House of Commons - The Scrutiny of European Business

Select Committee on European Legislation Seventh Report

THE SINGLE MARKET

15. We consider that the following raises questions of political importance, but make no recommendation for its further consideration:--

Department of Trade and Industry

(17675) 11668/96 COM(96)520	Commission Communication on the impact and effectiveness of the Single Market.
Legal base:	--

Background

The Commission's conclusions

15.2 The following extract from the Commission's own summary sets out the principal conclusion of this survey.

"In terms of economic impact the news is encouraging. It is still too early for many Single Market measures to have taken full effect but there are clear signs of significant change in the European economy. We now have evidence of the following positive, albeit preliminary effects of the Single Market in triggering the expected reinforcement of integration, competition, economic performance and benefits for consumers:

-- growing competition between companies in both manufacturing and services;

-- an accelerated pace of industrial restructuring, with the resultant benefits in terms of greater competitiveness;

-- a wider range of products and services available to public sector, industrial and domestic consumers at lower prices, particularly in newly liberalised service sectors such as transport, financial services, telecommunications and broadcasting;

-- faster and cheaper cross-frontier deliveries resulting from the absence of border controls on goods;

-- greater mobility between Member States for both workers and those not economically active (including students and retired people).

-- between 300,000 and 900,000 more jobs than would have existed in the absence of the Single Market;

-- an extra increase in EU income of 1.1 - 1.5% over the period 1987-93;

-- inflation rates which are 1.0 - 1.5% lower than they would be in the absence of the SMP.

-- economic convergence and cohesion between different EU regions.

"These benefits have been gained without any reduction in safety standards for consumers or workers. In many areas standards of protection for the citizen have in fact increased. Citizens of the Union also enjoy more personal freedom and have more choice than ever before. The Commission's survey confirms that Community legislation in the Single Market area has, taken as a whole, created the basic conditions for free movement and economic efficiency."

15.3 The Commission compares this situation favourably to that of the mid-1980s when, it says:

-- all goods were stopped and subject to checks at frontiers;

-- most products had to comply with different laws in each Member State;

-- services such as transport, telecommunications, banking and broadcasting were not subject to competition; and

-- citizens who were not employed could be subject to restrictions on residence and risk losing social security rights in another Member State.

15.4 The Commission says that while it is up to economic operators to make the most of the Single Market, public authorities at national and Community level must create the right conditions to permit the full benefits to be exploited. It points to such factors as lack of diligence by Member States in applying Community legislation or delays in applying and enforcing Community rules as negative factors. It also calls for action to be taken to reduce excessive legislation which inhibits competition and competitiveness.

15.5 The Communication also identifies particular areas (abolition of border controls on persons, taxation and company law) where further work is required and others (competition, consumer policy, information and the environment) which may need to be developed further for the effective use and development of the Single Market. The Commission suggests that the introduction of a single currency will also make the Single Market more effective.

The Government's view

15.6 In an Explanatory Memorandum dated 9 December, the Minister for Trade, Department of Trade and Industry (Mr Nelson) tells us:

"The Government welcomes the Review overall and will seek detailed discussion of its recommendations on enforcement (on the basis of the background documents which should be available by the end of January 1997, as well as the Communication). The Government also agrees with the support for continued progress on regulatory reform identified in the Communication.

"There are standard references in the Communication with which the Government has made it plain it does not agree, such as the passage on removal of frontier controls on people. However, the Government supports the overall emphasis on enforcement in the Communication."

Conclusion

This is a document of political importance because it is the first major attempt, based on a large number of academic and other studies, to assess the effect and impact of the Single Market. Without the examining the studies themselves, there is no reason to challenge the Commission's conclusions, and we do not think that we would be justified in recommending a debate. We are therefore clearing the document.

21.In its report, the Commission says:

A more detailed account of the Commission's findings can be obtained from the Office of Official Publications in the following documents:

--38 background studies and 1 business survey (to be published November 1996 - January 1997);

--A (100 page) Working Document of the Commission Services summarising the main findings of the studies (November 1996). Back

22.The Single Market Programme. Back



© Parliamentary copyright 1996	Prepared 19th December 1996