Navigation path

Left navigation

Additional tools

Other available languages: none

SPEECH/07/688












Joaquín Almunia

European Commissioner for Economic and Monetary Policy




Placing network industries at the centre of Single Market Integration























DPWNight (Deutsche Post)
Brussels, 7 November 2007

Ladies and Gentlemen,

I would like to thank Deutsche Post, and especially Monika Wulf-Mathies, for inviting me to speak at this year’s World Net Annual Event. It is my pleasure to address so many of you here this evening.

The Deutsche Post Group is a striking example of how a traditional postal operator has evolved into a modern European-based multinational and multi-sector organisation. A prime illustration of what can be accomplished in the European Single Market.

In turn, the postal and logistics sector makes an important contribution to the success of this ambitious project. After all, an integrated market in Europe would be impossible if individuals and firms did not have effective means to trade goods and services.

In light of the comprehensive review of the functioning of the Single Market that is currently under preparation, this evening I want to reflect on some of the achievements as well as the changes necessary to ensure the single market continues to deliver in the 21st Century.

The Single Market: achievements and challenges

Let me begin with the achievements.

Both the Single Market and the Economic and Monetary Union have contributed to Europe's well being and development by increasing growth and creating jobs throughout the second half of the 20th century. Cumulative gains from the Single Market were estimated at 2.2% of EU value added in 2006 and around 2¾ million jobs have been created between 1992 and 2006 as a direct result of this initiative.

In addition, trade and investment flows within the EU have been boosted, with some estimates citing a 30% rise in intra-EU trade since 1992.

Both the Single Market and EMU have facilitated market entry by new firms and, together with sharper competitive pressures, have generated an overall increase in productivity.

And consumers have enjoyed direct benefits as prices have fallen and the quality of products on the market has improved.

Nevertheless, there remains significant potential in Europe's economy that can be tapped through further integration of the Single Market. Some estimates suggest that the gains from EU market integration could still be doubled. In particular, the single market in services and network industries such as transport has yet to be achieved. This is just one area that if addressed, could make the Single Market an even more powerful launch pad for a dynamic, innovative and competitive economy.

The economic and geopolitical context has changed fundamentally since the launch of the Single Market in 1992. Today there are five key challenges that we need to address in order to reposition the single market within the new economic landscape of the 21st Century:

First, globalisation is a formidable source of dynamism and change. European companies can and should seize new opportunities from large and rapidly growing emerging markets.

To achieve this, we need to remove barriers that hinder European companies from accessing international markets. The Single Market can be a tool for increased regulatory convergence worldwide, thus ensuring a more level playing field for global trade. Indeed, through the Single Market the EU can harness and shape globalisation in a way that will ensure 'convergence to the top' rather than 'a race to the bottom'.

The second major development since the 90s has been EU enlargement which has widened the Single Market, creating new economic opportunities. The larger pool of consumers has compelled companies to draw on their comparative advantages, driving further efficiency and dynamism. However, greater divergence among the 27 members calls for appropriate policies to deal with a more diverse Single Market.

The creation of the euro in 1999 is a third factor that has transformed Europe's economic landscape. Economic and Monetary Union has reinforced the foundations of the Single Market and brought benefits beyond the euro area to the wider EU. But just as the euro is a natural complement to the Single Market, a flexible Single Market is essential for a good functioning EMU, especially as the euro area enlarges. A better understanding, and close monitoring, of market functioning is therefore essential.

As a fourth challenge, the Single Market must embrace the knowledge and services society of the 21st century. Originally conceived for an economy reliant on primary products and manufactured goods, the Single Market has to adapt to a new reality.

Today, knowledge is a key driver of growth and services are the dominant economic force in European economies, accounting for 70% of GDP, 68% of employment and 96% of the new jobs created in the EU. It is striking then that services account for only 20% of intra-EU trade. We need to remove the remaining barriers to competition in services and rapidly implement the Services Directive.

More too should be done to promote the free movement of knowledge. Here the Single Market should serve as a platform to stimulate innovation in Europe, for example by encouraging greater mobility amongst workers, researchers and students, the so-called "fifth freedom", that should complement the free movement of labour, goods, services and capital within the EU.

And finally, ensuring that the Single Market takes into account the social and environmental dimension of economic integration is crucial. Market opening impacts on society. It provides important new opportunities but individuals should be equipped to take advantage of these opportunities, notably through access to training and life long learning programmes.

Gaining public confidence is essential. We have to be able to demonstrate the overall benefits of market opening and liberalisation while at the same time putting in place policies that will help those more vulnerable to change.

The nature and pace of the societal changes we are confronted with, for example as a result of technological progress or globalisation, can be overwhelming at times and may affect our well-being and possibly our common values. While new opportunities are open to us in abundance, many people feel that today's world is characterised by uncertainty, insecurity and inequality.

The policies that are currently in place and that we will continue to develop in the future, should take into account Europe's social realities and address the concerns that are expressed.

The Commission is currently carrying out a broad analysis of the changes taking place in our societies and will present later this month its preliminary assessment of how best to approach the opportunities and risks that confront us together with the Internal Market Review.

We also need to factor in the environmental impact of change. We are already leading the global response to climate change and taking important steps towards building a low carbon economy. New environmental technologies hold great potential within the Single market and abroad, but barriers to market take up need to be reduced and global dissemination increased through an active promotion of standards and technology.

