Round table: Hidden barriers in single market must be removed

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The EU single market must change in order to improve competitiveness and remove hidden barriers against entrepreneurs and companies, a round table was told in Zagreb today.

The round table, entitled "Using the potential of the single market", was organised by the Economy and Sustainable Development Ministry, and was attended by Prime Minister Andrej Plenković and several government ministers as well as Italy's former prime minister and president of the Jacques Delors Institute, Enrico Letta, who was entrusted by the European Council with making a report on the future of the single market.

Plenković said the report would be finalised in the next few weeks, and that the purpose of today's meeting was for Letta, who is also visiting other EU members' capitals, to hear Croatia's positions on the functioning of the single market.

"The Union must bear in mind the long-term competitiveness of its economy and be based on equal conditions of market competition, and the full implementation of the four freedoms, as well as an even application of EU rules," Plenković said.
Along with the digital and green transition, Croatia takes special care of demographic revitalisation, he said.

One should also reduce, as much as possible, fragmentation, that is, remove hidden barriers to businesses. "The more developed the countries are, the stronger economically they are and the longer they have been EU members, the more sophisticated they are in putting up hidden barriers," he said, adding that this was one of the reasons for the report.

Plenković said that an attractive business climate should be created, with equal opportunities for all businesses, regardless of the size and strength of the country or the time of its EU accession. "With better access to financing and investments, we must stimulate the competitiveness of our economy," he said.

He noted that Croatia was the youngest EU member and its businesses were still developing and getting stronger to be able to compete in the EU market on equal terms, recalling in that context the crises the country had been faced with over the past four years.

"That is why the approach to the single market today, after such a common, European and global experience, is significantly more different than it was before the Covid-19 pandemic," he said.

Without social cohesion, market competition makes no sense

The crises have prompted the policy of state interventionism and state subsidies to households and the business sector, Plenković said, adding that this week his government would adopt decisions continuing the policy of subsidising electricity and gas prices to make those prices stay the same, and in that context, he also mentioned special support to vulnerable groups such as pensioners and jobless war veterans.

Those measures preserve another important EU value, social cohesion. "Without social cohesion, market competition makes no sense," Plenković said.

He underlined that since its accession to the EU, Croatia's trade with EU countries has increased two and a half times, from €18 to 46 billion. 

Before its entry, Croatia was at 61% of the EU development average, while in late 2022 it was at 73%.

The 2.8% economic growth in 2023 as against the EU average of 0.5% has brought Croatia to 75% of the EU development average, the PM said, adding that GDP per capita of 75% of the EU average was part of the national development strategy for the period until 2030. That means that the goal has been achieved six years sooner, he said.

Plenković and Letta today also discussed EU enlargement in the context of the European Commission's recommendation that the EU should launch accession talks with Bosnia and Herzegovina.

Plenković said that the issue of enlargement and the EU budget were topics that would determine the dynamic of the EU's future and consequently determine the atmosphere for the completion of the process of creation of the single market.

Government action plan to reduce non-tax and parafiscal charges

Economy and Sustainable Development Minister Damir Habijan said that improving competitiveness is "the cornerstone" of European integration and hence of the future of the single market.

Citing data from the European Commission, he said that 60 per cent of the obstacles on the single market have existed for more than 20 years. "For us this is a very clear call to action. We need to open up more opportunities on the market for doing business," Habijan said.

Habijan said that the government and his ministry have been working continually on a number of measures and policies to strengthen the single market. He added that it is necessary to continue to remove regulatory obstacles and prevent the introduction of new administrative burdens.

Habijan recalled that the new government action plan to reduce non-tax and parafiscal charges includes 67 measures aimed at cutting the costs of businesses by €137 million.

Speaking of the need to remove market barriers and simplify rules for doing business, Habijan emphasised the importance of a combination of different public policies to improve competitiveness, including investment in research and innovation, digitalisation and completion of the Capital Markets Union.

Create conditions for a better, more effective and more resilient single market

Andreja Metelko-Zgombić, State Secretary at the Ministry of Foreign and European Affairs, said it is highly important "to create conditions for a better, more effective and more resilient single market in the time ahead. In the radically changed geopolitical circumstances that we are witnessing the EU's single market must also change."

She highlighted the importance of maintaining the EU's active role in the global economy and addressing the issue of strategic dependence, the importance of an open, sustainable and rules-based trade policy, the need for a more flexible and more competitive regulatory market, and investment in skills and human resources.

"For Croatia, the issue of demographic revitalisation of the Union is inseparable from discussion on competitiveness," Metelko-Zgombić said.

Text: Hina