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IP/01/1604

Brussels, 19th November 2001

Internal Market Scoreboard reveals some progress on implementation but many infringements

For the first time the average percentage of Internal Market Directives not yet implemented in national law (i.e. the implementation deficit) has shrunk to 2.0% in the EU, according to the latest Internal Market Scoreboard. Five Member States (Finland, Denmark, Sweden the Netherlands and Spain) already meet the European Council's target of an implementation deficit of less than 1.5%. Finland has the best performance of all Member States, whereas France and Greece are together in last position. This positive trend is marred by a large number of Internal Market infringement proceedings, about 1500. France, Italy and Germany are together responsible for nearly 40% of all these infringement cases, while Ireland, Belgium and Greece account for a disproportionate number of infringements in relation to their size. The Scoreboard also features the results of a Europe-wide survey of 4000 companies about the quality of the regulatory environment. The survey shows that most companies find national and Community rules overly complicated and burdensome. It is estimated that at least €50 billion could be saved with better quality regulation. As for implementation of the Internal Market Strategy, 37% of target actions due by the end of 2001 to improve the functioning of the Internal Market are not expected to be achieved on time, according to the Scoreboard.

Internal Market Commissioner Frits Bolkestein said: "The Commission Scoreboard's 'name and shame' approach is beginning to bear fruit, and most Member States are trying hard to improve their implementation of Internal Market Directives. However, it is disappointing that France, Germany, the UK, Austria and Greece are still not making enough effort to meet the European Council's target of an average EU implementation deficit less than 1.5% by the Barcelona Summit in March 2002. The large number of Internal Market infringement proceedings is also major source of concern. This serves to undermine the confidence of citizens and businesses in the Internal Market. I therefore urge Member States to settle cases early and avoid protracted Court proceedings."

The Internal Market plays a key role in achieving the EU's objective of becoming the most dynamic economy in the world by 2010. It gives EU citizens a wider choice of quality goods and services, greater freedom to travel, work, study and live in other EU countries. It offers greater trading opportunities to our companies. But the Internal Market can only achieve its full potential if agreed Directives are effectively implemented by Member States. The Internal Market Scoreboard keeps pressure on Member States by showing their relative performance in implementing this legislation. This approach has worked well: the EU average deficit has steadily fallen from 6.3% in 1997 to 2.0% at present.

Only 63% of the Internal Market Strategy's target actions due by the end of 2001 are expected to be completed on time. This is better than 2000, but still disappointing. A number of crucially important proposals identified by the Lisbon European Council as top priorities, including the Community Patent, the reform of EU rules on open and competitive public procurement, application of VAT to digital products and the further liberalisation of electricity and gas markets, are stalled or moving far too slowly. A number of important steps towards creating an integrated European Market for Financial Services by 2005 have been taken, with progress on money laundering, investment funds (UCITS), electronic money, distance marketing of financial services, and cross-border payments.

Internal Market Index

The Scoreboard includes a first Internal Market Index to track progress on the basis of 20 variables, including price dispersion, intra-EU trade, prices of utilities services, energy intensity and pollution. Taking 1996 as 100, the Internal Market Index for 2000 stood at 105.1. While the development of the Index is best considered over a longer period, a number of variables have been exercising downward pressure between 1996 and 2000. The Index would have been higher were it not for rising postal prices, high greenhouse gas emissions and inefficiencies in the Union's banking system. On the positive side, declining state aids and a reduction in costs of telecommunications pushed the Index up.

Implementation of Internal Market Directives

Member State implementation deficits as at 15 October 2001 (percentage)

ELFAUKDPIRLBLIENLSDKFIN
3.03.02.92.82.62.52.42.32.11.71.31.30.90.80.7

Most Member States have made good progress over the last six months. Finland and Greece in particular have greatly reduced their deficits since the last Scoreboard in May 2001. Despite this, Greece remains at the bottom of the league (together with France) because they were lagging so far behind. The Nordic countries are vying for the top position. Luxembourg and Sweden are the only Member States whose record has deteriorated, although Sweden's deficit remains below 1%.

