OECD calls for more EU liberalisation

The EU must move faster towards full market liberalisation if it wants to benefit fully from economic growth, according to the OECD.

The Paris-based organisation said that the key to Europe’s long-term prosperity was the completion of the single market – a claim that is unlikely to be well-received in every EU capital, not least Paris itself.

The OECD’s first economic survey of the EU highlighted in particular the failure of EU member states to agree on how to open up the services sector to greater competition.

Original plans for wholesale liberalisation of all services were significantly watered down by MEPs last year, but are still considered excessive by some member states.

According to the OECD report, “differences in national laws make it hard for a service provider in one country to do business across Europe”, but the organisation said that it was “cautiously optimistic” that the new services directive would “help create Europe-wide markets” as long as “member governments stop protecting providers from outside competition”.

The report also called for further progress in liberalising markets such as electricity, gas, telecoms, transport, ports and postal services – the latter being another area where there is considerable disagreement among member states.

In the energy sector, the OECD report back the European commission’s controversial plans – unveiled earlier this week – to separate networks from the generation and supply activities.

As for the banking sector, Europe needs to do more to encourage consolidation in the sector, the report says, calling the creation of the single euro payments area (SEPA) a vital step towards this goal.

Another suggestion likely to prove unpopular among member states is the call for a cut in farm subsidies – with France again likely to prove the biggest stumbling block to achieving this goal.

 “Farm support could be better targeted so that, for example, it could be of more benefit to lower-income farm households and to the poorer farming regions,” the report states.

The OECD also called for the EU to act together with the world’s other big traders to reduce farm subsidies and open up its markets to the rest of the world – a reference to the seemingly interminable delays to the completion of the WTO Doha round.

The commission welcomed the OECD report, and acknowledged that despite the success it had already achieved, there was still work to be done.

“Further structural reforms are needed to raise potential growth, and cope with technological change, globalisation, population ageing and climate change,” said commission president José Manuel Barroso.

“The Lisbon strategy for growth and jobs – especially as re-launched in 2005 - provides an overarching framework to keep up the pace of reforms, focusing on both community and member state structural reform measures.”

“The forthcoming single market review, to be adopted by the commission in November 2007, will set out a strategic action plan to tackle remaining barriers within the internal market, and deliver additional tangible results to citizens.”

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