6 takeaways on the EU single market plan

The European Commission makes another run at breaking down borders for businesses.

The “last chance” European Commission on Wednesday released its third-and-final attempt to forge a single market that allows to sell across the 28 member countries.

Creating a seamless European market is a top priority for President Jean-Claude Juncker, and certain proposals could even help U.K. Prime Minister David Cameron convince the British public to stay in the European Union.

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The Commission will now pursue legislative action to prevent discrimination against consumers based on where they live, harmonize value added taxes, make bankruptcy less onerous and help startups expand across borders. After two previous attempts, Commission staff spent a year hammering out the latest version and they want to move fast: 14 of 22 actions have deadlines next year.

Here are six takeaways on the plan: 

1. Commission embraces the sharing economy. EU countries have a mixed record when it comes to dealing with (largely U.S.-based) upstarts that are trailblazing across Europe. Take Uber, the ride-hailing company with a price tag of at least $50 billion (€45 billion). France, Spain, Italy and Belgium, along with a host of other countries, have banned some of its services, while Lithuania and Estonia, among others, have embraced it.

The Commission has weighed in and now calls it the “collaborative economy.”

While the Commission wants “balanced development,” Vice President Jyrki Katainen said, “the single market must keep up with the times: innovative business models must be encouraged and welcomed.”

Expect a host of initiatives next year aimed at making ride, home and car sharing easier, plus guidance on how EU law applies to collaborative business models.

2. Trade unions won’t be happy. Labor strikes in Brussels are de rigueur, and there’s going to be a groundswell. Aside from the Commission’s tacit support for the sharing economy, workers are likely to walk off the job because of other elements, such as loosening labor mobility rules. There is also a proposal for a “services passport” in industries including construction, which would give companies a regulatory certificate to help them expand across borders.

3. The Commission will try carrots over sticks where possible: The Commission dodged the issue of whether to add more of the service industry, which makes up around 70 percent of the EU economy, into the EU single market. This choice anticipates likely German stonewalling when proposals reach the European Council. German sources told POLITICO they have staked out territory around the country’s liberal professions, like architects and accountants, and told the Commission to “keep off.”  With this in mind, the Commission suggests only a “notification procedure” when EU countries want to exempt a certain service from single market rules. 

More generally the Commission is putting a heavy emphasis on tools such as a “services passport” and “mutual recognition,” rather than new systems of fines and deadlines. They prefer to start with guidance and “compliance dialogues” before suggesting even specific reforms at the national level. If that still doesn’t work the Commission plans to shift into deeper structural investigations and “apply a smart enforcement strategy, including sectoral strategies.”

Only if all else fails will they consider taking governments to the EU courts. 

4. But expect a crack down on failures to implement existing laws. While the Commission is prepared to be lenient about how its new proposals are implemented, the Commission signaled it is fed up with governments not applying existing law despite having years to do so. 

Professionals frequently struggle to operate across borders, for example, because of different licensing systems. Elżbieta Bieńkowska, the European commission for the single market, reacted sharply to the suggestion the Commission was not willing to “go for the jugular” to ensure national compliance with existing rules to open up services.

“The number one activity will be enforcement,” she said.

5. Startups make the legislative grade. Five years ago, few European policymakers had an interest in cultivating startups. Voluntary initiatives sprang up towards the end of the last Commission, including a “start-up manifesto.” This time around, the Commission is launching a startup initiative.

This element carries the fingerprints of Juncker’s chief political strategist Ann Mettler. The effort will be as much about removing legislation that hurts startups as about writing new laws (such as potentially extending the so-called blue card migration directive to include entrepreneurs). Startups will also be helped to comply with existing laws.

One of the most ambitious proposals for startups from a previous draft of the strategy has been cut. In July, a draft of the strategy seen by POLITICO proposed a three-year regulatory “visa,” which would have allowed startups to follow their home-country rules on taxes, health and safety, even as they expanded across borders. A later version only mentioned a possible pilot of “temporary licenses or exceptions to a rule.” Now, no trace of the initiative remains.

6. Cross-border commerce is hard to crack. What counts as a standard transaction in the U.S. is often blocked across the EU. Consumers pay different prices based on where they live, companies choose not to send goods purchased online across borders, and language barriers abound.

The Commission has been itching to do something about those limitations for a long time. There is a failed e-commerce action plan as proof. Now the onus is on the Commission to deliver.