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Single Market Act – Frequently Asked Question

Commission Européenne - MEMO/10/528   27/10/2010

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MEMO/10/528

Brussels, 27 October 2010

Single Market Act – Frequently Asked Question

1) What is the Single Market?

The Single Market of the European Union is the common area between the 27 EU countries where goods, services, capital and persons can circulate freely. The Single Market also ensures that European citizens are free to live, work, study and do business where they want in the EU.

The Single Market is the core of the cooperation between the 27 Member States of the European Union. Yet getting it up and running took many years.

It all started with the 1957 Treaty establishing the European Economic Community (EEC). This Treaty set out a timeline for the original six founding members (Belgium, France, Germany, Italy, Luxemburg and the Netherlands) to abolish customs barriers within the Community and establish a common customs tariff to be applied to goods from non-EEC countries. This objective was achieved on 1 July 1968.

However, customs duties are only one aspect of protectionist barriers to cross-border trade. In the 1970s, other trade barriers hampered the complete achievement of a common market. Technical norms, health and safety standards, national regulations on the right to practise certain professions and exchange controls all restricted the free movement of people, goods and capital.

In June 1985, the European Commission, under its then President, Jacques Delors, published an action programme seeking to abolish, within seven years, all physical, technical and tax-related barriers to free movement within the Community. The aim was to stimulate industrial and commercial expansion within a large, unified economic area.

By amending the original 1957 Treaty, the EEC gained the enabling instrument for the Single Market. The revised Treaty – the Single European Act - came into force in July 1987. Its provisions included:

  • extending the powers of the Community in some policy areas (social policy, research, environment);

  • gradually establishing the Single Market over a period up to the end of 1992, by means of a vast legislative programme involving the adoption of hundreds of directives and regulations;

  • making more frequent use of majority voting in the Council of Ministers.

With these changes in place, 282 laws were passed between 1985 and 1992 to sweep away the technical, regulatory, legal and bureaucratic barriers that stifled free trade and free movement. The Single Market was finally put in place on 1 January 1993.

With these barriers removed and national markets opened, more firms can now compete against each other. This means lower prices – and wider choice – for the consumer. Firms selling in the Single Market now have unrestricted access to nearly 500 million consumers in the European Union.

Between 1992 and 2006, it is estimated the Single Market generated 2.75 million jobs and 2.15% of extra growth for the European economy – that is € 518 extra for every person in the EU in 2006 alone. Intra-European trade currently accounts for 17% and 28% of world trade in goods and services respectively. Phone calls in Europe cost a fraction of what they did 10 years ago, many air fares in Europe have fallen significantly and new routes have opened. Households and businesses are now able to choose who supplies them with electricity and gas.

2) Why are you proposing a Single Market Act?

The Single Market has been a valuable shield for the European Union to weather the financial and economic crisis. But the crisis is still hitting Europe very hard: much of the growth and many of the jobs that were created between 1992 and 2006 have been wiped out. Our production levels have been reset to 1990 levels. Almost 10% of our active population – 23 million people – is currently unemployed. Furthermore, globalising trade, technological advancements and the emergence of new global players make Europe's competitive edge even tougher to achieve.

Nevertheless, the Single Market still has many area of untapped or not fully exploited potential. Exploiting these could further boost our economy, to put the European Union's growth and competitiveness back on track. This is where the Single Market Act is to deliver: to further unlock the potential of the Single Market.

But the Single Market won't work properly if citizens and businesses don’t believe in the project and can't find an interest for them in the Single Market. The financial crisis has dented people's expectations and confidence in markets and sometimes in the Single Market itself. Answers are to be provided on social cohesion, employment and consumer protection. The Single Market Act responds to these concerns: putting people at the heart of the Single Market.

3) How is the Single Market Act to meet these challenges and restore confidence?

If we want to kick-start new growth that is both sustainable and fair, Europe needs to equip itself properly and act with strength and determination. A collective commitment at European level is required, with all players involved – European, national or regional, public or private, economic and social - making these goals their own. This is where the Single Market Act comes in.

The Single Market Act outlines 50 measures – that the Commission is proposing to re-launch the Single Market. Together they are aimed at achieving a highly competitive social market economy with sustainable economic growth based on renewed citizens and business confidence. However, this will only be the start of things.

For four months, the Single Market Act will be put up for debate throughout Europe – in Parliaments, regions, with civil society, trade unions, business federations etc. Are these 50 measures the right measures? Are there alternatives? Are there issues we have forgotten? Following a wide-ranging European public debate, the Commission will agree the final set of measures to focus on so that the 20th anniversary of the Single Market in 2012 can be celebrated with renewed dynamism.

4) What pre-work has been done already on the Single Market Act?

In September 2009, as part of his guidelines for the incoming European Commission, President Barroso identified the Single Market as a strategic priority to meet the goals for competitiveness and growth under the EU2020 strategy (see IP/10/225).

