1 European Semester: Annual Growth
| (35534)
16171/13
COM(13) 785
| Commission Report: A single market for growth and jobs: an analysis of progress made and remaining obstacles in the Member States — contribution to the Annual Growth Survey 2014
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| Legal base | —
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| Document originated | 13 November 2013
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| Deposited in Parliament | 20 November 2013
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| Department | Business, Innovation and Skills
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| Basis of consideration | EM of 11 December 2013
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| Previous Committee Report | None
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| Discussion in Council | Economic and Financial Affairs; Employment, Social Policy, Health and Consumer Affairs; Competitiveness; Environment; Education; Youth; Culture and Sport; Justice and Home Affairs and General Affairs Councils before the European Council in March 2014
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| Committee's assessment | Politically important
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| Committee's decision | For debate in European Committee B, together with the 2014 Annual Growth Survey, draft Joint Employment Report and Alert Report Mechanism
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Background
1.1 In March 2010 the Commission proposed a "Europe 2020
Strategy", to follow on from the Lisbon Strategy. This strategy
is aimed at promoting smart, sustainable and inclusive economic
growth. It was endorsed by the March 2010 European Council. During
the latter half of 2010 the Council adopted, in the context of
the Europe 2020 Strategy, broad guidelines for the economic policies
of the Member States and the EU and guidelines for the employment
policies of the Member States, together the "Europe 2020
integrated guidelines".
1.2 On the basis of two Commission Communications,
Reinforcing economic policy coordination and Enhancing
economic policy coordination for stability, growth and jobs: tools
for stronger EU economic governance, and of the Van Rompuy
Task Force report, Strengthening economic governance in the
EU, the June, September and October 2010 European Councils
considered and endorsed measures to increase coordination of EU
economic governance, including strengthening the Stability and
Growth Pact and introducing a "European Semester".
1.3 The European Semester is an EU-level framework
for coordinating and assessing Member States' structural reforms
and fiscal/budgetary policy and for monitoring and addressing
macroeconomic imbalances. It attempts to exploit the synergies
between these policy areas by aligning their reporting cycles,
which would tie together consideration of National Reform Programmes
(reports on progress and plans on structural reforms, under the
Europe 2020 Strategy) and Stability and Convergence Programmes
(reports on fiscal policy, under the Stability and Growth Pact).
1.4 The European Semester cycle begins with an
Annual Growth Survey by the Commission, followed by a series of
overarching and country specific documents from the Commission
and culminating in examination of the overall and country-specific
situations by the European Council. We reported on the 2014 Annual
Growth Survey last week, recommending it, together with the 2014
draft Joint Employment Report, for debate in European Committee
B.[1]
1.5 An element of the European Semester process
is the Macroeconomic Imbalances Procedure (MIP). The MIP is a
mechanism designed to identify and, if necessary, correct harmful
macroeconomic imbalances across the EU, which were a key cause
of the current sovereign debt crisis. The first stage of the MIP
is publication by the Commission of an annual Alert Mechanism
Report. Last week we reported the Alert Mechanism Report
for the 2014 cycle, recommending it also for debate with the Annual
Growth Survey.[2]
The document
1.6 The 2014 Annual Growth Survey is supplemented
by this Commission Report analysing barriers and obstacles within
the single market and how it functions within Member States. After
some general observations on implementation and enforcement of
the single market, the Commission considers five areas: services
markets, financial services, energy markets, transport markets
and digital markets. For each of these areas, the Commission outlines
the level of integration and some barriers to integration. It
then invites Member States to focus on particular areas to improve
integration.
Single Market
1.7 The Commission notes that analysis shows
a broad improvement in terms of transposition, but that the energy
sector remains a problem with many examples of non-transposition
by Member States, which have failed to transpose the four Directives
concerned. The Commission also notes the continuing problem of
lengthy duration of infringement procedures.
Services
1.8 The Commission suggests Member States', priorities
should be:
- adopting a more ambitious approach
towards the implementation of the Services Directive by systematically
screening regulatory frameworks with a view to assessing the necessity
and proportionality of the remaining obstacles;
- taking due account of single market principles
when adopting national rules impacting the provision of services
and establishment;
- simplifying legislation in the services sector
to achieve administrative simplification for businesses;
- improving the functioning of the Points of Single
Contact;
- reviewing restrictions on regulated professions;
- eliminating unnecessary and disproportionate
barriers and economic needs tests;
- increasing transparency of price differences
and consumer rights;
- setting up National Contact Points for patients
seeking healthcare abroad; and
- reducing complexity in public procurement.
