Small businesses are the beating heart of the EU Single Market and central to Europe’s competitiveness. The European Commission estimates that 99% of European businesses are SMEs, providing jobs to more than 85 million European citizens. On Amazon, we have 127,000 EU-based SME sellers, who last year recorded over €15 billion in exports. These entrepreneurs are creating an estimated 350,000 jobs in Europe, many in rural areas.
However, some small businesses are not fulfilling their potential. Rather than being able to focus on growing their businesses by selling their products to more customers all over Europe, they face unnecessary fragmentation and administrative burdens at every stage of their growth. Trade costs within the EU Single Market amount to an effective 44% tariff on the products of these businesses, according to the International Monetary Fund. These regulatory barriers are stifling cross-border growth, according to a report by Implement Consulting Group, commissioned by Amazon.
To unlock the full potential of Europe's SMEs, we need a stronger EU Single Market and greater support for selling internationally. The European Parliament itself highlighted these needs in its recent report on Strengthening the EU Single Market.
On Amazon, we have 127,000 EU-based SME sellers, who last year recorded over €15 billion in exports. These entrepreneurs are creating an estimated 350,000 jobs in Europe, many in rural areas.
These aren’t academic policy discussions. SMEs selling on Amazon tell us regularly of the real-world barriers they face, including at an SME Connect working session in the European Parliament earlier this summer. Belgian accessory manufacturer, Garzini, told delegates that it took them up to five months just to get a VAT number in Germany. The French high-quality food supplements, Novoma, spoke of a six-month delay to extend their market expansion due lack of standardisation in national and EU regulations.
We welcome the European Commission’s new Single Market Strategy, not least because it identifies Extended Producer Responsibility (EPR) schemes and digital labelling as focus areas. Our survey of more than 3000 SMEs from 11 member states found these to be priority areas for SMEs too. The Single Market Strategy also commits to Competitiveness Checks in future impact assessments, which aligns with our recommendations to strengthen the use of the better regulation toolbox.
However, other issues raised by our report are not included in the Single Market Strategy. For example, competitive cross-border payment solutions for euro and non-euro transactions; removing regulatory barriers to trade in climate goods and services; and designing the digital European product passport to make the circular work of businesses easier. Equally unaddressed is the need to harmonise VAT neutralisation options for donations across the Single Market (a barrier identified by Dr Letta).
It remains unclear how much progress has been made on the Single Market Strategy, and on what timeline its goals might be achieved. That’s especially crucial for the ‘terrible ten’ barriers. Private sector actors like Amazon can, and do, invest in the growth plans of European SMEs, but there is clearly also a role for the European Parliament and individual EU member states to ensure the delivery of the Single Market Strategy.
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