This year being the 20th anniversary of the Single Market, the European Commission on 3 October adopted Single Market Act II, putting forward twelve key actions for rapid adoption by the EU institutions. These actions are concentrated on four main drivers for growth, employment and confidence: a) integrated networks, b) cross border mobility of citizens and businesses, c) the digital economy, and d) actions that reinforce cohesion and consumer benefits.
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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, 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.
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.
Since its inception, the Single Market has generated millions of jobs and extra growth for the European economy. 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 II when it already proposed a first Single Market Act in 2011?
The first Single Market Act adopted in April 2011 came as a response to the crisis and the need to foster growth. It proposed 12 key actions to boost European competitiveness and to exploit the untapped potential of the Single Market to generate sustainable economic growth and additional employment, while at the same time helping to restore the confidence of citizens and businesses in the Single Market.
The joint involvement of the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions and many stakeholders in the first Single Market Act led to a widely shared political vision for the further development of the Single Market. It focused political attention, creating a sense of urgency and fast-tracking key actions.
Today, that focus is needed all the more as the effects of the crisis are still hitting Europe hard: growth needs to be revived, unemployment is persistently high, in particular among young people, and a part of the European population is living in poverty. The Single Market can do more to bring about new growth and jobs, to strengthen citizens’ and businesses’ confidence and to deliver concrete day-to-day benefits to them. Modernising and deepening the Single Market is a continuous exercise. The Single Market must respond to a constantly changing world where social and demographic challenges, new technology and imperatives, such as climate change, must be incorporated in policy thinking.
This is why the Single Market Act II proposes a second set of priority actions for new growth designed to generate real effects on the ground and make citizens and businesses confident to use the Single Market to their advantage.
3. What is the state of implementation of the first Single Market Act?
Since the adoption of the first Single Market Act in April 2011, the Commission has presented proposals for its twelve key actions. They are currently subject to discussions in the European Parliament and the Council and should, as a matter of urgency, be adopted by the end of this year where possible.
The Commission has also adopted or tabled proposals for 36 of its 50 complementary actions announced in the first Single Market Act.
4. How will the Single Market Act II contribute to creating growth and strengthening confidence?
The Communication on the Single Market Act II proposes twelve levers and corresponding key actions, concentrated on four main drivers for growth, employment and confidence: (i) integrated networks; (ii) cross border mobility of citizens and businesses; (iii) the digital economy; and (iv) social entrepreneurship, cohesion and consumer confidence. They constitute the next steps towards the objective of a highly competitive social market economy.
If implemented swiftly, the Single Market Act II, together with the delivery of the Single Market Act I, will open new paths towards growth, employment and social cohesion for 500 million Europeans.
5. What are the key proposals of the Single Market Act II?
The Communication on the Single Market Act II sets out key actions under four drivers for new growth:
- Developing fully integrated networks in the Single Market
- Fostering mobility of citizens and businesses across borders
- Supporting the digital economy across Europe
- Strengthening social entrepreneurship, cohesion and consumer confidence
The key actions are:
Developing fully integrated networks in the Single Market
Improving the quality and cost efficiency of rail passenger services by opening domestic rail passenger services to operators from another Member State.
Establishing a true Single Market for maritime transport by no longer subjecting EU goods transported between EU seaports to administrative and customs formalities that apply to goods arriving from overseas ports.
Improving the safety, capacity, efficiency and the environmental impact of aviation by accelerating the implementation of the Single European Sky. This aims at addressing the fragmentation of the European airspace that causes high additional costs to airlines estimated at around 5 billion a year, which are ultimately borne by air passengers and the European economy.
Achieving a fully integrated Single Market for energy by improving the application and enforcement of the third energy package and making cross-border markets that benefit consumers a reality. An integrated energy market contributes to lower energy prices and facilitates investments. For example, it has been estimated that EU consumers throughout the EU could save up to 13 billion per year if they all switched to the cheapest electricity tariff available.
Fostering mobility of citizens and businesses across borders
Enhancing the mobility of citizens by developing the EURES portal into a true European job placement and recruitment tool.
Improving access to finance for companies in the EU and boosting long-term investment in the real economy by facilitating access to long-term investment funds.
Improving the business environment for companies operating in Europe by modernising EU insolvency rules to facilitate the survival of businesses and present a second chance for entrepreneurs.
Supporting the digital economy across Europe
Supporting online services by making payment services in the EU more efficient. With 35% of internet users not buying online because they have doubts over payment methods3 and with remaining barriers to market entry, the improvement of the payments market is a priority.
Reducing the cost and increasing efficiency in the deployment of high speed communications infrastructure. The access to broadband is a crucial factor for innovation, competitiveness and employment. A 10% increase in broadband penetration can result in a 1-1.5% increase in GDP annually and 1.5% labour productivity gains.
Promoting a paperless administration by making electronic invoicing the standard invoicing mode for public procurement. As an example, in the case of the public sector, a preliminary estimate indicates that in the next few years, savings of approximately 1 billion per year could potentially be achieved if all invoices were submitted in electronic format.
Strengthening social entrepreneurship, cohesion and consumer confidence
Improving the safety of products circulating in the EU through better coherence and enforcement of product safety and market surveillance rules.
Improving participation in economic and social life by giving all EU citizens access to a basic payment account, ensuring bank account fees are transparent and comparable, and making switching bank accounts easier.
6. What are the next steps?
The Commission is committed to delivering all key legislative proposals by spring 2013 and proposals for all key non-legislative actions by the end of 2013.
The Commission calls on the European Parliament and the Council to fast-track all key legislative actions and adopt them as a priority by spring 2014.
7. Single Market Act, Single Market Week. Is there any link between the two?
The Single Market Act II will be presented and discussed at numerous public events across Europe during the Single Market Week to be held from 15 to 20 October 2012. An online Google debate will take place on 10 October.
The Single Market Week marks the 20th anniversary of the Single Market and is organised across the 27 Member States of the European Union.
Single Market Week: further information
Source: European Commission
