EU Single Market: major issues at stake for cities and regions

Full respect of the Schengen agreement and of the "Think Small First" principle is crucial to ensuring that the EU Single Market works and provides specific benefits to citizens and small and medium-sized enterprises (SMEs). These are the main messages of the opinion approved by local and regional leaders at the European Committee of the Regions plenary session.

"The EU Single Market is one of the greatest achievements of the European Union and we should not jeopardise it. On the contrary, we need economic and structural reforms to exploit its full potential. Regions play an important role here as economic regulators and operators. Moreover, their experience in cooperation across borders helps to identify not just local but European barriers to freedom of movement. Cutting off Schengen and freedom of movement from the Single Market would not only trigger high administrative costs but also hinder growth and job creation," says Alessandro Pastacci (IT/PES) CoR rapporteur on the CoR opinion on "Upgrading the Single Market" and President of the Province of Mantova.

The rapporteur also supports the inclusion of the Single Market pillar in the European Semester and a range of measures for SMEs and start-ups. He urges the "Think Small First" principle to be applied, which means having the smallest enterprises in mind when drafting legislation, a reduction of VAT registration and reporting burdens for SMEs and start-ups, especially when operating across borders, and the application of the Directive on combating late payment in commercial transactions.

Ahead of the vote on her report in the IMCO committee of the European Parliament (EP), scheduled for 21 April 2016, the EP rapporteur Lara Comi welcomed the CoR opinion as very valuable input into her work and highlighted the need for further measures to support SMEs: "It is necessary to provide forms of compensation for late payments by public bodies. Furthermore we should introduce a VAT flat rate in the e-commerce sector and support the proposal of a services passport with the aim of helping service providers to require only one valid document for all Member States."

In relation to public procurement, local and regional leaders would like to lower the ceiling of EUR 700 million for the voluntary ex-ante assessment in relation to the procurement of large-scale infrastructure projects. CoR members would also like to look into an analysis of the economic, social and territorial impact on the Single Market before granting China a Market Economy Status by the end of 2016.

The members of the CoR regret that the social economy, which represents 11 million jobs and 2 million businesses, is missing from the European Commission's proposal for upgrading the Single Market, as is the steel industry. The CoR will dedicate a specific opinion to the challenges faced by the steel industry presented by Isolde Ries, First Vice-President of the Saarland Regional Parliament, at the CoR's ECON meeting on 22 April.

Background:

On 28 October 2015, the European Commission presented a new Single Market Strategy to deliver a deeper and fairer Single Market, aiming to:

• modernise our standards system
• strengthen the single market for goods
• reduce barriers in key sectors such as business services, construction and retail
• prevent discrimination against consumers based on nationality or place of residence
• strengthen preventive enforcement by reforming the notification procedure
• enable the development of the collaborative economy.

The European Semester is the EU's annual cycle of economic policy guidance and monitoring. It sets out general economic and social priorities for the following year, and gives Member States policy guidance with the aim of fostering growth and preventing excessive macro-economic imbalances.

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