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Nordic iNNovatioN report 2013:03 // october 2013
Which enforcement barriers are hurting Nordic businesses?
Authors: Christian Jervelund
Amanda Stefansdotter
October 2013
Nordic Innovation Publication 2013:03
Which enforcement barriers are hurting Nordic businesses?
Copyright Nordic Innovation 2013. All rights reserved.this publication includes material protected under copyright law, the copyright for which is held by Nordic innovation or a third party. Material contained here may not be used for commercial purposes. the contents are the opinion of the writers concerned and do not represent the official Nordic innovation position. Nordic innovation bears no responsibility for any possible damage arising from the use of this material. the original source must be mentioned when quoting from this publication.
Which enforcement barriers are hurting Nordic businesses?
Nordic Innovation Publication 2013:03
© Nordic Innovation, Oslo 2013
ISBN 978-82-8277-053-8 (Print)
ISBN 978-82-8277-054-5 (URL: www.nordicinnovation.org/publications)
All Nordic Innovation publications can be downloaded free of charge as pdf files from
www.nordicinnovation.org/publications
Authors:Christian Jervelund
Amanda Stefansdotter
PublisherNordic Innovation, Stensberggata 25, NO-0170 Oslo, Norway
Phone: (+47) 22 61 44 00. Fax: (+47) 22 55 65 56.
E-mail: [email protected]
www.nordicinnovation.org
Cover photo: iStockphoto.com
Project Participants
DENMARKThe Danish Business Authority
THE NORDIC REGIONNordic InnovationRasmus WendtSenior innovation adviserPhone: +47 469 34 360E-mail: [email protected]
Which enforcement barriers are hurting Nordic
businesses?
4
Table of contents
Which enforcement barriers are hurting Nordic
businesses?
5
Which enforcement barriers are hurting Nordic
businesses?
6
Executive summary1
1 This study is a spin-off of the Copenhagen Economics study for Nordic Innovation entitled ‘Delivering a
Stronger Single Market' from 2012.
Which enforcement barriers are hurting Nordic
businesses?
7
Which enforcement barriers are hurting Nordic
businesses?
8
Chapter 1
1 Main findings
Table 1
Table 1 Comparative advantage
√ √ √ √ √
√ √ √
√ √
√ √
√ √ √ √
√ √ √ √ √ √ √ √
Figure 1
Which enforcement barriers are hurting Nordic
businesses?
9
Figure 1 Overview of Nordic strengths and enforcement barriers
Source: Based on analyses for this current study and Copenhagen Economics (2012).
1.1 Services
Service directive
Service directive/mutual recognition
Mutual recognition
Public procurement/mutual recognition
None
None
None
Services
Transport
Food
Green technology
Sector with advantageEnforcement barrier
Computer and
communications/ICT
Pharmaceutical products
Machinery
Which enforcement barriers are hurting Nordic
businesses?
10
Box 1 Falck
Worldwide revenue (2011): DKK 10.2 billion (approx. €1.3 billion)
Worldwide Employees: 25,262 employees
Which enforcement barriers are hurting Nordic
businesses?
11
Source: Based on CE interview June 2012, company website and other material.
Box 2
Box 2 Swedish waste handling company in Estonia A Swedish waste management company was through its subsidiary a majority owner
of a producers responsibility company’ in Estonia. An Estonian legislative change, how-
ever, limited the Swedish company's ability to hold shares in this organisation. The
new Estonian rules prohibited companies with waste management as their primary
business to be a member of a producers responsibility company, and no company was
allowed to hold an ownership interest exceeding 25 per cent of such an organisation.
The new restrictions on free movement could according to SOLVIT Sweden not be jus-
tified under EU law, and they turned to the Estonian authorities to mend the situation.
The Estonian authorities agreed that the rules constituted a barrier to trade but
claimed that the rules could be justified for reasons of environmental protection. Up-
holding the principle of producer responsibility, could, according to the authority, only
be ensured if packaging producers themselves can control the size of the fees charged
by the producers’ responsibility company. This was not possible as long as the waste
management company could hold a majority ownership in such an organisation. SOL-
VIT Sweden disagreed with the Estonian authorities' assessment that the restriction
could be justified, and claimed that there were less trade restrictive measures that
could ensure the principle of producer responsibility. The case was registered as un-
solved in SOLVIT.
