The Single European Market is the most advanced case of regional integration of the world. The SEM forms the nucleus of the European Union and has shown a very deep commitment from the different member states to harmonize and apply policies that drive economic, political and social integration. Although, there have been a lot of problems and disagreements that delayed its application, the SEM has managed to accommodate and unite 27 different countries into a single banner. There has to be said, that some of the members states come from very diverse historical, social and cultural backgrounds. This diversity has been one of the main reasons for the necessity of integration. The SEM through the Maastricht Treaty has been looking to reach the effective realization of the freedom of goods, services, capital and people for a population that surpasses the 500 million citizens. While achieving them has turned into a work-in-progress, the SEM has improved in terms of competition, price transparency and the elimination of tariff and non-tariff barriers. In this essay I will provide with some insight of the achievements the SEM has created in terms of trade, economic growth and competition while also discussing some of the obstacles still remaining.
The European Single Market is a reality and it has been since the Maastricht Treaty was signed in 1992. Although it has some shortcomings, there have been a lot of positive consequences from it, like FDI flows, elimination of the non-tariff and tariff barriers and the size of the market. Member states and companies operating in the region have posted growth throughout the years and some policies within the market have forced companies to increase their innovation and efficiency levels.(Potts, 2000) This is positive not only for the companies, but also from the consumers, because they can enjoy a bigger selection of choices, with a price transparency that 30 years ago was a dream. Also, when member states sign into the SEM, they enter some rules that eliminate protectionism and basically draws and defines the role of the government within the market. A government has the role to introduce legislation approved by the supranational power; it has to prevent the creation of a monopoly and it has to correctly direct spending to the social areas that need it.(Clawson, 1993) This clarification process shows that the SEM affects positively to the Eurozone.
The birth of the SEM occurred under unusual circumstances and this environment is responsible for much of the structure the EU has right now. The decade of the 80’s was marked by economic instability. The early 1980’s were comprised by a deep recession that created problems such as unemployment, stagnation of the GDP but also permeated a sense of fragmentation. (Ballew and Schnorbus, 1993) This period known as Eurosclerosis was drowning expectations from politicians, academics and even the common citizens. However, the SEA (Single European Act) paper that was ratified in 1987 provided the light at the end of the tunnel for the European Community. The fact that the European Council could now expedite voting procedures without the absolute majority, through the QMV (Quality Majority Voting), really helped speed the process. Moreover, the SEA agreement created the support in terms of legislation, incorporating more than 270 different proposals, reinforcing the main concept of liberalization. (Moravcsik, 1991) Liberalization was being used with two basic concepts, the employment of market economy and private property as a mean of production. Hence, almost all of the economic decisions were based on the laissez-faire effect of supply and demand; where prices and investment allocation were defined primarily through the markets. (Scheiber, 1981) This transformation had a deep effect on the perspective of