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The EU had 30 years to create a single market, and failed – we need change

14 January 2014

1:14 PM

14 January 2014

1:14 PM

It is perhaps the most striking failure of the EU that nearly 30 years since Margaret Thatcher signed the Single European Act with the vision of a single trading market by 1992, that in 2014 we do not yet have a genuine single market in the services sector. This profound failure has cost the EU billions in economic growth and disproportionately affects the UK, which has a huge service industry base.

The EU official website, with a delicious piece of understatement, comments:

‘Despite its achievements so far, the single market is not yet complete. Important gaps remain in some areas. Pieces of legislation are missing. And administrative obstacles and lacking enforcement leave the full potential of the Single Market unexploited.’

The cost of this failure is stark.

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Services account for 71 per cent of EU GDP, but only 3.2 per cent of this is from intra-EU trade. The Department for Business, Innovation & Skills has estimated that the completion of the single market in services could increase EU GDP by 14 per cent over ten years. No small prize when forecast economic growth of the Eurozone is so bleak, languishing around 1.2 per cent . Yet little has been done by the Commission or the member states to resolve this glaring failure.

The Commission’s solution was of course a Directive. In an attempt to provide impetus to internal EU service business, the Services Directive was introduced and in fairness, if it was actually fully implemented by member states, it could provide a one-off 2.3 per cent boost to EU GDP. Further Introducing an effective ‘Country of Origin’ principle, which was removed when that Directive was negotiated, could provide an additional one-off boost of over 2 percent. This would tell people whose laws applied when they bought services, and states what barriers they could – or couldn’t – keep in place.

You may have thought that this would be have been seized upon given the precarious state of the eurozone economy. Well, unsurprisingly, think again.

Non-tariff and technical barriers remain significant obstacles, and the EU should be working to boost intra-European trade. In short the protectionist instincts of nation states kick in and ‘invisible barriers’ make doing business complicated. But if agreement cannot be reached at the level of the member states, the UK should be freed to lead a group of interested member states to pursue services liberalisation through enhanced co-operation. Those that can should be free to do so.

This week I shall be joining colleagues at the EU Fresh Start group who are exploring what appetite there is in the EU for genuine reform. I remain very sceptical that other EU states want to reform but it would be unreasonable not to make the case and test their sincerity. The EU failure to deliver a genuine single market in services should be the catalyst for that change and now is the time to see if they are hungry enough to do just that. The failure to do so would just re-affirm my view that we would be ‘better off out’.

Nick de Bois is the Member of Parliament for Enfield North


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Show comments
  • pallavi

    i think EU has the potential to be ‘unite and prosper’, as christianity is the common element.

  • ArchiePonsonby

    Nick du Bois. Unlike certain tub-thumping, “anti-EU” Conservatives, here is a non-grandstanding Parliamentarian for whom I have the highest regard and who stood in admirably for David Mellor on the Ken ‘n’ Dave Show on LBC a couple of weeks ago. His anti-EU credentials are immaculate and one of the few Tories I would recommend for UKIP. So there!

  • global city

    So, the Fresh Start Group wish to suck us further into the bloody EU? Just agree the minimum that a free trade agreement would provide and leave it at that.

    It does rather lend the lie though to all this balderdash about harmony and effective business advantage in the single market. The EU aren’t really interested in the single market… yet our Europhiles go on about it being the centrepiece of our membership.

    Let’s just leave the rotten thing and leave it to the Germans to impose their worldview of commerce.

  • TheBoilingFrog

    The EU is not a single market, and never has been. It is a political integration project and with that it is continuing as planned.

    The EU does not disguise this at all, it never has – for example the first lines of the Treaty of Rome 1957 made this perfectly clear. Thus is this article stupidity on the Spectator’s behalf or just plain dishonesty?

  • Bob Thomas

    More babble.

    The European Union is not a “free trade area” or “single market”, it is a political institution dedicated to “ever closer union” of the member states and the gradual (but inevitable) abnegation of sovereignty to an unelected and unaccountable supranational government. If you want that, say so. If you do not want it, there is no room for “renegotiation” of the kind described herein because it would require a treaty change. This would require the universal agreement of the other 27 member states, which will not be forthcoming, because there is no desire for
    a “new settlement” anywhere outside of Great Britain.

