population still works in agriculture and lives in rural areas, where the lack of investment hinders effective development. The informal economy is widespread, undermining the economy as a whole, weakening the state budget and leaving employees without any social protection. Corruption, sometimes linked to organised crime, hampers not only economic development but also consolidation of the institutions. Furthermore, the judiciary is badly in need of reform if it is to guarantee genuine respect for the rights of individuals and organisations.

3.2

The EESC highlighted these different problems in its opinion on EU-Serbia relations: the role of civil society (29 May 2008), but it has also underlined the efforts made by the public authorities to undertake the necessary reforms. Many new regulations have been introduced; new institutions, in particular for organising dialogue with the social partners and other CSOs, have been set up; and the rights of minorities are now officially recognised. Although this process has not yet been completed, the main problem is to translate all these institutional and legal changes into practice.

3.3

Serbia has ratified 77 treaties and conventions of the Council of Europe (CoE), including key ones such as the Conventions on the Protection of Human Rights and Fundamental Freedoms, the Protection of National Minorities, the Prevention of Torture, the Protection of Children, Action against Corruption and the European Social Charter. Eight additional conventions have been signed but are still awaiting ratification, including the Convention on Preventing and Combating Violence against Women and Domestic Violence. At international level, Serbia has ratified 75 ILO conventions (73 are now in force).

3.4

As the CoE's Commissioner for Human Rights has emphasised (1), many of these conventions still require further action for proper enforcement. The CoE Commissioner highlighted the problem of the missing persons and of the persons forcibly displaced during the war; rampant discrimination against Roma; violence against women; and widespread homophobia.

3.5

Although the Government adopted a Media Strategy in October 2011, violence and threats against journalists still exist. Economic and political interference in the media is also a reality, which threatens the independence of the media and journalists' ability to do their job. Furthermore, trade unionists are still harassed or fired for being members of a trade union organisation.

3.6

The EESC considers that further consolidation of the reform process, the reform of the judiciary system and the enforcement of civil, social and human rights are clearly the priority for Serbia. EU relations with Serbia should clearly focus on those aspects. This is also a key issue for CSOs and their active participation should therefore be encouraged by all means.

4.1

Freedom of assembly and association is constitutionally guaranteed and generally respected. However, freedom of association is jeopardised by increased threats from violent nationalist groups.

4.2

Serbian civil society is predominantly based in cities and is unevenly represented across the regions. Civil society in rural areas is very limited and its capacities are not well developed. Further support is needed to encourage associative movements, build capacities and support the networking of CSOs based in rural areas and/or small towns.

4.3

Particular attention should be paid to agriculture, to developing agricultural interest groups, and to agricultural involvement in social dialogue. Agriculture continues to play a key role in Serbia - around a quarter of the working population is employed in farming, and the agricultural sector is also a key economic sector. Agriculture and agricultural policy will be of great importance in the future EU accession process; at the same time, alignment with EU legislation will be a particular challenge for the Serbian agricultural sector.

4.4

Not only could well-organised and structured interest groups help to promote agricultural interests, above all they could provide useful support for the forthcoming integration process, not least in terms of framing and implementing specific support programmes for agriculture, rural areas and the people who live there.

4.5

There are several active partnerships and coalitions among CSOs, but their resources and support are too limited to enable them to become more active and influential. With respect to partnerships between CSOs and public authorities, the established SECO (2) and KOCDs (3) mechanisms are examples that may become good practice, so long as their input is taken into consideration and if continuous and systematic funding and support are provided.

4.6

The most significant obstacles to the sustainability of CSOs are the fact that state support is neither sufficient nor based on well-defined priorities, under-developed business sponsorship, lack of individual giving, withdrawal of international donors, under-developed cooperation with local authorities and the limited accountability of decision-makers in general. Efforts should be made and support provided to develop CSOs' constituencies. A limited membership base hinders CSOs' image and recognition, while public funding is still not properly regulated at all levels. CSOs' ability to influence the social and political agenda is generally weak, with the exception of a dozen strong CSOs, most of which are based in Belgrade.

4.7

The EESC welcomes the efforts to improve the legal framework of associations and foundations, including the Law on Associations (October 2009), the Law on Endowment and Foundations (November 2010), the Law on Volunteering (May 2010), and Simplified accounting procedures for small associations and foundations (not yet adopted). However, other important laws have been passed but not yet implemented, such as the Social Welfare Law (2011). The EESC supports the development of a framework, as provided for by the law, which could ensure fair access by CSOs to public resources intended to support social service provision.

4.8

The EESC welcomes the changes made to Article 41 of the Government's Rules of Procedure on public hearings that lays down the criteria for mandatory public hearings, making them the rule rather than an exception, and providing reasonable timeframes for their duration. The EESC stresses the need to ensure that the mechanism is properly implemented. Priority should be given to raising awareness among public authorities as to the benefits of cooperation with CSOs, both in the early stages of designing public policies and later, when they are implemented. Furthermore, procedures regarding the appointment of representatives of CSOs to different public bodies at national and local level should be considered, taking into account some best practices in neighbouring countries and CSOs' proposals.

4.9

The Office for Cooperation with Civil Society (OCCS) became operational in 2011. The Operational Plan for 2013-2014 includes key objectives that need to be pursued:

4.10

The EESC welcomes the OCCS’s efforts to make the funding for CSOs from the state budget more transparent, by issuing an Annual summary report on funds allocated to associations and other civil society organisations from the state budget of the Republic of Serbia. The OCCS should be given greater powers, however, to increase the response rate from government bodies at all levels, with the aim of ensuring that data collection is complete and published annually. The EESC therefore welcomes the support provided by the EU Delegation to the OCCS, through the three-year Technical Assistance programme started in December 2012 (4).

4.11

Figures from 2011 reveal that little funding was allocated and actually disbursed for co-financing programmes/projects, even where donor support was assured, despite the fact that such funding is greatly needed by CSOs.

5.1

Social dialogue is essential for economic development and to ensure the social cohesion that Serbia requires. A General Collective Agreement was signed in 2008. In April 2011, the Social and Economic Council of the Republic of Serbia (SEC) adopted a new Social Economic Agreement signed by the leaders of the social partners and the Prime Minister, which included important undertakings by the parties. The agreement affirmed that social dialogue is a prerequisite for achieving shared development goals, successfully overcoming problems linked to the economic crisis, and ensuring economic and social progress in Serbia. In 2012, an agreement was signed by the SEC on the minimum wage. At sectoral level, four branch collective agreements were signed in 2011 and 2012 in the agriculture, construction, and chemical and metal industries. The Labour Minister extended these collective agreements to all State employers. Collective agreements also apply to most of the public sector, covering health workers, local and national government, culture, education and the police.

5.2

The SEC was legally established in 2005 and is the institutional platform for tripartite negotiations. In addition, there are now 18 Social and Economic Councils at local level, although, mainly due to the lack of commitments by the regional authorities, less than half of these are fully operational. The SEC still has to contend with a number of problems that hinder its activities, the most significant of which is the lack of financial and human resources. It has nevertheless managed to establish permanent working groups on economic issues, legislation, collective agreements and occupational health and safety. Representatives of the social partners now participate regularly at the SEC's meetings, in contrast with the Government, which is often represented by officials. Their involvement has increased since the Council was re-established in September 2012. Even the Prime Minister is now a member of the SEC, but the SEC continues to face problems with organising its sessions.

5.3

However, if social dialogue has succeeded in delivering results, it still needs to be consolidated and expanded. The social partners are weak, particularly in the private sector. Collective agreements when signed are not necessarily enforced; and there are vast areas that are simply not covered by social dialogue. At national level, the SEC is not systematically consulted on all the issues that fall within its remit, or the consultation is purely formal, its recommendations being too often ignored by the Government. One positive exception is the Ministry of Labour, which submits all draft laws and strategies for the Council's opinion. Moreover, it proposed recently to set up a tripartite working group to draft changes to labour law. There were also improvements in the legislation related to education, with the Ministry of Education and Science submitting three draft laws for the Council's opinion. In spite of these more positive signs, the SEC continues to be largely ignored, on general economic policies and measures that however have a direct impact on enterprises' and workers' activities.

5.4

An Agency for the Peaceful Settlement of Labour Disputes was established in 2005 to settle both individual and collective labour disputes. Its main focus is on individual cases where an arbiter can make a binding decision and has the same legal means as a court. However, in practice, it appears that the Agency did not really succeed in establishing itself as an alternative and that most of the conflicts are still submitted to the courts, which are notoriously overburdened. In collective dispute settlements, the Agency takes on the role of mediator and thus may not force the disputing parties into any settlement but tries to make both parties voluntarily accept a peaceful settlement.

5.5

In 2013, the Government should sign a "Decent Work Programme" with the ILO. This programme should help to review the different aspects of social legislation and procedures to bring them fully into line with international standards, and to build the capacities of the social partners in order to contribute effectively to social dialogue, supported by EU funding and programmes.

5.6

It is vital that the social partners be better integrated into the Government's economic, social and employment policies, not least in view of the EU accession negotiations. They should also be involved in preparations for Serbia's eligibility for the European Social Fund and other EU funds. Only then will it be possible for the Serbian social partners to effectively fulfil their future role in the forums of participatory democracy at EU level.

6.1

The Serbian Association of Employers (SAE) is the main national interest group of employers. It represents Serbian entrepreneurs in the SEC. However, the fact that most of the biggest businesses operating in Serbia, as well as other organisations such as the Association of Small and Medium-sized Entrepreneurs (ASME), are not members of the SAE weakens its legitimacy as a participant in social dialogue.

6.2

The Chamber of Commerce and Industry of Serbia, which is the largest business association, was not included in the work of the SEC in the past, due to a compulsory membership system. However, on 1 January 2013, the voluntary membership system was adopted in Serbia and the chamber is strongly committed to contribute to social dialogue, particularly in the areas of vocational training, foreign trade promotion and regional development. It supports the strengthening of the position of the Serbian Association of Employers in the SEC, providing it would be able to voice the broadest range of employers' interests through an efficient consultative process involving all employers' associations.

6.3

In view of the high unemployment rate, employers should be able to have a stronger influence on the development of a good business environment. It should encourage entrepreneurship and faster establishment of new enterprises, particularly small and medium-sized enterprises, one of the major sources of new jobs in Europe. Major obstacles to a better business climate include lack of transparency and predictability of the legislative framework, unattractive tax system including some para-fiscal charges, access to finance, business registration procedures, administration related to foreign trade, etc. The overall assessment of the business community in Serbia is that it is insufficiently involved in the legislative process and its impact assessment, particularly regarding the effects on SMEs.

6.4

Trade unions are fragmented and weak. Many of them are members of one of Serbia's two largest confederations: the Confederation of Autonomous Trade Unions of Serbia (SSSS) and the "Independence" Trade Union Confederation ("Nezavisnost"). There are also two other confederations, the Association of Free and Independent Trade Unions of Serbia (ASNS) and the Confederation of Free Trade Unions (KSSS), which claim to be representative. Under a new law of representativeness, currently under debate, this claim is to be checked. Moreover, according to the Ministry of Labour, there are around 2 000 union organisations in companies that are not members of a national confederation. All relevant workers' organisations need to be more closely involved in social partnership decision-making on the employees' side. The role of trade unions in Serbia is essential to strengthen social dialogue.

6.5

The difficulties of the transition and the economic crisis have accentuated the fragmentation and weakening of trade unions. The heavy registration procedure for trade unions, the opposition and the harassment, sometimes, of managers who are not ready to accept social dialogue at enterprise level, all hinders the normal development of workers’ representation and undermines social dialogue. However the effective cooperation that has emerged in recent years between the two representative confederations SSSS and Nezavisnost should, against this background, be welcomed.

12.11.2013   

EN

Official Journal of the European Union

C 327/11

1.1

One of the most important elements of a strategy to get Europe back on a path of sustainable growth is securing an adequate supply of long-term finance at reasonable cost. The Commission's consultative document on this issue is both welcome and timely.

1.2

The EESC welcomes the Green Paper's focus on productive investment and the formation of long-lived tangible and intangible capital but urges the Commission to give greater attention to the need to finance more "socially useful" capital investment.

1.3

If banks are likely to play a less prominent role in the future as providers of long-term financing, then opportunities may arise for other intermediaries such as national and multilateral development banks, institutional investors, sovereign funds and, crucially, bond markets. However, it is important to avoid creating obstacles that prevent banks from fulfilling their role as the main providers of long-term financing, and that a legal framework be in place that avoids driving financing and capital flows outside the regulated sector.

1.4

The EESC welcomes the recent recapitalisation of the EIB as this will strengthen its ability to leverage additional private investment finance and to play a stronger countercyclical role in investment funding and credit supply to SMEs. While a EUR10 billion capital injection is significant the EESC considers it to be short of what is needed in the present circumstances.

1.5

Similarly the arrival of EU 2020 Project Bonds, albeit in a pilot phase, is also a positive development. These Project Bonds were developed jointly by the Commission and the EIB. Consideration should also be given to similar joint ventures with sovereign funds.

1.6

If initiatives such as Project Bonds succeed in expanding the market for bond finance they should be ramped up once the pilot phase is completed and evaluated.

1.7

The Green Paper examines the role of savings in the supply of long-term investment finance. While some Member States have embarked on special savings schemes to mobilise longer-term savings hypothecated to wider social investments, the creation of an EU or eurozone wide savings vehicle, perhaps offering an interest rate premium may be worth considering.

1.8

Some Member States have been relatively successful in incentivising pension related and other savings by astute use of the taxation system. Citizens tend to balk at the prospect of paying tax on income earned and then more tax on long-term savings out of this post-tax income. In the context of socially responsible investment, it should be possible to design and market suitable low or zero tax personal savings products with appropriate annual limits so as to encourage greater long-term financial planning.

