Spain addresses fragmentation of its internal market

On Friday the Spanish Council of Minister approved a report on draft legislation set to improve the unity of the internal (national) market, for an estimated gain of 0.15% of GDP (€1,500m) per year for 10 years.
The scheme calls for a single license to allow a firm to trade in all autonomous communities (regions) throughout the country, instead of up to 17 procedures. A new dedicated body will bring together central and regional governments to monitor implementation, which will also use a common electronic database to support control and supervision functions. Conflict resolution procedures will be simplified, under the future National Commission for markets and competition. The report offers some detail on each of these points. Our correspondent (Prof. Gamero, Seville) estimates that the new legislation, which was negotiated with the autonomous communties, will be passed by Parliament before the summer, once the RIA has been drafted and endorsed by Governement.

EU Internal Market still marred by regulatory barriers

Last week, the European Commission presented its annual report on the state of the internal market integration, with a focus on areas, such as services and network industries, where there is a strong growth potential, provided regulatory barriers are removed. In spite of overall progress of integration, the report finds that some barriers remain in services, of which it listed the main ones:

• double regulation (enterprises need to comply with both home and host country rules), the uncertainty about the rules applying to cross-border service provision on a temporary basis,
• the heterogeneity of regulation of professions (especially the scope of reserved activities), the diverse quality of the Points of Single Contact, the low use of the Internal Market Information system.
• Specific problems in retail and wholesale, construction, and public procurement

This week (4 Dec), addressing one of the identified weaknesses, a new Regulation giving a solid legal basis for the Internal Market Information System entered into force, following approval by the EU legislator in October. It intends to provide strong guarantees for the protection of personal data handled in this system, which is already being used by more than 7 000 authorities across Europe.

Single Market Act II (EC Communication)

Yesterday (3 October) the European Commission issued a Communication on its draft Single Market Act II, which contains a batch of 12 new proposals to modernise and deepen the Single Market , the biggest smart regulation exercise on record, comprising some 600 directives. The new package aims "to respond to a constantly changing world where social and demographic challenges, new technology and imperatives, such as climate change, must be incorporated in policy thinking." It builds on the SMA I (2011) and further perfects the work engaged since 1992, when the "internal market" was launched. The 12 priority areas of the package cover transport and energy networks, citizen and business mobility, the digital economy and "social entrepreneurship, cohesion and consumer confidence." See press release and FAQ for details, and visit Internal Market website.

Smart Regulation for growth and jobs (EU)

The last European Council meeting under Danish presidency (28-29 June) has yielded another set of Conclusions interesting for smart regulation experts. Member States adopted the "Compact for Growth and Jobs", encompassing action to be taken by the Member States and the European Union with the aim of relaunching growth, productivity, investment and employment and endorsed the country-specific recommendations to guide Member States' policies and budgets. Among the measures to be taken at MS level, there is mention of "modernising public administration, in particular by tackling delays in the judicial system, reducing administrative burdens and developing e-government services.' Among the European Policies for growth and employment, there is new wording for "Deepening the Internal Market" and smart regulation: "Further efforts are needed to reduce the overall regulatory burden at EU and national level. The Commission will present a communication on further steps in "smart regulation", including measures to support micro-enterprises, by the end of 2012."

EU Council calls for improved internal market governance

At its 31 May meeting, the Competitiveness Council adopted conclusions on the "on the governance of the Single Market and the Digital Single Market". The conclusions stress that "strengthening the governance of the Single Market, including improved implementation and enforcement, the completion of a Digital Single Market and the swift adoption of the measures contained in the Single Market Act, could take the internal market to a new phase and create economic growth and jobs, as called for by the European Council on 1-2 March 2012." The conclusions take into account the evaluation made by the Commission of the Single Market governance check-up 2011.

