Explanatory Memorandum to COM(2018)441 - Programme for single market, competitiveness of enterprises, including small and medium-sized enterprises, and European statistics - Main contents
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| dossier | COM(2018)441 - Programme for single market, competitiveness of enterprises, including small and medium-sized enterprises, and European ... |
|---|---|
| source | COM(2018)441  |
| date | 07-06-2018 |
1. CONTEXT OF THE PROPOSAL
• Reasons and objectives
On 2 May 2018, the European Commission proposed the Union’s multiannual financial framework (MFF) for 2021-2027 1 . Among other things, the Commission proposed a new Single Market Programme. This Programme will help achieve the objectives set out in the political Communication accompanying the MFF proposal 2 . It will do so by strengthening the governance of the internal market, supporting the competitiveness of industry and in particular of micro, small and medium-sized enterprises (SMEs), by promoting human, animal and plant health and animal welfare and by establishing the framework for financing European statistics. The proposal 3 provides for a budget allocation of EUR 4 089 million. In addition, EUR 2 000 million allocated under the InvestEU Fund, in particular through its Small and Medium-sized Enterprises Window, will significantly contribute to the objectives of this Regulation.
The internal market is a cornerstone of the Union. Since its inception, it is a major contributor to growth, competitiveness and employment. The internal market has helped create jobs and brought consumers greater choice at lower prices. It continues to be an engine for building a stronger, more balanced and fairer economy. It is one of the Union’s major achievements and its strongest asset in an increasingly global world. Nevertheless, the internal market has to continuously adapt to a rapidly changing environment characterised by digital revolution and globalisation. This poses a significant challenge for regulation and enforcement.
The substantial body of Union legislation underpins the functioning of the internal market. This concerns, in particular, competitiveness, standardisation, consumer protection, market surveillance and food chain regulation. It also affects rules concerning business, trade, financial services and institutions and the promotion of fair competition, which helps create the level playing field essential for the functioning of the internal market. Still, barriers to a proper functioning of the internal market remain and new obstacles are emerging. Establishing rules is only a first step; making them work is equally important.
This makes it necessary to provide individuals and businesses with sufficient information about their rights, public authorities with knowledge of how to apply the rules, and courts with the required expertise to enforce them. This means information tools, training programmes and emergency mechanisms need to be put in place. It also requires cooperation to be stepped up among the competent authorities of Member States, and between them and the Commission and its decentralised Union agencies. In addition, effective enforcement and modernisation of the Union legal framework and its rapid adaptation to the ever-changing environment requires up-to-date analyses, studies or evaluations based on high-quality, comparable and reliable data.
The proposed Programme brings together activities financed under five predecessor programmes in the areas of competitiveness of enterprises, consumer protection, customers and end-users in financial services, policy making in financial services and as regards the food chain, or financed previously under several Commission budget lines 4 , all dealing with the internal market and the competitiveness of SMEs. The proposed Programme also includes new initiatives 5 which aim to improve the functioning of the internal market. All of these activities are united by their shared objectives to regulate, implement, facilitate, enforce and protect various activities and actors within the internal market; and to preserve an internal market that continues to function without interruption. All of those activities are thus, in their different ways, essential for a well-functioning internal market and the continuation of their financial support is necessary. The proposed Programme provides for continuity of the various previous actions while streamlining and exploiting synergies between them and the new activities.
Further streamlining is achieved by pooling all centrally managed financial instruments at the Union level in the InvestEU Fund 6 , including debt and equity financial instruments for the benefit of SMEs. The loan guarantees for SMEs previously provided under the COSME programme 7 will therefore be implemented under the ‘SME window’ of InvestEU 8 . With regard to the recipients of debt and equity financial instruments provided under the COSME programme, the continuity of financial assistance and smooth transition towards InvestEU will be reassured.
Consequently, the Programme aims to improve the functioning of the internal market. It provides a more flexible and agile financing framework with the aim of safeguarding a well-functioning internal market in the most cost-efficient way. In a context of budgetary constraints, the Union needs to seek synergies and prevent duplication and fragmentation in its support for the internal market. It also needs to give greater visibility and coherence to its action towards individuals, consumers, businesses and competent authorities, who may find the wide range of different tools and support programmes confusing. The Programme will therefore provide the budgetary means to support the establishment of a deeper and fairer internal market through a streamlined and flexible financing framework.
