The single market – mission unaccomplished

Fifteen years after the 1992 deadline, the plan to complete the EU’s single market has still not been fulfilled. This week the European Commission took the first step in a renewed drive to achieve the goal of a single market for goods, capital, services and labour by launching a review of the current gaps and failings across the Union.

A consultation exercise carried out last year found that there were still major barriers in the market, especially for services, financial services, transport, energy taxation, free movement of workers and intellectual property protection.

In a statistical sense, member states have come a very long way towards completing the single market. On 1 February Internal Market Commissioner Charlie McCreevy announced that member states had achieved their best ever results for implementing internal market legislation with only 1.2% of all laws waiting to be adopted at national level. This week (19 February) EU governments agreed to lower the implementation deficit target to 1% by 2009, a figure which should be endorsed by EU leaders at their summit on 8-9 March.

But as McCreevy explained, the test of a properly function-ing internal market is the reality on the ground, not the quantity of legislation adopted.

He pointed out that the focus should now be on whether member states have properly implemented EU legislation and reducing the length of time it takes the Commission to force governments to improve implementation through infringements procedures. The average length of time to get a member state properly to implement EU law is 26 months.

The shift in focus by the Commission away from a purely quantitative analysis towards an emphasis on implementation on the ground is welcomed by European businesses. Carlos Almazar, senior advisor for internal market issues at the European employers’ organisation BusinessEurope (formerly UNICE) said that enforcement of single market rules was one of his group’s four priorities for a relaunch of the single market project. Ensuring that member states were properly applying legislation was essential for a positive perception of the project by consumers and small businesses, he said. BusinessEurope wanted the EU to focus on completing the single market, especially filling the gaps in services and energy, raising the efficiency of the single market by improving the quality of law-making, enforcing single market rules and better communication and information so that consumers and businesses knew more about the opportunities available throughout the single market.

Almaraz stressed that one of the key elements for improving the single market was better co-operation between the Commission and the member states on implementation and enforcement, but also between member states. One example was the implementation of the services directive where member states’ authorities have to work together and exchange information.

The success of the single market cannot be separated from the issue of better regulation, as BusinessEurope’s four priorities indicate. This week saw EU governments sign up to cut the administrative burden of the Union’s legislation by 25% by 2012. The figure was first floated by Enterprise Commissioner Günter Verheugen last year and it was taken up by German Chancellor Angela Merkel. EU leaders are expected to endorse it at the March summit.

BusinessEurope’s Erik Berggren welcomed the agreement by ministers at the Competitiveness Council on Monday (19 February) to commit themselves to the 25% target for cutting red tape. But he regretted that member states had not, at the same time, agreed to similar national targets to cut bureaucracy. Ministers have pledged to draw up national programmes for cutting administrative burdens next year. Berggren pointed out that only the UK, Denmark and Sweden had set national targets for reducing bureaucracy, though Germany had started measuring its administrative burden.

EU leaders will try to send a strong signal at the March summit of their political commitment to improving EU lawmaking, cutting red tape and boosting efforts to complete the single market. Merkel has emphasised the need for the EU to respond to public perception that the Union encroaches too far into the daily lives of citizens and businesses. But the single market review is only the first step in a process to inject fresh political momentum into a project first hatched in 1986 to create a genuine single market for goods, services, capital and labour. The final report on the steps needed to plug the gaps identified by consumers and businesses alike will be finalised only next year. The difficulties in agreeing to break down national barriers to an effective EU-wide market for services and energy and removing obstacles to the free movement of workers and creating a single EU-wide patent protection regime suggest that the project still has several years to run. The single market may be a work in progress for another 15 years yet.

Fifteen years after the 1992 deadline, the plan to complete the EU’s single market has still not been fulfilled. This week the European Commission took the first step in a renewed drive to achieve the goal of a single market for goods, capital, services and labour by launching a review of the current gaps and failings across the Union.