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Viviane Reding

Vice-President of the European Commission responsible for Justice, Fundamental Rights and Citizenship

Making the Most of the Internal Market: Concrete EU Solutions to Cut Red Tape and to Boost the Economy

Figures and graphics available in PDF and WORD PROCESSED

Brussels, 24 February 2010

Good afternoon and thank you for inviting me today.

I'd like to take a few minutes to speak about my new portfolio as Justice Commissioner and how Europe can help its citizens and businesses break out of the economic crisis.

It's a moment of great change for Europe. Our citizens have been watching eagerly for the commission to get to work after months of delay.

The time to discuss institutional issues is over. It's now time to act.

To act, because our Union is facing rising unemployment and slow growth. We can't sit by as unemployment reaches 10 percent, government deficits soar and businesses struggle in an increasingly competitive and globalised economy.

The only way out for Europe, is to strengthen the single market. But the single market is far from being completed. There are still far too many cross-border problems that prevent businesses and citizens from benefiting from the single market . These problems were highlighted for the first time, in 2008, in a brilliant report by Alain Lamassoure called "Le Citoyen et L'Application du Droit Communautaire.''

The negative facts are there. But the good news is that now we have the instruments to tackle them. We now have the tools to make a real difference in citizens' lives. With the entry into force of the Lisbon Treaty on 1 December 2009, we now can tackle real barriers that prevent people from taking full advantage of their rights – especially their right to free movement.

For businesses, (particularly small- and medium-sized businesses that are the engines of our economic growth), we must do better to reduce bureaucratic barriers which add to lack of efficiency and unnecessary costs.

I'm here to discuss three concrete measures that will help ease citizens' lives and make a true difference to businesses. These are practical solutions to real-life problems: First, getting a court judgement recognised without unnecessary legal fees; second , recovering debts and third , boosting on-line commerce and smoothing differences in contract law.

As Justice Commissioner in charge of civil and commercial law, I'm committed to proposing sound EU legislation to overcome bureaucratic obstacles and to reduce transaction costs.

The first priority for me is cutting red tape .

EU rules allow for court judgements in one Member State to be fully recognised in another country. That's the rule, but the practice is rather shocking. Companies have to pay up to 2000 euro in additional legal costs when they want to have a legal judgement recognised in another EU country. This costly and cumbersome exequatur process burdens companies without providing any additional legal security. In more than 90 percent of the cases, this procedure is a pure formality.

Of course, we need some safeguards, but citizens and businesses should not be burdened with pointless and costly formalities. I will propose to abolish the exequatur whilst maintaining the safeguards.

My second priority is helping companies recover debts . At the moment, debtors can easily move funds from a bank account in one EU country to another. A creditor, however, has no way of blocking debtors' bank accounts to have them pay their bills. As a result, companies recover only 37 percent of cross-border debts.

Businesses won't trust our single market if more than 60 percent of debt remains unrecovered. The European Commission plans to make a proposal that will allow a creditor to block funds in a bank account.

The new European procedural tools for simplifying cross-border debt-recovery must be fully exploited. Real progress has been made in removing barriers to cross-border debt recovery: The European Payment Order – available since December 2008 – applies to non-contested claims and the European Small Claims procedure – available since January 2009 – deals with claims below €2000.

The European Small Claims procedure is a remarkable tool. It offers citizens and businesses across the EU a speedy and affordable civil procedure that is uniform in all Member States and in all procedural steps, from the start of the procedure to the final enforcement of the judgment. It introduces standard forms and time limits to speed up litigation, whilst not requiring the assistance of a lawyer.

The procedure could be implemented electronically through the European Judicial Portal. The challenge is to publicise these tools to ensure effective take-up and implementation. This would then act to reassure citizens and small businesses involved in cross-border transactions. A remaining question is whether to raise the €2000 threshold.

Insolvency proceedings increase during an economic crisis and should be organised in an efficient way to help the recovery.

A review of the Regulation on cross-border insolvency is needed to ensure that the length, complexity and cost of cross-border proceedings are cut to the minimum necessary. This would help both creditors and debtors. We should simplify dealings with cross-border groups of companies to avoid the current confusing situation. Practical measures such as the interconnection of insolvency registers through the e-Justice portal can also play an important role.

My third priority is to ease cross-border transactions .

Business-to-consumer relationships are complicated by 27 different regimes for contractual relations. That means that a consumer may be able to return a defective product for a full refund within 15 days of the sale in one country, whilst a consumer in another nation may get three months.

The general terms and conditions for business-to-consumer relations are a huge burden for small companies. The EU needs to do better. A possible solution is to have a 28th regime for contracts. Such a European Contract Law would exist in parallel to the national contract laws and provide standard terms and conditions. The United States started with a uniform commercial code to become a globally competitive economy. Why couldn't we have, in the end, a European civil code for our single market?

Jacques Delors once said that nobody falls in love with the single market. Sadly, one of the EU's main problems is that citizens don't see the benefits of the single market – the crown jewel of our Union's integration.

In the justice field, it's clear that the single market can do much better for reducing costs for companies. How can the EU make life easier for companies with cross-border businesses? The answer is simple : We must put the single market at the service of EU citizens. To reach this goal, I have three priorities: Cutting red tape , helping companies recover debts and easing cross-border transactions.

In that way, we could fall in love with our single market!

Another possibility is to harmoni se different contract laws that would give a high level of consumer protection. What's important is legal certainty. Businesses must know what the law is if they operate across the 27-nation EU.

Much has been said about the sad state of Europe's single market for on-line services. Businesses are not taking advantage of the power of the internet to boost sales. In 2008 only 7 percent of transactions over the web were cross-border in nature. This unacceptably low figure is partly explained by the results of an EU-wide test of 11,000 cross-border transactions which revealed that 61 percent of cross-border transactions fail largely because the on-line shops refuse to serve the consumer's country.

The proposed Consumer Rights Directive is therefore deliberately ambitious. The current status quo of minimum harmonisation in the existing consumer protection directives does not come close to establishing a real single market for businesses and consumers.

It's imperative that the co-legislators move swiftly to reach an agreement on this important law, which must balance businesses' need for legal certainty with a guarantee for the highest level of consumer protection.

The European Parliament is studying the legislation now and I'm willing to work with Member States and Parliament to get this crucial legislation into force.

The Commission supports a maximum level of harmonisation of consumer rights laws across the EU. This regime will give businesses the certainty they need to sell products anywhere in the EU.

Another important cross-border issue arises when citizens drive to another member state and are unfortunate enough to have an accident. Businesses are also confronted with legal uncertainty because of cross-border claims.

There are more 500,000 cross-border road accidents a year in Europe. EU law has helped resolve which country's law applies to those accidents, but citizens are confronted with massive confusion with insurance claims. They may have a short time period to file a claim . The Commission could harmonise these limitation periods for liability, giving consumers and businesses more legal certainty.

Finally, the increased use of alternative dispute resolution, (or, in short, ADRs), can contribute to the efficient administration of justice. ADRs are usually faster and cheaper than ordinary court proceedings. They can be important contributors to getting the most out of the single market. It's clear that on-line ADRs could offer particular advantages in a cross-border context.

As I start my new position as Justice Commissioner, let me assure you that President Barroso shares the same goal of bringing the EU closer to its citizens. That's why he created the new portfolio for Justice, Fundamental Rights and Citizenship. I look forward to working with you as I make these concrete proposals to put our economy on the path to recovery.

Thank you for your attention.

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