An Opinion of the EFTA Consultative Committee INTERNAL MARKET STRATEGY PRIORITIES And the follow-up on the EFTA side

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1 EUROPEAN FREE TRADE ASSOCIATION ASSOCIATION EUROPEENNE DE LIBRE-ECHANGE Ref. No: December 2003 Geneva An Opinion of the EFTA Consultative Committee on INTERNAL MARKET STRATEGY PRIORITIES And the follow-up on the EFTA side Rapporteurs: Ms Hanne Lyngstad (Norwegian Association of Local and Regional Authorities - KS) Mr Tor Jørgen Lindahl (Norwegian Confederation of Trade Union - LO) Ms Grete Gautvik (Confederation of Norwegian Business and Industry - NHO)

2 The Consultative Committee of the European Free Trade Association (EFTA) is a forum for Trade Unions and Employers organisations in the four EFTA Member Countries, namely Iceland, Liechtenstein, Norway and Switzerland. This opinion of EFTA s Consultative Committee addresses the Commission s Communication on the Internal Market Strategy , and submits proposals for follow-up actions to be taken by the EFTA and the EEA EFTA States authorities. EXECUTIVE SUMMARY The EFTA Consultative Committee underlines the need for the EEA EFTA States Governments to pay more political attention to the Internal Market and to commit themselves to its good functioning. This would ensure that businesses and citizens in the EEA EFTA States benefit from the same opportunities as those in the EU Member States. Accordingly, the EFTA Consultative Committee recommends that the authorities in the three EEA EFTA States establish national Internal Market Strategies, based on an evaluation of priority areas that are important for the EEA EFTA States competitiveness, growth, social inclusion and sustainable development. Such national strategies should be based on the actions listed in the Commission s Strategy, with special focus on actions addressed to the Member States. The national Internal Market Strategies must be systematically monitored and regularly assessed to ensure progress. National monitoring units should be established in all the EEA EFTA States, and steps to ensure effective problem solving systems should be taken without delay. The Committee furthermore underlines the importance of more and better administrative cooperation among all the surveillance and enforcement authorities of EEA Member States with the aim of achieving homogeneous interpretation and enforcement of Internal Market regulations. Mutual recognition is a basic principle for a well functioning internal market. The EFTA Consultative Committee therefore urges the EEA EFTA States to contribute to the Commission s ongoing work in this field, in close cooperation with the Social Partners. A high quality regulatory environment is essential for competitiveness. Consequently, the political agenda must give high priority to better and simpler legislation. Systematic and comprehensive impact analysis with the objective of reducing the administrative and economic burden is essential, also at national level. The Consultative Committee calls upon the authorities in the EEA EFTA States to carry through both impact analysis and Internal Market compatibility tests when proposing new national legislation. It is important that authorities at all levels and in all ministries involved in legislative activities are aware of the importance of this concept. National information campaigns should be carried through to raise general awareness of Internal Market opportunities and to improve knowledge of the EEA Agreement. The EFTA Consultative Committee calls upon the EEA EFTA States to establish national Information Action Plans, which would include information to both businesses and citizens on their rights and obligations, as well as information to the authorities at all levels on administration and management of the EEA Agreement. 1

