Examination of Witnesses (Questions 370
- 379)
MONDAY 29 OCTOBER 2007
Ms Arlene McCarthy and Mr Jacques Toubon
Q370 Chairman: First of all,
a very, very warm welcome to you both. For the shorthand record,
it is Arlene McCarthy, MEP, and Jacques Toubon, MEP, who have
very kindly agreed to come and help us with our inquiry. For the
benefit of our two witnesses, this is an all-party committee.
We have been working on a report to report to the House on the
review that the Commission is making of the working of the internal
market. We have already been to Brussels and are going back to
Brussels. We hope to produce a report in January in good time
for the summit which, I believe, is in March. Obviously it will
be after the Commission has produced its own report on the Review
of the Internal Market. I hope that both witnesses have got an
opening series of comments to make and then we will go straight
into questions. In due course I am going to ask Lord Haskel to
open the batting for us. Arlene?
Ms McCarthy: Could I thank you for inviting
us, myself, obviously, as Chair of the Internal Market and Consumer
Protection Committee, and Jacques Toubon is our rapporteur on
what, I think, is a very important issue on our agenda and, indeed,
on the agenda of the whole of the EU. My Lord Chairman, first
of all, could I say how very much we welcome the work by this
Committee. We find your reports extremely useful, we often use
them as reference tools and manuals in trying to shed some light
on what the view is of national Member States. I often say that
I would be very pleased if the House of Commons could follow the
quality of your work. Of course, we did not follow you on the
issue of mobile roaming and phone calls, I think we had a very
different view on that, but that is something which may come up
in our question session. I think it is important at the outset
to say that this Single Market Review has been billed as a more
fundamental review which aims to strengthen the internal market
in the face of a range of new challenges, enlargement to a range
of obviously poorer countries that have come in and globalisation.
I have travelled to India and I went to Mumbai to have a look
at some of the issues around outsourcing, so it is quite clear
to us the challenges are significant. What we are certainly trying
to achieve in our committee is to argue for an open and flexible
Europe which will create the economic conditions that are necessary
to enable our citizens and business to prosper and succeed in
a competitive and dynamic Single Market, which now, of course,
consists of some 495 million consumers. We also want to ensure
that competitive markets reward effort, creativity and entrepreneurship
and so that is why, as I said, we are trying to push—and
you will see that in Mr Toubon's report—for a modern and
flexible approach to the Single Market, perhaps with less focus
on legislation, more on competition, trying to reduce some of
the regulatory burdens and at the same time encourage innovation.
Certainly we do not think the fundamental task or objectives of
the internal market have changed, but we still think that we need
to bring down barriers, simplify existing rules and help EU citizens,
consumers and businesses to reap the benefits of a direct market
access to 27 Member States with nearly half a billion people.
We do not think the cornerstones have changed, we think the four
freedoms are still fundamental, free movement of people, goods,
services and capital, but we do want to make sure that our citizens
who have the right to work, live and study in another EU country
have choices and benefit from increasing competition, lower prices,
have equal levels of protection and our businesses have easier
access to those markets. You probably will be aware, my Lords,
that the previous reviews that we have had have been three-year
action plans and generally they have been legislative action plans.
As I said, we think that this is a more fundamental review which
will probably be a mix of policy initiatives and non-legislative
actions as well. Certainly that is what we are expecting when
Commissioner McCreevy comes to present to us on 21 November. Certainly
we have seen from 1992 to 2006 the benefits of an enlarged internal
market. We have seen that with 25 Member States the GDP and employment
levels rose, those are estimated at around 2.2% gain in GDP and
about 1.4% rise in employment. We were very pleased to receive
the Commission's Communication in May 2006 which talked about
and very squarely put citizens at the heart of the internal market.
