Editorial
by Alexander Schaub

A "genuine Internal Market for services by 2010” is the objective of a major set of proposals from the Commission (see Special Feature) to bring the advantages of a real Single Market to a sector which accounts for at least 50% of the business activity of the European Union. The majority of the firms affected by this are Europe’s dynamic small and mid-size companies. The implementation of these proposals could, we believe, be the biggest boost to the Internal Market since its launch in 1993. Removing red tape hindering cross-border trade is a constant demand from the business community and these far-reaching measures will get rid of many of the archaic, overly burdensome and sometimes illegal restrictions they face. It can boost the bottom line of many businesses whilst improving Europe’s competitiveness overall.

The United States had its Enron scandal and Europe its Parmalat. These and other corporate scandals have sent a shudder through the world of international finance and raised a myriad of questions about corporate governance, regulation and supervision. Has Europe been slow to act? Not at all. This issue of Single Market News shows the raft of measures that the Commission has in the legislative ‘pipeline’ (see After Parmalat). The scandals have given new impetus to existing Commission proposals in the areas of company law, corporate governance and audit. These measures have not been a ‘knee-jerk’ reaction to events but reflect long-standing concern within the Commission about these issues and the global financial market we now live in. Recent events have brought them to the top of the agenda. On 16 March the Commission published new proposals on statutory audit whilst IAS accounting standards for listed companies become obligatory from next year. Other significant measures on corporate governance and disclosure are on the legislative table and will help bring the necessary transparency and accountability.

It is always good for us to report success stories in our legislative programmes and we are of course delighted that the Financial Services Action Plan, launched in May 1999, is on track, on time and entering the home straight. Some 37 of the 42 measures have been finalised - an outstanding success rate for an EU legislative programme of this scale and complexity - with two more (the Investment Services and Transparency Directives) also close to formal adoption. A final push is needed to resolve the remaining key issues and to conclude the remaining major FSAP measures.

At present the cost of patents is too high in Europe compared to the costs in the US and Japan. This is mainly due to translation and litigation costs. The application system is also cumbersome and lacks transparency. Whilst discussions continue in the Council of Ministers on the Community Patent, the recent European Business Summit in Brussels (11 March) sent a clear message to politicians that if European leaders want a competitive Europe, they must resolve the Community Patent deadlock without delay. To resolve the litigation aspects the Commission has proposed the creation of a Community Patent Court, under the aegis of the European Court of Justice. Such a body would allow the resolution of disputes within the future Community Patent. Its judgements over Community Patent rights would be effective throughout the EU, avoiding the expense, inconvenience and confusion that can occur when judgements in several different national courts are required.