3 Such information should be directed towards these groups in the existing 18 EEA States and, even more importantly, to the 10 accession countries. The EFTA Consultative Committee is prepared to contribute to the authorities efforts to achieve a better functioning internal market, which ensures the European welfare society and a better quality of life for the citizens. The Committee underlines the importance of close cooperation between the authorities and the Social Partners in this respect. I INTRODUCTION 1.1 The EU s Internal Market Strategy is of great relevance and importance to the EEA EFTA States as they are partners in the Internal Market through the EEA Agreement. 1.2 New focus on the Internal Market through the Internal Market Strategy is not only very welcome, but also necessary in order to reap the full benefits of one big European market. As a central element of the Lisbon Strategy, the Internal Market Strategy represents a major instrument in the efforts to strengthen European competitiveness and to achieve an optimal internal market, and thereby ensure the European welfare society and better quality of life for the citizens. By participating in the Internal Market the EEA EFTA States are affected by and involved in the development of both strategies. Also, the enlargement of the Internal Market to 28 members is of major significance for the EEA EFTA States, as it is for the EU. 1.3 According to the Commission s analysis The Internal Market - Ten Years without Frontiers published in January this year, the Internal Market does not yet function optimally. Lack of political attention, discipline and will in the Member States are among the main reasons for the under-performance of the Internal Market. 1.4 Businesses and citizens in the EEA EFTA States experience exactly the same problems as their counterparts in the EU Member States, as was confirmed by the EFTA Bulletin on the EEA and the Internal Market Towards 10 years. However, lack of knowledge of the EEA Agreement, and the rights and obligations which it entails, causes additional problems for people and businesses from the EEA EFTA States. The EEA EFTA States must do their utmost to raise awareness of the Agreement - both through national efforts, as well as in cooperation with the EFTA Secretariat, the EU and its current and future Member States. II THE INTERNAL MARKET STRATEGY: GENERAL COMMENTS 2.1 The Internal Market Strategy lists a large number of actions. Special focus is put on the EU Member States obligations and commitments. The Consultative Committee stresses that it is as important that the EEA EFTA Member States take responsibility for the Internal Market and, thus, carry out initiatives to make it more integrated and functional. The Committee also underlines that an optimal Internal Market will not be achieved without full cooperation between the public authorities and the Social Partners. In this process, the ILO core conventions, including human and trade unions rights as well as gender equality must be respected and adhered to. The Social Dialogue should be vigorously pursued throughout the EEA as well as in the accession countries. 2

4 2.2 Greater administrative cooperation between Member States, e.g., in the areas of interpretation of directives and market surveillance, is crucial to the achievement of the goals of the Internal Market. The Consultative Committee believes that market surveillance has a very important role to play in ensuring confidence in the system, including fair competition, safe products and respect for human and workers rights. Therefore more attention should be given to this area. 2.3 The EFTA Consultative Committee believes that the key point for a successful implementation of the Internal Market Strategy is the support and commitment of the Member States, the EEA EFTA States included. The Committee underlines the need for increased political focus by the authorities of EEA EFTA States on the Internal Market to ensure that it functions well and on their commitments as members of this market. The EFTA Consultative Committee urges the authorities in the EEA EFTA States to closely follow up the actions listed in the Commission s Strategy, to ensure that the EEA EFTA States are not excluded from the new dynamism, which the Commission s Strategy aims at, and to ensure that the businesses and citizens of the EEA EFTA States benefit from the same opportunities as their counterparts in the EU Member States. The Consultative Committee recommends that the authorities in the three EEA EFTA States establish national Internal Market Strategies, based on an evaluation of priority areas that are important for the EEA EFTA States competitiveness, growth, social inclusion and sustainable development. Such national strategies should be based on the actions listed in the Commission s Strategy, with special focus on actions addressed to the Member States. The Committee underlines the importance of cooperation between the Governments and the Social Partners, thus ensuring a well-functioning Social Dialogue, basic democratic ideas, and trade union rights as well as gender equality. 2.4 In the following chapters, the EFTA Consultative Committee comments on certain priority areas, which it deems to be of importance for competitiveness, growth, social inclusion and sustainable development in the EEA EFTA Member States. III FACILITATING THE FREE MOVEMENT OF GOODS Mutual Recognition 3.1 The EFTA Consultative Committee supports the need for promoting a correct and uniform use of the principle of mutual recognition, which is a tenet of the Internal Market. The Committee welcomes the Commission s Communication, published on 28 October 2003, which aims at clarifying the mutual recognition principle. It is important to improve the application of mutual recognition by providing a user-friendly guide on how the principle should work in practice and what rights it gives to economic operators. 3

