![Page 1: Chapter Four The Single European Market. The Importance of SEM Catalyst of commercial change Stimulated re-organisation across borders Stresses predominance](https://reader030.vdocuments.us/reader030/viewer/2022032803/56649e2f5503460f94b1f9ee/html5/thumbnails/1.jpg)
Chapter Four
The Single European Market
![Page 2: Chapter Four The Single European Market. The Importance of SEM Catalyst of commercial change Stimulated re-organisation across borders Stresses predominance](https://reader030.vdocuments.us/reader030/viewer/2022032803/56649e2f5503460f94b1f9ee/html5/thumbnails/2.jpg)
The Importance of SEM
• Catalyst of commercial change
• Stimulated re-organisation across borders
• Stresses predominance of liberalism as a response to globalisation
![Page 3: Chapter Four The Single European Market. The Importance of SEM Catalyst of commercial change Stimulated re-organisation across borders Stresses predominance](https://reader030.vdocuments.us/reader030/viewer/2022032803/56649e2f5503460f94b1f9ee/html5/thumbnails/3.jpg)
Economic rationale
• Key theme
MARKET INTEGRATION
Fragmentation unified whole
• Removal of barriers– goods, services, capital, labour
• EU = world’s most ambitious and successful example of integration
![Page 4: Chapter Four The Single European Market. The Importance of SEM Catalyst of commercial change Stimulated re-organisation across borders Stresses predominance](https://reader030.vdocuments.us/reader030/viewer/2022032803/56649e2f5503460f94b1f9ee/html5/thumbnails/4.jpg)
Stages of economic integration
• Customs union (complete 1968)– no tariffs between members– Common External Tariff– Static effects - trade creation and trade
diversion– Dynamic effects - specialisation,
economies of scale, more competition
• Single market• Economic and monetary union
![Page 5: Chapter Four The Single European Market. The Importance of SEM Catalyst of commercial change Stimulated re-organisation across borders Stresses predominance](https://reader030.vdocuments.us/reader030/viewer/2022032803/56649e2f5503460f94b1f9ee/html5/thumbnails/5.jpg)
Roots of SEM
• Treaty of Rome
• Economic crisis
– Competitiveness concerns
– Costs of market fragmentation
– US de-regulation
• Emergence of neo-liberal economics
![Page 6: Chapter Four The Single European Market. The Importance of SEM Catalyst of commercial change Stimulated re-organisation across borders Stresses predominance](https://reader030.vdocuments.us/reader030/viewer/2022032803/56649e2f5503460f94b1f9ee/html5/thumbnails/6.jpg)
SEM principles
• Harmonisation = common rules– time consuming, complex, inflexible
• Mutual recognition - Cassis de Dijon
• home country control
• new approach to standards - ‘essential requirements’
• liberalisation
![Page 7: Chapter Four The Single European Market. The Importance of SEM Catalyst of commercial change Stimulated re-organisation across borders Stresses predominance](https://reader030.vdocuments.us/reader030/viewer/2022032803/56649e2f5503460f94b1f9ee/html5/thumbnails/7.jpg)
SEM IN PRACTICE
• 1985 Single Market White Paper– almost 300 barriers to go by 1992
• fiscal barriers• physical barriers• technical barriers
• 1987 Single European Act
• Many single market successes
![Page 8: Chapter Four The Single European Market. The Importance of SEM Catalyst of commercial change Stimulated re-organisation across borders Stresses predominance](https://reader030.vdocuments.us/reader030/viewer/2022032803/56649e2f5503460f94b1f9ee/html5/thumbnails/8.jpg)
SEM as a process
• A moving target
• SEM will exist when all tradable goods and services are freely traded not when 1985 programme in place.
• Spillover into other areas - e.g. labour, energy, competition, EMU
![Page 9: Chapter Four The Single European Market. The Importance of SEM Catalyst of commercial change Stimulated re-organisation across borders Stresses predominance](https://reader030.vdocuments.us/reader030/viewer/2022032803/56649e2f5503460f94b1f9ee/html5/thumbnails/9.jpg)
• Deferral of difficult issues - e.g. taxation
• Need for new policies to make SEM work - e.g. TENs
• Implementation and enforcement
• Evaluation, monitoring and updating
• Impact takes long time to work through
![Page 10: Chapter Four The Single European Market. The Importance of SEM Catalyst of commercial change Stimulated re-organisation across borders Stresses predominance](https://reader030.vdocuments.us/reader030/viewer/2022032803/56649e2f5503460f94b1f9ee/html5/thumbnails/10.jpg)
SEM Action Plan
• Phase one: give effect to previous commitments
• Phase two: adopt number of directives - e.g. European Company Statute, gas directive (done)
• Phase three: problematic areas - e.g. VAT modernisation, frontier controls
![Page 11: Chapter Four The Single European Market. The Importance of SEM Catalyst of commercial change Stimulated re-organisation across borders Stresses predominance](https://reader030.vdocuments.us/reader030/viewer/2022032803/56649e2f5503460f94b1f9ee/html5/thumbnails/11.jpg)
SEM- EU LANDMARK
• Stagnation - end 70s/early 80s
• New life into policy process - start of policy
activism
• SEM principles underpin most policies
• Spillover into other policies
• Coupled with greater openness to global
markets
• Integral to success of EMU
![Page 12: Chapter Four The Single European Market. The Importance of SEM Catalyst of commercial change Stimulated re-organisation across borders Stresses predominance](https://reader030.vdocuments.us/reader030/viewer/2022032803/56649e2f5503460f94b1f9ee/html5/thumbnails/12.jpg)
Impact of SEM Programme
• More market focussed EU
• Promote structural change
• Consolidation
• Created more open Europe to rest of world
• Changed environment of European Business