1.9

Short-termism in the financial system has been a major impediment to the provision of adequate long-term investment and is closely linked to corporate governance. Changing the incentives to promote long-term performance is not an easy challenge. The EESC welcomes the Commission's suggestions about enhanced voting rights and dividends for long-term investors and changes to the shareholders' rights directive. In addition, consideration could be given to a co-ordinated use of capital gains tax allowances to incentivise longer-term shareholding by fund managers.

1.10

In terms of venture capital the Green Paper contains some interesting suggestions. The EESC has already proposed that the EIF's role should be enlarged beyond providing loans to include the provision of venture capital. This was what its creators originally envisaged back in 1994. If the EIF, like the EIB, were to be adequately recapitalised then it could become one of the main providers venture finance for SMEs.

1.11

Finally, given that national and regional governments are already in the business of promoting the survival and long-term growth of SMEs through their regional development bodies, there is a case for these bodies to take on a role in the operation of such SME trading platforms. This role could range from assessing the credit worthiness of client SMEs to providing limited guarantees to institutional investors.

1.12

The EESC would like to see greater emphasis placed on socially responsible investment and proposes the establishment of an observatory to monitor long-term investment conditions.

2.1

The main motivation of the European Commission in producing this Green Paper is the need to get Europe back on the path of growth that is smart, sustainable and inclusive. Europe is facing major long-term, large-scale investment requirements as the basis for sustainable growth. Achieving this is severely complicated by the current risk aversion of households and businesses and the need for fiscal consolidation by many governments which together are restricting the supply of longer term investment finance.

2.2

Failures in the traditional channels of financial intermediation are currently problematical. Banks have been the main source of investment finance in the EU but many of them are now primarily engaged in deleveraging and are thus not able to fulfil their normal role. The Green Paper looks beyond the current crisis, searching for solutions to the provision of the necessary long-term finance for investment.

2.3

The Commission's focus is on productive investment and the formation of long-lived tangible and intangible capital which tends to be less procyclical than shorter lived capital. The Commission defines long-term financing as the way in which the financial system pays for investments that have a long project life.

2.4

Europe has undertaken a programme of reform of the financial sector so as to provide greater stability and confidence in financial markets. The stability of the financial system is a necessary condition for the encouragement of long-term investment but it is not a sufficient condition. The Commission identifies a number of additional areas where action is needed such as:

3.1.1

Commercial banks. The Commission's analysis of the challenges in securing adequate long-term finance in Europe is fundamentally correct. The traditional pre-eminence of banks as the main providers of long-term financing is changing and banks may play a less prominent role in the future. There is no discussion about the potential inconsistency between some new banking regulations and the aims of the Green Paper to stimulate long-term investment. The Green Paper notes merely that the effects of recent and likely future financial reforms may reduce the level of activity of banks in the intermediation chain. A better balance should be struck between the prudential requirements of Basel III and the incentives for banks to continue to provide long-term investment finance. In any case, opportunities are likely to open up for other types of intermediaries such as national and multilateral development banks, institutional investors, greater use of bond markets and sovereign funds.

3.1.2

National and multilateral development banks. These institutions play an important role in sharing the risk with private investors and operators to develop important projects and thus prevent market failures. They also play a countercyclical role through their longer term strategic actions. The EIB and the EIF have played increasingly prominent roles in risk-sharing and the recent recapitalisation of the EIB, though inadequate in the opinion of the EESC, will undoubtedly strengthen its ability to leverage additional private investment finance. The EESC encourages the EIB to do more to promote major cross-border infrastructure projects which face particular financing obstacles.

3.1.3

The EESC welcomes the creation of EU 2020 Project Bonds and they are now being piloted in a number of PPP infrastructure investment projects in fields of energy, transport and ICT infrastructures (1). The Commission touches upon the potential role sovereign funds in financing longer term investment. As in the case of Project Bonds which were jointly developed by the Commission and the EIB there may be merit in developing a similar joint initiative with sovereign funds thereby increasing the available pool of longer term investment finance.

3.1.4

On the issue of institutional investors, the Green Paper notes the potential clash between the need for effective regulation of asset risk among insurance undertakings and the need to incentivise them to finance longer term investments. Discussions between the Commission and the European insurance authorities on this matter are on-going. The Commission intends to make proposals on long-term investment funds (LTIF) with a view to stimulating the creation of a number of mechanisms for pooling risks involving different types of institutional investors. This proposal has much to commend it. Pension funds could take a more prominent role in long-term investment but they perceive a number of institutional, regulatory and political obstacles in the way. In particular they are concerned that policymakers attempt to mandate them to finance certain types of project that are not in the interests of their members. Pension funds should be consulted about how to minimise or overcome these obstacles. The creation of a banking union may be helpful in this context.

3.1.4.1

In the context of engendering greater participation of institutional investors in the provision of long-term finance, corporate income taxation incentives could also play a part. A system of tapered allowances in respect of large infrastructure projects investments could lead to greater institutional investor participation in them.

3.2.1

The Green Paper notes that in order to widen and deepen the pool of long-term finance some capital markets in Europe need to develop and mature. Bond markets in the EU are less developed than in the US and are viewed as off-limits to most mid-caps and SMEs. Even the arrival of Project Bonds has been greeted cautiously by the ratings agencies and this underlines the uphill struggle ahead to grow bond market capacity. If initiatives such as Project Bonds which could create as much as EUR 4.6 billion for new infrastructure projects succeed in expanding the market for bond finance they should be ramped up once the pilot phase is completed and evaluated.

3.3.1

There is an extensive review of the factors influencing long-term saving in financing. On the supply side, while some Member States have made efforts to boost the supply of long-term savings, much more needs to be done. The Green Paper suggests the possible creation of EU wide savings vehicles designed to mobilise more long-term savings hypothecated to wider social objectives. This idea may have advantages in the context of expanding cross-border infrastructures. It may also stimulate greater labour mobility and retirement planning across the single market. It may be necessary to offer new savings products at a premium or tiered rates of interest to incentivise longer term savings.

3.3.2

Taxation. The relationship between taxation, long-term savings and long-term investment is examined in some detail. The corporate taxation treatment of investment tends to produce a bias towards debt over equity finance. In search of suitable reforms to encourage greater use of equity funding of longer term investments, the use of a tapered relief system may be worth considering. Such systems are widely used in the taxation of capital gains and they could be configured so as to offset some of the current fiscal advantages of debt finance.

3.3.3

In terms of long-term savings and the taxation system, the Commission notes the importance of ensuring a stable, adequate supply of savings and of the incentives necessary to bring forth this supply. Some Member States have been relatively successful in incentivising pension related and other savings by astute use of the taxation system. Citizens tend to balk at the prospect of paying tax on income earned and then more tax on long-term savings out of this post-tax income. It should be possible to design and market suitable low or zero tax personal savings products with appropriate annual limits so as to encourage greater long-term financial planning.

3.3.4

The use of tax incentives to achieve desirable long-term investment outcomes is not without its drawbacks. There are serious issues such as deadweight and arbitrage to deal with. Nevertheless the use of tax incentives within a consistent and robust longer term planning perspective is necessary to stimulate and bring forth desired levels of investment.

3.3.5

Corporate governance. The issue short-termism lies at the heart of the provision of long-term investment and is very much tied up with corporate governance. Hitherto many of the incentives for fund managers, investment bankers and corporate executives have tended to be short-term in nature. Changing these incentives to encourage greater levels of long-term performance will not be an easy task. The Green paper contains a number of interesting suggestions including enhanced voting rights and dividends for long-term investors and modifications to the shareholders rights directive. Perhaps a more proactive use of capital gains tax allowances might be one means of encouraging longer term shareholding by fund managers.

3.4.1

The Green Paper notes the mounting difficulties facing SMEs in many Member States in accessing funding to survive and to grow. Quite apart from the effects of bank deleveraging, SMEs face a fragmented and rather piecemeal set of alternative sources of finance. Local banks have, to a large extent, lost or lessened links to their local regions. Bank-SME relationships have weakened and these need to be rebuilt or strengthened. Several initiatives have been undertaken to provide non-bank sources of finance for SMEs including access to some venture capital funds, the use of asset finance (2), supply chain finance and crowd funding. Much more needs to be done. The insurance industry and pension funds are willing to play a more prominent role but require appropriate incentives and these should now be addressed by the Commission. Future measures to help SMEs to access longer term finance should ensure that the latter are able to benefit from these measures as originally envisaged - without the banks adding excessive additional conditions, if the measures are to be rolled out via bank lending channels.

3.4.2

Venture capital. The Commission suggests a "funds of funds" approach to creating a critical mass of venture capital funding. In addition the proposed fund of guarantees for institutional investors could expand the market. The EESC has already proposed that the EIF's role should be enlarged beyond providing loans to include the provision of venture capital (3). This was what its creators originally envisaged back in 1994. If the EIF, like the EIB, were to be recapitalised then it could become one of the main providers venture finance for SMEs.

3.4.2.1

Hand-in-hand with the expansion of venture finance for SMEs goes the expansion of existing or the creation of new trading platforms for SME equity finance. The Green Paper contains a number of useful proposals on the subject. Given that national and regional governments are already in the business of promoting the survival and long-term growth of SMEs through their regional development bodies, there is a case for these bodies to take on a role in the operation of such SME trading platforms. This role could range from assessing the credit worthiness of client SMEs to providing limited guarantees to institutional investors.

3.4.3

The EESC would have liked the Green Paper to give greater support to investment in socially responsible funds through the creation of appropriate tax and financial regulations as well as public procurement itself. In this regard there is perhaps a case for the creation of a European Observatory for long-term investment. This body, with the active participation of organised civil society, could monitor developments in both the supply and demand for long-term investment and savings and help ensure an adequate supply of information relevant to sound long-term investment decision-making by economic agents.

12.11.2013   

EN

Official Journal of the European Union

C 327/15

1.1

The EESC considers it vital to take a common approach to customs risk management and security of the supply chain in order to ensure uniform, non-discriminatory application of EU customs legislation by all of the authorities concerned across the whole of the customs union, which is an exclusive EU competence, under Article 3 TFEU.

1.2

The EESC strongly supports the Commission's proposals, aimed at ensuring greater effectiveness and efficiency in risk management and the movement of goods across EU borders, by means of a common strategy, equipped with appropriate IT systems with a view to EU-level risk management.

1.3

The EESC is extremely concerned that the orientation and application of the customs union – established by the 1957 Treaty of Rome and implemented in 1968 as a common policy aimed at providing a single trading area where all people and goods circulate freely and a one-stop-shop for traders to carry out customs dealings on a non-discriminatory basis throughout the EU – is still uneven, which is preventing efficient and effective customs risk management and thus slowing down trade flows and the free movement of goods in the EU.

1.4

The EESC deems it vital to enhance customs capacities across all of the EU, in order to secure a high level of risk management throughout the customs union with regard to the uniform implementation of definitions, classifications, and data collection and transmission to the EU data base, in accordance with unambiguous common criteria whose implementation is checked by a single quality-assurance system and monitored, with penalties for offenders.

1.5

The EESC recommends that common technical standards be developed to ensure uniform implementation of high-quality risk management at all points along the EU's external borders, accompanied by an EU drive to ensure advanced professional training, which takes account of the various obligations pertaining to the many different national circumstances.

1.6

The EESC stresses the need to ensure the full interoperability of the various data bases that operate within the European market surveillance system – on the basis of a common strategy and with substantial support from EU programmes for technological development – in order to ensure real-time information-sharing between the various authorities at the different levels, inter alia to bolster efforts to combat the potential risk of health, environmental and social dumping.

1.7

The EESC calls for EU action to be stepped up towards developing skilled human resources and boosting management capabilities, including through measures to iron out disparities in control burdens and the establishment of a common customs support team that would intervene promptly, on request, in difficult situations.

1.8

The EESC deems it essential to strengthen the partnership between customs authorities, carriers and authorised economic operators (AEO), reinforcing its status and benefits, in order to ensure optimal cooperation in risk management, through the transmission of data in a single instalment, without unnecessary bureaucratic duplication.

1.9

The EESC calls for an overhaul of the system of governance here, comprising all national and EU authorities, agencies and EU warning and information systems, to ensure more structured and systematic cooperation between customs and other authorities operating in the internal market.

1.10

The EESC calls for the package of actions set out in the multiannual plan for market surveillance to be implemented in a coherent and coordinated way, in order to prevent duplications of controls, different criteria being applied, multiple requests being made for the same data, differing visions among the various market control and surveillance authorities, and a lack of interoperability.

2.1

The customs union is an exclusive EU competence, under Article 3 TFEU.

2.2

Back in 2004, the EESC was already underlining the need for a "changed emphasis in the strategic approach to customs services policies with the recent additional and merited emphasis on the challenges of the application of common customs policies across a series of new external borders following the enlargement of the Union. It also acknowledges the changed environment created by the raised concerns about security procedures, particularly with regard to the experience of the USA, to protect citizens in the Union" (1).

2.3

In response to the serious challenges facing the customs union in terms of the way it functions, given the uneven application of EU legislation, which could potentially dampen its overall effectiveness through inefficiencies, waste and the mismatch of needs and availability of resources, the EESC has called for "a single customs policy, based on uniform, up-to-date, transparent, effective and simplified procedures, which will contribute to the EU's economic competitiveness at global level …" (2).

2.4

The customs union is the operational arm of much of the EU's commercial policy measures, and implements numerous international agreements in relation to the trade flows of the EU, developing – through the Member States' administrations – important horizontal processes involving data management, trader management and "risk management, including identifying, assessing, analysing and mitigating the countless different types and levels of risks associated with international trade in goods" (3).

