Navigation path

Ireland and the Single Market
Print

Internal Market

Since our ratification of the 1987 Single European Act and its implementation on the 1st January 1993 the European Union is transforming itself into a “frontier free single-market”. This process of reform and establishing common standards is still continuing, but the majority of the work is complete. This type of single market is unlike any other world wide and provides Irish business with many unique opportunities.

Four Freedoms

The principle of the single market is supported by four freedoms that each member state must provide to its citizens and to those of other member states. These are:

1. Free Movement of People

Citizens of member states can move freely across most borders. It is now much easier to visit other countries for a holiday, to work or to study.

2. Free Movement of Goods

Delivery times of goods and a cost of transporting goods throughout the Union have decreased. This is mainly due to a reduction in paperwork and of other bureaucratic restrictions. Also, technical standards have been harmonised. Products which are now legally sold in one country can also be sold in any other member state.

Prices are now kept to a competitive level as domestic producers must now compete with competitors in other member states. This increased level of competition, further enhanced by the creation of a single currency, will keep prices lower for the consumer.

3. Free Movement of Services

While the market for services is not as open as the market for goods, greater efforts are being made to improve the availability of services throughout the Union . Already, signs of progress are recognisable as insurance, property, transport and tourism are being marketed in by companies in more than one country and market.

4. Free Movement of Capital

As a consequence of the single market, the prohibitions on the flow of capital are being reduced. This will further invigorate the creation of business throughout the enlarged Europe , as free-flowing capital provides the resources for business to flourish. One major step was the establishment of a single European currency. Now all future enlarging countries must commit themselves to joining the Eurozone soon after membership.

Ireland and the Single Market

The European Single Market Programme

The introduction of the Single European Act (SEA) in 1987 gave a major boost to the Irish economy at a time when any help was appreciated, no matter where it came from. Its economy was, by 1987, on the brink of economic disaster. Ireland 's only hope was to enhance its international attraction as a low cost manufacturing base, thereby inviting foreign investment and boosting local employment. Any efforts by the EU to create a viable single market by eradicating bureaucratic obstacles (Non-Tariff Barriers) and state aid, financial assistance from a national government to a domestic industry or company, would place Ireland as a identifiable base for large manufacturers exporting to the European Union.

This initiative by Jacques Delors, the President of the Commission at the time, was regarded as the most important factor in the recovery and rehabilitation of the Irish economy. The further promise of deeper integration attracted the attention of higher levels of foreign investment from such countries as Japan and United States of America.

In turn, the SEA also forced a change in Irish business strategy. It was easier for Irish exporters to expand abroad. New common technological standards and the guarantee of protection by strengthened EU legislation provided for a more reliable single market. One other benefit was the forced increase in productivity and efficiency of both domestic Irish firms exporters. The challenge of competing with European industry also refined corporate Ireland ‘commercial prowess'.

With opportunities also came challenges. For years the Irish economy was completely reliant upon its closest neighbour, the United Kingdom. The creation of a more integrated market meant a new trading scenario, where our dependence upon Britain would irreparably change. This exposure to outside competition would have an immediate impact on certain Irish industries. How could this economic change and social transformation be managed?

A Changing Irish Economy

In every member states certain industrial sectors were dominated by state owned industries.

From 1993, explicit state aids were outlawed. This also added the incentive for greater private sector investment, hence creating more jobs. In Ireland 's case, state aid to companies such as Irish Steel, Aer Lingus and Telecom Eireann was outlawed. Although initially politically sensitive, this form of deregulation proved incredibly beneficial for the Irish consumers. New competitors were created overnight, thereby reducing prices for consumers. Indigenous Irish companies such as Ryanair and Esat Telecom could not have been as successful without the creation of more integrated single market.

The introduction of free movement of capital has proved a major boost for the Irish financial services market. Together with the Irish Financial Services Centre (IFSC), international financial institutions have established themselves in Ireland , creating thousands of jobs in the process. Irish citizens can also invest in a broader range of equities, bonds and differing investment funds both inside and outside Europe. This greater choice has forced companies to deliver greater returns to their shareholders thereby ensuring a very competitive market.

In summary, all the Single European Act has disproportionately benefited the smaller nations of the Union . By the creation of common standards and total protection under EU legislation, all countries can now compete on a ‘level playing pitch'. These factors eliminate the greater political and economic might of the larger EU member states, thereby ensuring fairer competition. This advantage has and continues to be positively exploited by Ireland.

 




Last update: 21/08/2012  |Top