Brussels, 2nd December 1999
Business satisfaction with Internal Market grows but Scoreboard shows Member States still slow to implement
European businesses note a significant reduction in obstacles to cross-border trade and improved management and efficiency of the Internal Market, according to a survey for the latest issue of the European Commission's Single Market Scoreboard. The latest Scoreboard also shows that although most Member States now work faster to implement Internal Market legislation into national law, they are still too slow. All but Greece, Luxembourg, France, Portugal and Ireland have an implementation deficit below four per cent compared with only two Member States in November 1997 when the Scoreboard was first introduced, with Italy having made particular progress in the last six months. But disputes concerning alleged breaches of Internal Market rules still to take too long to resolve and stop citizens and businesses from enjoying the full benefits of the Internal Market.
"I am encouraged that people are increasingly satisfied with the performance, efficiency and management of the Internal Market, but we can still improve, building on the new Strategy which I hope will be endorsed by the Helsinki European Council. The Internal Market must deliver its full potential in terms of employment, flexible and efficient markets, competitiveness, growth and quality of life for Europe's citizens, but that can only happen if the rules are properly applied. We need to build a shared commitment to active enforcement, with the Commission acting as an independent referee," said Internal Market Commissioner Frits Bolkestein. The Internal Market gives Europe's citizens a wider choice of quality goods and services, greater freedom to travel, work, study and live in other EU countries. Previous editions of the Scoreboard, by comparing efforts and results achieved in applying Internal Market rules, have encouraged Member States to compete with each other to achieve the best performance.
The backlog of Internal Market legislation not implemented by Member States has further declined. Ten of the 15 Member States have an implementation deficit below 4% compared to only two in November 1997. The progress achieved by Italy is particularly noteworthy, similar efforts are now required from Greece, Luxembourg, France, Portugal and Ireland whose transposition record remains above the 4% threshold. Greece, France and Luxembourg together account for a third of the implementing measures overdue (306/902 Directives).
Figure 1: Progress in implementation of Internal Market Directives, 1997-99 Percentage of Directives overdue at 15 November 1999
Some 40% of Directives whose deadline for implementation expired in 1997 have still not been fully implemented by all Member States. For 1998 the figure rises to 78% and for those due for implementation before 15 November 1999, it is 95.7%. The slow implementation of recent legislation remains a source of concern because it fragments the Internal Market and delays economic reform. Measures adjusting rules to take account of technological developments and new provisions to improve consumer protection or protect the environment cannot take full effect if not implemented in all Member States.
Infringements and simplification
Similarly, early resolution of legal disputes between Commission and the Member States remains crucial to the efficient functioning of the Internal Market. Infringements activity remains relatively high but more importantly disputes continue to take too long to resolve. The Scoreboard shows that only 40% of infringement cases opened in 1997-98 for alleged incorrect application or implementation of Internal Market rules have been closed to date following the sending of a letter of formal notice. Performance is uneven among Member States. Cases concerning Portugal, Luxembourg, France and Belgium show the lowest rate of resolution.
The high proportion of reasoned opinions and referrals to the Court for certain Member States in part reflects this difficulty. It may result from political or legal problems or, more simply, from the fact that administrations take a long time to take the necessary measures to resolve the problem.
Figure 2 : Comparison of Member States ratio of cases closed after receipt of letter of formal notice for 1997-1998
|Letters of formal notice||56||17||70||74||50||132||29||105||16||27||51||45||26||32||40||770|
|Number of cases closed||16||8||25||31||20||37||11||43||4||13||19||10||14||13||19||283|
Business confidence in the Internal Market remains high. Results from a new business survey for the Scoreboard conducted in September 1999 among 4000 business people confirm the view that there is a continuing improvement in the functioning of the Internal Market. The majority of interviewees perceive a reduction in barriers to doing business in other countries of the Union.
In answer to the question, "In the last two years, how have obstacles developed in the Internal Market?", the responses were as follows:
|Tended to decrease||25%|
|Tended to increase||7%|
Three times as many firms believe obstacles have disappeared than believe they have increased. 44% of businesses believe that obstacles are tending to decrease or that they have been significantly reduced compared to just 27% who believe the situation has not changed.
This improvement is attributed to improved communications and access to information. Other important factors are reduced administrative burdens and improved knowledge of how other EU markets operate. The main inhibiting factors are cited as differences in the way rules are applied, the unfamiliarity with or complexity and inadequacy of the rules, lack of information on how other EU markets operate.
In rating the current openness and functioning of the Internal Market, business people give it 61.8 points out of hundred. Notwithstanding, an effort is still required to remove remaining obstacles. Firms identified a wide range of problems (Figure 3). Heading the list are barriers related to technical standards for goods and services, either in the form of the cost necessary to render products/services compatible with national specifications or as unusual testing or certification procedures. Other frequent obstacles are: problems with VAT obligations, state aids favouring competitors and restrictions in accessing markets related to licences, rights or exclusive distribution networks.
Three strong messages emerge from the business survey feedback:
Figure 3: Most frequent obstacles in the Internal Market cited in the business survey
SME + 20
|Additional costs to render products or services compatible with national specifications||36%||41%||37%|
|Unusual testing, certification or approval procedures||31%||34%||31%|
|State aids favouring competitors||28%||36%||29%|
|Difficulties related to the VAT system and VAT procedures||27%||30%||27%|
|Restrictions on market access; existence of exclusive networks||22%||29%||23%|
|Costly financing arrangements for cross-border transactions-||18%||20%||18%|
|Insufficient action against piracy and counterfeiting||18%||13%||18%|
|Discriminatory tax treatment of your operations||17%||20%||17%|
|Lack of legal security of cross-border contracts/transactions||17%||14%||17%|
|Requirement to establish branch in another MS||15%||20%||15%|
|Requested rights or licences in hands of local competitors||14%||20%||15%|
|Other legislative or regulatory obstacles||14%||21%||15%|
|Discriminatory practices of awarding authorities in public procurement markets||14%||19%||15%|
|Outright refusal of permission to market p/s legally marketed in another MS||9%||11%||9%|
|Double payments in social security for personnel posted abroad||8%||12%||8%|
(#)= The number in brackets indicates the number of interviews
Full details are available on the Commission's website: