The Single Market 10 years on, November 2002

The Single Market was officially launched on 1 January 1993. To mark its 10th anniversary, the European Commission has published a special edition of the Internal Market Scoreboard. Surveys conducted amongst citizens and businesses to accompany the Scoreboard show that the Single Market (referred to also as the 'Single European Market' and the 'Internal Market') is thought to have brought significant benefits, although a number of problems are also highlighted. Frits Bolkestein, the European Commissioner responsible for the Internal Market, said the surveys 'make fascinating and encouraging reading. Support for the Internal Market remains very strong but both citizens and businesses want us to do more. The surveys support my firm belief that the Internal Market is good for citizens and businesses alike and that ten years on from 1992 we must move up a gear in the fight to secure our Internal Market freedoms.'

Background

From the outset, the Single Market applied throughout the European Economic Area (EEA - now the 15 EU Member States plus Iceland, Liechtenstein and Norway). Although much was made of the need for participants to adopt and implement a large body of legislation prior to the deadline (some 300 measures were involved), there were some gaps when 1 January 1993 dawned. The Single Market therefore started as it will continue: incomplete. As the Commission's anniversary Scoreboard notes: 'The Internal Market will never be 'completed'. The effort to maximise its performance is a process, not an event. After 10 years, there are still holes to be plugged and barriers to be removed...'

One of the driving forces which led EU leaders to pursue the goal of completing the Single Market from the mid-1980s was Europe's poor economic performance compared to the United States and Japan. Ridding the EU of the numerous trade barriers which had evolved between the various Member States - thereby promoting cross-border business, making companies more competitive and giving consumers greater choice - was seen as the main way of boosting Europe's economic fortunes. The Single Market is still an integral part of Europe's bid to become the world's most competitive economy by 2010 (a target set by the March 2000 Lisbon European Council). As the Introduction to the special edition of the Internal Market Scoreboard says: 'A single open market - backed up by a single currency - provides the essential basis for future economic growth in the Community.'

The first Internal Market Scoreboard was published in November 1997. It was intended to 'name and shame' Member States which were not implementing EU legislation at national level, thereby preventing consumers and businesses from realising the benefits of the Single Market. The emphasis was therefore on measuring the transposition of EU law into national systems.

A new element was added to the Scoreboard with the publication of the current Strategy for Europe's Internal Market, which defined four objectives for the Single Market:

• to improve citizens' quality of life
• to enhance the efficiency of Community product and capital markets
• to improve the business environment
• to exploit the achievements of the Internal Market in a changing world

Published in October 1999 and revised in April 2001 to produce 'a more streamlined strategy with a much clearer sense of priorities', the Strategy stated that the Union's progress towards achieving these objectives would be assessed against 'a comprehensive set of indicators'. The November 2001 Single Market Scoreboard therefore listed 20 variables (including intra-EU trade levels, prices of utilities services, and greenhouse gas emissions) which comprised the first Internal Market Index. Taking 1996 as a starting point (i.e. 1996 = 100), the Index for 2000 stood at 105.1.

The 10th anniversary Scoreboard

The November 2002 Scoreboard differs from its predecessors in that it seeks to give a picture of what the Single Market has achieved over the last 10 years as well as an account of the current state of play. It has four main parts: a review of the state of implementation of EU law, details of the latest Internal Market Index, a survey of consumers' views, and a survey of businesses' views.

Implementation is measured in terms of an 'implementation deficit' - the percentage of EU level legislation which Member States have not yet implemented nationally. In 1992 the average deficit was 21.4% per Member State; in May 2002 the figure had dropped to 1.8%, but then rose to its current level of 2.1%. Member States are supposed to achieve a deficit target of 1.5% by Spring 2003 - a figure currently met by only five of them: Sweden, Finland, Denmark, The Netherlands and the UK. Commenting on the recent rise, Internal Market Commissioner Frits Bolkestein said he was 'rather alarmed that the positive trend on implementation over the last ten years seems in danger of being reversed.'

Another indicator used to assess Member States' implementation of EU law is the number of infringement proceedings: there are currently more than 1500 such cases involving Single Market legislation. France and Italy have the most cases (216 and 190 respectively), with Denmark, Luxembourg and Sweden having the least (33, 33, 32).

The Internal Market Index has been modified for 2002 and contains only 12 indicators, rather than the previous 20. It aims to 'provide some measure of the effects of Internal Market policy as defined in the broadest terms by the free circulation of goods, services, capital and workers within the European Union.' Five indicators were identified by Member States as particularly significant for assessing the success of the Single Market: intra-EU trade, public procurement, foreign direct investment, the cost of utilities and a reduction in state aid.

The latest Index stands at 143 - an increase of nearly 40 points over the previous year - with five Member States showing particularly strong growth: Finland, Spain, Italy, Sweden and Austria. The two elements most influencing growth of the Index are foreign direct investment (FDI) and the value of published procurement; gas prices and intra-EU trade tend to have more negative impacts.

