Friday 24 February 2017

House of Lords or European Single Market?

Is there a difference between the internal market defined by the EU treaties and the internal market the respected European Union Committee of the House of Lords campaigns for?

Single Market Act background

During the preparatory stage leading up to the Single Market Act SMA, actors and students had access to materials, notably:

The study by professor Mario Monti: A new strategy for the single market at the service of Europe’s economy and society (9 May 2010; 107 pages)

The European Parliament resolution of 20 May 2010 on delivering a single market to consumers and citizens P7_TA(2010)0186, based on the IMCO report drafted by Louis Grech  

The consultation paper (green paper) from the European Commission:

For a highly competitive social market economy
50 proposals for improving our work, business and exchanges with one another
Brussels, 11.11.2010 COM(2010) 608 final/2 (45 pages)

In addition, more than 800 contributions to the public consultation, conclusions of the Council of the European Union and the European Council, as well as three late resolutions by the European Parliament vied in order to influence the communication:  
Twelve levers to boost growth and strengthen confidence
"Working together to create new growth"
Brussels, 13.4.2011 COM(2011) 206 final (26 pages)  

Re-launching the Single Market

The European Union Committee of the House of Lords - @LordsEUCom on Twitter - has a long track record of clear and informative reports on strategically important EU subjects.

On 4 April 2011, less than two weeks before the publication of the Single Market Act (SMA), the House of Lords, European Union Committee, issued its 15th Report of Session 2010–11:

Re-launching the Single Market; HL Paper 129 (63 pages)

Much of the text is admirably readable on the earlier development of the common market, later officially the internal market, but most often - perhaps aspirationally - referred to as the single market in English.

Published so close to the SMA communication from the European Commission, the report from the UK select committee was less of a contribution to the EU Commission and more of a British policy paper on how to deal with internal market issues in the future.  

The EU Committee was honest enough to discuss (pages 14-17) the “historic compromise” Mario Monti had proposed in order to get market fundamentalists and proponents of a social model to join forces in order to re-ignite the single market. The EU Committee rejected this approach (page 17):

36. The relationship between the economic and social aspects of the EU is complex and politically charged. While the social aspect is important, we believe that it should not be seen as trade-off against market liberalisation. Any proposal on either aspect should be treated strictly on its merits. The case should be made separately for the economic benefits of the Single Market, especially given the urgent need for all Member States to stimulate growth in the aftermath of the financial crisis.

37. We believe a more fruitful approach is that advocated by the European Parliament Committee on the Internal Market and Consumer Affairs, in regarding citizens simultaneously as entrepreneurs, workers and consumers, and therefore as beneficiaries of the Single Market. Member States and the European Institutions should make the case strongly that it presents an opportunity rather than a threat.  

Britain seems to have a long tradition of national consensus regarding a single market designed for enterprises. Market reforms lead to jobs and economic growth, which decreases resistance to functioning markets. A dynamic labour market with high employment brings in more taxes for public services and requires less income transfers to compensate for unemployment.

Social market economy

Correct as these assumptions may be, I wonder if the EU Committee and Britain more generally have not evaded presenting the development of European Union as agreed among the member states through treaties, recently the Treaty of Lisbon, which entered into force 1 December 2009.  

Increasingly individuals, in various shapes and roles, are seen as the beneficiaries of EU legislation and actions.

A few quotes from the preamble of the Treaty on European Union (TEU), which acts as the sextant for navigating the union:

CONFIRMING their attachment to fundamental social rights as defined in the European Social Charter signed at Turin on 18 October 1961 and in the 1989 Community Charter of the Fundamental Social Rights of Workers,
DETERMINED to promote economic and social progress for their peoples, taking into account the principle of sustainable development and within the context of the accomplishment of the internal market and of reinforced cohesion and environmental protection, and to implement policies ensuring that advances in economic integration are accompanied by parallel progress in other fields,
RESOLVED to facilitate the free movement of persons, while ensuring the safety and security of their peoples, by establishing an area of freedom, security and justice, in accordance with the provisions of this Treaty and of the Treaty on the Functioning of the European Union,

The union’s compass is nowadays Article 3 TEU, which sets out the main aims of the EU.  The Lisbon Treaty set the internal market on a new course, encapsulated as a “highly competitive social market economy”, more focused on the individual, in Article 3(3) 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.

It shall combat social exclusion and discrimination, and shall promote social justice and protection, equality between women and men, solidarity between generations and protection of the rights of the child.

It shall promote economic, social and territorial cohesion, and solidarity among Member States.

It shall respect its rich cultural and linguistic diversity, and shall ensure that Europe's cultural heritage is safeguarded and enhanced.   

A social market economy, social progress, social justice and protection, economic and social cohesion, solidarity, just to name a few key words.

Not only for businesses and money, Article 26 TFEU aims for the free movement of goods, persons, services and capital.

Addressed to the member states as well as the EU institutions, Article 4(3) TEU lays down the principle of sincere (loyal) cooperation, encompassing both active and passive obligations regarding the objectives of the union.

The Charter of Fundamental Rights of the European Union, legally binding on the EU, reminds us of various rights of humans (not only corporations and property), relevant to the internal market.

Horizontal clauses

Article 18 Treaty on the Functioning of the European Union (TFEU) prohibits any discrimination on grounds of nationality.

In addition, Title II of Part One contains a number of provisions having general application (horizontal clauses), some of which are relevant to legislating for the internal market and to the application of its rules.

Here I am going to quote the social clause, which calls for integrating these aspects into EU legislation and administration:  

Article 9 TFEU

In defining and implementing its policies and activities, the Union shall take into account requirements linked to the promotion of a high level of employment, the guarantee of adequate social protection, the fight against social exclusion, and a high level of education, training and protection of human health.  

Politics is often partisan, but given the Treaty of Lisbon, is it legitimate for a member state deliberately to bypass a loyal presentation of the treaties or to try to exclude social aspirations from the creation of a dynamic single market, defined as a social market economy?  

Forgetting social

On 18 March 2011 the UK prime minister David Cameron and eight other EU heads of government sent a letter (reproduced in the HL Paper pages 60-62) to the president of the European Council Herman Van Rompuy and the president of the European Commission José Manuel Barroso, calling for the delivery of the full and untapped potential of the Single Market.

The letter remains a valuable reminder of concrete priorities just ahead of the SMA  in order to create more pan-European markets, but the prime ministers - including three Nordic ones - did not find a kind word to say about social aspects or the reasons for business regulation.

Social market economy: And they twain shall be one flesh.   

Ralf Grahn

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