The questions that were raised for us, which led on to the report
that Mr Toubon prepared for my committee as an own-initiative
report—it was not at that time a legislative report but
we took it on board as an own-initiative report—were how
do we build on the achievements, what are the gaps, what are the
challenges of the future and what are the best mechanisms for
delivery, I think the very questions that you are addressing in
your work. Of course, we were concerned to ensure that there was
an extensive public consultation with stakeholders. The interim
report that was presented to the Spring Council in 2007 was a
report on which my committee based its work. We adopted Mr Toubon's
report in a resolution in July 2007 in committee and we strove
to adopt it then in September so that we could be in advance of
the work that the Commission is currently preparing, both for
the presentation of its Communication and, indeed, the discussion
at the Spring Council and, as I said, that is why we wanted to
make sure we had our input. Certainly Mr Toubon will give you
this in detail, in our report we give a key message to the Commission
and the Member States. We want to see an internal market that
improves citizens' confidence, to reduce administrative burdens
and the Single Market to help make us fit for globalisation. We
clearly said we wanted to see more opening of the network industries
and, of course, we also said that we wanted to strengthen IPR
rights in terms of urging Member States in the Community to tackle
piracy and counterfeiting and to protect innovation in the EU
Member States, which is particularly important for the UK and
France as the biggest producers of innovation and the creative
industries. Of course, we also argued for the Community patent
which I am sure, my Lords, you will know has been a very tortuous
process over the previous years and one in which I was very actively
involved as a member of the Legal Affairs Committee. Mr Toubon's
proposal was backed by an overwhelming majority of the full European
Parliament, with 534 votes in favour, only 119 against and 27
abstentions. We had an informal meeting with Commissioner McCreevy
in the week that we voted it through Parliament and he promised
to take on board many of our recommendations in the review that
he is now engaged in and the report that will be coming forward.
As I said, we do not expect it to be a shopping list of new legislative
actions; we do expect it will be a major re-positioning reviewing
by policy area and a mix of legislative and non-legislative initiatives.
We expect it to better equip us in the area of governance, so
we do not think that Brussels alone can act in these areas, Brussels
needs to work very closely with the Member States. We think that
some of these challenges we face can be addressed by soft law
options, it does not have to be a legislative approach and certainly
we want to see an improvement in communication with Member States.
My Lords, you may be interested to know that we proposed putting
the Single Market Review on the agenda for an early meeting between
the European Parliament and national parliaments in 2008, that
was one of our priorities in our report. I am going to stop there
because I think I have given you the context in which our work
is being carried out and you can ask our rapporteur, Mr Toubon,
to explain some of the issues that were addressed by the committee
and the full Parliament in the Internal Market Review process.
Mr Toubon: My Lord Chairman, Lords, ladies and
gentlemen, first, let me apologise for my English, which is far
from being fluent, but I am French! I am deeply honoured to have
the privilege of appearing before this Select Committee in the
House of Lords. As Arlene said, the work of your House is very
useful for MEPs on a lot of issues. I was the draftsman of this
own-initiative report in the IMCO and I will briefly make an introductory
statement to the report. My own-initiative report was adopted,
as Arlene said, by a majority of more than two-thirds of the European
Parliament. On such an issue, that is not very common because
the Single Market and all these economic issues are very often
divisive between left and right inside our European Parliament.
There was a common view in our committee first and then in the
Plenary. This report has been established as an input to the European
Commission's current strategic review on the future of the Single
Market, what the Commission called, "The Single Market for
the 21st century". The Single Market is at the heart of the
European project and it is probably its biggest success. Almost
15 years since its beginnings, the EU Single Market remains a
work in progress. Our Parliament has insisted on the importance
of adopting a political approach during this period of European
"malaise". The deepening of the Single Market clashes
with the skepticism and an hostile European public opinion which
often considers the Single Market, and in particular competition,
to be at the origin of social problems, unemployment and poverty.