5 3.2 As recommended by the Commission in the Internal Market Strategy, the Committee believes that wide consultations with Member States, Social Partners, industry and consumer organisations on possible options and solutions is very important in order to prevent this principle from turning into a new administrative burden. Referring to the above-mentioned Communications, the EFTA Consultative Committee calls upon the EEA EFTA States to take necessary steps for consultations at national level on any legal steps to be taken to ensure that the principle of mutual recognition is functioning as intended. Enhancing the New Approach 3.3 The EFTA Consultative Committee welcomes the Communication from the European Commission on Enhancing the Implementation of the New Approach Directives, published at the same time as the new Strategy for the Internal Market. Enhancing the New Approach is important in order to ensure the free movement of goods and the competitiveness of European businesses. 3.4 Regarding the Commission s Communication, the EFTA Consultative Committee strongly supports measures that strengthen the legal framework and administrative cooperation between notified bodies, accreditation, market surveillance and enforcement. 3.5 The Committee also strongly supports the strengthening of CE marking and a stronger legal common base for a more consistent and effective implementation of directives including in areas not covered by the New Approach. However, some differences between individual directives are necessary in order to adapt them to specific sectoral needs. The Committee suggests an in-depth analysis of the legal and factual differences between the various directives before taking further steps on a common base directive. The Consultative Committee calls upon the EEA EFTA States to take the necessary steps to strengthen the understanding of CE marking among businesses and consumers and to strengthen the administrative cooperation between notified bodies, accreditation, market surveillance and enforcement. Product Marking 3.6 National product marks are fragmenting the Internal Market. Concrete measures should be taken to decrease the number of national (public as well as private) marking schemes. Findings of surveys among companies, both in EEA EFTA States and EU Member States show that there are still quite a few issues to be dealt with in connection with national testing, registration and marking. There are problems with countries that do not recognise the tests and standards of other EEA members. In such cases, further documentation is often required from the local authorities. These requirements considerably increase the costs borne by companies. 4

6 3.7 The EFTA Consultative Committee therefore welcomes and supports the Commission s proposal for a comprehensive study on voluntary marking at both national and European level. The EFTA Consultative Committee calls upon the EEA EFTA States to contribute to the study on voluntary marking and to encourage national test houses to conclude Mutual Recognition Agreements (MRAs). The Consultative Committee also urges the EEA EFTA States to contribute with more resources to the marketing and use of Europe-wide quality marks. For each product sector, the goal should be to have only one test and one mark, which would be accepted throughout the EEA. IV INTEGRATING SERVICES MARKETS 4.1 The Commission s report on the State of the Internal Market for Services 1 clearly demonstrates that action is needed. Services still account for only 20% of trade in the Internal Market this percentage was higher a decade ago. As nearly 90% of the SMEs in the EU are in service industries, there is an urgent need for improvement. 4.2 In the area of services, Member States are accountable for most of the barriers, for example through a lack of mutual recognition of qualifications and because of requirements for registrations. 4.3 The EFTA Consultative Committee welcomes a proposal for a Directive on Services as well as the Commission s proposal to extend the screening mechanism for draft national regulations. 4.4 The Committee supports the Commission s draft Directive on the recognition of professional qualifications. The proposed Directive seeks to clarify and simplify the rules in order to facilitate the free movement of qualified people between Member States. The EFTA Consultative Committee calls upon the authorities of the EEA EFTA States to contribute to a rapid and homogenous national implementation of the Directive on the recognition of professional qualifications when adopted, and also to strengthen the administrative cooperation in order to achieve actual mutual recognition of diplomas and professional qualifications. V ENSURING HIGH QUALITY NETWORK INDUSTRIES 5.1 The Committee welcomes the Commission s Green Paper on Services of General Interest and the debate on this topic. In the Green Paper, the Commission discusses the need for a general horizontal EU regulation on public service obligations. The EFTA Consultative Committee does not see the existing rules as a barrier to the ability of national, regional or local authorities to perform the tasks that they choose to. Nor do they stand in the way if authorities want to liberate a sector or a part of a sector 1 CM 2002/ 441 5

