Europe needs all of us to build its future.

How could we fail to be delighted? On 13 April 2011, after 15 months of hard work and discussion, the process initiated by the Commission culminated in a Single Market Act communication identifying twelve “levers” for growth: Working Together to Create New Growth (2). The objective is twofold: (i) to make the Internal Market a springboard for new growth and (ii) to strengthen confidence in the internal market, both among citizens (thereby ensuring that they make the most of the opportunities it provides) and businesses (so that they can develop their projects in total confidence).

It is the first time since Jacques Delors published his Single Act that a global plan, reflecting the progress made in terms of both method and ambition, has been developed to more effectively build the European market. The 12 levers, which are presented in the form of a list of tasks to be completed as of 2011-2012, all represent an opportunity to be pursued. Several other levers, which we regard as crucial, are still missing from the list. However, the Commission itself is talking about drawing up a second list at a later stage. This mixed result can be explained by the limits of joint action and the College of Commissioners’ arbitration process. All of us, including members of the civil society, businesses, elected representatives and political leaders, must reconsider the depth of our commitment in the past, review the situation as it stands and get ready to move on to the next stage, so that opportunities are turned into concrete results and the levers missing from the list are addressed. We need to consolidate and build on what we have accomplished thus far, by showing vision and determination and by combining our efforts. We suggest working together on two fronts: successfully implementing the twelve levers for growth and laying the groundwork for the next stage, when investment in social and public interest projects will be a top priority. We must conduct this “fight” in a critical and constructive manner, in order to further the general interest.

Going back over the past in order to clearly understand where we stand today

Just over a year ago, the internal market was regarded as a means towards “liberalisation”, i.e. towards the regulated opening up of national markets, and the goal was to remove the obstacles to its completion. Today, the Union has adopted a global approach to re-launching the market, and is addressing some shortcomings. This approach focuses not only on liberalisation, but also on ensuring that citizens and businesses alike really do have access to the market. This means pursuing new trade AND non-trade avenues, so that the Internal Market becomes a springboard for the development of innovation, industrial, service and cohesion policies and initiatives. As such, it would become a European public good and would stimulate fresh growth. We have not reached this stage yet, but it is what we are heading towards.

Michel Barnier has pushed the concepts of a base camp, ownership and an Internal Market pact; Mario Monti has outlined the terms of a large-scale debate on how to reconcile liberalisation with the social and public dimensions of the market; and no effort has been spared by either the European Parliament and its rapporteur Louis Grech (who are clearly in favour of a balanced, holistic approach) or by Confrontations Europe. A public consultation was launched by the Commission on 50 policy proposals. The European Parliament, the Committee of the Regions and the Economic, Social and Environmental Council approved these proposals, with some amendments. Following this, the Commission defined its 12 priorities.

However, the depth of commitment at this stage was not always as hoped. Almost one third of the 850 responses to the consultation came from Eurosceptics, while the other respondents consisted largely of professional groups and lobbies. Therefore very few social players, members of the civil society and government representatives actually participated. In addition, it was difficult for the European Parliament to adopt a holistic approach and hence to identify priorities. In the end, it focused on one of the sources of conflict, the “social clause”, i.e. the long-standing demand for legislation establishing the primacy of social rights over economic growth. A solid compromise has never been reached in this regard. In fact, on every important issue, social rights have to be reconciled with cross-border freedoms. But by focusing our attention on this problem once again, could we have failed to attach enough importance to those aspects which, in my opinion, are crucial, i.e. investments of public interest, universally accessible public goods, skills development and the management of job-to-job transitions? As far as the Member States go, only Great Britain managed to put forward its ideas at the last minute, and all of them focused on pursuing liberalisation. The other States were absent from the consultation, with the exception of France, which defended the principle of reciprocity with non-European countries. Finally, the Commission failed to come up with a strong, overall approach to developing consistency and coordination between the market model and growth policies – seven communications were published simultaneously at the end of October 2010, but no clear summary of them has been provided.

