The European Single Market is unique in the modern world of trade. With its 28 member states and an internal GDP of nearly 18 billion USD it represents the single biggest free trading zone in the world, ahead of both the US and China. But while the market has yielded large economic profits for its member states since its implementation in 1993 it has yet to achieve its full economic potential. In many sectors a patchwork rug of different national regulations still exists among the EU-States, hindering free cross-border trade. The economically biggest of these sectors is the European market for services, which alone accounts for roughly 70% of EU-GDP. To discuss the possibilities and challenges of tapping into this market’s vast potential for Europe, the Bertelsmann Stiftung, together with the European Commission organised a conference on the topic for next week on July 2nd in Brussels.
The EU won’t be number 1 forever.
There are several challenges the European Single Market is facing nowadays. Firstly there is the predicted decrease in Europe’s overall global economic influence. With the rise of China, India and other emerging markets both the US and Europe’s global market shares are dropping. It is predicted that within the first fifty years of the 21st century the European Single Market’s share of world GDP will have fallen behind that of China, India and the US.
Secondly, trade diversion effects of large free trade agreements such as the TTIP or CETA cause EU member states to trade more with their external agreement partners rather than among themselves, further weakening Intra-EU trade. And finally, there is the 2009 financial crisis and its ongoing European consequences, which have dealt a serious blow to EU citizens’ trust in their internal market. According to a Eurobarometer study from 2011, significantly more people think that the Internal Market has a negative impact now than did so in 2009 and almost two thirds of people believed the Internal Market would only benefit big companies.
Looking at these challenges it becomes clear how crucial a continued exploration of the European Single Market is for Europe in the 21st century. So where can we gain the most future potential?
The “growth engine” services market has been started
With its rapid rise in significance over the past decades, the European internal market for services has become the single largest contributor to economic growth in Europe. It accounts for slightly more than 70% of EU-GDP. Two out of three jobs in the EU are already in the service sector and for future jobs it will even be nine out of ten according to the European Commission.
The Commission has recognized this huge potential and in 2006 released the EU Services Directive. The directive, which was fully implemented by the year 2009 aimed to eliminate as many non-tariff barriers to cross-borders trade of services within the EU as possible. It also created so called “single points of contact”, a unified system of information sources with the goal to raise awareness and lower confusion on the topic of EU service regulations. While this directive has already brought significant economic gains for the European Single Market (more on this next week), many countries are still trailing behind with its full implementation and there is still plentiful potential in the services market to draw from.
To identify this potential and to discuss the challenges and possibilities of releasing it the Bertelsmann Stiftung and the European Commission organised next week’s joint conference in Brussels. Over the course of the day there will be a number of panel discussions on various topics and questions that come with the EU services market and we will hear opinions and discussions from prominent expert voices such as the EU Commissioner for the Internal Market Elżbieta Bieńkowska and professor for economics from Harvard University Philippe Aghion. It will be sure to be a day of animated debate and hopefully some real perspectives for the way forward at the end. For those who can’t be there personally, the GED team will also follow the event live on its twitter channel so make sure to follow us there for first-hand information and updates as soon as they unfold.