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Topic 7: The Single Market - Coggle Diagram

- - - - Potential disadvantages of free trade:
        
        EOS and economic efficiency can mean job losses, bringing economic and social consequences
        
        e.g. inefficient manufacturers become insolvent leading to social deprivation
        
        If no steps are taken to protect minimum standards, increased competition may result in deregulation of environmental/labour/consumer standards etc - another aspects of the 'level playing field'
        
        The regulatory 'race to the bottom'
        
        Population movements to where employment exists - immigration debates and rise of Far Right and 'populist' parties
    - - The arguments for forming a European Single Market:
        
        The economic argument is based on:
        
        General belief in free trade
        
        Need to work together as a regional bloc to be competitive ina. globalised world
        
        The EU represents its Member States on the global stage of international trade
        
        Its big attractive consumer market provides a strong bargaining position in international trade
        
        The political argument is based on:
        
        The internal reason: the specific European context: guaranteeing peace: from ECSC to EEC
        
        The external reason:
        
        A regional bloc stands stronger on the world scene:
        
        in terms of economic bargaining power in the trade negotiations
        
        But ALSO: capacity to protect own regulatory standards (environmental, social, consumer, health standards, human rights)
        
        (=) the external reason has become even more important as argument in favour of European integration
- - - - The 'building.blocks of the EU's Single Market:
        
        The Union shall comprise a customs union (Art 28 TFEU)
        
        Its legal framework is in place since the 1960s
        
        Covers all MS
        
        An Internal Market/Single Market (Art 26 TFEU) (Art 2 EEC 'common market')
        
        'The internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services, and capital is ensured in accordance with the provisions of the Treaties'
        
        This applies to all (27) Member States + European Economic Area (EEC) States
        
        The core of the Single Market: Four 'fundamental freedoms':
        
        Free movement of GOODS:
        
        Remove fiscal barriers: tariffs, discriminatory discrimination
        
        Remove non-fiscal barriers: quantitative restrictions, regulatory and technical barriers creating Measures having Equivalent Effect to Quantitative Restrictions (MEEQR)
        
        Free movement of PERSONS:
        
        Free movement of workers
        
        Free movement of EU citizens
        
        Free movement of SERVICES:
        
        e.g. freedom of establishment
        
        Recognition of qualifications
        
        Free movement of CAPITAL:
        
        Removing restrictions on capital movement between EU countries
        
        In addition to four freedoms of movement: European competition policy
        
        Private companies: avoiding monopolies and abuse of dominant positions
        
        Avoid States distorting the market via State aid
  - - - At the same time, the Single Market, like every political project, is always a work of progress
        
        Free movement of services, for instance, is not as much realised as free movement of goods
        
        There is a continuing political fluctuation between forces preferring more social market economy approaches, and other preferring less regulatory intervention
- - - - Hence, the Single Market is based on a combination of negative and positive integration/harmonisation
        
        Negative integration (harmonisation) (Decentralised approach):
        
        Non-discrimination, mutual recognition
        
        Positive integration (harmonisation) (centralised approach):
        
        Common European rules on product requirements
        
        In order to create a Level Playing Field: protect environment, health, social and worker protection
        
        Common European rules on process requirements? (the way products are produced) (don't confuse with selling agreements)
        
        More challenging for EU to adopt process requirements due to EU competence limitations, but does happen
        
        Common EU policies to ensure functioning of the market/strengthen its competitiveness e.g. competition policy or common European research policy
        
        Common EU policies to correct downsides of a common market: cohesion funds
        
        Both negative and positive integration depend of effective judicial enforcement (role of CJEU and supremacy)
        
        Yet; courts (also national courts) are key players to enforce negative integration
        
        EU legislative institutions are key to develop the common rules of positive integration
    - - 'Mutual recognition' of each others standards:
        
        Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein (Cassis de Dijon) [1979]
        
        In absence of harmonising legislation
        
        Product lawfully manufactured in one MS may be sold in any other Member State
        
        Receiving States accept the products, and regulations they were made under, as comparable with their own
        
        Requires trust in each others' systems
        
        Member States must accept the sale on their markets products which have been lawfully produced in another Member State
        
        However: Not an absolute rule
        
        States may still raise derogations under Art 36 TFEU/mandatory requirements under Cassis
        
        Limitations of negative integration/harmonisation:
        