Every strategy of the Single Market must, therefore, try to transform
this mistrust by underlying the advantages of the Single Market
and by pursuing at the same time two main objectives, the opening
up of competition and the social cohesion with its different components,
environment, employment and culture. Our contribution endeavours
to find this balance and emphasise the fact that it will be impossible
from now on to develop the Single Market if our citizens do not
support it. In particular, the European Parliament has identified
three axes to re-enforce the Single Market: increase the confidence
of all those involved in the Single Market, consumers, producers,
all our fellow citizens; keep an eye on the reduction of administrative
costs in businesses; and taking into account the external dimension
of the Single Market. Within these three axes MEPs agreed on a
number of areas where room for improvement is visible and reform
necessary. I will take some examples from our proposals. First,
strengthen the working relationship with national parliaments
so that the issues and benefits of the Single Market become clearer
to representatives of citizens in the Member States; and that
is why it is important that the Single Market Review will be on
the agenda of the next forum between national parliaments and
the European Parliament. Secondly, the need to complete the opening
of network industries, such as transport, telecommunications,
postal services, energy and transport. The European Parliament
believes that greater harmonisation may be necessary in certain
areas, in particular in retail and financial services and in the
functioning of tax systems which need the Commission to push ahead
with proposals on a common, consolidated corporate tax base; that
will be a controversial issue but important for Europe. MEPs urge
the Commission to adopt a global strategy concerning intellectual
property rights. Arlene has said the importance of establishing
a Community patent and a Community way to judge the litigations
on this patent issue. We encourage free movement of workers within
the internal market. Our house shares the view that tackling climate
change and ensuring sustainable development are of paramount importance
and can be achieved only with a balanced energy mix. We appeal
to improve public procurement rules, so that public contracts
can more easily be accessed by SMEs. .Better promote innovation
while responding to environmental and social concerns, and providing
accessibility for disabled people is of ultimate importance for
the European Parliament. The European Parliament has also asked
the Commission to clarify the legal situation of public services
by using the mandate given to the Inter-Governmental Conference
to write a protocol annexed to the Treaty regarding SGIs, Services
of General Interest, and SGEIs, Services of General Economic Interest.
Our Parliament calls on the Commission to incorporate an internal
market test into the Better Regulation mechanisms to ensure that
regulators always take into account the implications of their
actions on the four freedoms of the Single Market. MEPs emphasise
that better is not necessarily less regulation. MEPs urge the
Commission to consolidate and simplify legislation. To this aim,
MEPs share the Commission's view that co-regulation and self-regulation
can be tools which may complement legislative initiatives in some
areas. My Lord Chairman, my Lords, those were the essential guidelines
of the road map we addressed to the European Commission. Joining
the fundamental strength of the Single Market with the commitment
of citizens, producers and consumers will form, in our point of
view, a real force for growth and employment and set up a major
continental player to bring the European values into economic
globalisation.
Q371 Chairman: Thank you very
much indeed. May I commence by, first of all, thanking you not
only for your evidence but, if I might on behalf of the Committee,
say how much we found your report very clear and very helpful.
May I ask a question on paragraph six, which says that the committee
regrets that Member States do not feel enough ownership of the
Single Market on a practical level. Could you just develop that
comment a little further, just give it perhaps further definition
and depth.
Ms McCarthy: I think one of the concerns that
we have in terms of the general approach by Member States to internal
market legislation is a lack of commitment in terms of transposition
and implementation. We receive on a six-monthly basis the internal
market score board and, while sometimes we find improvements,
we find this process of naming and shaming those Member States
who are not taking their commitments seriously as useful for us
to then follow up on why is it the case that there are failures
in this area. We do think that this requires a stronger political
will by Member States and part of the Better Regulation agenda
is not just about how we regulate, but it is about effective enforcement.
There are two innovations we think that are going to be very useful
in terms of getting a better buy-in from the Member States, or
at least following up on transposition and implementation. First
is the Solvit system, which I am sure you are aware of, which
my committee particularly gives the Commission a lot of support
on because we believe it is the front desk of the European Commission,
a front desk where a citizen or business can take a complaint
in terms of where a piece of legislation is not working for them.
We often find that the Solvit offices in the 27 Member States
can solve that problem and it may result in a Member State being
told that they are not in compliance and need to look at their
transposition or implementation of that piece of legislation.
