Cause and Effect in European Politics and Law

The Internal Market of the EU

Adelina Marini, May 15, 2007

One of your priorities, Commissioner McCreevy, is the removal of all cross-border restrictions and barriers in front of the internal market for services. What is the main challenge against the backdrop of the strong opposition among some member states to accept the Services Directive?

CHARLIE MCCREEVY: The Services Directive was adopted in the end of 2006. Its initial version was published in 2004, when it stuck between the Council and the European Parliament in order for the document to be further amended to allow more of the apprehensions of the member states to be taken into consideration. From here on, 3 years would be given to the member states to transpose the directive into their national legislation. By December 2009, all Member States should have complied with the commitments under the directive. That means, that the states should revise their entire legislation and check for contradictions with the text of the directive. This directive should allow the potential of the Single Market for services to fully unfold.

QUESTION: Do you believe it possible similar transition periods to be imposed for the Services Directive, similar to the restrictions on the labour market that some Member States imposed against other Member States?

CHARLIE MCCREEVY: Each new piece of legislation needs time to be properly integrated into the national legislations of the Member States. In most cases this process takes up to 2 years but as the negotiations on the Services Directive were extremely complex and prolonged a three-year deadline was agreed.

QUESTION: Do you believe that in the near future some progress could be achieved with respect to further integration of the market for services and goods, as we also consider the fact that the development gaps between the old and the new Member States is still far too big?

CHARLIE MCCREEVY: My colleague responsible for the industry Günter Verheugen recently made a proposal to eliminate all administrative barriers in the field of goods. Expert evaluations have been given of the Single Market for goods and its impact on the EU GDP. Only in terms of jobs, the Single Market has created additionally two and half million jobs. While we were working on the Services Directive we carried on a variety of studies and according to them the Single Market for services will contribute to the creation of even more jobs. The results are just amazing. When it comes to the part of your question about the moods of some of the older Member States, yes, some of them are not very inclined to open their markets in the field of services but we succeeded to negotiate significant concessions in the new directive. It is a political fact that not all countries are ready to open their markets because of clearly political reasons. But I think, and I believed in this long before I was a member of the Commission, that such a move could lead to an increase of the economic activity and hence to prosperity for the whole of Europe.

ВЪПРОС: Another important aspect of the creation of a more competitive Single Market capable of attracting more foreign investors is easing the administrative burdens. But isn’t this rather a matter of national policies?

CHARLIE MCCREEVY: President Barroso bet on the better regulation in his agenda - this is one of his top priorities. Better regulation, simplification of the existing rules. The Council of Ministers accepted the proposal for better regulation in the Member States and the Commission. The aim is to reduce the administrative burden by 25%. Brussels is often accused of clumsiness regarding regulations, which is true, but the statistics show, that in fact the the greater part of the burden comes from the Member States themselves. So, every state should think about easing, simplifying and better regulating, and should also judge how it can make the business environment more attractive and hence improve the economic activity. Of course, an appropriate balance should always be in place because if there are way too many or no regulations at all then there shall be only the law of the jungle

QUESTION: Isn’t it hard to fulfil the main objectives of the Lisbon Strategy with an institutionally clumsy European Union and 27 different interests and levels of economic development?

CHARLIE MCCREEVY: You can present the situation in that way too but we should also consider the fact that the bulk of work required under the Lisbon Strategy is already completed in the Member States. For instance, the flexibility in the labour market, in the financial systems. All these are issues which the national governments have already solved by themselves because we don’t have the competence and no one is going to grant us the chance to force legislation in the member states and to tell them how exactly to fulfil the objectives of the Strategy. It is a fact that even the most pro-European states are not keen to let Brussels tell them what to do. The subsidiarity principle should be preserved. The member states themselves should carry on the responsibility for their actions. If they refuse, they won’t be able to achieve the objectives of the Lisbon Strategy and these are: increase economic competitiveness and economic activity. With regard to the other part of your question, being at the more than a half of my mandate, I am still unable to see any substantial differences. Yes, it is true that now there are more points of view, but some of them are really useful. It is not that I am saying this only because I am in Bulgaria but a real advantage of the new Member States lies exactly in the new ideas which they are putting on the table. That matters.

QUESTION: How is the debate about the common tax policy going on?

CHARLIE MCCREEVY: As you probably know already, the changes in taxation can only be achieved through consensus by all member states, i.e. all the 27 states must agree to that. The official position of the Commission is not to advocate tax harmonisation. The proposal of my colleague László Kovács is actually for a consolidation of the coordination on taxation. To me, however, this proposal constitutes a serious loophole and I have always been strongly against any harmonisation or consolidation in this regard. I think it would be a bad decision. Competition in taxes is like competition in many other areas and I believe that a country should always be left to deal alone with what it considers proper in the economic sphere.

QUESTION: One of the most important conditions for the completion of the Internal Market is the implementation of the directives. Is that already accomplished, are all the directives completely applied in all Member States?

CHARLIE MCCREEVY: No. Every 6 months we publish our assessment on the harmonisation of directives. The idea is for us to have around 1% unadopted legislation, this is in fact a new goal - the previous one was 1.5%. Bulgaria, according to that indicator, is doing pretty well, mainly because your country was obliged to complete the task before its accession to the EU – to adopt the larger part of the directives. But I have to make it clear that this is not the ultimate goal because, while the current legislation is being harmonised, new regulations and directives are being adopted which also need to be implemented. In reality, no member state could ever possibly reduce to zero its tasks with this regard simply because of the new regulations and directives that are queueing. In July, when the new assessment will be published, you will see Bulgaria's performance in comparison with the other member states.

QUESTION: Can we say that the energy sector is the most non-integrated in the European Union, since most states still follow their own national interests?

CHARLIE MCCREEVY: Not the most non-integrated, it is not integrated at all, because energy is not among the Community competences. A number of countries opposed until recently any role of the European Commission in the guidance of energy. However, perhaps because of the difficulties in the sector over the past 2 years, some states, which were until then not very eager, changed their positions. Therefore, recently heads of state and government adopted a single energy policy. I also support the efforts of my colleague Andris Piebalds because there is logic in having a common energy policy. For the smaller states, for example, it is of utmost importance because there is a great difference between solving such strategical problems on your own and in an alliance with 27 countries.

QUESTION: How is the European Union positioned on the global stage beside such rapidly developing players like China and India?

CHARLIE MCCREEVY: In the beginning of our interview we have discussed topics related to competitiveness and galvanisation of markets. Why should we do this? Because we are going to be driven out from these areas that you have mentioned. I am not specifically considering these countries as a threat, they are rather an opportunity. You have mentioned China. Yes, they are our competitors but at the same time China is the single largest market for Europe. The Chinese economy grows, goods are produced and services are offered and they need our production and services as well. This will also happen between the European Union and Bulgaria – you will begin to produce certain goods which will have competitive prices and quality, so that you could sell them to the rest of Europe. Your standard of living will rise and you will wish to sell in other parts of the world if, of course, you can cope with the production. I believe that open markets are profitable and lucrative for all, there are no losers in this game. Here we are encountering a problem which we had years ago in Ireland. There were manufacturers once that do not exist anymore but the Irish economy is much more developed than 34 years ago. This is the benefit of competition.