7 or further quality improvements in these areas. The Consultative Committee underlines that it is important for the authorities to be able to continue to determine on their own how they want to produce and offer services of general interest. 5.2 The Consultative Committee supports the debate on public-private partnerships. VI REDUCING THE IMPACT OF TAX OBSTACLES 6.1 The EEA Agreement does not cover taxes and duties. Nevertheless, within all of the four freedoms, which the EEA Agreement is based upon, regulations on taxes and duties have an effect, in particular when it comes to company, property and capital tax systems. In addition, businesses and industries in the EEA EFTA States are directly affected by the regulations in the EU s VAT Directive for third countries. The EFTA Consultative Committee urges the authorities in the EEA EFTA States to follow closely the development in the taxation area, and to align policies in such a way that the conditions of competition for the businesses and industries in these countries are at least equal to those of their competitors in the EU Member States. VII EXPANDING PROCUREMENT OPPORTUNITIES 7.1 The EFTA Consultative Committee supports the proposed actions for a more efficient and open public procurement market and underlines the need for an urgent and homogenous national implementation of the legislative procurement package. 7.2 The Consultative Committee believes that it is very important that the EEA Member States establish and support the development of training programmes for officials working in the public administration as well as in private and public companies to increase knowledge on procurement rules and procedures. The Committee welcomes the proposal for national surveillance and enforcement authorities on public procurement tenders. 7.3 The EFTA Consultative Committee is pleased to see that the Public Procurement Network will be expanded to include the EEA EFTA States. Enhancing European cooperation in this field will make it easier for SMEs to take part in this substantial market. The EFTA Consultative Committee recommends that the authorities in the EEA EFTA States take sufficient steps to inform procurement officials in all administrations and at all levels, as well as companies, about the public procurement regulation. Efficient surveillance and enforcement of the public procurement regulations must also be ensured, exchange of best practices encouraged and access to public tenders for SMEs improved. VIII IMPROVING CONDITIONS FOR BUSINESS 8.1 To a large extent, it lies within the responsibility of each EEA Member State to create framework conditions which support creative and dynamic businesses, necessary 6

8 in the stimulation of innovation and investment and in ensuring industry s competitiveness. This is the very focus of the Lisbon Process The policy measures required to foster entrepreneurship and innovation are mainly within the direct control of Member States. This can be achieved by benchmarking on the basis of best procedure projects co-ordinated by the Commission and by making use of the information collected in the course of the reporting on the implementation of the Charter for Small Enterprises. 8.3 The EFTA Consultative Committee hopes that, in accordance with the recommendations of this charter, a system will be established for consultation and cooperation with the organisations representing small enterprises and trade unions to guarantee their participation in the legislative process. 8.4 Economic operators need to know that their investment in innovative ideas and products will be protected across the EU. The EFTA Consultative Committee therefore welcomes actions to fight against counterfeiting and piracy. 8.5 Moreover, investors need the guarantee that, when making investment choices, they can rely on company accounts and reports. Firms need to be confident that they can compete on a level playing field, e.g., free from the distortion effects of state aid. The EFTA Consultative Committee supports the Commission s appeal to the Member States, to re-direct state aid towards horizontal objectives of common interest, such as environmental protection and research and development and SMEs. The Committee calls upon the EEA EFTA States to follow in the same direction. The Committee suggests that ESA monitors the developments and publishes the results in an ESA State Aid Scoreboard, along with the Commission s State Aid Scoreboard. IX MEETING THE DEMOGRAPHIC CHALLENGE 9.1 The EFTA Consultative Committee acknowledges the fact that Europe s demographic development presents a major challenge. The Committee is of the opinion that a well functioning Internal Market will generate extra growth and competition, which again may create new jobs. This is necessary in meeting the demographic challenges and the increasing unemployment rate. 9.2 The recently adopted Pensions Funds Directive will prove important to the development of the effective second pillar of pension systems in many Member States and thereby help to alleviate the pressure from the ageing population. However, for the Directive to be fully effective, elimination of tax obstacles to cross-border provision of occupational pensions is necessary. The Consultative Committee supports the Commission s plan to monitor national tax rules impeding the cross-border provision of occupational pension and cross-border transferability. 2 Reference is made to the Committee s opinions on the Lisbon Strategy of 23 January 2001, 26 February 2002, 12 December 2002 and 14 May

