History of the EU
Some 100 Nanyang Junior College were treated to a talk by Ms Anne Pollet-Fort, an NUS Lecturer and EC official on The EU’s Single Market on 5 May 2010. Ms Pollet-Fort opened the talk with the history and background of the formation of the European Union and the Single Market. She noted that European integration in the immediate aftermath of WW2 was actually a political endeavour primarily aimed at ensuring lasting peace and prosperity in Europe. But to do this, as Schuman had pointed out, solidarity in the warring countries’ economies needed to be established first. The 6 founding members of union pooled their steel and coal resources to create a single European Steel and Economic Community (1952). They next tried to integrate their economies, including by creating a common market, in an enterprise known as European Economic Community (EEC) (1957). The EEC established 1) a customs union (a free trading area + a common external tariff (the same customs duty applies to all goods entering in the area regardless member country), 2) a common market with free movement of goods, people, services and capital and common policies and 3) the key institutions of the EU. More and more countries joined the Community through time. With increasing expansion, the Single European Act was adopted to create a Single Market by 1992.
Single Market Today
The main aim of EU’s Single Market (SM) is to unify separate national markets and integrate them into one whole market. Aside from the common tariff, the Single Market brought about non-discriminatory and free movement of goods, people, services and capital. Ms Pollet-Fort explained what each of these freedoms meant. She highlighted that for the SM to work, the EU countries had to harmonise their laws and regulatory frameworks. This does not mean all laws and regulations are affected, she said. The common rules targeted goods that affected safety, health and the environment. For other goods, the free movement of goods was facilitated through the principle of mutual recognition of goods: all member states (MS) must accept goods produced or marketed in other MS. The Maastricht Treaty (1992) formed the legal basis for the establishment of a single currency through Economic and Monetary Union.
Benefits to Citizens and Businesses
Ms Pollet-Fort highlighted the many benefits the Single Market has brought to European citizens and businesses. In the last 15 years, GDP in EU has increased by 2.15%. Over 15m EU citizens moved to other countries to work or retire as social benefits were transferable. 1.5m young people have studied in other member states other than their own. The SM drives healthy competition. EU citizens can compare prices across the whole SM. Consumers have a wider choice of products and services. Companies have the right to provide services without hindrance in any Member State. EU businesses became more competitive and innovative due to increased internal competition. In turn, increased competitiveness also makes Europe more attractive to investors. The SM boosted intra-EU trade. It liberalised nationally protected industries such as air travel and reduced red tape, particularly cross border ones, for businesses.
Challenges of Globalisation
The SM is not without challenges. Gaps remain in the liberalisation of the energy sector and financial services for example. The SM was visionalised in an era before globalisation. The SM needs to adapt to new realities, press forward its services sector, and refocus to help SMEs in order to compete. The SM needs to be seen by the EU not just as one big market or a trading power but part of the global economy.
So how can the EU level the trading ground with the rest of the world? A new strategy for EU trade policy was launched in 2006. The EU rationale is to open new markets and create more opportunities for trade, and ensure their companies can compete fairly. One way for these objectives to be achieved is to establish Free Trade Agreements, she noted, such as with Singapore where there is economic potential for EU businesses. The EU’s internal market growth has gifted the EU with a lead in setting benchmarks and standards and bringing about rule convergence.
EU as Inspiration for ASEAN
Comparing the EU and ASEAN, Ms Pollet-Fort said the SM’s success was possible due to the EU integration model at large. She explained that the EU established the SM through a vast legislative programme spanning a myriad of legally binding directives and regulations and was made possible through the existence of a rules-based system. The EU also unlike ASEAN does not require unanimity in many fields but qualified majority voting. If the EU cannot be a model- and Ms Pollet-Fort agreed ASEAN may well need its own model- it may service as a source of inspiration and learning of best practices. A leap forward in ASEAN or EU integration would ultimately depend on political will and leadership, and the support of their populace.
A lively Q&A session ensured. Among the queries, NYJC students wanted to know the benefits of ASEAN adopting a common currency like the euro, the criteria for candidate countries to enter the EU, and whether those outside the euro zone – with the current Greek crisis- will be better off. Ms Pollet-Fort explained that the euro offered protection to its members during the financial crisis. The challenge for the European Economic and Monetary Union, however, is to coordinate a centrally decided monetary policy with nationally decided fiscal policies. There is a need for more convergence of the economies of the members of the EMU. In her view, the Greek crisis may lead to a new system of economic governance in Europe with stricter criteria.