The other issue is the internal market information system, which
came out of the discussion around the Services Directive, or would
strengthen the discussion around how we would deliver on the Services
Directive, and we are expecting Commissioner McCreevy and his
staff to come and present to us on how that will work. Of course,
that is about the whole issue of administrative co-operation between
Member States, so setting up effective organisational bodies—in
our case it probably will sit within the DTI—where you will
be able to have a proper and effective exchange in terms of implementation
of legislation. I think one of the two test areas—and my
staff member will correct me if I am wrong—is on the mutual
recognition of professional qualifications. That is fundamentally
important to the movement of labour across the EU and we want
to make sure that all Member States are following up the commitment
to recognise people's professional qualifications to be able to
work in other EU Member States. The Services Directive will be
the other test ground for these two systems. We do have a concern,
as reflected in Mr Toubon's report, about this issue of ownership,
but we are trying to find mechanisms to ensure that Member States
do face up to their commitments and responsibilities in terms
of implementing legislation and following through to deliver for
citizens, businesses and individuals as well.
Q372 Chairman: Do you think
that we can go further than simply naming and shaming in terms
of implementation? I know there is now a target of 1% as opposed
to 1.5% in terms of the number of regulations that are not implemented
within a certain period of time. Do you think we can go further
in terms of requiring rather than shaming Member States to implement
faster?
Ms McCarthy: I think there have been some improvements
to this mechanism, but what we have argued is perhaps this has
to be dealt with upstream, that in a sense naming and shaming
is a last resort. What we should seek to do is when we sign off
a piece of legislation, they then need to be more proactive in
what they currently do, which is a tour des capitals, to
talk to every administrative system and every department asking,
"How are you implementing these?", so they can check
in advance whether there may be any weaknesses in the system or
interpretations that move away from the spirit of the legislation.
In our case, of course, we would be very concerned if that sought
to introduce a protectionist element when it was quite clear we
were opening a particular area, for example the Services Directive.
Yes, naming and shaming is one element, but we would like the
Commission to continue with its new approach which is to sit down,
to have a discussion in advance, let us see how you are implementing
and assist you with that, technical assistance where necessary,
but further down the line, before there are infringement proceedings
to the European Court, to sit down and see if they can work out
where the problems are and, again, assist the Member States to
have a better transposition and implementation rate.
Mr Toubon: My Lord, there are three levels of
answers. First, at the institutional level, the Commission has
the accurate tools, I think, but that is not enough. Naming and
shaming is a good way for the media but I am not sure it is very
efficient for the people from the "bureaux" in the capitals
or the other civil servants, I think they are not very impressed
by all that. On this point, 1%, or less than 1%, is a rather good
result because in the process of transposition and implementation
there is very often a lot of technical problems, they are not
political or ideological problems but technical problems, that
is the second level of response. As Arlene said, it is very important
that the Commission should help the Member States and I will give
an example of that. For the Services Directive, the Commission
had issued a handbook to the Member States on a number of issues
they needed to take on board when transposing the Directive. This
included, for instance, the manner of how to put in place the
famous Points of Single Contact, administrative co-operation,
and I think that was a good way to give an hand to the national
administrations. The third level is a political one and, I would
say, the electoral one. If citizens support the Single Market,
the Member States and the Member States' governments will support
it, but if the citizens are against, for electoral reasons the
governments and the parliamentarians are against it too. That
is why our report aims to get a new strategy to take on board
citizens in this Single Market strategy for the future and avoid
the situation where our fellow citizens are viewing the European
bodies making their own policies on their own paths besides all
the citizens' needs or aspirations.
Q373 Lord Geddes: If I may,
I would just like two follow-up questions to Arlene McCarthy.
