What is the European Union and the single market

The European Union binds together the 15 current member states, the aim of which is “an ever closer union among the peoples of Europe, in which decisions are taken as closely as possible to the citizen”. This ‘union’ was first established in the Treaty of Rome in 1957 and has been revised four times: in 1987 (the Single Act), in 1992 (the ‘Maastricht’ Treaty on European Union), in 1997 (Treaty of Amsterdam) and in Nice in 2000. In terms of internal and external trade, the Single Act is crucial.

The single European market was established in 1993 when the Single European Act 1987 came into force. This is based on the belief that the dismantling of trade barriers will further economic efficiency and prosperity in the participating states. It was the most important stage in the creation of a free trade area, without internal frontiers and which guaranteed the free movement of goods, persons, services and capital. It also maintains common external custom tariffs with other countries. The keenest supporters of the European Union view the single market as one more step towards the creation of a genuine economic, monetary and possibly political Union.

The push for a single market has come primarily from European business. Their ultimate goal is the creation of a single European market encompassing about 400 million people, larger than North America and Japan, thus giving European corporations an edge in global competition. During the 1970s and 1980s, it was evident that Japanese and U.S.-based multinationals were increasing their dominance because of their larger, domestic markets; they could afford to invest more in electronics, biotechnology, new fibres etc (ie, the new growth industries of the day). In 1983, the European Roundtable of Industrialists (ERT) – consisting of 45 ‘captains of industry’ from large European transnational corporations – was created with the purpose of reviving European integration and shaping it to the preferences of European transnational corporations.

The European Union and trade policy

The European Commission is responsible for administering all areas of the Union’s policy – it is the executive power of the EU. It is divided into 24 Directorates General (DG) of which DGI is responsible for external relations. The EU has competence for trade policy – ie the European Commission has the mandate to negotiate trade agreements on behalf of the 15 EU member states. The most important feature is the way the EU acts as a single block.

The European Commission conducts trade negotiations in many ways:

* Bilaterally, e.g. in the Transatlantic Economic Partnership

* Regionally, e.g. EFTA and the Mediterranean Free Trade Zone (MFTZ)

* Multilaterally, eg in international fora, such as the WTO and the United Nations Conference on Trade and Development and with ACP countries through the Lome Convention (now amended in the light of WTO rules and known as the Cotonou agreement).

The EU has common custom tariffs vis a vis third countries and the EC Treaty of Rome prohibits quantitative restrictions on imports and exports. The Commission acts to check member states’ adherence to these articles to eliminate obstacles to trade.

The European Union, the single market and the environment

A report by the Task Force on the Internal Market and the Environment concluded that without a complementary environmental policy framework, the internal market would produce additional environmental pressures, particularly in the area of transport. The growth in road traffic, passenger as well as freight, could undermine the EU’s clean air policy (it is estimated that freight transport alone will increase by some 70% by the year 2010). The Trans European Network (TEN) is a mega project that proposes expanding the transport infrastructure in Europe, concentrating on road building, airport expansion and high-speed trains. The influence of such business bodies as the ERT was sufficient to get the TEN’s masterplan incorporated into the Maastricht Treaty. See FOEI briefing, Seattle Series – The World Trade System: Winners and Losers for further information of the environmental and social impacts of the single market.

A recent communication from the Commission on the Internal Market and the Environment shows clearly that environmental protection is subordinate to the internal market. Despite the fact that the Amsterdam Treaty reinforced the principle of integration of environmental concerns, the communication gives no answer as to how this might be achieved. The Cardiff European Council meeting endorsed a strategy for the integration of environmental objectives into all community policies and actions. The strategy was further developed in the Vienna European Council.

However, concrete examples show how various initiatives aimed at reducing resource consumption and protecting the environment have become a casualty of free trade and the single market. Denmark introduced a scheme to promote the reuse and recycling of drink bottles; it was challenged by the European Commission on the grounds that it was “…a barrier to trade within the EU’s single market and discriminates against non-Danish drinks makers”. The scheme subsequently had to be amended.

Many of the European Commission’s policies also have environmental and social impacts. The Common Agricultural Policy is not only environmentally damaging and undermining rural communities throughout the EU, it is has severe impacts on issues relating to food security, particularly in developing countries. Overseas development projects have caused the loss of tropical rainforests and displaced traditional populations, for example in Cameroon (when checking the Rainforest Action Network website, look under Campaigns, Cameroon). Structural funds – which are allocated to less developed regions of the EU – have caused environmental damage, for example the building of a visitor centre in the Burren National Park in Ireland.

Key corporate players

The ERT is probably the most influential of the corporate lobby groups within the EU. Just two years after it was established, in 1985, ERT chairman Wisse Dekker launched a proposal for the Internal Market. The European Commission readily supported the idea. The Commission was seeking further European integration, and this provided the necessary momentum. Commission President Jacques Delors gave a speech shortly afterwards in which he proposed the idea to the European Parliament. Lord Cockfield, Commissioner of Industry, then published his White Paper, which became the basis of the 1987 Single European Act. The ERT had great success due to its privileged access to decision-makers, both at the national and at the European level.

The ERT has most recently pushed for further deregulation, arguing that the single market is not complete. Their main demands are the liberalization of the telecommunications, transport and energy markets, and the harmonization of national taxation systems. These are now all official EU policy. Neither the ERT nor the European Commission seem concerned about the environmental and social impacts of the continued movement towards more free trade within Europe.

The ERT has also been a very influential player in multilateral fora, such as the WTO. It has pushed for investment liberalization for a long time. Its main objective has been to get investment into the WTO. To this end, the ERT has established a working group on foreign economic relations. At its head is Peter Sutherland, former GATT Director General and now chairman of BP Amoco. The ERT indicated its willingness to work with the Commission and sent a delegation to Seattle to assist the Commission in the preparation of investment in the WTO.

Apart from ERT other powerful business interest groups include the Union of Industrial and Employers Confederation of Europe (UNICE), the European Centre for Infrastructure studies, the Competitive Advisory Group, the International Chamber of Commerce, the Transatlantic Business Dialogue and EuropaBio.

Conclusion

The European single market has had severe environmental and social impacts, particularly given the increase in transport and the movement of goods between the 15 member states. ‘Free trade’ within the market is undermining environment initiatives. And the policies of the European Commission are having impacts not only within the Union but at a global level as well.

Environmental and social issues and the promotion of sustainable development should be more fully integrated into EU policy; and these issues should take priority over trade rules.