Europe must act to create more prosperity and jobs. And it must do this urgently in the wake of the financial crisis. That is why the European Commission adopted the Single Market Act, a series of measures to boost the European economy and create jobs.
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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, Luxembourg 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.
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. 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 that 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 up. Households and businesses are now able to choose who supplies them with electricity and gas.
2. Why is the Commission proposing a Single Market Act?
The Single Market has been a valuable shield for the European Union in helping to weather the economic and financial crisis. But the effects of the crisis are still hitting Europe very hard: almost 10% of our active population 23 million people is currently unemployed.
In this situation, it is all the more important to exploit any additional and yet untapped potential of the Single Market to generate sustainable economic growth and additional employment. The Single Market Act proposes 12 key actions to boost European competitiveness and to unlock economic growth and jobs which, considering the crisis, we want to see adopted by the end of 2012.
But the Single Market will not work properly if citizens and businesses cannot use it and experience its benefits on a day to day basis. The financial crisis has dented people’s expectations and confidence in markets and sometimes in the Single Market itself. It is the objective of the Single Market Act to strengthen this confidence.
3. How will the Single Market Act 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 from all the 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.
In May 2010, at the request of President Barroso, Professor Mario Monti presented his report on ‘A New Strategy for the Single Market’.
This was followed on 27 October 2010 by the Commission’s Communication ‘Towards a Single Market Act’ outlining 50 potential priority measures to re-launch the Single Market and kick-started a Europe-wide debate on the future priorities of single market policy.
For four months debates were held throughout Europe in Member States, EU institutions and consultative bodies, national parliaments, regions, local authorities, with civil society, trade unions, business federations, NGOs, and all other stakeholders. Questions that were asked were: Are these 50 measures the right measures? Are there alternatives? Are there issues we have forgotten?
The purpose of the public debate was to generate a dialogue between citizens and stakeholders across Europe on single market issues that matter to them. As a result, more than 800 contributions were received from a wide range of respondents, reflecting the keen interest of European citizens, businesses, workers and civil society at large in the single market. More than 30% of responses came from individual citizens. Nearly three-quarters of respondents expressed a positive view of the Single Market Act and a large number came forward with useful comments and ideas on the overall exercise or the individual proposed actions (1).
Following the wide-ranging public debate, the Commission is now putting forward its Single Market Act with twelve key priority measures. These actions are put forward on the basis of the opinions expressed by the European Parliament in its Resolutions on the Single Market (2), by the EU Council (3), the European Economic and Social Committee (4) and the Committee of the Regions (5), as well as in response to the public consultation.
The Commission commits itself to delivering these proposals as soon as possible in order to guarantee adoption by the European Parliament and the EU Council of the legislative proposals by the end of 2012, in time for the 20th anniversary of the Single Market.
4. What are the key proposals of the Single Market Act?
The Communication on the Single Market Act sets out twelve levers that can boost growth and enhance citizens’ confidence in the Single Market. Within each of these levers, a key action is singled out which, if adopted quickly by European legislators and properly transposed and implemented by Member States, can have a concrete effect on restoring economic competitiveness and the participation of citizens in the single market, in their multiple role of active citizens, workers, consumers, students etc.
For each lever, other important actions are also included – to be delivered in parallel with a slightly longer timetable which will benefit from the impetus given to the key actions. Taken together, all these initiatives will significantly boost growth.
A separate section is devoted to the governance of the single market which is an essential condition to deliver results, and in particular focuses on (i) dialogue with civil society and evaluation; (ii) partnership approach with all single market actors; (iii) better information for citizens and businesses; and (iv) better implementation and enforcement of single market rules.
The twelve key actions are:
(1) Improving access to finance for the more than 20 million European SMEs by introducing legislation to make it easier for venture capital funds established in one Member State to invest freely in any other Member State.
(2) Facilitating the mobility of citizens by modernising legislation on the recognition of professional qualifications awarded in another Member State.
(3) Supporting research and innovation by establishing a unitary patent protection and a unified patent litigation system.
(4) Helping consumer-business relations by facilitating alternative dispute resolution in the single market. For example, increased confidence in cross-border e-commerce is thought to produce an economic increase of approximately 0.02 % of EU gross domestic product, i.e. 2.5 billion.
(5) Boosting the free movement of services by facilitating the definition of services standards at European level. A well functioning services market is of utmost importance in generating growth and jobs in Europe. When growth in the European economy was on average 2.1% per year between 1998 and 2008, the services sector was growing by 2.8% year. Jobs in the services sector have increased by 2% per year, compared to an average of 1% for the economy as a whole.
(6) Improving transport and energy infrastructures in the single market by introducing legislation to identify and implement strategic European projects in order to obtain a seamless, efficient and ecologically friendly network. By 2020, investment in these could create 775 000 jobs and increase GDP by 19 billion.
(7) Developing the digital single market by ensuring the pan-European operation of electronic identification and signatures.
(8) Facilitating social entrepreneurship by setting up a European framework for the development of ethical investment funds.
(9) Improving energy taxation by ensuring a consistent tax treatment of different energy sources (see IP/11/468 and MEMO/11/238).
(10) Enhancing social cohesion by improving the application of legislation on the posting of workers from one Member State to another and by ensuring that social rights are applied. Today, more than 1 million people are posted to another Member State in the framework of service provision.
(11) Improving the regulatory business environment by simplifying accounting rules which can generate potential savings of 1.5 billion per year for 1.1 million small companies and of 5.2 billion per year for 5.9 million micro-enterprises.
(12) Modernising public procurement legislation to make rules more simple and flexible and to foster demand for environmentally sustainable, socially responsible and innovative goods, services and works. The open and transparent tendering procedures required under EU public procurement rules mean more competition, stronger safeguards against corruption and better service and value for money for taxpayers.
Alongside these twelve key actions, the Single Market Act puts forward more than 60 additional policy actions, which the Commission will propose in line with the above policy objectives.
5. Is there a deadline for adopting these measures?
The European Commission commits itself to presenting proposals for each of the twelve key priority actions outlined in the Single Market Act as soon as possible in order to guarantee the adoption by the European Parliament and the EU Council of the legislative proposals by the end of 2012. The Commission calls on the European Parliament and the EU Council to respond to the invitation by the European Council to adopt these key priority proposals by the end of 2012.
6. Why did you not include all 50 proposals put forward in the October 2010 Communication ‘Towards a Single Market Act’?
The objective of the October Communication was to propose potential priority measures for a wide public debate. On the basis of this debate, the Commission has now identified twelve key actions to be delivered as a priority.
However, Commission activity will not be limited to these twelve key priority actions. The Commission will deliver on a host of parallel policy initiatives also set out in the Single Market Act. The top priority will be nonetheless to deliver the twelve key actions by the end of 2012.
7. What are the next steps?
Beyond setting out actions to focus on in the coming 18 months, the Commission will start preparing to develop the single market beyond 2012. These preparations will be fed by a comprehensive economic study, whose results should allow identifying niches where there is untapped growth potential, and identify possible new levers for growth.
Single Market Act, further information
Notes
1 : SEC(2011)467
2 : P7TA-PROV(2011)0144; P7TA-PROV(2011)0145; P7TA-PROV(2011)0146
3 : 3057th Council meeting: 17668/1/10 REV 1
4 : CESE 525/2011-INT/548
5 : CdR 330/2010fin-ECOS-V-009
Source: European Commission