You mentioned just now the importance of Solvit and the IMI and
in your paper you produced a third body, which I certainly was
not aware of before and I am not sure how many of my colleagues
were, the European Consumer Centres Network. Could you tell us
a bit more about that and perhaps it would help if I asked my
second question at the same time. You also mentioned the importance
of recognition of professional qualifications and you were polite
enough to say in your opening remarks how much you enjoyed reading
our reports. You will, therefore, have read our report on the
Services Directive and our views on the Country of Origin Principle
and I think, with respect, the European Parliament did not totally
agree with what we said in that report. Could you expand on that
a bit and perhaps we will come back to it because I am going to
concentrate on SMEs later on with my questions. Maybe you might
want to duck that Country of Origin Principle question until we
get on to SMEs, I leave that entirely up to you. First, on this
European Consumer Centres Network, what is it?
Mr Toubon: Yes, it is paragraph 28 in the report.
Q374 Lord Geddes: Indeed,
what is it?
Ms McCarthy: My committee is the Committee for
Internal Markets and Consumer Protection. Solvit deals with problems
where the internal market is not working on behalf of the citizens
and consumers or business and the European Consumer Centres, a
network of centres across 27 Member States, are again the front
desk for consumer complaints. Just to give you an example, our
European Consumer Network was within the CAB network in Manchester,
so that was where you went practically to have your problem solved,
we had the same office, in fact the DTI minister launched the
ECC in that office and it made sense to combine those two together.
Again, just to give some examples, we are currently reviewing
the Time Share Directive which, again, I hope that your Committee
will look at in some detail, and the European Consumer Centres
have been extremely useful in bringing to us the complaints they
have taken from consumers. Of course, the benefit we have is that
they liaise with each other, so the Spanish European Consumer
Centre in Madrid will talk to the Manchester or London centre,
so we then understand a little bit of the problems that are ongoing
and sometimes we can resolve issues. We had an excellent report,
again, which I will commend to you, from the European Consumer
Centre on problems that our consumers are currently experiencing
with cross-border Internet purchasing. We had very good figures
on what the problems were and a very good read-out of what the
real issue was and, in fact, in virtually every Member State the
real issue was delivery, people were not having their goods delivered.
I think it is a very good innovation which deals with the practical
aspects of where consumers have a problem and how do they get
redress. The European Consumer Centres work together with each
other to try and resolve those issues, sometimes they can be resolved
simply, and they refer to us issues for us to look at in terms
of the need to review certain directives, like the Time Share
Directive.
Q375 Lord Geddes: How long
have they been in operation, roughly?
Ms McCarthy: 2002, maybe five years. We will
check that for you.
Mr Toubon: A short answer to your second question
on the Country of Origin Principle. I was one of the main protagonists
in this discussion. In summer 2004, I was a brand new deputy in
the European Parliament, but I understood that at the political
level this text was a major, major issue and that it was a bomb.
With Arlene, with the left side, Evelyne Gebhardt was the draftswoman
and Malcolm Harbour, my co-ordinator, I was one of the men behind
the agreement in February 2006 and I was amazed on this issue
by how far the Commission was from the social and economic reality
on the ground. On this question of the Country of Origin Principle,
what we have try to find a balance between what is necessary to
open the market for services, Article 16.1 and 2 and, on the other
hand, what is necessary to protect all the social acquis, specially
labor law, and that is the third paragraph of Article 16 in the
Directive. I think that in my report on the Single Market Review
I was always inspired by the will of trying to get this balance
between the two sides of our work, opening the market, opening
up the competition, that is the best we can do for all the people
but, on the other hand, to protect some rules, some social acquis,
that is very important for our fellow citizens and for the equilibrium
of our societies in Britain, France and Germany. That was for
me very inspiring for this report. That is why I do not regret
the true and pure Country of Origin Principle, I think we have
got a balance which is a good one.
