MONDAY 23 JULY 2007

Mr Thierry Stoll, Mr Jens Nymand Christensen, Ms Elizabeth Golberg, Mr Peter Scott, Mr Adriaan Dierx, Mr Andras Inotai, Mr Emanuel Cabau and Mr Luc Tholoniat

  Q196  Chairman: Good morning.

  Mr Christensen: My Lord Chairman, Lords, ladies and gentlemen, first of all, on behalf of the Secretariat General, I would like to welcome you to the European Commission this morning. I will make a few introductory statements. I thought it would better if we started by introducing ourselves at the very beginning so we get to know each other a bit more by name and background, particularly those of us over here. If you agree, I would ask my colleagues to briefly state who they are and what DG we are representing today.

  Q197  Chairman: Then perhaps we could repeat the courtesy.

  Mr Christensen: Thank you very much.

  Mr Inotai: Good morning. My name is Andras Inotai and I represent the Competition Directorate-General.

  Mr Tholoniat: Good morning. My name is Luc Tholoniat and I work in the Secretariat General of the Commission.

  Mr Scott: My name is Peter Scott. I work in DG Information Society and Media.

  Mr Stoll: Good morning. My name is Thierry Stoll, I am Deputy Director General of DG MARKT, the DG that deals with the internal market.

  Mr Christensen: My name is Jens Nymand Christensen and I am Director in the Secretariat General.

  Ms Golberg: Good morning. Elizabeth Golberg, I am Adviser to the Secretary-General.

  Mr Dierx: Good morning. I am Adriaan Dierx, I work with the internal market issues within the Directorate-General for Economic and Financial Affairs.

  Chairman: Thank you very much indeed for your hospitality and for meeting us this morning, which we hope will be a very productive session. May I introduce myself: I am Lord Freeman, the Chairman of Sub-Committee B which deals with the internal market part of the House of Lords Select Committee on the European Union. We are well into our inquiry into the future of the internal market, awaiting the Commission's report, or review, which we expect later this year when we would like to come back to Brussels to talk directly to some of the Commissioners before we produce our report at the turn of the year. May I go to my right and ask Lord Powell to introduce himself.

  Lord Powell of Bayswater: Charles Powell, member of the Committee.

  Baroness Eccles of Moulton: Diana Eccles, member of the Committee.

  Lord St John of Bletso: Anthony St John, member of the Committee, Crossbench member of the House of Lords.

  Q198  Lord Haskel: Simon Haskel, Labour member of the House of Lords and a member of the Committee.