2.5

Establishing a common approach to integrated risk management at entry and exit points would involve the following objectives:

3.1

As stated in the Commission communication on the state of the customs union at the end of 2012, "customs is the only public authority having a complete overview and control responsibility for all the goods passing through the external borders of the EU, which, once released for free circulation by customs somewhere in the EU, can move freely within any part of the EU customs territory" (4).

3.2

Because of this unique position, EU customs authorities have primary responsibility for the supervision of the EU’s international trade, and contribute to the implementation of the external aspects of the internal market, of the common trade policy and of the other policies having a bearing on trade and overall supply chain security.

3.3

The EESC has emphasised that "an efficient customs union is a vital prerequisite for European integration in order to ensure […] EU-wide efficient, […] free movement of goods with maximum consumer and environmental protection and effective combating of fraud and counterfeiting" (5), and advocated a single customs policy, based on uniform, up-to-date, transparent, effective and simplified procedures.

3.4

Although it is based on common legislation and policy, the operational functioning of the customs union is complex and is still being implemented by 27 different administrations across the EU, making use of a mix of human, technical and financial inputs at various levels to carry out goods clearance and control procedures, data management and processing, trader management, and management of the different levels of risk associated with international trade in goods and supply chain security.

3.5

The EESC points out that these proposals should not result in Member States' hands being tied when it comes to implementing customs legislation, so that they can continue to take into account the volume of the relevant trade flows. In this connection, the EESC underlines that the Member States have stepped up measures to facilitate trade, moving to paperless formalities, simplifying procedures and implementing authorised operator status.

3.6

Harmonisation should be based on "best practices" and not on an average European level.

3.7

The EESC also deems it desirable, if the aim is to work in a cost-efficient, results-oriented manner (in financial terms too, with regard to revenues) and to make genuine progress, for controls to be carried out not on a transaction-by-transaction basis but under a systems-based approach underpinned by risk assessment.

4.1

Constantly growing trade flows, new and increasingly complex business models and an ever faster pace have put growing pressure on the operational functioning of the customs union, which faces a rapidly growing number of tasks and expectations from stakeholders. Modernising its operational functions, in an electronic customs environment, means:

4.2

In order to achieve effective common strategies for risk management, control and analysis, there needs to be a cultural shift within all of the relevant administrations towards common strategies and working methods, within a framework of joint risk management with other agencies and international partners, especially as regards security, health and the environment.

4.3

In particular, effective risk management requires closer cooperation between customs administrations and market surveillance authorities, at national and EU levels, the absence of which would be a serious impediment to developing common risk criteria and specific risk profiles.

4.4

In establishing a common approach to risk management at entry and exit points, it must be borne in mind that customs are currently delegated control responsibilities in more than 60 legal acts (6), while surveillance authorities are responsible for a chain of interdependent processes ranging from inspections, sampling, laboratory testing, interpretation of results and risk assessment, to corrective measures and penalties, with a view to enhancing the safety of products circulating on the market, as envisaged in the Single Market Acts I (7) and II (8).

4.5

Risk assessment methods should be pooled in a common systemic platform – inter alia by means of administrative cooperation groups – involving customs and market surveillance authorities at the various levels and be able to benefit from the experience gained in the various data bases that are operational in different areas.

4.6

Customs and market surveillance authorities should pool resources and expertise and "apply SME-friendly methods" (9) inter alia through the implementation of the guidelines by both sets of authorities, strengthening cooperation and coordination, information exchange and joint activities, and with a view to managing consignments presenting a high safety risk in a targeted way.

5.1

The customs-trade-carrier partnership plays a fundamental role in securing the integrity of the supply chain, in the interests of citizens, business and government.

5.2

This partnership should be based on solid mechanisms of mutual trust, involving:

5.3

Limiting intrusive controls is already among the provisions of the revised Kyoto Convention on the simplification and harmonisation of customs procedures, under the auspices of the World Customs Organization (WCO) (10), and that this is also an aim of the WTO negotiations on trade facilitation (11), despite the temptation to bolster systematic controls, especially in the wake of "9/11".

5.4

There is a need to address the fragmentation in information flows and overcome difficulties associated with differences in risk management capacity between Member States so as to ensure a uniform standard of electronic risk analysis and management: the basis of this remains the development of a common European culture of risk management and supply security.

6.1

The EU's multiannual R&D programmes – and in particular the 7th Framework Programme, but also IDABC (12) and ISA (13), for the interoperability of public administrations – have laid foundations for the development of various joint projects in the field of risk management, with new tools that can overcome the national processes and national domains of the IT infrastructure and applications, which vary significantly among the Member States.

6.2

It is essential that R&D and innovation efforts in the field of risk management and supply chain security be coordinated across the EU to ensure the timely deployment and commercialisation of the technologies. In particular, "proof-of-concept" demonstration projects and manufacturing pilot lines are preconditions for the deployment of technologies on an industrial scale. Public-private partnerships can provide the funding for such initiatives, using the Structural Funds or in the framework of Horizon 2020 and through other EU programmes.

7.1

The EESC recently emphasised that "closer cooperation is needed between customs administrations, market surveillance authorities, Commission departments and European agencies in order to ensure better quality control of goods crossing the borders" (14), and stressed the need to provide appropriate joint training and information.

7.2

According to the Commission "at EU level, better pooling of the capacity and resources of Member States is required to achieve EU risk management objectives more effectively at all points of the external border" including through the "deployment in real time of an electronic risk engine" boosting capabilities at EU level.

7.3

In the EESC's view, the issue of cooperation and coordination in the field of risk management is one of the key points of the Commission proposal, not only in terms of systematic coordination between Member State authorities, but also at the level of the EU itself, between the various directorates-general and operating agencies.

8.1

The EESC welcomes the Commission's initiative, aimed at ensuring the effectiveness and efficiency of risk management and of the movement of goods across EU borders, by means of a multi-layered strategy for identifying the type and level of risk and the range of possible responses, within an EU framework of multi-agency coordination, and on the basis of a uniform approach and predefined common criteria.

8.2

The EESC is convinced of the need to centralise the process of electronic clearance, equipping the Commission with appropriate IT systems with a view to EU-level risk management on the basis of a network of interoperable data bases and the systematic use of standardised working methods which ensure that workers, consumers and businesses are protected against the risk of health, environmental and social dumping.

8.3

In the EESC's view, it is vital to increase customs capacities so as to ensure an equivalent level of risk management throughout the EU, in accordance with unambiguous common criteria whose implementation is checked by a single quality-assurance system and monitored, with penalties for offenders.

8.4

The EESC believes that this issue rightly belongs within the scope of the multiannual action plan for market surveillance, which sets out 20 practical actions  (15) to be implemented by 2015 with particular regard to:

8.5

The EESC believes that the management of customs controls and the management of market surveillance cannot be addressed in isolation and that the framing of a common approach at EU level should be pursued jointly, along with full interoperability of the tools for analysing, collecting and processing the data in the network by the various authorities involved.

8.6

The EESC is in favour of a support system to bolster Member States' risk management capacities, with a view to ensuring uniform standards of quality and providing an EU mechanism for checks, controls and monitoring, as well as penalties. It also calls for greater EU efforts to ensure advanced professional training, which is particularly needed in the areas where the undertakings and costs involved are greater, such as along the borders of the Schengen area.

8.7

In this regard, the EESC calls for EU action to be stepped up towards developing skilled human resources and boosting management capabilities, including through the establishment of a common customs support team that would intervene promptly in difficult situations.

8.8

With a view to ensuring a clear and coherent set of common standards throughout the single market, for the same levels of security, the EESC strongly calls for closer cooperation and increased information-sharing – on the basis of high common standards – between customs administrations, market surveillance authorities, Commission departments and European agencies, in order to ensure better quality control of goods crossing the borders.

8.9

The EESC endorses the Council conclusions on progress in the strategy for the evolution of the customs union as regards improving the governance of the customs union  (16), enhancing its ability to measure its own impact and promote uniform application of customs legislation, enhancing cooperation between agencies and, above all, adopting "a more comprehensive approach of the international supply chain", facilitating trade and "bringing real and tangible benefits to authorised economic operators".

12.11.2013   

EN

Official Journal of the European Union

C 327/20

1.1

The Committee supports the holistic approach taken by the action plan and has already given its views on many of the 11 actions proposed, which will require time and support (including economic support) to be put into effect.

1.2

The Committee considers that some actions may not be implemented or completely feasible because they do not take account of the impact of the economic crisis on the sector, particularly in the countries hardest hit by austerity measures.

1.3

The Committee recommends that, when implementing the plan, the diversity of forms that SMEs and microenterprises often take should be taken into account and harnessed.

1.4

The Committee welcomes the proposal to set up a permanent Group on Retail Competitiveness and hopes that the European social partners and representatives of consumer and SME organisations will be part of it.

1.5

The Committee recommends that relevant and truthful information be made available and truly accessible to consumers, in a form which is both concise and easily understandable (avoiding technical or legal language).

1.6

The Committee recommends that the Member States be encouraged to define which forms of retail can be included among the general interests (social and cultural) referred to in the Services Directive.

1.7

The Committee asks that businesses be encouraged to integrate online and offline trade (in many cases, businesses give priority to just one form), with a view to overcoming problems related to opening hours and days when shops are closed.

1.8

The excessive concentration in the distributive trades poses various problems, including difficulties in achieving genuine competition.

1.9

The EESC recommends that abusive transfer pricing, which is a way of setting the prices of transactions within the same group on the basis of evaluation criteria that reflect the fiscal requirements of the group concerned rather than the natural market conditions, should be addressed at European level, as already recommended in a Committee opinion (1).

1.10

The Committee recommends working towards a sustainable retail sector and the reduction of waste, partly by promoting the roll-out of a dispensing-based sales system which cuts back on packaging which is a source of pollution.

1.11

The Commission should strive to achieve innovation and change using all the instruments available to it, as competition is a condition for change but will not trigger change on its own.

1.12

The Committee considers that matching up the professional skills needed and the skills possessed by workers is crucial, and believes that corporate involvement should include targeted investments as well as influencing the curriculum of training courses.

1.13

Building on the experience of the European Skills Council for Commerce, the Committee urges the Member States to set up bilateral bodies between the social partners to develop professional training (matching, training schemes, financing, identifying training needs, and carrying out and getting feedback on training).

1.14

The Committee endorses the Commission's move to initiate dialogue with all stakeholders to define effective measures at EU level to combat the informal economy and undeclared work. It hopes that the Member States will bring strong political will to bear which the Commission will be able to coordinate via an enhanced partnership.

2.1

In order to achieve the single market in the distributive trades, the action plan proposes a roadmap of five priorities and 11 actions within the framework of the Europe 2020 strategy, to be carried out by 2014. The Commission will be responsible for monitoring and in 2015 will submit a progress report.

2.2

In the EU, the distributive trades are crucial for stimulating growth, job creation and more sustainable innovative consumption patterns. The sector represents 11 % of GDP and almost 15 % of jobs, accounting for almost 36 million employees in over 6 million businesses, which comprise 29 % of all businesses and include a very high level of SMEs and micro-enterprises.

2.3

The plan shows that the distributive trades are increasingly integrated with other economic sectors and that the distinction between them is fading. It points out that obstacles remain to the creation of an efficient, competitive and integrated single market in the distributive trades. It is therefore essential to make the sector more competitive and productive and to improve its economic, social and environmental performance, taking into account its diversity in general and the situation of SMEs and microenterprises in particular.

2.4

The Committee points out that, despite efforts over the last two decades to modernise the sector, many SMEs in the retail sector are failing. This is partly due to rising price competition and falling profit margins, and partly to the economic crisis which has brought about a contraction in consumption and dissuaded people from buying.

2.5

The financial crisis, rising prices of raw materials, demographic ageing, the drive for greater sustainability and technological innovation (e.g. electronic payments, self-scanning) are revolutionising business processes and models both in large-scale commercial chains and in SMEs.

2.6

The Committee welcomes the proposal to set up a permanent Group on Retail Competitiveness (involving Member States, stakeholders and SMEs) to bring the problems besetting the sector to the fore in European political debate, identify avenues for development, monitor progress and prepare recommendations. The Committee calls for the European social partners in this sector (UNI-Europa commerce and Eurocommerce), which have been engaged in constructive social dialogue since the late 1980s, to be part of this group as representatives of civil society, particularly consumer and SME organisations.

2.7

The Committee urges the Commission and the Member States to encourage and support all fair and balanced forms of collaboration and trade associations between independent businesses as well as between large retail companies and independent businesses on the basis of contracts with clear, balanced guarantees.

3.1

Rights only really exist when they are exercised, and for that they need to be known. Information does not equate to knowledge, the primary right of consumers which gives them the freedom to make their choices in pursuit of wellbeing and individual and collective convenience. These days, many purchase choices are accompanied by a vast quantity of available information.

3.2

One of the chief problems currently affecting the sector is the large retail companies' marketing strategy, which focuses almost exclusively on the price for the consumer and overlooks value for money. In many Member States, the result is a drop in the quality of food products, partly because natural ingredients are replaced by substitutes. This reduces the choice available to consumers who would often be prepared to pay more for a good quality product but cannot find one in the range on offer.

3.3

Knowledge of product features enables people to make informed choices, thus spurring on quality, diversification and service in the product range. However, an increase in available information does not equate to an increase in knowledge, and in fact the opposite is often true: faced with an excess of information, consumers often choose not to read it owing to lack of time and the overly technical, incomprehensible language used.

3.4

In addition to drawing up guidelines on good practice and codes of conduct (action 1) (2), the Commission should establish effective, binding instruments requiring producers and distributers to provide consumers with accessible information on all the features of their products, services and prices which are vital for other social, environmental, territorial and economic purposes. In addition, all necessary information should be made available in concise, easily understandable form. They can then freely decide which of these features they will give priority to and not base their choice solely on marketing aspects.

