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A New Strategy for the Single Market and Single Market Act

Some quite recent changes and transformations Europe has faced:

– Globalization and the emergence of new economic powers;

– The technological revolution, triggered in particular by Information and Communication Technology;

– The growing importance of services in the economy;

– Environmental challenges;

– The collapse of the Soviet block;

– Enlargement, from 10 to 27 Member States;

– Greater economic diversity linked to enlargement;

– Introduction of a single currency;

– Increase in migrations and in cultural diversity;

– Open rejection of further (or even existing) EU integration, through referenda in several Member States;

– Explicit clarification of the limits of acceptability, by one Member State, of further EU integration in the future (ruling of the German Federal Constitutional Court of July 2009);

– Lisbon Treaty,

have been the basis of and indicated in the Report to the President of the European Commission „A new strategy for the single market. At the service of Europe’s economy and society“ that was published on 9 May 2010. The Report has been worked out by Mario Monti, professor of the Università Commerciale L. Bocconi, and named also as „Monti Report“.

The Report is divided into five main Chapters:

  1. A market in search of a strategy.
  2. Building a stronger single market.
  3. Building consensus on a stronger single market.
  4. Delivering a strong single market.
  5. A political initiative to strengthen the single market (and EMU).

As for concepts, the Report uses the notion of single market, save quoting documents referring to the “internal market”. The Report explains why from „a conceptual and communication point of view, “single” seems more appropriate than “internal”“ – Firstly, “internal” refers to the domestic markets, rather than the EU-wide market. Secondly, “internal” may picture “fortress Europe”. Thirdly, the Report considers “single” more committing in the sense that particular goods or services within the EU are treated as “single”, rather than fragmented. (The official version, used in the Treaties and other documents after the Lisbon Treaty enetred into force, is “internal market”).

The importance of the Report is revealed in the beginning of it, where the single market is recognized as a „key strategic objective for Europe“, which should be „pursued with renewed political determination“. If, the Report says, one analyses the single market critically, one may distinguish between three challenges the internal market faces – first, little political and social support; second, uneven treatment of the various components of the internal market; third, the internal market was not treated as a priority policy area for quite a long time.

The Report identifies four clusters of Member States: continental social-market economy countries, Anglo-Saxon countries, Central and Eastern European countries, and Nordic countries. As unification of these strategies is important, the Report proposes a new strategy to avoid the risk of economic nationalism, but the Report also aims at new areas, and consensus building.

This strategy consists of three sets of initiatives:

1. Initiatives to build a stronger single market;

2. Initiatives to build consensus on a stronger single market;

3. Initiatives to deliver a stronger single market.

The initiatives are grouped in clusters of recommendations that concern:

– ensurance of better functioning of the single market in the perspective of citizens, consumers and SMEs;

– creation of a digital single market;

– exploitation of the potential of the single market to support green growth and Europe’s transition to a low-carbon, resource efficient economy;

– reaping the full benefits of the single market for goods;

– fully exploiting the potential of the single market for services;

– ensuring geographical labour mobility in the single market.

– establishing the “physical” infrastructure for the single market.

The initiatives deal with:

– the conciliation between economic freedoms in the single market and workers’ rights, following the Viking, Laval and other rulings of the CJEU;

– the place of social services within the single market;

– the integration of EU’s policy goals in public procurement policy;

– how to use tax coordination to safeguard national tax sovereignty as market integration proceeds;

– the balancing of competitiveness and cohesion within the single market through regional development policies;

– the potential for an active industrial policy based on sound competition and state aid policies;

– how to ensure that the single market remains open, but not disarmed, vis-à-vis competitors at a global level.

– ensuring light but effective regulation in the single market;

– reinforcing enforcement, by establishing a coherent system in which infringement actions, informal problem solving mechanisms and private enforcement form a seamless web of remedies against breaches of EU law.

Key recommendations for making the single market work for citizens, consumers and SMEs:

● Ensure the free circulation and recognition of official acts;

● Introduce a European Free Movement Card;

● Make progress in the mutual recognition of civil acts relating to international marriages and to successions and wills;

● Ensure easier cross-border debt recovery, including a wider use of the European Small Claim portal;

● Abolish double taxation of registration for cars;

● Adopt EU legislation on collective redress;

● Improve the transparency of bank fees, ensure the availability of standardised and comparable information for retail financial products and facilitate bank customer mobility;

● Speed up implementation of the Small Business Act;

● Adopt the Statute for a European Private Company.

