Thursday, April 14, 2011

The tricky path to a real EU Single Market, especially for Services

The Single Market Act was re-launched on April 13 via the presentation of the Commission Communication (COM(2011) 206/4) "Single Market Act: Twelve levers to boost growth and strengthen confidence "Working together to create new growth"" {SEC(2011) 467}

The 12 "levels" are:

1. Access to finance for SMEs
2. Mobility for citizens
3. Intellectual property rights
4. Consumer empowerment
5. Services
6. Networks
7. The digital single market
8. Social entrepreneurship
9. Taxation
10. Social cohesion
11. Business environment
12. Public procurement


For my part, for now, I will focus on the Services "level" where I have some key concerns partly because of the potential for protectionism (prompted by the so-called "Polish Plumber" issue) but also because this effort should not lead to more red tape or regs for more service related activities and professions (eg the idea of "professional ID cards" has been discussed)!

In Services, the "Key action" proposed by the European Commission is:

"Revision of the legislation on the European standardisation system, to extend it to services and make standardisation procedures more effective, efficient and inclusive"

So extension of the European stnadardisationn system to Services? This by itself raises some red flags for potential protectionism and unnecessary red tape!

The Commission claims that "Standardisation is a primary tool for the free movement of goods whilst ensuring product interoperability, safety and quality. It is also increasingly used in the services sector, although mainly at national level. This can hinder the integration of the single market for services."

Indeed, but many pitfalls exist that can make the situation worse!

The Commission points out that "In order to avoid the emergence of new barriers and to facilitate the cross-border provision of services, particularly business-to-business services, such as logistics or facility management services, services standardisation should be developed at European level, taking full account of market needs."

If that means that EU level standardisation will be put in place instead of national ones, where these exist, that sounds good. But what if an activity is standardised in eg 10 states and not stardardised in 17? Should there be EU standardisation or should those 10 MS be asked toi remove those standards unless they prove their reason for existing to the rest 17? It can get messy!

The Commission adds that "This will be a major objective of the review of the European standardisation system" and that "Another major objective will be to establish a more effective, efficient and inclusive system. It should be possible for the standardisation system to enable standards to be adopted rapidly and to be adapted to new technologies (not least in the area of information and communication technologies), to enable SMEs and other interested parties to become more extensively involved and to ensure that standards remain accessible to all interested users."

I reserve comment on the above.

The Commission also stresses that: "To create a Single Market in services, the immediate priority is the full and complete implementation of the Services Directive in all Member States, including the establishment of Points of Single Contact."
I think that MS were supposed to transpose the directive already.

Note the following:
"Beyond the implementation of the Directive, and in accordance with the European Council Conclusions of 24/25 March 2011, the Commission – together with the Member States – will carry out "performance checks" aimed at closer scrutiny of the practical functioning of the EU regulatory framework applicable to certain growth sectors such as business services, construction and tourism."

Business services? I wonder why? We shall see!

The Commission adds that it will "carry out further assessments on reserved activities, requirements as regards capital ownership and legal form, and insurance obligations, all of which are persistent obstacles to better integration of the markets in services."

Insurance obligations? I wonder which types of services the Commission has in mind!
It also adds: "On the basis of .the outcome of these various initiatives, the Commission will decide in 2012 on the subsequent steps."


The Commission also says that "particular attention should also be devoted to the retail and wholesalesectors on account of their important contribution to growth and job creation. An initiative will be launched to combat unfair business-to-business commercial practices, in order to identify the nature and scale of the problems associated with unfair commercial practices between professional operators throughout the supply chain, list current regulations within the Member States, to assess their implementation and, finally, identify the various possible options."

I reserve comment, for now, on the above as well!

The European Commission argues that "the goal will be to put an end to unfair practices which jeopardise the viability of businesses and stimulate the competitiveness of the various operators in the supply chains in the context of a fairer and more effective single market in the retail and wholesale sectors, while at the same time meeting consumers' and producers' expectations with regard to competitive prices. Given the importance of business services, the Commission will set up a High-Level Group to study the shortcomings of this particular market."


The Commission also notes that "without prejudice to the recognition of qualifications, the question of how to safeguard the quality of education provided in the context of the freedom to provide services, given the increasing use of franchising in education, will need to be examined"

Certainly the issue of recognition of qualifications is important by the very nature of certain activities, eg doctors, nurses, engineers, but it is important that this creation of a single market for services and professions that provide "services" does not provide regulations and red tape for other professions than those required at national levels, assuming of course that the list of professions that require a "permit" is the same in all 27! Which is probably not the case! Thus attention vis-a-vis protectionist efforts is warranted!

My final point (for now): All this may/is fine, but IMO at the end of the day the best (and cheapest?) way to get a real EU single market is via EU political union.

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