19 Implementation of the Internal Market
Strategy
| (25305)
5645/04
COM(04) 22
| Commission Communication: Report on the implementation of the Internal Market Strategy (2003-2006)
|
| Legal base | — |
| Document originated | 21 January 2004
|
| Deposited in Parliament | 29 January 2004
|
| Department | Trade and Industry
|
| Basis of consideration | EM of 23 February 2004
|
| Previous Committee Report | None
|
| To be presented to Council | Spring 2004 European Council
|
| Committee's assessment | Politically important
|
| Committee's decision | Cleared
|
Background
19.1 This is the first annual report on implementation of the
Internal Market Strategy (2003-2006) which was published in May
2003.[32] It forms part
of the 'Guidelines Package', alongside the Broad Economic Policy
Guidelines and the Employment Guidelines, which will be presented
as part of the Commission's Report to the Spring 2004 European
Council.
19.2 The main emphasis of the Strategy is the need
to strengthen the basics of the Internal Market to address areas
of weak performance, with a view to maximising the contribution
which an enlarged Internal Market could make to increasing the
EU's competitiveness, growth and prosperity, and to fulfilling
the Lisbon Agenda. Ten areas requiring action were identified:
- Facilitating the free movement
of goods;
- Integrating services markets;
- Ensuring high-quality network industries;
- Reducing the impact of tax obstacles;
- Expanding procurement opportunities;
- Improving conditions for business;
- Meeting the demographic challenge;
- Simplifying the regulatory environment;
- Enforcing the rules; and
- Providing more and better information.
Commission Communication
19.3 The report gives a short summary of progress
in each of these ten priority areas and provides details on individual
target actions, only 60% of which have been completed on time.
The Commission describes progress as generally disappointing,
though there have been some successes. In the implementation
scoreboard annexed, Denmark and Spain have the best performance
and Ireland made "giant strides" — more than halving
its transposition deficit since May 2003. Finland and the UK
are to be congratulated, though they should follow the examples
of Denmark and Spain and improve further. Portugal, Austria and
Italy have made an effort but Italy's deficit is still double
the EU 1.5% target. France, Germany, Luxembourg and Greece continue
to be among the worst performers. With the exception of Greece,
their deficits have got worse.
19.4 The Commission notes that there is not yet a
genuine internal market for services — 53.6% of the EU economy
is still not integrated. This fragmentation harms EU service
providers, with productivity gains between 1996 to 2000 of 0.6%
compared with 1.5% in the US over the same period. Given that
the report was published a little less than eight months after
the Strategy, it is perhaps not surprising that many of the key
messages have not changed. However, the Communication points
to clear signs that speedy progress needs to be made to remove
the remaining obstacles to trade within the European Union, and
to encourage investment. The report highlights the fact that
three of the key indicators, which track the level of market integration,
are beginning to point in the wrong direction:
- the value of manufacturing
trade inside the EU barely grew in 2001 and shrank in 2002;
- price convergence in the EU stalled, indicating
that the level of trade between Member States has slowed down;
and
- the EU is investing more in the rest of the world
than in the EU, although the difference has narrowed in the last
two years.
19.5 The report suggests that, as some of the downturn
in these indicators may be due to cyclical factors, it is too
early to draw firm conclusions.
19.6 A significant section of the report focuses
on the potential for increased trade from the Accession States,
and calls on them to heed the conclusions drawn up by the Commission
in its Monitoring Report on their state of readiness, and to take
immediate and decisive action to address the remaining weaknesses.[33]
The Commission emphasises that it is vital for foreign direct
investment, which accounts for a large part of the expansion of
their trade with the EU, to continue to flow in. Without such
investment these States will not be able to catch up with the
current Member States as their domestic savings are inadequate
to fill the gap. Increased capital flows will depend on full
integration into the Internal Market and implementation of the
rules on which it is based.
19.7 In order to meet the Lisbon targets, and to
strengthen the foundations of an enlarged EU, the Commission calls
for urgent action to be taken over the next 12 months on two fronts:
- Fresh efforts should be made
to adopt key legislative proposals which have run into delays,
including the Community Patent,[34]
the Directive on Enforcement of Intellectual Property Rights,[35]
the Directive on the Recognition of Professional Qualifications,[36]
and the Investment Services and Transparency Directives of the
Financial Services Action Plan; and
- The concept of 'better governance', as set out
in the Strategy, needs to be developed and implemented. This
includes Member States working together in partnership. A good
start has been made in helping each other to solve cross-border
problems through the SOLVIT network. This willingness to cooperate
needs to be extended to other tasks, such as improving the rate
and quality of transposition of legislation, and providing more
and better information to citizens and business. Problems could
be prevented through closer day-to-day cooperation between national
administrations.
19.8 The Commission seeks firm endorsement of the
report, and a commitment from the Council and the European Parliament
to meeting the deadlines.
The Government's view
19.9 The Minister of State for Industry and the
Regions, and Deputy Minister for Women and Equality, at the Department
of Trade and Industry (Jacqui Smith) says that the Government
believes that it is beneficial to the UK for the Commission to
play an active role in improving the operation of the Internal
Market. There are a number of weak areas which need to be addressed
and a strategy of this sort will assist in prioritising the key
issues, as well as making the Commission's plans more transparent.
The Minister comments that the UK's priorities, reflected in
the Strategy, include the Community patent and liberalising services.
It is encouraging, she says, that the Commission sees a strong
link between strengthening the Internal Market and the Lisbon
Agenda in improving competitiveness in the EU.
Conclusion
19.10 Without going into unnecessary detail on
why action to meet some targets has yet to be completed, this
succinct report from the Commission usefully highlights those
areas in which the Member States need to agree to make greater
efforts. The areas of particular weakness having been drawn to
its attention, it will be up to the Council to give the Commission
the strong endorsement which it seeks.
19.11 We now clear the document.
32 (24520) 9250/03; see HC 63-xxv (2002-03), para 12
(18 June 2003). Back
33
(25005) -; see HC 63-xxxvii (2002-03), para 17 (12 November 2003). Back
34
(24501) -; see HC 63-xxxvii (2002-03), para 16 (12 November 2003). Back
35
(24313) 6777/ 03; see HC 63-xxii (2002-03), para 6 (21 May 2003)
and (25394) 6376/04; see para 15 above. Back
36
(23345) 7239/02; see HC 152-xxxv (2001-02), para 10 (3 July 2002). Back
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