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European Commission


Brussels, 28 November 2012

Report on the State of the Single Market integration (2013) – Frequently Asked Questions

1. Why issue this report?

The first edition of this report accompanies the Annual Growth Survey 2013. The untapped potential of the Single Market to generate growth is huge. Because of the shared responsibility for its implementation between the EU and the Member States, the Single Market is thus one of the pillars of the European semester. This means that the EU needs to have the tools at its disposal to assess, on an annual basis, the functioning of the Single Market within the European semester process.

The report presents an analysis of the state of Single Market integration and looks at the main barriers to a better Single Market functioning in particular in key areas with the greatest growth potential, i.e. services, networks and digital economy. Its objective is to identify policy priorities, which if carried out by Member States would contribute to unlocking the full Single Market growth potential, and to removing remaining obstacles to further integration. This report also calls for efforts to be stepped up to ensure better implementation and enforcement of rules that are already in place.

The need for such an analysis was reflected in the conclusions of the January 2012 European Council, which requested the Commission to “report annually on progress made towards releasing the growth-creating potential of a fully integrated Single Market”. The annual report was subsequently announced in the June 2012 Communication on Better Governance for the Single Market (IP/12/587).

2. Who is the report addressed to?

The report is addressed to Member States, policy-makers from the EU institutions, advisory bodies, the European Investment Bank as well as the wider public. The report clearly indicates the existing integration gaps in a number of areas and makes recommendations as to the key priorities Member States should focus on.

In addition, the report points to key cross-border obstacles to further integration as well as to the key EU initiatives which can also contribute to removing barriers. And it should, in particular, help Member States in the preparation of their national reform programmes and will inform the Commission in its assessment of the programmes and when it prepares its country specific recommendations.

3. What are the main elements of the report?

The report starts with an overview of integration trends in the “four freedoms” over recent years: the free movement of goods, services, capital, and labour. It briefly recalls the recent initiatives related to the governance of the Single Market) and a better functioning of the single market for services (IP/12/587).

Finally, it moves to an in-depth analysis of barriers in selected sectors which are currently the key areas with the greatest growth potential: services, networks (energy and transport) and digital economy. The sectoral focus may evolve in the future so that the analysis stays concentrated on the areas which may bring largest gains in terms of growth and jobs through a stronger integration of the Single Market.

4. What are the main messages and conclusions of the report?

In its general section:

  1. The report points to continued progress in trade in goods and services (with a temporary dip following the financial crisis), though slower than EU trade with the rest of the world.

  2. -It demonstrates that the integration of services is much slower than in goods or even stagnating (e.g. in price dispersion).

  3. -The flows of capital (via foreign direct investment) in the EU have suffered from the financial crisis, but the recovery is already taking place.

  4. -The integration of the labour markets is progressing, but at a very low pace.

As far as sectoral analysis is concerned, the following main barriers in services were identified:

  • double regulation (enterprises need to comply with both home and host country rules), the uncertainty about the rules applying to cross-border service provision on a temporary basis,

  • the heterogeneity of regulation of professions (especially the scope of reserved activities), the diverse quality of the Points of Single Contact, the low use of the Internal Market Information system.

  • Specific problems have been pointed out in retail and wholesale, construction, and public procurement.

In addition, the report described several integration bottlenecks in the network industries, for example:

  1. consumers’ low assessment of the EU energy market and little convergence in retail energy prices,

  2. accumulated large investment needs in energy infrastructure,

  3. poor performance of the rail sector (especially domestic passenger transport), fragmented port services and sea shipping between Member States being often still considered as going beyond the EU external borders,

  4. low coverage of rural areas with broadband, very low progress in cross-border e-commerce, low consumers’ trust in the digital markets, heterogeneous use of e-procurement, and the shortage of ICT professionals.

The report recommends some priority actions, addressed in principal to Member States in the context of the European semester.

5. What are the next steps?

As a part of the Annual Growth Survey 2013 package, the report will be discussed by the Council and the European Parliament and will be on the agenda of the Spring European Council.

The report should help in the preparation of the Member States’ National Reform Programmes. It should also provide useful guidance in the subsequent assessment of these National Reforms Programmes, by the Commission thus contributing to country-specific recommendations.

This is a first edition. This report will be issued on annual basis, accompanying each Annual Growth Survey.

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