9 9.3 The EFTA Consultative Committee supports moves to facilitate labour mobility in the European Union. It therefore welcomes the Commission s consultation on the portability of supplementary pension rights of workers making use of their right to free movement within the European Union. However, any EU initiative should aim to remove obstacles to free movement without interfering with the organisation of supplementary pension arrangements in Member States. 9.4 The ageing of the population will also have an impact on health services. To fully exploit the potential of the Internal Market, the Consultative Committee supports proposals on cross-border provision of and access to treatments. This should not impair Member States ability to ensure sufficient access to high quality hospital treatment on their territory, to control expenditure and maintain public standards. Language problems are a challenge in this context but, as a first step, regional cooperation could be outlined. X SIMPLIFYING THE REGULATORY ENVIRONMENT 10.1 A high quality regulatory environment is essential for competitiveness and a functional Internal Market. Better and simpler regulation must be given high priority on the European political agenda. It is essential that all new legislation and revision of existing legislation are submitted to a systematic and comprehensive impact analysis with the objective to reduce the administrative and economic burden for companies and citizens The Consultative Committee supports the Better Regulation Action Plan and the Simplification Rolling Programme. The Committee underlines the need for concrete actions that can lead to better and simpler legislation The Consultative Committee fully supports the idea of putting more focus on choosing the right legislative instrument or technique. In certain areas there might be a need for more harmonisation instead of mutual recognition and in others there might be a need for regulations instead of directives In this connection and for the further simplification process, the Committee stresses the importance of making a wide stakeholder consultation. It is important that the process starts on the basis of real life and that citizens and businesses get a simple and efficient legislative framework The EFTA Consultative Committee welcomes the proposal for a compatibility test to be carried out when new legislation is developed at national level. Through such a test, greater responsibility and commitment for safeguarding the principles of the Internal Market could be better shared by all decision-makers and thus inspire national authorities to think European. The Consultative Committee calls upon the authorities in the EEA EFTA States to give due consideration to such compatibility tests when proposing new national legislation. It is important that ministries and all the levels of administration involved in legislative activities are aware of the importance of this concept. 8

10 10.6 It seems to be a good idea to create a website where interested parties can report on particularly complex rules or rules which may fail the Internal Market compatibility test. It would be appropriate if the Commission on the same site could give feedback and monitor the follow- up of the simplification process. This should be coordinated with the SOLVIT initiative, which the Consultative Committee strongly supports The Commission highlights the need to give citizens from other EEA countries easy access to information on national legislation. Such information and availability online would facilitate the free movement of persons, the setting up of companies etc., which are often complicated due to a lack of information on national legislation in the 18 EEA Member States. The EFTA Consultative Committee calls upon the EEA EFTA States to take on the task of informing about national legislation without delay. It may also be a good idea to create common on-line information on national regulations in the EEA EFTA States on the EFTA website Indicators for measuring the administrative burden can prove very useful. In this connection, the Consultative Committee refers to the Dutch system MISTRAL. In the Netherlands, there is also an independent organisation (ACTAL), whose task is to monitor the simplification process. Such a model might also be useful at European level. To achieve more transparency, it would be an advantage if the same indicators were used in all countries. XI ENFORCING THE RULES 11.1 Homogenous transposition, interpretation and enforcement of the Internal Market rules and regulations are vital for the credibility of the Internal Market. This can only be achieved if the authorities of the EEA Member States are prepared to play a much more active role in the day-to-day management of the Internal Market. The EFTA Consultative Committee fully supports the idea of studying the possibilities of setting up national mechanisms, which could help to ensure the correct and timely application of Internal Market legislation. Such national monitoring units should work in close cooperation with each other in a network to ensure uniform interpretation and enforcement. Such national monitoring units should also serve as national coordination centres and contact points for problem-solving through the SOLVIT initiative The Swedish Kommerskollegium could serve as a good model for such problemsolving units. One could also consider regional cooperation in this field, i.e., neighbouring countries setting up one common regional monitoring and problemsolving unit. XII PROVIDING MORE AND BETTER INFORMATION 12.1 The EFTA Consultative Committee fully supports the proposal for national Information Action Plans to raise general awareness of the opportunities in the Internal 9

