EU must put single market ‘back on stage’, says Monti

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The EU's 20-year-old single market is at a critical juncture and needs to be fully completed to further boost Europe's crisis-battered European productivity and competitiveness, reveals a report presented yesterday (10 May) by former Italian Commissioner Mario Monti, who was tasked with coming up with a comprehensive new strategy.

On the basis of an extensive consultation process, Monti has drawn a map of new legislative proposals to improve the EU's single market that the Commission should present by July.

Presenting his report to European Commission President José Manuel Barroso before the European Parliament's internal market committee yesterday, Monti urged the EU to remove the remaining bottlenecks that are hampering innovation and dampening Europe's growth potential.

"There is now a window of opportunity to bring back the political focus of the single market," he argued.

Fighting economic nationalism

His report proposes a new strategy to safeguard the bloc's free trade area from the risk of economic nationalism and to extend it into new areas that are key to Europe's growth.

"Many policies traditionally not regarded as policies for the single market have to be integrated into a single market strategic objective," he stressed, outlining new initiatives to build a stronger market.

These include creating a digital single market, and harnessing the potential of the system that is already in place to support green growth and Europe's transition to a low-carbon, resource-efficient economy.

Much has been done since the launch of the single market in 1992, but Europeans have not fully exploited its potential in many areas, including free circulation of persons, goods and services. A lot of work remains to ensure effective geographical labour mobility, said Monti.

Members states' grand bargain

Monti, who was European commissioner for internal market policy in the Santer Commission (1995-99) and competition chief in the Prodi Commission (1999-2004), said the success of his "package deal" would depend on the political will of member states to improve the single market.

Countries with different cultural traditions, concerns and political preferences should each find elements of the plan appealing enough to justify making concessions relative to their past positions, Monti said.

A few months ago, the former commissioner called for a new "grand bargain" between countries with "social market" and "Anglo-Saxon" outlooks. The latter would agree to curb tax competition (by signing up for the harmonisation of tax bases and minimum rates of corporation tax) and make sure that governments have sufficient revenue to pay for social policies.

His report further develops such thinking and points to several challenges, including conciliation between economic freedoms in the single market and workers' rights following the Viking, Laval and other rulings in the European Court of Justice.

The chairman of the European Parliament's internal market committee, Malcolm Harbour, who is a strong voice in the Conservatives and Reformists' group, rebuked Monti's "strong endorsement of tax co-ordination and co-operation in the context of addressing 'social concerns' within the single market". He warned that such an initiative would lead to tax harmonisation and reduce competitiveness.

Liberal Romanian MEP Cristian Busoi argued that the critical problem facing European companies doing business in the global market place is that Europe's high environmental and social standards are not always shared.

"There is an urgent case for exporting such standards to our trade and cooperation partners if we wish to remain competitive as well as innovative in the years ahead," Busoi said.

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UK Conservative MEP Malcolm Harbour, chairman of the European Parliament's internal market committee, said governments' attentions have understandably been on bail-outs and financial markets but they must also look at the single market as a catalyst for economic growth.

"In too many national capitals there has been a sense of inertia about the development of the single market. We need national governments to drive it forward again and this report will help jump-start the process."

Internal market expert and French MEP Robert Rochefort, single market spokesperson for the European Parliament's liberal ALDE group, noted that the report - which states that the single market is today less popular than ever due to 'integration fatigue' and 'market fatigue' - may be slightly exaggerated.

"But indeed, the European institutions have to make a fresh effort in order to draw up legislative proposals on how to reignite the single market and increase the confidence of Europe's citizens," Rochefort said.

ALDE group leader Guy Verhofstadt (Belgium) said: "In these days the future cohesion of the European Union is at stake and the way ahead will strengthen this cohesion with an enormous financial commitment. But our cooperation and the billions of euros we are talking about have their base in the single market and its tremendous effects on the welfare of our citizens and companies. I am grateful that by proposing substantial improvements for the single market, Mario Monti reignites the debate about its effectiveness and its future."

Last October, José Manuel Barroso, president of the European Commission, tasked Mario Monti, a former European commissioner, to prepare a report on the future of the single market.

Giving the mandate to Monti, Barroso said that the recent crisis has shown a strong temptation - particularly when times are hard - to roll back the single market and seek refuge in forms of economic nationalism, as European countries fall in integration and market fatigue.

The single market report needs to be seen in the context of the EU's new strategy for sustainable growth and jobs, dubbed Europe 2020 (EURACTIV 24/02/10). That strategy, presented in February, puts innovation and green growth at the heart of its blueprint for competitiveness, but will have to include tighter monitoring if it is to succeed where the Lisbon Agenda failed.

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