Examination of Witnesses (Questions 272
- 279)
MONDAY 23 JULY 2007
Mr Carlos Almaraz and Mr Vincent McGovern
Chairman: A very good afternoon to you.
Thank you very much for coming. We will introduce ourselves to
begin with and then explain very briefly the timetable of our
inquiry. Then perhaps you would introduce yourselves and make
any general comments and we will open up to questions. If I can
ask my colleagues to introduce themselves, starting with Lord
St John.
Lord St John of Bletso: Anthony St John,
Crossbench member of the House of Lords.
Lord Powell of Bayswater: Charles Powell,
Crossbench member of the House of Lords.
Baroness Eccles of Moulton: Diana Eccles,
Conservative member of the House of Lords.
Chairman: Roger Freeman, the Chairman.
Lord Haskel: Simon Haskel, Labour member
of the House of Lords.
Lord Whitty: Larry Whitty, Labour member
of the House of Lords.
Chairman: We commenced our inquiry into
the future of the Single Market timed to coincide with publishing
our report after the Commission has produced its review and, therefore,
this is our first visit to Brussels on this inquiry. We plan to
come back in November after the Commission produces its report
and hopefully in time for serious consideration by not only the
European Parliament but by ministers. Today we have talked to
Commission representatives who have brought us up-to-date as to
where they are. You might be interested to know that estimates
of publication range from late October to mid-November, a pretty
wide range. I think the Competitiveness Council is slated for
22 November or thereabouts, and then you have the December Council
Meeting and then the Spring Council. That is the sort of timeframe.
We are working on a review of the market as a whole, where it
has got to, where it has got to over the last decades and where
it should be going. We appreciate that it does not have finite
limits to it, it is constantly changing as economies change and
as society's expectations change. We have been looking at implementation,
effectiveness and scope in three particular areas as exemplars.
One is energy, the other is telecommunications, that is fixed
telecommunications in reality, and the last one is financial services,
and that principally means retail rather than wholesale. You will
appreciate, although I am sure you are well aware of the scope
of our inquiry, we have very general questions that might then
lead into something more specific, but if it is outside your field
of interest or competence do please say. I am going to ask my
colleague, Lord Haskel, to comment in terms of consumers, or whatever
you wish to ask.
Lord Haskel: The purpose of our work
is to see whether the concept of the Single Market has reached
a point where we need a new vision, whether it has reached a point
where we take for granted the fact that we have a Single Market
and the benefits that brings, and to achieve further implementation
of the Single Market philosophy we need a whole new vision. We
wondered what you felt had been the benefits from BusinessEurope's
point of view emanating from the Single Market and what you thought
was necessary now to move on and move on further.
Q272 Chairman: Perhaps you
could say a bit about your organisation and yourselves and then
run on to answer the question.
Mr Almaraz: Okay. Thank you very much for inviting
us today, we are very pleased to be here to speak about the internal
market which for European companies is one of the main elements
of the European project. My name is Carlos Almaraz and I am from
Spain. I am a lawyer in training, I have been working in BusinessEurope
for seven years from the beginning on internal market issues,
first on consumer policy and now I am working on general issues
in the internal market co-ordinating the work that we do and trying
to put together general messages on the internal market that are
coherent and horizontally relevant. BusinessEurope is the Confederation
of European Business. We represent 39 national members covering
33 countries on the European Continent. We have all the members
of the European Union who are full members of our organisation
but we also have members from other countries which are not yet
EU members, some of them are candidates and others are just on
the European Continent. Our main mission is to make sure that
we have a business friendly Europe so that we can contribute to
growth and jobs in Europe and make European wellbeing a sustainable
asset in the European Union. One of the main tasks that we perform
at European level is social dialogue. We are considered as social
partners by the European Treaty, so we negotiate and discuss social
issues with ETUC, who I understand you will meet later, and in
the rest we cover a very full range of issues: international affairs,
WTO, all internal market issues, environmental issues, industrial
issues and economic issues. It is quite a big range of issues
that we follow.