    The British “political class” and their sycophants and toadies in the legacy media lie ceaselessly, endlessly, shamelessly about this essential point. As that arch europhile Roy Jenkins accurately pointed out so many years ago, there are only two coherent positions vis a vis EU membership: in or out. Being “in” means being wholly committed to “ever closer union” of the member states and (eventually) the total abnegation of national sovereignty. Being “out” means independence, sovereignty and self-government for the peoples of Great Britain and Northern Ireland, with all of the attendant difficulties and opportunities implied therein. Those are our choices. One or the other, but not both.

    • Ricky Strong

      You are spot on, I watch EU parliament debates quite often and there is absolutely no hiding the desire among Barroso, Schultz et al to push for a fully federal state, a United States of Europe. And I suspect in the case of Barroso this is the realisation of his communist dream, a 21st century version though, slipped in through the back door.

      There will be no public debate for the UK on Europe, and if there is it will highly censored and edited.

  • Lady Magdalene

    “I remain very sceptical that other EU states want to reform but it would be unreasonable not to make the case and test their sincerity.”

    So give them a year and if they aren’t co-operating Cameron could invoke Article 50 of the Lisbon Treachery before the General election.

    Except he’s determined to keep us IN regardless of whether their is a substantial renegotiation or not.

  • Bob Thomas

    More babble.

    The European Union is not a “free trade area” or “single market”, it is a politicial institution dedicated to “ever closer union” between the member states and the gradual (but inevitable) abnegation of sovereignty to an unelected and unaccountable supranational government. If you want that, say so. If you do not want it, there is no room for “negotiation” of the kind described herein because it would require a treaty change, for which there is no appetite outside of Great Britain, and the universal agreement of the other 27 member states, which will not be forthcoming.

    The British “political class” and their sycophants and toadies continue to lie ceaslessly, endless and shamelessly about this essential point. As that arch europhile Roy Jenkins accurately pointed out so many years ago, there are only two coherent positions vis a vis EU membership: in or out. Being “in” means being wholly commited to “ever closer union” between the member states and (eventually) the total abnegation of national sovereignty. Being “out” means independence, sovereignty and self-government for the peoples of Great Britain and Northern Ireland, with all of the attendant difficulties and opportunities implied therein. Those are our choices. One or the other, but not both.

  • Ricky Strong

    It’s not just the failure of member states to implement specific directives that prove problematic, but the Treaty Articles themselves. Articles 34-36 TFEU which purport to facilitate the free movement of goods do nothing other than impose layer upon layer of rules and regulations; laissez-faire it is not. Moreover, the courts themselves struggle to interpret their own legislation, problematic when the markets need stability and certainty.

  • DWWolds

    I remember being in a meeting in Rensburg in Northern Germany some years ago when a leader of one of Germany’s industrial sectors said: “We are not free traders like the English. We believe in protecting our industries”.

    Fast forward to last month when Frau Merkel made a speech saying that, to make the euro “crisis proof”, there was a need for closer EU co-operation and for greater powers to be given to Brussels.

    In the same speech she also promised to fight the imposition of any green regulations that damaged the competitiveness of Germany’s industries [see Der Spiegel].

    Having your cake and eating it Frau Merkel?

    • global city

      No. She wants the EU to run to German notions of trade and commerce…. protectionism and no free trade.

  • Smithersjones2013

    Hague said on Sunday:

    He told the Murnaghan show on Sky News: “If national parliaments all
    around the European Union were regularly and unilaterally just able to
    chose which bits of EU law they would apply and which bits they wouldn’t
    well then the European single market wouldn’t work.

    Clearly De Bois’s view is “unrealistic” in his leadership’s eyes and now that Hague has let the cat out of the bag (that the Government and the leadership of the Tory Party are in agreement with the EU Commission) we should make the working assumption that the Tory Party are incapable of delivering any return of sovereignty.

    • HookesLaw

      And Hague’s words were correct. Picking which regulations to choose would not work. There would be no point. Such talk is mere code for being ‘out’ and as you know i regard being out as resulting in only a minor change of effective status.
      There is always argument to be had about the merits of the regulations. But there is no merit to having a regulation we want but with no one else abiding by it. This I would have thought would be particularly true of services.

      • global city

        Yeah, we’ve all been aware of that and have moved on to significant things.

        You are still trying to con us all that the Tories are a Eurosceptic party who would deliver an honest referendum.

        They would not.

    • global city

      Incapable is the wrong word to use there….opposed would have been better.

  • wycombewanderer

    You simply will never get a single market whilst France is a part of it.
    It really is that easy.

    • global city

      EU trade will never work while it contains the continentals (with just a couple of noble acceptations)

      That’s an irreconcilable fact that the Europhiles just do not care about.