Ms McCarthy: Could I perhaps add to that. It
is very interesting that, as a neutral chairwoman, whichever side
of the political fence you sit on, some people believe we have
the Country of Origin Principle with protections and some people
believe we have the Country of Destination Principle. I think
it is a very important question because the proof will be in the
implementation. Mr Toubon is quite right to say that the Country
of Origin Principle is there with some modifications in paragraph
three or four of Article 16 and that was the issue which involved
a lot of discussion and negotiations by the rapporteurs in the
shadows but, of course, it says very clearly that there are some
derogations on public policy grounds—and you know this because
you looked at it in detail—which are justifiable. We have
asked the Commission—it is a question you may wish to raise
with Commissioner McCreevy—that they will produce the report
and they will be the watchdog on what is justifiable, so we do
not end up with public policy being protectionism or legitimate
public policy objectives being protectionism.
Mr Toubon: General interest is not protectionism.
General interest could be used as protectionism but in the Principle
it is not protectionism.
Chairman: Some would say amen!
Lord Geddes: I think I started a hare
running there, Lord Chairman.
Q376 Lord Haskel: We have
spoken a lot about the economic benefits of the Single Market,
about globalisation, competition, jobs and consumers and, yes,
it has been successful but Eurobarometer tells us that citizens,
in spite of this, do not really love the Single Market. Mr Toubon,
in his excellent English, told us that we really have to have
the support from the citizens. In your document, Mr Toubon, at
the beginning of number eight you talk about increasing stakeholders'
confidence in the Single Market and you speak about the importance
of boosting citizens' confidence by promoting social and environmental
objectives and about social cohesion. My question is this: what
are the arguments for this social dimension in the Single Market?
Is the Single Market really the right vehicle for achieving these
non-economic objectives, such as social cohesion?
Mr Toubon: You know I am from the right side
but from my point of view, social cohesion could be an economic
objective because social cohesion is one of the bases of economic
development . Experience of the new Members, the former Communist
states, which were just up and down in the 1990s, is a signal
that social cohesion is necessary for economic development because
when we have such a gap between a few people richer and richer
and a mass of people poorer and poorer, it is impossible to achieve
development. A good example is Spain. The economic development
of Spain was made on a kind of social model but with a lot of
freedom, a very good tax policy, and that is a model for me. On
the other hand, I think that in the Lisbon Strategy social cohesion,
social dimension, is highlighted. In the 2001 economic strategy
for Europe, the Lisbon Strategy, the social dimension had a greate
role and the social and territorial cohesion was one of the components
of the Single Market. The Single Market is not made only to provide
a kind of empty territory, empty table, it is made to provide
more and more integration and that means territorial and social
cohesion. The final purpose for the European building is integration
in a lot of economic, social and cultural issues, and integration
that means more and more cohesion. In my view, there is no opposition
between the two, social and economics, and I think that social
cohesion part of the Single Market and that Single Market has
to combine in an effective way competition and protection of general
interest, for instance, some equality or perequation between the
territories inside a nation. That is why if you want to get the
support of the citizens, you have to say that the Single Market
could be a factor, the Single Market could be a medium for social
cohesion and not the enemy of social cohesion as a lot of people
now believe.
Ms McCarthy: Could I perhaps give
a nuance of difference to that. I think there are some different
approaches. We agree, in a sense, that social cohesion is a key
element of the drive in the internal market, but I would demur
from the question that says the Single Market objective is not
to achieve social cohesion, social cohesion is a flanking measure
which will make the internal market work. It is precisely the
point that Mr Toubon said, that if it is to work, citizens and
consumers have to have the confidence that this means in the end
they do not lose their job or their livelihood or their standard
of living does not drop. I refer, my Lord, to the letter that
the Prime Minister, Gordon Brown, wrote to Barroso just before
the Lisbon Summit. What we are really talking about is a modern
version of social cohesion which combines flexibility with fairness
with a sense really that we want to put modern social policies
at the forefront, so flexibility is clearly an aspect of our response
to the challenges of globalisation. People need to be allowed
to make the most of opportunities in terms of skills, we need
to raise the level of skills, so it is a proactive social policy,
not a protectionist social policy that, unfortunately, still exists
in some Member States. We need to help people to adapt to change,
to help them to have employability skills and obviously that goes
to a whole range of issues. I think it is useful to recall that
when Ireland joined the European Union, it was indeed Ireland
that forced the European Union to have a European regional policy
with all the cohesion policies that we see in terms of the social
fund and regional development funds. They argued that many of
their regions and many of their poorer people would not benefit
from this Single Market, so if we are to get some benefit from
the market, we need to have a countervailing force in terms of
flanking measures and regional and social policy so they both
go hand in hand. If you look at the Irish economy as an example
of where that has led to, clearly they have benefited from regional
funds but they also are a very key economic player in the internal
market and one of our motor economies to drive the EU forward.
