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What is the meaning?
How/why did it happen when it did?
Describe the main initiatives of SEA
Discuss the modalities of implementation
(instruments of implementation)
Analyze in some detail problem areas,etc
Related topics: cohesion, structural funds
Institutional aspects (QMV, the Court)
Informal effects: business firms
Major source for lecture
– Loukas Tsoukalis, The New European Economy Revisited

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Non-tariff barriers (NTBs)
Concrete Measures (initially “300”)
Timelines for Implementation
New decision-making approach:
– Qualified majority voting in Council of Ministers
(QMV)
Related areas put on the agenda
– Health and safety at work
– Environmental policy
– Cohesion

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Economic conditions 1973-1984
– Worst (longest, deepest) postwar recession, related to 2 oil crises (1973,
1978-9)
– Unemployment plus inflation
– EEC performance worse than other major industrial areas (Japan, USA,
EFTA countries)

– Signs:
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Stagnation of intra-EEC trade
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Decline in world share of manufactures exports
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Falling behind in strong-demand sectors especially:
– Electrical and electronic equipment
– Office machinery
– Information technology (computers etc)

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Economic Policies 1973-1984
– Multiplication of protectionist barriers to trade through variety of “legal” means (NTBs)
– “National champions” as the favored approach to New Sector Initiatives (R&D, high technology, etc.)
– Divergent economies, especially in dealing with inflation
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Monetary policy (interest rates and currency values)
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Budget Policy (deficits)

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New Models/ New Thinking of 1980s
– Supply-side economics
– Deregulation
– In a nutshell: Thatcher and Reagan
Dramatic Failure of the Old Model
– Socialist/Keynesian Macroeconomic Expansion
1981-83
– In a nutshell: “The First” Mitterrand
– “The Second” Mitterrand (1983 on) as a turning point for EEC

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Constructive Initiatives of Business
– Cross-border collaboration in R&D (vs.
“national champions” approach)
– Concern about fragmentation of European markets (pro-forward movement of EEC)
– Round Table of European Industrialists
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Led and first chaired by head of Volvo (from a then non-EC country)
– EEC crucial role in the process:
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Etienne Davignon, Commissioner for Industrial Affaris since 1979 (DG 3), organizes sectoral “round tables”
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Results: ESPRIT, RACE, BRITE, EUREKA

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Within the EEC: The problem
– Eurosclerosis: many ideas and proposals (especially Commission proposals) and little action
– Two huge barriers to forward movement
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Community Agricultural Expenditures: need to reform CAP
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Budget
– Inadequate “own resources”
– Excessive net contribution of Britain and Germany

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Within the EEC: Hope for Solution
– Temporary but significant resolution of the two barriers (1984 Fontainebleau Summit of
European Council)
– Margaret Thatcher changes her tune
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Appointment of Lord Cockfield as Commissioner for
Internal Market affairs (1985)
– Jacques Delors as new president of the
Commission (Jan 1985 term begins)
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Tour of the 12 capitals: the 4 options
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Focus on Internal Market as single objective

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Process:
– Jacques Delors’ Speech to European Parliament
(January 1985)
– White Paper “ Completing the Internal Market ” presented by Commission to European Council in Milan (June 1985)
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Central role of Lord Cockfield in preparation of White
Paper
– Decision of Milan Council to convene
Intergovernmental Conference (IGC) on Treaty
Revisions
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Majority decision accepted by the opposition (Britain,
Denmark, Greece)

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Process (cont’d)
– SEA signed (February 1986)
– SEA into effect (July 1987) following referenda in Denmark and Ireland
Provisions
– Removal of NTBs in 3 areas by 1993
– QMV for many measures
– Cooperation procedure with Parliament
– Court of First Instance established
– Recognition of domains needing special attention: health and safety, environment, cohesion

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Unparalled unity of views and optimism about Europe
Dynamic economy, investment-led, leading to the impression of strong positive effects of Single Market
Special enthusiasm of business
– Pro-active role of “peak organizations”
– Lobby offices in Brussels
– Multinationals see opportunity
– Context of mergers and acquisitions (1988-90) with cross-border perspectives

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The Commission takes an ambitious and assertive role
– Delors II (1989 re-appointed president; second time since Walter Hallstein)
Key governments/key summits create framework for bold new steps
– Hannover summit (1988): Germany takes the lead to move forward
– Kohl-Mitterrand come together on political union and monetary union

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Two New IGCs (“Big Ones”) in 1990
– IGC on Monetary Union (EMU)
– IGC on Political Union (Institutional Reform and Other Areas than Economics)
Conclusion: SEA leads to integration initiatives on a broad front
– Single Currency
– Institutional Reform
– European Union

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The “three areas” (official, specified in SEA)
– Physical barriers
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Remaining frontier controls based on “rules of origin”
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Frontier adjustments due to CAP border taxes (MCAs, or monetary compensatory amounts)
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Transport restrictions due to national licensing and quotas for non-national carriers

– Technical barriers (the “other” category)
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Technical standards as indicator of product quality
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Health and environmental standards
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Discriminatory public purchasing: “national champions,” public procurement
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State subsidies
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Company law
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Different regulatory frameworks for
“services”: insurance, financial services
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Restrictions on capital movements

– Technical barriers (cont’d)
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Obstacles to free movement of labor
– Social security legislation and transferability of social benefits
– Professional qualifications (eg, architects, lawyers, doctors, accountants)
– University degrees
– Fiscal barriers
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Different tax systems, taxable base, tax rates
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Key issue of indirect taxes (value added tax)

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The “heart of the problem”
– European postwar tradition of “mixed economies” (lots of government intervention)
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Centrality of regulatory frameworks
– The resort to NTBs as hidden form of protection in crisis periods
– The inherently complex world of technical standards, especially in high technology sectors
– Citizen concerns for quality living standards: consumer protection, environmental standards

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Solutions
– Strong reliance on “mutual recognition”
– Harmonization as a “last resort” or for the most intractable matters
– General rule of decision-making (several exceptions and “safeguards”)
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QMV for physical and technical barriers
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Unanimity for fiscal barriers

– The special matter of technical regulations and standards (about 80% of all barriers, according to one estimate)
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The “new approach” adopted by Council just prior to White Paper on Internal Market
(June 1985)
– Harmonization limited to safety matters
– Standards developed by private standards organizations on the European-wide level:
“European technical standards”
– Highly specific to products and sectors rather than general directives

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Results:
– By 1995, more than 5,000 European standards produced by private organizations such as CEN and CENELEC, as well as ETSI (European
Telecommunications Standards Institute)
– Membership of these standarization organizations consists of national standardization bodies of EU and EFTA countries
– Development of “a European doctrine in terms of product safety and the adoption of common
European standards” (Tsoukalis, p. 111)
– Long process

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The crucial importance of “mutual recognition”
– An action of the Court of Justice in the
Cassis de Dijon case of 1979
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Principle: Whatever meets the technical standards and regulations of a member state must be accepted as doing so in any other state
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Exceptions: Health and safety, restriction
“proportionate to objective”

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Some problems and delays
– Allowable “derogations”
– Reliance on directives for implementation
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“implementation deficit” due to delays and
“complexities” of translating directives into national legislation
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Public procurement, insurance, intellectual and industrial property, pharmaceuticals, veterinary and plant-health controls as the biggest “delayed” sectors

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Internal Market
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DGs
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Bulletin
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White Papers
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Green Papers