The single market is the EU’s real core business

By Mikael Janson, Director of the North Sweden European Office

EC photo

The existence of the European Union is at stake. Everyone involved in European affairs can feel this existential anxiety. It is also the backbone of the ‘White Paper on the Future of Europe’, released in March by the European Commission: We need to ‘reinvent’ the EU.

The EU offers a unique platform for cooperation, built on nations voluntarily giving it supranational power to bring Member States together in a common regulatory framework. Without this ‘forced voluntary cooperation’ Europe would undoubtedly go back in time, heading towards unrest and potential conflict.

The Brexit debate on both sides of the Channel has clearly shown that the EU is still a cooperation between sovereign nations, who are open to apply for membership or indeed leave, but also that Europe is still its own worst enemy, with neo-nationalism once again growing.

The basic goal of the EU is to bind countries together to avoid future wars. However, in the long run, to safeguard this role, it will also be necessary to foster common prosperity and economic growth, to avoid internal tensions. That is what could be called the leverage side of the EU project, which also makes Europe a relevant and competitive global actor. No European economy is big enough on the world scale, not even that of Germany’, but a common market can deliver the critical mass required.

It is in this context that the common or European internal market should be seen. It ties countries together with the need to create economic prosperity that in turn also delivers wealth to citizens. The possibility of maintaining interventionist welfare states is also very much part of the European market economy model.

Therefore, the internal market of today is not only a customs union, or some sort of extended trade deal mechanism, it is a common market, with common regulations decided in a common open regulatory framework.

Within this common structure, the European Commission is the guardian of the free movement of goods, services, capital and people, as these four freedoms are the basis for the full functioning of the internal market. As such, the internal or single market is very much the core of the EU project.

In the Commission’s White Paper on the Future of Europe, the second scenario of ‘nothing but a single market’ is presented. It is put forward on one hand as some sort of ‘EU light’ and on the other is the scenario of ‘doing much more together’.

By presenting the scenario in this way the European Commission aligns itself with the Brexit perspective of being able to have full participation in a single market of goods and services on the one hand, whilst getting rid of all EU regulations and payments to the EU on the other.

Of course, the idea of a single market can be something other than what we see today and this needs to be discussed as a part of the overall debate on the future of the EU. However, to some extent the White Paper is just an illusionary trap when the scenario is read fully, as it delivers a concentrated story of the full dissolution of the EU, rather than some simple single market EU.

It is a future where the EU is some sort of trade agreement member platform for emerging different internal and bi-lateral markets, that will certainly result in a total collapse.

In the end, the single market wouldn’t really be a single market. Case closed.

The “EU light” scenario would surely instead be to get rid of the single market altogether. Most regulations that affect individuals and businesses in daily life could then more or less be removed, paving the way for a possible so called ‘multi-speed Europe’ of different integration ambitions between the States.

In contradiction to this, the internal market approach is the driver for more integration and even actions in other areas such as migration, customs and external border controls, national security, national and regional development, climate actions, global competitiveness, foreign affairs and more. If you are to trade on a common market you need common rules and regulations in and around that market.

Without such rules, the risk is that it will be a race to the bottom between the countries concerning social and worker rights, taxation, income levels, security and climate, environment protection and more. It will also be impossible to know what you as a customer buy, as there are no common standards and quality marking, or even safety guarantees concerning the products.

The single market approach requires a social pillar, and even more the EU Cohesion policy, to safeguard the possibility for everyone to take part in a socially responsible way, strategically balancing this with the ambition and need for global competitiveness for the whole of Europe.

A two-speed Europe at macro-economic level, made up of those within the Eurozone and those outside, offers to some extent the opportunity to have opt-ins and outs concerning people’s movements. But it soon becomes complicated if different countries at different levels integrate in an EU with one market, without putting up borders and customs.

Furthermore, this would make it impossible for the EU to have one common trade policy, as that is built on trade partners having access to the EU as one common body for the external trade relations and the full internal market.

Therefore, the single market is not, and cannot be, “EU light”. The question is rather what new structures at EU level a true internal market approach needs in order to increase EU growth potential, as the internal market is not today functioning as well as it could or should.

This is, of course, my personal view. Europe’s remote regions, with few people living in vast areas, are also very much export dependent. They need the internal market and Europe’s ability to be globally competitive, in order to foster their own regional development. But that is another story.

The important point here is that the discussion on the future of Europe should provide a realistic viewpoint on what the single market really is. It should deliver what the EU aims to do. This to avoid simplified beliefs about what a possible “EU light” is and is not.