Financial Services
1.9 In terms of financial services, the Commission
recommends that the areas on which Member States should focus
include:
- ensuring new rules on capital
requirements for banks are implemented by 1 January 2014;
- making arrangements for the Asset Quality Review,
the balance sheet assessments and the stress tests for banks;
- compliance with the cooperation requirements
in banking legislation;
- finalising the implementation of the Directive
on Alternative Investment Fund Managers;
- ensuring all market participants complete migration
to the Single European Payment Area before 1 February 2014;
- encouraging and supporting SME access to finance,
by developing alternatives to bank financing including crowd funding
and venture capital;
- improving the quality of SME credit assessments
and facilitating cross-border access to company information, by
timely transposition of the Directive on the interconnection of
central, commercial and companies' registers; and
- improving the financing flows within the supply
chain and combating payment delays.
Energy Markets
1.10 The Commission expresses concern about progress
towards completing the single energy market. In particular, it
highlights issues relating to the transposition of the Third Energy
Package in some Member States, a need for investment in infrastructure
across Europe, concerns on market concentration in some Member
States and it calls for the phase out of retail price regulation
and for continued investment in renewable energy capacity.
Transport Markets
1.11 The Commission encourages Member States
to use the Trans-European Transport Network (TEN-T) to develop
and improve cross-border connections and remove bottlenecks, noting
the priority for the development to be the TEN-T Core Network,
with Core Network Corridors proposed as an implementing tool,
particularly for co-ordinating cross-border projects. The Commission
suggests that Member States should:
- for rail, focus on ensuring
timely transposition of the transport acquis, open domestic
rail passenger services to competition and ensure that the institutional
set-up guarantees the independence of the infrastructure manager,
in order to allow effective competition in railway markets ensuring
and guaranteeing equal access to infrastructure;
- for shipping, remove red tape in ports, easing
customs formalities for intra-EU shipping and easing customs formalities
for ships that dock in third country ports;
- for aviation, accelerate implementation of the
Single European Sky to improve safety, capacity, efficiency and
the environmental impact of aviation, with the Single European
Sky defragmenting the Air Traffic Management network, through
implementation of Functional Air Blocks; and
- for road, review any remaining national restrictions
to access to domestic road haulage and road passenger markets,
with the view to ensuring their full compatibility with existing
EU legislation, which should increase the freedom for foreign
road hauliers and passenger transport operators to carry out certain
cabotage operations and to establish in any Member State.
Digital Markets
1.12 The Commission suggests Member States should
focus on:
- ensuring the proper functioning
of the electronic communications markets by reinforcing their
national regulatory authorities and by implementing regulation
that supports a competitive deployment of high speed broadband;
- completing the assignment of the 800 MHz frequency
bands as soon as possible and bring the radio spectrum available
for wireless broadband to a total amount of at least 1200 MHz
and remove barriers to the efficient deployment and use of wireless
broadband networks;
- timely implementation of relevant legislation,
from e-commerce, as the legislative centrepiece for the provision
of on-line services, to taxation, from parcel delivery to payments,
from consumer protection legislation such as the Consumer Rights
Directive to dispute resolution mechanisms such as Alternative
Dispute Resolution/Online Dispute Resolution legislation;
- supporting the use of ICT by improving access
to financing connectivity and usage for SMEs;
- adopting a comprehensive and up-to-date cyber-security
strategy;
- increasing the availability of user-friendly
on-line public services, making e-procurement interoperable and
rolling it out more widely across the various levels of administration
and promoting more frequent use of e-invoicing; and
- without prejudicing the quality of granted patents
and trademarks, considering possible reductions of costs and average
delays for registering national patents and trademarks; and
- ensuring specialised intellectual property chambers
are in place and have the necessary resources.
The Government's view
1.13 The Minister of State, Department for Business,
Innovation and Skills (Lord Livingston), first comments generally,
in relation to the single market, that:
- the Commission's focus on transposition
masks more fundamental problems ¯
implementation and enforcement;
- often, Directives which have been properly transposed
are not properly implemented on the ground, which means businesses
still face the same problems, but there is no downward pressure
from the Commission to address this;
- that said, there has been an increase in infringement
proceedings, but the Commission failed to meet its own targets
for the length of proceedings;
- this is important for business because when a
complaint is made, the time taken to resolve it has adverse consequences;
- responsibility for this to some extent lies with
Member States and the Commission, but it also indicates the ongoing
issue with Court of Justice capacity; and
- given that Member States are encouraging the
Commission to take more action, this is likely to get worse and
will need to be addressed in a holistic solution.