Q273 Lord Powell of Bayswater:
Just out of interest, how do you relate to UNICE and to the European
Union Chambers of Commerce?
Mr Almaraz: UNICE was our former name.
Q274 Lord Powell of Bayswater:
You just changed the name?
Mr Almaraz: We changed it in January and for
us it is so assimilated we tend to forget. We changed in January.
We had been called UNICE for almost 50 years and it was an important
decision to become BusinessEurope, something more telling as a
name.
Q275 Lord Powell of Bayswater:
Much better.
Mr Almaraz: One of our policies is to maintain
a good relationship with the main stakeholders in Europe. We have
very regular dialogue with other European organisations representing
retailers, like Eurocommerce or the Chambers of Commerce. Our
bosses are in constant dialogue. We also have regular contact
at the level of policy advisers, either we invite them to our
meetings or they invite us to their meetings. We have contacts
to see where we have common points, et cetera. Very important
for us also is to maintain very good co-ordination with sectoral
organisations because normally we only follow horizontal issues
but sometimes horizontal issues can be very sectoral, like REACH
and other issues that affect a concrete sector of the industry.
We seek to have a very good relationship with those European federations
that cover specific sectors, be it pharmaceutical, the chemical
industry or direct marketing, you name it, it depends on the issue.
We put a lot of emphasis on complementing our work. We want to
avoid duplication of work, so whenever we see that we try to look
for the added value that we can offer as BusinessEurope. That
would be my short introduction about BusinessEurope, I do not
know whether you want to add anything?
Mr McGovern: Just briefly. My name is Vincent
McGovern. I have been working at BusinessEurope for four years.
Primarily I work on issues relating to the free movement of goods,
public procurement, research and innovation and transport, just
to give you an idea of the areas I am primarily able to speak
on. Carlos works on some others. In case you were not aware of
what he said about BusinessEurope, the CBI would be our British
member federation, just so that you know where we are coming from.
Mr Almaraz: We would be the European CBI. Going
back to your question on how we see the internal market, as I
said the internal market for us is one of the main achievements
and assets of the European project. It is where European companies
live, they operate, and it is at the heart of their systems. We
are great supporters of the internal market and that was why we
decided quite recently within BusinessEurope to create a new policy
committee. Until recently we had six policy committees—industrial
affairs, legal affairs, economic affairs, for example—but
we thought there was a need and a momentum to rethink a new vision
for an internal market so as a sign of stronger commitment from
our organisation to the internal market we created a specific
policy committee and we have eight working groups belonging to
the committee, some of them Vincent just named, to be more coherent,
to become more vocal in defending and explaining what the internal
market means. This has been running for three years now and it
comprises the free movement of goods, free movement of services,
financial services, telecommunications, transport and better regulation
as well. It is quite a comprehensive policy committee. For us
the internal market is a priority, it was and is and will be a
priority. As you said, it is an ongoing project. We do not believe
we need a new vision, we believe we need important adjustments
to the policy and the approach to the internal market that we
have, especially at national level. We have divided our message
and our policy vis-a"-vis the internal market into four strands.
The first one would concern the gaps that we still have, so we
believe there is a need for continuing the removal of barriers
to the four fundamental freedoms: capital, persons, goods and
services. That is the one where we foresee more legislative action.
The second important strand to which we give special importance
is enforcement and what we call the reality of the internal market,
how the existing rules, existing standards and other jurisprudence
are applied in practice, and are they applied in practice. The
third would be what we call the efficiency of the internal market
and we mean better regulation and the international dimension
of the internal market is very important. For us, better regulation
is not only words, it is not paper, it has to be something concrete.
For us, the transformation of better regulation happens mainly
in the internal market so we keep pushing for the realisation
of better regulation objectives when we prepare new rules and
consult interested parties and choose the right instrument for
harmonisation and convergence and apply the rules. As I said,
the international dimension is very important as well. Europe
is becoming more and more a standard setter in the global market.
We like that the European standards become the global standards,
if they are good, so we want the European authorities when they
engage in bilateral talks or regulatory dialogue to try to export
the good things that we have in Europe so that they become the
global standards. That would be efficiency. The last one, which
is equally important, is information and awareness of the internal
market. We have clearly identified that what the internal market
means is not sufficiently known by citizens and small companies.