  • Mynydd

    When Margaret Thatcher signed the Single European Act she should have ensured that written into it, a time table for creating a genuine single market including the services sector. This profound failure by her has cost the UK dearly. Mr Nick de Bois is a bit late coming to the party, and what has Mr Cameron been doing since he came to power in 2010? But there again Mrs Thatcher could do no wrong.

    • Andy

      And you think writing in a timetable would have made the slightest difference ? They take no notice of referendum results if it suits them so you can be sure a mere timetable would be set at nought.

      • HookesLaw

        The plain fact is Thatcher signed it.

        • Andy

          I never said she didn’t. But even of she had pt a timetable in, which was binding, I hardly think the Continental Europeans would have honoured it. They don’t honour things if you notice.

  • Q46

    Additionally, what are we to make of the current desire/attempts to prevent the free movement of labour (immigrants) no less important than free movement of services or the other freedoms necessary for a Single Market?

    Clearly the Single Marketeers are not serious.

    The whole project ever was a political not an economical one, and is a con to bring Europe under a central Government run by a select bunch of Continental ‘princes’, again, without the use of military force… yet.

  • Denis_Cooper

    “The Department for Business, Innovation & Skills has estimated that the completion of the single market in services could increase EU GDP by 14 per cent over ten years.”
    We’ve had these kinds of estimates of economic benefits before, and whether they actually materialise is another matter, and how much of any actual increase in GDP is down to more people being employed to ensure compliance with the regulations is another matter again – many firms say that for them the costs of the Single Market exceed its benefits – but at the long term natural growth rate of the UK economy our GDP would increase by something like 28% over ten years, and then increase again by something like 28% over the following ten years, and then increase again by something like 28% over the following ten years, and these would be recurrent increases not just a one-off boost of 14%, and they would not further undermine our national sovereignty and democracy by extending the scope of EU laws imposed on our country as the author wants.

  • Denis_Cooper

    I repeat:

    The benefits of the EU Single Market are in any case greatly over-hyped.

    It was originally projected that it might provide a one-off boost of about 5% to the collective GDP of the EU member states; as far as I’m aware that hasn’t been achieved, but even if it had been it would have been equivalent to just a couple of average years’ growth of the UK economy at its long term trend growth rate.

    So there was a choice: give up swathes of democratic self-government in an attempt to get a slightly higher GDP, or wait for a couple of years for GDP to increase to that slightly higher level through natural growth; and Thatcher made the wrong choice when she pushed for the abolition of national vetoes through the Single European Act, and moreover undermined the basis for the popular consent given to EEC membership through the 1975 referendum.

  • Tony_E

    Surely the largest failure of the EU is that 71% of GDP is service sector – and with the weight of manufacturing that happens in Germany that figure is probably higher for many of the less industrially productive countries.

    I rather suspect that regulation has reduced the ability of the smaller industrial entrants to break into many markets, so therefore prices are probably higher than they might be and competition reduced. Corporates, with deeper pockets from the what was historically state sponsored larger industry, lobby for tighter and tighter regulation which further cements their positions at the top of the pile.

    The EU needs desperately to be reduced in size and power.

  • Kitty MLB

    Someone called ‘Nick’ that I actually agree with- well your last few words anyway.
    The other EU states are utterly sick of the EU, it takes all their money, does not represent them, its greedy, incompetent and built on a lie, a political project
    that went wrong-
    A lot of them like Italy were told, everything will be fine, we will share the same currency, easier for travelling- they were not told what would happen, if too many countries joined, and what would happen if they ran out of money.
    I probably wrong- but was there ever a ‘ get out clause’?
    Perhaps it may of worked out if only a few countries joined, but that elephant grew too
    large, and now needs to be put to sleep. What the EU is today is not what
    we agreed to.
    There really is NO appetite for reform, just countries that feel they cannot escape. and fortunately there is a big wide world out there to do business with
    and we can escape.

  • tribalterror

    How strange that in the one area the UK is dominant (i.e. services) there is still no single market. Coincidence…perhaps not. Why don’t we restrict our payments in until this problem is sorted – or better still refuse to pay in any amounts for agricultural subsidies – that will soon bring the French to the negotiating table.

    • Holly

      Refuse…The EU…Don’t be daft.

      The bit that scares me the most is, ‘pieces of legislation are missing’.
      Going on the ‘pieces of legislation’, we are already saddled with, are bad enough, so the thought of any more coming towards us, just fills me with horror!
      Can France afford a table?
      Course they can, tax some sucker, or borrow the money, to buy one.

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