  Mr Christensen: Thank you very much. We have been looking forward to this occasion very much to discuss this subject with you and I can tell you, my Lord Chairman, that we would very much welcome you back here again once the Commission has moved forward and adopted its Internal Market Review. In a way, this is an opening to some of these contacts. This morning is a welcome and, I must say, rather unique opportunity for us to discuss directly with you the ongoing review of the internal market. Strengthening our contacts with national parliaments is a priority for the Barroso Commission and its main overarching objective of better regulation. One illustration is the new procedure of direct and immediate transmission of all Commission proposals to national parliaments, which has been in place since last year and in our opinion is already yielding very promising results. We value the efforts from national parliaments to strengthen the European dimension of their work and we appreciate very much your making contact with us and coming here today. Early contacts and consultation is always very much in the spirit of the Single Market Review, which we are going to discuss this morning. Before we go into the substance of the matter I would like to make a few general remarks on the exercise by way of introduction. My first remark relates precisely to the nature of the exercise. This review of the Single Market is a participatory process which builds on extensive consultation and takes account of the views of many stakeholders. More generally, it builds on the premise that the Single Market is for the common good of the EU and what we in jargon call "Brussels" cannot and should not deliver alone. In a larger, more diverse Europe the success of the future Single Market will depend on an effective partnership between all those concerned, in particular within Member States as well as between them, with the Commission playing a steering and facilitating role. Internally, as you will see from the participation at this table, the work on the review involves many departments and services of the Commission. Thierry Stoll, who is sitting to my left, is the Deputy Director General from the Directorate-General for internal market and services. He has kindly accepted to join us this morning to go into greater detail about the plans. Colleagues from the Directorates-General for Economic and Financial Affairs and, I hope, ultimately, for Transport and Energy when he joins us, Competition, the Information Society and the Secretariat General are also present to respond to your questions. My second remark relates to the timing of the exercise. As you know, in February the Commission presented its vision for the Single Market of the 21st century. This took the form of an interim report to the Spring European Council. The report was welcomed by the Heads of State and Government which gave a clear mandate to the Commission to come forward with concrete proposals this autumn and we hope to present the final report by, I would guess, mid-November. This should be the starting point for an informed discussion in the various Council formations in order to prepare and decide on the key priorities at the next Spring European Council. Your report will no doubt prove very timely in this context. My third remark relates to the significance of the exercise. What we are discussing today is not routine business. The Single Market is one of Europe's concrete success stories with direct benefits for citizens and business across Europe. It is the cornerstone of other European successes, such as the abolition of border controls for most of us, the creation of a single currency and the strength of the EU in global trade talks. From a Commission perspective the Single Market is a living project, it is not a "done deal", a part of the acquis for which we just have to monitor the implementation. It cannot and will never be finished business because it has to adapt constantly to new circumstances and challenges. Globalisation, enlargement and technological changes have radically transformed the Single Market of 1992 and the new challenges on energy, climate change and the ageing of the population will transform it once again. This is why the Commission considers it essential to take stock of achievements in an open manner and to take a resolute course of action in order to design a Single Market which can meet the expectations of our European citizens and businesses. You will understand that it is too early for the Commission to give a more precise list of the priorities and initiatives which will feature in the final report but the interim report published in February indicated a number of avenues to explore. The written reply that we have transmitted to you also provides some facts and ideas. My colleagues are here to help you gather the evidence you are looking for and we will be available to provide any further assistance you may seek following the meeting today. At the same time, it would be very interesting for us to hear your preliminary views. It may be too early for us to disclose our final thinking but it is never too late for the Commission to listen to your experience and ideas. I hope we can have a fruitful meeting and look forward to working with you in the coming months. Thierry, I do not know whether you want to say a few opening remarks.

