The Single Market Flashcards
How the Single Market started
- Rome Treaty: Prohibition of customs, quantitative restrictions, measures having equivalent effects
Quantitative restrictions allowed when…
… justified by public interest (as of Art. 36 TFEU, e.g. public morality, security, health, etc.)
Formation of customs union
- removal of internal tariffs (done by July 1968)
- removal of internal quotas
- common external tariff
Technical barriers to trade
Technological, environmental, health or security standards to be fulfilled in order to enter national markets
-> Dassonville and Cassis-de-Dijon case-law fostered mutual recognition of standards
Cockfield White Paper
1985: 282 measures needed for achieving single market
Main elements Single European Act (SEA) (1987)
- removal of frontier controls (customs formalities, Schengen Agreement (1985))
- technical barrier to trade: minimum technical standards (harmonisation should be limited to essential objectives and requirements), principle of mutual recognition
- public procurement (transparency, non-discrimination)
- fiscal harmonisation
Art. 114 TFEU
EU has competence to adopt single standards:
- legislation contributes to the elimination of likely obstacles to the exercise of fundamental freedoms
- legislation contributes to the removal of appreciable distortions of competition which are likely to arise from the diverse national rules
How much is the effect of Single Market on GDP Growth?
Various studies, stating positive effects from 0.2-6.5% of GDP
Prices, Competition and Innovation
- convergence of prices of MS until 2007, then stagnating
- trade of services, free movement of capital and labour between EU states steadily increased
Explanation of weak Single Market GDP Effects
EU did not keep up with ICT revolution from 2000s on
- > Single market far from complete and barriers still prevalent (many infringement court cases deal with taxation and free movement of professionals)
- > complementary policies to support proper functioning of SM at national or EU level were not put in place
- > Unsupportive national policies hampering creative destruction dynamics
Incomplete SM: Insufficient mutual recognition
- application of mutual recognition is not automatic (Art. 36 TFEU exceptions)
- lack of trust among national authorities (more requirements)
- legal uncertainty about the scope (which goods are covered) and burden of proof
- lack of knowledge of the application of the mutual recognition principle among competent authorities and businesses
- lack of cooperation/dialogue between national authorities (leading to delays, incomplete + unhelpful information)
Incomplete SM: Free movement of people
- remained rather low
- barriers exist in this area: language, culture, etc.
- administrative barriers: recognition of professional qualifications, differences b/w national labour markets, lack of coordination of social security schemes (esp unemployment benefits and pensions), lack of coordination on income taxation (resulting in double taxation), inefficient skill matching with cross-border vacancies
Policies supporting the Single Market
- some degree of harmonisation of fiscal rules (28 tax regimes)
- coordination of consumer policy
- coordination of energy, climate and environmental policies
- investment in infrastructure (transportation, energy networks, financial infrastructure, data grids)
Unsupportive national policies hampering creative destruction dynamics
- national regulations/policies creating or protecting undue rents
- rigid labour market rules
- industrial policies supporting national champions, including monopolistic supply of network services
- inefficient regulation of network utility services
- cumbersome procedures to set up new businesses
Conclusions of Success of Single Market
- overall the SM program has been an ambitious and successful project
- the SM has developed enormously since 1992
- project in motion, not likely to be “completed” any time soon
- > still huge potential GDP gains from closing gaps (some argue about 5% of GDP extra)
