What Is the Single Market?
The European Single Market is an entity created by a trade agreement among participating nations, including all of the members of the European Union (EU) and four non-EU countries that are members of the European Free Trade Association (EFTA).
The Single Market created a unified trading territory that functions without the border regulations and tariffs which typically apply to trade between countries. The Single Market allows the unrestricted movement of goods and services as well as capital and people throughout the territory or bloc.
- The European Single Market was created by a trade agreement among participating countries, including all of the European Union nations and several non-EU members.
- The Single Market evolved into an economic powerhouse that could compete globally more effectively than its component nations could on their own.
- Great Britain's exit from the European Union forced it to negotiate a separate deal on trade with the Single Market.
The European Single Market, originally known as the Common 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.
Understanding the 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. A number of 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 also is tasked with setting and enforcing measures that ensure high safety and quality standards and environmental protection.
Downsides to the 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 does not have the 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 over-ruled 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. 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.
At the time of the announcement of Brexit, regaining control over immigration appeared to be a key issue for the United Kingdom (UK). It took until the end of 2020 for an agreement to be reached between Britain and the EU on their new trade relationship.
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 which have encountered obstacles.