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Europe's Single Market EUROPE’s SINGLE MARKEt – EXPLOITING UNTAPPED POTENTIALS THE EUROPEAN SINGLE MARKET 27 EU MEMBER STATES * 3 ADDITIONAL COUNTRIES IN THE EUROPEAN ECONOMIC AREA (EEA) Iceland Sweden Finland Norway Estonia Latvia Denmark Lithuania United Kingdom Ireland Netherlands Poland Belgium Germany Czech Republic Luxembourg Slovakia Liechtenstein Austria France Hungary Slovenia Romania Croatia Italy Bulgaria Portugal Spain Greece Malta Cyprus * On 1 July 2013 Croatia joined the European Union as 28th member state. There are transitional periods, for example, for the freedom of movement. Thus, not all Single Market freedoms are granted directly. CONTENTS 4 | SUMMARY 6 | THE SINGLE MARKET AS THE KEY CORNERSTONE OF EUROPEAN INTEGRATION AND PART OF THE FUTURE POLICY AGENDA Historic Role Played by the Internal Market in European Integration ...... 6 The Single Market Belongs on the Future Policy Agenda ....................... 7 9 | 20 YEarS’ SingLE MarKEt: IMPACT AND NEED FOR IMPROVEMENT Assessment of the Impact to Date .................................................... 9 The Cecchini Report foresaw great potential ............................... 10 Retrospective Analyses of the Single Market in the Narrow Sense ........ 11 Studies Relating to European Integration in all its Aspects .................. 12 Implementation of the Concept: Developments with Respect to the Four Fundamental Freedoms.......... 13 On the Current State of Integration ........................................... 13 Services and the Services Directive ........................................... 18 22 | STRENGTHENING THE EU SINGLE MARKET Areas where the Single Market Can be Developed ............................. 22 Job Mobility ........................................................................... 22 Potential in the Services Sector ................................................ 23 Public Procurement ................................................................. 24 Fighting the Fragmentation of the Capital Markets ....................... 26 Energy Markets ...................................................................... 26 Transport Markets, Particularly Railway Transport ....................... 28 Infrastructures ....................................................................... 29 EU Single Market Activities............................................................. 30 32 | SINGLE MARKET AND SINGLE CURRENCY 34 | CONCLUSIONS AND RECOMMENDATIONS FOR AcTION 39 | BIBLIOGRAPHY 41 | TABLE OF FIGURES 42 | APPENDIX Summary By realising the Single Market Project, Deficiencies in the implementation of internal the European Union (EU) has deepened eco- market integration to date are immediately nomic and political integration considerably. obvious from the large number of infringement Not only has it been possible to strengthen com- cases, which the Commission is conducting petition internally and produce greater growth against Member States not complying with the and employment through the free movement of legislation. An analysis of the four fundamental workers, goods, services and capital. The external freedoms uncovers existing potentials for dimension is also of importance. The Single Mar- strengthening the Single Market. The freedom of ket has strengthened the EU’s position in global movement across borders in the EU is relatively competition and represents an asset in bilateral modest compared to other trading areas. The free trade agreements. free movement of services is still meeting with various barriers, which even the watered down The Single Market has also acted as an Services Directive has not been able to eliminate engine for further steps towards integration. entirely. One important indicator for the obstacles One measure to be mentioned in this context in the cross-border trade in services is that is EU citizenship, whereby people’s freedom although there has been a price convergence in of movement has been uncoupled from their the trade in goods this has not been replicated in economic activity as employees or self-employed the trade in services. The movement of capital persons. Another is the creation of the single has been hampered because of the crisis in currency. While opinions may differ about the eurozone. So there is no doubt that potential whether the Single Market actually requires for strengthening the Single Market exists. a common currency, turning back the wheel is hardly an option. Individual countries leaving In fact, the EU has undertaken various the eurozone or it actually breaking up would activities to further improve the functioning have severe repercussions for the Single Market. of the Single Market. With the Single Market Act It is no longer possible to separate the two. In I of 2011 and the Single Market Act II of 2012, any case, it is highly likely that it would result in the Commission is addressing some areas where the four fundamental freedoms being curtailed the potential of the Single Market could be utilised and in protectionist tendencies being encouraged. to greater effect. These initiatives generally aim in the right direction. But some criticism of the It is of course true to say that the Single Commission’s approach is justified, particularly Market has not been completed. There are the fact that it partly links internal market aspects actually further important ways in which the with other policy areas such as social policy in its four fundamental freedoms, and thereby also proposals without always bearing in mind the competition within the EU, can be strengthened. principle of subsidiarity. As strengthening competitive intensity is an important tool for boosting growth, productivity and competitiveness, it is particularly important at this time to place the deepening of the Single Market onto the policy agenda. 4 | EURope’s SINGLE MARKet – explOITING UNTAPPED POTENTIALS In this study, important starting points for Finally, there is considerable room for further strengthening of the Single Market improvement with respect to transport and are identified – based on the Commission infrastructures in the Single Market. However, initiatives: if the European Council’s decision to cut funding in the multiannual financial framework stands, Infringement cases that the Commission the cuts will hit precisely those areas where funds is conducting against non-compliant Member from the European budget should be used to States take up too much time, particularly when finance projects that would achieve added value the dispute is taken all the way to the European for Europe. Court of Justice. The numerous infringement cases relating To improve the free movement of workers, to public procurement demonstrate that there mutual recognition of qualifications should be is room for improvement where the application facilitated. In addition, institutions that provide of legislation by Member States is concerned. information about work opportunities in other EU During the planned review of the legislation on countries, relevant regulations and the required procurement within the EU, care must be taken qualifications should be supported or created. to ensure that it will not be overburdened with criteria that are not directly related to the award- The Services Directive must be applied more ing of contracts. consistently, and the duplication of regulations needs to be reduced. Above all, there should While the creation of a banking union did be no economic needs testing, and the situation not form part of the original remit of the Single regarding the single points of contact needs Market Programme, it may help to boost the improving. Requirements for a particular type cross-border movement of capital. of business structure can be dispensed with. But a universal change to the country of origin Strengthening the Single Market should be an principle is probably a more long-term option. important part of the reform agenda under the Europe 2020 strategy. Furthermore, revitalisa- The high level of concentration in the tion of the Single Market can also be part of electricity markets in some Member States the strategy to combat the current debt crisis. (Greece, Portugal, Estonia, Lithuania, Latvia, Managing the partly severe debt problems will Italiy, France) and the distinct price discrep- only be possible if there is new growth. ancies illustrate that greater competition is required in this area. The implementation of the different energy packages should therefore be driven forward more forcefully, which means that production and distribution should be unbundled and the independence of the regula- tory authorities enforced. In addition, any remaining restrictions on competition should be eliminated in order to create a genuine internal market for energy. EURope’s SINGLE MARKet – explOITING UNTAPPED POTENTIALS | 5 The Single Market as the Key Cornerstone of European Integration and Part of the Future Policy Agenda HISTORIC ROLE PLAYED BY THE INTERNAL MARKET IN EUROPEAN INTEGRATION With the White Book 1 on Completing the Internal Market published in 1985, the Com- mission initiated a further deepening of European integration. The declared aim was to create a single market by eliminating the physical, technical and fiscal barriers. The Commission picked up on the goal of gradually creating a Common Market, which had previously been agreed in the 1957 foundation treaty of the European Economic Community (EEC). The customs union that this entailed, i. e. the abolition of all cus- toms duties within the area and
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