The essence of the EU’s internal market

What is the essence of the internal market, often (aspirationally) called the single market in English (although this distinction not made in all of the official languages of the European Union)?

Social market economy

Among the aims of the European Union we find “a highly competitive social market economy” in Article 3(3) of the Treaty on European Union (TEU):

3.   The Union shall establish an internal market. It shall work for the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment. It shall promote scientific and technological advance.

Free movement x 4

Instead of being confined to the national markets, the factors of production are supposed to move without obstacles in the internal market. Article 26(2) of the Treaty on the Functioning of the European Union (TFEU) expresses the goal in the form of four - not only one - freedoms of movement, also known as the four freedoms:

2.   The internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of the Treaties.

Non-discrimination

Non-discrimination on the grounds of nationality is central to the tearing down of obstacles in the union generally and the internal market specifically. From Article 18 TFEU:

Within the scope of application of the Treaties, and without prejudice to any special provisions contained therein, any discrimination on grounds of nationality shall be prohibited.

CJEU

These basic principles, other treaty provisions and the rest of the EU legislation (acquis) have been brought to life by the Court of Justice of the European Union (CJEU).

EEA

The European Economic Area (EEA) extends the internal markets to three of the four EFTA states: Iceland, Liechtenstein and Norway. Switzerland, the fourth member of the European Free Trade Area (EFTA), has more limited access to the internal market based on bilateral agreements with the EU.

Brexit

According to Eurostat the population of the internal market was 515,640,100 at the beginning of 2016 (EU + EEA). If Brexit means that the population of the whole United Kingdom (about 65 million) leaves the internal market (not only the EU, but the EEA as well), about 450 million would remain, somewhat smaller than the combined 480,516,824 population (2016 estimate) of the less integrated North American Free Trade Agreement (NAFTA) countries Canada, Mexico and the USA.

 

Summary

The aim of the internal market, which consists of 31 countries with a total population of 515 million, is a highly competitive social market economy by the free movement of goods, persons, services and capital and the prohibition of all discrimination on grounds of nationality.

Ralf Grahn

The Cost of Non-Europe project

Politicians joining forces with experts?

Real calculations, real numbers and different areas of expertise are needed if people are to decide what is better for them – Europe or non-Europe, summarised Kristina Belikova in the July 2014 story The Cost of Non-Europe in the Gbtimes. She referred to Klaus Welle, the secretary-general of the European Parliament, at the Martens Centre reasoning why the Cost of Non-Europe project made this parliamentary term different (pages 8 and 9):

My twelfth argument is that Jean-Claude Juncker’s ten points are in fact the Parliament’s ten points. And this is not an issue of copyright. Because Juncker's five points were inspired by what Parliament had been elaborating under the heading of ‘Mapping the Cost of Non-Europe’. Do you remember? Based on parliamentary reports adopted in Plenary, we had produced an agenda of what should be done over the next years – a positive agenda for European integration. We had asked ourselves what could be additional benefits of European regulations. What is the value added if we were to get rid of 28 sets of different national regulations in order to have one set of European regulation instead. You remember: this is not new; this is the original approach that paved the way to the Single Market. As I have said: nothing new, nothing sensational. This is a well-established methodology coming from the 80's. And you may also remember that we had identified a potential of one thousand billion Euro, per year, of potential benefit if further European integration were to happen in the area of:

- a genuine digital Europe,

- an updating of our Internal Market in the field of services,

- an updating of our financial service regulations,

- a genuine energy union,

- a better cooperation in security and defence,

- and others.

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What needs to be done in the years to come and why is this important? This is important because at the end of the day, if you draw a line under the agenda for the next five years, this is a programme for growth without debt.  

This would have been impossible without the European Parliamentary Research Service (EPRS; overview), particularly its European Value Added Unit (EAVA), which provides European Added Value Assessments and Cost of Non-Europe Reports which analyze policy areas where common action at EU level is absent but could bring greater efficiency and a public good for EU citizens.

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In future blog posts we are going to look at what the Cost of Non-Europe Reports teach us about the potential of a seamless internal market (single market).

