BRIEFING EU Legislation in Progress 2021-2027 MFF Supporting the single market beyond 2020 OVERVIEW The single market programme is a new, dedicated €3.7 billion (in 2018 prices) or €4.2 billion (in current prices) programme for the 2021-2027 period supporting the single market. It is particularly aimed at empowering and protecting consumers, and enabling Europe's many small and medium- sized enterprises (SMEs) to take better advantage of a well-functioning single market. On 3 May 2021, the Regulation establishing the programme entered into force, with retroactive application from 1 January 2021. The new programme aims to strengthen and streamline the governance of the EU's internal market. It will support the competitiveness of enterprises, and promote human, animal and plant health and a safe food chain, as well as financing European statistics to provide reliable data relevant to the single market. The proposal consolidates and streamlines a wide range of activities that were previously financed separately, and bundles them into one programme. The aim is to create benefits in terms of flexibility, simplification and synergies, and eliminate overlaps. Proposal for a regulation of the European Parliament and of the Council establishing the programme for single market, competitiveness of enterprises, including small and medium-sized enterprises, and European statistics and repealing Regulations (EU) No 99/2013, (EU) No 1287/2013, (EU) No 254/2014, (EU) No 258/2014, (EU) No 652/2014 and (EU) 2017/826 Committee responsible: Internal Market and Consumer Protection (IMCO) COM(2018) 441 Rapporteur: Brando Benifei (S&D, Italy) 7.6.2018 Shadow rapporteurs: Arba Kokalari (EPP, Sweden) 2018/0231(COD) Sandro Gozi (Renew, France) Ordinary legislative Virginie Joron (ID, France) procedure (COD) David Cormand (Greens/EFA, France) (Parliament and Eugen Jurzyca (ECR, Slovakia) Council on equal Kateřina Konečná (The Left, Czechia) footing – formerly 'co-decision') Procedure completed. Regulation (EU) 2021/690 OJ L 153, 3.5.2021, pp. 1-48 EPRS | European Parliamentary Research Service Author: Marcin Szczepański Members' Research Service PE 628.237 – June 2021 EN EPRS | European Parliamentary Research Service Introduction The single market was launched 25 years ago, and allows the free movement of people, goods, services and capital between the European Union's Member States. Today, it is the largest market in the world, with close to 500 million European citizens and 24 million companies. It generates €14 trillion in annual gross domestic product (GDP) while trade in goods alone accounts for a quarter of the EU's total GDP and constitutes nearly a sixth of global trade in goods. However, despite the adoption and implementation of over 3 500 measures, the single market project is far from finished, rather it is constantly evolving, taking into account changing circumstances and emerging challenges and obstacles. Many barriers, such as gaps in legislation, administrative burdens, ineffective implementation and poor enforcement of EU law, continue to stand in the way of the EU unleashing the full potential of a genuine European market in which there are no differences between operating nationally and at EU level. The benefits to be reaped are significant – a study by the European Parliamentary Research Service (EPRS) shows that as much as €615 billion annually, representing 4.4 % of EU GDP, could be gained by full delivery of the single market in the areas of free movement of goods and services and public procurement, and in relation to consumer laws. Consequently, further market integration was one of the Juncker Commission's main priorities, pursued principally by means of the single market and digital single market strategies as well as the capital markets union action plan. It is also supported by the Council and the European Parliament, which have both called on numerous occasions for improvement in the governance and efficiency of the single market. To achieve this in times of budgetary constraint, the Commission sees the need to identify potential synergies and eliminate the overlaps in EU policies, as well as the necessity to address the complexity of the many existing tools and programmes. It therefore proposed to create a dedicated single market programme in the next long-term EU budget framework, which will bring many activities together into a more coherent framework. Context The single market programme was proposed as part of the 2021-2027 multiannual financial framework (MFF). The expenditure side of the next long-term EU budget proposed by the Commission totals €1 134 583 million in commitments and €1 104 805 million in payments (in 2018 prices), equivalent to 1.11 %, and 1.08 % of the EU-27's gross national income (GNI) respectively.1 There are differences between the structures of the future and 2014-2020 MFF. The number of headings has risen from five to seven, and some programmes have shifted between headings. Furthermore, the number of programmes has been reduced from 58 to 37. One EPRS analysis finds that the 'headings chosen by the Commission show a move away from the current nomenclature based on the Europe 2020 strategy, such as "smart and inclusive growth", towards other EU priorities, such as the digital economy, migration, border management and defence. This shift in priorities can be seen in the choices made to increase or decrease funding: increases are most visible in the areas of research and innovation, support for investment, migration and border management, and security and defence. Cuts have mainly fallen on cohesion policy and the EU's Common Agricultural Policy. Instruments outside the MFF have generally been boosted and the rules adapted to afford the EU more flexibility within its seven-year financial plan'. The single market programme has been included under heading 1: 'Single Market, innovation and digital', which constitutes almost 15 % of the MFF. The heading's biggest components are Horizon Europe (currently Horizon 2020), with €86.6 billion (up by 29 %), the Connecting Europe Facility, with €21.7 billion, the European Space Programme, with a budget of €14.2 billion (up by 26 %) and the InvestEU fund, with €13 billion. 2 Supporting the single market beyond 2020 Existing situation Current financing of the single market involves a mix of programmes and budget lines. A harmonised and coordinated framework such as the proposed single market programme does not exist. The areas financed under existing programmes include the competitiveness of enterprises, interoperability solutions, statistics on Europe, financial reporting and auditing, consumer protection, customers and end-users in financial services, policy-making in financial services and safety of the food chain. The areas financed under several budget lines deal with the following: internal market, its governance and standardisation, and the competitiveness of SMEs: implementation and development of the internal market for financial services; company law; operation and development of the internal market for goods and services, customs and tax policy development.2 These actions and programmes amount to nearly €6 billion under the 2014-2020 funding framework. Furthermore, as compared to the baseline in 2014, the Commission has undertaken a number of new commitments during the 2014-2020 MFF that will also need to be financed under the next MFF. These include the health technology assessment, mutual recognition and market surveillance, procurement strategy and the ex-ante assessment mechanism, the single digital gateway, the type approval and market surveillance of motor vehicles, the new deal for consumers, the action plan to finance sustainable growth,3 and initiatives to empower competition authorities.4 These actions are estimated to amount to €315 million in the next MMF. The following legislative acts are to be superseded by the proposal: the 2014-2020 consumer programme, the COSME 2014-2020 programme for the competitiveness of enterprises and SMEs, the European statistical programme 2013-2017, the programme to support specific activities in the field of financial reporting and auditing 2014-2020, the management of expenditure relating to the food chain, animal health, animal welfare, plant health and plant reproductive material 2014-2020, and the programme to support specific activities enhancing the involvement of consumers and other financial services end-users in Union policy-making in the area of financial services 2017-2020. Parliament's starting position In its resolution of 14 March 2018 on preparing the Parliament's position on the post-2020 MFF, the European Parliament asked for the COSME budget to be doubled to correspond to the actual needs of the economy and the high demand for participation. Members of the European Parliament called for a 'greater concentration of budgetary resources in areas that demonstrate a clear European added value and stimulate economic growth, competitiveness, sustainability and employment across all EU regions'. The resolution also sees the need for genuine simplification of the EU budgetary system in the next MFF, with the aim in particular of facilitating fund absorption. The Parliament also highlighted the need to reduce unnecessary overlaps between instruments that serve similar types of action, for example in the areas of innovation and SMEs. Parliament underlined that this should be done 'without running the risk of losing important elements of the different programmes, and the necessity of eliminating