Given that a number of initiatives in the Programme are new and that the conditions in the area of competition are particularly affected by dynamic developments in the internal market, the pace and magnitude of which are difficult to estimate, it is anticipated that flexibility will be required to face the evolving needs under this part of the Programme.
In addition, the Programme establishes the financial framework for providing high-quality, comparable and reliable European statistics to underpin the design, monitoring and evaluation of all the Union policies. This replaces the predecessor European Statistical Programme 9 . It must be underlined that, while it undoubtedly contributes to the delivery of internal market policies, European statistics have a much wider scope than the internal market, as they serve all policies of the Union.
• Consistency with existing policy provisions
The Programme contributes to the establishment of a deeper and fairer internal market, supporting the implementation of the Single Market 10 and the Digital Market Strategies 11 , the Capital Markets Union Action Plan 12 and the New Deal for Consumers package 13 . A strong Single Market is also seen as a precondition for a stronger Union as set out by the President of the Commission in his 2017 State of the Union speech 14 .
Strengthening the governance of the internal market also responds to numerous Council Conclusions and European Parliament Resolution on the Single Market. The most notable of these are the Competitiveness Council Conclusions of 29 February 2016 on the Single Market Strategy (Ref 6622/16) and the European Parliament Resolution of 26 May 2016 on the Single Market Strategy (Ref. 2015/2534 (INI)).
• Consistency with other Union policies
The proposed Programme is consistent with other proposed Union action programmes and funds that pursue similar objectives in related fields of competence. In particular, the actions under this Programme will be complementary to those of the Customs 15 and Fiscalis 16 Programmes which also aim to support and improve the functioning of the internal market.
The proposed Programme promotes synergies and complementarities in support for SMEs and entrepreneurship under the InvestEU Fund 17 . For this purpose, in addition to the amount of EUR 1 000 million designated for non-financial instrument type of support for the competitiveness of SMEs under this Programme, an SME guarantee facility with a budget of EUR 2 000 million will be implemented under the SME window of InvestEU.
The Programme is complementary to the support for SMEs and entrepreneurship under the European Regional Development Fund 18 . The Programme seeks synergies with the Horizon Europe 19 and the Space Programme 20 in encouraging SMEs to benefit from breakthrough innovation and other solutions developed under those programmes. The Programme is also complementary to the Digital Europe Programme 21 which aims to promote the digitalisation of the Union economy and the public sector.
In addition, the proposed Programme, will seek synergies with the Justice, Rights and Values Fund 22 which aims to support the further development of a European area of justice for the effectiveness of national justice systems, a key enabler of a fair and cost effective European economy.
The proposed Programme is consistent with Erasmus 23 and the European Union Solidarity Fund 24 as well as the European Social Fund Plus 25 . It will act as a catalyst for mobility in the labour market and among young people, which is essential for the well-functioning internal market.
Finally, the food chain actions supported under the proposed Programme, such as veterinary and phytosanitary measures to address animal and plant health crises, could be complemented by market-based interventions from Union’s Common Agriculture Policy budget 26 .
Where relevant the Programme's actions should be used to address market failures or sub-optimal investment situations, in a proportionate manner, without duplicating or crowding out private financing and have a clear European added value. This will ensure consistency between the actions of the programme and EU State aid rules, avoiding undue distortions of competition in the internal market.
This proposal provides for applying the Regulation from 1 January 2021. It is presented for a Union of 27 Member States. This is in line with the notification by the United Kingdom of its intention to withdraw from the European Union and Euratom based on Article 50 of the Treaty on European Union. The notification was received by the European Council on 29 March 2017.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
According to settled caselaw, the choice of the legal basis for a European Union measure must be based on objective factors amenable to judicial review. Where the Treaty contains a more specific provision that is capable of constituting the legal basis for the measure in question, the measure must be founded on that provision. If examination of a measure reveals that it pursues two aims or that it has two components, and if one of those aims or components is identifiable as the main one, whereas the other is merely incidental, the measure must be founded on a single legal basis, namely that required by the main or predominant aim or component. Regarding a measure that simultaneously pursues a number of objectives, or that has several components which are inseparably linked without one being incidental to the other, the Court has held that, where various provisions of the Treaty are therefore applicable, such a measure will have to be founded, exceptionally, on the various corresponding legal bases. Recourse to a dual legal basis is not possible where the procedures laid down for each legal basis are incompatible with each other 27 .