Services
1.14 The Minister says that:
- the Government can support
the vast majority of the conclusions in the research, particularly
as the UK has been at the forefront of calling for a more ambitious
approach towards implementation of the Services Directive;
- this suggests that Member States fully assess
their requirements for necessity and proportionality;
- the Government has been calling for this for
three years and it has concluded that without the threat of infraction,
it is very unlikely Member States will do this;
- so the only answer is for more active enforcement
or the Commission carrying out the proportionality assessment
¯
this assessment falls short of that and consequently, adds nothing
to the debate; and
- the Government can broadly support the general
plea to improve the functioning Services Directive Points of Single
Contact, but the language used in the section covering the screening
process for regulated professions is disappointingly weak by only
inviting Member States to explore the possibility of alternative
or less restrictive mechanisms, which is at odds with the analysis
of the problem.
1.15 The Minister notes that the Commission
in the Report, take the opportunity to advertise and talk up some
of the initiatives it already has in train — commenting
that some of these will have minimal affect on growth (for example,
contact points to help patients seeking healthcare abroad), others
are supportive of better regulation efforts (in simplifying public
procurement procedures).
Financial Services
1.16 The Minister says that:
- the Government welcomes the
policy recommendations outlined in the Report and is working with
the Commission to ensure that UK objectives are met in the individual
areas;
- in particular it encourages the Asset Quality
Review to be credible so as to create market confidence in the
European Central Bank supervisory mechanism; and
- furthermore, the Government looks forward to
seeing the Commission's proposals to encourage SME access to finance.
Energy Markets
1.17 The Minister says that:
- the Government strongly supports
the aim of completing the internal energy market by 2014, as reiterated
by the Council in May;
- to this end, it broadly supports the priorities
identified by the Commission and has already made significant
progress on these. For instance, the Third Energy Package has
been fully transposed and effectively implemented in the UK;
- the UK has some of the most liberalised and competitive
energy markets in the EU; and
- the Government has put in place progressive policies
to protect the rights of consumers.
Transport Markets
1.18 The Minister first comments that:
- it is important to note that
legislation creating the single market for transport services
has certainly delivered some benefits for the UK and the EU as
a whole over the past 20 years;
- the Government believes that the transport sector
is a key area for growth and competitiveness;
- while it believes that there are specific areas
of the transport market where progression is possible there is
a need, however, to remain cautious to ensure that proposals in
this area are justified, proportionate and give due regard to
costs and benefits; and
- the Government would therefore only encourage
the maintenance and effective enforcement of single market rules
in the transport sector where this would genuinely deliver added
value and economic growth.
1.19 Then, on rail, the Minister says that:
- the Government supports further
market opening in the domestic rail passenger market;
- the Fourth Railway Package has the potential
to reduce costs for passengers and operating subsidies for governments
and the Government will support efforts to further open the domestic
rail market within the EU; and
- in developing this package, it must ensure, however,
that there is sufficient flexibility so that EU action is compatible
with domestic plans for reform and that proposals on the governance
of infrastructure management reduce burdens on businesses and
do not prevent infrastructure and train operators from working
together.
1.20 In relation to shipping the Minister says
that:
- the Government supports action
to remove duplication in administrative and customs processes
and the 'Blue Belt' Package is an essential part of this;
- there is a very competitive transport market
in the UK and the Government should support improving the competitiveness
of ports across the EU;
- enhancing the efficiency and quality of port
services should be the EU's overarching objective and the Government
believes that a free market with vigorous competition between
ports is the best way to deliver this with minimal recourse to
public expenditure; and
- it would not support a prescriptive EU approach
to the provision of services within ports as it believes that
ports themselves are best placed to determine how to provide services
that reflect the nature and location of their work.