![Page 13: Chapter Four The Single European Market. The Importance of SEM Catalyst of commercial change Stimulated re-organisation across borders Stresses predominance](https://reader030.vdocuments.us/reader030/viewer/2022032803/56649e2f5503460f94b1f9ee/html5/thumbnails/13.jpg)
Issues for a Single Market
• Speed up implementation of regulation - bureaucratic
• Slim down legislation – burden upon business from SEM has been blamed for undermining competitiveness
• Especial concern over labour market regulation
• Lisbon Summit seek to assess business impact of regulation before implemented
![Page 14: Chapter Four The Single European Market. The Importance of SEM Catalyst of commercial change Stimulated re-organisation across borders Stresses predominance](https://reader030.vdocuments.us/reader030/viewer/2022032803/56649e2f5503460f94b1f9ee/html5/thumbnails/14.jpg)
Issues for a Single Market
• Excessive regulation imposes costs upon business – these can limit competitiveness
• But need to balance need of consumers/labour vs. business
• Other issues:
- fuller integration of capital market
- Apply SEM to the internet
![Page 15: Chapter Four The Single European Market. The Importance of SEM Catalyst of commercial change Stimulated re-organisation across borders Stresses predominance](https://reader030.vdocuments.us/reader030/viewer/2022032803/56649e2f5503460f94b1f9ee/html5/thumbnails/15.jpg)
Where are we now? - the Lisbon Council (2000)
• SEM boosted by Lisbon Council & new strategic goal– ‘to become the most competitive and dynamic
knowledge-based economy in the world’
• Links to earlier SEM aspirations - includes ‘stepping up the process of structural reform for competitiveness and innovation and by completing the internal market’
i.e develop existing processes
![Page 16: Chapter Four The Single European Market. The Importance of SEM Catalyst of commercial change Stimulated re-organisation across borders Stresses predominance](https://reader030.vdocuments.us/reader030/viewer/2022032803/56649e2f5503460f94b1f9ee/html5/thumbnails/16.jpg)
Ease/difficulty of trading with:
1. Finland (easiest)
2. Luxembourg
3. Portugal
4. The Netherlands
5. Ireland
6. Belgium
7. Germany
8. Denmark
9. Sweden10. Spain11. Austria12. Greece13. France14. Italy15. UK (hardest)
(Survey conducted on behalf of EU Commission, 2001)
![Page 17: Chapter Four The Single European Market. The Importance of SEM Catalyst of commercial change Stimulated re-organisation across borders Stresses predominance](https://reader030.vdocuments.us/reader030/viewer/2022032803/56649e2f5503460f94b1f9ee/html5/thumbnails/17.jpg)
Internal Market Strategy 2003-6
• 10-point plan - addresses key problem areas
• Key objectives:– Facilitate enlargement– Ageing population
1. Enforcing the rules- Some recent deterioration in implementation
and enforcement
![Page 18: Chapter Four The Single European Market. The Importance of SEM Catalyst of commercial change Stimulated re-organisation across borders Stresses predominance](https://reader030.vdocuments.us/reader030/viewer/2022032803/56649e2f5503460f94b1f9ee/html5/thumbnails/18.jpg)
Number of directives to be transposed into national law
0
10
20
30
40
50
60
70
I P IRLA G
RF L G
ERNL B UK SP FIN
SP DK
Internal Market Scorecard - May 2003
![Page 19: Chapter Four The Single European Market. The Importance of SEM Catalyst of commercial change Stimulated re-organisation across borders Stresses predominance](https://reader030.vdocuments.us/reader030/viewer/2022032803/56649e2f5503460f94b1f9ee/html5/thumbnails/19.jpg)
2. Integrating services markets - 70% of GDP & jobs - little integration- new initiatives - MR, harmonisation, codes of conduct, complete Financial Services Action Plan
3. Improve free movement of goods: standards– Mutual recognition - works well in many
sectors but not foodstuffs, vehicles, financial services and professional qualifications.
– No real SEM yet for construction products and machinery - can still take up to 8 years to agree European standard
![Page 20: Chapter Four The Single European Market. The Importance of SEM Catalyst of commercial change Stimulated re-organisation across borders Stresses predominance](https://reader030.vdocuments.us/reader030/viewer/2022032803/56649e2f5503460f94b1f9ee/html5/thumbnails/20.jpg)
4. Meeting the demographic challenge- More efficient SEM - helps pay for
pensions- Pension, benefits mobility
5. Further opening of network services - energy, transport, telecommunications,
post, possibly water- Infrastructure links
6. Simplified regulatory environment
7. More open procurement
![Page 21: Chapter Four The Single European Market. The Importance of SEM Catalyst of commercial change Stimulated re-organisation across borders Stresses predominance](https://reader030.vdocuments.us/reader030/viewer/2022032803/56649e2f5503460f94b1f9ee/html5/thumbnails/21.jpg)
8. Improve conditions for business
- Action on state aids, stronger competition enforcement
- Community patent?
- legal, entrepreneurship
- Takeover bids remain unresolved
9. Reduce tax obstacles
- Eliminate double taxation
- Simpler VAT rules
- Common corporate tax base?
10. Provide better information and citizen’s needs
- e.g. cross-border consumer protection
![Page 22: Chapter Four The Single European Market. The Importance of SEM Catalyst of commercial change Stimulated re-organisation across borders Stresses predominance](https://reader030.vdocuments.us/reader030/viewer/2022032803/56649e2f5503460f94b1f9ee/html5/thumbnails/22.jpg)
SEM- EU LANDMARK
• Stagnation - end 70s/early 80s
• New life into policy process - start of policy
activism
• SEM principles underpin most policies
• Spillover into other policies
• Coupled with greater openness to global markets
• Integral to success of EMU
• Perfect SEM elusive?