3.5

The supply system generates a wealth of knowledge which is useful to consumers when making their choices, but that knowledge is largely concentrated on product aspects linked to purchase and initial use, focusing on initial satisfaction and overlooking the later stages in the product's lifecycle (to what extent the packaging can be recycled, duration of performance, whether assistance and spare parts are available, value in the event of the item being sold on second hand, after-sales services).

3.6

As well as proposing methodologies for measuring and communicating the overall impact of products and organisations (action 2) (3), the Commission should take on the task of supplementing the knowledge that shapes consumers' purchase choices (4). In doing so, it should provide clear indications regarding:

3.7

The Committee therefore proposes that this action should be implemented effectively and realistically in the interests of consumers, ensuring stronger protection, and of companies (particularly SMEs), ensuring that they know how to implement it in practice.

4.1

When prohibiting the imposition of compliance with certain requirements, the Services Directive stipulates that "this prohibition shall not concern planning requirements which do not pursue economic aims but serve overriding reasons relating to the public interest" and "This Directive does not affect the freedom of Member States to define, in conformity with Community law, what they consider to be services of general economic interest". The Directive clearly states that these "overriding reasons relating to the public interest" include "the conservation of the national historic and artistic heritage; social policy objectives and cultural policy objectives".

4.2

Some forms of retail are characteristic of the local culture and lifestyle. These and only these forms should be able to compete in a system of similar businesses which continually seeks improvements in quality and efficiency in the interest of consumers. Exposing such businesses to the aggressive tactics of large organisations could uphold free market principles in the short term but would result in the probably permanent loss of a cultural and lifestyle heritage, thereby weakening the community and the area, not least from an economic point of view.

4.3

Competition has forced retail businesses to deliver better service and become more efficient. It is imperative that the Commission distinguish between healthy competition between similar businesses (which drives the pursuit of continual improvements in quality and efficiency, in the interest of consumers) and other forms of economic and commercial conflict between businesses.

4.4

It is important for areas to have healthy competition between businesses in the sector, regardless of their size, not with a view to aggressive tactics but so that each business spurs on the others in a virtuous circle. This will result in better services, a wider selection, more user-friendly organisation, better prices and a local identity.

4.5

When the economic strength of major chains undermines traditional shops, this should be recognised as a loss as it destroys part of the cultural and lifestyle heritage as well as the economic and social fabric of that area and community, which is worth more than the mere convenience of selection and prices for the consumer.

4.6

With regard to actions 3 and 4, the Commission, in line with the Services Directive, should encourage the Member States to assess whether and which forms of retail can achieve these social policy and cultural objectives. Therefore, the Commission should promote the inclusion of traditional independent local retail in general interests, where retail reflects local culture and characteristics. However, it is important to ensure that local vested interests do not masquerade as general interests of the community such as the environment and land use. The Commission should therefore state very clearly what constitutes acceptable general interests of a region, and even ask each region to draw up a list of three priority interests in order of importance to be used as criteria when assessing new commercial establishments.

4.7

Online retail cannot replace bricks-and-mortar retail, but the two models need to find ways to integrate, particularly since retail has a key role to play in society beyond simply supplying goods and services at low cost.

4.8

The Committee calls on the Commission, hand in hand with the Member States and in cooperation with SME organisations, to spur on SME training on integrating various types of sales alongside traditional forms.

4.9

The growth potential of online trade cannot be predicted with any certainty because it is dependent on how the markets and institutions will regulate it. The Commission should initiate and facilitate all actions that will enhance the value of non-sale services (which do not relate directly to a specific purchase) performed by offline retail.

4.10

Shops currently offer customers many services free of charge (for instance window shopping), with the cost reimbursed by the margin on sales. Producers therefore often deter online purchasing, obliging customers to buy offline. However, increasing numbers of consumers now combine purchasing techniques: comparing products and prices online and physically handling the product and trying it out offline. The Committee recommends rendering this online/offline competition obsolete by integrating and developing services delivered by traditional shops, since shopping in person leads to real, physical social interaction which cannot be converted into digital interaction: integration is needed, not replacement.

4.11

The Committee points out that Member States have different legislation on retail business opening hours and opening on Sundays and at night. These rules are under discussion in many Member States in terms of competition between independent businesses, SMEs and micro-enterprises, and impact on staff. The Committee asks the Commission to overcome this barrier to the completion of the single market and the European social model, partly by integrating online and offline trade.

5.1

The Committee considers that the distributive trades sector is one of the most highly concentrated. The market in every Member State is controlled by three to five companies, often multinationals. This poses major problems in terms of competition, as the sector has far too much power over suppliers which are much greater in number.

6.1

The Committee supports action 6, which is aimed at supporting retailers in implementing actions to reduce food waste (6) and welcomes the decision to adopt a communication on sustainable food in 2013.

6.2

The Committee supports action 7, which aims to "make supply chains more environmentally-friendly and sustainable" by using every means possible to cut back on energy use and the production of materials which are a source of pollution. With regard to such materials, the Committee suggests promoting a distribution model for general consumer goods based on dispensers as an alternative to packaged products. The Committee asks the Commission to consult all stakeholders with a view to implementing this action, intended to reduce the production of packaging which will then have to be disposed of.

6.3

This practice is used in a handful of situations and for a very small number of products but could be applied much more widely:

6.4

This model is currently used in small-scale situations, for instance selling fresh milk, and fuel for vehicles is already sold on a huge scale using the dispensing model. The product itself is not environmentally-friendly but the distribution of it does not generate a single gram of plastic nor is any of it wasted.

6.5

This model would entail changing the way that sales points are set up; they would need to arrange warehouse-to-shelf re-supply pipes or at least systems for refilling the dispensers. In any case, shop shelves would no longer be static and bland.

6.6

To have a real chance of success, this shift in model would have to be pushed by the major distributors responsible for most consumer products which would have the capacity and the resources needed to kick off this game-changing process. SMEs would also need to play a key role.

6.7

The Commission could help kick-start this change, raising awareness of the social and environmental advantages and using every instrument available to it (including economic and financial instruments) to promote and facilitate practical initiatives and projects.

7.1

Recovery in the real economy is partly dependent on innovation in this sector (action 8) and it is crucial that SMEs have more and easier access to bank loans so that they can begin innovative projects and activities.

7.2

Unlike past developments in the USA, business investment in innovation must be combined with employee protection and job quality.

7.3

The Commission seems to expect these changes to result from enhanced retail competitiveness – boosting this competitiveness is the sole purpose of the actions proposed in the communication. However, while a lack of competition hinders change, competition per se does not guarantee change.

7.4

The Commission, when it describes retail businesses as "innovation multipliers", recognises that SMEs in the retail sector, being in closer contact with consumers, have a better grasp of new needs and so, as they are also more flexible than large companies, they are better able to match supply to the varying and varied demand.

7.5

However, some changes in system and model require planning capacity and above all bargaining power – meaning that large companies have to be involved. The Commission must strive to include all small, medium and large companies in the processes of innovation and change.

7.6

The Committee welcomes the creation of a database containing all EU and domestic food labelling rules (action 9) (7).

7.7

The Committee supports the Commission's moves to ensure better market integration for card, internet and mobile payments (action 10) (8) and hopes that this will be rolled out swiftly.

8.1

Matching up skills is essential for improving the quality of jobs (9) in the sector, which often serves as the way into or back into the labour market and is not generally seen as an attractive, interesting sector in which to spend one's entire working life.

8.2

In order to make the retail sector more competitive and productive, employers' requirements and employees' skills need to match up more closely (action 11); employees need to be given the opportunity to enhance their performance, partly in response to rising levels of automation.

8.3

The Commission aims to step up cooperation between the social partners in order to improve training and reskilling policies, partly through the EU Sectoral Skills Council.

8.4

Despite technological innovation, productivity in the sector is still relatively low and SMEs struggle to invest in new technology, innovation and staff training.

8.5

However the action plan cannot overlook the fact that within the single market, the sector is being hit by social dumping and unfair competition between retail businesses, regardless of their size. This is because industrial relations and collective bargaining systems vary from one country to another, resulting in different development models and investment policies.

8.6

One limiting factor in the analysis is that it refers only to skills-needs matching and does not consider the host of problems preventing the establishment of an integrated, competitive European single market in this sector, in terms of working conditions, organisation of work, low salaries, flexibility, insecure employment and a high rate of false self-employed.

8.7

The communication proposes investment in training, responsibility for which would fall to governments, individuals and the education system, calling on companies to play an important part in preparing new programmes for study, training and traineeships. The Committee considers that company involvement should extend beyond identifying training needs; they should also be proactive, investing in the skills they want (10).

8.8

Public and private investment together would aid young people to enter the labour market, as well as groups which find it very difficult to break back in (long-term unemployed, older workers, immigrants and people with disabilities). Efforts should focus on women who are in greater danger of losing their job following restructuring and who have more problems balancing home life and work.

8.9

Matching up skills, strengthening school-business partnerships and traineeship-based training schemes cannot deliver the expected results in terms of employee mobility and higher productivity in the sector unless it is accompanied by EU-wide recognition of formal qualifications, traineeships, apprenticeships and acquired skills.

8.10

Despite efforts at national level undeclared work is still a serious problem, with companies competing unfairly in the area of labour costs. Workers in the informal economy have no access to health and welfare systems, or to training and traineeship schemes which obviously damages their chances of acquiring professional skills.

8.11

The Commission's move to initiate dialogue with all stakeholders to assess the informal economy's impact on labour conditions and to define effective measures at EU level to combat it, is laudable. The Committee considers that the more political will the Member States bring to bear, the more effective this initiative will be; the Commission could coordinate this via an enhanced partnership.

8.12

The Committee considers that measures on combating undeclared and informal work must remain a discussion point for the social partners as part of the European social dialogue (11).

12.11.2013   

EN

Official Journal of the European Union

C 327/26

1.1

The EESC takes note of the European Commission's publication of this Green Paper and thinks that it reflects a positive and marked shift in the Commission's approach to unfair trading practices (UTPs).

1.2

The EESC considers the use of unfair trading practices as not only "unfair" or "unethical", but also as contrary to fundamental legal principles and to the interests of the supply and demand sides. Since it amounts in fact to the abuse of a significantly stronger market position, we recommend using the term "abusive trade practices", which is routinely used in French and English, for example.

1.3

The Committee sees the present breadth and depth of unfair trading practices as being mostly the result of the mergers and acquisitions that have occurred over recent decades.

1.4

In the Committee's view, the results so far of the High Level Forum for a Better Functioning Food Supply Chain are unclear and the approaches proposed are insufficient to solve the problem of unfair practices. It would therefore urge the European Commission to come up with further initiatives.

1.5

While the EESC has no doubt that unfair practices may be employed in any kind of contractual relationship, it is convinced that matters are particularly grave when it comes to dealings between supermarkets on the one hand and farming and food SMEs on the other. There are forms and degrees of abuse here that do not occur elsewhere.

1.6

The EESC is particularly pleased that the Commission explicitly casts doubt in the Green Paper on the existence of true contractual freedom where relationships are very unequal, thus concurring with the EESC view.

1.7

The Committee finds that the Commission's Green Paper captures very well the essence and main types of unfair trading practices. However, it firmly believes that the Commission should provide a uniform definition of UTPs similar to that already set out in Directive 2005/29/EC, since the practices referred to in the Green Paper bear some resemblance to "misleading marketing practices" (1).

1.8

UTPs are all the more important within a "climate of fear" in which the weaker contracting party is frightened of losing the custom of the stronger party. This is especially true when large retailers put unfair pressure on their suppliers and/or they pass on excessively high prices to the retailers and consequently to the consumers.

1.9

In the EESC's view, the consequences of unfair trading practices are not restricted to business-to-business dealings; nor do they affect only weaker contracting parties. Consumers are also victims, as are national economic interests – a fact insufficiently highlighted in the Green Paper.

1.10

The EESC thinks that the laws to curb unfair trading practices adopted in several Member States reflect the fact that the current state of affairs is unacceptable. Although these laws have for various reasons not produced satisfactory results, it would be wrong to say that nothing has been achieved. One success is the greater transparency in the sharing of benefits and the cessation of the most outrageously extortionate practices.

1.11

Although the EESC has no reason to believe that the adoption of these laws by Member States is detrimental to the free movement of goods in the EU, some restrictions may occur. However, none of these laws is protectionist in nature and they apply equally to domestic businesses and to those from other Member States.

1.12

The EESC recommends that any further consideration of how to address the problem of UTPs should start with the absence of contractual freedom in some relations.

1.13

The EESC recommends that any proposals in future to regulate unequal commercial relations take the "fear factor" into account. The essential balance between contracting parties must be secured so that their relationship is a fair one. For this reason, the prime aim of UTP regulation cannot be to protect the weaker contracting party exclusively, but also the national economic interest. This would mean, for example, that food suppliers affected would not have to take an active part in administrative and legal proceedings.

1.14

The EESC calls on the European Commission to propose legislation banning UTPs. This should be based on an indicative list of the most typical such practices employed by the stronger contracting party and designed to transfer its own normal costs and risks to the weaker party.

1.15

The EESC calls on the European Commission to work with national competition authorities in drawing up, on the basis of practical experience over recent decades, a radical revision of current – and evidently obsolete – competition rules so as to promote fair competition based on the fair exchange of relevant information in this sector and take all existing dominant positions into account.

2.1

The Green Paper draws a distinction between food and non-food supplier/distribution chains, which is entirely justified, since the former has its own distinct features compared with others.

