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Internal Market

Internal Market. The Core of the EU. History: The First Steps. Free trade area: Treaties of Rome (1957) Customs Union (1967) “Eurosclerosis” of early 1980s Lack of global competitiveness Lack of progress towards higher level of integration

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Internal Market

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  1. Internal Market The Core of the EU

  2. History: The First Steps • Free trade area: Treaties of Rome (1957) • Customs Union (1967) • “Eurosclerosis” of early 1980s • Lack of global competitiveness • Lack of progress towards higher level of integration • 1985 - The Commission’s White Paper “Completing the Internal Market” – contained the legislative blueprint for completing the single market by end 1992 • 1987 Single European Act • Mutual recognition • 1992 target date • 1991 Maastricht Treaty adopted the Delors Report, established a timetable for implementation, and called for adoption of single currency

  3. The Single European Act • The SEA established a legislative programme of some 300 directives designed to remove barriers, which were classified under three headings: • Physical Barriers, associated with frontier inspections; • Technical Barriers, causing legal and regulatory obstacles; • Fiscal Barriers, differences in indirect taxes and excise duties.

  4. The Single European Act: Next Steps • After adjustments, the SEM programme was comprised of 282 directives designed to create: • A New Community Standards Policy • A Common Market for Services • Conditions for Industrial Co-operation • A Single Public Procurement Market • Plant and Animal Health Controls

  5. Philosophy of the Project • Jacques Delors (President of the European Commission) called it: ‘one of the main engines of the EU’ but also said: ‘you can’t fall in love with the single market.’ • Building one internal market - to launch Europe as an economic superpower • Elimination of obstacles to trade, companies would start to enjoy new economies of scale • More cross-border competition would wipe out inefficient firms

  6. The expected benefits of economic integration • Cecchini report (1988). Cost saving effects: • ‘Static trade effect’: benefits from allowing public authorities to buy from the cheapest suppliers • ‘Competition effect’: Downward pressure on prices as a result of greater competition • ‘Restructuring effect’: Reorganisation of industrial sectors and individual companies as a result of greater competition

  7. The expected benefits of economic integration (II) • Combination of cost saving effects results in two kinds of benefits: • Direct benefits: from the eradication of economic borders • Indirect benefits: from economic restructuring, increases in trade and competition and greater economies of scale • Result: • The emergence of virtuous cycles of innovation and competition • Lowering of prices for consumers • Greater job creation

  8. The principles of functioning of the Internal Market • The four freedoms: removing barriers and obstacles, assuring market access • Free movement of goods • Customs union • Duties and charges • Quantitative restrictions and measures with equivalent effect • Free movement of persons • The beneficiaries of free movement: workers; family members; students, retired persons and other persons • The evolution of the “free movement of persons”: from the Single European Act to the Treaty of Amsterdam • Free movement of services and freedom of establishment • Free movement of capital • Short description from the Treaty of Rome to the Treaty of Maastricht • Justifying restrictions and obstacles • Justified discriminations and exceptions to the 4 freedoms • The public policy, security and health derogations • The public service exceptions

  9. The instruments of the Common/Internal Market • From the Treaty of Rome to the mid-80s: • A limited harmonisation (Art. 100 EC Treaty) • the role of the ECJ and the principle of “mutual recognition”(“Cassis de Dijon”) • The “new approach” to harmonisation • Removing obstacles since the Single European Act

  10. The latest developments: Ten years of Internal Market: Achievements • Economic benefits • EU GDP in 2002 is 1.8 percentage points or €164.5 billion higher • About 2.5 million jobs have been created in the EU since 1992 • Benefits for citizens/consumers • A wider choice of high quality goods and services • Cheaper prices for goods • Lower telecommunications tariffs • Benefits for business • The absence of border bureaucracy has cut delivery times and reduced costs • The mutual recognition principle

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