The basic acts establishing programmes currently in force which will be integrated into the Programme are based on different legal bases. These concern the following Articles of the Treaty on the Functioning of the European Union (TFEU):
·Article 114 for activities supporting financial reporting and auditing 28 (and a large number of internal market measures that contain ancillary financing provisions);
·Article 169 (2)(b) concerning consumer protection 29 ;
·Articles 43 and 168 (4)(b) concerning veterinary and phytosanitary measures 30 ;
·Article 197 on administrative cooperation;
·Article 173 encouraging a favourable environment for the development of undertakings, particularly SMEs;
·Article 195 concerning tourism; and
·Article 338 on statistics.
In light of the synergies obtained, merging the previous programmes has resulted in the proposal simultaneously pursuing four objectives that are inseparably linked without one being incidental to the other. The objectives are:
·the internal market (Article 114 TFEU);
·veterinary and phytosanitary measures (Articles 43 and 168 i (b) TFEU);
·encouraging a favourable environment for the development of undertakings, particularly SMEs (Article 173 TFEU); and
·statistics for the Union policies (Article 338 TFEU).
Consequently, the legal bases of this Programme are Article 114, Articles 43(2) and 168(4)(b); and Articles 173 and 338 of TFEU.
• Subsidiarity
Establishing a deeper and fairer internal market requires a well-functioning regulatory framework, informed and empowered individuals, consumers and businesses and a competitive industrial eco-system. This cannot be achieved by the Union or Member States acting alone. Even if Member States are primarily responsible for delivering the internal market on the ground, the Commission, as guardian of the Treaties, and the Union as a whole have an interest in ensuring that these goals are delivered in a coherent way so and that individuals, consumers and businesses enjoy the same rights and opportunities throughout Europe. Action is required at Union level to ensure the consistent development of the internal market; non-discrimination; consumer protection; effective competition; the development of Member States’ capabilities and of cooperation between them; and the tackling of cross-border issues. Common rules and European cooperation are needed to enable the Commission and the competent authorities of the Member States to work in a coherent way at operational level.
Such a high degree of cooperation and coordination can be achieved only through a centralised approach, ideally at Union level. The activities of the proposed Programme are more cost-effective than if each participating Member State were to set up individual cooperation frameworks on a bilateral or multilateral basis. By pooling resources the Programme builds on economies of scale. This makes it possible at the same time to deepen trust in the internal market among the public, consumers, businesses and the competent authorities of the Member States.
In addition, the need for Union intervention was already well established under the predecessor programmes. The proposed Programme will not alter that rationale.
Consequently, this Programme can only be established at Union level as the actions require active cooperation and coordination between Member States.
• Proportionality
The proposed Programme will help to effectively enforce and modernise the Union legal framework and to adapt it rapidly to the ever-changing environment. This will be done, among other things, through data-gathering and analyses, studies, evaluations and policy recommendations. More than half of the proposed budget will be spent on capacity-building activities and on the facilitation of joint actions between Member States and between their competent authorities and the Commission and the decentralised Union agencies. Furthermore, the Programme will finance mechanisms allowing individuals, consumers and business representatives to contribute to decision-making processes. It will also strengthen the exchange and dissemination of expertise and knowledge. The Programme will support very specific types of actions in the following areas: improving competitiveness, notably of SMEs, as well as standardisation and emergency measures in the context of the food chain.
In addition, the Programme provides a framework for financing the development, production and dissemination of European statistics within the meaning of Article 13 of Regulation (EC) No 223/2009 31 .
None of the actions goes beyond what is absolutely necessary to achieve the Programme’s objectives in establishing a well-functioning internal market, promoting the competitiveness of SMEs and producing European statistics. The actions are based on analysis of actual needs on the ground but also take into account the legal requirements (e.g. emergency veterinary and phytosanitary measures, European statistics). The Commission will exercise coordinating, executive and management functions, as laid down in the Treaties.
Consequently, the objectives of the Programme will be achieved in a much more proportionate manner at Union level than at the level of Member States.
