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Vice-President of the European Commission, EU Justice Commissioner
Towards a stronger Single Market: How Justice means a green light for Growth
Parliamentary Hearing at the Camera dei Deputati and Senate
Rome, 29 March 2012
Onorevoli Senatori, Onorevoli Deputati,
Gentile Signore, Gentili Signori, I am delighted to talk to you about how to get Europe back on the path of growth.
There is no denying that we live in times of economic crisis. Overcoming the crisis requires fiscal consolidation and fiscal responsibility. We must put public finances on a sounder footing. It also requires clear structural reforms raising the potential for sustained economic growth and job creation. These are political imperatives across Europe from Rome to Riga and from London to Lisbon. We need financial stability and economic growth – one and the other. This forms the basis of the new deal for our united Europe: a “new deal" based on stability, solidarity and growth.
This is also at the foundation of our common economic growth agenda – Europe 2020 – in its various elements. These include structural reforms, deepening of the Single Market, targeted investment, and boosting the export potential of our European brands by strengthening fair trade with foreign markets.
It was with this goal in mind that the European Commission made a number of proposals to speed up Europe's exit from the economic crisis. Times of economic hardship are times of immense challenges. But they are also times that present us with an extraordinary opportunity to take the right action and leave the next generation of Europeans better off.
As Justice Commissioner, I am committed to putting growth at the heart of the Justice agenda. It is of key importance that we do more to exploit the full potential of the Single Market, and to make European and national regulation sensitive to the needs of businesses, in particular, small businesses and private entrepreneurs, which form the backbone of the European economy and job creation. This is all the more important in Italy where micro and small business generate over 81% of the jobs compared to the EU average of 66%.
My simple message today is that we can do so much more by working together and taking advantage of our crown jewel: A Single Market of 500 million consumers. Let us give the green light to growth.
You may ask whether new legislation will speed up economic recovery. I am firmly convinced that the answer is yes. The right legislation means structural reforms that boost the growth potential of our economy. These are particularly needed to support growth during consolidation. The proposals I recently made in the Justice field will help raise the overall productivity and enhance competition in product and services markets. They are part and parcel of the European growth strategy – Europe 2020. This will increase business and consumer confidence. That, in turn, will boost economic growth and jobs in Europe. Today, I will describe four ways that Justice contributes to growth.
From removing barriers to cross-border trade, reforming Europe’s data protection rules, to cutting administrative burdens and getting more women in decision making, my proposals directly address today’s challenges and will help restore Italy’s and the entire continent’s economic growth.
The way to spark this growth is staring us in the face face.
The Single Market is the single most important asset and a source of growth, wealth and cohesion of our European Union. Unfortunately, its tremendous potential however has not been fully unlocked.
After decades of integration, 9 out of 10 EU companies still do not export. The majority of those who do (62% in Business to Business and 57% in Business to Consumer transactions) export to no more than 3 EU countries. It is a fact that a number of barriers still pose obstacles to cross-border trade in the EU.
First, let’s look at contract law.
One huge barrier is that there are 27 different contract laws in our 27 Member States. Businesses do not want to invest in the legal manpower to overcome this barrier. The European Commission’s proposal for an optional Common European Sales Law is key to get businesses to expand across borders. The Common European Sales Law will make cross-border trade much easier without replacing national laws. It is an optional second regime, which will stand alongside national contract laws. When making this proposal, the Commission was largely inspired by the "Monti Report" in 2010. In his report to Commission President Jose Manuel Barroso, Mario Monti pushed for this innovative optional approach to Single Market regulation later becoming a central element of the Europe 2020 strategy.
Italy has a lot to gain from a Common European Sales Law. Its use by businesses can give a further boost to its economy. Italian gross domestic product is forecast to contract this year. However, a recent Commission report highlights the positive role of exports for the Italian economy.
When companies export, they boost country’s real GDP and create jobs. At a time of booming technological innovation, e-commerce offers even greater opportunities for export growth. The Common European Sales Law will make exports easier. Italy has a lot to gain by taking advantage of this opportunity.
On the business side, 4 out of 10 export-oriented Italian companies said that contract law-related obstacles hindered them from exports. 7 out of 10 have been deterred from exporting. Those that do export face complexity and average costs of € 10 000 per country to which they export.
7 in 10 export-oriented companies in Italy are interested in using a European contract law and 4 in 10 said that they would increase their cross-border operations, mainly by exporting to additional countries.
On the other hand, Italian consumers could benefit more from the opportunities the Single Market offers. 1 in 2 products can be found cheaper outside of Italy. Price is a major factor for consumers' decisions to purchase, especially at times of economic difficulty.
However, only 5% of Italian consumers have recently shopped abroad online. One of the reasons is that many are uncertain about their rights. Furthermore, those Italians who try to shop abroad often cannot buy what they want. A recent study showed that more than 50% of the attempts to make a cross-border purchase online from Italy failed.
The Common European Sales Law will encourage traders to sell to more EU countries. Companies will no longer have an excuse for not offering their products to Italian customers. As a result, Italians would benefit from easy access to more and better cross-border offers.
I believe that together we can turn this great idea into a successful reality.
The second way we can boost Italy’s and Europe’s economy is by reforming our data protection rules.
The Internet economy is bursting with innovations. We can instantly send messages to people on another continent with the tap of a finger on a screen. We can instantly update our friends and family about the birth of a child or the latest holiday pictures. We can entrust our private data to a cloud service provider without knowing where and how this personal data will be stored and processed.
All these technological developments are welcome drivers of innovation, growth and jobs creation.
But is our Single Market equipped for data that knows no geographic boundaries? How can we enable the free flow of information while making sure that people's personal data is well protected?
