The Single Market I 4/23/12 1:54 PM Types of Policy • Distributive policy • Redistributive policy • Regulatory policy o Pareto efficiency and the “public interest” o The distributive effect of regulation o Positive v. negative integration of Single Market What is a single market? • No boundaries/borders within market • No national discrimination • No unfair (and few fair) advantages • Common (similar) regulatory framework Physical barriers • Borders and customs • Movement of goods v. movement of people Technical barriers • Standards o Mutual recognition  Status Quo  Country with the weakest standards rule the EU  “strength of alcohol”- really only the Germans would be worried about this  Chocolate- What is chocolate?  Belgium • In order to be chocolate, need 4 ingredients o Cocoa, cocoa butter, milk, sugar o Most British chocolate does not meet this standard o Did not want this “watered down chocolate” in Belgium o Cannot allow fake chocolate in “our” market- rest of the EU thought they were crazy If countries cannot agree under any of he other approaches, Mutual Recognition will reign  Need to put together a QMV o Harmonization  Come up with a common set of standards  UCJ came up with the standard of countries recognizing other country’s standards o “New approach” v. “sectoral integration”  Sectoral  Higher sector of the economy and came up with detailed standards for the regulation  Take an entire sector and set up a list of rules and regulations  Leads to possible watering down of standards  Dangerous or important decided by this • Car bumpers o If a car gets in a crash, the car has crumple bumpers that will crumple if the car hits people- so it won’t kill the person hit  New  Instead of the EU coming up with the detailed rules, the EU will set a minimum standard which countries can surpass  Leave it up with the companies to figure out how to do it  Generally toys get looked at under this • Certify that the company has met the standard and that it isn’t dangerous • “CE” European certification o Testing and certification  What is the level of safety/quality do you want  Leaves more up to the discretion to the individual companies • Services- harmonized o Financial services  Need to be agreements on financial services  If you are a Belgium and you put your money in a foreign bank, is it protected- yes  What if a foreign bank wants to open a bank on foreign soil- allowed to do this as well Whose regulations rule over the banks?  We will let every country to continue to have their own standards  EU must vote to do this  Includes drugs as well- Amsterdam has its own rules on drugs • Regulate drugs as they see fit  Must have some amount of capital in the bank  Rules governing the branch of the bank, are the same rules that govern the head of the bank o Telecommunications  Skipped o Professional training  Done nationally  Doctor who got his certification in France can work as a doctor in another country  Common standard as to how you can become certified in another country • Public Procurement • Transportation o Allow elimination of borders, border controls  Trucking, Train service  Trucking • Cabotage- rule that says you are not allowed to return with goods • Got rid of these rules  Airline Service • Domestic air service is reserved to domestic airlines • Got rid of these rules as well • Corporate management o Shareholder rights • Intellectual property o EU agencies that could provide patents and trademark copy rights o Same rules for the number of years it lasts • Energy o Energy market tends to be segmented, however they tried to break that up some o Still tends to be national relatedFiscal Barriers • Value-Added Tax (VAT)- 20-30% o Similar to a sales tax o Tax on all products sold o Tend to be higher than US o Not progressive, EU has a more regressive tax system than the US o High degrees of variation of the VATs in different countries  Set a floor- no country to go below a certain VAT, if a country wants to go above the floor VAT, they could • Excise taxes Implementing and Enforcing the Single Market • Implementation • Open method of coordination • Level and pattern of compliance • Enforcement mechanismsSingle Market II 4/23/12 1:54 PM Competition Policy- for the single market to function properly, competition is essential • Mergers o When does the EU make merger decisions?  If competition is needed companies can merge, if approved by the Commission o What and how do they decide?  After the Merger Reform, more flexibility was introduced into the time frames to improve the ability of companies to respond to the Commission concerns  Commission has to approve the merger o International mergers  US Federal Trade Commission • Anti-trust policy o Outlaw a variety of agreements between companies that would restrict competition (such as cartels, price fixing, or predatory pricing agreements, exclusive sales agreements, and discrimination on the grounds of nationality by a firm in a “dominant position” in a national market) and ensure that publicly owned industries abide by the EU competition rules • Subsidies History of the EU environmental policy • Piecemeal part of Single Market • Environmental Action Plans o 1972- the heads of government agreed to launch a series of environmental action programs o Highlighted 4 areas  Climate change, nature and biodiversity, environment and health, management of natural resources and waste o While allowing member states to apply higher environmental protection standards if they wished, the treaty requires the EU to develop a common environmental policy to achieve “a high level of protection” and to rectify environmental damage at source, based on the “polluter pays” principle • Inclusion in SEA • Increased competence in all subsequent treaties o Not covered in the Treaty of Rome, but covered in all following treaties Improving national environmental standards- to name some • Labeling, auditing, and regulating• Wildlife and ecosystems • Emissions • Water pollution • Waste management Enforcement of environmental policy