Book project: Next Europe

20 years internal market: an uneasy birthday

Commissioner Barnier

The European Union’s single market exists 20 years – this means celebration. In the midst of the eurocrisis EU officials are pressing for recognizition of the successes of the internal market. Before the start of a special conference in The Hague on October 19, the journalists get a big dossier full of facts & figures on the internal market. Apparently the incredible effects of the disappearance of borders don’t speak for themselves.

The (outgoing) Dutch minister for Economic Affairs, Maxime Verhagen, used the platform of the conference to remember the audience (mainly entrepreneurs and CEOs) that the single market wasn’t all that obvious, when it started on January 1st, 1993. ‘In that time Europe was in danger. After the fall of the Berlin Wall many countries were struggling with issues like high interest rates, and there were calls for protectionism. There was a fear of what the future might actually bring. Many people were pessimistic and the internal market wasn’t an easy deliverable.’

Twenty years later, it’s crisis again. But the single market proved very efficient, says Verhagen. According to him, close to three million jobs were created through the opening of markets, in the first 15 years alone. Prices fell, of phone calls and international flights up to 40 percent. ‘We would earn a fifth less without the internal market’, states Verhagen.

But there is still a lot of work to be done to make the single market is a true success. Verhagen: ‘Take the digital market. Why can we order cd’s from the British, but not download them directly from the site? Regulation is in the way.’ He therefore calls for a further opening up of the borders between the EU member states, to bring back growth.

The Dutch government will do that without interference of the European Commission, on issues where ‘deals between member states’ are possible. ‘I believe a strong Europe starts at home. We cannot sit and wait for Brussels to take action.’ That is why minister Verhagen has launched the frontrunners initiative. The idea is simple: to remove obstacles for trade between member states. The Dutch government will use its diplomats in the EU member states to ‘use economic diplomacy and find out the barriers’. Also, Verhagen will ask the companies that are active in the Netherlands which obstacles they face. ‘For instance, we want to reduce the paperwork time of starting up activities abroad to 24 hours, instead of the 2-3 weeks it now takes.

Commissioner Michel Barnier fully agreed with ‘les remarques de Maxime.’ He is now travelling around the entire EU to celebrate the Single Market. But his speech, which was improvised for a large part, wasn’t all that rejoicing. ‘We do not have a lot to celebrate, because many countries suffer in this time of crisis,’ he said. ‘People have a sense of nostalgia to the past.’

Though the internal market is a success that is experienced in the daily life of half a billion people, it is by no means completed. For instance, innovative companies have not been protected sufficiently. The digitalisation of the public sector is lagging behind: La simplification du service publique, reduit la buraucratie et les paperasses’. Electronic transfers across borders are not safe enough (something that Commissioner Kroes is working on). Six million people in the EU do not have a bank account because they don’t want to open one as they move to another EU country. Barnier used these examples to highlight the importance of the current ‘Single Market Act II’ proposals that aims to further open up and strengthen the internal market. You can read these twelve proposals on the special website for 20 years Single Market.

The Commissioner for the Internal Market and Services was very critical on the role of the banks. ‘They have behaved irresponsibly. Certain rules have been declared obsolete, such as transparancy, morale, ethics and responsibility.’ Many ‘systematic errors have been made’ and therefore the European Commission has been working for years to bring back law and order in the financial sector. Barnier waved with an colorful Excel sheet, showing 29 proposals that have been made to renovate and balance the financial system. ‘Every aspect of that system has to be covered by law,’ he warned, in the so called ‘single rule book. And of course there should be just one supervisor.

Looking at the role of Europe in the world, he almost seemed depressed. Barnier had just been to Brasil and has also visited other fast-growing countries. ‘We have to realise that the world is changing so fast. China is going to be the biggest economy, Russia is coming back. And the United States, well they’re still there.’ (Lot of laughter in the audience).

‘In these dynamics Europe has become a spectator of economic change. We can loose our top position in all economic scoreboards and can become a mere consumer of products from China, without retaining any (political) influence in the near future.’ The only reason why is Europe still respected in the world, Barnier concluded, ‘is the existence and the power of the internal market.

Joop Hazenberg / 19 October 2012 / The Hague