2.2

Substantial consolidation has taken place among companies belonging to supply/distribution chains in the last two decades, leading to the creation of what are in reality oligopolies. As far as food supply/distribution chains are concerned, this is particularly true in the retail sector, somewhat less in the processing industry and least of all in the primary production of agricultural products. This has resulted in large imbalances in the food supply chain, since the oligopolies have enormous bargaining power vis-à-vis their commercial partners, who are far more fragmented.

2.3

The EESC is convinced that the structural imbalances that have emerged lead to UTPs being used in some cases and that these practices are often not only inimical to fairness, honesty and ethics, but also contravene fundamental principles of law.

2.4

The Green Paper is wrong in stating that UTPs were first discussed at EU level only in 2009. This is the year in which they first appeared on the European Commission's official agenda. As early as 2005, however, the European Economic and Social Committee issued an important opinion (2) which – at a time when the question of UTPs was still taboo – highlighted and criticised a number of negative aspects of the behaviour of retail chains. Mention should also be made of the important role played by the 2007 Written declaration on investigating and remedying the abuse of power by large supermarkets operating in the European Union  (3), in which the European Commission was directly called upon to take the steps needed to remedy the situation.

2.5

In the EESC's view, the results so far of the High Level Forum for a Better Functioning Food Supply Chain are somewhat uncertain, since the proposed good practice implementation framework has brought no agreement on tackling UTPs, a matter on which three European Commissioners, among others, have expressed regret (4).

2.6

The European Competition Network (ECN) report confirms that the use of UTPs is a reality, especially in the food sector. This accords with the EESC's conviction that the abuse of a stronger economic position by supermarkets vis-à-vis SME food producers and processors is orders of magnitude more serious than in other contractual relations. The fact that for years it is only these suppliers of food to large retail chains that have been complaining, and no one else, is further proof of this.

2.7

The EESC notes the Commission's statement that UTPs are harmful to the EU economy as such and not only to contractual relations between two businesses.

3.1.1

So far, no doubt has officially been cast upon the existence of contractual freedom in commercial relations – not even between supermarkets and SME food producers. Until recently, this freedom was one of the main arguments not only of the supermarkets, but also public authorities, against the regulation of UTPs, which would allegedly have curtailed such freedom. The EESC finds it very significant that the Green Paper has abandoned this position and that it explicitly acknowledges that there is no true contractual freedom where there is marked inequality of economic muscle between the two contracting partners.

3.1.2

For the European Economic and Social Committee this recognition of the lack of contractual freedom is the fundamental prerequisite for effectively seeking comprehensive solutions to problems arising from existing imbalances in the supply/distribution network, above all in the case of food.

3.1.3

In this section of the Green Paper, the European Commission captures very well the essence and main types of UTPs. In relations between supermarkets and food suppliers, in particular, the weaker party has no real alternative, since there are very few major customers in the market and, more importantly, they all treat suppliers in a very similar way.

3.1.4

Several examples of UTPs mentioned in the Green Paper reveal that some buyers do not hesitate to use any means whatsoever to secure extra and totally unwarranted benefits to the detriment of the other party. One particular form is payment for fictitious services or unsolicited services that have no value for the other party.

3.1.5

These are the EESC's answers to the questions posed in this section of the Green Paper:

3.2.1

The EESC welcomes the fact that the European Commission draws here on information from a number of national competition authorities. In addition to those mentioned, we particularly recommend collaboration with the French and Czech authorities, which have direct experience with implementing their national UTP laws. In conducting their inspections, anti-monopoly authorities have the right to examine accounting documents (contracts, invoices, bank statements, etc.) that can directly prove the use of UTPs.

3.2.2

These examples furnished by the UK, Spanish and Irish competition authorities show that it is misplaced to refer to many of the practices deployed as merely "unethical", since they are patently beyond the bounds of legality (especially where "bullying and intimidation" are involved).

3.3.1

The adverse impact of the stronger party's use of UTPs against the weaker party is beyond doubt and the stifling of investment and innovation in production is their logical consequence. However, the impact on consumers is, in the EESC's view, inadequately signalled, since it translates into far more than just impeding innovation. Yet, this section completely ignores the threat to national economic interests, which does get some mention earlier in the Green Paper. This threat is most in evidence in the countries of Central and Eastern Europe, where supermarkets are entirely in the hands of businesses from other Member States. Given that domestic producers – the vast majority of them SMEs – are unable to meet what often amount to extortionate terms, the whole agri-food sector in this region is collapsing and countries that were traditionally self-sufficient in the production of food staples have to a large extent lost their food security. Domestic production is thus replaced by imports of often very dubious quality.

3.3.2

These are the EESC's answers to the questions posed in this section of the Green Paper:

4.1

Two facts emerge from analysis of current legal frameworks at Member State and EU level. Firstly, the use of UTPs by some strong economic players is now a matter of common knowledge and an indisputable fact, with the appropriate authorities in several Member States having concluded that the current situation calls for regulation.

4.2

The current extent of UTPs, especially in dealings between large retail chains and food producers, reveals above all the obsolescence of competition legislation. Some forms of UTP highlight the severe distortion of the competitive environment and the existence of real dominant positions that current monopolies legislation fails to address.

4.3

In addition to revision of competition legislation, the EESC thinks it entirely legitimate to ban at EU level the use of certain defined UTPs and so create the necessary harmonisation of a disparate legal environment. However, there must be a logical link between regulation of UTPs and revised monopolies legislation to make sure that it is only the logical initiators of contracts with UTPs – i.e., parties with the dominant position – that are sanctioned.

4.4

To be effective, this harmonised regulation must take account of the "threat of delisting" and hence the inability of weaker contracting parties, especially SME suppliers to supermarkets, to complain; it must be conceived to do more than merely tackle problems in B2B relations.

4.5

These are the EESC's answers to the questions in this section of the Green Paper not yet answered:

5.1.1

The EESC endorses the European Commission's view that current mechanisms implemented at national level against UTPs are generally inadequate. This is mainly because they fail to take into account a certain climate of fear arising from the absence of true contractual freedom and the threat of delisting. These problems have so far been best tackled by France, where the supervisory authority can act on the basis of unofficial information and on its own initiative. Suppression of UTPs is also based on the protection of the national economic interest and not on protecting the weaker contracting party.

5.1.2

While some Member States have laws to combat the use of unfair contractual practices, others do not. Moreover, there are rather significant differences between individual laws. There is no doubt that these two facts constitute a certain hurdle to crossborder trade (question 16).

5.1.3

In the view of the EESC, the only sensible common approach to tackling the adverse impact of differences in the applicable legislation would be to adopt harmonising legislation targeting the use of UTPs (question 17).

5.2.1

The EESC agrees with the Commission's claim that there is currently no specific mechanism at EU level to combat UTPs. It is also convinced of the necessity – if the fear factor is to be overcome – of giving national authorities for this area the powers to act on their own initiative, to receive anonymous or unofficial complaints and to impose sanctions (question 18).

6.1

The EESC agrees that UTPs occur throughout the food and non-food supply chain, but is convinced – in keeping with what has been said above – that the situation is at its worst in dealings between supermarkets and SME producers.

6.2

Where listing is concerned, it is not at all clear what the consideration is for the fee that the would-be supplier has to pay. In the vast majority of cases, even payment of this fee – which is a preliminary and necessary condition of any form of commercial dealings – does not give the supplier any guarantee that the purchaser will actually take the goods in question and will not, for no reason, delist him.

6.3

Supplier rebates are a routine part of the current practice of large retail chains. The EESC believes their general benefit to be doubtful, to say the least. On the one hand, supplier rebates are a symbol of the abuse of an actual dominant position, since they often conceal unsolicited and fictitious services; on the other, they create a significant lack of transparency regarding the distribution of benefits. The existence of supplier rebates means that suppliers (and outside observers) find it very difficult to ascertain how much they have really been paid for the goods supplied. In reality, the order to supply goods is conditional upon acceptance of services offered by the buyer. In the view of the EESC, fees for real and justified services provided by the buyer to the supplier should be included in the purchase price of food.

6.4

These are the EESC's answers to the questions in this section of the Green Paper not yet answered:

12.11.2013   

EN

Official Journal of the European Union

C 327/33

1.1

The EESC supports the Commission's objective of placing smart regulation high on its agenda. Regulation is a necessity but needs to be well designed in order to achieve EU policy goals at minimum cost. The EESC welcomes the European Commission's efforts over the year to promote the design and application of better regulatory tools, including impact assessments (IAs) and stakeholder involvement.

1.2

The Committee therefore:

2.1

In November 2011, the Commission published a Report on "Minimising regulatory burden for SMEs – Adapting EU regulation to the needs of micro-enterprises (1)" setting out measures aimed specifically at SMEs. This Report reflected on the "Think Small First" principle set out in the Small Business Act (2) (SBA) which required that impacts on SMEs be taken into account when designing legislation and that the existing regulatory environment be simplified. The Commission expressed its willingness to address SMEs burdens via the new Regulatory Fitness and Performance Programme (REFIF) (3) launched in December 2012 as well.

2.2

The Commission's Communication to the Spring European Council on "Smart Regulation – Responding to the needs of small and medium-sized enterprises (4)", adopted on 7 March 2013, takes stock of all the measures carried out by the Commission since 2011 as regards SME burden issues. The report reviews progress in:

3.1.1

The EESC has always supported and encouraged initiatives for better regulation, as indicated clearly in its various opinions (5). We recognise that, while smart regulation is necessary for all businesses, red tape has a disproportionate impact on micro and small enterprises. Therefore, the application of the Think small first principle has to be a priority guideline when drawing up new legislation and throughout the decision making process.

3.1.2

SMEs differ in their size, field of activity, objectives, financing, management, geography and legal status (6). Policymakers therefore need to take into account these variations when drafting regulation for them. They need to remember that individual regulations may not seem especially burdensome, but it is, inter alia, the accumulation of rules and legislations that discourages a micro or a small business from developing new ideas, expending existing markets or employing more people.

3.1.3

As a consequence, many SMEs, especially micro and small enterprises, perceive legislation as a way to stifle entrepreneurial development rather than facilitate growth. The EESC takes the view that smarter regulation at EU level is not going to help unless legislation clearly identifies which businesses it is trying to help and which (if any) exemptions these businesses are being given or allowed to claim. The EESC therefore strongly urges the Commission to fully implement the SME test during all Impact Assessment exercises carried out in different DGs. Our Committee is of the opinion that the SME test must include the potential costs and benefits of the proposals with respect to the business size, clearly differentiating between micro, small and medium enterprises. If the SME test would not be carried out properly, then it would receive a negative opinion from the Impact Assessment Board.

3.2.1

The EESC therefore acknowledges the role of IAs (7) as a key element of SME policy making at EU level. The Committee insists that the Commission prepare robust IAs that are fit for purpose and logical. The EESC reminds the Commission that the principles of subsidiarity and proportionality need to be respected. Impact assessment must focus on cost analysis as well. The increased costs borne by business as a result of regulation render uneconomic some activities that, in the absence of regulation, would be profitable. As a consequence, therefore, some marginal firms will be forced to leave the market, thereby depressing the potential for private sector economic activity. The EESC invites the Commission to issue an independently verified annual statement of the total net cost to business of regulatory proposals. The statement should also report key changes to policy proposals introduced as a result of IAs.

3.2.2

The EESC recognises that IAs are technical documents, but their length and language can make them impenetrable, especially if small companies want to contribute. The Committee recommends making them more user-friendly (8) by using a standard template and a clear executive summary highlighting the main issues that have been addressed and focussing on each SME subgroup.

3.2.3

The EESC calls for independent and transparent scrutiny of draft impact assessments by stakeholders, including business organisations representing micro/small and medium enterprises, to ensure that they are of a high quality and drawn up according to the guidelines (9).

3.2.4

Impact assessments need to judge in detail how and to what extent special measures and models (such as exemptions, simplifications, etc.) should be used to reduce the regulatory burden on SMEs. The EESC welcomes increased application of the SME test but reminds the need to screen thoroughly and individually the impact of legislation for the three different subgroups and thereafter examine the scope for exempting micro-enterprises from new regulations or adopting lighter regimes.

3.2.5

The EESC notes that the Commission seems to be moving away from its plans for blanket dispensation for micro-enterprises from EU rules when concluding the impact assessment exercise. The EESC welcomes this move and underlines the fact that smart legislation should be modulated, relevant to the type and size of the business and not overly complicated. Providing that these parameters are met, it is easy for business owners to respond by developing appropriate internal procedures that meet the objectives of smart legislation.

3.2.6

Micro and small businesses recognise that they are closer to their customers than large multinational companies. They also recognise that there is a growing demand from customers to use local businesses that are ethical and care for the local environment. The EESC reminds the Commission that it is therefore essential that standards and regulations governing the quality of enterprises, their products and their services be respected by companies if they want to be successful and remain competitive in different markets. Exempting micro-enterprises from consumer and environmental protection regulations, for instance, may ultimately harm those businesses (10).

3.2.7

The Committee feels that, in addition to the above-mentioned points, impact assessments should also aim to quantify accurately the possible domino effect of measures aiming to reduce the administrative burden by amending regulations targeting SMEs. Such measures could have side effects for social balance and relations with State authorities (undeclared work, knowledge of tax data, social contributions, classification and nature of employment contracts, etc.).

Smart regulation aimed at SMEs must, by its very nature, ensure that it has no external impact, or at least no negative consequences. In this respect, the EESC reminds the Commission that smart regulation should neither undermine worker's rights (11) nor reduce their basic level of protection, especially in terms of occupational health and safety.

3.3.1

The EESC welcomes the establishment of an annual SME scoreboard making it possible to track specific measures throughout the decision making cycle. We await to see its implementation and outcome.

3.3.2

The EESC considers that the European Commission should constantly monitor the SME scoreboard through a centralised coordinating service in close cooperation with the different institutions and organs of the EU. Member States and SME organisations are invited to join the exercise as well.

