PURPOSE: Second Implementation Report of the Internal Market Strategy 2003-2006.

CONTENT: This report forms part of the economic and employment policy “implementation package”

together with the Broad Economic Policy Guidelines (BEPG) and the Employment Guidelines (EG) implementation reports. All three reports were presented in support of the Commission’s Report (Lisbon Mid Term Review) to the Spring European Council 2005.

The recent Kok report reminds us of the importance of the Internal Market in enhancing competitiveness and creating the wealth necessary to raise living standards and maintain the European social model. This echoes the principal message of the Internal Market Strategy 2003-2006.Whilst each Member State has prime responsibility for ensuring that its own economic policies are conducive to promoting growth and prosperity, the Internal Market is a common project to which all Member States must contribute and from which we all stand to gain. In EU-25, this is an even greater challenge but the potential rewards are also greater. This was the second main message of the Internal Market Strategy.

Economic success for the European Union thus relies upon collective responsibility; a combination of Member State initiatives and European action designed to integrate national markets into one large Internal Market. Such action needs to address both the supply and the demand side, taking account of the interests of businesses and consumers. This report on the implementation of the Internal Market Strategy 2003-2006 confirms the need to act together.

Its analysis of the progress and delays so far shows that more needs to be done to get agreement on key proposals and to make the Internal Market work better in practice, whilst market integration remains more or less static.

Internal market integration may have temporarily stalled but the expansion of the internal market to the ten new Member States since last May has gone relatively smoothly. Market integration in EU 25 will offer opportunities for a fresh economic impulse. As last year’s Implementation Report pointed out, there remains scope for a significant increase in trade and investment between EU 15 and EU 10 in the short to medium-term. There is reason therefore to be optimistic about the contribution that the Internal Market will continue to make to Europe’s competitiveness.

In addition to the positive effects of a larger internal market, several measures have been adopted over the last few years, in areas such as financial services, network industries or company law, which can be expected to begin producing positive effects on the ground.

It is also encouraging that two thirds of the actions foreseen have been achieved by the end of 2004, although many of these tend to be Commission proposals, which in order to contribute to growth and competitiveness still need to be decided upon in Council and Parliament and implemented effectively by the Member States.

The reports reaches four broad conclusions:

- While much of the Internal Market’s legal framework is already in place, there are still important gaps in key economic areas. In the field of goods, the revision of the New Approach and a possible regulation on the application of the mutual recognition principle stand out. Important proposals for action, such as the Services Directive, are on the table of the Council and the Parliament and need to be adopted and implemented as soon as possible. The same goes for the Community Patent and computer-implemented inventions and the remaining FSAP measures.

- Agreeing rules at European level is only the beginning. To produce the desired effects on the ground they must be implemented on time and effectively enforced in each of the twenty-five Member States. It is the Member States who have a crucial role to play in making the Internal Market work on a day-to-day basis. In particular, this involves co-operating more with each other and with the Commission, exchanging information, providing mutual assistance and solving problems. Such networking needs to be facilitated by modern information systems, such as those that underpin the SOLVIT network. In addition, optimal use has to be made of business networks, including for SMEs, such as the network of European Information Centres (EICs).

- Internal Market policies do not operate in a vacuum. They need to be dovetailed with other important policy objectives, wherever possible, to establish synergies. The immediate priorities are the links to consumer, competition and environmental policy. Synergies with other areas, such as regional and agricultural policies, are also important. The competition effects of an efficiently functioning Internal Market benefit consumers in the form of wider choice and more competitive prices. In turn, the importance of a strong consumer dimension of a well-functioning Internal Market has been recognised by the European Council and is a priority for all Community institutions. Consumers must also be confident that products are safe and that their rights will be well protected. Measures must therefore be designed in such a way as to preserve the competition-stimulating effects of free movement on which economic benefits for consumers depend whilst protecting them from health, safety and other risks. In addition environmental policies, combined with free movement, may provide opportunities for innovation and greater competitiveness through better resource efficiency and new investment opportunities.

- In today’s highly globalised economy, the impact of legislation adopted thousands of miles away is increasingly felt in the EU and vice versa. Where companies increasingly operate globally, for example in finance, regulation cannot lag behind. The strategy therefore calls for a strengthening of dialogue with major trading partners. The aim of dialogue is to arrive at effective legislation that enhances market opening and reduces the regulatory burden for businesses participating in world markets. Thus, the dialogue should promote convergence and reduce regulatory divergence or conflict. The rewards possible from successful cooperation can be significant in terms of jobs and growth.

COM(2005)0011
EUR-Lex

T5-0183/2004
OJ C 102 28.04.2004, p. 0653-0857 E

T5-0183/2004

Debate in Parliament

A5-0116/2004

A5-0116/2004

COM(2004)0022
EUR-Lex

CES0956/2003
OJ C 234 30.09.2003, p. 0055-0060

COM(2003)0200
EUR-Lex

2510

EUR-Lex
SEC(2003)0554

COM(2003)0238
EUR-Lex

COM(2003)0238
EUR-Lex