In October 2009, he tasked Mario Monti, professor at the Bocconi University and former Member of the Commission, to identify the challenges that a new policy initiative to re-launch the Single Market would face. In May 2010, Mr Monti proposed a comprehensive strategy with key policy recommendations. In Mr Monti’s view, it is important to safeguard the Single Market from the risk of economic nationalism, to extend it into new areas key for Europe's growth and to build an adequate degree of consensus around it1.

Following an exchange of views with Mr Monti to re-launch the Single Market, the European Parliament's Internal Market and Consumers Committee entrusted one of its Members, Mr Louis Grech (S&D) with the task of coming up with a Report on "Delivering a single market to consumers and citizens". In Mr Grech's view, the integration into the Single Market is not an irreversible process, and the continued existence of the Single Market should not be taken for granted2.

The Single Market Act responds to these two reports, and incorporated many of their recommendations.

5) What are the main initiatives of the Single Market?

The Single Market Act initiatives address three broad categories and can be summarized as follows:

  • Growth that is both sustainable and equitable is the foundation of the Single Market Act. Europe's 20 million enterprises providing 175 million jobs form our growth engine – particularly small and medium sized enterprises (SMEs). But to get the engine to work at full speed, access to capital for SMEs must be improved to ensure they are given a fair chance to innovate and grow. An EU patent system that stimulates innovation by reducing the cost burden for individuals, researchers and businesses must be realised. Furthermore, red tape is to be cut by simplifying accounting and taxation rules and improving SMEs' access to public procurement contracts. Furthermore, the Commission will take further steps to make a Single Market for services is fully functioning: recent studies show for example that the full implementation of the Services Directive would gain Europe 60 to 140 billion euros, or 0.6 to 1.5% of GDP3.

  • Incorporating a citizen dimension in the Single Market is a theme that runs through many of the proposals in the Single Market Act. This includes initiatives such as improving access to public services and public infrastructure and developing tools to ensure fundamental rights and freedoms that are fair and adequately met in all the Member States. Social concerns also extend to efforts such as minimising paperwork and addressing the needs of mobile professionals, who often face unnecessary hurdles in establishing themselves in another Member State.

  • For citizens as consumers, their needs were taken into consideration in drafting many of the proposals. As part of the Digital Agenda for Europe, some of the proposals will work to empower consumers by eliminating barriers to cross-border online shopping and improving market surveillance for product safety. While others seek to address more financial matters like improving access to banking facilities and working towards more responsible and transparent lending practices.

  • A better governance of the Single Market is also needed. The Single Market cannot be built in 'Brussels' alone: it is the responsibility of all parties concerned. Therefore, the Commission will open its experts groups to civil society, promote a partnership and dialogue with the Member States to mutually evaluate and share their efforts to write EU laws into national laws. The Commission also proposes to use new electronic tools to improve administrative cooperation and simplify procedures when people want to work or offer services cross-border.

6) Why are you launching a public debate on this?

The Commission does not want to prescribe a set of policies to the public. With the process of public debate on the Single Market Act, it seeks to renew the confidence of Europeans in the Single Market by involving them in the process from the start. Understanding that each and every European has a stake in the future of the Single Market will help to improve our growth prospects and address the challenges that lie ahead. It is also a collaborative effort involving all European institutions including the Commission, the European Parliament and the Council of Member States, who each have a part to play in seeing it through. The Economic and Social Council and the Committee of the Regions will play a crucial role in opening up the discussion to local and regional representatives, as well as stakeholders in associations and civil society organisations.

The purpose of the public debate itself is to generate a dialogue between citizens across Europe on the issues that matter to them over the coming months. The action programme, which will be made available in all languages, will be widely disseminated throughout the Member States. Multiple mediums will be in place for people to get involved. These include a website, hearings at the European Parliament, visits by Commissioners to the different Member states, and events organized by the Commission Representations in the Member States. Events already scheduled include the following:

  • 9 November: Single Market Forum at the European Parliament

  • 30 November: Single Market Act Conference at the Committee of the Regions

  • 8 February 2011: Single Market Conference organised by the European Commission in Brussels

What are now the next steps?

In the debate that is to take place in the next four months, the Commission will invite the other European institutions to find a common agreement on the choice of priority actions and the possibility to implement them in an accelerated and coordinated way before the end of 2012.

Following this discussion, the Commission will propose to the other European institutions to seal their commitment to the final work programme of the Single Market Act that is to be adopted in the early spring of 2011.

More information is available at:

http://ec.europa.eu/internal_market/smact/

1 :

M. Monti A new Strategy for the Single Market: at the service of Europe's economy and society

See: http://ec.europa.eu/bepa/pdf/monti_report_final_10_05_2010_en.pdf - 9 May 2010

2 :

L. Grech Delivering a single market to consumers and citizens

See: http://www.europarl.europa.eu/sides/getDoc.do?language=EN&reference=A7-0132/2010 - 3 May 2010

3 :

"Expected economic benefits of the European Services Directive",

Netherlands Bureau for Economic Policy Analysis (CPB), November 2007.


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