Nonetheless, despite falling short of the original objectives, the 12 levers represent real progress; enough not to be sneered at anyway.

The SMA aims to establish a link between the reform of market regulations and growth factors. However, social and public investment is still very much a secondary concern.

The Commission is striving to ensure that the objectives outlined in its EU 2020 strategy result in concrete action. The open method of coordination defined in the Lisbon Strategy has proven to be ineffective, so new tools must be developed. The Commission believes that a consolidated internal market is one of these tools; the other lies within the realm of “financial perspectives”. In fact, the market is more than just a means of fulfilling objectives; it is also a public good in the making. This being so, the desire to create a link with EU 2020 has prompted efforts to develop a global approach. Non-trade avenues are being tenuously but visibly explored, alongside liberalisation measures.

Let me explain this briefly here. To simplify matters I will distinguish between citizen ownership and social cohesion levers, and business ownership and sector-based policy levers. Citizens are no longer regarded as just consumers, but also as workers: the recognition of professional qualifications, the European certification of skills and the portability of pension rights should facilitate cross-border mobility (lever no. 2). It should be noted, however, that this applies to skilled workers only and, furthermore, job-to-job transition management is not addressed. Of course, consumers have not been forgotten (lever no. 4) and the aim is to ensure that they play an active part in trade; the Commission wishes to create the climate of security and confidence necessary to e-commerce and cross-border transactions. However, the need for platforms of services of general interest is not addressed. On the other hand, the development of companies with a social purpose (lever no. 8) reflects the drive to innovate to meet new needs; still, a balance will need to be found between social business and social economy companies, the performance criteria of which do not include financial profitability. Europe’s citizens are concerned about the potential lack of ethics in the Internal Market, and taxation is a good example of this (lever no. 9). The taxing of financial transactions is not mentioned, and this is a huge shortcoming considering that the majority of MEPs have already pronounced themselves in favour of such an approach. Other useful subjects are mentioned, such as the integration of CO2 emission targets into the energy taxation system, the introduction of a common consolidated corporate tax base and, (after 2012), the development of a European VAT strategy to prevent intra-community tax competition and fraud. Finally, lever no. 10 on “social cohesion” is a real rag-bag of ideas, a surprise parcel which some may like but which I, personally, find disappointing. The demand for a social clause is certainly meeting with a positive reaction: legislation will be drawn up to clarify the compatibility between economic freedoms and social rights in the services sector. It is important that we try to progress on this issue, provided that elected representatives and social action programmes do not focus on it almost exclusively in the near future. Likewise, drawing up new legislation on the secondment of workers from one country to another is a very good and useful idea provided that we do not forget to address such issues as unemployment, training and jobs, which are notably missing from the SMA. Lastly, a further serious failing lies in the fact that publishing yet another communication on services of general economic interest will not reassure those who, like me, have spent the last fifteen years or more advocating the promotion – through legal and practical channels – of services of general interest in the internal market.

The matter of access to finance for SMEs is addressed right away in lever no.1. The provision of access to the financial markets and the Europe-wide promotion of venture capital funds are welcome initiatives, but what about unlisted SMEs, cash requirements and the cost of credit? The role of the banks and other financial organisations is not taken into consideration. The focus on innovation and on how to implement it is very clearly reflected in the plan to introduce European patents and the protection of intellectual property rights (lever no.3). It is also one of the reasons behind the reform of public procurement procedures (lever no. 12): a public contract can be an incentive for social and environmental innovation. This reform deserves credit in one respect: legislation on the eligibility of companies in third countries to win public contracts in Europe is going to be drawn up, in a spirit of reciprocity and mutual interest. But we are still struggling in regard to the recognition of different forms of cooperation agreements and, in particular, of public/private and public/public partnerships. The promised service concession directive will not solve the problem; will it do anything to clarify the situation, given that no comprehensive, global approach to partnerships has been defined? Under lever no. 11 relating to the modernisation and the simplification of the regulatory framework, the possibility of introducing a European contract law instrument is mentioned.

