This report opens with a discussion of the European Commission's decision to recommend the use of a size standard that is very different than the size standard used in the United States. It then examines the Small Business Act for Europe's various provisions and the major programs the European Commission has implemented to achieve the act's objectives. Next, it compares and contrasts the European and American approaches to assisting small- and medium-sized businesses. This report provides information and analysis useful to Congress as it crafts small business policy for the United States. It is a European Commission initiative, endorsed by the Council of the European Union, which provides 10 "guiding principles" for its own policies, and those of its member states. Create an environment in which entrepreneurs and family businesses can thrive and entrepreneurship is rewarded. Design rules according to the "Think Small First" principle. Facilitate SMEs' access to finance and develop a legal and business environment supportive to timely payments in commercial transactions. Comparisons with the United States

The European Commission was very aware of the United States' Small Business Act, the SBA's various programs, and the SBA's definitions used to determine small business eligibility for assistance as it crafted its Small Business Act for Europe and designed its small business programs and size standards. In some instances, the European Commission enacted policies that are relatively similar to those found in the United States. Both the Small Business Act for Europe (2008) and the U.S. Small Business Act (1953) indicate that its primary purposes are to assist small businesses in fostering competitive markets (e.g., by preventing large businesses from forming market oligopolies and monopolies) and to address market failures (e.g., the difficulties faced by small businesses in accessing capital). However, the Small Business Act for Europe and the European Commission's subsequent implementing policies and programs were created during one of Europe's most severe economic recessions in modern times. This may help to explain why the Small Business Act for Europe is much more explicit in its language concerning the need to focus on supporting SMEs as a means to create jobs than the U.S. Small Business Act. In addition, reflecting prevailing economic conditions in Europe, the Small Business Act for Europe has a greater focus on assisting small businesses engaged in specific industries deemed essential to Europe's competitive position in the world, such as international trade, tourism, and technology-related industries, including space exploration and satellite-based telecommunications and global environmental monitoring. Europe also has a greater focus on assisting small businesses offering products and services related to combating climate change, a relatively new issue not on the American political agenda during the 1950s. Concluding Observations

The Small Business Act for Europe was the product of the political and economic context in which it was created. Given Europe's economic circumstances, and lacking the legal authority to impose small business policies on its member states, the European Commission examined the small business policies in other nations, especially in the United States and Japan, and crafted 10 guiding principles it considered to best fit Europe's needs in an increasingly interdependent and global economy—emulating some policies (e.g., access to capital) and taking a different direction in others (e.g., size standards). Of course, given their differing political and economic circumstances, what works well for Europe may not work as well in the United States, and vice versa. Nevertheless, as the Europeans have demonstrated, examining what other developed countries are doing to assist smaller enterprises can be useful as each nation considers which policies may work best for them.
The Small Business Act for Europe (2008) is not an act, per se, as understood in the United States. It is a European Commission initiative, endorsed by the Council of the European Union, that provides 10 "guiding principles" to promote the growth of small- and medium-sized enterprises (SMEs) in Europe (e.g., "Create an environment in which entrepreneurs and family businesses can thrive and entrepreneurship is rewarded," "Design rules according to the 'Think Small First' principle," and "Facilitate SMEs' access to finance and develop a legal and business environment supportive to timely payments in commercial transactions.")
The European Commission was very aware of the United States' Small Business Act, the various programs offered by the U.S. Small Business Administration (SBA), and the SBA's definitions used to determine small business eligibility for assistance as it crafted its Small Business Act for Europe and designed its small business programs and size standard. It also examined small business policy in other nations, including Japan and China. In some instances, the European Commission enacted policies that are relatively similar to those found in the United States (e.g., both have programs designed to reduce small business regulatory burdens and enhance their access to capital). In others, the European Commission went in a different direction (e.g., size standards).
The Small Business Act for Europe was the product of the political and economic context in which it was created. For example, both the Small Business Act for Europe and the U.S. Small Business Act (1953) indicate that their primary purposes are to assist small businesses in fostering competitive markets (e.g., by preventing large businesses from forming market oligopolies and monopolies) and to address market failures (e.g., the difficulties faced by small businesses in accessing capital). However, the Small Business Act for Europe and the European Commission's subsequent implementing policies and programs were crafted during one of Europe's most severe economic recessions in modern times. This may help to explain why the Small Business Act for Europe (1) is much more explicit in its language concerning the need to focus on supporting SMEs as a means to create jobs than the U.S. Small Business Act; (2) has a greater focus on assisting small businesses engaged in specific industries deemed essential to Europe's economic recovery and its competitive position in the world, such as international trade, tourism, and technology-related industries, including space exploration and satellite-based telecommunications and global environmental monitoring; and (3) has a greater focus on assisting small businesses offering products and services related to combating climate change, a relatively new issue not on the American political agenda during the 1950s.
This report opens with a discussion of the European Commission's decision to use a size standard that is very different than the size standard used in the United States. It then examines the Small Business Act for Europe's various provisions and the major programs the European Commission has implemented to achieve the act's objectives. Next, it compares and contrasts the European and American approaches to assisting SMEs. This report provides information and analysis useful to Congress as it crafts small business policy for the United States.
Given their differing political and economic circumstances, what works well for Europe may not work as well in the United States, and vice versa. Nevertheless, as the Europeans have demonstrated, examining what other developed countries are doing to assist smaller enterprises can be useful as each nation considers which policies may work best for them.