Firms attack single market action plan

Date: 09/12/1999

By Renée Cordes

WHEN they meet in Helsinki this weekend, EU leaders will give their blessing to the European Commission's ambitious strategy for filling the gaps in the Union's internal market over the next five years.

The blueprint for achieving a well-functioning single market centres on four over-riding objectives: improving citizens' quality of life; enhancing the efficiency of the EU's product and capital markets; improving the business environment; and exploiting the achievements of the internal market to date in a changing world.

While these may seem, at first glance, to be relatively simple goals for a five-year action plan, the Commission's strategy paper also includes a comprehensive list of short-term targets to be met over the next 18 months.

Before the action plan has even been formally launched, European business lobby groups are urging the Commission to whittle down the list and concentrate most of its attention on a few key problem areas.

"We think it is very good to have an action plan, but we stress the need for a focus," said Wytze Russchen, spokesman for the European employers' organisation UNICE. "If you start with everything at the same time, it is difficult to say where you end up. If you start with concrete priorities, you can be more successful."

The Commission's strategy envisages getting agreement within the next six months on several highly-controversial pieces of proposed legislation, including the planned EU-wide savings tax, measures to boost the use of renewable energy, postal services liberalisation, moves to open up public procurement and four proposals to amend existing EU telecoms legislation - and this is just the tip of the iceberg.

The plan also lays down a number of non-legislative goals for the next few months including the implementation of existing policy initiatives such as the common rules governing the internal electricity and gas markets; the elimination of bilateral 'open skies' aviation accords between individual Union governments and third countries; and a new Commission report on counterfeighting.

The plan due to be endorsed by EU heads of state and government at their two-day summit in Helsinki, which begins tomorrow (10 December), identifies nearly 100 initial 'target actions' to be completed over the next 18 months. Of these, nearly a third (30%) are new initiatives.

"In some instances, the onus will be on the Commission to perform; in others, the member states," Internal Market Commissioner Frits Bolkestein said recently. "But I want to ensure that all the target actions are specific, concrete and feasible within certain time frames."

But industry is worried that many of the proposals contained in the action plan, which has already been welcomed by EU internal market ministers, may be just the opposite.

When it carries out its first evaluation of the action plan in April 2000, the Commission has pledged to take into account the views of industry and citizens in assessing the programme's success. But many business groups are already coming forward with their own strategies for erasing what they see as the most difficult obstacles to cross-border business.

UNICE is, for example, encouraging the Commission to concentrate on four narrowly-defined priorities: establishing a Community-wide patent; getting agreement on a proposed statute which would allow companies (specially small and medium-sized firms) to set up as EU-wide firms; the liberalisation of financial services; and the creation of a more business-friendly value added tax system for the EU.

The organisation is also urging Bolkestein to set a "realistic" deadline of 2002 for completing the single market.

Other groups have called on Union policy-makers to be more vigilant in ensuring that legislation which has already been agreed in Brussels is transposed onto national statute books and implemented quickly and fully before the Commission draws up a new wish list.

"I think there has been a need to revisit the internal market," said Alastair Tempest, director-general of the Federation of European Direct Marketing. (FEDMA). "Clearly a lot of directives have come out over the last decade and now they need to be assessed as to whether they work."

FEDMA is worried about the Commission's increasingly frequent practice of covering the same sector in several different legislative proposals. Tempest points out, for example, that there is a significant overlap between proposals on distance selling, data protection, telecoms and electronic commerce - all of which give consumers the right to opt out of certain types of 'commercial communications'.

"You have got four different directives, with a slight difference in each," he said. "This creates legal uncertainty. It is the sort of thing that we would resist very strongly."

Small and medium-sized enterprises (SMEs) are equally concerned, if not more so than their bigger rivals, about outstanding barriers to cross-border trade.

"Our businesses are pretty annoyed that so much new legislation is coming before there has been adequate implementation by the member states," said Garry Parker, spokesman for the SMEs' lobby group UEAPME.

He added that small firms were especially concerned about the lack of acceptance of mutual recognition for product standards and certification in different member states and the lack of a well-functioning single banking market. "Before we are faced with anything new, we want to make sure that what is already there is working," he insisted.

There are, however, some grounds for optimism. One fifth of the business executives surveyed by the Commission in a recent poll said some obstacles to the single market had disappeared in the last two years, although just over a quarter (27%) said the situation had not changed.

A lack of harmonised technical standards for goods and services, problems with VAT obligations, state aid which favours competitors and restrictions to market access such as licenses or exclusive distribution networks were among the most significant barriers identified by the survey.

Everyone - including the Commission - agrees that to make the single market a reality, the EU executive must get tougher on individual member states which fail to put into practice legislation designed to ensure the free movement of goods and services.

"We do not want to create paper tigers; we want to create realities," said one Commission official. "A few hard nuts have been cracked, but the toughest ones will have to be cracked at the last moment."

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