Among the measures called for:

• reaching the transposition deficit target of 1% on Single Market Directives while the aim remains to have no transposition deficit;
• exchange of best practices to ensure the quality of transposition and enforcement;
• speadier infringement procedures;
• easier access to information for citizens and businesses on Single Market rights at EU level and how those rights are implemented at national and local level;
• better quality and consistency of legislation for achieving a more integrated Single Market;

Commission lists gaps in implementation of EU law

Smart regulators know how important it is to ensure proper implementation of regulation if the underlying policy objectives are to be met. This is all the more important when the norm requires specific measures to be taken by different implementing authorities. Such a situation is to be found in the European Union where the directives adopted in Brussels need to be transposed into national law to become effective and citizens and companies from across the Union to reap the benefits of the Internal Market and other European standards. Hence the importance of the issue of "application of EU law" and the procedure to identify and correct failure by Member States(MS) to transpose directives (the "infringement procedure"). The Commission has just published its monthly package of infringement decisions by which it pursues legal action against MS for failing to comply properly with their obligations under EU law. The package consists of 170 decisions, including 37 reasoned opinions and 5 referrals to the European Union's Court of Justice. Individual press releases explain the background and reasons for each Commission decision, which specifies which MS are at fault, in a rare case of an international organisation "naming and shaming" its members.
The infringement procedure begins with a request for information (a "Letter of Formal Notice") to the MS concerned, which must be answered within a specified period, usually two months. If the Commission is not satisfied with the information and concludes that the MS in question is failing to fulfil its obligations under EU law, the Commission may then send a formal request to comply with EU law (a "Reasoned Opinion"), calling on the Member State to inform the Commission of the measures taken to comply within a specified period, usually two months. If a MS fails to ensure compliance with EU law, the Commission may then decide to refer the case to the Court of Justice.
The decision to open infringement proceedings against a Member State is taken by the Commission on the basis of an unbiased legal analysis conducted by the its services on the documents and information submitted by the parties and on any complaints.

How to boost European competitiveness

Three interesting and informative updates from the European Commission were published on 14 October: the Communication on "Industrial policy: Reinforcing competitiveness,"the yearly report on "Member States competitiveness performance and policies 2011" and the "European Competitiveness Report 2011." The joint message, as summarised in the press release, is that the European economy needs coherent and coordinated industrial policies from the Member States if it is to get back to a growth path. Whilst financial and fiscal stability are necessary preconditions for sustainable growth, they need to be complemented by the implementation of structural reforms and microeconomic policies enhancing the competitiveness of the EU economy and its long term growth potential. Drawing on the Communication and the two reports, a press Memo presents an abridged look at industrial competitiveness in EU Member States in the fields: innovative industry, sustainable industry, business environment and SME policy. It contains a brief update on the situation of each of the 27 member states. Among key areas of action, the importance of improving the regulatory environment of business (including efforts to reduce administrative burdens) and the need to further improve the Internal Market, are reaffirmed.

EESC advises on internal market

The opinions of the European Economic and Social Committee (EESC) are always a source of interesting information and comment as they frequently address BR issues (see this blog's EESC category).

Recently, the EESC has issued two opinions which aim to reduce the number of cross border difficulties experienced by European citizens and businesses. In the opinions, the EESC promotes the importance of a transparent, yet smoothly functioning system to instil confidence in citizens and businesses when dealing with cross border matters.

• Improving the single market for services: Services are the main driver of the EU economy and according to the Commission this sector accounts for around 70% of EU GDP. In recent years, there has been a marked shift to knowledge based industries. The opinion agrees that greater integration and a better functioning of service markets should enhance EU competitiveness. The EESC is positive about the “points of single contact” system, which facilitates easier access to country specific information in each Member State, but raises concerns about drawing conclusions from the screening too soon, and withouth taking account of the new treaty.
• Cross border tax problems: the opinion assesses the Commission’s plans to tackle the cross border tax problems that citizens and businesses face. The EESC recommends the establishment of one-stop shop services, whereby citizens can obtain information, pay taxes and receive the necessary documentation to be used across the whole EU. It also calls for a simplification of the administrative procedures applied to cross-border situations, to be undertaken on a bi-lateral and multi-lateral basis across Member States and the establishment of an independent Cross-Border Taxation Observatory with specific resources and functions clearly entrusted to it.

