Standards as Crucial Element for the Implementation of the Single Market in Services

The extension of the European legislation, i.e. the New Approach, on the European standardisation system to extend it to services was overdue reflecting the crucial and – despite the economic crises – still increasing relevance of the service sector for the economic development of the European economy.

Due to the different modes of service trade, European standards for services do not only promote the traditional trade of services, but also the other forms like foreign direct investments in service companies. This removal of barriers will increase the competition in service markets. However, the full potential of service standards for the promotion of trade, competition and employment will only be exploited if a sufficient number of service standards are available.

So far only a very small share of the total stock of both European and national standards in the member states is focused on services. Obviously, the driving forces to produce service standards are not yet strong enough. A reason is certainly the heterogeneity of services necessary for the development of critical masses of common interest to develop standards might be lower compared to the manufacturing sector on the one hand. On the other hand, the share of small and medium, but also of micro enterprises is even larger in the service sectors, aggravating the resource and incentive problem of small entities related to the involvement in standardization. In addition, the “export” propensity of small, but also medium sized service companies is rather low, which limits the interest in European or international service standards.

However, the strong bias toward small and even micro enterprises in many service industries requires the strong involvement of their industry associations in standardization activities, because their direct involvement is in most cases impossible and ineffective despite the various supportive solutions offered by national standardization bodies and the European standardization organizations. Finally, the extension of the New Approach to services is also a chance for the European Union to harmonise the rather heterogeneous national regulatory frameworks relevant for service industries via harmonsied European standards.

Revision of the legislation on the European standardisation system is to extend it to services and make standardisation procedures more effective, efficient and inclusive. Standardisation is a primary tool for the free movement of goods whilst ensuring product interoperability, safety and quality. It is also increasingly used in the services sector, although mainly at national level. This can hinder the integration of the single market for services.

In order to avoid the emergence of new barriers and to facilitate the cross-border provision of services, particularly business-to-business services, such as logistics or facility management services, services standardisation should be developed at European level, taking full account of market needs. This will be a major objective of the review of the European standardization system. Another major objective will be to establish a more effective, efficient and inclusive system. It should be possible for the standardisation system to enable standards to be adopted rapidly and to be adapted to new technologies (not least in the area of information and communication technologies), to enable SMEs and other interested parties to become more extensively involved and to ensure that standards remain accessible to all interested users.

More generally, a Single Market in services which functions well is a prerequisite for generating growth and employment in Europe. Whereas the growth of the European economy was on average 2.1% per annum between 1998 and 2008, the services sector grew on average by 2.8% per annum. Employment in this sector increased by 2% per annum, compared with 1% for the economy as a whole.

To create a Single Market in services, the immediate priority is the full and complete implementation of the Services Directive in all Member States, including the establishment of Points of Single Contact. Beyond the implementation of the Directive, and in accordance with the European Council Conclusions of 24/25 March 2011, the Commission – together with the Member States – will carry out “performance checks” aimed at closer scrutiny of the practical functioning of the EU regulatory framework applicable to certain growth sectors such as business services, construction and tourism. It will carry out further assessments on reserved activities, requirements as regards capital ownership and legal form, and insurance obligations, all of which are persistent obstacles to better integration of the markets in services. On the basis of the outcome of these various initiatives, the Commission will decide in 2012 on the subsequent steps.

Particular attention should also be devoted to the retail and wholesale sectors on account of their important contribution to growth and job creation. An initiative will be launched to combat unfair business-to-business commercial practices, in order to identify the nature and scale of the problems associated with unfair commercial practices between professional operators throughout the supply chain, list current regulations within the Member States, to assess their implementation and, finally, identify the various possible options. The goal will be to put an end to unfair practices which jeopardise the viability of businesses and stimulate the competitiveness of the various operators in the supply chains in the context of a fairer and more effective single market in the retail and wholesale sectors, while at the same time meeting consumers’ and producers’ expectations with regard to competitive prices.

Given the importance of business services, the Commission will set up a High-Level Group to study the shortcomings of this particular market. Finally, and without prejudice to the recognition of qualifications, the question of how to safeguard the quality of education provided in the context of the freedom to provide services, given the increasing use of franchising in education, will need to be examined.