Source: SOLVIT Sweden, annual report 2010
1.2 Food and green technology
Which enforcement barriers are hurting Nordic
businesses?
12
Barriers to exporting clean technology in the Single Market
Figure 2
Figure 2 Trade value of exported wind technology, 99-08, mil-
lion USD
Source: Nordic Energy Technology scoreboard based on UN Comtrade Database
5 000 10 000 15 000 20 000 25 000
Austria
France
Netherlands
United Kingdom
Portugal
Italy
Spain
Germany
Denmark
Exporting country
Trade value in mill.
USD
Which enforcement barriers are hurting Nordic
businesses?
13
1.3 Policy suggestion I: SOLVIT
Which enforcement barriers are hurting Nordic
businesses?
14
Which enforcement barriers are hurting Nordic
businesses?
15
1.4 Policy suggestion II: Change management
2 European Commission (2012), “Communication to the European Parliament and the Council: First Report on
the application of Regulation (EC) No 764/2008 of the European Parliament and of the Council of 9 July 2008
laying down procedures relating to the application of certain national technical rules to products lawfully mar-
keted in another Member State and repealing Decision No 3052/95/EC”, 15.6.2012, COM (2012) 292 final 3 Fernandez & Rainey (2006). 4 IBM (2008). 5 McKinsey & Co (2010).
Which enforcement barriers are hurting Nordic
businesses?
16
Table 2
Table 2 Worlds of Compliance
Criteria World of ob-
servance
World of domes-
tic politics
World of dead
letters
Word of transpo-
sition neglect
1: Transpostion behaviour Respect of rule of
law
Pick and choose Pick and choose Neglect
2: Administrative effectiveness Respect of rule
of law
Respect of rule
of law Neglect
Respec of rule of
law/neglect
3: NEW: Change management ? ? ? ?
Countries DNK, FIN, SWE AUT, BEL, DEU,
NLD, ESP, GBR
IRE, ITA, CZE,
HUN, SVN, SVK
FRA, GRC, LUX,
PRT
Note: Transposition behaviour is our shorthand for the original phrase of 'Process pattern at stage of trans-
position' and Administrative effectiveness is our shorthand for the original phrase of 'process pattern
at stage of practical implementation'.
Source: Falkner and Treib (2008) expanded with micro enforcement through change management
1.5 Policy suggestion III: Standardisation
6 As it reads in Falkner and Treib (2008), "… Since administrations and judiciaries generally work effectively, application
and enforcement of transposition laws are not a major problem in this world…'
Which enforcement barriers are hurting Nordic
businesses?
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7 Nordic Innovation (2012b).
Which enforcement barriers are hurting Nordic
businesses?
18
Chapter 2
2 Nordic comparative advantages
Box
Box 3 Measure of comparative advantage
2.1 Overview
Table 3
Which enforcement barriers are hurting Nordic
businesses?
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Table 3 Comparative advantage in the world market?
√ √ √ √
√ √ √
√ √
√ √
√ √ √ √
√ √ √ √ √
2.2 Services
Figure 3
Figure 3 Level of regional trade in services in the EU and among
the Nordic countries
Note: The Nordic countries include Denmark, Finland, Iceland, Norway and Sweden.
Source: Copenhagen Economics (2012).
5%
89%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
EU Nordics
The effects of regional cooperation on trade in services
Which enforcement barriers are hurting Nordic
businesses?
20
Table 4
Table 4 Transportation, communication and ICT services, 2010
√
√
√
√ √
√
√ √
2.3 Goods
Which enforcement barriers are hurting Nordic
businesses?
21
Table 5 Food, machinery and pharmaceutical products, 2010
√ √ √
√
√
√ √
√ √
The Nordics are strong in some ICT goods
Figure 4 ICT goods, 2009
√
√
√
Source: OECD trade statistics, data from 2009
The Nordics are leaders in green technology
Which enforcement barriers are hurting Nordic
businesses?
22
Figure 5 Trade value of exported wind technology, 99-08, mill.