Today, businesses in the European Union have to deal with a complex maze of 27 different data protection laws. In the future, there will be one single law. Today, businesses that want to take advantage of the European Single Market have to deal with Data Protection Authorities in 27 Member States.
The new data protection rules will unleash the potential of the Digital Single Market. The directly applicable EU Regulation (one single law) and the "one-stop-shop" for companies will greatly simplify the regulatory environment within the internal market, provide more clarity and reduce administrative burden for all businesses. For businesses operating in several Member States this will be a giant leap forward. Multinational business will find a more consistent, uniform and simplified regulatory environment.
This will reduce the administrative burden – we have estimated net savings amounting to about €2.3 billion.
This is not a reform for big business. Small and medium-sized enterprises will also benefit from simpler and more consistent rules. Small companies will find it easier to expand cross-border.
Moreover, we are greatly simplifying the rules on international data transfers. So there will be clear, reliable rules for new applications and services whose business model is based on fast international data transfers. Take cloud computing for example. The new rules will better protect personal data when they are transferred internationally. So people's data are safe everywhere – inside and outside the Union.
The third way Justice can help the economy is by reducing administrative barriers.
A good example is the reform of the Brussels I Regulation. For the Single Market to function properly, both people and businesses need access to justice, good cooperation between courts in the Member States, and free circulation of judgments in the EU. With the Brussels I Regulation on jurisdiction and the recognition and enforcement of judgments we are making sure this is happening.
First, we proposed to abolish the "exequatur" procedure for civil and commercial matters. Currently this procedure is necessary to enforce the judgment of a court in one Member state in other EU countries as well.
On an EU average, exequatur costs €2,200 in a straightforward case. This additional procedure also takes time – sometimes up to 12 months.
Another major element of the reform is the extension of jurisdiction rules to defendants established outside Europe. Currently European law only ensures access to court if the defendant is established in Europe. As soon as a defendant is established outside Europe, national law applies.
We have proposed removing this old-fashioned distinction of where parties are living. It should not matter whether a defendant lives in London or in New York.
Similarly, we are proposing changes to strengthen arbitration agreements in Europe. Indeed, parties can effectively obstruct arbitration agreements by shopping around in Europe and trying to get an agreement declared invalid. This creates unnecessary litigation, and leads to additional costs and delays for businesses.
As part of the reform, parallel proceedings and abusive litigation tactics will be prevented. Strengthening arbitration agreements, as well as simplifying the recognition across borders of judgments in civil and commercial matters, are a major contribution to economic recovery and growth.
Finally, getting more women on company boards will unleash huge benefits for our economy.
Currently, women are clearly at a disadvantage: only 13.7% of the board members of Europe's largest publicly listed companies are female.
In Italy, the figure is significantly worse. Women make up only 6.1% of the boards of the largest publicly listed companies in Italy.
At the same time women account for 60% of new university graduates. Getting more women into the labour market can be one of the ways to improve Europe's competitiveness. It will also help to achieve the Europe 2020 goal of raising the employment rate for adults to 75%. We simply have to make better use of the talent pool of highly skilled women for the benefit of our economies.
In March 2011 I invited companies to sign the "Women on the Board Pledge for Europe" to voluntarily increase women's presence on corporate boards to 30% by 2015 and 40% by 2020.
A year later, on 5 March 2012, I presented a progress report on women in economic decision-making to see if there is sufficient progress and enough commitment to achieve a faster and more meaningful change.
The report showed that some progress has been made – the number of women on boards rose by 2 percentage points – but the progress is very slow. I therefore launched a public consultation which will last till end of May. I will then see which policy option at EU level is the best to bring more women on the boards.
My call for more gender balance sparked a wide debate in Europe including here in Italy in particular.
One point was clear in our report: the biggest progress in improving gender balance on company boards was due to binding quota legislation in Italy, France and Belgium.
I also would to take the opportunity to congratulate Honourable Mosca and Honourable Golfo for their leadership on this file. Without them, no quota legislation would have been possible in Italy.
Before concluding, I would like to make a final point about consular protection.
We adopted a proposal on consular protection in December last year, and I know this is of great interest to you. Let me briefly outline the main features of the proposed Directive.
Sometimes EU citizens find themselves in a third country where their country has no embassy or consulate. These people have the right to turn to the diplomatic representation of any other EU Member State for protection. This EU Member State has to assist them as if they were its own nationals.
This is EU solidarity in action. More than 5 million Europeans travel to countries where their home Member State has no embassy or consulate. Another 1.7 million live is such countries.
The proposed Directive provides for clearer and simpler cooperation between Member States' consular authorities.
The European Parliament and the Council of Ministers are currently negotiating the proposal. Italian support is crucial. Italy is a Member State with a wide consular network and a long tradition in this field. Clearer rules and simpler ways of cooperating will not bring new costs: on the contrary, they will help us save money. In times of financial responsibility, it is an imperative to improve our cooperation and better use existing synergies. Our common goal is that no European citizen is left behind.
Ladies and gentlemen, Europe is full of opportunities and potential. The proposals that I have described today will help turn these opportunities into reality. They will increase consumer and business confidence and boost growth and jobs in Europe and contribute to ensure that the next generation of Europeans is able to enjoy living in an ever more united, prosperous and strong European Union.
We know the challenges ahead. Now is the time for action. We have the key to growth in our hands. If we unlock the potential of the Single Market, I am convinced our citizens will quickly see the benefits of EU action. I am determined to make this happen. I am confident that Italy will help make this happen and I know that I can count on your support.
Grazie mille per la vostra gentile attenzione.