CIAO DATE: 06/03

Integrating European Business

Abstract

The first speaker considered the questions, ‘What was expected from the internal market/ “1992” Programme?’ and ‘What is the single market?’ The single market is the cornerstone of the EU, enshrined in Article 3 of the Treaty on European Union. It had not yet been completed but the Commission had argued, nevertheless, that EU GDP is 1.8% higher than it would have been without the single European market (SEM).

Four freedoms are enshrined in the EU treaties: good, services, capital and labour. However, it appeared that none of these freedoms were fully extant in practice. In terms of free movement of people there had been some progress in respect of travellers with Schengen but there were still outstanding issues for people wishing to work abroad, for example, the unwillingness of some member states to recognise university degrees earned in other EU states and the lack of portability in pensions. Free movement of services was perceived to be a disaster. To take just one example, even a baker from Austria would require many different licences to work in Italy. Yet the EU could become a more competitive economy than the US if services were integrated, the speaker asserted. Free movement of capital appeared to exist until one considered the failure of the takeovers directive and the investment services directive. Free movement of goods has worked best but there are still gaps there as well. The SEM works well for companies in terms of cutting costs but there are still big price differences in the different member states; for example, Colgate toothpaste is twice as expensive in the UK as it is in Spain and Portugal. Such price differentials were not acceptable in an area with a common currency the speaker asserted. [Editor’s note: it was later queried by at least one participant whether price differences were really a major problem and others pointed to the role of the Euro in highlighting price differences].

The member states of the EU were not good at implementing legislation: for example there was bad implementation in France and Italy; Germany was bad at agreeing legislation. However, it was also pointed out that the Commission was a poor drafter of legislation. It was also poor at implementation because the Internal Market Commissioner has far fewer powers than the Competition Commissioner. This is, of course, the member states’ choice. The European Parliament (EP) can also be to blame. For example, it voted down the takeovers directive because the German MEPs voted against en bloc.

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