USD
Source: Nordic Energy Technology scoreboard based on UN Comtrade Database
5 000 10 000 15 000 20 000 25 000
Austria
France
Netherlands
United Kingdom
Portugal
Italy
Spain
Germany
Denmark
Exporting country
Trade value in mill.
USD
Which enforcement barriers are hurting Nordic
businesses?
23
Chapter 3
3 Enforcement barriers
3.1 Areas affected
Taxation (VAT)
Services
Public procurement
Goods governed by mutual recognition
Table 6
Table 6 Economic impact by areas, EU GDP
Note: *We were not able to come up with an estimate of the potential not reaped from mutual recognition
legislation, therefore we have not included the expected gain in the total. (1). Primarily VAT Directive
2006/112/EC; (2). Primarily services Directive 2006/123/EC;(3). Primarily procurement Directive
2004/18/EC; (4) primarily Regulation 764/2008.
Source: Copenhagen Economics (2012) 'Delivering a Stronger Single Market’
Which enforcement barriers are hurting Nordic
businesses?
24
Provision of services is accompanied by language requirements
Member States do not allow providers to acquire insurance in other Member
States.
Businesses (when providing services both online and offline) are often confronted
with additional requirements to those to which they are subjected to in the Mem-
ber State where they are established.
Directive 2004/18/EC (the so-called Public Sector Directive or Classic Directive).
This regulates tender bids and contracts awarded by public bodies, in particular of
supplies of goods and services and some public works
Directive 2004/17/EC (so-called Utilities Directive), which regulates procurement
in four specific areas of activity, namely water, energy, transport and postal ser-
vice.
Which enforcement barriers are hurting Nordic
businesses?
25
3.2 Sectors affected
3.3 TRIS
Which enforcement barriers are hurting Nordic
businesses?
26
Table 7 Share of detailed opinions, industries
Note: Based on the TRIS database
Source: Copenhagen Economics (2012), Delivering a Stronger Single Market, and CEPS (2012), Enforcement
in the EU Single Market
3.4 SOLVIT cases
Which enforcement barriers are hurting Nordic
businesses?
27
Figure 6 Cases in reported to SOVLIT 2011 relating to services
Source: CEPS (2012), Enforcement in the EU Single Market
3.5 ECC centres cases
Which enforcement barriers are hurting Nordic
businesses?
28
3.6 Publicly procured goods and services
Figure 7
Figure 7 Reasons for not bidding cross-border
Source: CEPS (2012)
Which enforcement barriers are hurting Nordic
businesses?
29
Chapter 4
4 Matching comparative advantages with barriers
4.1 Overview of strengths and barriers Figure 1
Figure 8 Nordic sectors with comparative advantages and en-
forcement barriers
4.2 Services
Service directive
Service directive/mutual recognition
Mutual recognition
Public procurement/mutual recognition
None
None
None
Services
Transport
Food
Green technology
Sector with advantageEnforcement barrier
Computer and
communications/ICT
Pharmaceutical products
Machinery
Which enforcement barriers are hurting Nordic
businesses?
30
Box
Box 4 The case of Falck
Worldwide revenue (2011): DKK 10.2 billion (approx. €1.3 billion)
Worldwide Employees: 25,262 employees
Lack of transparency in procedures
Unfair competition
Discriminatory measures favouring national service providers and legislative
practices seeking to avoid tendering of EMS
Which enforcement barriers are hurting Nordic
businesses?
31
Single Market solutions
Increased use of e-procurement to make the procurement process more efficient
by reducing red tape
Removing political and administrative barriers to implementing European public
procurement procedures in EMS-services by EU authorities
Mandatory procurement for EMS-services
4.3 Transport
8 EU Commission (2011) Roadmap to a Single European Transport Area – Towards a competitive and resource efficient
transport system
Which enforcement barriers are hurting Nordic
businesses?
32
4.4 Food
Which enforcement barriers are hurting Nordic
businesses?
33
4.5 Green technology
Which enforcement barriers are hurting Nordic
businesses?
