The single market is a key driver of growth and jobs, but it needs timely and effective implementation of relevant legislation in order to function smoothly. As guardian of the EU Treaties, the European Commission monitors the application of EU law and investigates any infringements committed, so as to ensure that citizens and businesses can fully enjoy the benefits of the Union's basic principles, such as the free movement of goods.
The single market has been one of the EU's greatest success stories. Besides being the largest economic area in the world, with a combined GDP of around a trillion euros, it is estimated that the single market has created over €800 billion in extra wealth and millions of new jobs since its launch in 1993. It has also resulted in better prices, bolstered foreign direct investment and led to greater trade between the Union's Member States.
This is because it is all about freedom of movement. In fact, EU treaties guarantee four basic economic freedoms: the free movement of people, goods, services and capital. The free movement of goods is a prominent one. For instance, intra-EU trade in goods rose from under 25% of the Union's GDP in 1991 to 38% in 2005. In addition, around 75% of intra-EU trade is in goods.
Despite all these clear successes, the single market for goods is a complex creature. It is made up of so-called harmonised and non-harmonised sectors. Harmonised products are those for which common European procedures, standards and rules have been established. As for non-harmonised products, no such common standards exist, but the principle of free movement enshrined in EU treaties acts as a 'safety net', thus preventing Member States from adopting and maintaining unjustified restrictions on intra-EU trade
The single market requires a level playing field, which is achieved through a number of mechanisms. Most of the major restrictions on the free movement of goods have now been removed. However, the stream of complaints from citizens and businesses to the European Commission reflects the fact that some trade barriers still remain. For instance, if individual Member States incorrectly transpose or apply relevant European legislation, the single market does not cover the entire EU, but remains smaller and fragmented. In turn, this causes detriment to the European economy as a whole.
SMEs in particular, equipped as they are with fewer means to overcome such obstacles, tend to suffer the most from them. This makes the identification and ending of infringements a crucial pillar in the effective functioning of the single market.
National courts are the first port of call, and it is their responsibility to ensure that the free movement of goods is not hindered unnecessarily. Towards that end, individuals who feel a violation has been committed can bring a case before a national court.
With the single market being a key driver of growth and jobs, it is essential for it to function smoothly. To this end, the European Commission has an important role to play as it is tasked with monitoring the application of EU law and dealing with any infringements. Either through its own monitoring efforts or through a complaint lodged by a concerned citizen or enterprise, the Commission examines whether or not an actual infringement has occurred.
While the single market generally works well, some trade barriers still exist. These may include import licences, inspections and controls, the need for a national representative in the importing Member State, national price controls and reimbursements, national bans on specific products, advertising restrictions, etc. Online shopping, which increases the demand for the quick and easy transfer of goods from one Member State to another, is highlighting trade restrictions in certain areas that were not apparent in the past.
If the European Commission deems that a violation has occurred, it starts by making direct contact with the Member State in question, the objective being to reach a rapid resolution. However, if the Member State does not resolve the infringement in a timely fashion, the Commission may then begin formal infringement proceedings and refer the case to the European Court of Justice. Positive solutions allow citizens and businesses to enjoy fully the opportunities the single market offers them. In addition, the EU has also developed tools to tackle the misapplication of single market legislation without legal proceedings, such as the online network Solvit (see related boxes).
The transposition and implementation of single market legislation are regularly monitored through the Internal Market Scoreboard. The latest data, published in September 2010, show some positive trends, such as a 2.1% decrease in the overall number of infringement proceedings relating to the Internal Market. In order to raise awareness of the importance of the free movement of goods, the European Commission has also published a guide [458 KB] on the matter.
The European Commission handles two distinct classes of infringement proceedings: those for harmonised products based on the specific legislation and standards in place, and those for non-harmonised products based on EU treaty guarantees. Below are some examples for non-harmonised products.
Prescribing the right medicine In 2008, Belgian authorities issued a circular to all hospitals informing them that they were not allowed to import magistral formulas which are medicinal products prepared in a pharmacy in accordance with a medical prescription for an individual patient. The European Commission considered that this total ban on imports of magistral formulas was an unjustifiable barrier to trade between Member States and asked Belgium to remove it. Belgian authorities repealed the circular in May 2010.
Towing a new line In the UK, only lorries, vans and other larger vehicles (over 3.5 tonnes) could legally tow caravans which were over 2.3m wide. This situation created significant restrictions on the importation of German, Dutch, Slovenian and French-built caravans into the UK. The European Commission decided to pursue infringement proceedings against the UK. Following contacts, the UK authorities amended national rules on the maximum width for certain trailers.
Court cases are costly and time-consuming, especially for SMEs, and can engender ill will. Arbitration can play a crucial role in avoiding legal confrontations and resolving disputes amicably. The EU-backed network Solvit plays such an arbitration role by mediating, without recourse to legal action, in cases where single market rules have been misapplied by public authorities As a sign of Solvit's success, the number of cases Solvit handles is rising constantly, and passed the 1 000 mark in 2008. Its resolution rate is an impressive 83%.
'Regulatory approach for the free circulation of goods' unit,
Directorate-General for Enterprise and Industry