Single European Market (SEM)

Question 1

History of the single market?

Answer 1

1950s:
Spaak Report of 1956: Pre-equisit to Rome signing on market affairs greater than ECSC

Rome Treaty of 1957: attempted to establish customs union in Europe and dismantle trade barriers among the original six of the EEC, yet strong capitalism persisted, given strong institutionally embedded practices and norms

1960s-70s:
- Harmonisation as main strategy but showed limited results

1980s:
- Mid-1980s saw business engaged in extensive lobbying for single market and supported measures to improve European competitiveness

1990s:

• 1992 Programme by Delors and Cockfield
• SEA and SEM

2000s:
- Act 1 and 2 as attempts to ‘complete’ the single market whereby they engender renewed awareness of the central role of the single market as means of promoting growth, innovation and competitiveness… yet there remains a disjuncture

Question 2

How do we explain the single markets evolution through the 1950s?

Customs union vs. common market

4 freedoms

Balassa argument

Answer 2

1950s: Had the set target of creating a customs union and establishing a ‘common market’
- The Four Freedoms: free movement for goods, services, capital and labour within single regime of competition rules
- Balassa: Design was more so for a customs union than a single common market

Question 3

1960s-70s (new pressures led to national regulations and harmonisation)

Answer 3

Pressures: new technologies, environmental protection and pressure from domestic firms to curb competition led to large amounts of national rules and regulations which impeded trade on a larger scale

Harmonisation: harmonisation through EEC was to harmonise EU MS in areas it may be justified, instead of assuming full control of their markets.

Failure of harmonisation: could not keep pace with national rules as MS increasingly adopted measures to protect their industries which led to undoing of earlier work and increase in CJEU cases concerning movement of goods

Cassis de Dijon counter: judgement in 1979 whereby CJEU ruled that MS should accept products in their own market if deemed OK by another MS. E.G.

German ban on sale of French liqueur as did not conform German standards on alcoholic content. Was rejected by CJEU. Crucial step in launching the new regulatory strategy > mutual recognition which will facilitate the circulation of trade

Question 4

1980s (trade deficit of european goods vs. us/japanese, Iran oil price and recession)

Answer 4

Crisis hits Western European states:

• Poor competitiveness of goods from European firms in comparison to US and Japanese counterparts: led to large trade deficits

Oil price increase: with Iran’s increasing of oil prices in 1979 being the nail in the coffin to European recession. Investment was low, unemployment was high and inflation soared – both foreign and European investors began turning away from the Community, as noted by Pelkmans.

Question 5

What is Neo-liberal economics?

How did this prompt a response from member states?

Answer 5

Stresses that markets are better to assist in economic growth than governments

Prospect of collective response: form of liberal intergovernmentalism and neo-liberal economics as argued by Morav.

Question 6

How do the SEA and SEM interlink?

Answer 6

Coincided: Coincided with the Single European Act which focused heavily on enlargement through intergovernmentalism.

1992 Programme: Endorsed the 1992 programme to complete the single market which changed decision making from unanimity to QMV. This was crucial in interlocking institutional changes and substantive policy goals

Question 7

What was the Delors and Lord Cockfield 1992 Programme? How did it display the market?

Answer 7

Aimed at liberalising the market further through deepening and widening using negative and positive integration

Question 8

What is positive and negative integration?

Answer 8

• Negative: SEM revived negative integration (removal of national rules which impede economic exchange)
• Positive: SEA changed institutional framework for this (agreeing common rules to replace national ones by activating QMV and enhancing the powers of the EP)

Question 9

What does Jabko argue?

Answer 9

SEM supranational example: commission strategically exploited ambiguity around the meaning of the market in order to advance European integration and competition

Question 10

What does Moravscik argue?

Answer 10

SEA intergovernmental example: SEA was product of interstate bargaining, principally big 3 through threats of exclusion.

Commission: He does however note the supranational role of the commission but argues that MS were willing to accept their limited policy autonomy as it was the only sure way to have their partners comply

Question 11

How do both fit as an understanding of SEM progression?

Answer 11

• SEM: Whilst the commission, CJEU and big businesses contributed most to the SEM programme

SEA: the bargaining amongst MS primarily determined the outcome of the SEA.

Policy-framing and History-making decisions: Policy-framing remains mostly supranational, with ‘history-making; decisions such as the SEA residing with the MS powers.

Question 12

What are the latest efforts of the single market?

What does the Monti Report foresee?

Who controls the single market today, Member States or Commission?

How has the 2008 financial crisis and nationalist pressures affected single market progress?

Answer 12

• Single market act 1 and 2: latest efforts to complete this ‘unfinished business’ engendering renewed awareness of the central role of the single market as a means of promoting growth, innovation and competitiveness
• Monti report: argues that the social dimensions of market economy need to be strengthened to create a competitive social market economy, as set out in the Preamble to the Treaty of Rome.
• 2008 financial crisis and nationalist pressures: has not totally undermined the 2000s idea of less regulation is better, but is giving greater impetus to reregulation rather than deregulation, especially in the financial services.

Question 13

Conclusions?

Answer 13

• Well entrenched but demands more effective legal and judicial mechanisms to guarantee compliance
• Needs to generate better political support and legitimacy for economic integration which can be done by re-examining economic and social rights as market will flourish if better balance of economic growth

Question 14

Scholars used?

Answer 14

• Moravscik: Liberal Intergovernmentalism
• Haas: Neo-functionalism
• Supranationalism
• Lord Cockfield and Delors (1992 papers)
• Balassa (design of SEM as it stood with treaty of Rome)
• Pelkmans (European recession)
• Jabko (supranationalist account)
• Egan (European Politics)
• Young (Policy making in the EU)