Examination of Witnesses (Questions 380
- 382)
MONDAY 29 OCTOBER 2007
Ms Arlene McCarthy and Mr Jacques Toubon
Q380 Lord St John of Bletso:
Could I ask a supplementary question on the whole issue of effective
enforcement. If I could now speak to the whole project of enlargement,
of course we have seen the whole process whereby the accession
countries have needed to comply with the Acquis Communitaire.
Many would have argued that there was somewhat of a fudge on many
chapters of the Acquis Communitaire. To what extent is the Commission
able to enforce those chapters of the Acquis Communitaire? You
have mentioned naming and shaming, but what is the follow-on process
to ensure that there is compliance with the Acquis Communitaire,
particularly of those new accession countries?
Mr Toubon: Two answers, but first a general
comment. For the Single Market the accession of the 12 new Members
since 2004 is a challenge. It could give to the Single Market
what I would call a "challenging dynamism", dynamism
but challenging. Why? Five hundred million people, the strongest
economic area in the world, new opportunities because these nations,
these people, are often very well skilled and they have an industrial
culture. I took the example of Spain. I would not say that Poland,
Slovakia or Hungary would be other Spains in ten years from now,
but they have changed and are open. That is challenging because
with the enlargement there are bigger differences between Member
States and it is more difficult to get common rules and common
behaviour between such different countries. That is my answer
on the Acquis. Just a personal anecdote: I was Culture minister
in my country between 1993 and 1995 and then minister for justice
between 1995 and 1997. That was the moment when the western countries,
Germany, France, Britain, tried to help the eastern countries
to prepare their accession processes. On the two levels, culture
and justice, but especially justice, I launched for my government
and in the frame of the European programmes, a lot of co-operation
with these countries, Poland, for instance, or Romania. My impression,
at this moment and now after the accession, is that these countries,
with one or two exceptions, have integrated the Acquis Communitaire
in an amazing way. I would say that they were 100 years behind
us after the Communist experience and between the two world wars'
experience and they integrated the Acquis Communitaire with a
speed which, in my point of view, has to be admired. There are
one or two exceptions. There are problems like corruption in,
for instance, Romania, but on the legal they are really at a very,
very good level of integrating the Acquis Communitaire. For me
it was amazing because I saw this country in the beginning of
the 1990s, for instance, the justice system in some of these countries.
Ten of 15 years ago they made great progress. We have to say that
because on the western side we are always despairing about this
enlargement and enlargement countries: "Oh, they are very
far and there are a lot of problems", but I think they have
done a very good job during these 10 last years.
Ms McCarthy: I want to add to that really that
I think the principle has been made that accession for Eastern
Europe was a catalyst for reform of their economic policies and
they really have prepared because the accession was so important
for them, they made the preparations long in advance. If you look
at the recent score boards, you will see, in fact, that Hungary
had one of the best transposition and implementation records,
whereas of the old 15 Member States, some of those were at the
bottom of the pile. On the point of corruption, of course you
will find corruption in Southern Italy, it is not just an Eastern
European phenomenon, I think it is something that is a factor
in other EU Member States. Your question about what can the Commission
do, of course it comes back again to the Better Regulation agenda
in that we would like really to deal with these problems upstream
so we do not have infringement problems but, of course, where
there is an infringement case, the Commission can go to the European
Court and ask for financial penalties and those sanctions in terms
of financial penalties can apply on a daily basis until that country
puts its house in order. They are very extreme powers and I think,
therefore, the Commission is often reluctant to go down that route
and, as I said, what we would prefer to do in the Better Regulation
agenda is to try and avoid that by a Better Regulation process.
I have to say with the support of my very good members in the
committee, as a committee, we are taking our Better Regulation
responsibilities very seriously. We have signed up to the inter-institutional
agreement, we have a budget for research and a budget for experts
and we have a panel of permanent experts that we keep available
for us. In fact, Mr Toubon's report on pre-packed products was
one of the first pieces of legislation where we carried out our
own impact assessment on our own amendments, which was a first
in Parliament. In fact, the expert independent study told us we
were right to put forward those amendments, we were in disagreement
with the Commission but we could stand up and say that, because
we had had an impact assessment taken out on those amendments,
we were not providing irresponsible amendments without knowing
what the consequence were. We are determined, certainly for as
long as I am Chair of that committee, to make sure that we do
undertake studies and impact assessments where it is possible
for us to do that with the finance available to us.
Mr Toubon: May I say with some irony that, for
instance, on the pension system reform some eastern countries
are much more advanced than France!
Chairman: We will conclude with Lord
Geddes.