Key recommendations for Europe’s digital single market:

Telecommunications services and infrastructures

● Review of the sector to prepare proposals for creating a seamless regulatory space for electronic communications, including proposals to reinforce EU level regulatory oversight, to introduce pan-European licensing and EU level frequency allocation and administration.

E-commerce

● Present proposals to end the fragmentation of EU consumer legislation and introduce in particular harmonised rules for delivery, warranty and dispute resolution.

● Present proposals to simplify the business environment for cross-border detail transactions, including VAT rules, the cross border management of recycling rules and of copyright levies on blank media and equipment.

Online digital Content

● proposals for an EU copyright law, including an EU framework for copyright clearance and management

● proposals for a legal framework for EU-wide online broadcasting.

Key recommendations for the single market and green growth: energy, climate change, environment:

● Establish new EU regulatory frameworks for the large scale deployment of renewable sources, smart metering, smart grids and transparent wholesale energy markets;

● Establish a single market for green products, by developing EU-wide standards for measuring and auditing carbon footprints and for energy efficient products, including trade certificates for renewable energy products;

● Step up targeted EU funding for energy infrastructure.

Key recommendations for the single market for goods: reaping the full benefits:

● Assess the effects of the 2008 package on the functioning of the internal market for goods and identify possible further steps;

● Review the EU standard setting system striking the right balance between EU and national levels;

● Adopt new measures to deal with remaining technical and administrative barriers which prevent the establishment of a single market for rail;

● Establish a single transport document and liability regime for multimodal transport;

● Adopt the EU patent and a single patent jurisdiction as a matter of urgency.

Key recommendations for the single market for services: the powerhouse of the European economy:

● Examine which initiatives are required regarding the services sectors that are not or not fully covered by the services directive and make any necessary proposals;

● Adopt the proposed cross-border health care directive and take supporting actions, in particular launch a benchmarking of the healthcare systems in the Member States.

Key recommendations for workers in the single market: old problems and new challenges:

● Coordinate social security systems for highly mobile individuals, and in particular for researchers;

● Introduce a 28th regime for supplementary pension rights for cross-border workers;

● Remove tax obstacles to cross-border work;

● Extend automatic recognition of qualifications;

● Strengthen the transparency and recognition of qualifications and skills, developing national qualifications systems and establishing the ESCT system;

● Strengthen the EURES system transforming it into a fully fledged platform on placement within the single market.

Key recommendations for the single market for capital and financial services:

● Make sure that the structure of financial supervision is such as not to lead to fragmentation of the single market;

● Explore the possibility of reinforcing financial integration through the issuance of E-bonds.

Key recommendations for the physical infrastructure of the single market: meeting the investment challenge:

● Facilitate the combination of public-private partnerships with the use of structural funds;

● Examine whether an ad hoc European regulatory framework would be needed to encourage long term investors’ focus on infrastructure projects;

● Provide maximum legal security as regards competition policy in the area of infrastructure investment and financing.

In Chapter 3, the Report refers to the judgments of the CJEU in the cases C-438/05, International Transport Workers’ Federation, Finnish Seamen’s Union v. Viking Line ABP, OÜ Viking Line Eesti, and C-341/05, Laval v. Svenska Byggnadsarbetareförbundet, Svenska Byggnadsarbetareförbundets avdelning 1, Byggettan and Svenska Elektrikerförbundet as to some underlying policy documents of the Report.

The inspired by the cases key recommendations are:

● Clarify the implementation of the Posting of Workers Directive and strengthen dissemination of information on the rights and obligations of workers and companies, administrative cooperation and sanctions in the framework of free movement of persons and cross-border provision of services;

● If measures are adopted to clarify the interpretation and application of the Posting of Workers Directive, introduce a provision to guarantee the right to strike modelled on Art. 2 of Council Regulation (EC) No 2679/98 and a mechanism for the informal solutions of labour disputes concerning the application of the directive.

