Non-tariff and non-tax barriers hamper the effectiveness of the EU’s single market and must be eliminated urgently, says Kosma Złotowski
The single market – with the opening of borders within the Schengen area – is one of the greatest achievements of cooperation between sovereign states within the European Union.
The removal of restrictions on the cross-border movement of goods and services has been a key factor in creating prosperity for all Europeans and economic growth in the Member States that joined the EU in 2004, 2007 and 2013.
Yet despite the many achievements in this area and the common belief that free trade and the free provision of services have a positive impact on the European economy, many non-tariff and non-fiscal barriers remain. These hamper the potential of European businesses, in particular small and medium-sized enterprises (SMEs) that operate in a cross-border environment.
Member States abuse exclusions and justifications to restrict foreign competition in what they consider particularly sensitive sectors. No one questions the right of sovereign EU member states to pass national laws to protect the security of their citizens, public health or their strategic interests.
“An efficient single market, free of unnecessary barriers, is the best guarantee for a rapid recovery of the European economy after the COVID-19 crisis”
However, the use of treaty exceptions to circumvent the free movement of goods and services should be vigorously opposed by the European Commission. This is of particular concern for the service sector, which is subject to overregulation in many areas. These include a lack of cooperation between Member States, incorrect implementation of European law, excessive and cumbersome controls and a lack of effective redress tools at European level.
My report for the Committee on the Internal Market and Consumer Protection (IMCO) draws attention to these problems and suggests solutions. Many of these measures cannot be implemented if there is a lack of political will to protect the weakest, namely SMEs on the periphery of the European Union.
A notable example is the road transport sector, a key component of the European economy. Its proper functioning has a decisive influence on trade between Member States.
A significant part of the operations of the sector has an international dimension, which therefore exposes them to the risk of heavy and costly bureaucracy outside the country of registration of companies. There is also the threat of incorrect application of EU law, disproportionate sanctions and unjustified actions by national supervisory authorities.
The development of the single market in digital services also faces a number of non-tariff barriers, limiting its potential and preventing consumers from accessing products and services offered in other Member States.
Given the ongoing digital transformation of the European economy, identifying and removing obstacles to the development of e-commerce appears to be one of the key challenges for the European Commission.
Unfortunately, most of the initiatives taken by the Commission to remove existing and heavier non-tariff barriers have either proved ineffective or have met strong resistance during the legislative process.
At the same time, there is a rise in protectionism in many Member States, which restricts access to national markets for companies operating cross-border or posting workers. This approach is dangerous for the proper functioning of the single market, which also benefits businesses and consumers in all Member States.
Discrimination against companies from countries which joined the EU from 2004 is, unfortunately, most apparent here. As coordinator of the European Conservatives and Reformists (ECR) group in the Committee on Petitions, I have often had to deal with complaints from Polish companies, mainly SMEs which have been victims of excessive and abusive controls and pressure from national administrations in Western European countries to stop providing their cross-border services.
“The use of the exceptions of the Treaty to circumvent the free movement of goods and services should be vigorously opposed by the European Commission”
Legal disputes are very long, which is why it is essential to create a mechanism for the speedy resolution of these cases. Many of them are obvious, but a lack of understanding, language barriers or simply prejudices make it impossible to find amicable solutions.
The COVID-19 pandemic has clearly proven that in a crisis, the fluidity of trade and the free movement of services are extremely sensitive to disproportionate actions by national authorities and the lack of harmonization and cooperation between Member States.
The disruption of supply chains within the single market has posed a serious threat to the stability of production and trade, especially in sectors critical to the fight against the pandemic. A proper assessment of the European Commission’s response to the health crisis is needed to identify and remove bottlenecks, in particular for the cross-border movement of goods and services.
In my opinion, an efficient single market, free of unnecessary barriers, is the best guarantee for a rapid recovery of the European economy after the COVID-19 crisis.
Through the efficient use of digital services and the widespread implementation of eGovernment tools at European and national level, we will be able to remove a significant number of obstacles encountered by companies operating in multiple states. members when dealing with public administration.