Internal Market The Core of the EU

History: The First Steps Free trade area: Treaties of Rome (1957) Customs Union (1967) “Eurosclerosis” of early 1980s Lack of global competitiveness Lack of progress towards higher level of integration 1985 - The Commission’s White Paper “Completing the Internal Market” – contained the legislative blueprint for completing the single market by end 1992 1987 Single European Act Mutual recognition 1992 target date 1991 Maastricht Treaty adopted the Delors Report, established a timetable for implementation, and called for adoption of single currency

The Single European Act The SEA established a legislative programme of some 300 directives designed to remove barriers, which were classified under three headings: Physical Barriers, associated with frontier inspections; Technical Barriers, causing legal and regulatory obstacles; Fiscal Barriers, differences in indirect taxes and excise duties.

The Single European Act: Next Steps After adjustments, the SEM programme was comprised of 282 directives designed to create: A New Community Standards Policy A Common Market for Services Conditions for Industrial Co-operation A Single Public Procurement Market Plant and Animal Health Controls

Philosophy of the Project Jacques Delors (President of the European Commission) called it: ‘one of the main engines of the EU’ but also said: ‘you can’t fall in love with the single market.’ Building one internal market - to launch Europe as an economic superpower Elimination of obstacles to trade, companies would start to enjoy new economies of scale More cross-border competition would wipe out inefficient firms

The expected benefits of economic integration Cecchini report (1988). Cost saving effects: ‘Static trade effect’: benefits from allowing public authorities to buy from the cheapest suppliers ‘Competition effect’: Downward pressure on prices as a result of greater competition ‘Restructuring effect’: Reorganisation of industrial sectors and individual companies as a result of greater competition

The expected benefits of economic integration (II) Combination of cost saving effects results in two kinds of benefits: Direct benefits: from the eradication of economic borders Indirect benefits: from economic restructuring, increases in trade and competition and greater economies of scale Result: The emergence of virtuous cycles of innovation and competition Lowering of prices for consumers Greater job creation

The principles of functioning of the Internal Market The four freedoms: removing barriers and obstacles, assuring market access Free movement of goods Customs union Duties and charges Quantitative restrictions and measures with equivalent effect Free movement of persons The beneficiaries of free movement: workers; family members; students, retired persons and other persons The evolution of the “free movement of persons”: from the Single European Act to the Treaty of Amsterdam Free movement of services and freedom of establishment Free movement of capital Short description from the Treaty of Rome to the Treaty of Maastricht Justifying restrictions and obstacles Justified discriminations and exceptions to the 4 freedoms The public policy, security and health derogations The public service exceptions

The instruments of the Common/Internal Market From the Treaty of Rome to the mid-80s: A limited harmonisation (Art. 100 EC Treaty) the role of the ECJ and the principle of “mutual recognition”(“Cassis de Dijon”) The “new approach” to harmonisation Removing obstacles since the Single European Act

The latest developments: Ten years of Internal Market: Achievements Economic benefits EU GDP in 2002 is 1.8 percentage points or €164.5 billion higher About 2.5 million jobs have been created in the EU since 1992 Benefits for citizens/consumers A wider choice of high quality goods and services Cheaper prices for goods Lower telecommunications tariffs Benefits for business The absence of border bureaucracy has cut delivery times and reduced costs The mutual recognition principle