The Commission’s new strategy for the Single Market needs greater ambition to realise its full economic potential

The Single Market is an impressive European project – a free trade area of more than 500 million people offering businesses and consumers choice and opportunity. However, it remains a work in progress which is why the Commission last week published a new Single Market strategy “Upgrading the Single Market”.

The Commission is promising a deeper and fairer Single Market with help for Small to Medium-sized Enterprises as well as innovative startup companies. The collaborative economy, which has seen an explosion of national rules to regulate emerging services, will also be the subject of a new initiative.

However, reaching the level of integration needed for European businesses to achieve scale will require a deeper push into the dark corners of the Single Market. This will mean a concerted effort to further open the EU market for services and to remove the possibility for Member States to adapt EU law.

Any company that has tried to provide services across borders will attest to the continued difficulty of complying with differing national requirements and paperwork. The Commission wants to make this easier with a services passport, available initially to the construction sector and business services. This may help with access to information but won’t lead to a harmonization of requirements.

The real game changer in this respect would be to revisit the country of origin principle in the 2006 Services Directive; this was stripped out of the final legal text for fear of provoking a regulatory race to the bottom in Europe. However, nearly a decade later, with Europe exposed to even greater global competition, a rethink is required.

In relation to better law making, the Commission is promising stricter enforcement of EU law. For years Member States have been chipping away at the edges of the Single Market. However, tackling this is bigger than enhanced monitoring of Member State implementation. The EU needs to question whether the legal instruments it uses are fit for purpose. For example, should directives still be the preferred legal instrument for primary legislation in Europe? Directives invite local adaptation. While this flexibility is politically attractive, the cost is increased administrative burden. A true single market should be governed by directly applicable regulations rather than directives that inspire 28 national transposition measures.

These are not easy issues to address because they impinge directly on the ability of Member States to control national law; however, limiting this is inevitable if Europe is to enjoy the economic benefits of a truly Single Market.


Kieran O’Keeffe

Deputy Managing Partner, EU

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