Q377 Lord Haskel: Our Chairman
will remember this. When John Smith was leader of the Labour Party
he started what we came to call "New Labour" when we
were working on this by saying that the strong economy and the
fair society were the same side of the coin, they had to go together.
I am sure this is part of what you were saying and I entirely
agree with you.
Mr Toubon: I agree with John Smith and with
Arlene McCarthy, my chairwoman!
Q378 Lord Haskel: What we
are trying to really see is can this be enough to reinvigorate
the enthusiasm of people for the Single Market, because somehow
we have to persuade people that the Single Market is good for
them socially and economically. We are trying to see if there
is some sort of vision, some sort of idea, some sort of ideal
which can motivate people. At the moment the Single Market is
not particularly appreciated, Eurobarometer shows us that all
the time, we are trying to see is there some way in which this
can be rectified.
Mr Toubon: Yes, you are right. That is the purpose
of my report and, I hope, of the new strategy of the Commission,
to give people and the governing bodies in our Member States the
feeling that when they serve Single Market policy, Single Market
orientation, they serve people and on ideology and on economic
theory or the business only, and probably big business more than
small business. That is why it is very important to explain what
the benefits of the Single Market are. Europe would not be what
it is now without the Single Market, it is true. See the story
between the six Members during the 1960s and Britain. There were
two very different economic evolutions and probably one of the
main factors was that the six were members of a common market
and Britain was alone and that is why it was of great interest
for Britain to join the six to make a Community of nine. I think
that the Common Market, and then the Single Market since the beginning
of the 1990s, are probably the best achievement of the European
Union. In social welfare, way of life, a wider range of consumer
goods, all of that, we have to explain and to demonstrate to our
people. Until now governments have been very reluctant because
they think that people do not agree with the Single Market. French
government, for instance, right or left, are very cautious to
show all the benefits of the Single Market. The second point is
that the Parliament has a big role to play to give to this economic
strategy some part of human soul and that is all we try to do.
That is not a question of left or right, that is not an argument
between business or consumers, that is a question that Europe
could not exist, could not succeed, if is solely a kind of economic
engine. We have to be politicians in the good sense, that means
to understand what people want and try to deliver what they want.
I think that in this Single Market strategy, in two or three years
from now, we will have a lot of main critical issues and I hope
that the Commissioners, Mr McCreevy or the others, will be, as
Mr McCreevy was on the Services Directive, very clever. He said,
"Why try to pass the Commission's proposal when nobody wants
the Commission's proposal? That is silly", so he said, "I
am a politician, I was ten years a minister in my country so I
accept the proposals of the Parliament, they are politically wise".
I think that is the spirit we have to keep on these issues for
the future.
Chairman: We will come back to Lord Geddes'
on SMEs but in the meantime, Lord St John.
Q379 Lord St John of Bletso:
I have no doubt that Lord Geddes will be speaking about the benefits
of SMEs and the impediments for SMEs, but if I could revert to
the whole issue of regulation. You spoke about the whole project
to reduce administrative burdens, you also spoke about less emphasis
on legislation moving forward and the need for the promotion of
innovation and simplifying existing rules. I was interested in
Mr Toubon's comments that we are looking at co-regulation and
self-regulation. My question really reverts to, in your opinion,
talking about effective enforcement, does the Commission have
the right tools for the effective enforcement of existing legislation
and is there a need for super regulators? Of course, here in the
United Kingdom we have Ofcom to regulate the telecommunications
and communications sector. We have heard of the potential for
a super regulator. What is the scope for co-ordination between
national regulators?