The citizens' survey encompassed 7500 people from all 15 Member States and a wide range of ages and socio-economic groups. The overall impression is that people see the Single Market as having a positive impact on their lives.

The reality of the Single Market for people was examined via a number of questions: asked if they would consider going to another Member State to buy a product or a service because it was cheaper or better there, 53% said they would - with respondents in Luxembourg (74%) and the UK (66%) most likely to. The main reasons cited for not doing so included travel costs and language problems. Asked about going to live in another Member State to study or to work, 67% said they had never considered the possibility. The survey revealed that just 6% of those questioned have actually moved to another EU country. The main barriers appear to be family life, language, lack of information and problems finding work.

People were also asked questions about their basic rights in the Single Market. Knowledge was limited, with an average score in all 15 Member States of 52%. The countries recording the highest scores were France and Luxembourg, where respondents answered 61% of questions correctly. Greece fared worst in the quiz, averaging just 41% of correct answers.

People's actual knowledge of the Single Market was compared with their own assessment of how much they know. Across the EU, 45% of people questioned felt they were 'well' or 'very well' informed about their rights. Austrians felt they knew most (61%) and people in the UK least (33%).

(In the same week that the Scoreboard was published, the Commission also gave details of two surveys on cross-border shopping. They show that in the previous year only 13% of EU consumers made a cross-border purchase and that businesses spend only 6.6% of advertising and marketing budgets to encourage cross-border sales - which currently account for 'only a small percentage of sales to final consumers.'

Commenting on the survey results, David Byrne, European Commissioner responsible for consumer affairs said: 'Cross-border shopping still appears to be stuck at a stubbornly low level. The regulatory obstacles we have identified do appear to be a major cause of the problem, although others need to be tackled too. Encouragingly, the potential for cross-border shopping to take-off does appear to be there, both on the part of business and consumers. There seems to be a real appetite among small and medium-sized enterprises, who are currently deterred by the maze of laws in operation.')

The business survey published in the November Scoreboard covered 5900 businesses in all 15 Member States. They ranged in size from small to large, included both exporters and non-exporters and spanned a range of sectors.

Results show that 46% of EU businesses believe the Single Market has had a positive effect on their business, while 11% feel it's had a negative effect. On this evidence the Commission suggests that 'the overall effect of the Internal Market has been to open up new opportunities for many thousands of businesses and probably also to raise standards.' However, with 42% of businesses saying the Single Market has had no impact, the Commission also recognises that much remains to be done to persuade companies of its benefits.

UK-based businesses are the least enthusiastic about the Single Market, with only 26% believing it's had a positive impact - in contrast to companies in Greece and Ireland, where 69% of those questioned see it as a positive development.

The bigger a business, the more it seems likely to benefit from the Single Market: 67% of the large companies surveyed saw it as having a positive impact on them, compared to 55% of medium-sized companies and 44% of smaller companies.

Not surprisingly, the most positive responses were elicited from exporters, with 76% of companies exporting to more than five EU countries seeing the Single Market as a good thing.

Businesses in Luxembourg, Denmark and Austria feel they are best informed about their rights in the Single Market, recording 69%, 62% and 61% respectively. Businesses in Germany (34%) and the UK (40%) feel much less well informed - and both are amongst those countries which feel least positive about the Single Market.

The survey shows that a majority of companies 'believe that improving the functioning of the Internal Market should be a key priority for the European Union in future. Companies believe that the priority should be to ensure that they can do business throughout the Internal Market on the basis of one set of rules, not 15.' The Commission is also keen to stress that businesses' concerns with competition and tax issues show that 'even ten years after Europe's internal borders were in principle dismantled, business people understand that much remains to be done in order to make the Internal Market function better and that Internal Market policy must therefore remain at the top of the political agenda.'

Further information within European Sources Online:

European Sources Online: Topic Guides:
	The Single Market

European Sources Online: Financial Times:
	31.07.02:	Single market 'failing business'
	11.11.02:	EU states falling behind with single-market laws

Further information can be seen in these external links:
(long-term access cannot be guaranteed)

EU Institutions

European Commission:
	DG Press and Communication
		Press Releases:
			11.11.02:	Internal Market: Scoreboard highlights slowdown in national implementation of EU law IP/02/1644
			15.11.02:	Unlocking the potential of cross-border shopping in the EU: Commission publishes survey results IP/02/1683
		Memos:
			11.11.02:	Internal Market has brought big gains in last ten years, but more needed, say citizens and companies MEMO/02/231

	DG Internal Market:
		Internal Market Scoreboard. Special edition November 2002.
		Update on the Internal Market
		Update on the Internal Market: Implementation, Internal Market Scoreboard and related documents

Eric Davies
KnowEurope Researcher
Compiled: Monday, 18 November 2002

A special edition of the Internal Market Scoreboard has been published by the European Commission to mark the 10th anniversary of the launch of the single market.