Single Market Update 2008

1. Single Market Update 2008 Dr Andreas Staab EPIC - the European Policy Information Centre

2. Plus 2.5 million jobs 800 billion € extra wealth Lower prices (phone, air travel) Opening of key industries 15 million EU aliens Minus Knowledge sector Environment social cohesion Sustainability professional standard recognition Network industries Taking stock in 2003

3. Problems with the Single Market • Average time to adopt EU standard is now 8 years • Trade is often complex: re-testing, re-modification of products • EU Market in services (BANKING, MOBILE PHONE) more legal concept than practical reality • Network industry (utilities, travel) is fragmented • Tax Obstacles, in particular VAT and cross border transactions • Procurement opportunities • Aging population

4. Single Market Strategy 2003 - 2006 • Free movement of goods • Integrating service market • Network industries • Tax obstacles • Procurement opportunities • Business conditions • Demographics • Simplify regulation

5. Single Market for the 21st century • Social dimension • European Passport for Researchers • External dimension • Service directive • Telecoms reform • Financial services • European Framework for Patent Protection • E-procurement • Consumer protection law • Small Business Act

6. SEM Update: The New Service Directive (November 2006) Find balance: competitiveness and avoid social dumping Antagonism: Country of origin versus freedom to provide services Included: 1. services of general economic interest (post, water, electricity, waste), but business has to be registered in country where service is delivered. 2. Business services (consultancy): no restrictions at all 3. Services provided to consumers and businesses (travel, legal advice). No restrictions at all. Excluded 1. Healthcare, social services gambling, lottery tax services, non-economic services 2. Industries that already have EU regulation in place (transport, finance, telecom) 3. Does not affect MS labour and criminal law

7. SEM Update: Telecommunications I Actors: • Viviane Reding. Telecoms Commissioner • ERG: European Regulators Group • GSMA: GSM Association Facts: • Former state owned companies control 39% of mobile sector (2006): UK 26 %, Cyprus 90 % • EU Telecoms sector has 24,000 enterprises

8. SEM Update: Telecommunications II • June 2007: Regulation 717/2007; Cap on prices of cross border mobile calls • Jan 2007: ERG Report: gap between billed and actual calls is around 20 per cent • Feb 2008: Reding threatens to introduce price cap on SMS and mobile internet use • July 2008: second ERG report asks for new regulation

9. SEM Update: Telecommunications II • Roaming Charge Regulation July 1, 2009 • 0.35 € for calls made abroad (2011) • 0.11 € for incoming calls (2011) • Per second billing • Downloading: 0.50€ per MB (2011) • Cut off mechanisms once bill reaches 50.00 €

10. SEM update: financial services • Aim • Achieve free movement of services and capital • One EU wide area with one set of regulations • That would allow financial service providers to establish themselves anywhere • That would allow consumers access to services from other member states.

11. Legislated Areas of financial services • FSAP: Financial Services Action Plan • Single European Payment Area (SEPA) • Financial fraud and money laundering • Capital Requirements Directive (Basel II) • Markets in Financial Instruments Directive (MIFID) • For future: consumer credit, pension, payment systems

12. Financial Service Action Plan (FSAP) • Started in 1999 • 42 measures • Harmonise rules on securities, banking, insurance, mortgages, pensions and other financial transactions • Integral part of Lisbon Process (world’s most competitive economy) • Three areas (wholesale, retail, supervision)

13. Credit Crunch Responses (2009) De Larosiere Plan for a European Supervisory Authority EBA: European Banking Authority EIOPA: European Insurance and Occupational Pensions Authority ESA: European Securities Authority Rew rules on Lending New rules on hedge funds

14. Single European Payment Area (SEPA) • One payment system to make money transfers easier and cheaper • Current cost: 50 - 100 billion €/year • 2002: Cross Border Payments Regulation • 2003: Cross Border Transfers in € • 2004: Fraud Prevention Action Plan • 2008 (Jan) SEPA operational (credit only) • 2008 (NOV) SEPA extends to direct debit

15. Money Laundering • 1st. 1991: banks have to establish customers’ identity and report suspicions • 2nd. 2001: lawyers, accountants, auditors, notaries have to do the same • 3rd. 2003: transactions which might be linked to terrorist activities plus more checks on politically exposed persons

16. Capital Requirements Directive (Basel II) • Protects savers from risks of bankrupt banks • Full implementation during 2008 • Based on Basel II: committee consisting of Benelux, Ger, US, CAN, Jap, UK, Spain, Ita, Fra, Sweden, Sui • Banks have to guard themselves against risks through derivatives, futures, bonds, assets

17. Markets in Financial Instruments Directive (MIFID) • Intends to reduce barriers to cross border share trading • But: very complex at heavy costs • Proposed 2002. • deadline of Nov 2007 not met by 50 per cent of member states • Why: drastic changes to the way industry conducts business: new rules, new IT, new practises