Transcript PowerPoint Presentation - Single Market

Single Market
Topics
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What is the meaning?
How/why did it happen when it did?
Describe the main initiatives of SEA
Discuss the modalities of implementation
(instruments of implementation)
Analyze in some detail problem areas,etc
Related topics: cohesion, structural funds
Institutional aspects (QMV, the Court)
Informal effects: business firms
Major source for lecture
– Loukas Tsoukalis, The New European Economy Revisited
What is the meaning of
Single Market?
Non-tariff barriers (NTBs)
 Concrete Measures (initially “300”)
 Timelines for Implementation
 New decision-making approach:
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– Qualified majority voting in Council of Ministers
(QMV)
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Related areas put on the agenda
– Health and safety at work
– Environmental policy
– Cohesion
Historical Context
Why did it happen when it did?
 Economic
conditions 1973-1984
– Worst (longest, deepest) postwar
recession, related to 2 oil crises (1973,
1978-9)
– Unemployment plus inflation
– EEC performance worse than other
major industrial areas (Japan, USA,
EFTA countries)
Historical Context
(cont’d-1)
– Signs:
 Stagnation
of intra-EEC trade
 Decline in world share of manufactures
exports
 Falling behind in strong-demand sectors
especially:
– Electrical and electronic equipment
– Office machinery
– Information technology (computers etc)
Historical Context
(cont’d-2)
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Economic Policies 1973-1984
– Multiplication of protectionist barriers to trade
through variety of “legal” means (NTBs)
– “National champions” as the favored approach
to New Sector Initiatives (R&D, high
technology, etc.)
– Divergent economies, especially in dealing with
inflation
 Monetary
policy (interest rates and currency values)
 Budget Policy (deficits)
Historical Context
(cont’d-3)
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New Models/ New Thinking of 1980s
– Supply-side economics
– Deregulation
– In a nutshell: Thatcher and Reagan
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Dramatic Failure of the Old Model
– Socialist/Keynesian Macroeconomic Expansion
1981-83
– In a nutshell: “The First” Mitterrand
– “The Second” Mitterrand (1983 on) as a
turning point for EEC
Historical Context
(cont’d-4)
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Constructive Initiatives of Business
– Cross-border collaboration in R&D (vs.
“national champions” approach)
– Concern about fragmentation of European
markets (pro-forward movement of EEC)
– Round Table of European Industrialists
 Led
and first chaired by head of Volvo (from a then
non-EC country)
– EEC crucial role in the process:
 Etienne
Davignon, Commissioner for Industrial Affaris
since 1979 (DG 3), organizes sectoral “round tables”
 Results: ESPRIT, RACE, BRITE, EUREKA
Historical Context
(cont’d-5)
 Within
the EEC: The problem
– Eurosclerosis: many ideas and
proposals (especially Commission
proposals) and little action
– Two huge barriers to forward movement
 Community
Agricultural Expenditures: need
to reform CAP
 Budget
– Inadequate “own resources”
– Excessive net contribution of Britain and Germany
Historical Context
(cont’d-6)
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Within the EEC: Hope for Solution
– Temporary but significant resolution of the two
barriers (1984 Fontainebleau Summit of
European Council)
– Margaret Thatcher changes her tune
 Appointment
of Lord Cockfield as Commissioner for
Internal Market affairs (1985)
– Jacques Delors as new president of the
Commission (Jan 1985 term begins)
 Tour
of the 12 capitals: the 4 options
 Focus on Internal Market as single objective
Single European Act
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Process:
– Jacques Delors’ Speech to European Parliament
(January 1985)
– White Paper “Completing the Internal Market”
presented by Commission to European Council
in Milan (June 1985)
 Central
Paper
role of Lord Cockfield in preparation of White
– Decision of Milan Council to convene
Intergovernmental Conference (IGC) on Treaty
Revisions
 Majority
decision accepted by the opposition (Britain,
Denmark, Greece)
Single European Act
(cont’d-1)
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Process (cont’d)
– SEA signed (February 1986)
– SEA into effect (July 1987) following referenda
in Denmark and Ireland
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Provisions
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Removal of NTBs in 3 areas by 1993
QMV for many measures
Cooperation procedure with Parliament
Court of First Instance established
Recognition of domains needing special
attention: health and safety, environment,
