Powering Up the Single Market

Despite the atmosphere of crisis, triggered by the problems of mass migration and returning global economic uncertainty, EU policy makers must not take their eyes off the health of the single market. It continues to underpin EU economic growth, global competitiveness and social cohesion.

The single market is a work in progress and far from complete in a number of key sectors, most notably in services. It is a complex construction, once memorably described by former single market Commissioner Frits Bolkestein as “a Ferrari stuck in second gear”.

Ferrari cars have evolved significantly since that remark was made back in 2003. They have been extensively redesigned, the range has been expanded, and they incorporate the latest digital technology. They are more reliable, easier to drive, and owners are even using them more for everyday journeys. But can we say that the single market has received equal attention in terms of design and development? And are the market’s tools easily accessible, simple to use and fit for purpose?

The need to keep a political and policy focus on the single market was recognised during the last Commission. Mario Monti’s report, commissioned as a personal initiative by Jose Manuel Barrosso, set out a clear path to move the single market forward. Parliament and Commission promoted a new political initiative, the Single Market Act, backed by the European Council. Member States started to show signs of being less protectionist and more committed to single market goals. Significant reforms continued to be adopted, notably in public procurement and mutual recognition of qualifications.

But, despite this steady flow of actions, flaws that have been evident for many years still make the single market underperform. Overly complex legislation deters Europe’s enterprises, especially small firms, from exploiting its full potential. The rules often discourage the innovation that a dynamic economy needs.

The basics of a single market are still not in place. Far too many barriers remain, and the promise of “barrier free” access is seriously compromised by inconsistent implementation.

What should be done now? The Juncker Commission now has a better organisation to promote the single market. Commissioner Elżbieta Bieńkowska has responsibility for the key single market instruments, covering goods, services, public procurement and mutual recognition of qualifications. She is about to announce new market-boosting measures.

To have an impact, these must be bold, ambitious and realistic. Yet another worthy strategy paper is not what’s needed, nor is any fundamental new legislation. We need practical measures to make the existing rules work, and to discourage Member States from actively undermining their effect by arguing for special treatment. The underlying principle of a single market is that standards are recognised automatically unless a national authority can fully justify protective measures.

Only public policy, public health and public safety can be considered as sufficient grounds for overriding single market rules. Under current legislation for goods and services, public authorities are required to argue their case for closing markets to goods and services already available in other EU Member States. But the widespread flouting of these rules means that only the most determined market actors, generally with deep pockets, are prepared to force their way into markets through uncertain, lengthy and costly court challenges.

In a world where speed is important, especially in the digital age, uncertainty imposes a real cost. There should be strict time limits for Commission decisions to be taken or guidance to be issued. There should be a fast-track extra judicial arbitration procedure for dealing quickly with mutual recognition disputes, based on a fast examination of the facts. The existing, and much under used, SOLVIT network was established to help resolve these problems. It could become a “gateway” to an arbitration mechanism. Unless decisions are taken within clear time limits, the market actors can then go ahead, without suffering economic penalties at a later date. There should be a formal system of mutual evaluation by all member states of proposals to introduce national exceptions. This is not a radical idea, but already part of the services directive!

Other Commission initiatives can be very helpful to the Bieńkowska reforms. An ambitious single market agenda and the aims of Better Regulation are very strongly related. More effective and evidence-based legislation leads to better, clearer and more effective rules. Competition policy should be fully enforced to stop market partitioning, and attack artificial measures such as the arbitrary requirement for testing or certification by national bodies to verify already proven compliance. Capital markets and access to capital are crucial and a consistent legal framework facilitates private investment. The digital single market initiative would be fully integrated into this programme, as would progress on energy and transport markets.

The new single-minded single market team can sow the seeds of a different, more radical approach to creating the dynamic economy and high quality jobs that Europe desperately needs.

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