  Mr Stoll: My Lord Chairman, ladies and gentlemen, thank you very much for coming to see us. I very much appreciate this initiative which is a good example of democracy being interested and involved in European matters. I have had the privilege of appearing before a Select Committee in the House of Lords in London and I have come to appreciate the high level of competence of these committees and the very thorough work that they are doing, which I think is a model for other Member States. Your visit is very timely, not just because of the upcoming review of the Single Market but because I think the internal market as such is at a crossroads. I have been heavily involved in developing the internal market on the side of the Council, especially in the 1980s when the Single Market was one of the key policies that was fairly easy to put in place. I remember the discussions in the Council when President Delors was the President of the Commission and Lord Cockfield was in charge of the internal market, and each Presidency could boast the adoption of tens of dozens of directives. Today we may think this was too much, or too much in one go, but the least one can say is that very much of the internal market was put in place in those days and what we are looking at now are the more difficult parts, the last mile or the last centimetre of achieving the internal market, although this will never be a completely finished story. We have produced the facts about the benefits that the internal market has brought in economic terms. I would say that today what is different compared to the 1980s is more the perception of the internal market and the way this policy is being developed and, even more importantly, applied on the ground. It is quite clear from the works that we are engaged in within the Commission that the focus will have to change. Of course we will continue to produce very important legislation to complete the internal market where this is not the case, but increasingly I think we will have to devote our attention to the upstream process and the downstream process. By that, I mean the upstream process is to be much more engaged in understanding how the internal market is working on the ground and how it is affecting various parts of the population. We tend to look at the users or beneficiaries or actors of the internal market as one single coherent group but we know this is not the case and when we consult in preparation for legislation one criticism that we hear very often is that we only listen to the usual suspects and we neglect some of the less vocal constituencies, in particular in the civil society. It is all too easy to put a draft Bill or draft legislation on the Internet and ask those who are interested to comment on this but this will not reach many of the concerned and affected parts of the population. We are learning lessons from this as part of the better regulation process. We need to devote more resources and attention to establishing the facts, establishing the real nature of the problems that we want to address and through the better regulation agenda seek the best means to address this, whether legislative or not. Downstream of the legislative process, the focus will certainly increase on the whole issue of enforcement, application on the ground, providing information about the rights and opportunities of a Single Market and helping to resolve problems. I think we will come to talk about this in more detail later on, but one of the keys for the success of the future internal market will be the way in which national administrations also take ownership of the internal market and deal with each other to apply it from the ground, smooth problems and not just have the Commission acting as a guardian of the Treaty to pursue them if they do not apply the law on the ground. It is a shift in the nature of the way that we deal with the internal market, less legislation, better regulation and also more focus on the non-legislative instruments to make the internal market work. It is a change in the approach and in the spirit in which we want to handle the internal market, very much in the spirit of the 10 May 2006 Communication which sought to bring the internal market, and through it European integration, much closer to the citizens who we have seen are sometimes concerned about where the European Union is going, sometimes they view the internal market as a threat, and they need to be reassured and convinced on the basis of facts that this is in the overall interests of the European Union. We look forward to having this exchange with you today and also in the future and very much welcome and look forward to the exchange of views this morning.

  Chairman: Thank you very much indeed, Mr Christensen and Mr Stoll. It might be helpful if we proceed by asking different colleagues to lead a brief set of questions and discussion, but I think the areas that you have already identified as being important provide a good agenda for this morning. I think you will find a great deal of sympathy from this Committee towards your general approach, which is the Single Market is something that is growing and we need to be flexible in our understanding of what the needs of the European Union and its citizens are. It is a living organism and it is important that our regulators and those responsible within the European Union listen to citizens, to consumers, to businesses, particularly small businesses, and perhaps a greater emphasis is put upon effective implementation of existing regulations rather than fresh. I think there is a great deal of sympathy within our Committee towards that general approach. I would like to ask Lord Haskel to start and perhaps he could focus on the consumer, the citizen.

  Q199  Lord Haskel: Thank you very much for your kind words and for your reception, it has been very welcoming. What we would like to do is start off by understanding a little bit more what you mean by the benefits to consumers and citizens. I would like to probe this to see whether the rhetoric is, in fact, reflected in reality because it is a very difficult matter. Perhaps you could start off by telling us how have consumers, citizens, benefited from the Single Market in general?