Mr Toubon: I am not in favour of a super regulator.
I think the best solution would be the co-ordination of the national
regulators and probably on some European issues, issues which
are better handled at European level, a European regulator but
not a super regulator; national regulators and on some issues
European regulators. For instance, on public health there are
some issues which need to be handled at the European level because
people are crossing the frontiers, but generally I am against
a super regulator. For instance, on telecoms, I am against the
super telecom regulator. Mrs Reding is now preparing a Communication
on this question and I am not in favour of Reding's proposal.
Ms McCarthy: Could I add to that. I think on
the issue of Better Regulation my committee already produced a
report which, perhaps, would be useful for you to look at which,
in fact, I authored as chair of the committee to ensure that we
had a comprehensive and consensual view on how we felt we could
improve the legislative experience of our businesses in the internal
market and we had a number of recommendations which I think are
interesting in that report. Of course, I would say, and you may
find the same in the House of Commons and, indeed, the House of
Lords, co-regulation or self-regulation does not get a fair wind
in Parliament because people believe they are there to legislate.
However, I have said frequently if the same objective can be achieved
with co-regulation, then that should be tried. Regulation, again,
should be something that we use as a last resort, but I think
the key issue there is what oversight does Parliament have, any
parliament, of a co-regulation process, namely what happens if
it does not work? If it goes wrong, do we have a call-back mechanism?
Can we then force the industry? We did have an issue originally
in the UK around telecoms unbundling of the local loop, if you
recall, and of course the industry said they could do it, they
did not do it and then we had to legislate. There has to be a
mechanism by which we can force the issue if co-regulation or
self-regulation does not work and that is an issue which I think
is the biggest concern for Parliament. They feel they lose control
and they have no oversight or scrutiny and that needs to be addressed.
If we can address that issue, then you will find generally the
European Parliament will be more amenable to looking at alternative
forms of regulation. On the issue of super regulators, I think
it is a very interesting question because we had it raised in
the context, again, of a report that I prepared on behalf of the
committee on public procurement. Public procurement was to be
the great hope of the internal market and there was a view that
it had not delivered. Therefore, we undertook a report looking
at what was not happening, why was public procurement not delivering
more and better outcomes. We did think do we need perhaps a super
regulator for public procurement because the Commission clearly
cannot do the job and they admitted to us that they were not in
a position to do that job. Then we looked at it and decided that,
in fact, it would be better to have a national regulatory system
because we did not think the super regulator system would have
enough enforcement power, that national Member States probably
would not co-operate with a super regulator. Therefore, we thought
it better to have a committee, which effectively does currently
happen, on public procurement at EU level, the problem is it has
no teeth. This kind of committee that currently meets does not
have any real enforcement teeth and that is why we had originally
thought to go for a bigger super regulatory body. If I can then
give you another practical example, given your views on mobile
phone roaming. At the time we asked the Commission, because we
were very sceptical that we needed legislation in this area, and
we put to Commissioner Reding the question, "Is this not
a job for the national regulators? Why are we taking on this task
at EU level?" The answer that she gave to me—and I
have seen a copy of the letter, in fact, which came back from
one of the national regulators—was to say, "We do not
have the competence to do this. On a cross-border basis, we cannot
interfere with the pricing mechanisms on a cross-border level.
Therefore, we have no power to do it". In the absence of
a super regulator, we went the legislative route and many people
have not been happy with the legislative route, but that was the
only way which we could redress what was a market failure. Of
course, it is a piece of legislation that has a three-year lifespan
by which time, we believe, the market will have caught up with
the issues, but the only way for us to redress market failure
was with regulation in the absence of a super regulator given
the fact that national regulators informed the Commission by letter—I
have seen the letter—that they did not have the competence
to do this.
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