11 Market, as well as information on where companies and citizens can find help and assistance. The EFTA Consultative Committee calls upon the EEA EFTA States to establish national Information Action Plans to raise the general awareness of Internal Market opportunities among businesses and citizens. Information on the SOLVIT system must be included. It is also necessary to conduct a comprehensive information campaign on the EEA Agreement, and the rights and obligations entailed by the Agreement. Such information must be directed towards the authorities at all levels in the existing 18 EEA States, and, even more importantly, in the 10 accession countries. The EFTA Consultative Committee urges the EEA EFTA authorities to carry through such information campaigns. The EFTA Secretariat could be given the resources to work out the information and carry through the campaign. The Consultative Committee would be happy to assist and contribute in the development and distribution of the information. XIII GETTING THE BEST OUT OF THE INTERNAL MARKET 13.1 In the Communication on the Internal Market Strategy , the Commission says that the administrations of the accession countries and the current EU Member States will be requested to demonstrate that they have taken steps to inform the competent authorities and enforcement officials of the implications of EU enlargement, so that full rights are conferred on citizens and businesses consistent with membership, subject to any transitional arrangements. The EFTA Consultative Committee urges the EEA EFTA States to work closely with the Social Partners to ensure that new funds for economic and social cohesion in the EEA following EEA enlargement are directed to areas where they will be of the most effective possible use. The EFTA Consultative Committee is confident that the new Member States will pursue practices, which give companies, workers and citizens the full benefits of the enlargement of the Internal Market. The EEA EFTA Social Partners can through cooperation with social partners in the new Member States share experiences and advices on how the Financial Instrument can best be utilised to realise this important goal. Activities to raise awareness about the EEA Agreement in an enlarged Internal Market are and will continue to be essential. XIV THE INTERNAL MARKET IN AN INTERNATIONAL CONTEXT 14.1 The Commission seeks to improve controls at the external frontier via a common risk management approach. It also proposes creating teams of customs experts in the Member States to provide rapid specialised support at the external frontier. 10

12 The EFTA Consultative Committee underlines the importance for the EEA EFTA States to follow and take part in the work outlined by the Commission in this field. It will be important to keep up with the EU in the establishment of Mutual Recognition Agreements with third countries, so that the EEA EFTA States do not suffer a comparative disadvantage in their trade relations with these countries. XV MONITORING 15.1 The Commission s Internal Market Strategy acknowledges and underlines the importance of monitoring and evaluating the Internal Market. The Commission notes that the Internal Market Strategy will fail unless the market is systematically monitored and evaluated. The EFTA Consultative Committee supports this view, and urges the EEA EFTA States to follow up the different exercises of surveillance and evaluation of the Internal Market and remove obstacles Even if it is not enough in itself, the Committee assumes that the success of the Commission s new strategy for the Internal Market will be assessed regularly and published in yearly reviews, as has been the case for the previous strategy. In the EFTA Consultative Committee's opinion, such an assessment should focus on: Consolidation; Enforcement; Problem-Solving; and Information. All actions and activities in the Strategy can be assessed under these focus areas. The EFTA Consultative Committee suggests that national Internal Market Strategies in the EEA EFTA States be assessed in the same way. The EFTA Surveillance Authority (ESA) should develop its Scoreboard to include an assessment of the follow-up by the EEA EFTA States of the relevant actions listed in the Commission s Strategy. 11