We have repeated to the Commission that it is not only about citizens,
it is also about small companies that do not know what the internal
market means, they do not know how to defend their rights and
they need to be informed on that to make it easier for them to
exploit the opportunities. There is a lot to be done in terms
of showing the beauty of the internal market to small companies
and those who are unaware of the internal market. We are promoting
these four strands very much and recently organised a seminar
on the issue of enforcement, and I think there were some representatives
from the UK Permanent Representation there. We have come a long
way in the European project, a lot of legislation has been produced
but it is not properly enforced. It is not properly enforced for
a number of reasons and we have to solve that situation. We have
to shift the focus from legislating and producing rules to making
what we have work better. We have a number of recommendations
to improve that. You have in your folder our most recent publication
on enforcement. It is not about creating new rules to improve
enforcement, it is a number of different proposals which range
from better training of national officials and judges to improving
non-judicial systems when there are problems in the internal market,
be it SOLVIT, be it arbitration, be it mediation. We also suggest
the appointment of a high ranking member of the government as
responsible for the compliance of national laws with internal
market rules, we believe this is very important. We want to create
a greater ownership of Member States in the internal market because
for us the Member States are the key to the success of the internal
market and the implementation of the rules. This is something
that we are working on a lot and trying to steer the debate towards,
which is a difficult debate because the Commission has limited
powers in enforcement. Part of the infringement procedure is with
the Commission and it cannot be the only one in a Europe of 27
members, we believe that the Member States are a big part of the
solution so we are trying to convince Member States to become
more committed, to spend more resources in implementing and enforcing
the internal market laws. In a nutshell that is our position on
the internal market.
Q276 Lord Haskel: You spoke
about the international dimension, for European standards to become
global standards. Is that the work of your organisation or do
you see that as being part of the work of the Commission and the
Single Market?
Mr Almaraz: We see it more as the work of the
authorities to decide because we do not decide the rules to play
in the global market. We believe that when the Commission participates
in dialogue with their trading partners, like the US, China or
Japan, they should be the defenders and the promoters of the standards
that we design in Europe because our companies are becoming more
and more global, they consider the global market as a very important
part of their business and that has consequences on the way the
internal market works. Of course, we must support the Commission
and public authorities in that task but it is more their task
to do.
Mr McGovern: You asked was it our task or the
task of the internal market, I think it is something more linked
to the internal market. The idea behind a true internal market
is to create a level playing field for companies and consumers
across Europe, and one way of doing that is similar standards
where applicable. I am not saying that requires harmonisation
but where applicable, so that there are commonalities between
the businesses, between the companies, and also for consumers
across the European Union to apply in the internal market. Where
Carlos' point comes from then is for those companies, for those
players from outside the internal market who wish to access the
internal market. If they wish to access it they have to abide
by the standards that are set for the internal market and that
is where the international role comes from, an influencing role
where if companies, be they American, Chinese or Japanese, whatever,
wish to access the internal market, because the internal market
introduces a level playing field for all the European companies,
those external actors also have to play by those rules. Theoretically
that is how it should happen and that is where the standard setting
role comes from.
Q277 Lord Haskel: You think
that really enforcing and making people aware of what is going
on in the Single Market and continuing very much as we are, that
is what BusinessEurope wants to achieve, you do not want any radical
changes, you want to continue as you are and make it more effective?
Mr Almaraz: Our members do not think that we
need radical changes in the way we have been building up the internal
market. We are in a phase of the internal market becoming more
national. It is a question of a mindset. Until now it has been
more Brussels producing the rules for the internal market to be
built but now it is becoming more rooted in the national dimension
and for us the role that national authorities has to play is greater
and has to be greater. Another element that we believe is essential
is better co-operation between national authorities. Recently
I had the pleasure—I do not know that you would call it
a pleasure—of dealing with the Services Directive and one
of the main obstacles in this dossier was the lack of trust between
competent authorities, and that lack of trust—
Q278 Lord Haskel: You mean
national competent authorities?