3.4.1

The EESC welcomes the fact that roadmaps informing stakeholders about possible Commission initiatives are made available to them in planned preparatory and consultative work. Consultations with stakeholders should be widely advertised so that they can respond in good time. However, they should be based not on quantity but on quality and supported by empirical evidence gained from interviews with real businesspeople, including employees, and business organisations, visits or observation of micro and small companies. The EESC recalls the Commission that roadmaps should always include a first rough assessment of expected costs in order to allow stakeholders to provide a quality check of the possible impacts. Our Committee reminds the Commission that comprehensive stakeholder consultation is crucial for collecting high quality data as well as drawing up proposals for smart regulation.

3.4.2

After consultation has taken place, many business associations and their members are left wondering whether their efforts to help identify potential problems and possible solutions have been worthwhile. The EESC advocates that some of them, following an official procedure, participate in the IAB as external experts to provide additional scrutiny of Commission proposals in order to ensure that different concepts at stake are properly understood.

3.4.3

The EESC has noted a relative increase in the number of delegated acts passed by legislators in recent years. Many of the decisions taken via delegated acts have a significant impact on SMEs. The Committee therefore feels that the scope of consultation should also be extended to cover some key delegated acts which may have a substantial economic, environmental and/or social impact on a specific sector or on major stakeholders.

3.4.4

The EESC calls for a genuine and structured "SME dialogue" with different parties when drawing up legislation. This partnership should ensure participation by all SMEs and their organisations, especially small business associations defending application of the "Think Small First" and "only once" principles of the SBA (12) in order to stimulate efficiency objectives.

3.4.5

The EESC supports the Enterprise Europe Network (EEN) in principle. It regrets that its potential has not yet been realised because many European SMEs appear to be unaware that it exists. The services offered by the EEN should be grounded in real SME demands and needs with a close cooperation of SMEs organisations.

The Committee takes the view that Enterprise Europe Network host organisations shall be supported to dedicate more resources towards SMEs needs when dealing with public administration. The EESC believes that this support should especially focus on the smallest enterprises which should be directly consulted by their local Enterprise Europe Network Center when facing regulation issues. The findings out of the face to face meetings and the input of SME organisations should be taken into consideration by all Commission services in order to put the "Think small first" principle into practice.

3.4.6

The EESC welcomes the extension of the mandate of the High Level Group of Independent Experts on Administrative Burdens (13) (the Stoiber Group). The EESC would especially like to see the group given a new key role in assisting the Commission with the preparation, monitoring and implementation of policies relating to micro and small businesses in close cooperation with SME organisations and trade unions.

3.4.7

The EESC notes the results of the TOP 10 consultation on the worst examples of red tape affecting SMEs (14). The Committee invites the Commission to respond to its findings as soon as possible by publishing specific proposals for simplification.

3.5.1

The EESC supports a regulatory fitness check for SME policy making (15) (the so-called "REFIT programme"). The EESC looks forward to seeing the results of the pilot assessments (16), and would encourage the Commission to launch further fitness checks in its 2014 programme in key areas which we believe are crucial to creating growth and jobs. The Commission is invited to publish on its website all fitness checks that have been carried out or are planned.

3.5.2

The EESC also proposes a comprehensive fitness check of EU legislation that businesses encounter when trading across the EU's external borders. The EESC considers that the regulatory burden of such legislation is high and that such a check would make a significant contribution to the EU's agendas for smart regulation, growth, and trade.

3.5.3

The EESC invites the Commission to use the REFIT programme to identify and propose for withdrawal as soon as possible existing regulations and pending proposals that are no longer of use, and to pursue the consolidation of existing legislation as part of its simplification efforts. It is recommended that all reduction targets must be measurable and aimed at delivering tangible, positive change for businesses.

3.5.4

The EESC considers that a better selection of legal instruments should be used, including mechanisms for self-regulation and co-regulation (17).

3.6.1

The EESC points out that smart regulation is the shared responsibility of all those involved in EU policy-making whether at European level or Member States level.

3.6.2

At European level:

3.6.3

At Member State level:

12.11.2013   

EN

Official Journal of the European Union

C 327/38

1.1

The EESC recognises the importance for Europe of having an autonomous space surveillance system in order to protect its space infrastructure and launches. It welcomes the Commission's initiative, which raises this issue for the first time and puts forward options for initiating a process of collaboration and integration in this field in the European Union.

1.2

The EESC backs the Commission's idea that Member States should submit practical proposals for the Commission's approval, since it is clearly in the European interest to have the quality and quantity of information envisaged and to share knowledge, including on methodology and data analysis capacity.

1.3

The EESC is aware of the difficulty of finding options that Member States agree on and sees the Commission's proposal as a first and important step towards more ambitious goals for collaboration. The fact that there are strong military interests in this programme makes the creation of a shared infrastructure very difficult and the EESC hopes this particular initiative will enable this to be achieved as quickly as possible. It is a good thing, however, to get the foundations of this collaboration between civilians and military underway. This should be shared with the ESA, the European Defence Agency and the Crisis Management and Planning Directorate.

1.4

In the EESC's view, funding provided for SST operations in the seven years in which the service is set up must be used, as a matter of priority, to create the initial embryo of an independent European capacity into which some of the capacity currently belonging to the defence departments of the Member States is transferred. This should be achieved by employing the optical telescopes already in use in Europe (Canary Islands) and by building at least one European radar of similar class to those that defence departments have available. This would give the sense of a long-term investment in which new capacities and competences are transferred into the civil domain to improve the quality of life of Europe's citizens.

1.5

For the seven years envisaged for implementing this programme, the EESC thinks it necessary to establish specific provisions to make clear the level of services expected by national partners in terms of quantity and type of data, frequency, quality and availability. This will mean the necessary instruments are then available for evaluating the service in a way similar to research programmes in the Seventh Framework Programme, in which these parameters are clear and agreed.

1.6

The EESC recommends keeping criteria for access to the programme open and explaining it in greater detail in Article 7(1)(a). It is crucial that participation in the programme be open not only to countries that already have an independent capacity (France, Germany and the United Kingdom, for example), but to all those that can make data processing competences available. The proposed wording should be revised.

1.7

The EESC points out that the surveillance package of operations known as Space Situational Awareness includes not just Space Surveillance and Tracking, but also Space Weather (relating to magnetic solar activity) and monitoring of Near Earth Objects (NEO).

1.8

In particular, since it is generally recognised that the danger to space infrastructure from solar activity is at least the same, if not far greater than from the effects of particularly intense events, the EESC thinks that the two aspects, as originally intended in the definition of SSA, must be pursued in parallel. For this reason, it calls on the Commission to lay down a comprehensive and integrated framework of the various facets of space infrastructure defence, especially with the ESA, which is already actively engaged in a solar radiation protection programme. The conclusion of the Conference on Space and Security held in Madrid on 10 and 11 March 2011 (referred to in the impact assessment) clearly sets out the path for strengthening cooperation in this area between all stakeholders, especially the EU, the ESA and the Member States.

1.9

The EESC endorses the Commission's proposal to improve cooperation with the USA and with other countries interested in a joint project for protecting space infrastructure and averting dangerous and sometimes catastrophic collisions, including with minute particles that can put out of use a satellite that is expensive and indispensible for human activities.

2.1

This communication proposes the creation of a new European programme for space surveillance and tracking of space objects in orbit around the Earth, known as SST (Space Surveillance and Tracking).

2.2

The programme is being created in response to the need to protect space infrastructure – especially that involved in the Galileo and Copernicus/GMES programmes, but also European launches – from the danger of collision with space debris.

2.3

The communication also sets out the programme's legal framework and its funding arrangements for the period 2014-2020.

2.4

The communication is accompanied by a report (1) which discusses in particular five funding and governance options for the programme, setting out their characteristics, costs and benefits.

2.5

The legislation proper is prefaced by an explanatory memorandum which sets out the background.

2.6

The indicative overall EU contribution to the implementation of the SST is EUR 70 million over the period 2014-2020.

2.7

This would cover the cost of operating the sensors already in the possession of participating Member States (usually their military) and a warning system based on data provided by these Member States and run by the European Union Satellite Centre (EUSC).

2.8

Involvement in the programme is optional and requires participating countries to have sensors (telescopes, radars) already operational and the necessary technical and staffing resources or competences needed for data processing.

2.9

According to the impact assessment summary accompanying the proposal, the minimum loss occasioned by the collision of debris with operational European satellites is EUR 140 million a year in Europe, estimated to grow to EUR 210 million in view of the predicted 50 % increase in satellite sector services over the next few years. These figures represent a very conservative estimate and do not include the loss "on the ground", meaning the economic loss due to the rupture of services that rely on satellite data.

2.10

It is important to note that almost all of these losses involve not so much the physical loss of satellites, but the reduction in their operational life as a result of manoeuvres taken to avoid collisions.

2.11

Although a number of Member States already have their own surveillance service, the Commission believes that the EU must be involved in order to gather together the investment necessary to fund the project, to specify the management aspects and a data policy and to ensure that current and future capacities are exploited in a coordinated manner.

2.12

At this time, the standard for all warning services is set by the US Space Surveillance Network (SSN), managed by the US Department of Defense. Cooperation between the EU and the USA in which US data is made available without charge is considered insufficient, since this data is not accurate enough and the EU can have no control over its management.

2.13

Setting up the services under discussion would therefore be very much in keeping with the strategy of making Europe independent in areas deemed critical, especially access to space.

2.14

It is currently estimated that 65 % of sensors for Low Earth Orbit (LEO) satellites in Europe are totally or partially managed by institutions linked to defence (2).

2.15

The European Space Agency (ESA) is not considered the appropriate agency to implement a programme of this nature, since it is not equipped to process classified data such as that from sensors managed by the military.

2.16

The European body intended to manage coordination is the European Union Satellite Centre (EUSC), an EU agency established by the Council Joint Action of 20 July 2001, which provides geospatial imagery information services and products with various levels of classification to civil and military users. The EUSC could facilitate the provision of SST services and will collaborate with the participating Member States in the establishment and operation of the SST service function, which is one of the aims of the SST support programme. At present, however, the centre's statutes do not provide for any operations in the SST domain.

2.17

Management of the programme is expected to require a staff of 50 (including HR made available by participating Member States, EUSC and Commission).

3.1

In the EESC's view, the proposal does not provide for the creation of adequate instruments and competences at European level for the gathering and analysis of the data. As a result, Europe would find itself in the same position at the end of the programme's five-year funding period as it was in at the beginning and would therefore, presumably, have to renew this agreement to secure the continuing provision of data from the defence infrastructure of participating Member States.

3.2

There is no specification of the requirements in terms of availability, quality and currency of data to be provided by the national bodies for the proposed funding of EUR 70 million. This makes it difficult to establish criteria for evaluating the services provided, which will only be possible when the Commission has issued the implementing acts that will have to be drafted.

3.3

The Member States contend that the ESA does not provide sufficient guarantees for the processing of sensitive data, which should be handled by the EUSC. However, those countries that have their own surveillance and tracking service (such as the United Kingdom, France and Germany) run it as part of a collaboration between space and defence agencies, which suggests that this kind of collaboration between such agencies is in fact effective. It is not clear, therefore, why the ESA should be excluded from a service of this kind, not least given that it is already participating in a global warning and disaster management service, namely the International Charter on Space and Major Disasters.

3.4

The SST programme is one of three domains in the Space Situational Awareness (SSA) Preparatory Programme implemented on a pre-operational basis by the ESA since 2009, the other two being Space Weather and Near-Earth Objects.

3.5

The ESA's SSA Preparatory Programme has had funding of EUR 55 million. It is not clear what the relationship between these two programmes is. Above all, it is not clear how this SST service is to be supported by a similar service that generates and manages warnings of risks from solar activity.

3.6

It is useful to compare the severity of the damage caused by collisions with debris and that caused by geomagnetic/solar activity. According to a study carried out by the US National Oceanic and Atmospheric Administration (NOAA) (3), economic loss due to the influence of solar storms on satellite infrastructure is enormous. In 2003, intense solar activity destroyed ADEOS-2, a Japanese satellite that cost USD 640 million. In 1997, a magnetic storm caused the loss of the Telstar telecommunications satellite, worth USD 270 million. In 1989, another magnetic storm caused nine hours of blackout in Canada, with losses calculated at USD 6 billion.

3.7

It is thought that a solar superstorm like the one recorded in 1859 would today cause losses of USD 30 billion in damage to satellites in geostationary orbit alone, with damage to power grids raising the figure to USD 1-2 trillion. Four to ten years would be needed to restore full operation.

3.8

The risk level from solar activity is at least the same as that from debris. The two should therefore be monitored together, as was in fact envisaged at the Madrid conference in March 2011. However, the Commission does not make it clear who will implement an operational service for solar activity warnings.

3.9

The EESC believes the proposal should take into account the protection of European space infrastructure, including complementary activity to monitor Space Weather and timescales for implementation and integration of the two systems.

4.1

Article 5(2) stipulates that no new capacities will be created: existing Member State capacities will simply be re-employed. However, section 2 of the explanatory memorandum states explicitly that existing capacities are insufficient. When it comes down to detail, then, it is by no means clear what type of system – including which of the five listed in the impact assessment – is the one chosen for implementing.

4.2

The technical characteristics of this system are not explicitly defined. While its aims are defined, a decision on what it will comprise is left to future discussions between the Member States.

4.3

Relationship between military and civil use. The system is built as a civil system. Most of the information, however, comes from military sources. There are no explicit conditions or protocols obliging the military side to provide this information to the civil side. Here, again, the proposal says the matter will be resolved in the future.

4.4

Member State/EU relationship. The proposal states that all the sensors are and must remain in the hands of individual Member States. There do not appear to be explicit conditions guaranteeing a minimum data and information flow.

