Saturday 31 December 2016

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 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.


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).


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.


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.


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