34
Figure 9 Limitations to green procurement identified by central
government procurement officials (2010)
Other barriers to exporting clean technology in the Single Market
1. No common approach to enforcement
2. Surveillance of green products is not high priority in Member States
3. Testing results are not recognised across borders
4. Court decisions are not recognised in other jurisdictions
No common approach to enforcement
9 IEA (2010) page 11 10 IEA (2008b) 11 Mark Ellis (2010). The authors also mention that a reason for the few available records may also be that authorities are poor
at recording enforcement actions.
Which enforcement barriers are hurting Nordic
businesses?
35
Figure 10
Figure 10 Annual costs incurred by Member States in monitor-
ing retailer compliance with Energy Labelling Directive
Source: Fraunhofer et al (2009)
Surveillance of 'green compliance' is not high priority in most Member States
Figure 10
0 100000 200000 300000 400000 500000
PortugalItaly
EstoniaCyprus
RomaniaGermany
FranceSlovakiaAustria
Czech Rep.Spain
SloveniaBelgiumGreece
MaltaBulgaria
LuxembourgLatvia
FinlandLithuaniaHungaryIrelandPoland
UKSweden
DenmarkNetherlands
EUR
Which enforcement barriers are hurting Nordic
businesses?
36
Court decisions are not recognised in other jurisdictions
Ta-
ble 8
12 Fraunhofer et al (2009), page 127. 13 IEA (2010), page 1 14 IEA (2010), page 16 15 IEA (2010), page 13
Which enforcement barriers are hurting Nordic
businesses?
37
Table 8 Range of fines available in EU countries
Source: ATLETE (2010)
Testing results are not recognised across borders
16 Atlete (2008). Delivarable 2.3, page 6
Which enforcement barriers are hurting Nordic
businesses?
38
4.6 Computer, communications services and ICT goods
legal uncertainty
non-compliance with requirements
lack of confidence in the implementation of e-Business solutions
Which enforcement barriers are hurting Nordic
businesses?
39
4.7 Health care
Pharmaceutical products
Reference pricing – takes the price for a ‘basket’ of countries and sets a price
based on the average, or on the lowest price.
Parallel trade – the core of the Single Market which allows distributors to pur-
chase goods in a Member State where prices are low, and re-sell them in a Mem-
ber State where prices are high.
17 Based on interview with industry representatives from AmCham Europe, June 2012
Which enforcement barriers are hurting Nordic
businesses?
40
Mitigation of parallel trade. For example, pricing policy in Spain supports rebates
for domestic consumption but not for re-exporting, thus offering a possibility to
charge lower prices domestically without risking the products being sold abroad.
Using reference pricing with baskets consisting of ‘equal income’ countries.
Ranking index where companies are rewarded for effort to enhance global access
to drugs, such as the Netherland based Access to Medicine Index.
Swedish health care exports
Box 5 Swedish health care companies abroad
Which enforcement barriers are hurting Nordic
businesses?
41
Box 6 The case of Capio
18 London Economics, Ecorys, pwc (2011), Public procurement in Europe – cost and effectiveness.
Which enforcement barriers are hurting Nordic
businesses?
42
- CEPS (2012) Enforcement in the EU Single Market, p. 95
Which enforcement barriers are hurting Nordic businesses?
43
References
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gle Market, Nordic Innovation, 22 June 2012.
Copenhagen Economics (2012), Delivering a Stronger Single Market,
Nordic Innovation, 22June 2012.
Copenhagen Economics (2012), Kvantificering af Grænsehindringer
Mellem de Nordiske Lande –Hvor stort stort er potetialet i større
integration?, 1November 2012.
Copenhagen Economics (2012), Presentation by Christan Jervelund,
Potentialet i et mere integreret Norden, Nordiska ministerråder 1
November 2010.
Deloitte (2011), The Internal Market for assistive ITC Final report,
June 2011.
European Commission (2012), “Communication to the European
Parliament and the Council: First Report on the application of
Regulation (EC) No 764/2008 of the European Parliament and of
the Council of 9 July 2008 laying down procedures relating to the
application of certain national technical rules to products lawfully
marketed in another Member State and repealing Decision No
3052/95/EC”, Brussels, 15.6.2012, COM (2012) 292 final.