cohesion
SEA Follow-Up
Unparalled unity of views and optimism
about Europe
 Dynamic economy, investment-led,
leading to the impression of strong
positive effects of Single Market
 Special enthusiasm of business
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Pro-active role of “peak organizations”
Lobby offices in Brussels
Multinationals see opportunity
Context of mergers and acquisitions (1988-90)
with cross-border perspectives
SEA Follow-Up (cont’d-1)
 The
Commission takes an ambitious
and assertive role
– Delors II (1989 re-appointed president;
second time since Walter Hallstein)
 Key
governments/key summits
create framework for bold new steps
– Hannover summit (1988): Germany
takes the lead to move forward
– Kohl-Mitterrand come together on
political union and monetary union
SEA Follow-Up (cont’d-2)
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Two New IGCs (“Big Ones”) in 1990
– IGC on Monetary Union (EMU)
– IGC on Political Union (Institutional Reform
and Other Areas than Economics)
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Conclusion: SEA leads to integration
initiatives on a broad front
– Single Currency
– Institutional Reform
– European Union
Implementing the Single Market
 The
“three areas” (official, specified
in SEA)
– Physical barriers
 Remaining
frontier controls based on “rules
of origin”
 Frontier adjustments due to CAP border
taxes (MCAs, or monetary compensatory
amounts)
 Transport restrictions due to national
licensing and quotas for non-national
carriers
Implementing (cont’d-1)
– Technical barriers (the “other” category)
 Technical
standards as indicator of product
quality
 Health and environmental standards
 Discriminatory public purchasing: “national
champions,” public procurement
 State subsidies
 Company law
 Different regulatory frameworks for
“services”: insurance, financial services
 Restrictions on capital movements
Implementing (cont’d-2)
– Technical barriers (cont’d)
 Obstacles
to free movement of labor
– Social security legislation and transferability of
social benefits
– Professional qualifications (eg, architects,
lawyers, doctors, accountants)
– University degrees
– Fiscal barriers
 Different
tax systems, taxable base, tax
rates
 Key issue of indirect taxes (value added tax)
Implementing (cont’d-3)
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The “heart of the problem”
– European postwar tradition of “mixed
economies” (lots of government intervention)
 Centrality
of regulatory frameworks
– The resort to NTBs as hidden form of
protection in crisis periods
– The inherently complex world of technical
standards, especially in high technology
sectors
– Citizen concerns for quality living standards:
consumer protection, environmental standards
Implementing (cont’d-4)
 Solutions
– Strong reliance on “mutual recognition”
– Harmonization as a “last resort” or for
the most intractable matters
– General rule of decision-making (several
exceptions and “safeguards”)
 QMV
for physical and technical barriers
 Unanimity for fiscal barriers
Implementing (cont’d-5)
– The special matter of technical
regulations and standards (about 80%
of all barriers, according to one
estimate)
 The
“new approach” adopted by Council just
prior to White Paper on Internal Market
(June 1985)
– Harmonization limited to safety matters
– Standards developed by private standards
organizations on the European-wide level:
“European technical standards”
– Highly specific to products and sectors rather than
general directives
Implementing (cont’d-6)
 Results:
– By 1995, more than 5,000 European standards
produced by private organizations such as CEN
and CENELEC, as well as ETSI (European
Telecommunications Standards Institute)
– Membership of these standarization organizations
consists of national standardization bodies of EU
and EFTA countries
– Development of “a European doctrine in terms of
product safety and the adoption of common
European standards” (Tsoukalis, p. 111)
– Long process
Implementing (cont’d-7)
 The
crucial importance of “mutual
recognition”
– An action of the Court of Justice in the
Cassis de Dijon case of 1979
 Principle:
Whatever meets the technical
standards and regulations of a member
state must be accepted as doing so in any
other state
 Exceptions: Health and safety, restriction
“proportionate to objective”
Implementing (cont’d-8)
 Some
problems and delays
– Allowable “derogations”
– Reliance on directives for
implementation
 “implementation
deficit” due to delays and
“complexities” of translating directives into
national legislation
 Public procurement, insurance, intellectual
and industrial property, pharmaceuticals,
veterinary and plant-health controls as the
biggest “delayed” sectors
Sources
 Internal
Market
 DGs
 Bulletin
 White
Papers
 Green Papers