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Empowering European Business: The Single European Market (SEM) and Its Key Benefits

Explore the advantages and challenges of the Single European Market (SEM) for European businesses. Discover how SEM enhances economies of scale, promotes competition, reduces costs, and facilitates cross-border operations. Learn about the benefits to supply chains, production and distribution systems, and the barriers hindering seamless integration. Dive into the legislative framework supporting the SEM, including EU competition and regional policies. Uncover the impact of SEM on growth, FDI, and employment, and the gaps requiring attention for a successful relaunch. Lastly, examine the New Strategic Economic Agenda (SEA) focusing on digitalization, social entrepreneurship, taxation, and more.

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Empowering European Business: The Single European Market (SEM) and Its Key Benefits

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  1. The Single European Market

  2. The SEM and European business The SEM is seen as key to solving Europe’s problems through: • wider availability of economies of scale in the production process • the effects of more intense competition • direct cost reductions due to abolition of border formalities and national regulations • simplification of cross-border mobility and increase in labour force potential • lower financial transaction costs • lower barriers to entry

  3. The SEM and European business Benefits to the enterprise’s logistical chain are derived from: • suppliers: sourcing from new suppliers that offer lower prices and/or better quality inputs to the enterprise • production systems: developing new locations to enter new markets with lower entry costs • distribution systems: competition in services to the firm (in areas such as transport, warehousing and retailing systems) can further increase efficiencies

  4. Barriers to SEM • Physical Barriers: these include border stoppages, customs barriers and other time delaying and cost increasing measures involved in mobility between states • Technical Barriers: these include the absence of common standards across the EU which means developing different versions of the same product for each market; also included are public procurement practices, technical regulations and differing business laws and practices (such as a culture of state support) • Fiscal Barriers: these include differentials in the levels of VAT and excise duties among the states

  5. Core to SEM is legislative framework This has number of forms: • rules set out in the treaty • rulings of the European Court of Justice • secondary legislation mainly directives which have to be implemented into national law

  6. SEM supported by flanking policies • The EU’s competition policy to ensure a level playing field for the business community • A regional policy to counter any regional imbalances that result from the advent of the SEM • The social dimension to prevent any erosion of social rights that may arise from the development of the SEM (see Chapter 14)

  7. Impact of SEM • The effects have been mixed • Growth impact limited • FDI rose but fell back • Employment effects mixed Results skewed by Euro crisis

  8. Gaps in SEM • Extending de-regulation and harmonisation • Public procurement • Cross-border mobility • Increasing importance of services • Energy markets • Transport markets • Infrastructures

  9. Re-launching the SEM Driven by three challenges: • The erosion of political and social support for market integration • The uneven policy attention given to the development of various components of SEM • The sense of complacency that emerged based on a mistaken belief that the SEM was complete and could be retired as a political priority

  10. New SEA is based on 12 levers Digital Single Market Social entrepreneurship Taxation Social cohesion Business environment Public procurement • Access to finance for SMEs • Mobility for citizens • Intellectual Property Rights • Consumer empowerment • Services • Networks

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