Paragraph 3.3 of the Impact Assessment makes reference to the Union value added.
• Choice of the instrument
As the Impact Assessment concludes, Union intervention through a funding programme is appropriate. Merging all the predecessor programmes, activities financed previously under budgetary lines dealing with the internal market, the competitiveness of SMEs and European statistics into one single Programme will improve the coherence and integration of actions. At the same time it will reduce the number of divergent and fragmented financing rules.
In accordance with the legislative policy the Commission has adopted under the MFF, the funding programme is proposed as a Regulation.
3. RESULTS OF RETROSPECTIVE EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
• Retrospective evaluations/fitness checks of existing legislation
The proposed Programme builds on lessons learned from the evaluations of the predecessor programmes. It also takes into account the results of evaluations and public consultations on activities financed previously under internal market budgetary lines or assessing the need for the implementation of the new ones.
In particular, it is worth noting that only 6 % of EU citizens feel well informed about their rights as a citizen of the Union and only 36 % feel fairly well informed 32 . In the public consultation on the Single Digital Gateway 33 , 80 % of businesses found complying with national requirements in other countries difficult. 60 % of individuals found it difficult or somewhat difficult to know which national requirements they had to comply with when moving to another Member State 34 .
The REFIT evaluation 35 of the functioning of market surveillance for products also revealed a lack of awareness of rules among businesses and little transparency on product compliance. The evaluation found that non-compliance is driven by, among other things, the fragmentation of the organisation of market surveillance in the Union. The financing of joint actions by market surveillance authorities needs a more coherent coordination framework in order to reduce non-compliant products in the internal market.
With regard to competition policy, ‘Eurobarometer’ surveys in 2010 and 2014 showed that public lacked awareness of where to turn when faced with higher prices, fewer products or supplier choices or lower quality. In addition, a 2016 Eurobarometer survey showed only limited knowledge and awareness of State aid rules.
The evaluation of the Consumer Programme 36 pointed to its slowness to respond to new market challenges driven by fast and often unpredictable societal and technological change. The evaluation also highlighted specific limitations in certain Member States, which prevent optimal uptake, typically due to limited resources.
The mid-term evaluation of the Food Chain Programme 37 showed that all activities receiving Union financial support in this area remained essential to human, animal and plant health throughout the food chain. This Programme had also proven flexible in addressing emerging needs for co-financing, especially outbreaks of animal diseases and plant pests.
Finally, the ongoing evaluation of the European Statistical Programme 38 shows that is necessary to develop a permanent capacity to respond faster to emerging new data needs. Globalisation, digitalisation and rapid technological change are challenging the foundations of measuring economic performance, i.e. Gross Domestic Product and key economic indicators. Therefore, substantial efforts also need to be invested in developing new methodologies. Data collection needs to be adapted to encompass all available data sources.
• Stakeholder consultations
The public consultation on the Multiannual Financial Framework proposal took place between 10 January and 9 March 2018. The questionnaire covered investment, research and innovation, SMEs and the internal market.
Around 80 % of stakeholders considered that Union Programmes and funds added more value than could be achieved at national level. The internal market was considered the best example of the Union’s added value as it was considered a public good delivering real and tangible value.
Among the most important challenges relevant to the Programme as identified by the wide majority of the respondents were: support for SMEs and for industrial development, fair competition and food safety. Generally speaking, between 20 % and 50 % of respondents considered that the Programme-related policies contribute fully or fairly well to addressing these challenges. Smooth circulation of goods in the Union received the highest score (50 % of all replies). Next came support for industrial development (42 %), provision of Union statistics (40 %) and support for capital flows and investments (39 %). Only 12 % of respondents considered that these policies were not successful at all.
• Impact Assessment
The design of the proposed Programme was the subject of the Impact Assessment. The following three overall scenarios were analysed:
–Option 1: a business as usual scenario where implementation of the current multiannual programmes and budget lines continues, with the addition of the new spending proposals through separate basic acts.
–Option 2: an integrated scenario where a new programme is adopted to deliver current and new programmes and budget lines falling within the programme’s scope. This is done through a single basic act that is flexible enough to preserve specific legal and institutional requirements.