Faulkner and Treib (2008), "Three worlds of compliance of four? The
EU-15 compared to new member states", JCMS 2008, Volume
46, number 2, pp. 293-313.
Frontier Economics (2008), The competition impact of environmen-
tal product standards, Office of Fair Trading October 2008.
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principiellt intressanta ärenden under året.
Kommerskollegium (2009), SOLVIT Sverige 2009, Ett urval av
principiellt intressanta ärenden under året.
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oktober 2010, SOLVIT hjälper privatpersoner och företag att röra
sig fritt i Europa.
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principiellt intressanta ärenden under året.
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Kommerskollegium (2011) Cross-border public procurement – an
EU perspective, November 2011.
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principiellt intressanta ärenden under året.
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vices, CEPS Special Report No. 67/October 2012.
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Table of Abstract
Series title, number and report code of publication:Nordic innovation publication 2013:03
Author(s):christian Jervelund, amanda stefansdotter
Organisation(s):Nordic innovation & the danish business authority
Title (Full title of the report): Which enforcement barriers are hurting Nordic businesses?Abstract:this study summarizes the main findings from a previous Nordic innovation study, delivering a stronger single Market (2012) and identifies the areas which have the largest impact upon Nordic business. the areas identified is the service directive, mutual recognition and public procurement. this is especially harmful for Nordic service providers, food exporters and green technology producers. the study points on four areas for action: a stronger soLvit mechanism; a mechanism which should check against parallel national legislation when new eu laws is implemented; increased focus upon common european standardization and certification within services; and finally strengthen focus upon micro level implementation in the member states.
ISBN:isbN 978-82-8277-053-8 (print) isbN 978-82-8277-054-5 (digital) (urL: http://www.nordicinnovation.org/publications)
Language:english
Name of Nordic Innovation funding program (if relevant): Commissioned by (if relevant):
Name of project:Which enforcement barriers are hurting Nordic businesses?
Project acronym (if relevant):
Nordic Innovation project number:p 11100
Pages:50
Date:october 2013
Keywords:single market, enforcement, market barriers, services, public procurement, Nordic region
Publisher:Nordic innovation stensberggata 25, No-0170 oslo, Norway phone: +47 47 61 44 00 [email protected] www.nordicinnovation.org
Main contact person:rasmus Wendt, senior innovation adviser Nordi innovation stensberggata 25, No-0170 oslo, Norway [email protected]
The Nordic region is particularly competitive in services, transport, food, green technolo-
gy, communication services and equipment, machinery and health care services includ-
ing pharmaceuticals. This leads to high exports in these industries which generates
jobs and brings wealth to the region. Barriers to exports in these industries are thus
particularly harmful for growth and wealth creation. We find evidence that a subset
of these industries namely services, transport, food and green technology are facing
barriers due to EU legislation that is not being applied as intended. For example, the
existing public procurement directives ought to pave the way for non-discrimination
between domestic and Foreign Service providers. Yet, it is not always the case, which an
example of emergency service provider Falck demonstrates.
By taking the lead and push for better enforcement of existing EU legislation within
these targeted industries in the other EU countries, the Nordic countries will directly
strengthen the competitiveness of its businesses eventually leading to higher economic
wealth. However, what is at least as interesting, but often overlooked, is that pushing
for better enforcement within the Nordic region may indirectly increase economic
wealth creation. The reason is that a level playing field in the Nordic countries provides
a ‘training’ ground for Nordic businesses sharpening their offerings and production
processes, stimulating innovation and supporting the build-up of larger businesses to
name a few. This allows them to better compete in the EU – barriers or not – and even
more importantly, to compete globally.
Nordic Innovation is an institution under Nordic Council of Ministers that facilitates sustainable growth in the Nordic region. Our mission is to orchestrate increased value creation through international cooperation.
We stimulate innovation, remove barriers and build relations through Nordic cooperationNORDIC INNOVATION, Stensberggata 25, NO-0170 Oslo, Norway // Phone (+47) 47 61 44 00 // Fax (+47) 22 56 55 65
[email protected] // www.nordicinnovation.org // Twitter: @nordicinno // Facebook.com/nordicinnovation.org
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Which enforcement barriers are hurting Nordic businesses?