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The following OECD assessment and recommendations summarise chapter 3 of the Economic Survey of the European Union published on 21 September 2009.
The single market is moving ahead, but more remains to be done
The single market programme has already delivered many benefits to the European economy and improved longer term growth prospects, by raising competitive pressures. But much more remains to be done, especially in service sectors and some network industries. OECD product market regulation indicators show that such regulations remain relatively stringent and that competitive pressures are lower than they could be. Intra–EU trade in goods and services is growing only modestly and price convergence between member states appears to have stalled, with the exception of the new member states. Some important past reforms are awaiting full implementation by member states. There has been an improvement in the rate of transposition of legislation, but as of the end of 2008 there were 92 single market directives (6% of the total) that had not been transposed fully by all member states by the due date. Some were several years overdue. There are also many cases of directives either being transposed incorrectly or incorrectly applied. In all, over 1 200 infringement cases remained open as of the end of 2008. Assessment of the quantitative importance of such infringements is difficult, but actions should be taken to limit their number. The Commission should press ahead with measures to identify best practices amongst member states, particularly with regard to the application of single market rules and administrative co–operation on single market issues, and continue to pursue infringement proceedings where necessary.
The Services Directive needs to be implemented in a timely and effective manner
The Services Directive should bring a marked improvement in competition, provided it is implemented in a timely and effective fashion, as intended, by the end of 2009. Implementation is a demanding task for member states as numerous legislative changes are required and new procedures have to be introduced to reduce administrative and regulatory costs. Information on the state of progress is sparse, but there are indications that some member states may find it difficult to meet the deadline. The Commission is already providing advice to member states and has drawn up plans to continue collaboration through a "mutual evaluation exercise" that will take place with member states in 2010. The Commission will need to act decisively in introducing follow–on actions if member states do not meet the transposition deadline. Assessments of the state of transposition could be helped by the development of a centralised website with timely information on measures adopted by member states.
The single market needs to be extended further
Increasingly, the focus of single market activity appears likely to turn towards monitoring and implementation, but further steps will need to be taken to ensure that obstacles to cross–border retail financial services are tackled and that further liberalisation takes place in EU energy markets. The adoption of the third Postal Directive marks the commitment of EU member states to fully open their postal markets by the end of 2010 (with the possibility for some member states to postpone full market opening by two more years as a maximum, accounting for the remaining 5% of the EU postal market). Previously untouched sectors, such as port services, also have to be tackled. Increasingly, the Commission will need to strengthen the evidence base for single market initiatives and identify the importance of specific barriers for market size and productivity growth. Without these, the impact of past legislation and the need for follow–up measures will be impossible to assess effectively. The Market Monitoring exercises recently begun by the Commission are an important step towards achieving this.
Continued efforts should be made to simplify regulations and improve assessments of new policy proposals
The business environment can be further improved by continuing efforts to simplify the administrative burdens resulting from Community law. Considerable progress has already been made by the implementation of the Better Regulation agenda since 2005, which includes proposals to simplify more than 130 regulations. A programme is now in place to reduce administrative burdens by an estimated 25% by 2012. It is important that this is pursued vigorously, with high quality ex post evaluation of the resulting measures being undertaken. More could also be done to improve the quality of ex ante impact assessments of new legislative proposals. Impact assessments of Commission proposals are always made, but are rarely revisited after amendments are made by the European Parliament and the European Council. This complicates effective evaluation of the final policies introduced.
How to obtain this publication
The complete edition of the Economic Survey of the European Union is available from:
The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations.
For further information please contact the European Union Desk at the OECD Economics Department at email@example.com.
The OECD Secretariat’s report was prepared by Nigel Pain and Jeremy Lawson under the supervision of Peter Hoeller. Research assistance was provided by Isabelle Duong.