1. Chapter Four The Single European Market

2. The Importance of SEM Catalyst of commercial change Stimulated re-organisation across borders Stresses predominance of liberalism as a response to globalisation

3. Economic rationale Key theme MARKET INTEGRATION Fragmentation  unified whole Removal of barriers –goods, services, capital, labour EU = world’s most ambitious and successful example of integration

4. Stages of economic integration Customs union (complete 1968) –no tariffs between members –Common External Tariff –Static effects - trade creation and trade diversion –Dynamic effects - specialisation, economies of scale, more competition Single market Economic and monetary union

5. Roots of SEM Treaty of Rome Economic crisis –Competitiveness concerns –Costs of market fragmentation –US de-regulation Emergence of neo-liberal economics

6. SEM principles Harmonisation = common rules –time consuming, complex, inflexible  Mutual recognition - Cassis de Dijon home country control new approach to standards - ‘essential requirements’ liberalisation

7. SEM IN PRACTICE 1985 Single Market White Paper –almost 300 barriers to go by 1992 fiscal barriers physical barriers technical barriers 1987 Single European Act Many single market successes

8. SEM as a process A moving target SEM will exist when all tradable goods and services are freely traded not when 1985 programme in place. Spillover into other areas - e.g. labour, energy, competition, EMU

9. Deferral of difficult issues - e.g. taxation Need for new policies to make SEM work - e.g. TENs Implementation and enforcement Evaluation, monitoring and updating Impact takes long time to work through

10. SEM Action Plan Phase one: give effect to previous commitments Phase two: adopt number of directives - e.g. European Company Statute, gas directive (done) Phase three: problematic areas - e.g. VAT modernisation, frontier controls

11. SEM- EU LANDMARK Stagnation - end 70s/early 80s New life into policy process - start of policy activism SEM principles underpin most policies Spillover into other policies Coupled with greater openness to global markets Integral to success of EMU

12. Impact of SEM Programme More market focussed EU Promote structural change Consolidation Created more open Europe to rest of world Changed environment of European Business

13. Issues for a Single Market Speed up implementation of regulation - bureaucratic Slim down legislation – burden upon business from SEM has been blamed for undermining competitiveness Especial concern over labour market regulation Lisbon Summit seek to assess business impact of regulation before implemented

14. Issues for a Single Market Excessive regulation imposes costs upon business – these can limit competitiveness But need to balance need of consumers/labour vs. business Other issues: -fuller integration of capital market -Apply SEM to the internet

15. Where are we now? - the Lisbon Council (2000) SEM boosted by Lisbon Council & new strategic goal –‘to become the most competitive and dynamic knowledge-based economy in the world’ Links to earlier SEM aspirations - includes ‘stepping up the process of structural reform for competitiveness and innovation and by completing the internal market’ i.e develop existing processes

16. Ease/difficulty of trading with: 1.Finland (easiest) 2.Luxembourg 3.Portugal 4.The Netherlands 5.Ireland 6.Belgium 7.Germany 8.Denmark 9. Sweden 10. Spain 11. Austria 12. Greece 13. France 14. Italy 15. UK (hardest) (Survey conducted on behalf of EU Commission, 2001)

17. Internal Market Strategy 2003-6 10-point plan - addresses key problem areas Key objectives: –Facilitate enlargement –Ageing population 1. Enforcing the rules - Some recent deterioration in implementation and enforcement

18. Number of directives to be transposed into national law Internal Market Scorecard - May 2003

19. 2. Integrating services markets - 70% of GDP & jobs - little integration - new initiatives - MR, harmonisation, codes of conduct, complete Financial Services Action Plan 3. Improve free movement of goods: standards –Mutual recognition - works well in many sectors but not foodstuffs, vehicles, financial services and professional qualifications. –No real SEM yet for construction products and machinery - can still take up to 8 years to agree European standard

20. 4. Meeting the demographic challenge -More efficient SEM - helps pay for pensions -Pension, benefits mobility 5. Further opening of network services -energy, transport, telecommunications, post, possibly water -Infrastructure links 6. Simplified regulatory environment 7. More open procurement

21. 8. Improve conditions for business -Action on state aids, stronger competition enforcement -Community patent? - legal, entrepreneurship -Takeover bids remain unresolved 9. Reduce tax obstacles -Eliminate double taxation -Simpler VAT rules -Common corporate tax base? 10. Provide better information and citizen’s needs -e.g. cross-border consumer protection

22. SEM- EU LANDMARK Stagnation - end 70s/early 80s New life into policy process - start of policy activism SEM principles underpin most policies Spillover into other policies Coupled with greater openness to global markets Integral to success of EMU Perfect SEM elusive?