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Internal Market Scoreboard shows worsening national delays in implementing EU laws

Commission Européenne - IP/03/621   05/05/2003

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IP/03/621

Brussels, 5th May 2003

Internal Market Scoreboard shows worsening national delays in implementing EU laws

The latest Internal Market Scoreboard shows that the implementation deficit for Internal Market Directives is now an average of 2.4% per Member State, up from 1.8 % a year ago. The implementation deficit is the percentage of Directives which have not been written into national law after the deadline for doing so has passed. Only five Member States (Denmark, Sweden, Finland, Spain, UK) meet the European Council's target of a 1.5% deficit or less. Italy currently has the worst record, closely followed by Portugal and Ireland. The number of open infringement cases has also gone up by 6% compared to last year. This Scoreboard also presents data on prices in the future Member States which are on average almost 50% below the EU 15 average. Services are in general much less expensive in the future Member States while consumer electronics prices for example are closer to the EU15 average. Previous enlargements have sparked off price convergence and this enlargement may well do the same.

Internal Market Commissioner Frits Bolkestein said "Member States which do not implement Directives on time are reneging on commitments they have made. Worse, they are creating unnecessary barriers which prevent Europe's economy from achieving its full potential and hold back our companies and citizens. They are also damaging the prospects of a smooth enlargement process. Heads of Government have reiterated at successive European Councils the importance of getting the implementation deficit down. I now call on Heads of Government to back up those words with action, by making respecting European laws one of their personal objectives for this year."

Implementation of Internal Market Directives

After many years of uninterrupted progress the trend in the implementation deficit has taken a significant turn for the worse. 12 months ago it stood at 1.8% it is now at 2.4%. The eight Member States who last year failed to meet the 1.5% target set by the European Council but in some cases came close, all now have deficits of 3% or more.

It is a measure of their poor overall performance that France, which was bottom of the league a year ago, has managed to jump five places although its deficit has worsened slightly over the period from 3.1% to 3.3%. Only five Member States meet the 1.5% target (Denmark, Sweden, Finland, Spain, UK).

Member State implementation deficits as at 15 April 2003 (percentage)

IPIRLAELFLDNLBUKEFINSDK
3.93.73.53.43.33.33.23.02.01.81.51.21.01.00.6

Italy, soon to take over the Presidency of the European Union, now finds itself in last position. This is the consequence of a slow but steady fall in its ranking since 2001. The Commission will ask the Italian authorities to look into the reasons for this worrying development and find ways to speed up the implementation process.

Only four Member States (France, Spain, Belgium, and Denmark) have fewer Directives outstanding compared to six months ago.

Change in the number of outstanding Directives since 1 October 2002

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211615121110107632-1-3-5-6

The Barcelona European Council in March 2002 also set a 'zero tolerance' target for Directives whose implementation is two years or more overdue. In these cases, the reason for delay is not usually insufficient planning, but often goes deeper: it may be a symptom of serious political difficulties or even sheer unwillingness to implement. Only four Member States met this target (Denmark, Finland, Portugal, and UK).

Number of outstanding Directives with an implementation deadline before 1 March 2001

FLBIRLDELAIENLSDKFINPUK
965544331110000

Infringement proceedings and alternative problem solving

Regrettably, the number of open infringement cases has also gone up by 6% from 1505 in the November 2002 Scoreboard to 1598 today. The distribution of cases has hardly changed during the last 2 years; France and Italy continue to account for almost 30% of all cases.

Open infringement cases per Member State as at 28 February 2003

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22020015314413813613212179685747363432

Infringement proceedings are the Commission's 'classic' tool to ensure respect for EU law. The number of infringement proceedings has increased considerably over the last decade and their handling today takes up a considerable amount of resources both in the Commission and in Member States. With enlargement, the number of infringements may rise further. The majority of infringement cases take more than two years to be resolved.

In its recent Communication on 'Better Monitoring of the Application of Community Law' (COM (2002) 725 final), the Commission has therefore opted for a differentiated approach to the handling of complaints. In light of the seriousness of an alleged breach of Community law, the Commission decides on a case-by-case basis whether alternative problem solving mechanisms should be given a chance to resolve the problem or whether formal legal action needs to be initiated straight away. The underlying philosophy is, where possible, to find rapid solutions (which conform to EU law) to the problems faced by complainants. Nevertheless, Member States remain fully responsible for implementing EU law correctly and on time and the Commission always retains the right at any time to begin infringement procedures.

