Paris, 20/09/2007 (Agence Europe) - Launching the OECD's first Economic Survey of the European Union, the OECD's Secretary-General, Angel Gurría, said on Thursday 20 September that “A vibrant single market is central to Europe's long-term prosperity.” He commented: “The European Commission is making tremendous efforts to get rid of barriers to trade, and we fully support them”, and added that states need to provide a fresh impetus to clear the rules and red tape which are stifling competition and blocking cross-border trade and investment. Despite a recent upturn and favourable prospects in the short-term, the study singles out the EU's 'mediocre' economic performance, particularly its new member states, compared with the best performing economies in the OECD.
According to the report, the main weak point in the EU's internal market is the services sector. Differences in national laws make it hard for a service provider in one country to do business across Europe, it explains. The report is cautiously optimistic that the EU Services Directive, to be implemented by the end of 2009, will help create Europe-wide markets but said that member governments need to stop protecting providers from outside competition.
The report notes that competition is weak also in network industries such as electricity, gas, telecoms, transport, ports and postal services. To create more competition in energy markets, the authors recommend improved linking of national markets to create regional or pan-European markets. The networks also need to be fully separated from the generation and supply activities. The OECD believes that the legislative proposals announced yesterday by the Commission in this connection (see EUROPE 9505) are 'a welcome development'.
The report highlights good progress in financial markets but calls for changes to Europe's fragmented banking industry. The establishment of an effective single euro payments area (SEPA) to make it easier to transfer money from one country to another, needs to be accelerated.
The report also calls for farm support to be cut and made less market-distorting. It recognises that the reform of Common Agricultural Policy in 2003 was a major step forward but that to be even more effective the link between subsidies and farm production needs to be broken completely. Farm support could be better targeted so that, for example, it could be of more benefit to lower-income farm households and to the poorer farming regions, explain the authors.
The survey calls for the EU to act together with the world's other big traders to reduce farm subsidies and open up its markets to the rest of the world.
It also recommends getting better value for money from spending on the regions of Europe, continuing to modernise and strengthen competition law and removing restrictions on immigration from the EU's new member states.
The Economic Survey of the European Union focuses solely on EU-wide policies. National policies of EU countries which are also members of the OECD are reviewed in the OECD's regular economic surveys of individual countries and of the eurozone.
The report's Executive Summary and Assessment and Recommendations can be found at http://www.oecd.org/eco/surveys/eu. (ol)