The EEC was initially an economic project, aimed at reducing the 'cost of non-Europe' – that is, of stimulating trade between and economic activity in member states by creating a larger free trade area. This simple idea aimed to see the costs of European business reduced by removing internal tariffs and standardising regulation – a process which has since been expanded to include the establishment of a common currency and monetary policy across most of the EU, and which aspires ultimately to achieve a common fiscal (taxation and spending) policy.
Internal tariff and quota barriers within the EU were abolished in 1968 – 18 months ahead of schedule – but it was not then until 1992 that the single market was deemed to have been completed.
In the absence of strong supranational and intergovernmental decision-making structures, it proved difficult to make progress on the more intangible barriers to free movement of goods, services, capital and labour, such as professional standards, regulations, persistent protectionist attitudes and of course divergent fiscal regimes. The oil crises of 1973 and 1980 reinforced protectionist attitudes where they survived.
The result was that during the 1970s and early 1980s, growth in the EU member states began to lag seriously behind that of international competitors. While efforts were being made to establish a single market, they were meeting with limited success.
As such, in 1985 a white paper was produced – adopted in the Single European Act (SEA) 1987 – identifying some 300 measures that would have to be addressed to complete the single market and setting December 31st 1992 as the deadline for completion. The new powers given to the EU's institutions by the SEA made this goal achievable.
The single market (or SEM) rests on four pillars.
1. Free movement of goods, persons, services and capital between member states
2. The approximation of relevant laws, regulations and administrative provisions between member states
3. EU-wide competition policy, administered by the commission
4. A system of common external tariffs (CET – also known as the common customs tariff)
While the SEM was ostensibly complete by the end of 1992, it remains a project in 'continuous creation': much SEM legislation remains to be implemented in member states; several important areas – particularly energy – remain unexposed to liberalisation; and several member states continue to exploit loopholes and discover new ways of protecting domestic industries.
Furthermore, many areas beyond the purely economic impinge upon the functioning of the SEM, such as internal borders, cross-border police and judicial co-operation, and differing systems of civil law. Most controversially, the question of tax harmonisation looms large as the empty chair at the SEM table.