The common thread that runs through our approach to all of these challenges is a renewed focus on consumers and businesses. The Single Market has to become more responsive to the expectations and concerns of citizens and SMEs. It needs to open up further for small businesses and overcome its fragmentation in crucial markets affecting consumers most directly – markets like postal services, telecommunications, energy, retail financial services.

The Single Market Review

In order to meet these challenges, the Commission is developing a range of policy options that will be presented in the Review of the Single Market.

This Review will be based on analysis of the single market's current "limitations" and will set out a vision for a more efficient and effective functioning. This will imply a new approach to governance, one that requires shifting from a purely legal approach to Single Market policies to a more impact driven approach – in other words, concentrating action on policy areas where it has most effect.

While regulation will remain important in some areas, it may not always be necessary or adequate. Our efforts will also focus on improving the implementations of EU rules, and on a closer monitoring of how major goods and services markets are functioning.

Achieving integrated and competitive markets for network industries

Now let me turn to the specific question of network industries.

Achieving an integrated market for network industry services is a key component of the dynamic Single Market that we are working towards.

Network industries account for around 8% of value-added in the EU and about 5% of employment. However, it's not only their size that makes them so important, but also the fact that they provide many of the basic inputs that other industries rely on – inputs such as energy, water, transport, and communication services, including of course postal services. Indeed, in the EU, postal services are estimated to handle 135 billion items per year and countless businesses are dependent on a well run, cost-effective service.

Efficiency improvements in network industries can thus have positive repercussions across the whole economy whether by leading directly to lower prices for households and cheaper basic inputs for industries, or indirectly as lower costs enable firms to expand their production and create more jobs.

However, despite the crucial role they play in the economy, the opening up of network industries to competition has yet to be completed. Unlike the markets for manufactured products, the process of liberalising these markets is ongoing and major regulatory reforms are still in the pipeline.

But the experience of network industry liberalisation that we have so far has demonstrated the value of this process. Indeed, the gradual market opening reforms which were initiated some 15 to 20 years ago have already accomplished a lot in terms of increasing competition, raising productivity, but also by creating jobs. In fact one study has estimated that market opening measures before 2001 led to a net increase of half a million jobs in the EU15 Member States alone.

Nonetheless, the current performance of these industries is not as satisfactory as we believe it could be. As it stands, significant obstacles to competition remain and serve to hinder the completion of the Internal Market.

That said, the process of market opening is not always simple and straightforward. We have to ensure that the combined effects of competition and the new regulatory environment provide adequate incentives for firms to invest, to safeguard security of supply and to provide high quality services, which are affordable and accessible to all.

The Commission has proposed two key pieces of legislation to achieve this, and a third proposal will be made next week:

  • One of the proposals already made is the new Postal Directive, now under discussion between the Council and the Parliament. Significantly, this initiative proposes to remove the outstanding 'reserved segments' that will lead to the full opening of markets in the postal sector. Some EU members have already opened up their postal markets and are reaping the benefits, while others are in the process of doing so. However, sooner or later, in every Member State, this sector will have to adapt and embrace competition.

I have no doubt that increased competition in postal services – a sector which is already restructuring in the face of new technological and commercial challenges – will raise efficiency and innovation and provide sustainable jobs. And as an industry of vital importance for consumers and commerce alike, the benefits will rebound to the wider economy.

  • The second key piece of legislation is the latest package of legislative proposals in the energy sector. The measures proposed in this package, such as ownership unbundling or the creation of an independent system operator and the establishment of a European Agency for the cooperation of national energy regulators will open the EU's energy markets to further competition and cross border integration. In doing so, they would bring more choice and fairer prices for consumers. They would also help bring cleaner energy and security of supply by stimulating efficiency and allowing smaller companies, such as those that invest in renewable energies, access to the market.
  • The third key piece of Commission legislation relating to network industries will be released next week. The new "telecoms package" will aim both to reduce unnecessary overregulation in sectors where competition is now working and to strengthen the regulatory framework in order to facilitate development in new services and markets.

A distinctive feature of network industries is that they provide universal services that are vitally important to consumers and businesses alike. The principle that certain types of services – including not only those of network industries, but also social and health services – should be provided to everybody, is a core value of our European societies and economies.

The Commission will renew its pledge to these values in a Communication that will accompany the report on the Single Market Review, taking into account the "Protocol on services of general interest" annexed to the new Treaty of Lisbon.

Market opening has often been met by criticism and some fear that greater competition would lead to a fall in standards or to particular groups of users being excluded.

That is precisely why the provision of universal services is anchored in many pieces of EU legislation. In the postal sector for example, the universal service obligations specified in the current Directive – which include the daily collection and delivery of letters 5 days a week as well as targets for the speed of delivery – still form an integral part of the proposal.

The Commission will continue to closely monitor the effect of market opening on the performance of network industries so as to identify those areas where performance can be further improved in the future – and to reassure citizens that their concerns are fully taken into account and their interests are protected at all times.

Conclusion

Ladies and Gentlemen, let me conclude.

Rapid change in our economies and societies is placing new demands on our Single Market. Nevertheless, we are ready to respond. The Commission's review will set a course for greater efficiency and competition, more opportunities for business and new initiatives to help citizens.

But we can only succeed if there is real commitment and support among stakeholders. Making the Single Market work is a joint responsibility, both between EU and national levels of government, but also for businesses and consumers. By achieving success together, we will all reap the benefits of a stronger, more dynamic Single Market in the 21st Century.

Thank you for your attention.


Side Bar

My account

Manage your searches and email notifications


Help us improve our website