Deepen rather than backtrack. I don't know whether Mario Monti, when he was preparing his report on the situation and the relaunch of the single market, expected so many misgivings to be expressed (see this column yesterday). Europeans give the impression that they have forgotten to what extent the removal of the borders has changed their lives. Younger people have not had to experience controls at every border, customs duties on anything brought into their country or sent abroad, or having to change money whenever one changes country. A few years ago, a film was made that focused on a group of university students of several different nationalities living together in Barcelona, as part of the Erasmus programme. The film did not, however, indicate that this programme was part of the Community project promoted by Jacques Delors.
This attitude proved to what extent the European situation is now taken for granted as part of daily life. The people in countries who are not yet participating in the EU have only one dream, to take a step in this direction, with an end to visa restrictions when crossing EU borders, as a starting point. Those who are already part of the EU only notice the difficulties and risks, real or supposed, without being aware of what would be involved if they returned to the past. That said, whilst considering current fears as excessive, it is true that shortcomings persist and that any distortion should be rectified. Mario Monti's analysis, however, proves that any corrections made should not go in the direction of limiting what has already been acquired, but in the opposite direction: towards an enhanced coordination of common rules. The single market should not be picked apart, on the contrary, it should be completed and perfected. It represents the indispensable basis on which common management of the euro and economic governance can be developed - objectives that have finally been acknowledged.
Tackling these misgivings. This is why the possibly most significant part of the Monti report is that which illustrates what responses can be made to the misgivings and prevarication expressed. I will mention two closely related examples, which involve further progress towards achieving the European construction:
1) A better balance between income tax and taxation on other revenues. During the era when he was a European commissioner for the internal market and taxation, Mario Monti highlighted the imbalance (already criticised by Jacques Delors in his White Paper) provoked by the trend in member states to increase income tax as a means to compensate for the fall in tax revenues resulting from the fact that each country, in an effort to attract capital, had almost become a tax haven for neighbouring savers. In the meantime, the situation has improved but the demand to re-establish a better balance is still pertinent. The correct response can therefore be located within a certain degree of tax harmonisation;
2) Corporation tax. Attempts to harmonise this aspect of taxation have so far failed. Even the more modest objective of introducing a uniform basic level of taxation has not been achieved. The dossier is at least expected to be relaunched, even if Mr Monti is now talking about fiscal coordination rather than harmonisation.
The advantages. There is a long list of areas in which correction of current single market shortcomings could increase the efficiency of European business activity and therefore economic growth and prosperity for all. We only need to point out that the number of small and medium-sized enterprises operating outside their countries of origin are no more than 5%, due to persisting bureaucratic obstacles; that the creation of the single market in the digital sector could increase EU GDP by 4%; and that a common energy market would improve competitiveness throughout European industry and facilitate the introduction of new technologies. The relaunch of the single market also involves several legal and sometimes thorny problems, such as: evaluation of state aid (the positions of the European Commission and those of the General Court do not always coincide, as we have just seen with regard to French aid for France Télécom); the application of the “services” directive, which is lagging behind in several member states (in both cases see EUROPE 10144). Neither are the political positions of member states always aligned on important issues like company relocations.
All these issues and many others are on the table and the Commission will tackle them under the responsibility of Michel Barnier, in the proposals and communications that have already been announced. Strengthening the single market is recognised as being a priority.
(F.R./transl.fl)