Key recommendations for social services and the single market are:

● Further increase the flexibility of the State aid rules applicable to financial compensation;

● Review the procurement rules with a view to aligning them with the rules on compensation;

● Present a proposal, possibly on the basis of Article 14 TFEU, for a regulation ensuring that all citizens are entitled to a number of basic banking services;

● Examine the case for extending, possibly on the basis of Article 14 TFEU, universal service in electronic communications to the provision of broadband access; Strengthen rights of air passengers.

Key recommendations for harnessing public procurement for Europe’s policy goals:

● Re-think public procurement policy to make it simpler, more effective and less onerous for national and local authorities; Strengthen SMEs participation by applying the Small Business Act Code of Conduct;

● Clarify the rules applicable to “in-house” provision;

● Make public procurement work for innovation, green growth and social inclusion by imposing specific mandatory requirements.

Key recommendations for the tax dimension of the single market: working together to safeguard tax sovereignty:

● Further work on the elimination of tax barriers within the single market, modernising e-invoicing rules, updating rules on cross border relief, introducing a binding dispute settlement mechanism covering double taxation suffered by individuals and reviewing the savings directive;

● Work towards a common definition of the corporate tax bases and move forward with the work of the code of conduct group on business taxation;

● Reform VAT rules in a single market-friendly way;

● Develop the area of environmental taxation in the broader context of tax policy and their impact on growth and employment;

● Agree on the establishment, at the initiative of the Commission, of a Tax Policy Group chaired by the Commissioner in charge of taxation and composed of personal representatives of the Member States Finance Ministers as a forum for strategic and comprehensive discussion of tax policy issues.

Key recommendations for competitiveness and cohesion: the regional dimension of the single market:

● Evaluate the potential impact on EU regions of the relaunch of the single market;

● Introduce a conditionality clause in Structural Funds to reward the Member States most disciplined in transposing single market directives;

● Tighten up rules preventing the use of structural funds in support of company re-location.

Key recommendations for the single market and industrial policy:

● Review merger regulation abolishing the so called “two-thirds rule”;

● Develop a new approach to industrial policy which builds on a mutually reinforcing relation with single market and competition rules.

Key recommendations for the external dimension of the single market:

● Promote a pro-active market access agenda in the G20 and other multilateral fora, with a specific focus on subsidies;

● Press for the introduction in bilateral Foreign Trade Agreements of provisions on subsidies;

● Press for greater opening of public procurement markets, in particular in the BRICs.

Key recommendations for regulating the single market:

● Use regulations rather than directives when possible;

● Use the 28th regime as an ad hoc solution where appropriate.

Key recommendations for reinforcing enforcement:

● Set out a benchmark for the maximum average duration of infringement procedures, limiting to 6 months procedures for non notification and 12 months all other infringement procedures;

● Explore how to align the Commission infringement powers to those it has under competition policy;

● Amend the Procedural Regulation on State aid to modernise the procedure and strengthen the investigative powers of the Commission, bringing them in line with those in the fields of mergers and antitrust;

● Strengthen preventive action by shaping enforcement-friendly regulation based on impact assessment, introducing systematically correlation tables and stepping up technical assistance to national administrations;

● Create single market desks within Representation offices with the task of pre-screening conformity between single market legislation and national implementing rules and to liaise with national administrations responsible for implementation;

● Extend Mutual Evaluation Process to new legislative initiatives;

● Integrate the ex post evaluation of the implementation situation in a given sector into Market Monitoring analysis;

● Select every year one or more EU laws for screening by the EP through a process involving input from National Parliaments and the COSAC;

● Extend the EU Pilot scheme to all 27 Member States and step up the SOLVIT system ensuring EU co-funding and a clearer legal basis.

● Step up administrative cooperation by extending the IMI system to other areas of legislation

● In the long term, establish an EU network of alternative dispute resolution centres.

Private enforcement:

● Step up EU law training initiatives for judges and legal professionals in partnership with Member States;

● Adopt minimum standards on the right to compensation for damages.

Wider political background can be viewed at http://ec.europa.eu/internal_market/strategy/index_en.htm

Based on the strategy for the single market, A Single Market Act was adopted on 27 October 2010 as COM(2010) 608 final Additional link: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0608:FIN:EN:PDF



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