Consumer rights improved in EU law after much discussion

Last week the European Parliament adopted, after much discussion (see previous post), the text of a new directive on consumer rights which had been under discussion since 2008 (on the basis of Commission proposal (2008)614)). The text still needs to be finallly voted by the European Council (planned for September) and published in the official journal. To take effect, the new rules will need to be transposed into national law before 2013.
The Commission press release lists 10 areas where the rights of consumers have been improved. The changes focus on eliminating hidden charges, increasing price transparency when making online payments to internet merchant accounts. What is special about this directive from a BR point of view? The lengthy discussion has shown how difficult it is to agree on a European-wide set of standards, even when the case is clear that EU law is outdated (in this case it predated the digital revolution). The UK, Austria and other member states have criticised the initial draft as offering guarantees lower than those in force in their respective national legislations.
According to a 27 June Euractiv dossier (the best analysis online of the recent development), "Consumer groups are broadly satisfied with new consumer rights legislation in Europe, but SMEs fear the law will increase administrative burdens on small traders." The reform may lift one of the obstacles to enhanced cross-border online trade (the outdated EU legal framework) though business cite legislative differences between EU countries as their main reason for not selling across borders.

Re-regulation back on the agenda for trade contracts

We BR experts have been working largely on the assumption that there was too much regulation around, especially on business. We always remember however that BR does not mean deregulation, but more relevant and efficient norms. The economic crisis has highlighted the vulnerabillity of our economies to unchecked speculation, which may be promoted in the absence of appropriate regulation. Recents events in Greece, though more structural, also call for prompt action. The current trend towards more regulation on financial activities was illustrated with the European Commission making proposals at the March Council. Now the French president, current head of the G20, in a speech in Brussels on 14 June, argued that the "financialisation" of commodity markets and trades that are not backed up by real money could lead to a repeat of the recent economic crisis. He calls for developing and enforcing better regulations of trades in the commodities market, and the extension of the use of cash deposits to all derivative deals. The issue had been under scrutiny since last summer. The European Commission, by the voice of Commissioner Michel Barnier, backed Mr. Sarkozy's proposals of capping individual trade sizes. So did Farm Groups around the world, according to Associated Press.
Meanwhile, the European Parliament, reacting to the March European Council conclusions quoted above, has stated that "finance ministers have not done enough to improve economic governance." The EC has already formulated a compromise version of its 6 proposal package (21 June).
For the theoretical background, see "Regulation and Markets" by D. Struber (1989), and for updates in thinking, a conference will be organised in London on 6 July by City and Financial.

EU-wide standards: more controls on the economy?

Standards are in a complex relation with regulation in that they appear less unilateral, less legal binding form of constraint on economic operators, while achieving very similar policy goals. An earlier post pointed at the link, with stakeholders showing that they remain vigilant on the use of this tool to improve the performance of markets without creating undue new burdens.

The recent Single Market Act places new emphasis on this policy tool: "Boosting the free movement of services by facilitating the definition of services standards at European level" is one of the 12 "key actions."

On 1 June, the Commission approved a Communication on a strategic vision for European standards - COM(2011)311 and a related draft regulation. The EC webpage on standardisation policy gives a brief history since a 2004 communication, and sums up the news as follows:  "More Standards for Europe and faster: this is the main objective of a series of measures that the European Commission proposed on 1 June 2011. Standards are sets of voluntary technical and quality criteria for products, services and production processes. Nobody is obliged to use or apply them but they help businesses in working together which ultimately saves money for the consumer.

See also the official press release and a guide published by the EC In its communications, the EC stresses the link between standardisation and  better regulation policies.

An Euractiv article gives an overview of the topic in the light of this announcement, including the industry's concerns that  the expanded powers of the Commission may lead to a wave of new regulatory constraints.

There is no doubt that standards can be viewed as softer substitutes or "alternatives" to regulation, provided that their adoption process fully achieves the goals of smoother markets and geater economic competitiveness. (see also previous post on standardisation.)

The most important steps proposed by the Commission to strengthen the system of standard-setting in Europe are:

• The enhancement of its cooperation with the leading standardisation organisations in Europe (i.e. CEN, CENELEC and ETSI);
• The drafting of European standards with the help of organisations representing those most affected, or most concerned – consumers, small businesses (SMEs), environmental and social organisations;
• The recognition of Global ICT standards that will play a more prominent role in the EU;
• The increase of the number of European standards for services if there is a demand from business."

