Single Market Essay

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A single market is a common market between member states where barriers have been removed to enable free movement of goods, services, capital, and labor. These barriers may take various forms including physical borders, product standards, national laws and regulations, fiscal taxes, and foreign discrimination. There are elements of a single market in various custom unions or free trade areas in Asia (Association of Southeast Asian Nations [ASEAN]), South America (Mercosur/Mercosul), and the Caribbean (Caribbean Community and Common Market [CARICOM]). However, the closest example of a single market is the European Union (EU).

The European Single Market

The European single market has its origins in the 1951 Treaty of Paris, which created the European Coal and Steel Community, and the 1957 Treaty of Rome, which abolished all internal barriers to the free movement of goods, services, capital, and labor. In 1958, the European Economic Community was formed with the vision of creating a common market among six member states over a 12-year transition period (Belgium, France, Germany, Italy, Luxembourg, and the Netherlands). The common market required common external tariffs among member states and the elimination of internal tariffs within those member states. In 1968 this objective was achieved. The Treaty of Rome also called for the elimination of nontariff barriers including the harmonization of product standards and indirect taxes, ban of public purchasing discrimination, ban of cartel practices that restricted competition, ban of state aid that created unfair competitive advantages, and regulation of state trading monopolies that discriminated against imports. Finally, the treaty banned discrimination based on nationality, established the Common Agricultural Policy, the Common Transport Policy, and the Common Commercial Policy for trade with nonmember states. Although the original Treaty of Rome did not envisage a monetary union for the common market, in 1972, at a summit meeting in Paris, the Community endorsed the creation of the Economic and Monetary Union to be achieved by 1980.

In the 1970s and 1980s, both trade and nontrade barriers still remained, hindering the progression of the common market. Concerned about Europe’s lack of international competitiveness during a period of increasingly globalized markets, the Community viewed further trade integration as the path to future economic prosperity and job creation. These concerns led to the discussion and culmination of the 1985 White Paper on the Single Market Programme (SMP). The SMP focused on completing the single market by removing the remaining physical, technical, and fiscal nontariff barriers by 1992. Also known as the Single European Act of 1986, this program was the most ambitious target the Community ever set for itself and one of its greatest achievements.

The provisions of the Single European Act increased the Community’s powers to make laws based on the qualified majority of the Council of Ministers. However, fiscal matters still remained outside the Community’s powers. This provided the Community with the power to harmonize national laws, thereby eliminating obstacles to the free movement of goods, services, capital, and labor. Vast legislation programs to expand the single market were adopted in the areas of the environment, research, and social policy. Specifically under the Treaty of Rome’s Economic and Social Cohesion, the Community was committed to improving regional disparities. In 1992 the Maastricht Treaty, which officially created the EU, included a provision that member states that fail to comply with the Court of Justice are subject to financial penalties thereby making the EU’s laws more binding.

In subsequent years, the EU focused on improving the integration of the single market, and in 2004 it embarked on enlargement. The single market welcomed 10 new member states from eastern Europe with an additional two eastern European states following in 2006, bringing the EU to a total of 27 member states (Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom). The accession of these states provided the single market with a larger pool of consumers and a wider range of opportunities leveraging member states’ comparative advantages. However, it also brought challenges with increased tensions among member states on migration flows, tax competition, and service markets.

The single market has made significant progress on the free movement of goods, services, capital, and labor since its inception in 1951. Border controls on goods and customs controls on people have been abolished within the EU. Many products benefit from the mutual recognition of national rules, which allows a product legally manufactured in one member state to be marketed in any other member state. Worker mobility has been improved based on mutually recognizing member states’ educational diplomas and certain professions. A partial alignment in national value-added tax rates has enabled tax barriers to be reduced and public contracts are open to bidders from any member state.


  1. Iain Begg, “Commentary: The Single Market,” National Institute Economic Review (April 1998);
  2. Commission of the European Communities, From Single Market to European Union (Commission of the European Communities, 1992);
  3. Commission of the European Communities, The Single Market and Tomorrow’s Europe: A Progress Report From the European Commission (Office for Official Publications of the European Communities, 1996);
  4. Jörg Decressin, Hamid Faruqee, and Wim Fonteyne, Integrating Europe’s Financial Markets (International Monetary Fund, 2007);
  5. European Commission, Directorate-General for Economic and Financial Affairs, Economic Evaluation of the Internal Mar
  6. ket (European Commission, 1997);
  7. European Commission, Directorate-General for Economic and Financial Affairs, Steps Towards a Deeper Economic Integration: The Internal Market in the 21st Century: A Contribution to the Single Market Review (European Commission, 2007);
  8. Forfás, Review of the European Single Market (Forfás, 2008);
  9. Georg Menz, Varieties of Capitalism and Europeanization: National Response Strategies to the Single European Market (Oxford University Press, 2008);
  10. Peter Sutherland, The EU Single Market Implications for Globalisation (National Europe Centre Australia, 2003);
  11. Zhang Xin-An, Nicholas Grigoriou, and Li Ly, “The Myth of China as a Single Market: The Influence of Personal Value Differences on Buying Decisions,” International Journal of Market Research (v.50/3, 2008).

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