        If the derogations are broad --> barriers will remain
        
        Member States often use national rules/derogations nto only to protect environmental or health standards but to protect own industry --> one depends on individual litigation to enforce EU rules
        
        Vice versa: if derogations are too narrow --> regulatory race to the bottom
        
        Therefore: need for legislation, i.e. positive integration/harmonisation
    - - cont:
        
        The Single European Act and the 1992 Single Market project changed the approach:
        
        Art 114 TFEU now based on qualified majority voting; later also increase of ordinary legislative procedure in other Treaty articles providing competence for harmonisation measures
        
        Understanding that there are alternatives to 'exhaustive harmonisation'
        
        minimum and optional harmonisation
        
        use of the 'new approach to technical harmonisation and standardisation
      - Generic legal base: Art 114 TFEU:
        
        (1) 'Save where otherwise provided in the Treaties, the following provisions shall apply for the achievement of the objectives set out in Art 26. The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market
        
        (3) 'The Commission, in its proposals envisaged in paragraph 1 concerning health, safety, environmental protection and consumer protection, will take as a base a high level protection, taking account in particular of any new development based on scientific facts. Within their respective powers, the European Parliament and the Council will also seek to achieve this objective'
        
        Specific legal bases:
        
        Example:
        
        Free movement of workers: Art 46 TFEU:
        
        "The EP and Council shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, issue directives of make regulations setting out the measures to bring about freedom of movement for workers as defined in Art 45..."
        
        Regulation 1612/68/EEC on free movement of workers
        
        Directive 2004/38 on citizens free movement rights
    - - The new approach to technical harmonisation and standardisation:
        
        The EU produces thousands of products. How can we ensure they comply with health and safety requirements?
        
        Do the European Commission, the EP and Council have the expertise to regulate all this?
        
        Even if they had the expertise, how could they adjust to innovations and new products that arrive on the market continuously?
        
        The EU Institutions cannot exhaustively regulate technical standards for goods in the Single Market
        
        The new approach is based on:
        
        A balance between a) negative and b) positive integration
        
        A reliance on 'standardisation' by private European Standardisation Organisations (ESO's) so that EU Directives only set out essential safety requirements, while ESOs define the technical details to comply with such safety requirements
        
        a) Negative integration in the new approach
        
        New approach based on the principle of mutual recognition (Cassis de Dijon principle)
        
        When there is no positive harmonisation, mutual recognition applies
        
        MS are required to accept products from other MS which have been alwfully produced and marketed in the original MS
        
        MS may impose national rules regulating standards which affect inter-state trade ONLY if
        
        i) they fall within the Art 36 TFEU derogations, OR
        
        ii) they fall within the Cassis mandatory requirements. Both are subjected to the principle of proportionality
        
        b) Positive integration in the new approach:
        
        EU level positive integration, via Directives, to focus on harmonising national rules that fall within Art 36/Cassis MRs,
        
        e.g. 30 directives on health & safety of toys, medical devices, etc
        
        The Directives only set out the essential safety requirements with which products brought on the market must comply in order to qualify for free movement within Single Market
        
        The Directives refer to the more detailed standards developed by Private European Standardisation
        
        e.g. what is the detailed requirement for a safe mobile phone?
        
        What the ESOs?
        
        European Committee for Standardisation (CEN)
        
        European Committee for Electrotechnical Standardisation (CENELEC)
        
        European Telecommunications Standards Institute (ETSI)
        
        These are private industry bodies; but
        
        EU requirements regarding transparency, stakeholder participation, and coordination between EU level and national standardisation bodies
        
        Standards are approved by EU Commission and published in OJ
        
        cont:
        
        The Directive ensures:
        
        If a product complies with the EU standard --> CE mark
        
        The standards are 'voluntary';
        
        A producer is not obliged to comply with it; and one can e.g. prefer to seek for approval of the good according to a national standard
        
        But in that case, its up to the producer to prove this lives up to the EU requirements in order go get access to the market
        
        Member States are normally expected to accept all goods produced according to the standard
        
        EU regulatory standards set via standardisation organisations are hugely important in
        
        Creating free movement of goods within EU
        
        Allowing access to Single Market for 3rd countries
        
        Cf, UK post-Brexit will find it difficult to escape these standards
        
        e.g. CE mark:
        
        What does it mean for companies in practice?
        