  Mr Stoll: I will give maybe a very general reply to this to begin with. I need not come back to the growth benefits of the internal market, benefits in terms of growth and jobs, because to some extent they are only partially relevant for the individual citizen and consumer. What we need to look at is how individual consumers have felt the benefits of the internal market. We have conducted a number of surveys in order to measure this impact, both in real terms and also in terms of perception. A couple of facts that are worth reporting are the following: when you look at the financial side, what is measurable in your wallet, at the end of the day we can say that the benefits of the internal market have translated into nearly €500 worth of additional annual revenue or income, or richness, per head over the last ten years, or even the last 14 or 15 years. This is the way to translate the growth of 2.2 per cent that can be attributed to the development of the internal markets from 1992-2006. 2.2 per cent of GDP does not mean much to a citizen but €500 in addition does, which may not sound a lot but you have to consider the population of the European Union. In terms of concrete rights, therefore, not just measurable financially but the rights, the picture is very positive as well from our findings. Take the possibility of being able to study abroad, that is one of the major successes of European integration. It is considered positive by 84 per cent of citizens and 1.2 million students, young people, have completed part of their studies in another Member State as part of the Erasmus Programme. If you ask me what are the three main flagships of European integration I would quote the Erasmus Programme as one of the most successful ones to bring home to citizens that they are part of a wider union and that they have very concrete rights flowing from this. The ability to travel in another Member State is another clear benefit. Compared to ten years ago, three-quarters of citizens in the Union say that travelling is now much easier. I think that applies even to citizens from countries that are not in Schengen because, generally speaking, travelling has become easier. Another very important, decisive benefit from European integration is the right to work and live abroad. There are still restrictions, of course, flowing from the last enlargement but the right to work in another Member State is seen as a positive development for 70 per cent of European citizens. Indeed, more than 15 million European citizens have moved across borders either to work or to enjoy their retirement and obviously a number of them are UK citizens. They can vote and stand for election in local elections, municipal elections. When they work abroad they also enjoy full equality of treatment as regards employment, remuneration, social security and conditions of work. These benefits may be taken for granted by the vast majority of citizens but they are there and when you ask the citizens they recognise that. In terms of consumers more specifically, what consumers generally see as a benefit of the internal market is a wider choice of high quality goods and services. 73 per cent of citizens consider that this has been one major benefit of the internal market, a wider range of products and services on offer. They also see the positive side of competition. 67 per cent of citizens very much welcome the increase in competition in areas like transport, communication and financial services. It tends to be the same example again and again but there are others. To quote telephone prices, they have come down by 40 per cent between 2000 and 2006 through the abolition of national monopolies. Consumers, when they go shopping, have a very wide ranging number of consumer rights when they shop outside their own country. The majority of citizens, 53 per cent, a smaller majority and I think we need to look at that, consider that internal market rules have increased consumer protection within the EU. This is certainly true when it comes to the levels of product safety, standards, misleading advertising, unfair terms in contracts, and air passenger rights where this has been very visible. We should not hide the fact, nevertheless, that there can be situations where consumers feel less secure when shopping abroad. Certainly they feel less encouraged at the moment to shop by the Internet, although this is a developing trend as well with the help of secure payment across the Internet, for instance, which is one major source of concern. I would like to highlight in the financial services sector tangible benefits from financial integration. One excellent example is the price for cross-border payments. Since the adoption of the regulation in 2001 which evened out fees for domestic and cross-border money transfers in the EU there has been nearly a ten-fold reduction in the average fee for a cross-border transfer of €100 from about €24 in 2001 to €2.5 in 2005. The fees for normal, common financial products like bank accounts still differ substantially between Member States but the price discrepancies between banks are falling compared to areas like the United States or in the Asian market. One last example which is very telling is declining retail prices in banking, and in particular mortgage provision. One experience of opening up in the Dutch market has diminished mortgage profits by 50 per cent over just three years. This means that the consumer in the Netherlands saves €100 a month on a mortgage of €200,000. All of that is thanks to the arrival of new entrants to the banking market in the Netherlands. The story about the benefits for citizens and consumers, and I think there could be many more examples, is a positive one. That is not to say that the opportunities for shopping, buying and selling across the internal market are totally exploited. One of the important strands of the Single Market Review will be how to involve the consumer better in the definition of policies, again upstream, and how to ensure that he feels confident enough to exercise these rights across the Union and feels that he has equivalent means of redress and equivalent legal certainty as he would when shopping at home. We know that rogue traders also exist in the national markets but we must minimise the risks that exist from an enlarged market involving 27 Member States. It is a positive story but certainly one that can still be improved. There are sectoral areas where the benefits for consumers have also been very markedly felt and maybe some of our colleague would like to comment on that?

  Mr Christensen: Thank you. You raised some specific questions relating to DG TREN and we spoke about airline liberalisation where all the consumers have visibly seen a significant drop in the costs of flying. We also spoke about roaming and I do not know whether Info Society would like to develop a little bit more on it because they are examples that people talk about where the internal market has brought tangible and proven benefits in a very clear way to the consumers.