In a research study commissioned by the Malta Business Bureau (MBB) and conducted by Grant Thornton, it was found that 89 per cent of respondents, comprising of Maltese entrepreneurs, feel they are better off since joining the Single Market.
The study assesses the perceived value of the European Single Market for Maltese enterprises and seeks to explore the tangible benefits of the Single Market, while identifying barriers and gaps in legislation that need to be addressed, both at national and EU level.
The findings of the study are intended to support the MBB’s endeavour to directly influence proposed EU legislation and ensure a favourable outcome for Maltese businesses.
The survey found that 89 per cent of respondents have claimed they are better off since joining the Single Market. However, 49 per cent of the respondents – comprising of local firms and entrepreneurs - are concerned with excessive legislation, 35 per cent are worried about ineffective enforcement of EU law at a national level while 26 per cent of the respondents are uneasy with the inefficient implementation of legislation which, they say, have resulted in more stringent regulatory burdens and higher costs than necessary for local operators, causing a competitive disadvantage for businesses.
Malta Business Bureau President Simon De Cesare /
Photo by Alan Carville
Simon De Cesare, President of the Malta Business Bureau, believes that the study’s results will provide enough material to be able to back up lobbying work in Brussels over the next five-year political cycle with evidence and hard facts. “This will enable us to pinpoint accurately to the key decision makers in the EU where exactly the problems lie, and this will aid us in our quest for tangible solutions,” he explains.
However, in addition to searching for such solutions, he was also concerned with ensuring that the rules – as they stand – are adhered to. One of these crucial elements is “the principle of mutual recognition”, he states, whereby Member States must allow goods that are legally sold in another Member State to also be sold in their own territory. “The legislation at European level is robust but there seems to be little enforcement by the Commission,” he says, “and there are several instances where this principle isn’t functioning as it is supposed to.”
Another issue of concern stems from the fact that businesses often do not operate on a level playing field with each other, with some businesses importing goods which do not conform to EU health and safety standards, or labelling and packaging requirements, EU law requires Member States to conduct their own market surveillance to ensure that products conform with EU rules. “We believe that Market Surveillance authorities should be given greater resources in order to effectively monitor and enforce rules set at EU rules and national level. It is crucial that all businesses operate on a fair level playing field, by ensuring that standards such as labelling and packaging restrictions are adhered to”, he continues.
Therefore, while the main aim of the Single Market project was to eradicate all barriers to trade, the survey results suggest that there is the perception that several still remain. In this regard, the European Commission has recognised the need to address certain issues with the Single Market as a whole. The MBB President notes that, as a result, towards the end of the last political cycle, and over summer, there was a huge effort to gather more information on the remaining barriers. Mr De Cesare indicates that the MBB saw this as an opportunity and undertook this study in order to participate in the Commission’s process of analysing these issues. “Malta will have given its contribution to the process in order to ensure that the solutions brought forward will be to our benefit,” he underlines.
Economy Minister Chris Cardona
Echoing many of these thoughts, Economy Minister Chris Cardona points out that, over the past 26 years, the Single Market has come a long way. “During this period, it has become the most economically integrated trading bloc in the world,” he says. “It has successfully dealt with considerable growing pains to reach this milestone, including expanding to include new Member States with very difficult economic legacies and ever freer movement of goods, services, labour and capital.” This achievement has allowed Maltese companies to make good use of the resources available to them, and consumers now enjoy a variety of choice.
Reacting to the findings of the study, Minister Cardona says that “the Maltese government has always been a firm supporter of the Single Market. Nonetheless, we have listened to the concerns of Malta’s biggest companies and SMEs as they regularly blame mounting regulations for stifling competition that threaten their businesses with thousands of euros in extra costs.” In Dr Cardona’s opinion, excessively complex or burdensome legislation means they do not reach their targets, resulting in SMEs using their scarce resources to ensure they abide by the rules, rather than growing their businesses and creating jobs. “SMEs need EU rules that are future-proof and sufficiently flexible to allow for innovation, new business models and digital transformation,” he continues.
“I believe that policy initiatives and programmes on SMEs should be better assessed to avoid disproportionate administrative burdens,” he adds. Dr Cardona thinks it is essential to improve SME access to information on markets and regulation, simplifying the administrative procedures needed to operate cross-border, and tackling barriers due to bad implementation and the lack of enforcement of the Single Market legislation. “If we do so, we would be achieving another step to reap the potential which the EU Single Market can have.”
Labour MEP Alex Agius Saliba
MEP Alex Agius Saliba agrees that the Single Market is Europe's best asset to generate economic growth. However, he feels that the Single Market is underperforming in many areas and has brought about several challenges that hinder participation and cross-border trade. Companies often find themselves negatively exposed, “either because the current legislation is not appropriately enforced or, simply, because it has not been developed to deal with the new digital challenges”.
Commenting further on the results of the MBB’s survey, when it comes to the existing rules, compliance and enforcement are essential to creating a level playing field, where all players compete fairly. “Better enforcement and implementation of Single Market legislation and ensuring the correct application of the current existing rules will create a trust for businesses to confidently engage and participate in the Single Market,” he continues.
Yet, Dr Agius Saliba proposes the need to further examine whether the existing framework is still suitable for the new digital world since “most of the EU legislation that deals with the internal market has not been created with a specific digital structure in mind”. He points out the need to lower the cost of internet access for SMEs and to further improve the related infrastructure such as 5G, also noting that “we need to have a stronger competition policy regulatory regime concerning the economic dominance of the large players”.
Nationalist Party MEP Roberta Metsola
MEP Roberta Metsola feels that local businesses need to be given all the tools they need to be able to compete, with the two most important being access to finance and the reduction of bureaucracy, as also evidenced by the survey results. “I have, and will continue, to push against a one-size-fits-all approach. It is clear that such an approach could not always work, especially considering economies of scale,” she says. Access to finance means increasing the uptake of EU funding by SMEs. She praises the InvestEU Programme, which will trigger more than €650 billion in additional investment, and will make EU funding simpler to access, with one set of rules and procedures, and one contact for advice. “This programme will bring together a multitude of financial instruments under one roof, but it is the channelling of information related to this programme that is especially important to make sure that it is implemented effectively,” Dr Metsola stresses.
In addition, and looking ahead to the new legislative cycle, the European Commission needs to continue working on its action plan aimed at enhancing efficiency, transparency and legal certainty for a fully functioning Single Market, she adds. It will need to continue “eliminating the backlog of harmonised standards that have not yet been published in the Official Journal of the European Union” as well as streamlining “internal decision-making processes with regard to references to harmonised standards; elaborating a guidance document on the practical aspects of implementing the Standardisation Regulation; and, finally, reinforcing the system of consultants to support swift, robust assessments of harmonised standards and timely publication in the Official Journal,” Dr Metsola states.
This article will appear in the upcoming edition of Business Agenda.