4.5

Definition of the service. The proposal does not provide this explicitly. It is not possible, therefore, to gauge whether it is sufficient for the projects established for the programme.

4.6

In its resolution of 26 September 2008 entitled ‘Taking forward the European space policy’, the Council referred to the need to "develop a capacity to meet European user needs for comprehensive situational awareness of the space environment".

4.7

It is important to continue development of both the SST programme and current SSA programmes.

4.8

The "indicators of results and impact" in paragraph 1.4.4 are rather tautological, providing little, in operational terms, for an ex post evaluation of the effectiveness of the programme.

4.9

Beyond the definitions of governance, an operational model of the system is not well defined. Member State participation is not obligatory. What is a minimum basis on which the service can operate?

12.11.2013   

EN

Official Journal of the European Union

C 327/42

1.1

In view of the unquestionable economic value of trade marks and their positive effect on the functioning of the internal market, the current supranational legislative framework for their protection is manifestly inadequate. Nevertheless, the Proposal for a Directive is an improvement on the current situation, which is characterised by regulatory differences between the EU and national frameworks.

1.2

As a consequence, the EESC advocates strengthening the intellectual property rights inherent in the legitimate use of trade marks, supports, as far as possible, the EU registration of trade marks, and urges the Commission to support the Office for Harmonisation in the Internal Market (OHIM) in carrying out its oversight functions in relation to these rights.

1.3

In this regard, EU law confers on the proprietor of a trade mark both its exclusive use for profit-making purposes ("ius utendi"), and the possibility of preventing its use from being undermined by the actions of third parties through imitation or improper appropriation of their distinguishing marks ("ius prohibendi"). The EESC calls for preventative and compensation measures to tackle piracy, which undermines the competitiveness of European businesses.

1.4

However, the EU legislation in force does not precisely state the conditions in which the proprietor of a trade mark can take the relevant action to prevent that use.

1.5

In general, the entire process should complete the alignment of trade mark laws within the next few years, culminating in the adoption of an EU trade mark rulebook, which should establish, inter alia, the creation of a flexible, uniform and cost-effective procedure giving interested parties the option to register trade marks on a voluntary basis and putting an end to current differences in the law.

1.6

The EESC should play an active role in the legislative process for adopting all legislation on intellectual property. It therefore regrets that it was not consulted on the proposal to amend the Regulation on the Community trade mark.

1.7

The EESC hopes that, in the future, there will be a system that ensures the uniform protection of trade marks for businesses and consumers.

2.1

At international level, the law on trade marks is governed by the Convention for the Protection of Industrial Property signed in Paris on 20 March 1883, as last revised at Stockholm on 14 July 1967 and amended on 28 September 1979 (1) (hereinafter the 'Paris Convention').

2.2

Under Article 19 of the Paris Convention, the States to which it applies reserve the right to make separately between themselves special agreements for the protection of industrial property.

2.3

That provision served as a basis for the adoption of the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks, concluded at the Nice Diplomatic Conference on 15 June 1957, last revised in Geneva on 13 May 1977 and amended on 28 September 1979 (2). The Nice Classification is revised every five years by a committee of experts.

2.4

According to the database of the World Intellectual Property Organisation (WIPO), of the Member States of the European Union, only the Republic of Malta and the Republic of Cyprus are not party to the Nice Agreement, but nevertheless use the Nice Classification.

2.5

Trade mark protection is, quintessentially, territorial. That is because a trade mark is a property right that protects a sign in a defined territory.

2.5.1

In the Union's primary law, Article 17-2 of the European Charter of Fundamental Rights provides for the protection of intellectual property.

2.5.2

Furthermore, Article 118 of the TFEU states that, in the context of the establishment and functioning of the internal market, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall establish measures for the creation of European intellectual property rights to provide uniform protection of intellectual property rights throughout the Union and for the setting up of centralised Union-wide authorisation, coordination and supervision arrangements.

2.6

Within the European Union, national and Community trade mark protection co-exist. A proprietor of a national trade mark can exercise the rights associated with that mark within the territory of the Member State under whose national law the mark is protected. A proprietor of a Community trade mark can do the same within the territory of the 28 Member States because the mark is effective throughout that territory.

2.7

The laws of the Member States relating to trade marks were partially harmonised by Council Directive 89/104/EEC of 21 December 1988, subsequently codified as Directive 2008/95/EC.

2.8

Alongside and linked to the national trade mark systems, Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark, codified as Regulation (EC) No 207/2009, established a stand-alone system for the registration of unitary rights having equal effect throughout the EU. In that context the Office for Harmonization in the Internal Market (OHIM) was set up to be responsible for registering and administering Community trade marks.

2.9

Over recent years, the Commission has launched public debates on intellectual property, with the participation of the EESC, and in 2011 announced a review of the European trade marks system, with a view to modernising it, both at EU and at national level, making it more effective, efficient and consistent as a whole.

2.10

In its Resolution on a comprehensive European anti-counterfeiting and anti-piracy plan, the Council called for a review of Council Regulation (EC) No 1383/2003 of 22 July 2003 concerning customs action against goods suspected of infringing certain intellectual property rights and the measures to be taken against goods found to have infringed such rights (3). The EESC hopes that improvements will be made to the legal framework to strengthen the protection of intellectual property rights by the customs authorities and to ensure adequate legal certainty.

2.11

The European trade marks system is based on the principle of coexistence and complementarity between Union and national trade mark protection.

2.12

While the Regulation on the European trade mark provides a comprehensive system in which all issues of substantive and procedural law are provided for, the Directive is limited to selected provisions of substantive law only, and the proposal therefore intends substantive rules to be essentially similar and procedural provisions at least to be compatible.

2.13

The objective of the proposal is to foster innovation and economic growth by making trade mark registration systems all over the EU more accessible and efficient for businesses in terms of lower costs and complexity, increased speed, greater predictability and legal security.

2.14

This initiative to recast the Directive is driven by the following objectives:

2.15

On the one hand, the proposal for a Directive modernises and improves the existing provisions in relation to:

2.16

On the other hand, the proposal intends to achieve greater approximation of substantive law, through the protection of geographical indications and traditional terms; the protection of trade marks with reputation; stressing trade marks as objects of property, since they may be subject to transfers of right in rem, and the regulation of collective marks.

2.17

With regard to the alignment of principal procedural rules, it deals with designation and classification of goods and services; ex officio examination; fees; the opposition procedure; non use as defence in opposition proceedings; procedure for revocation or declaration of invalidity, and non use as defence in proceedings seeking a declaration of invalidity.

2.18

The proposal also intends to facilitate cooperation between offices. As a complement to the legal framework for cooperation proposed in the context of the review of the Regulation, Article 52 provides a legal basis to facilitate cooperation between OHIM and the intellectual property offices of the Member States.

3.1

The EESC welcomes the European Commission's Proposal for a Directive, which is particularly timely in a global economic context which is highly competitive and at a time of economic slowdown in Europe.

3.1.1

The trade mark contributes, on the one hand, to creating business value and customer loyalty, whilst, on the other, protecting consumers.

3.1.2

The latter is very important here, for various reasons:

3.2

The Proposal for a Directive will very significantly improve the current legal framework in the legislations of the Member States, in three regards:

3.3

It also includes, in light of economic, commercial and legal developments, significant innovations, such as the definition of a trade mark, permitting representation by other than graphical means, permitting a more precise identification of the mark, and leaving the door open to register matter that can be represented by technological means offering satisfactory guarantees.

3.4

We welcome the intention to achieve greater approximation of substantive law, such as adding the protection of geographical indications and traditional terms, the protection of trade marks with reputation and the treatment of trade marks as objects of property, such as transfers or right in rem, and vital aspects of the commercial exploitation of trade marks. The Proposal for a Directive's inclusion of collective marks and guarantee marks will be very important for businesses and consumers.

3.5

Finally, the EESC welcomes the alignment of the principal procedural rules since this would establish common rules for the designation and classification of goods and services, in line with the principles established by the Court of Justice, and ex officio examination and the opposition procedure and the procedure for revocation or declaration of invalidity.

3.6

Furthermore, the Committee welcomes the fact that the procedure for drawing up the Proposal for a Directive has taken place with a high degree of publicity and with the participation of the relevant sectors of civil society.

3.7

However, the Committee has certain objections to the object and content of the proposal, without prejudice to the proposed amendment of Regulation (EC) No 207/2009, which established a stand-alone system for the registration of unitary rights, and which makes up a legislative package with the Proposal for a Directive.

3.8

In this context, the EESC wishes to express its surprise that the proposal to amend the abovementioned Regulation on the Community trade mark (COM(2013) 161 final of 27.3.2013) was not submitted to it for its advisory opinion.

3.9

Since this matter has a direct impact on the functioning of the internal market (Article 118 TFEU) and affects the level of consumer protection (Article 169 TFEU), a contextual and consistent interpretation of the provisions of the Treaties, which explicitly grants the EESC a consultative role in these areas, requires the mandatory participation of the EESC in the legislative process for adopting this act.

3.10

In this regard, EU law confers on the proprietor of a trade mark both its exclusive use for profit-making purposes ("ius utendi"), and the possibility of preventing its use from being undermined by the actions of third parties through imitation or improper appropriation of their distinguishing marks ("ius prohibendi"), Article 9 of Regulation (EC) No 207/2009.

3.11

However, the EU legislation in force does not precisely state the conditions in which the proprietor of a trade mark can take the relevant action to prevent that use.

3.11.1

Although the Proposal for a Directive significantly increases the number of situations in which the proprietor of the trade mark can prohibit its use by third parties (Article 10), establishing a new provision in this regard, i.e. infringement of the rights of the proprietor by use of get-up, packaging or other means (Article 11), or the improper use of a trade mark registered in the name of an agent or representative (Article 13), it falls to the court to determine the precise scope of the law in the event that the proprietor launches judicial proceedings.

3.11.2

It will therefore be for each judicial body to establish whether or not there is a risk of confusion or improper appropriation of the protected mark by a third party, and in the event that there is, also to determine the compensation for the proprietor in accordance with the action brought.

3.11.3

Consequently, the proposal does not offer uniform protection for the rights of proprietors to use their trade marks or for consumers, when they are affected by the inappropriate or fraudulent use of a commercial trade mark.

3.12

The complementarity between the supranational and national protection systems for the rights of trade mark proprietors therefore implies a clear risk in terms of whether this protection is as efficient and expeditious as possible, in line with the proposal's objectives.

3.12.1

Thus, for instance, there is no guarantee that internal differences resulting from the incorrect transposal of the provisions of Directive 2004/48/EC (on the enforcement of intellectual property rights) concerning protection measures will ensure:

3.12.2

This legal uncertainty will be aggravated if the rights of a trade mark proprietor are infringed in a number of Member States.

3.13

This is compounded by the fact that the proposal sets out a number of provisions that make protection more complex.

3.13.1

Thus, for example, the third paragraph of Article 4 (grounds for refusal or invalidity), establishes that a "trade mark shall be liable to be declared invalid where the application for registration of the trade mark was made in bad faith by the applicant" and that "any Member State may also provide that such a trade mark shall not be registered".

3.14

Since according to the OHIM, absence of intent to use is not a ground for establishing bad faith, what authority will establish uniform criteria to enable the relevant assessors to determine whether there are other indications of bad faith?

3.15

This gap in the laws is paradoxical if compared with the new provision of Article 10(5) of the proposal, which entitles the proprietors of registered trade marks to prevent all third parties from bringing goods into the customs territory of the Union without being released for free circulation there. As a result, this proposal is not in line with the current case-law of the Court of Justice on goods in transit (Joined cases C-446/09 and C-495/09, Philips and Nokia), and any presumption or proof of good faith on the part of third parties is invalid (4).

3.16

On the other hand, the prevention and prosecution of these types of illegal commercial practices would undoubtedly be strengthened if the Proposal for a Directive established a specific legal basis authorising the European Commission to step up its action through cooperation with authorities in third countries where these business practices are widespread and systematic.

3.17

There are also shortcomings in the provisions of Article 45(1) of the proposal, which generally foresees that Member States shall provide for an efficient and expeditious administrative procedure before their offices for opposing the registration of a trade mark application on the grounds provided for in Article 5. There need to be more concrete provisions on the nature of this procedure and to legally establish the reasonable timeframe within which the relevant national authorities can take action, in line with Article 41(1) of the EU Charter of Fundamental Rights (right to good administration).

3.18

Similarly, the efficiency and predictability inherent in supranational protection of the rights of trade mark proprietors necessitates a revision of the content of other provisions of the proposal, such as Articles 44 and 52. With regard to Article 44, which establishes that the registration and renewal of a trade mark shall be subject to an additional fee (generic) for each class of goods and services beyond the first class, a maximum rate needs to be established for these fees.

3.19

With regard to Article 52, which provides for cooperation between the Member States and the OHIM in order to promote convergence of practices and tools and achieve coherent results in the examination and registration of trade marks, a specific provision needs to be established, in compliance with Article 291 TFEU, granting the Commission implementing powers to adopt a binding "code of conduct".

3.20

Administrative cooperation between the OHIM and the national offices should be regarded as a matter of common interest, in line with Article 197 TFEU. It would be particularly worthwhile, in this context, to exchange information and staff and to promote training programmes, establishing a public budget for this purpose.

3.21

In general, the entire process should complete the alignment of trade mark laws within the next few years, culminating in the adoption of an EU trade mark rulebook, which should establish, inter alia, the creation of a flexible, uniform and cost-effective procedure giving interested parties the option to register trade marks on a voluntary basis and putting an end to current differences in the law.

12.11.2013   

EN

Official Journal of the European Union

C 327/47

1.1

The Committee welcomes the Commission's proposed amendments to the accounting directives concerning both disclosure of non-financial information and diversity on governing bodies. These limited amendments will help to improve the EU's corporate governance framework (1).