        You find the CE trademark on goods like smartphones, toys and laptops
        
        Indication that a product is compliant with EU legislative requirements
        
        Free movement across the EU
        
        Its the responsibility of the manufacturers to ensure that their products meet the legal requirements for the CE mark
        
        Whether manufactured within or outside the EU
        
        Products can be then sold to the whole of the EU
- - - - EU competence to defend its single market externally:
        
        What is the eU's competence to act on behalf of its Member States in external trade and to defend the Single Market?
        
        A Customs Union implies the capacity to set common external tariffs
        
        Similarlyl the Single Market comes with broader trade capacity of the EU institutions on behalf of the Member States
        
        The EU has exclusive competence for Common Commercial Policy (Art 207 TFEU)
        
        "The common commercial policy shall be based on uniform principles, particularly with regard to change in tariff rates, the conclusion of tariff ad trade agreements relating to trade in goods and services, and the commercial aspects of intellectual property, foreign direct investment, the achievement of uniformity in measures of liberalisation, export policy and measures to protect trade such as those to be taken in the event of dumping or subsidies"
      - The EU has thus exclusive competence to act in external trade policy in relation to trade in goods, services, commercial aspects of intellectual property and foreign direct investment
        
        It can do so by international agreements or internal actions
        
        The EU's competence to act externally goes even beyond that, under the principal of implied powers, namely for areas in which it has internal competence it is implied it has also external competence
        
        Art 216(1) TFEU: "The Union may conclude an agreement with one or more 3rd countries or international organisations where the Treaties so provide or where the conclusion of an agreement is necessary in order to achieve, within the framework of the Union's policies, one of the objectives referred to in Treaties, or is provided for in a legally binding Union Act or is likely to affect common rules or alter their scope."
        
        Hence, for all power the EU has to act in relation to the Single Market (internally) it has also external powers
        
        In contrast to Art 207 TFEU, the EU here has shared competence with the Member States
        
        Hence, the EU has extensive powers to protect the competitiveness and the regulatory standards of the Single Market on the global stage
        
        (The CJEU sometimes had to intervene to clarify whether Art 207 or 216 is the appropriate legal base)
        
        Thanks to the size of the Single Market, the EU can negotiate international agreements its individual states would not be able to achieve individually
        
        This helps to defend not only the European economy, but equally the protective standards, welfare standards, and norms the EU has adopted as founding values (Art 2 TEU)
- - - - Yet, when one argues that the SIngle Market has not realised its full potential, the question needs to be raised what is the objective:
        
        Removing barriers by further deregulation?
        
        Adopting new common policies?
        
        Strengthening the Single Market's competitiveness in the global economy
        
        The Single Market can never be really 'complete' as it develops over time and is built on different tensions and approaches
    - - Criticism 3:
        
        Those arguing against the Single Market because the EU prioritises removing barriers to trade while not adopting enough protective common regulation
        
        Both criticism 2 and 3 relate to 2 inherent tensions in market integration:
  - - - Laissez-faire free market vs social market economy:
        
        Laissez-faire capitalism
        
        = where the market operate with minimal counter-veiling social regulation
        
        Favours negative integration
        
        Some strongly in favour of laissez-faire capitalism might oppose EU integration;
        
        Because too much positive integration
        
        For reasons of sovereignty; or with excuse of sovereignty
      - Social Market Economy:
        
        = welfare capitalism, which sees other values respected - social protection, solidarity, environmental protection and consumer protection
        
        Favours positive integration;
        
        To avoid regulatory race to the bottom
        
        To protect EU protective standards in a globalised world
        
        Some in favour of a social market economy might still oppose EU integration
        
        Because they believe the EU is too much based on negative integration and this cannot be changed
        
        They believe even a small country can stand its ground in a global economy
        
        For reasons of sovereignty
      - Centralised decision-making vs national sovereignty
        
        Countries have different cultures; is it desirable to centralise decision-making?
        
        Decisions at a lower level of governance are supposed to be more democratic; critique on EU democracy
        
        However, remind:
        
        National democracies are not by definition doing better in terms od democracies
        
        Some issues (e.g. environment) needs supranational coordination
        
        In a globalised world, its difficult to escape free trade; regional integration in that context rather strengthens than weakens sovereignty
        
        Positive integration in particular has been criticised from a sovereignty perspective; 'there are too many EU rules'
        
        But: Also negative integration is in tension with sovereignty; Member States can no longer impose their own national rules and have to accept rules of other Member States
        
        A mix of negative and positive integration to address these tensions:
        
        To answer this double challenge (laissez-faire vs social market economy; centralised decision-making vs sovereignty) the EU uses a mix of negative and positive integration:
        
        You cannot build the Single Market just on the basis of either positive or negative integration:
        
        Only positive integrationL you cannot adopt all rules in detail at the centralised level (Member States disagree and you will fail to adopt those rules)
        
        Only negative integration; without positive integration you get a race to the bottom and considerable gaps between 'winners' and 'losers'
  - - - On the other hand, setting limits on overreach by the EU:
        
        Limits on power; conferral and subsidiarity
        
        Control on competences:
        
        Too extensive use of Art 114 TFEU?
        
