Transcript Lecture Four

Chapter Four
The Single European
Market
The Importance of SEM
• Catalyst of commercial change
• Stimulated re-organisation across borders
• Stresses predominance of liberalism as a
response to globalisation
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
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
Roots of SEM
• Treaty of Rome
• Economic crisis
– Competitiveness concerns
– Costs of market fragmentation
– US de-regulation
• Emergence of neo-liberal economics
SEM principles
• Harmonisation = common rules
– time consuming, complex, inflexible

• Mutual recognition - Cassis de Dijon
• home country control
• new approach to standards - ‘essential
requirements’
• liberalisation
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
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
• 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
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
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
Impact of SEM
Programme
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More market focussed EU
Promote structural change
Consolidation
Created more open Europe to rest of world
Changed environment of European
Business
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
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
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
Ease/difficulty of trading with:
1.
2.
3.
4.
5.
6.
7.
8.
Finland (easiest)
Luxembourg
Portugal
The Netherlands
Ireland
Belgium
Germany
Denmark
9. Sweden
10. Spain
11. Austria
12. Greece
13. France
14. Italy
15. UK (hardest)
(Survey conducted on behalf of EU Commission, 2001)
Internal Market Strategy
2003-6
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10-point plan - addresses key problem
areas
Key objectives:
– Facilitate enlargement
– Ageing population
1. Enforcing the rules
- Some recent deterioration in implementation
and enforcement
Number of directives to be
transposed into national law
70
60
50
40
30
20
10
0
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P
IR
L
A
G
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F
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U SP
K
FI SP
N
D
K
Internal Market Scorecard - May 2003
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
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
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
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?