The single market can be improved to bring growth and opportunity if we act now
When the Single European Act was signed in 1986 as the first major revision of the 1957 Treaty of Rome, it triggered a success story that still continues today – particularly after 1992 when the single market became a reality.
Between 1992 and 2006, it is estimated that the single market generated 2.75 million jobs and 2.15 per cent of extra growth for the European economy. That is €518 extra for every person in the European Union in 2006 alone. Intra-European trade currently accounts for 17 per cent and 28 per cent of world trade in goods and services respectively. Phone calls in Europe cost a fraction of what they did 10 years ago, many airfares in Europe have fallen significantly and new routes have opened up. And households and businesses are now able to choose who supplies them with electricity and gas.
But after the worst financial crisis since the Great Depression in the 1930s, Europe needs to take the next step. The single market turned the EU into the largest economy in the world, and has been a valuable shield in helping to weather the economic and financial crisis. In order to compete with economic superpowers like China, the United States and a string of emerging markets, more needs to be done to realise the full potential of the single market. With 10 per cent of the population – or 23 million people – currently unemployed, action is needed to create growth, jobs and new opportunities.
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.
Following a wide-ranging public debate, the European Commission adopted on 13 April the Single Market Act, which is based on the opinions expressed by the European Parliament in its Resolutions on the Single Market, by the European Council, the European Economic and Social Committee and the Committee of the Regions, as well as in response to the public consultation.
The Single Market Act identifies 12 single market levers that can boost growth and enhance citizens' confidence. Within each of these levers, a key action is singled out that, if adopted rapidly 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 roles of active citizens, workers, consumers, students, businesspeople, etc.
The commission commits itself to delivering its proposals on the remaining key actions in the coming months in order to allow for adoption by the parliament and the council of the legislative proposals by the end of 2012, in time for the 20th anniversary of the single market.
These 12 tools for success will improve and modernise the single market and bring growth, new jobs and opportunities to European citizens and businesses. To make this happen we need to act together and we need to act now. The 12 key actions of the Single Market Act include, first, improving access to finance for the more than 20 million European small and medium-sized enterprises by introducing legislation to make it easier for venture capital funds established in one member state to invest freely in any other member state. Second, by facilitating the mobility of citizens by modernising legislation on the recognition of professional qualifications awarded in another member state.
Third, by supporting research and innovation by establishing a unitary patent protection and a unified patent litigation system. Fourth, by 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 per cent of EU gross domestic product, that is, €2.5bn.
Fifth, by 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 cent per year between 1998 and 2008, the services sector was growing by 2.8 per cent per year. Jobs in the services sector have increased by 2 per cent per year, compared to an average of 1 per cent for the economy as a whole.
Sixth, by 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 €19bn.
Also, by developing the digital single market by ensuring the pan-European operation of electronic identification and signatures; by facilitating social entrepreneurship by setting up a European framework for the development of ethical investment funds; and by improving energy taxation by ensuring a consistent tax treatment of different energy sources.
Further, by 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 one million people are posted to another member state in the framework of service provision.
Eleventh, by improving the regulatory business environment by simplifying accounting rules that can generate potential savings of €1.5bn per year for 1.1 million small companies and of €5.2bn per year for 5.9 million micro-enterprises. And twelfth by 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 12 key actions, the Single Market Act puts forward more than 60 additional policy actions, which the commission will propose in line with the aforementioned policy objectives.Michel Barnier is European Commissioner for Internal Market and Services. This article first appeared in PublicServiceEurope.com's sister publication Public Service Review: European Union