BRUSSELS — The European Commission is set to impose tougher penalties on countries obstructing trade across the EU, according to a draft document seen by POLITICO.

President Ursula von der Leyen wants to revamp the three-decade-old single market to boost the bloc’s competitiveness vis-à-vis China and the U.S., drawing on the recommendations of former Italian Prime Minister Mario Draghi, who has warned that the EU faces a “slow agony of decline” if it fails to take decisive action.

The action plan — branded as the One Europe, One Market Roadmap — aims to complete a revamp of everything from the rules on founding companies, to public procurement, to posting workers by the end of 2027.

The Commission was due to outline the draft roadmap to the EU’s 27 ambassadors at a meeting on Friday. It is seeking the approval of Parliament and governments for the plan, which is expected to land in the coming weeks.

The EU’s single market was created in the 1990s to enable the free movement of goods, services, capital and people.

But in recent years it has become tangled in a web of rules that drive up costs for businesses and stymie cross-border trade within the bloc. The International Monetary Fund estimates that the EU’s internal barriers — from language rules on food labels to different weight limits on trucks — are equivalent to a 44 percent tariff on goods and 110 percent on services.

The Commission claims that member countries are to blame for this, as they routinely ignore its recommendations and adopt their own rules to protect local stakeholders.

In a last-ditch attempt to fix this problem, the Commission has proposed cracking down on EU countries that flout its advice.

“The Commission will track progress by means of key performance indicators, and will make use of all available instruments, including infringement procedures [legal action], to address implementation gaps,” the Commission writes in the draft.

Eliminating the ‘Terrible Ten’

The EU’s goal is to eliminate by March 2027 the main barriers to the EU single market — the so-called “Terrible Ten.” These include complex EU rules, overlapping national legislation and complicated business establishment laws.

Brussels already launches legal proceedings against countries that obstruct trade across the single market. But these cases often drag on for years before fines are imposed. Commission officials have long encouraged quicker and more biting sanctions.

In a further attempt at increasing delivery by EU countries, the EU executive plans to link payouts under its next €1.8 trillion long-term budget to executing reforms to strengthen the single market.

The document also opens the door to smaller groups of countries joining forces to push forward reforms if there is no unanimous agreement among the bloc’s 27 states.

The plan highlights simplification as the first of five pillars that member countries should work on together with the EU institutions. These will include favoring agile legislative instruments and keeping tabs on rules that are making slow progress or not yielding results, the document says.

Key priorities also include a more integrated single market, championing strong trade, reducing energy prices and decarbonizing, and driving the digital and AI transformation.

A steering group including the Commission, Parliament and Council will watch over progress and touch base every two months. That would effectively institutionalize the three-way dialogue format, or “trilogue,” that serves as a forum for the EU institutions to hammer out compromises.

This report has been updated.