Percentage improvement since 30 April 2001

SLBDPAFUKIRLEDKINLELFIN
-80-14779141527283435353850

The implementation process is continuous and a large number of new Directives, or amendments to existing Directives, will have to be implemented by the spring of 2002 the European Council's deadline. Indeed, Member States have to communicate to the Commission by 15 March 2002 a total of 822 national implementing measures to achieve a zero deficit. The table below shows the number of Internal Market Directives each Member State would have to implement to achieve a zero or a 1.5% deficit within that deadline.

A

ELFUKBDPIRLLINLDKESFIN
For a zero deficit717066666363635951504440393938
For a 1.5% deficit484743434040403628272117161615

The Internal Market remains seriously fragmented in that 10% of legislation has not yet been implemented in all of the Member States, so that the Internal Market is still operating at only 90% of its potential. As Germany, France and the UK large Member States - are amongst the Member States that have the most implementation delays, the legal insecurity that European companies and citizens are facing and the missed opportunities that flow from this are significant.

Infringements

The current number of Internal Market infringement proceedings is about 1,500. France, Italy and Germany are responsible for nearly 40% of all cases. Every breach of Community law is one too many, but the UK's score shows, for example, that it is quite possible for a major Member State to keep the number of infringement cases down. On the other hand, some of the smaller Member States account for a disproportionate number of infringements. Ireland, Belgium and Greece are the subject of twice as many infringement cases as the Netherlands. In turn, each of the three is responsible for more cases than the Nordic Member States combined.

Open infringement cases per Member State

FIDEBELIRLAUKNLPDKSLFIN
2241921501321281251227876595440353527

The Scoreboard also shows that only about one third of infringement cases are settled early. The majority of cases take more than two years to be resolved. When infringements go to Court, it can take very long before they are settled. But even when the Court rules in the Commission's favour, which it does in 9 out of 10 cases, Member States sometimes drag their feet before complying, so that the Commission has to re-launch proceedings. Belgium is the Member State that has failed to execute Court rulings most often.

Standardisation

Serious problems remain with European standards, particularly for construction products and in the machinery sector. In the construction products sector, for example, less than 10% of the standards that are needed to make the Internal Market work have been adopted. In the area of machinery, just half of the required standards have been agreed. It is not only the lack of standards in key industrial sectors, but also the long time it takes before they are adopted that causes uncertainty and fragments the Internal Market. The average time for adopting a harmonised standard now approaches 8 years.

Standardisation and product conformity are of vital importance to the functioning of the Internal Market. Without a large number of standards, the Internal Market for products will continue to frustrate EU companies, requiring them to make major investments in design and production before they can put their products on the market.

Survey on quality of regulatory environment in the EU

The results of a major independent survey of 4000 businesses in all Member States, undertaken for the Commission to assess how European companies rate the quality of their regulatory environment, is featured in the latest Internal Market Scoreboard. The key findings are that:

  • a large share of companies are dissatisfied with the quality of their regulatory environment

  • most companies have not yet felt any impact from government's attempts to simplify legislation, particularly companies in France, Germany and Denmark

  • at least € 50 billion could be saved with better quality legislation

  • Finland is regarded as the easiest Member State to trade with; the UK and Italy the most difficult.

The results of this survey underline the urgent need for a coherent and radical strategy to create a better regulatory environment for businesses across the Union. The December 2001 Laeken European Council (which will consider both the Commission's Action Plan on Better Regulation and proposals from Member States' experts) offers an invaluable opportunity for the EU to map out a clear and fresh approach to how regulation can best be designed and applied.

For more information on the Business Survey, see MEMO/01/376.

The full text of the latest Internal Market Scoreboard is available on the Europa internet site:

http://ec.europa.eu/internal_market (look under Single Market Scoreboard).


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