–Option 3: a fully unified scenario; here all programmes within the programme’s scope are merged into a single common basic act with identical legal and institutional requirements for all activities within its scope.
Option 2 — a new, integrated Programme — was considered the preferred option. It was recognised that it would mean for a less ambition than option 3, but was a feasible and pragmatic way of achieving additional simplification, flexibility and synergies across the programmes and budget lines within its scope. At the same time, it would make it possible to accommodate the specific legal and institutional requirements for governance of those individual programmes. Examples are the emergency veterinary and phytosanitary measures and the European Statistical Programme 39 , which have dedicated institutional and governance settings of no relevance to other parts of the Programme.
The Impact Assessment received a positive opinion by the Regulatory Scrutiny Board 40 . However, the Board issued several considerations and recommendations for improvements, which were addressed in the following way:
| RSB recommendations | Revisions introduced |
| The report should be updated to reflect and explain the latest decisions regarding the scope of the programme. | Section 1.1 ‘scope and context’ has been expanded to reflect the scope of the Single Market Programme. |
| In the introduction, the report could better explain the nature of the programme-specific annexes. It should fix inconsistencies between the annexes and the report. It should include findings which are significant for the Single Market Programme budget from the annexes in the main report. It should spell out the changes within the individual programmes which will be implemented in the next period. It should also reflect stakeholder input more clearly in the presentation of the policy context and new priorities. The report should explain how the concerns expressed in particular in terms of prioritisation are properly reflected, e.g. with regard to health and to a safe and sustainable food chain. | The nature of the programme-specific annexes have been clarified in section 1.1 ‘Scope and context’. Main findings from SMP (sub)programmes have been clarified in the main IA report in table (1.3, Main lessons learned in programmes and budget lines included in the Single Market Programme), and main changes to (sub)programmes have been added in table (2.1, Main adjustments in existing programmes/budget lines). In addition, stakeholder views have been clarified. |
| The report lays out common priorities of the Single Market Programme but could discuss more the prioritisation between them and between the sub-programmes. As such, the analysis could reflect the scenarios for cutting activities and/or achieving synergy gains in order to cope with a possibly limited budget. | Section 3.3 about ‘possible prioritisations in response to the EU27 baseline scenario’ has been added to the report. |
| The report could better explain the coherence and potential synergies between the instruments of the Single Market Programme and other MFF programmes. | ‘Exclusions from the scope and coherence with other MFF programmes’ under section 1.1 has been expanded with additional information about coherence and potential synergies with other programmes. |
• Simplification
As explained above, the proposed Programme brings together activities previously financed under six predecessor programmes, including the European Statistical Programme, but also activities previously financed under several Commission budget lines 41 dealing with the internal market. The Programme also includes new initiatives 42 which aim to improve the functioning of the internal market.
Consequently, the proposed Programme streamlines and exploits synergies between the various actions. It also provides a more flexible and agile financing framework aimed at safeguarding and deepening a well-functioning internal market most cost-efficiently.
• Fundamental rights
The Programme ensures the full respect of the rights and principles set out in the Charter of Fundamental Rights of the European Union and contributes to the implementation of several of those rights. In particular, the objectives of the Programme are notably to ensure citizens’ health in accordance with Article 35 of the Charter and consumer protection in accordance with Article 38 of the Charter. It also contributes to the right to effective remedy and fair trial as prescribed by Article 47 of the Charter. The Programme also aims to reinforce the freedom to conduct business in accordance with Union law and national laws and practices (Article 16).
4. BUDGETARY IMPLICATIONS
On 2 May 2018, the Commission adopted a proposal for the next Multi-Annual Financial Framework for the period starting in 2021. In accordance with this proposal, this Regulation contains a budgetary framework of EUR 4 088 580 000 (in current prices) for the period starting in 2021.
5. OTHER ELEMENTS
• Implementation plans and monitoring, evaluation and reporting arrangements
The proposed Programme will be mainly implemented by direct management, using in particular grants, prizes and procurement.
Parts of the Programme are expected to be implemented by executive agencies. These concern in particular activities with regard to the competitiveness of businesses and SMEs and relating to training in the area of health of humans, animals and plants along the food chain, and to the support of the welfare of animals.