A link with sectoral policies exists in several large areas: services (lever no.5), where European standardisation and the promotion of business services are very topical issues; and energy and transport infrastructure (lever no. 6), where the problem of developing and financing priority strategic investment projects is also high on the agenda. These are very important matters. In regard to the digital market (lever no. 7), the persistent fragmentation between the Member States, the lack of consumer confidence and the need for cross-border data transmission have been identified as problems that need to be solved. However, all of these issues give rise to questions about governance (project selection for example) and the financing of long-term investments. These questions are not addressed at all.

Our advice is obvious: step up efforts to make the most of these opportunities and rectify these shortcomings by adopting a more global approach and developing more effective arguments. I will say it again: long-term investment accompanied by the development of new industrial and social policies, the promotion of services of general interest and the improvement of training and employment are three priorities. We should be preparing for the next stage of the process right now: the key actions relating to the twelve priority levers will be implemented as of 2011-2012, but there is no time to lose in preparing the next stage and promoting the missing levers. There is no obligation to wait until the first stage is completed before beginning the second one.
Everything will hinge on effective governance and action

The title of the SMA communication, Working Together to Create New Growth, expresses the Commission’s expectation. To fulfil this expectation, we all have to make an effort.

Despite Michel Barnier’s original wish, this Communication still does not provide for a true pact between partners, based primarily on projects and cooperation in the field. Therefore, in order to get the civil society involved, the Commission has offered to publish a regular list of the 20 things that citizens and businesses most expect from the Single Market. Although this list will be presented to a Forum of the different stakeholders on a “periodic” basis, it is difficult to see it as a major step towards consultation: the fact that the Commission will be drawing up this list of expectations itself is very top-down, whereas what we really need is an elaborate, innovative bottom-up approach.

Likewise, the frequent reference to assessments and “impact studies” conducted by the Commission or by “independent” bodies selected by the Commission seems to suggest an undemocratic, self-justifying attitude. The models used for these studies provide for neither preliminary discussions nor pluralist evaluations by the scientific community, socio-economic players and elected representatives. The latter should think about setting up new, independent and pluralist bodies with the ability to analyse problems and conduct impact studies themselves.

Finally, we believe that citizens and the civil society should not have to suffer the consequences of the internal segmentation of the Commission and of the resulting lack of coordination. For example, have there been any preliminary studies or public debates on the impact of globalisation on the internal market, and on the measures needed to prevent the latter from being swallowed up by the global market? Our idea of creating a base camp in the global market has broken through, but we are a long way from turning it into practical action. We are constantly hearing concerns about this. Were the SMA and the external trade, industry and finance policies discussed in depth by all the parties concerned before they were drawn up? Has there been any such cooperation on the future employment policy? We would like such policies to be discussed publicly from now on – especially given the need for competitiveness.

The regions and, more generally speaking, the public institutions are wondering how they are going to restore their investment and service levels within the framework of the internal market rules. The dichotomy between these rules and the available financing tools is seen as a major hindrance in both the public and private sectors.

That said, I will conclude by saying that we would like to see more commitment from the public. We would like to work with the public, in order to share our views and clarify our choices. The trade unions could be of valuable assistance in the Single Market reform project. It would be dangerous to get bogged down in radical criticism, or even outright rejection. The regions are starting to play a bigger role and will be a driving force in the future provided that they improve their expertise and their ability to work within a network. The potential of professional groups could be exploited further by improving their knowledge of how the Community institutions operate internally, and by enabling them to monitor the activities of these institutions more closely. National politicians must be called upon to help, and the European Parliament can now increase its support for the internal market reform project and strive more strongly to adopt a global approach. Provided that we are willing to learn from our mistakes together and to put more commitment into it, the Single Market Act will be a success.

Philippe Herzog
18 April 2011

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Post-scriptum

(1) : A new Single European Act at the heart of European revival, 15 January 2007, available on our website.
(2) : http://ec.europa.eu/commission_2010-2014/barnier/headlines/news/2011/04/20110413_fr.htm