1.21 Turning to aviation the Minister says that:
- the Government supports the
Commission in its efforts to tackle the fragmentation of European
airspace;
- it believes that greater coordination of the
European air traffic network and the safe introduction of new
technologies is the best way to deliver a safe, sustainable, cost
effective and operationally-efficient network;
- the Government fully supports the objectives
of the Single European Sky initiative;
- by working together across Europe it can help
to deal with some of the biggest problems facing the aviation
industry, governments and air passengers today ¯
delays, cost and environmental impact;
- the UK has already successfully implemented many
of the key elements of the Single European Sky, such as the separation
of regulation from service provision and the establishment of
a Functional Airspace Block with Ireland;
- the Government believes that greater coordination
of the European air traffic network and introduction of new technologies
under a single safety umbrella is the best way to deliver a safe,
sustainable and efficient network;
- it is considering the recently published legislative
proposals on accelerating the implementation of the Single European
Sky, referred to as Single European Sky II+ (Two Plus), but it
is clear that some elements would need further development before
implementation could be achieved;
- other Member States have even greater concerns
than the UK and it is uncertain how and at what speed these proposals
will be progressed; but
- either way the Government stands ready to provide
the necessary technical experts to contribute to progress on the
Single European Sky.
Digital Markets.
1.22 The Minister says that:
- the Government supports the
Commission's priority of ensuring a proper functioning and competitive
electronic communications market;
- completion of the telecoms, and wider, single
markets could generate much needed economic growth and jobs for
EU citizens and ensure that the EU retains its global competitive
edge;
- the Government also supports, therefore, the
objectives of the Commission's Telecoms Single Market package
published on 11 September, especially those proposals within it
that empower consumers, tackle unexpectedly high bills, increase
transparency in contracts, agree reduction of the differential
between domestic and roaming mobile rates and accelerate the roll-out
of new technologies across the EU;
- the first two objectives also match the recently
agreed UK Telecoms Consumer Action Plan that includes action by
industry on transparency, contracts, and reducing EU roaming charges;
- the Government's broadband scheme also mirrors
the Commission's call for deployment of high speed broadband using
targeted public support, including the use of EU Structural
Funds for broadband rollout;
- parts of the UK are already utilising such funds
to help support broadband rollout, especially in rural areas,
for example, North Cornwall;
- the Government supports the Commission's priority
to complete the digital single market and boost cross-border e-commerce;
- to deliver the full benefits of a digital single
market, action at EU level should include addressing the digital
divide by ensuring all EU citizens have access to online services
using the latest technology, ensuring competitive provision of
cutting-edge communications services through fixed and mobile
networks, opening up choice for consumers by making it simple,
cheap and secure to buy goods and services online, providing new
opportunities for businesses to engage in e-commerce across the
EU, improving the portability of digital goods and services and
promoting research and innovation into the digital technologies
and services of the future;
- in relation to one of the Commission's key priorities,
for Member States to adopt a comprehensive and up-to-date cyber-security
strategy, whilst the Government agrees with the aim, and already
itself has one in place, this is a provision included in the on-going
negotiations on the Network and Information Security Directive
and it would not wish to prejudge any outcome of those discussions;
- in relation to the Commission's prioritising
speeding up the registration of patents and trademarks, this year
the UK Intellectual Property Office introduced its e-filing system
for trade mark applications;
- currently, UK trade mark applications are examined
within ten to 15 working days;
- proposals from the Commission, currently under
negotiation, include a provision for the introduction of one class
one fee in Member States;
- the UK already has a specialist intellectual
property court in place ¯
the Intellectual Property Enterprise Court (formerly known as
the Patents County Court), which is part of the Chancery Division
of the High Court;
- the Government welcomes the Commission's recognition
of the need for the reinforcement of the EU's 'intellectual property
infrastructure';
- effective protection of intellectual property
rights is essential in today's knowledge society, where competitiveness
relies essentially on creativity and innovation and effective
protection includes access to justice at a fair cost;
- the Government has recently concluded a package
of sweeping court reforms to support businesses to protect their
intellectual property and save them time and money;
- the key changes include introduction of a scale
of recoverable costs, capped at £50,000, a time limit on
case hearings of one-two days to reduce costs and the creation
of Small Claims Track for copyright, trade mark and unregistered
design cases under a value of £10,000; and
- the UK regime allows rights holders to protect
their intellectual property rights effectively and has helped
contribute to the UK being listed as top in the Taylor Wessing
Global Intellectual Property Index report, published on 12 November.
Conclusion
As we have already noted, we have recommended the
2014 Annual Growth Survey, together with other documents, for
debate in European Committee B, to take place before various functional
Councils consider the documents in preparation for the March 2014
European Council. This document has been produced as a "Contribution
to the Annual Growth Survey 2014" and we recommend that it
too be included in the European Committee B debate.
1 See (35532) 15803/13 (35535) 16348/13: HC 83-xxiv
(2013-14), chapter 3 (11 December 2013). Back
2
See (35533) 15808/13: HC 83-xxiv (2013-14), chapter 4 (11 December
2013). Back
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