Among the complementary mechanisms used are 'package meetings' and SOLVIT.

Infringement "package meetings"

Package meetings involve experts from Member States and the Commission coming together in order to discuss a 'package' of cases being examined by the Commission for violation of EU law. The purpose of these meetings, which have been taking place since 1987, but which have been stepped up in recent years, is to solve cases without the need for further legal action. Nearly half of all cases discussed in package meetings are solved or can be considered to be on the way to being solved, usually because the Member State concerned has undertaken to change its legislation.

SOLVIT

SOLVIT has been in operation since July 2002. It deals with cases of misapplication of Internal Market rules by national and local administrations; for example the refusal to recognise a valid diploma or to allow market access to a product which conforms to the requirements of European directives. The victims of such misapplication can refer the case via a website or by telephone to the SOLVIT centre in their own Member State, which takes the case up with its counterpart in the country where the misapplication has occurred. SOLVIT's main advantage is speed: it sets target deadlines of 10 weeks to resolve complaints and finds solutions to more than 70 % of its cases.

    Average time (days) to resolve a SOLVIT case as at 15 April 2003

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1011009383777362615857564845403764

The use made of SOLVIT is uneven. Germany, Portugal and the Netherlands have made the most active use of SOLVIT on behalf of their businesses and citizens.

    Cases input by 'Home' SOLVIT Centres as at 15 April 2003

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211713987765533321100

For more details of SOLVIT and addresses of national SOLVIT centres, see IP/02/1110 and :

http://ec.europa.eu/internal_market/solvit/index_en.htm

Substantially lower prices in future Member States

Most of the countries which will soon join the EU have a very low price level compared to current Member States. When Portugal and Spain joined in 1985 their price level was respectively 60 and 72% of the EU12 average. Half of the new Member States have a price level below 50% of the EU15 average.

Price level for goods and services (private final consumption) in percent of the EU15 average (=100)

MaltaCyprusSloveniaPolandLatviaLithuaniaEstoniaCzech RepublicHungarySlovakia
87826655544746464641

The low aggregate price level in the future Member States seems to be explained to a large extent by their relatively low wages and rents. Products with a high input of local labour and produced in the future Member States (e.g. hairdressing, bread) thus have significantly lower prices, whilst prices for product groups where many goods are imported are similar to prices in the existing EU (soft drinks, washing machines, dryers).

Monitoring price convergence across current and future Member States provides valuable hints to the extent to which markets are really integrating. There is every reason to believe that this enlargement will follow the example of previous enlargements and lead to price convergence. Indeed, for the ten new Member States that will join next year, convergence seems to have begun already. It is too early to draw firm conclusions from the data currently available. However, from 1999 to 2001 the price dispersion in EU25 has been reduced from 27.2% to 25.6%. In the same period the price dispersion in EU15 has remained stable. The narrowing of the gap seems therefore to be a result of a convergence process starting in the new Member States.

Once those countries become part of the EU they will continue to catch up with EU15 living standards. Wages and incomes will increase as the countries get richer and this will spill over into prices, especially non-tradable goods and services. The large differences in prices of services between the new and the old Member States is therefore likely to be reduced over time.

However, enlargement may deliver downward pressure on the prices of some tradable goods and services in the new Member States. More efficient economic structures in the new Member States can lead to lower prices in some sectors. For instance, the experience with the liberalisation of telecommunication industries in EU15 shows that competition can deliver lower prices to consumers. In this context the Internal Market plays an important role not only by ensuring competitive pressure, but also by facilitating cross border investment and exchange of know-how.

Tax obstacles in the Internal Market

This Scoreboard also illustrates how differing rates, bases, and systems of taxation in the areas of corporate taxation, Value Added Tax (VAT), motor vehicles, and occupational pensions prevent the Internal Market from delivering its full potential.

More information and the full text of the Scoreboard are available on the Commission website at:

http://ec.europa.eu/internal_market/en/update/score/index.htm


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