Business Policy

& Economy, Finance and Tax

 

Essentially, business policy and the common market lie at the heart of European Union legislation and are at to top of member states' priorities. The aims of the policies are to streamline the way business is being conducted within the Union, facilitating faster deals as well as guaranteeing accountability of both consumers and suppliers on the market. These achievements are enabled by other organizations and policies of the EU, such as the common currency, overseen by the European Central Bank, or the European Court of Justice. Further contributors to the smooth functioning of business within the Union include the Commission, the Economic and Financial Committee, as well as the Economic Policy Committee. The reach of the policies devised by these institutions is extensive, as they have drawn up legislation and a set of best practices which all member states and firms have to abide by, and are accountable to. The following overview of the European Union's business policy, and economy, finance and tax policy will give an insight into the agreements reached by the EU, and how this affects the opportunities, rights, and limitations of states, firms, and people living within the Union.

 

 

Enterprise

 

Enterprise Policy

-  Access to finance

-  The enterprise policy of the EU focuses on the facilitation of financing for small and medium-sized enterprises help innovation and development within the union. Furthermore, the provision of better information both for lenders as well as businesses, the EU wishes to streamline risk assessment and improve the structure of loan or venture capital provision.

-  There are overall more loans available, thanks to legislation by the EU, including the aforementioned provision of clearer information for risk assessment, as well as Round Tables between Banks and SMEs for finding agreements on what the businesses need and what terms the banks require. The EU Capital Requirements Directive was an important step in the process of the facilitation of opportunities for SMEs (European Commission 2010 'Business Policy'). It sets the amount of capital which banks need to set aside against their lending and imposes good practice requirements from both banks and their customers. Through the use of several financial instruments the EU has provided guarantees for 360,000 small firms since 1998. These are part of the Competitiveness and Innovation Framework Program for the period 2007-2013 with a budget of over EUR 1 billion (European Commission 2010 'Business Policy').

 

-  Other instruments such as microcredit, and mezzanine financing (a combination of loan and equity finance), as well as direct grants are also used to encourage startup businesses.

-  The European Investment Bank and the European Investment Fund are both large players in the provision of help and financing for innovative SMEs.

-  The European Union is working to benefit small businesses not only in their early phases but engages in the promotion of investment throughout the development phase of a SME.

-  A large part of European Union legislation is to facilitate best practices across all member states through better regulation, including the reduction of administrative costs by 25% by 2012, the implementation of common standards and practices, (European Commission 2010 'Business Policy') vitally important for the provision of larger markets for SMEs.

-  The insurance of industrial competitiveness, will play a crucial role in the facilitation of SMEs and their capacity for growth and innovation in the future. The Commission is striving to make this all possible under the umbrella of greater cohesion within the single market, competition policy, and industrial policy (European Commission 2010 'Business Policy'). The Commission takes into account factors which may be cause for concerns about the future, such as the effects of globalization, demographic change, and climate and energy situations, and is working to minimize the effects these may have on the development of Europe in the future. 

-  Innovation is one of the pillars for future EU development, and is one of the areas on which the Commission of intensively focusing on. More avenues for the creation and financing of SMEs are continuously opened up, as well as further platforms for cooperation and interaction with professionals, as well as the protection of intellectual property. These programs are all financed under the Competitiveness and Innovation Framework Program (CIP). (European Commission 2010 'Business Policy')

 

-  A coherent, and fair competitive environment for European companies on the global market is also vitally important. Because of this, the Commission is establishing an action plan for the more effective streamlining of foreign policy especially in terms of trade, to open up more markets and liberalize competition between members as well as non-EU countries. This is part of the Market Access Strategy. (European Commission 2010 'Business Policy')

 

-  Raw materials play a key role in the future of the EU, and will decide what direction the union will take. Responsibility is key when dealing with this issue, ensuring that the exploration and exploitation of raw materials from within the EU is safe and responsible, to gain raw materials from international markets with the same terms as other industrial competitors, and lastly to improve efficiency and use of raw materials across the board, in order to reduce Europe’s relative resource dependence. These targets are all a part of the Raw Materials Initiative. The Commission is to report on the progress of these targets to the Council in 2 years.

 

Free movement of goods

-  Essentially, the removal of any existing trade and travel barriers within the union will facilitate the growth of all levels of the economy and will enable Europe to become a key player in the global market.

-  The insurance that no new trade barriers are put up is a priority, and is being pursued through the monitoring of legislative proposals put forward by member states, while at the same time implementing the WTO agreement on Technical Barriers to Trade.

-  Legislative streamlining is also a priority to ensure best practices and trust between businesses in different member states, when dealing with the assurance of transactions and compensations when failures to pay or facilitate goods or services occurs.

-  All of the above rules and guidelines ensures a transparent system in which both the consumer and the producer or seller has assurances of best practices. Furthermore, it assures that Europe as a single market becomes a competitive and attractive region for international businesses.

