Saturday 8 April 2017

Annual Growth Survey 2015 without Single Market integration report

We took leave of the first and the second Single Market Act, and the second Barroso Commission, through the blog posts Tracing Single Market Act proposals and Latest Single Market Act blog entries.
Still interested in improvement and governance of the internal market, in the entries Single Market integration 2013 report and Second Single Market integration report 2014 we saw that the Council and the European Parliament welcomed the integration reports, while calling for improvements.

The Parliament had even formally requested a legally binding act with detailed data, establishing  a Single Market Pillar for the European Semester and the Annual Growth Survey, as related in my Swedish blog post Europaparlamentet om styrningen av den inre marknaden.   

Juncker Commission: AGS 2015

After the elections to the European Parliament, the new Commission, headed by Jean-Claude Juncker, assumed office 1 November 2014. Soon after that, the Commission started the 2015 European Semester, by publishing its first Annual Growth Survey (AGS):

Annual Growth Survey 2015; Brussels, 28.11.2014 COM(2014) 902 final (20 pages)   

Based on an integrated approach, the Commission recommended three main pillars for the EU's economic and social policy in 2015 (pages 4-5):

  • A coordinated boost to investment
  • A renewed commitment to structural reforms
  • Pursuing fiscal responsibility

But it was not immediately clear what the Commission meant by streamlining and reinforcing the European Semester process (page 5):

To implement the logic of the new integrated approach, the Commission proposes to streamline and reinforce the European Semester of economic policy coordination in support of the three pillars.

The renewed commitment to structural reforms (Section 3, from page 9) started with these general remarks:

Making the European economy more competitive and ensuring the right regulatory environment for long-term investment is crucial for growth. Structural reforms can help to attract private productive investment, particularly in network industries and smart manufacturing where investment needs are high. At EU level, this requires further deepening of the single market and avoiding unduly burdensome regulations, particularly for small and medium sized enterprises, improving access to finance and ensuring the quality of investment in research and innovation. At Member State level, these efforts have to be complemented by an ambitious implementation of structural reforms of product, services and labour markets.

Deepening and widening the internal market (single market) was very much on the Commission’s mind, as presented after each of these paragraph introductions for removing key barriers at EU level:

  • Implementing the single market in goods and services is a priority.
  • The Digital Single Market is essential for jobs, growth and innovation.
  • Further structural reforms in energy markets are necessary to achieve a resilient Energy Union with a forward-looking climate change policy
  • Ambitious action is required to ensure an EU regulatory framework supportive of jobs, growth and investment.

Regarding structural reforms at member state level, internal market substance and governance came to the fore in point four (page 13):

4. Improving the flexibility of product and services markets. Modernising the functioning of network industries, upgrading infrastructure capacity and further opening services sectors remains a challenge for most Member States, as shown the country-specific recommendation issued to the Member States in 2014, which put the focus on measures to improve the functioning of their network industries and to enhance competition in product and services sectors, notably as regards regulated professions. Effective enforcement of consumer legislation can also increase trust and create demand in the single market.

EU legislation provides a framework for modernisation at national level, and for making Europe more attractive and competitive as a whole. Member States have undertaken numerous reforms in the services sector following the entry into force of the Services Directive in 2006, but progress has been more uneven recently. The full implementation of the Services Directive would significantly improve the functioning of the single market for services and could lead to an economic gain of up to 1.6% of EU GDP in the long run on top of the 0.8% of EU GDP under the current level of implementation. The overall persistence of a high number of exceptions to the general principles foreseen by the Directive, together with lengthy reform processes in a number of Member States, are still weighing on the full implementation of the Directive and thus do not allow reaping its full benefits. Stepping up national reforms should focus on removing the following barriers: (i) disproportionate and unjustified authorisation requirements in some Member States, notably legal form and shareholding requirements; (ii) lack of clarity of domestic legislation as to the rules applicable to businesses providing cross-border services; (iii) lack of mutual recognition; (iv) cumbersome administrative procedures, with scope for improving the performance of the Points of Single Contact; (iv) uneven progress on the ongoing mutual evaluation of professional regulations and reforms of regulated professions; (v) remaining obstacles to the free movement of goods. The Commission will continue to work closely with the Member States to remove these barriers.

However, while discussing streamlining and reinforcing the European Semester (pages 16-17), the Commission said nothing about the single market integration report or a single market pillar for the Annual Growth Survey and European Semester. Neither did the more detailed annex on pages 18-19 or the graphic presentation on page 20.  

If we look at the Commission’s Europe 2020 web pages, we find that the Annual Growth Survey 2015 page mentions the following documents besides the 2015 AGS: the Alert Mechanism Report, its statistical annex, the Joint Employment Report, the annexes to the Joint Employment Report, as well as views from the social partners ETUC and European cross-industry employers.

Thus, it looks as if the 2015 report on single market integration as a part of the Annual Growth Survey (and the European Semester exercise) disappeared without a trace, despite the welcome and wishes for further improvement expressed by the Council and the European Parliament regarding the first (2013) and the second (2014) integration reports.

Ralf Grahn

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