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Elder statesman tries to revive EU single market

By Foo Yun Chee BRUSSELS, May 10 (Reuters) - Elder statesman Mario Monti urged European Union countries on Monday to make concessions on tax policy, social services, workers' rights and industrial policy to strengthen Europe's single market. European Commission President Jose Manuel Barroso charged the former EU competition and internal market commissioner last year with preparing a plan to revive the single market in the face of rising protectionism since the financial crisis began. Monti urged all member states to abandon long-held positions and further open the internal market of 500 million people, which is based on the principle of free movement of people, goods, services and capital, and is the cornerstone of EU prosperity. "The single market is less popular than ever, yet it is more needed than ever," the Italian economist said in the 107-page report which he handed to Barroso. Monti said "socially-minded" countries -- France and Germany -- should do more to open up their markets in exchange for better cooperation from the EU's Anglo-Saxon countries, a reference to states such as Britain and Ireland. This, he said, would be part of a "package deal" from which all member states could see gains if they made concessions. "The case for the single market needs to be made afresh, in a context that is profoundly different form the one in which the project was launched 25 years ago," he said. He made clear that, in exchange for more cooperation on tax policy, workers' rights, public services and industrial policy, Paris and Berlin would be more willing to open their energy, telecoms and services markets to more cross-border competition. He called for improved coordination on tax policies, saying Europe had a "highly fragmented tax landscape", but stopped short of seeking tax harmonisation which is opposed by Britain, Ireland and east European states with low corporate taxes. "There is scope for exploring measures of tax coordination that would smooth over rough edges ... while respecting tax sovereignty," he said. Monti's recommendations have been overshadowed by Greece's debt crisis and efforts to prevent it engulfing other countries in the single currency area. EU efforts to extend and streamline the internal market in the last decade have ended in failure on takeover rules and a single European patent, or have been severely watered down on opening up the cross-border market for services and energy. Public support for free markets has also decreased in western Europe because of increased unemployment and the discrediting of financial capitalism during the credit crisis. But Monti proposed steps to boost consumer confidence in the single market, saying it should become easier for Europeans to receive compensation of they are the victims of unfair and anti-competitive business behaviour. He rejected calls for loosening strict EU state aid rules, saying these were essential to prevent a subsidy race. (Reporting by Foo Yun Chee; Editing by David Cowell) Keywords: EU MONTI/REPORT (foo.yunchee@thomsonreuters.com; tel +32 2 287 6844; Reuters Messaging: foo.yunchee.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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