Non-tariff and non-tax barriers hindering effectiveness of EU single market and must be tackled urgently, argues Kosma Złotowski

The removal of restrictions on the cross-border movement of goods and services has been a key factor in creating prosperity and economic growth, says INI report's rapporteur
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By Kosma Zlotowski

Kosma Zlotowski (PL, ECR) is rapporteur of the INI report on non-tariff and non-tax barriers in the Single Market

16 Dec 2021

The Single Market - together with the opening of borders within the Schengen Area - is one of the greatest achievements of cooperation between sovereign states within the European Union.

The removal of restrictions on the cross-border movement of goods and services has been a key factor in creating prosperity for all Europeans and economic growth in those Member States that joined the EU in 2004, 2007 and 2013. 

Yet despite the many achievements in this area, and the common view that free trade and freedom to provide services have a positive impact on the European economy, many non-tariff and non-tax barriers remain. These hinder the potential of European businesses, particularly small and medium-sized enterprises (SMEs) that operate in a cross-border environment. 

Member States abuse exclusions and justifications to restrict foreign competition in what they consider to be particularly sensitive sectors. No one is questioning the right of sovereign EU Member States to adopt national laws to protect the security of their citizens, public health or strategic interests.

“An efficient single market, unencumbered by unnecessary barriers, is the strongest guarantee for swift recovery of the European economy following the COVID-19 crisis”

However, the use of Treaty exceptions to bypass the free movement of goods and services should be vigorously opposed by the European Commission. This is particularly concerning for the service sector, which is subject to excessive regulation in many areas. These include a lack of cooperation between Member States, incorrect implementation of European law, excessive and burdensome controls and a shortage of effective appeal tools at European level. 

My report for the Internal Market and Consumer Protection (IMCO) Committee draws attention to these problems and suggests solutions. Many of these measures cannot be implemented if there is a lack of political will to protect the weakest, namely those SMEs from the European Union’s periphery. 

A notable example is the road transport sector, a key element of the European economy. Its smooth functioning has a decisive influence on trade between Member States.

A significant proportion of the sector’s operations have an international dimension, which therefore exposes them to the risks of burdensome and costly bureaucracy outside the country of company registration. There is also the threat of incorrect implementation of European legislation, disproportionate penalties and unjustified action by national inspection authorities.

The development of the Single Market in the area of digital services is also encountering a number of non-tariff barriers, limiting its potential and preventing consumers from accessing products and services offered in other Member States.

Taking into account the ongoing digital transformation of the European economy, the identification and removal of barriers to the development of e-commerce appears to be one of the key challenges for the European Commission.

Regrettably, most of the initiatives taken by the Commission to remove the existing and most burdensome non-tariff barriers have proved ineffective or have encountered strong resistance during the legislative process.

At the same time, there is a rising tide of protectionism in many Member States, resulting in restricted access to national markets for companies operating cross-border or posting workers. This approach is dangerous to the smooth functioning of the single market, which benefits businesses and consumers in all Member States equally. 

Discrimination against companies from those countries that joined the EU in 2004 onwards is, unfortunately, most apparent here. As the European Conservatives and Reformists (ECR) Group coordinator in the Petitions Committee, I have often had to deal with complaints from Polish enterprises, mostly SMEs that have been the victims of excessive and abusive controls and of pressure from national administrations in Western European countries to stop providing their services cross-border.

“The use of Treaty exceptions to bypass the free movement of goods and services should be vigorously opposed by the European Commission”

Judicial disputes take a very long time, which is why it is essential to create a mechanism for the swift settlement of such cases. Many of them are obvious, but a lack of understanding, language barriers or simply prejudice make it impossible to find amicable solutions.

The COVID-19 pandemic has clearly proved that, in a crisis situation, smooth trade and free movement of services are extremely sensitive to disproportionate action by national authorities and lack of harmonisation and cooperation between Member States.

The disruption of supply chains within the single market posed a serious threat to the stability of production and trade, particularly in sectors crucial to the fight against the pandemic. A proper assessment of the European Commission’s response to the health crisis is required to identify and remove bottlenecks, particularly for the cross-border movement of goods and services.

In my opinion, an efficient single market, unencumbered by unnecessary barriers, is the strongest guarantee for swift recovery of the European economy following the COVID-19 crisis.

Thanks to the effective use of digital services, and the widespread implementation of eGovernment tools at European and national level, we will be able to eliminate a significant number of obstacles encountered by businesses operating in more than one Member State when dealing with public administration. 

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