Opportunity knocks, when politicians join forces with experts.  

Ralf Grahn

The Single Market Strategy in the EU Competitiveness Council

The first day, 28 November 2016, of the EU Competitiveness Council was dedicated to issues relating to the internal market and industry. Despite more concrete news items available, I am going to approach the horizontal issue of the Single Market Strategy.

Single Market Strategy

Thirteen months ago the European Commission published the new single market strategy (available in 23 of the 24 official EU languages): Upgrading the Single Market: more opportunities for people and business; Brussels, 28.10.2015 COM(2015) 550 final (22 pages).

The communication was accompanied by two staff working documents, available in English only, but with more detailed facts and reasons.

The economic and competitiveness analysis is contained in SWD(2015) 203, available through the legal portal Eur-Lex in three parts, but more conveniently downloaded from a Commission web page as a “printed” whole document: Single market integration and competitiveness in the EU and its member states - Report 2015 (112 pages).

The second Commission staff working document is A Single Market Strategy for Europe - Analysis and Evidence; Brussels, 28.10.2015 SWD(2015) 202 final (108 pages).

For a structured overview you may want to study the Commission web page The Single Market Strategy.

Competitiveness Council

In order to prepare the discussion in the Competitiveness Council 28 November 2016, the Slovakian presidency had prepared a discussion paper: Single Market: One year after Single Market Strategy adoption (document 14246/16).

After a brief description of the Single Market and the Single Market Strategy, the discussion paper summarised some of the progress and future work:

C. Progress so far

The Commission has delivered first initiatives identified in the Single Market Strategy. In May 2016, the Commission adopted its legislative proposal to prevent discrimination against consumers based on nationality or residence (initiative on geo-blocking), as part of the e-commerce package. In June 2016, the Commission adopted a Standardisation package, which included the Joint Initiative on Standardisation (presented in the Competitiveness Council of 28 September) and a dedicated guidance document on service standards. The Commission also adopted a European agenda for the collaborative economy in June 2016. This Communication identifies good practice solutions and explains how existing EU law should be applied; clarifying key issues faced by market operators and public authorities alike, namely market access requirements, consumer protection, liability, labour law and tax. Moreover, in November 2016, the Commission will adopt the Start-Up initiative, a communication that aims at helping young firms to scale up and grow in the Single Market.

D. Steps forward

Many of the initiatives have not yet been adopted by the Commission. The Commission plans to deliver some important proposals and packages in the remainder of 2016. Towards the end of the year the adoption of the services package is foreseen. The package will include a proposal to improve the notification procedure for legislation with regard to services, a proposal for a European Services Card (identified as the Services passport initiative by the Single Market Strategy), which is to improve the cross-border provision of services and initiatives on regulated professions, such as a proportionality test to be applied when developing new legislation in this field and guidance to Member States on the matter of regulated professions.  

The Commission will continue adopting the remaining initiatives announced in the Single Market Strategy in 2017. These include a review of the intellectual property rights enforcement framework (IPRED), a Compliance and assistance package, including the Single Digital Gateway, the Single Market Information Tool and the Action Plan for SOLVIT. This will be followed by a Goods package, including initiatives regarding mutual recognition and addressing the increased rate of noncompliance within the Single Market for Goods. Also in 2017 the Commission will present a Public Procurement package including the voluntary ex-ante mechanism for large infrastructure projects. Finally, the Commission is planning to publish a Communication setting out best practices to facilitate retail establishment within the Single Market.

The presidency tried to structure and to focus the discussion by providing the following questions to the national delegations:

E. Questions for discussion

1. What is your assessment with regards to the implementation and the progress achieved so far concerning the Single Market Strategy?

2. Where do you see the biggest potential to inject new dynamism into the Single Market, to the benefit of EU consumers and the EU's industrial competitiveness?

3. How can the Council help ensure the swift and ambitious implementation of the Single Market Strategy?

The press conference wrapping up the first day (internal market and industry; 28 november 2016; webcast 17:05) emphasised the sense of urgency among ministers to achieve progress on the single market.  

Ralf Grahn