1.2

The Committee recommends that the European Parliament and the Council take account of the balance achieved with these amendments, which increase transparency regarding environmental, social and corporate governance (ESG). The Commission's proposal constitutes a flexible and appropriate mechanism for improving communication with shareholders, investors, workers and other stakeholders. This proposal is targeted only at large companies, in order to avoid imposing additional burdens on smaller businesses.

2.1

The Committee recognises that a balanced combination of the following elements will make it possible to provide shareholders at annual general meetings with non-financial information and to inform stakeholders in large companies. This set of requirements meets the stated objectives of transparency and consistency:

2.2

Given this degree of balance, the Committee feels that this would be a good time to adopt the proposal for a directive amending the accounting directives:

2.3

The Committee welcomes the fact that these amendments to the accounting directives open up new prospects, as they:

2.4

The Committee would draw the attention of the European Parliament and the Council to the following recommendations:

2.5

The Committee endorses the proposed amendment to the fourth directive regarding the requirement to provide information on the diversity policy pursued by the company for its governing bodies.

2.6

It would stress that this does not only involve administrative and supervisory boards, and that it may be worth extending the diversity policy to cover board committees such as the audit committee.

2.7

It points out that the ambitions regarding numbers of women on boards have not been achieved in most Member States (5).

2.8

It believes that the diversity criteria should include the involvement of employee board members from the workplace, for example from the European Works Council, appointed by the trade unions.

2.9

The Committee finally recommends that the Commission make this revision subject to a non-regression clause in respect of existing national legislation, and carry out an assessment of the impact of these amendments to the accounting directives on corporate practice as regards disclosing non-financial information, within five years of the entry into force of the directive.

3.1

The proposed amendments to the accounting directives follow on from the work done since the 2001 Green Paper on CSR (6), as supplemented by the communication in 2006 (7), and meet the commitments undertaken in the work plan in the communication from 2011 (8). These amendments are necessitated by the results of the impact assessment, showing the limited effectiveness of the non-financial information disclosed by businesses and largely fed by contributions from public consultation. The quality of the information is patchy, and not enough businesses are involved.

3.2

The Commission stated its intention to improve companies' transparency concerning social and environmental issues in April 2011, in its communication on the Single Market Act.

3.3

In its opinion on information and measurement instruments for CSR (2005) (9), the Committee referred to the fourth directive on annual accounts, which includes a provision on non-financial information giving businesses the option of disclosing certain information on the social and environmental aspects of their activities. In 2012, the Committee supported the Commission's objective of increasing diversity on administrative and supervisory boards. In its 2012 opinion (10) on the communication on CSR, the Committee reiterated its support for mandatory reporting of non-financial information.

3.4

The United Kingdom was the first Member State, in 1992, to introduce a corporate governance code (known as the Cadbury Code) (11) following the "comply or explain" principle. This approach was adopted, with variations in provisions, by other countries including Germany and Denmark. The flexibility of the method means that companies have a right to hold back information on certain sensitive issues, such as anti-corruption actions, that require a degree of discretion or even confidentiality in order to be effective.

3.5

Over the past decade, a number of Member States, including France, the Netherlands, the United Kingdom, Sweden and Spain, have adopted legislation aiming to create a national reporting framework with a view to harmonising European standards.

3.6

A European agreement on transparency in the extractive industries was concluded under the Irish Presidency, which revises the Accounting Directive. The directive now requires country-by-country and project-by-project transparency regarding all payments made by European extractive and logging companies to the States where they operate.

3.7

In its resolution of February 2013 (12), the European Parliament acknowledged the importance of businesses divulging information on sustainability such as social and environmental factors, with a view to identifying sustainability risks and increasing investor and consumer trust. The EP called on the Commission to present a proposal on the disclosure of non-financial information by companies.

3.8

In a context of crisis in which European public opinion is calling on businesses to act more ethically, CSR practices are acknowledged to be contributing factors in the European Union's trade and development policies and the implementation of the Europe 2020 strategy. They promote social and civil dialogue (societal dialogue), and should also improve understanding of the realities throughout the subcontracting chain. Disasters such as the collapse of the Rana Plaza building in Bangladesh are a reminder of the need to pay attention to the responsibility held by the client.

12.11.2013   

EN

Official Journal of the European Union

C 327/52

1.1

Citizens are at the heart of European integration. The EU Citizenship report underlines that EU citizenship brings citizens new rights and opportunities. The report calls to attention that the right that persons living in Member States (MS) associate most closely with is the right to move and live freely within the EU: the ability to come and go between EU MS, for shorter or longer periods, to work, study, train, to travel for business, or to shop across borders (1).

1.2

The 2013 EU Citizenship Report presents twelve new actions in the following six areas directed to further remove obstacles standing in the way of citizens’ enjoyment of their EU rights, including the right to move freely across EU borders. These include the (2):

1.3

The European Economic and Social Committee (EESC) welcomes the European Commission's (EC) Proposal for a Regulation of the European Parliament and of the Council on promoting the free movement of citizens and businesses by simplifying the acceptance of certain public documents in the European Union and amending Regulation (EU) No 1024/2012: COM(2013) 228 final, 2013/0119 (COD).

1.4

This proposal is consistent with EU Citizenship report as it introduces measures that will facilitate the ability of EU citizens to genuinely enjoy the substance of the rights conferred by their status as EU citizens.

1.5

Although the Lisbon Treaty and the EU Charter of Fundamental Rights reinforced EU citizens’ rights defined by Maastricht Treaty, including the right to move and reside freely within the EU, the administrative process that supports the use of this right has not been reformed accordingly. Indeed, the presentation of an Apostille – a formality based on the Hague Apostille Convention of 1961 designed to facilitate movement across international borders in a world devoid of technology - does not reflect the fact that the EU is borderless and hence hampers rather than facilities the execution of EU citizenship right for free intra-EU movement.

1.6

The simplification of the following certain public documents in the EU as presented in the proposal is one important measure that will result in a more cohesive legal framework which will facilitate the right of intra-EU movement:

The simplification of these public documents will, undoubtedly, facilitate the promotion of the free movement of citizens and businesses as it will further increase commerce within the internal market as well as render increased ease in the collection of such documents by citizens of each MS.

1.7

The introduction of a simplified framework for the acceptance of certain public documents up to local public administration level is to be considered as an important policy instrument as it also:

1.8

The EESC regrets that the reforms being brought in by virtue of the proposal directed to facilitate citizens and businesses to exercise their right for intra-EU movement are presented 20 years after the launch of the EU citizenship and 42 years after the Hague Convention. Indeed, the EU has not moved in parallel with technological progress which could have been leveraged to reduce or eliminate the burdens placed on citizens and businesses to exercise their right to movement. The EESC emphasises that the Internal Market Information System (IMIS) is an important vehicle that should be exploited more aggressively with regard to enabling EU citizens to exercise their fundamental rights.

1.9

The EESC, therefore, concludes that the policy recommendation presented by the EC for:

1.10

The EESC recommends:

2.1

The 2009 Stockholm Programme "An open and secure Europe serving and protecting citizens" (6) stressed the importance of making Union citizenship effective and place citizens at the heart of EU policies in the area of justice. The related Action Plan (7) confirmed this mandate and stated that a well-functioning European judicial area that "should be put at the service of citizens and business so as to support economic activity in the single market (…)". The EC responded by confirming its commitment to facilitating the free circulation of public documents within the EU in its 2010 Citizenship Report and presented in December 2010 a concrete vision to the public in the Green Paper on "Less bureaucracy for citizens: promoting free movement of public documents and recognition of the effects of civil status records" (8).

2.2

In parallel to the above a Single Market Act (9) was introduced directed towards strengthening citizens’ confidence in the internal market and in maximising its potential as the growth engine within the EU’s economy. This demanded, amongst others, the elimination of disproportionate barriers hampering of internal market freedoms by citizens and business. The fostering of citizen and business mobility within the EU is one of the cornerstones of the Single Market Act II (10).

2.3

The EC’s Action Plan on company law and corporate governance (11) focuses on supporting European business particularly with regard to the strengthening of legal certainty for cross-border operations. The Digital Agenda for Europe (12) refers to the proposed legislation on electronic identification and e-Signatures (13) which includes the introduction of a regulatory framework for common administrative facilities relating to citizen and business electronic identification.

2.4

The recent Entrepreneurship 2020 Action Plan (14) underlines that reducing excessive regulatory burden remains on the top of the EC's political agenda. The Action Plan calls for the elimination or reduction of red tape whenever possible for all businesses and particularly for micro-enterprises. Consequently, cutting red tape, simplifying the procedures for cross-border use and acceptance of public documents between the MS as well as harmonising the related rules contributes to all actions aimed at moving towards the creation of a citizens' Europe and a well-functioning Single Market for EU businesses.

2.5

The EU Citizenship report underlines that EU citizenship brings citizens new rights and opportunities. The report calls to attention that the right that persons living in MS associate most closely with is the right to move and live freely within the EU: the ability to come and go between EU MS, for shorter or longer periods, to work, study, train, to travel for business, or to shop across borders. The 2013 EU Citizenship Report presents twelve new actions in the following six areas directed to further remove obstacles standing in the way of citizens’ enjoyment of their EU rights, including the right to move and to go into business freely across EU borders. These include the (15):

2.6

Although Lisbon Treaty and the EU Charter of Fundamental Rights reinforced EU citizens’ rights defined by Maastricht Treaty, including the right to move and reside freely within the EU, the administrative process that supports the use of this right has not been reformed accordingly. Indeed, there continues to exist a fragmented legal framework in EU as MS continue to apply administrative formalities such as the presentation of an Apostille to certify copies and translations – a formality based on the Hague Apostille Convention of 1961 designed to facilitate movement across international borders. This is a formality that does not reflect the fact that the EU is borderless and hence hampers rather than facilities the EU citizenship right for free intra-EU movement.

2.7

Currently, for example, citizens who move to another MS have to spend a lot of time and money in order to ensure that public documents from a MS state of origin are authentic. It is recognised that businesses and citizens will, undoubtedly, benefit from a framework of consistent and transparent rules governing certain public documents that are critical to the flow of goods, services and people within the EU and single market.

2.8

The EU has not moved in parallel with technological progress which can be leveraged to reduce or eliminate the burdens placed on citizens and businesses to exercise their right to movement. The EESC understands that the IMIS, a web-based application that allows national, regional and local authorities to communicate quickly and easily with their counterparts abroad, is an appropriate ICT platform that will facilitate administrative cooperation once the proposal is implemented. The IMIS will also act as an important repository of templates of the most frequently used national public documents within the EU, including their translation into all Union official languages, in order to support authorities with insufficient linguistic expertise to judge correctness or quality of translations of public documents presented to them (16).

2.9

The EESC regrets that the reforms being brought in by virtue of the proposal directed to facilitate citizens and businesses to exercise their right for intra-EU movement is presented 20 years after the launch of the EU citizenship and 42 years after the Hague Convention.

3.1.1

The EESC agrees that the definition of "public documents" as presented in Article 3(1) of the proposal embraces the important public documents related to EU rights of EU citizens and businesses.

3.1.2

The EESC underlines, however, that the public documents identified in the proposal should indeed be the first of a series of public documents that should be subject to a simplification process directed to enhance intra-EU mobility, cross-border activities, and the functioning of the EU single market.

3.1.3

The EESC underlines that future simplification exercises with regard to public documents should target important public documents such as those relating to intra-EU mobility of workers (which is fundamental for the development of cross-border enterprise and commerce) or persons with disabilities in so far that such public documents are not being accounted for by other EU Directives. Such public documents may include, for example, national education accreditation certifications and social security public documents.

3.2.1

The EESC emphasises that the current requirements demanding the presentation of an Apostille reflects international procedures and, thus, do not reflect the developments of the EU as a single market. There are approximately 12.5 million EU citizens living in MS other than their own and over 380 thousand of EU micro and small and medium sized (SMEs) businesses involved in MS cross border subcontracting practices which are continuously confronted by red-tape and unnecessary bureaucracy to move from one MS to the other or to carry out cross border business. This is a state of play which does not reflect a borderless EU.

3.2.2

The EESC, therefore, agrees with the EC’s proposal’s objective to exempt the public documents from legal and administrative requirements in place across MS. The EESC considers this as a first phase in a continued programme of the simplification of public documents.

3.2.3

The EESC agrees that provisions should be introduced to ensure that the necessary level of verification is undertaken where there is a case of a reasonable doubt. The EESC recognises that there will be instances where administrative coordination would be required amongst MS to ensure that a public document or its certified copy is authentic.

3.2.4

The EESC strongly supports the principle that a citizen or a business should have the maximum degree of certainty with regard to the extent that public documents presented are exempted from all forms of legalisation or similar formality. Such certitude will allow a citizen or a business to pro-active plan his/her or its activities and in doing so ensure that tangible and intangible gains and benefits identified in the EC Impact Assessment are actually accrued (17).

3.2.5

The EESC notes that under the current system 99 % of the approximate annual 1.4 m Apostilles presented for intra-EU activity do not result in issues. The EESC, therefore, is of the opinion that the policy option presented by the EC with regard to administrative cooperation (that is based on the IMIS in cases of reasonable doubt on the authenticity of public documents supported by multilingual forms) should lead to improved results.

3.2.6

The EESC recommends that the definition of "reasonable doubt" as presented in the EC’s proposal should be rendered unequivocal to remove uncertainty. In the regard the EESC proposes the following amendment:

3.2.7

In the event that a MS is to make an official request with regard to arising of reasonable doubt, on the basis of this new definition, to the relevant authorities of the MS where the document were issued it is to explicitly inform the person on the reasons of why such a request is being made.