Smart regulation relevance re-affirmed (EU Council)

EU presidencies are influential in nudging agendas and conclusions of the European Council, though of course official texts represent the consensus. The press release (see section page 11 and text of conclusions) published yesterday (30 May 2011) following the Competitiveness Council puts smart regulation back right at the top of the agenda, from which it had seemed to decline in recent presidencies. Council recognises the success of better regulation and asks that MS "move up one notch" and "systematically apply smart regulation principles throughout the EU policy-making process."
The Council adopted conclusions on "smart regulation", underlining, among other elements, the continuous need of reducing administrative burdens for businesses to what is strictly necessary, in order to allow them to work and compete more effectively. Ministers also put emphasis on the need to establish mechanisms which would allow the Council to conduct impact assessments. In particular, the conclusions provide with orientations, addressed to the national governments, the European Parliament and the European Commission, for:
– improving the implementation and enforcement of existing EU legislation;
– ensuring high quality of new legislation through impact assessments, simplification and reduction of unnecessary administrative burdens, in particular for SMEs; and
– making EU law more clear, easily understandable and accessible to all citizens.
In addition, Member States backed the Presidency’s proposal on easing the financial reporting burden of micro-entities and adopted conclusions on 12 concrete actions of the Single Market Act, but could not reach an agreement on the creation of the European Private Company (see presidency press release).

Single Market Act to usher in new growth

The European Union Single Market Act (SMA) was signed on 13 April,  concluding a process launched in 2010 with the Monti report aimed at revitalising the European Internal Market, a vast space of free movement of goods, services, capital and people. The SMA offers a series of measures to boost the European economy and create jobs. The whole project can be said to be an implementation, on a continental scale, of the better regulation principles. Since 1992, the Single Market has brought tremendous econimic and social benefits. But making possible free movement requires deliberate action on amending national legislations and introducing simpler administrative procedures. The European market is still not fully integrated. Pieces of legislation are missing, and administrative obstacles and deficient enforcement leave the full potential of the Single Market unexploited. The SMA, which is based on 12 projects to "relaunch the Single Market", is supposed to open the doors to new, greener and more inclusive growth. The twelve instruments of growth, competitiveness and social progress range from worker mobility to SME finance and consumer protection, via digital content, taxation and trans-European networks. Their aim is to make life easier for everyone on the Single Market: businesses, citizens, consumers and workers (see IP/10/1390, EC press report.)

Improving the regulatory environment for business is specifically target as one of the 12 projects: companies are hoping that doing business in the Single Market will be made easier and that fewer resources will be lost on regulatory and administrative constraints. To promote such change, the Commission is proposing a simplification of the accounting Directives as regards financial reporting obligations, and a reduction of the administrative burden, especially for SMEs.

EC treads cautiously between regulation and market

The conclusions of the European Council of 24/25 March  can be seen as a balancing act between the two main conceptions as to the best way of drawing Europe out of its financial difficulties. This is illustrated by the two main outcomes mentioned in "chapeau" page 1:

- the package of measures to exit the crisis, including the Euro Plus Pact (close to the Franco-German plan) and six new legislative proposals on economic governance;

- "robust action at the EU level to stimulate growth by strengthening the Single Market, reducing the overall burden of regulation and promoting trade with third countries," which incorporates a significant UK input (see Cameron proposals). A target date for adopting the Single Market Act is set at end 2012 and the importance of fully implementing the Services Directive is emphasized. The goal of reducing overall administative burdens is re-stated, including by exempting micro-enterprises from certain future regulations.

PM Cameron advises Brussels on growth

On 31 March, the British Prime Minister David Cameron offered a blueprint for reforming Europe and drive growth across the continent in coming years. The new document officialises the positions made public last week during the European Council, which was primarily devoted to growth strategy. See Euractiv article. Experts may want to check the UK Government's new pamphlet Let's Choose Growth setting out why and how Europe should boost economic growth. It contains a warning that if current trends continue, by the middle of the century, leading EU nations could fall out of the world's top-10 most powerful economies. The proposals make the case for action on growth, deregulation and completing the single market. To secure sustainable growth Mr Cameron is calling for action to be taken to complete the Single Market, unlock the benefits of trade and reduce the costs of doing business (making it easier for all companies to start up, grow, invest and take on staff). This requires reducing the overall burden on business of EU regulation over the life of this Commission, ensuring that new burdens are offset by savings elsewhere and exempting small business from regulatory burdens. It costs €593 to set up a business in Brazil, €641 in India and €644 in the US, but it costs on average €2,285 to do so in Europe.