The impact of the Programme will be assessed through mid-term and final evaluations as well as by continuous monitoring of a set of high-level key performance indicators. These evaluations will be carried out in line with paragraphs 22 and 23 of the Interinstitutional Agreement of 13 April 2016 43 , where the three institutions confirmed that evaluations of existing legislation and policy should provide the basis for impact assessments of options for further action. The evaluations will assess the Programme's effects on the ground based on indicators and targets and on a detailed analysis of the degree to which the instrument can be deemed relevant, effective, and efficient, provides enough Union added value and is coherent with other Union policies. They will include lessons learnt to identify potential gaps or problems, as well as the potential for further improvement of the actions or their results, and to help maximising their impact.
The Programme’s results and outputs will be regularly assessed through a comprehensive monitoring system, based on defined indicators, with a view to ensuring value for money. Since the Programme mostly plays a supporting role, assisting Member State administrations in the sharing of information and boosting their capacity, the monitoring system focuses among other things on following the progress of the Programme’s activities through output indicators.
• Detailed explanation of the specific provisions of the proposal
Contents
The scope of the Programme covers the area of the internal market, the competitiveness of SMEs and European statistics in a comprehensive manner.
The Programme-specific objectives concern:
·making the internal market work better;
·improving the competitiveness of businesses, especially SMEs;
·increasing standardisation;
·promoting the interests of consumers;
·contributing to a high level of health for humans, animals and plants throughout the food chain; and
·producing and communicating high-quality statistics on Europe.
The Programme will be open to participation by the Member States, European Free Trade Association (EFTA) members which are the members of the European Economic Area (EEA), acceding countries, candidate countries and potential candidates. In line with overall Union policy, countries covered by the European Neighbourhood Policy will also have the possibility to take part in the Programme under certain conditions. In addition, the Programme will be open to Switzerland in accordance with the conditions established in the Agreement between the European Community and the Swiss Confederation on cooperation in the field of statistics 44 .
The Programme will be implemented through the most commonly used spending mechanisms of the Union budget, namely public procurement and grants.
This Chapter indicates generic types of actions which will apply to all specific objectives. These include:
·support for the effective enforcement and modernisation of the Union legal framework through data-gathering and analyses;
·studies and evaluations;
·capacity-building activities and facilitation of joint actions between Member States and between their competent authorities and the Commission and the decentralised Union agencies;
·financing of mechanisms allowing individuals, consumers and business representatives to contribute to decision-making processes; and
·strengthening the exchange and dissemination of expertise and knowledge.
In addition, this Chapter lists very specific and targeted strictly limited types of actions in the following areas: improvement of competitiveness, notably of SMEs; standardisation and emergency measures along the food chain. Moreover, this Chapter lists the specific activities for implementing the framework for financing the development, production and dissemination of European statistics within the meaning of Article 13 of Regulation (EC) No 223/2009.
In order to achieve maximal simplification, this Chapter stipulates either additional conditions or derogations from the Financial Regulation concerning eligibility requirements for entities, exceptions from the requirement of call for proposals, co-financing rules, eligible costs, etc.
Implementation of the Programme should be based on annual or multi-annual work programme or programmes. In view of the mid- to long-term nature of the objectives pursued, and building on experience gained over time, work programmes may cover several years. While not impacting the implementation of the Programme, multiannual work programmes will reduce the administrative burden.
A list of core indicators has been added in Annex IV to improve the monitoring of the Programme and its performance from the outset. The Commission will be empowered to adopt delegated acts in order to amend the monitoring and evaluation framework and the list of indicators where necessary.
The Commission proposal for the 2021-2027 Multiannual Financial Framework set a more ambitious goal for climate mainstreaming across all Union programmes, with an overall target of 25% of Union expenditure contributing to climate objectives. The contribution of this Programme to the achievement of this overall target will be tracked through Union climate marker system at an appropriate level of disaggregation, including the use of more precise methodologies where these are available. The Commission will continue to present the information annually in terms of commitment appropriations in the context of the annual draft budget.
To support the full utilisation of the potential of the Programme to contribute to climate objectives, the Commission will seek to identify relevant actions throughout the Programme preparation, implementation, review and evaluation processes.
Interim and final evaluations will be carried out.
Coherent, effective and proportionate targeted information will be provided to multiple audiences, including the media and public.