Mr Almaraz: Yes. That resulted in the introduction
of barriers to foreign providers. The system that this service
created to enhance co-operation is a very explanatory and very
revolutionary methodology to some extent that we want to be seen
more often in Europe. More and more they see the cross-border
aspects of the internal market are pressing on their daily life
and they need that co-operation. They need to know what the internal
market means and that is why we say that more training is necessary.
We need to break that lack of trust. We believe it will help not
to need so much legislation but if there is a need for legislation
we are totally okay with that. There is a need for more Member
States to become more internal market minded.
Q279 Lord St John of Bletso:
You mention about the benefits to SMEs of the internal market.
Could you perhaps turn that around the other way and talk about
the blocks which SMEs have to operating in the internal market?
Mr Almaraz: That is probably one of the main
challenges. The benefits are there but we believe that many of
them have not reached the SMEs. I have a figure from our SME expert
which shows that around 60 per cent of SMEs are active only in
their home market, which is worrying or something to give some
thought to at least. What we see as one of the main obstacles
for SMEs doing cross-border activities, which is always more difficult
than national for a number of reasons, they are less familiar,
there are more actors involved, is SMEs have greater problems
in terms of access to information, for example. Big companies
can spend more on getting what they need to do cross-border but
SMEs do not have the means and if they have to do it themselves
they probably do not even consider doing cross-border. They have
the legislative, regulatory, divergence factors that sometimes
they cannot afford to comply with so they rethink or it is a deterrent
for them. Another point we are trying to work on with SMEs is
access to finance. It is a problem for SMEs to get the finance
they need. It is important for SMEs that it is easy for them to
constitute themselves as a company, and that is why we put a lot
of emphasis on the creation of the European Private Company Statute
and the Commission is now consulting on the added value. It has
to be easy for a company to be created and considered as a company
within Europe without having to face duplication of legal requirements,
as is the case now. This is a problem that we think is going to
help SMEs to become European in their business plans. Also, intellectual
property rights is something that is very important for SMEs,
we need innovative SMEs and protection of intellectual property
is something that affects SMEs in particular. Of course, they
have more difficulties dealing with red tape. As I said before,
the internal market cannot be too burdensome because if it is
the SMEs will turn their backs to the internal market. Another
important point that we are asking the Commission to go into more
in-depth is administrative facilitation, the creation of points
of contact as they are doing in goods, in services, to make the
internal market easier for companies, easier for them to get the
information they need and to go through the formalities they need
to to become a cross-border operator. The benefits are there but
they face special difficulties that have to be tackled.
Mr McGovern: The federation/associations we
represent inform us they represent primarily SMEs. The definition
of an SME is a company with anything up to 250 employees working
for that company. The figures indicate that is 98 per cent of
companies active across Europe in the internal market. For this
reason, and this reason alone, we have to make sure that the internal
market does help SMEs. The figure my colleague gave a little earlier
of 60 per cent of companies focused on a national market makes
sense because a lot of companies are small and the barriers that
he mentioned, primarily resources, are a problem, in particular
when they are SMEs that are small, five or six people in a small
company, and then you are talking about site problems, time problems,
resource problems, money problems. They contribute to why SMEs
are perhaps more focused on the national than internal market,
which they are fully entitled to access. It comes back a little
to the answer that Carlos gave to Lord Haskel that enforcement
and communication are key aspects of future internal market policy.
Enforcement so that the rules that are put in place are actually
enforced and they are the rules that are understood to exist across
the internal market, and communication so that SMEs understand
what their rights are, they understand where they can go to get
help, they understand what the rules are. Enforcement of the rules
and communication of what those rules are and what the opportunities
are is not done enough and that is something we think has to happen
much, much more. It is something that at the European level the
European institutions, whether it is the Commission or the European
Parliament and the elected members of the parliament, have to
do more of. It is also something which Member State governments
have to do because if they want companies within their jurisdictions
to really access and benefit from the internal market they have
to take it upon themselves to ensure that those companies are
equipped to do that.
|