        Case C-376/98 Germany v Parliament and Council [2000] (Tobacco Advertising Ban Directive)
        
        Minimum harmonisation, rather than maximum harmonisation
        
        e.g. EU Working Time Directive: max 48 hours/week on average
        
        A MS can say: max 35 hours/week; but not max 60 hours/week
        
        Since much of EU regulation is based on minimum harmonisation, claiming one has to leave the EU to provide better protection is largely a false argument
        
        Proportionality; e.g. use of Directives over Regulations
        
        Combining (positive) harmonisation with mutual recognition:
        
        The challenge is to find the right balance
    - - Hence: the single market = NOT apolitical or 'ideologically neutral'
        
        The underlying tension between negative and positive integration is always present
        
        Some find the EU too market oriented and 'neo-liberal'
        
        e.g. the French 'non' to the Constitutional Treaty as considerably based on arguments that the EU was not social enough, and had not enough social regulation --> wanted more positive integration
        
        Others think there is too much positive integration/EU regulation, and the EU is too interventionist
        
        e.g. key reason for Brexit
  - - - (a) The EU as a bureaucratic nightmare, making life difficult for business, is largely a myth:
        
        The EU does adopt many rules, but not more than what one would otherwise do at the national level
        
        Several studies in the UK of the EU legislative acquisition showed there is not much superfluous in the EU's regulatory framework
        
        Most EU rules are very technical and detailed;
        
        They relate to product regulation
        
        Producers are not particularly opposed to product regulation (shape, composition of goods, labelling etc)
        
        Priority is common rules
        
        Others relate to process regulation (how goods are produced; e..g while respecting environment and worker rights)
        
        Those opposing positive regulation are mainly opposing process regulation
        
        The debate on red tape is often framed in terms of ridiculing technical rules, while hiding that its about wanting to reduce the protective standards provided by process regulation
        
        If you don't have EU rules, you will have a multitude of national rules companies would need to comply with in international trade
        
        EU = reducing a lot of regulatory barriers
        
        Post Brexit is the perfect example; outside the Single Market, the regulatory burden for companies is much higher
      - (b) Stepping out of the EU/Single Market is not a panacea to regain regulatory sovereignty either:
        
        To get access to the SM from the outside: need to comply with product regulation
        
        So much of the eU's most 'technical regulation' is still to be complied with by UK companies
        
        But UK no longer a say in defining these rules
        
        EU process regulation:
        
        Level playing field in TCA, and potential sanction of tariffs
        
        By being out of the SM, no longer the same bargaining power in international trade
        
        Less scope to decide on one's own product and process rules
        
        Hence, the Brexit debate has taught us much about the nature of the Single Market:
        
        Those favouring laissez-faire capitalism often hide behind the argument of sovereignty
        
        By leaving the EU actually you create a lot of extra burdens on companies rather than reducing rules
        
        It is even questionable it returns sovereignty; since one needs access to the Single Market and trade in a globalised world
  - - - Challenges for the new Von der Leyen Commission (2024 - 2029)
        
        External challenge 1 (peace):
        
        The EEC/EU started as a peace project, but between European countries; what can if offer against external threats (as made clear by Russia/Ukraine conflict; NATO weakening, and even the US threatening to invade European territory (Greenland) (even if not part of the EU)
        
        External challenge 2 (trade):
        
        The post-war global trend towards free trade is turning, particularly following the 2nd Trump election. "Trade wars" as not been the eU's mode of operation
        
        External challenge 3: increased global hostility requires more autonomy:
        
        Strengthening energy independence of the Single Market
        
        Strengthening 'digital sovereignty'
        
        ---> more common policies yet at the same time these are opposed internally
        
        Increased opposition to the EU and rise of Far Right across Member States
        
        Often supported by foreign hostile powers