Competitiveness - Economic and Financial Affairs

Forum on SMEs and Skilled Crafts in Europe – The need for harmonisation of European regulations at the centre of the debates on eco-innovation issues and digital transformation for SMEs


On 29 October 2015, a Forum for exchanging ideas and best practices  on SMEs and craft businesses was organised in the Chamber of Trade under the heading 'SME and Skilled Crafts in Europe' in the frame of the Luxembourg Presidency. The objective was to present the challenges and opportunities that SMEs face in terms of eco-innovation and digital transformation.

The Secretary of State of the Economy Francine Closener on 29 October at the Chamber of Trade
(c) Chambre des métiers / Photo Kalliste
During her presentation of the priorities of the Luxembourg Presidency, the Secretary of State for the Economy, Francine Closener, insisted on the need to reduce border crossing costs and to establish common regulations.

She highlighted the importance of eliminating the 'cost of non-Europe', calling to mind many regulations, standards and national standards 'which apply only in the territory of a single Member State' and which 'are also synonymous with cost, particularly for the SMEs'. If a company wishes to sell beyond its national borders, the costs amount to 10,000 Euros per market, she said. According to Secretary of State, without a legal service or large financial resources, it is impossible to comply with the national legislation of 28 different countries.

To meet this challenge, the single market must be accomplished, believes Francine Closener. According to her, the internal market strategy that the European Commission has just presented should be the basis to eliminate remaining barriers and achieve administrative simplification. 

In this context, the Secretary of State has noted an increased use of the mutual recognition principle which aims to 'create common and harmonised rules to protect essential interests in sensitive areas', such as consumer protection or safety standards. For the other sectors, the Member States should recognise the equivalence of their national measures to ensure that products can move freely, continued Francine Closener.

The Secretary of State then emphasised the 'mainstreaming' of competitiveness, in reference to the competitiveness 'check-up', a new working method introduced by the Luxembourg Presidency during the last Competitiveness Council of the 1 October 2015 which aims to integrate competitiveness into other relevant policies and to ensure that the impact on the competitiveness of the European economy is better taken into account, especially in the other Council configurations.

According to Francine Closener, this is a "transversal approach" which must take account the needs of businesses, in particular SMEs, as "a lot of decisions affecting SMEs are made in other configurations of the Council", like environmental requirements, the collection of VAT or food labelling requirements.

Francine Closener called on the European Commission to present a new Small Business Act. Launched in 2008 but under revision, this is an initiative to better tailor the single market to the current needs of SMEs and to establish better framework conditions. For the Luxembourg Presidency, it is an "essential element to underline our ambitions for SMEs – including in terms of visibility", insisted the Secretary of State.

She also stressed the importance of sustainable development which "is a key industry for future growth" as well as the circular economy whose "strict implementation will generate strong economies in supply costs for companies, up to 600 billion Euros in the EU according to the European Commission.

In conclusion, the Secretary of State stressed the need to develop a digital single market, expressing that information technologies and communication (ITC) will be a real driver of innovation for the whole economy with a potential 800,000 jobs to be created.

Eco-innovation: call for easier access to financing and harmonisation of European rules

The debate about the challenges of eco-innovation
(c) Chambre des métiers / Photo Kalliste
Next, there was a first debate on the challenges and perspectives of SMEs in terms of eco-innovation.

Christian Tock of the Luxembourg Ministry of Economy, welcomed the fact that the green economy is no longer a 'niche', but an imperative for companies, which should become less reliant on raw materials, the costs of which are constantly increasing.

Romain Schmit of the Luxembourg Federation of Craftsmen regretted that SMEs' investments remain "cautious" and that they often lack knowledge of the European funds available to them. He called for "putting a price on ecological effort" which must be "valued" by including it in the balance sheets of a company. According to him, crossing borders for SMEs is a "growing complexity". He also raised the issue of certification of the durability of materials, regretting that responsibility for this is "left up to businesses".

François Moutot of the Chamber of Trades and Crafts in France (APCMA) affirmed that the majority of craft businesses "are aware of the importance of measures to encourage the green economy". He pointed to the "limited financial resources", calling for review of the financing of innovation and regretting that "the EU does not take sufficient notice of the specific needs of small businesses". He also criticised the "catastrophic influx of regulations" for SMEs.

Karolina D’Cunha of DG Environment of the European Commission recalled that the European Commission has set up instruments for SMEs, including a pilot project for environmental technology verification (ETV), aimed at helping businesses certify their products at the European level. According to this European official, it is difficult to find funding in the eco-innovation sector as it is still considered to be a sector at risk.

The Luxembourg MEP Claude Turmes (Greens/EFA) underlined the need to create simpler instruments and to ensure tax equality between SMEs and multinationals. He welcomed the fact that the green economy has become truly "mainstream", while calling for facilitate investment in the circular economy.

Digital transformation: the fragmentation of the European market requires the creation of a digital single market

The debate about digital transformation
(c) Chambre des métiers / Photo Kalliste
In a second debate, experts and politicians discussed the opportunity of digital transformation for businesses.

Holger Schwannecke of the German Confederation of Craftsmen (ZDH) explained that a large majority of craftsmen perceive digitisation as an opportunity, but that only 2% of SMEs in the EU genuinely benefit. He welcomed the initiative of the German Ministry of the Economy to create a centre for expertise (Kompetenzzentrum) specifically for the craft industry, aiming to support companies in digitisation. He also criticised the delay of Europe in the deployment of broadband infrastructures. According to him, powerful Internet is a huge competitive advantage for SMEs, some of which would not survive unless they sell their products online.

Philippe Ledent of the Belgian employers' organisation UCM regretted the slowness of the process of creating a digital single market, believing that it was necessary to go much faster. According to him, harmonisation of the rules is 'crucial', because digital transformation will in his opinion completely change businesses as well as the chain of value creation.

Viviane Reding, Luxembourg MEP (PPE) and former European Commissioner, reinforced this observation. The Europe that still finds itself in the Palaeolithic era in terms of digitisation would run out of time to create rules in the face of the 'tsunami' of the digital economy, she said. The former commissioner has denounced a "balkanisation" of Europe in 28 different legislations, stressing the need to provide a common legal framework on data protection. The MEP also regretted the fact that in terms of funding, priority in Europe is given to security and not to risk, unlike in the United States.

Khalil Rouhana of DG Connect of the European Commission regretted the fragmentation of the European market. He mentioned problems with European businesses wishing to market a product and which must "go through 28 national legislations", a process which drives many of them to go to the United States, where they find "a single market". This European official views a single market as essential for the growth of SMEs. He also insisted that Europe is "very present in the market for digital services", particularly in the electronics sector.

  • Updated 02-11-2015