Single Market in the European Union

Introduction:

The Treaty established the European Economic Community in 1957 which opened the doors to eliminating the tax barriers within the community and put common custom tariff to be implemented on goods imported from non member states of the EEC. This goal has been achieved in July 1968. Despite this, custom obligations are only one portion of the protectionist barriers on trading through borders. In 1970, other trading barriers obstructed the complete achievement of common markets. Restrictions on technical, safety and environmental standards and national regulations concerning rights of performing specific professions and exchange free movement of people, goods and assets.

In June 1985, a white paper was published to remove all physical, technical and tax barriers within the seven years that have been preventing free movement within the community. The goal of this paper was to motivate commercial and industrial expansion in the wide and cohesive economical areas on the scale and with the American market.

Single European Act (SEA) was the tool for Single Market, which was implemented in July 1987, the included provisions:

Expand the community powers in some of the political fields (social policy, environment and research).

Establish Single Market gradually during the period till the end of 1992 through wide legislative programmes includes depending on hundreds of regulations.

Benefit more from most of the voting of the Ministry Council.

There were still some non-tariff barriers exciting even after the achievement of Single Market, which are:

Physical barriers

Border power and transport allowance on goods within the European Union were terminated side by side with the customs control on people. There are still some random investigations by the police that take place when necessary. Schengen Agreement which was signed by the first group from the EU in 1985 and later extended on others despite that the UK, Bulgaria, Romania, Ireland and Cyprus do not participate; connection between police and common security and migration policy make it possible to cancel restriction on people in the internal borders in the EU.

2. Technical barriers

For most of the products, EU depended on the mutual recognition in national rules. Any product being produced legally and is sold in one state should be allowed in other member states and be found in further markets. It was likely to release services sector through mutual recognition or coordinate national rules concerning practicing some professions such as law, insurance and banking. Despite that, free movement of people is still out of completion. Obstacles that are still observing people from moving from one state to another within the EU or make particular work there. Some procedures were taken to improve the capability of worker mobility and more specifically to guarantee educational certificates and job qualifications that are being obtained in one EU country recognized by the other countries.

3. Tax barriers

Tax barriers have been decreased through partial harmonization from the national VAT rate. Taxation imposition on the investment income based on an agreement between member states and other countries as well as Switzerland that become were implementation in July 2005.

4. Public contracts

Despite the fact that these contracts have been given by countrywide, district or local authorities, community agreements are opened for offerers in any of the EU countries due to the instructions that covers services and obligations that works in several sectors including water and telecommunications (Fontaine, 2006)

Mutual recognition Benefit to Single Market:

Mutual recognition played an essential role in the establishment of Single Market where the concept of mutual recognition embraces goods and services free movement devoid of harmonizing the national regulations of member states. Goods that are being manufacture legally in one of the member states should not be prevented from being traded in other member state countries even if it was produced based on technical quality different than the ones applied on their own products. The only exception is the public dominant interest such as health or environment protection that is being obliged under extreme conditions and the same applies on services. Generally, origin of member state rules overcome where this assures the concept of supplementary through avoiding setting detailed rules on the level of the EU and guarantee as much of the respect of the local, national and regional traditions which makes it possible to reserve the variety of goods and services. Therefore, it would be a powerful tool to achieve complete economy. (Europa 2007)

Mutual recognition is applied on all goods that do not have harmonized technical criteria, this means that in sectors that are not a subject of local community or willingly harmonization and all member states should accept goods that are being produced legally in other member states. Any procedures must be essential and comparative. Not to mention that mutual recognition is applied on about quarter of intra-EU industrialized trade. (Organization for Economic Co-operation and Development, 2007, p. 79).

Shortcomings of Single Market:

Single Market approach have succeeded in establishing Single Market for banking service provides, insurance and investment services in entire countries of the EU under one license and not all countries are integrated on the same scale. Sometimes, non integration is associated with cultural or historical predilections (i.e. differences between the U.S and Germany in choosing the appropriate channel for intermediation, market versus funding bank). In addition to that, market structure is not always ideal such as in clearing and agreement, where it leads to an increase of trading costs across borders. Legal tradition also differs between member states (bankrupt system) where member states sometimes restrict to active actors such as financial services concerning deciding on asset option for pension funds that also leads to market integration. Tax differences also play an essential role in creating obstacles to integration.

Obstacles regularity always explains the inexistence of integration. In some areas, EU legislations level is missing where it can exist in another area but is unclear and can leave space for a lot of freedom for member states to act in some of the implementations or it has been transferred wrongly to the committee and was too slow in its implementation. In other areas, legislations are too detailed and financial markets are rapidly developing, thus makes legislation go out of date. Generally, EU legislative procedures are slow where it takes usually three years to implement a legislative suggestion that are not suitable for quick transportation of financial markets.

Securities markets particularly have been challenging due to the incoherent development of the European capital market. These inherences opened the opportunity for EU member states to hold back free provisions of services, referring to unequal stability in market harmonization. When comparing the European banking system and the European Commission, there is some negligent in applying harmonization prerequisites and lack of experience in dealing with such issues. This was a real reflection that securities markets are still largely dominated by the state in many of the member states. (Lannoo and Levin, 2004, p. 9-10)

Conclusion:

Internal market of the EU is a Single Market that allows liberty in movement of goods and services as well as people and capital for the European citizens to freely live, study and perform their work. Since 1993, when the single market was established, it opened the window of more competition and created employment and distinct more reasonable prices for consumers and citizens to profit from large options of goods and services. The EU is operating towards more generalization of policies which are still averting people and industries from benefiting as much as they can from the Single Market. Additionally was the concept of mutual recognition that swooped in to benefit singe market through the recognition and acceptance of one member state goods by other member states even if these goods do not have harmonized technical criteria, if and only if these goods are produced legally.