The Single European Market

The SEM and European business The SEM is seen as key to solving Europe’s problems through: wider availability of economies of scale in the production process the effects of more intense competition direct cost reductions due to abolition of border formalities and national regulations simplification of cross-border mobility and increase in labour force potential lower financial transaction costs lower barriers to entry

The SEM and European business Benefits to the enterprise’s logistical chain are derived from: suppliers: sourcing from new suppliers that offer lower prices and/or better quality inputs to the enterprise production systems: developing new locations to enter new markets with lower entry costs distribution systems: competition in services to the firm (in areas such as transport, warehousing and retailing systems) can further increase efficiencies

Barriers to SEM Physical Barriers: these include border stoppages, customs barriers and other time delaying and cost increasing measures involved in mobility between states Technical Barriers: these include the absence of common standards across the EU which means developing different versions of the same product for each market; also included are public procurement practices, technical regulations and differing business laws and practices (such as a culture of state support) Fiscal Barriers: these include differentials in the levels of VAT and excise duties among the states

Key to SEM is four freedoms The free movement of goods The free movement of services The free movement of capital The free movement of labour A fifth can be added: The free movement of information

Core to SEM is legislative framework This has number of forms: rules set out in the treaty rulings of the European Court of Justice secondary legislation mainly directives which have to be implemented into national law

SEM supported by flanking policies The EU’s competition policy to ensure a level playing field for the business community A regional policy to counter any regional imbalances that result from the advent of the SEM The social dimension to prevent any erosion of social rights that may arise from the development of the SEM (see Chapter 14)

Impact of SEM The effects have been mixed o Growth impact limited o FDI rose but fell back o Employment effects mixed Results skewed by Euro crisis

Gaps in SEM Extending de-regulation and harmonisation Public procurement Cross-border mobility Increasing importance of services Energy markets Transport markets Infrastructures

Re-launching the SEM Driven by three challenges: The erosion of political and social support for market integration The uneven policy attention given to the development of various components of SEM The sense of complacency that emerged based on a mistaken belief that the SEM was complete and could be retired as a political priority

New SEA is based on 12 levers Access to finance for SMEs Mobility for citizens Intellectual Property Rights Consumer empowerment Services Networks Digital Single Market Social entrepreneurship Taxation Social cohesion Business environment Public procurement