What Is the Single Market?
The European Single Market is an entity created by a trade agreement among participating nations, including all of the European Union (EU) members and four non-EU countries that are members of the European Free Trade Association (EFTA).
The Single Market instituted a unified trading territory that functions without the border regulations and tariffs that typically apply to trade between countries. The Single Market allows the unrestricted movement of goods, services, capital, and people throughout the territory (also called a bloc).
The European Single Market aims to boost economic growth, enhance goods and services quality, and lower prices. Participants in the Single Market must relinquish some control over trade regulations and immigration. The European Commission oversees compliance and policy implementation within the Single Market. Brexit required the UK to negotiate a separate trade agreement with the Single Market.
Originally known as the Common Market, the Single Market has its foundations in the former European Economic Community (EEC), established by the Treaty of Rome in 1957. The first significant change to the original treaty was made in 1986 with the Single European Act (SEA). In 1992, the European Union was formed, encompassing the former EEC.
Key Objectives of the European Single Market
The primary goals of the Single Market include stimulating economic growth across the region, improving the quality and availability of goods and services, and reducing prices. Several benefits were identified, including:
A broader domestic market with greater resources.Greater specialization within individual regions.A powerful presence in global trade.Increased economic integration among members.
The Single Market is also tasked with setting and enforcing measures that ensure high safety, quality standards, and environmental protection.
Challenges Faced by the European Single Market
Being a part of the Single Market requires that a nation give up some of its ability to regulate its own exports and imports. The Single Market bureaucracy takes over some of those powers.
For instance, an individual country has no right to refuse to sell products deemed acceptable in other countries in the bloc.
There have been instances in which a country has challenged EU law in an effort to ban the sale of a product it deems harmful. For example, France won permission to ban the sale of Red Bull drinks on the grounds that one of its ingredients was harmful to health. The ban remained in place for 12 years until it was overruled because there was no proof of this health risk.
A country is also unable to limit the immigration of nationals from other countries in the bloc. For instance, a desire to regain control of immigration was one key issue in Great Britain’s exit from the European Union, which was finalized in early 2020.
How the European Single Market is Governed
The Single Market is governed by the European Commission, which is responsible for monitoring the application of EU laws and acting on non-compliance under the Single Market Act. The Commission also collects data to evaluate policy implementation and assess areas in which policy development is required.
Economic reports are also presented based on analysis conducted by the Commission. These reports investigate the results of the application of regulations in various sectors and provide a basis for future direction. Reports also pinpoint areas in which progress has been made and those that have encountered obstacles.
The European Single Market allows member countries to trade without restrictions. The theory is that it boosts trade between members, but it is still a controversial concept.
The goal of the single market is to allow EU citizens to cross borders uninhibited and go about their lives, similar to how U.S. citizens are free to live and work anywhere they want in the country.
There is a single market in America, but the one the EU created is much less regulated across boundaries than the U.S. version.
The Bottom Line
The European Single Market is an agreement between jurisdictions allowing for the free movement of goods, services, capital, and people. The single market in the EU is intended to let citizens of the union pass through borders uninhibited and allow more trade between members and adjacent countries. Participating countries have to give up some individual regulatory control over trade in return for the potential for greater economic growth.