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Measures Proposed to Enhance Functioning of the EU’s Single Market; Hong Kong Traders Could Face Less Red Tape When Doing Business in Multiple Member States

On 2 May 2017, the European Commission adopted a tri-pack of measures designed to make it easier for businesses and persons to manage their paperwork and regulatory compliance efforts online between Member States. The aim of these measures is to enhance compliance with EU rules and to facilitate the practical functioning of the EU Single Market. Improving services and tools of the Digital Single Market will help Hong Kong businesses seize the opportunities of a market of more than 500 million citizens, reducing obstacles in moving or selling products, or providing services cross-border in the EU.

Two of the measures will be submitted as proposals to the European Parliament and Council of Member States’ ministers for adoption as a Regulation, and the third is an expansion plan for an existing mechanism. Hong Kong businesses trading with EU customers in different Member States should take note of the possibilities for increased efficiency—and in some cases, responsibilities—that these measures afford.

The Single Digital Gateway (SDG): The SDG will require EU Member States to offer key national procedures fully online and to make those procedures completely accessible for users involved in cross-border operations within the EU. The SDG recognises a commitment to modernising public administration by developing ambitious, borderless, and user-focused e-government strategies.

Hong Kong companies with interests in one or more Member States and their EU customers should now find it easier to access the information, procedures, and assistance services needed to comply with the regulatory and administrative requirements for their cross-border operations within the EU. Specifically, the SDG will provide businesses with information about applicable rules available on national websites, but also direct them towards further assistance services and allow them to follow national administrative procedures online. This facilitation should also reduce the costs and regulatory burdens associated with the existing lack of quality access to such information outside of the originating Member States.

Hong Kong companies will especially benefit from accessing concrete information on taxation rules, selling goods, providing services, product requirements, assessing finance and environmental rules, and the like.

Of particular note are the following elements of the SDG:

  • Any procedure currently available online for domestic users will be accessible to EU retailers, distributors, etc., in other Member States, reaffirming the principle of non-discrimination in relation to online procedures;
  • Member States will be required to offer at least 13 key administrative procedures online in a safe, central, and user-centric national platform (e.g., the registration of general business activity and regulating EU-based employee contracts and benefits);
  • The SDG clarifies the conditions which the online procedures should meet in order to be more accessible (e.g., instructions in an additional EU language, the non-use of national data formats, e-signatures and e-seals).

Currently, the preferred proposed option for Regulation is an EU coordinated approach where information, procedures, and assistance services are found via an EU search facility.  

Positively for Hong Kong retailers and distributors, the SDG will reduce transaction costs for searching information, assistance service, completion of key procedures, and providing services or selling goods across Members States. This is especially true for small to medium-sized businesses. For example, the SDG could reduce costs by EUR 11 to 55 billion annually (taking into account 9 businesses’ procedures and 9 information topics that businesses typically search when expanding across borders).

The implementation goal, depending on the support of the European Parliament and the Member States, is to have the SDG fully-fledged and operational by 2020.

The Single Market Information Tool (SMIT): The second measure aims to enable the Commission to be more efficient with ensuring compliance with EU laws so that citizens’ Single Market rights are duly respected and businesses face fewer barriers when scaling up and entering new markets.

The SMIT is a regulatory initiative allowing the Commission, in targeted cases, to collect reliable information directly from selected market players (e.g., information on cost structure, pricing policy, profits, or product volumes sold). The SMIT is thus anticipated to provide the Commission with timely access to comprehensive and reliable quantitative and qualitative market information and allow it to identify regulatory and market failures.

This approach addresses the current difficulty in acquiring information directly from the market, particularly in cross-border cases where the information is not available to Member States or the necessity of coordinating among several Member States results in fragmented and insufficiently detailed information.

The new method is anticipated to prove especially valuable to the collection of information on suspected geo-blocking practices, to corroborate information on public tenders, and to obtain data on the pricing and underlying costs of cross-border parcel delivery. 

The SOLVIT (SOLVIT) Action Plan: The third measure is designed to provide quick and pragmatic solutions for citizens and businesses experiencing difficulties moving or engaging in cross-border business in the EU. Hong Kong businesses encountering problems with the movement of their goods through EU distributors or retailers may make use of this service to ensure that their rights to transport goods freely upon entry into the EU are not infringed.

SOLVIT is a free Alternative Dispute Resolution Mechanism designed to deal with cross-border problems encountered by individuals and businesses stemming from the misapplication of EU law by a public administration in another Member State. The system operates through a network of SOLVIT Centres based in the national administration of each Member State. It provides a mechanism for redress for policies linked to the four freedoms of movement (e.g. taxation or employment disputes and difficulties in cross-border product sales) without the need to resort to legal action. In total, the network has dealt with over 17,000 cases with almost 90% resolved.

The current action plan is intended to improve SOLVIT services by:

  • Offering capacity building (training and knowledge sharing) to improve accessibility, quality, and improve the handling of complex and sensitive cases;
  • Facilitating access to SOLVIT through the Your Europe web portal and the SDG.

The SOLVIT plan will be presented to the European Parliament and the Council and its implementation will be the joint responsibility of the Commission and Member States.

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