 

Industry Sectors

-  Aerospace

-  Automotive

-  BioTech

-  Chemical

-  Construction

-  Cosmetics

-  Defense

-  Electrical engineering

-  Food

-  Footwear

-  Furniture

-  ICT

-  Leather

-  Legal metrology and pre-packaging

-  Maritime industries

-  Mechanical Engineering

-  Medical devices

-  Mining, metals and minerals

-  Pharmaceuticals

-  Pressure equipment and gas appliances

-  R&TTE

-  Textiles ad clothing

-  Tourism

-  Toys

-  Wood, Paper, Printing

 

Small and Medium-sized enterprises are being given opportunities to prosper through the activities of the EU's initiative to facilitate credit opportunities including microcredit. More on the initiative and process of obtaining this service, visit: http://ec.europa.eu/small-business/index_en.htm

 

 

 

Internal Market

 

Competitiveness and Innovation Framework Program

-  The focus of the CIP are SMEs. Operating with a budget of EUR 3621 million between 2007 and 2013 it aims to promote entrepreneurship, innovation, and investment as well as the use and implementation of renewable energies and energy efficient technology. (European Commission 2010 'Business Policy')

-  The CIP is divided into three operational programs, each with its specific objectives:

-  The Entrepreneurship and Innovation Program (EIP)

-  The Information Communication Technologies Policy Support Program (ICT-PSP)

-  The Intelligent Energy Europe Program (IEE)

 

Free movement of services

-  The importance of services within the European Union is undisputed, as they account for between 60 and 70% of all economic activity within member states. As outlined in the central principles of the internal market, the free provision and movement of services within and between EU member states is guaranteed for all businesses. This measure, since its completion in 1993 has resulted in the creation of over 2.5 million new jobs and an extra EUR 900 billion for the wealth of the internal market. (European Commission 2010 'Business Policy') These freedoms have been assured by the ECJ, which has since specialized regulations for specific industry sectors such as financial services, telecommunications, broadcasting and the recognition of professional qualifications.

-  There are still improvements to be made in terms of the movement of services, however, as most of the benefits brought about by the common internal market have been the result of the movement of goods, rather than services. Improvements have to be made in the facilitation of cross-border financial services, for example. Existing barriers in the movement of services have to be broken down, and encouragement has to be given to local businesses to consider their potential through the usage of their rights to export their services to other EU member states. These barriers are especially harmful for SMEs, as they do not have the resources to necessarily break through the existing barriers and exploit their potential in the common internal market.

-  The implementation of the Services Directive in 2006 by the European Parliament should help the movement of services by eliminating obstacles to trade (removal of discriminatory barriers, cut red tape, modernize and simplify the legal and administrative framework), harmonizing states’ policies and cooperation thus strengthening the rights of users and providers of services.

 

Market access

-  The basis of the common market of the European Union is about the facilitation of market opportunities to all of the 480 million people in the 27 countries of EU.

-  The cornerstones of this are the ‘four freedoms’ in the free movement of ‘people, goods, services and capital’. These are guaranteed by the EC Treaty and means that individuals can live, work, study or retire and any EU country, consumers can benefit from lower prices through greater competition and a wider choice of products as well as higher levels of consumer protection. Finally for businesses it means a greater ease and cost effective means of doing business all across the EU. (European Commission 2010 'Business Policy')

-  All of these freedoms and benefits are assured by the ECJ, which can be appealed to by any citizen of the EU.

 

 

Economic Policy and Competition

 

Economic Policy

- Access to Finance

- Budget 

- EURO

- Taxation

 

Competition

- Anti-trust - legislation concerning anti-trust and competition issues was brought in through Article 101 and 102 of the Treaty of the European Union, ensuring a transnational commitment towards the prevention of price-fixing, cartel-building and dumping within the Union. (European Commission 2010, Economy, Finance and Tax Policy)

- Fraud (OLAF - European Anti-Fraud Office) - the aim of the organization is to ensure best practices amongst market actors within the Union. This includes the prevention or disciplining of fraud, corruption and other dishonest activities. The office encourages transparency, and accountability across all market areas within the EU.

 

 

Bibliography

European Commission (2010) 'Economy Finance and Tax Policy' [Online] Available at: http://ec.europa.eu/policies/economy_finance_tax_en.htm [accessed 20.04.2010]

 

European Commission (2010) 'Business Policy' [Online] Available at: http://ec.europa.eu/policies/business_en.htm [accessed 21.04.2010]

 

European Commission (2010) 'Financial Programming and Budget' [Online] Available at: http://ec.europa.eu/budget/budget_detail/current_year_en.htm [accessed 22.04.2010]

 

OLAF (2010) 'European Anti-Fraud Office' [Online] Available at: http://ec.europa.eu/anti_fraud/index_en.html [accessed 21.04.2010]

 

Useful Links

http://europa.eu/legislation_summaries/economic_and_monetary_affairs/institutional_and_economic_framework/treaties_maastricht_en.htm

http://europa.eu/legislation_summaries/economic_and_monetary_affairs/introducing_euro_practical_aspects/l25007_en.htm

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:12008E101:EN:NOT

http://ec.europa.eu/internal_market/index_en.htm

http://europa.eu/legislation_summaries/economic_and_monetary_affairs/stability_and_growth_pact/l25095_en.htm

http://europa.eu/legislation_summaries/economic_and_monetary_affairs/stability_and_growth_pact/l25091_en.htm

http://ec.europa.eu/enterprise/policies/finance/index_en.htm

http://ec.europa.eu/budget/budget_detail/index_en.htm

http://ec.europa.eu/economy_finance/euro/emu/index_en.htm

http://ec.europa.eu/taxation_customs/index_en.htm