THE SINGLE MARKET

EUROPEAN UNION

Contents:
A. Basic Information
B. History
C. Objectives
D. Barriers broken down
a. Physical
b. Technical
c. Tax
d. Public contracts
E. Policies
a. Transport
b. Competition
c. Protecting consumers and public health
F. Flaws in the System
G. References

BASIC INFORMATION
● The EU Single Market accounts for 500 million consumers and 21 million small and
medium-sized enterprises (SMEs)
● Goal: ​To ensure the free movement of goods within the market, and to set high safety
standards for consumers and the protection of the environment
● Services account for over 70% of all economic activity in the EU and a similar proportion
of its employment. EU companies have the freedom to establish themselves in other EU
countries and the freedom to provide services in countries other than the one in which
they are established
● The Commission works to remove or reduce barriers to intra-EU trade and prevent the
creation of new ones so enterprises can trade freely in the EU and beyond. It applies
Treaty rules prohibiting quantitative restrictions on imports and exports and manages the
notification procedures on technical regulations and technical barriers to trade
● The Commission monitors the application of EU law and can launch infringement
proceedings against EU countries that do not comply. It monitors the functioning of the
Single Market, producing evaluations and key economic reports. The Single Market
Forum gathers stakeholders to examine the state of the Single Market and contributes to
policy evaluation. The forum monitors the implementation of the Single Market Act.

HISTORY
● The ​1957 Treaty of Rome made it possible to abolish customs barriers between
the member countries and to apply a common customs tariff to goods from non-EEC
countries (achieved on July 1968)
 ● In 1970, other trade barriers hampered the complete achievement of the common
market​. Technical norms, health and safety standards, exchange controls and national
regulations on the right to practice certain professions all restricted the free movement of
people, goods and capita.
● In June 1985, the Commission​, under its President Jacques Delors, published a ​White
Paper ​setting out ​plans to abolish​, within 7 years, ​all physical, technical and
tax-related barriers to free movement within the EEC​.
● The single market has not yet become a single economy​: some sectors (in particular
services of general interest) are still subject to national laws. Freedom to provide
services is beneficial, as it stimulates economic activity.
● The ​financial crisis that started in 2008 has led the EU to ​tighten up its financial
legislation​.
● Over the years the EU has introduced a number of ​policies (on transport, competition,
etc.) ​to ensure ​that as many businesses and consumers as possible benefit from
opening up the single market

OBJECTIVES
● The aim was to ​stimulate the growth of trade and industrial activity within the
‘single market’ ​— a large, unified economic area​ on a par with the United States​.
● The Single European Act, which came into force in July 1987. Its provisions included:
○ Extending the powers of the EEC in some policy areas (such as social policy,
research and the environment)
○ Establishing the single market​ by the end of 1992
○ Making more frequent use of majority voting in the Council of Ministers, to
make it easier to take decisions about the single market

BARRIERS BROKEN DOWN

A. Physical Barriers
● All border controls within the EU on goods have been abolished
● Customs controls on people, but the police still carry out random spot checks as part of
the fight against crime and drugs
● In June 1985, five of the ​10 Member States signed the Schengen Agreement under
which their national police forces undertook to work together, and ​a common asylum
and visa policy was set up
● This made it possible to completely ​abolish checks on persons at the borders
between the Schengen countries
B. Technical Barriers
● Any product ​legally manufactured and sold in one Member State must be allowed to
be ​placed on the market in all others
● Where services are concerned, ​EU countries mutually recognise or coordinate
their national rules allowing people to practice professions such as law, medicine,
tourism, banking or insurance
 ● Qualified people (whether lawyers or doctors, builders or plumbers) are increasingly
free to practice their profession anywhere​ in the European Union
● Improve worker mobility​, and particularly to ensure that ​educational diplomas and
job qualifications ​obtained in​ one EU country are recognised in all the others
C. Tax Barriers
● Tax barriers have been reduced by partially ​aligning national VAT rates, which must
be agreed by the EU Member States
D. Public Contracts
● Public contracts ​in any EU country are now ​open to bidders from anywhere in the
EU
● Opening up national markets for ​services has brought down the price ​of telephone
calls to a fraction of what they were 10 years ago. Competitive pressure has also
significantly reduced air fares in Europe.

POLICIES
A. Transport
● The EU’s activities have ​focused mainly on ensuring the freedom to provide
services in land transport
● Giving transport companies free access to the international transport market and
allowing transport firms from any EU country to operate in all other EU countries
● Ensure fair competition in road transport​, by (for example) harmonising the rules on
worker qualifications and market access, the freedom to establish a business and
provide services, driving times and road safety
● All EU airlines may now ​operate air services on any route within the EU and set
fares at any level they choose. Many new routes have been opened up and ​prices
have fallen dramatically​.
● Shipping is subject to ​EU competition rules​. These ​rules are intended to combat
unfair pricing practices (flags of convenience) and also to ​address the serious
difficulties facing the shipbuilding​ industry in Europe.
B. Competition
● Within the European single market, competition is ​not only free but also fair
● The purpose of this policy is to ​prevent any business cartel, ​any aid from public
authorities or any unfair monopoly from distorting free competition within the
single market
● Any ​agreement falling under the Treaty rules must be notified to the European
Commission ​by the companies or bodies concerned
● The Commission may impose a fine directly on any company which breaks the
competition rules or fail to make the required notification (For example: in the
case of Microsoft, which was fined €900 million in 2008)
C. Protecting Consumer and Public Health
● EU legislation in this field aims to ​give all consumers the same degree of financial
and health protection​, regardless of where in the European Union they live, travel or
do their shopping
 ● The need for EU-wide protection came into sharp focus in the late 1990s with scares
over food safety issues such as ‘mad cow disease’ (BSE)
● The ​European Medicines Agency (EMEA) was setup to handle applications for
European marketing authorisations for medicinal products. ​No medicine can be
marketed in the EU without authorisation
● The European Union also takes action to ​protect consumers from false and
misleading advertising, defective products and abuses in areas such as consumer
credit and mail-order or Internet selling

FLAWS IN THE SYSTEM

● It has been an instrument to promote more economic integration in Europe but it failed to
achieve its potential as a source of large macro-economic benefits though increased
competition within the EU
● Mark-ups or price-cost margins are often used as indicators of the degree of competition
because an increase in competition translates into a reduction in the monopolistic
behavior of firms and then into a fall in prices and mark-ups. OMark-ups or price-cost
margins are often used as indicators of the degree of competition because an increase
in competition translates into a reduction in the monopolistic behavior of firms and then
into a fall in prices and markups
● Services account for 71 per cent of EU GDP, but only 3.2 per cent of this is from
intra-EU trade. The Department for Business, Innovation & Skills has estimated that the
completion of the single market in services could increase EU GDP by 14 per cent over
ten years. No small prize when forecast economic growth of the Eurozone is so bleak,
languishing around 1.2 per cent . Yet little has been done by the Commission or the
member states to resolve this glaring failure
● Non-tariff and technical barriers remain significant obstacles, and the EU should be
working to boost intra-European trade. In short the protectionist instincts of nation states
kick in and ‘invisible barriers’ make doing business complicated. But if agreement cannot
be reached at the level of the member states, the UK should be freed to lead a group of
interested member states to pursue services liberalisation through enhanced
co-operation. Those that can should be free to do so.

REFERENCES
http://ecipe.org/publications/wrong-single-market/
http://blogs.spectator.co.uk/2014/01/the-eu-had-30-years-to-create-a-single-market-and-failed-w
e-need-change/
http://ec.europa.eu/finance/index_en.htm