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Services: Commission launches new strategy to dismantle remaining barriers

European Commission - IP/01/31   11/01/2001

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IP/01/31

Brussels, 11 January 2001

Services: Commission launches new strategy to dismantle remaining barriers

The European Commission has launched a major new strategy to improve the practical working of the Internal Market by ensuring that service providers can operate as easily throughout the EU as they can in any single Member State. The Commission's initiative responds to a specific request from the Lisbon European Council in the context of making the EU the most competitive economy in the world within ten years. The aim of the strategy is to eliminate by the end of 2002 all barriers that can currently prevent a business model successful pioneered in one Member State from being introduced elsewhere in the Union. Currently, red tape all too often stops cross-border competition in services, restricts choice and increases costs for business and private customers and so limits economic growth and job creation. Under the Strategy, the Commission will in 2001 accelerate a number of initiatives in specific problem areas (such as recognition of qualifications and sales promotions) whilst in parallel rigourously analysing persistent barriers to cross-frontier movement of services and where necessary pursuing infringement procedures. In 2002, the Commission will set a precise timetable for Member States to dismantle specific barriers identified, present non-legislative supporting measures (e.g. codes of conduct) and propose harmonised rules for service provision where strictly necessary. It will also propose a mechanism to ensure that in other areas EU Member States will be required to recognise each others' rules and practices, rather than impose their own, whilst ensuring a high level of protection of public interest objectives.

Internal Market Commissioner Frits Bolkestein said "The services sector in Europe offers huge potential for growth, competition and employment. If the EU employed the same percentage of people in the services sector as the US, we could create 36 million new jobs. This strategy marks a step change for Internal Market policy towards the free movement of services. To date we have tended to approach services on a sector by sector basis which has led to an over-emphasis on sector-specific detail when so many of the necessary changes are common to a wide range of services. This new approach to the problem reflects the fundamental shift in Europe from a manufacturing to a service-driven economy."

Harnessing the new dynamic in services

Improving the conditions for the free movement of services should release the dynamism inherent in the Internal Market and so enhance competitiveness, growth and employment creation in the European economy. The spread of the internet and other aspects of the Information Society has sparked a new dynamic in services, by cutting the cost of transmitting and acquiring information and accelerating the rate of diffusion of innovation across national borders. There is thus vastly increased potential for cross-border demand and supply of services in the Internal Market.

This new potential is not merely for on-line services. For example, companies may learn about new suppliers or new market opportunities on-line, but the actual business conducted may also be off-line. In order to spread the opportunities created by new technology to all businesses and consumers, it is essential that the Internal Market in services works efficiently and that companies and their customers are not put off from taking up cross-border opportunities because of regulatory or other barriers. Currently, for example, over 47% of firms providing business services to other EU countries realise 10% or less of their turnover outside their home Member State, according to a survey undertaken by the Commission for its latest report on the functioning of goods, service and capital markets (see (IP/01/7).

In order to create a comprehensive framework for the free movement of services, the strategy takes a new approach, rather than taking a sector by sector approach. This means it will cover not only the traditional service sectors (such as retail, logistics, transport, accounting, recruitment and other business services), but also all the service activities carried out by manufacturers such as promotion, distribution, marketing and after-sales care for their products.

The strategy sets out a two step approach to allow services to move across national borders as easy as within a Member State:

    Stage one 2001

    The Commission will launch a detailed survey of several thousand EU enterprises to identify persistent barriers to the cross-border provision of services. The results of this survey will be analysed to identify key areas in which to accelerate infringement procedures. In parallel, the Commission will work actively with Member States and the European Parliament to speed adoption of a number of proposals already in the pipeline (concerning for example postal services liberalisation, distance marketing of financial services, takeover bids and value added tax on digital products). It will also review existing Directives (e.g. technical standards, legal protection of conditional access services and of databases) to enhance their contribution to the functioning of the Internal Market in services and look at flanking measures to support the competitiveness of the EU service industry (e.g. improved statistical data, benchmarking).

    Stage two 2002

    This stage represents the core of the Commission's new approach. Based on the analyses carried out in 2001, the Commission will present a systematic and comprehensive list of persistent barriers and a request for their removal to Member States. Crucially, as a spur to action and to guarantee a competitive Internal Market, the Commission will propose harmonised rules where strictly necessary For barriers which are horizontal in nature, an instrument will be proposed containing the following elements:

    • Targeted harmonisation of requirements affecting several sectors or with knock-on effects across sectors, on the basis of a high level of protection for general interest objectives.

    • A mechanism to ensure that the Internal Market can be used by all European service providers as their domestic market, notably through the efficient application of the principle of mutual recognition.

    • Procedures to cope with new market developments and the evolution of the law, so as to avoid the risk of re-fragmentation of the Internal Market and to identify at an early stage the need for new Community legislation.

Consultation

The Commission hopes to draw on the experience of customers and businesses trying to provide or use services across national frontiers in developing this strategy. In addition to the planned survey, all comments on the issues raised in the Communication are welcome and can be sent in writing by 1 June 2001 to: European Commission, attention DG MARKT/E, rue de la Loi/Wetstraat 200, B-1049 Brussels, e-mail address: MARKT-services@ec.europa.eu.

The full text of the Communication is available on the Europa website:

http://ec.europa.eu/internal_market/


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