Q381 Lord Geddes: I will try
and shorten this up, Lord Chairman, if I may, because this has
been such a fascinating bit of evidence. On the overall subject
of SMEs, it is interesting that your excellent paper specifically
mentioned SMEs in five out of the 46 paragraphs and, even more
interesting to me, was in paragraph five SMEs are the second specific
point mentioned. I take that as indicating the importance you
put on SMEs. You then go on, on the other specific ones, just
very quickly, you talk about the situation of SMEs in the electronic
commerce marketplace, you want to encourage Member States to improve
access for SMEs to public procurement contracts and you talk about
ensuring that risk capital reaches SMEs properly—
Mr Toubon: And innovation.
Q382 Lord Geddes: Innovation.
You talk about the necessity for transparency, targeted particularly
at SMEs. With this wonderful catalogue, and it is very impressive,
what more do you think can be done to help SMEs access the Single
Market?
Mr Toubon: It is one of our main concerns in
the European Parliament on both sides because we know that for
our countries the big groups, the global companies, are not enough
to provide jobs, employment and this social cohesion; for instance,
it is very important that e-commerce is not only the thing of
the big global companies. We hope that the Commission in the legislative
agenda for 2008 will give us a Communication on these issues and
on practical measures in favouring SMEs and to favour the access
of SMEs to the Single Market. Mr Verheugen is in charge and I
think he will present some proposals to our committee and, if
you invite Commissioner Verheugen, he could probably present to
you some practical measures on this issue. I think it will be
one of the duties of next year to establish a kind of new frame.
It would not be a Small Business Act. People from SMEs are always
asking, "We want a European Small Business Act", that
is not possible, but I think that it could be a frame of different
measures in favour of SMEs and it will be an issue for next year.
Ms McCarthy: Perhaps just to add
to that, I think one thing that we would like the Commission to
do is we really need some good hard economic research done on
the kind of barriers that SMEs are facing because, on the one
hand, we have picked out public procurement as an area where there
is a sense that SMEs are not getting in on the contracts that
are there, yet I am told in discussions I have had with the DTI
that there is no evidence to suggest that SMEs aren't, in fact,
accessing contracts. I think the first point of departure for
us as a committee, again, I said we do not want to regulate without
the evidence and evidence-based regulation is we need to have
a look, first of all, to see what are the barriers and how we
can address those, some of those may not need legislative responses;
some of them may be an issue. One example has been should we not
be creating SME envoys in every Commission representation in the
office, so the Commission office here in Queen's Gate should have
an SME envoy in there who is assisting SMEs. That is a non-regulatory
approach which may have a good result. Of course, the whole debate
around the Small Business Act-type of approach, particularly related
to public contracts, came out of a French initiative. In 2007
the Commission has been invited to explore all means of improving
SME access to public contracts, but we do not want to go down
the route, as Mr Toubon has said, of looking at the US system
of reserving 23% of all public contracts only for SMEs because
that may not effectively be good for the consumer or competition.
I also feel it probably would not sit very easily with the current
legislation around public procurement, we probably would not be
compliant, so I think clearly there is a need for us to try and
ensure better SME access. We have been told Commissioner Verheugen
will come to us on 28 November and one of the key points that
he will talk to us about is how to improve the regulatory environment
for SMEs, whether or not that means in some cases SMEs may be
excluded from a particular directive because it may not apply
to them. To give one example, on the Consumer Credit Directive
we argued very fiercely that credit unions should not be included
in the Consumer Credit Directive, because simply the regulatory
burden was too high for them in terms of the job they were doing
at a very local level. It may be that we are arguing in a sense
that there are some aspects of legislation which should have a
threshold in terms of whether it applies to companies of a certain
level.
Mr Toubon: For instance, at this
moment, after all the arguments on the "Chinese toys",
inside Parliament we have a crucial concern on security, on security
for consumer goods and user goods. But SMEs emphasize and they
are right in one extent that it is very difficult for small businesses
to implement all the security regulations. It is not the same,
I think, for big businesses, but we say, "Yes, but the consumer
needs to be sure that your product is as safe as the product of
the big company". That is the kind of question where it is
difficult to divide the business into small and not small, but
on other issues I think we can try to get some specific frame,
like Arlene said.
Chairman: Thank you very much indeed
for your help and guidance. We look forward, some of us at least,
to participating in meetings with the national parliaments with
the European Parliament, not necessarily those around the table.
I will ask the clerk to confer with the Select Committee clerk
on the timing of that because I am particularly interested in
the subject of the internal market. This has been a most valuable
session and your kindness in taking one hour and 20 minutes with
us, which is much longer than others have been prepared to give
us, is much appreciated and we thank you for your evidence.
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