EU Consumer rights: a test for BR principles

An updated version of the EU’s Consumer Rights Directive was approved by the European Parliament on 24 March, but MEPs postponed adopting a final position on the new law to buy themselves more time to reach agreement with member states on the most controversial issues (and possibly secure Council approval at first reading). The reform proposal aims to update protection rules, especially for on-line commerce, which are currently spread across four separate directives and pre-date the digital revolution. It is supported by business because it could usher in a EU wide level playing field. Full harmonisation is however difficult as some MS already have stricter rules than the planned common regulations. And it has not been fully established that the new rules would overall reduce administrative burdens. For more, see excellent Euractiv dossier.

EU and ASEAN join forces on regional economic integration

At the close of a seminar on regional economic integration earlier this month, a joint communiqué from EU and ASEAN announced the official launch of revamped cooperation between the two organisations, in the ASEAN-EU Economic Integration Support Program (AEISP). This new instrument succeeds the Programme for Regional Integration Support (APRIS Phases I and II) and aims in particular to assist the establishment of the ASEAN single market and production base by 2015. APRIS Phase I and Phase II have been operating for the last eight years with EU grant support of €10 million. The new programme has expanded targets and can draw from a larger budget of $20.7 million.
These goals are to be sought via actions similar to those undertaken by the EU to build its Internal Market, which relies to a large extent on Better Regulation principles and results, including the simplification of customs procedures across borders, harmonization of administrative documents, standardization of technical requirements and the transition from governmental pre- approval system to a post-market surveillance.
The programme also requires improving dispute settlement mechanisms.

Council wants to perfect Internal Market for Services

At its 10 March meeting, the European Coucil (Competitiveness) adopted interesting conclusions "on a better functioning Single Market for services – mutual evaluation process of the Services Directive." This endorsement of recent Commission work on monitoring of the implementation of the Services Directive invites the Member States to cooperate with each other and the Commission in order to move towards a more integrated Single Market for Services. The Council is acting on the assumption that the relaunch of the Single Market (and specially its services dimension) can increase competitiveness and create smart and sustainable growth and jobs. For background, see Commission site on Mutual Evaluation.

Small Business Act review hits red tape

Yesterday (23 February) the European Commission published its long-awaited review of the Small Business Act, promising to do better to cut red tape, improve access to financing and try to harmonise tax systems among EU member countries (see press release for a summary). The Small Business Act has 10 guiding principles, including improving access to finance, drawing up bankruptcy rules to give entrepreneurs a second chance and upgrading skills. After much discussion of its contents (see excellent Euractiv dossier) the final report includes, inter alia:

• the promotion of the "only once" principle whereby public authorities and administrative bodies should refrain from requesting the same information, data, documents or certificates which have already been made available to them in the context of other procedures;
• a commitment to enhance electronic interoperability in the Internal Market, in particular delivering on the Single Market Act’s proposal for a decision by 2012 to ensure mutual recognition of e-identification and e-authentication across the EU and the revision in 2011 of the Directive on electronic signatures.
• Proposing an instrument of European Contract Law for SMEs that want to enter new markets.
• Setting up a uniform procedure to facilitate cross-border debt recovery.
• Speeding up and reducing the cost to start a business to a maximum of three days and €100.

 

 

Administrative cooperation for better governance (Internal Market)

Earlier this week (21/02/2011) the Commission issued a Communication (COM(2011)75) developing its future course of action for expanding and developing the Internal Market Information System ('IMI') in keeping with its promise made in the 27 October 2010 Communication "Towards a Single Market Act" (see earlier post). The idea is that the benefits of the single market will not materialise unless EU law is correctly applied and the rights it creates are upheld to allow a truly borderless single market to emerge. This requires administrative cooperation between MS, based on the exchange of information.
IMI was launched in February 2008 to support the revised Directive on the Recognition of Professional Qualifications (2005/36/EC) and since December 2009, MS are legally obliged to use IMI to fulfil the information exchange obligations of the Services Directive (2006/123/EC).
The new Communication reviews the strategic objectives of IMI, examines the actions needed to achieve them, and proposes criteria for determining which new functions could be added to IMI. With its practical emphasis on end-results provided to business and citizens, this component of the Single Market strategy is one of the most promising BR ventures underway.