Benefits of EU Membership
The
Single (or “Internal”) Market is the
result of the EU’s policies on trade, industry, employment
and consumer affairs. Since its launch on 1st January
1993, the Single Market has brought major benefits to
businesses, consumers and employees alike. Some of the
changes have been very noticeable - border controls
have been abolished, cutting costs to business and speeding
up the physical movement of goods and people across
the Union.
Other
changes have been less noticeable, but have made a real
difference to people’s everyday lives. Standards have
been harmonised for hundreds of products, producing
a level playing field for manufacturers across the EU,
regardless of where they are based. And “mutual recognition”
of goods produced in one member of the Single Market
by all the others means that if a product is good enough
to be sold in one country, it cannot be excluded from
sale in another. The overall effect has been to turn
the EU into a “domestic” market for all citizens.
The
EU is the world's largest international single market.
Following the expansion of the EU on 1st May 2004, the
Single Market now includes the 25 Member States and
also the three European Free Economic Area countries
- Norway, Iceland, and Liechtenstein. Its population
numbers around 460 million people – a bigger trading
area than the US and Japan combined.
Single Market Achievements
In
2003, the Commission published an assessment of achievements
during the first ten years of the Internal Market.
According to European Commission statistics, in broad
terms, the Single Market project has meant:
·
EU Gross
Domestic Product (GDP) in 2002 was 1.8% higher (€164.5
billion) [£110 billion] than it would have been without
the Single Market.
·
Over ten years, the Single Market has
boosted the EU’s GDP by €877 billion [£588 billion].
This represents €5,700 [£3,819] of extra income per
household.
·
Employment has grown (1992-2002) by 1.46%
(an extra 2.5 million jobs) thanks to the Internal Market.
Up to 3 million British jobs are linked to exports to
the EU, around ten percent of the total workforce.
·
Intra-EU trade has increased as a percentage of GDP from
less than 25% in 1993 to 35% in 2001
·
Foreign direct investment in the Single
Market has risen from €23 billion [£15.4 billion] in
1992 to €159 billion [ £106.5 billion] in 2000.
·
60 million customs clearance documents per year no longer
need to be completed, cutting bureaucracy and reducing
costs and delivery times.
But it’s not just at
the national level that we can see evidence of the Single
Market making a real difference – evidence of the benefits
for business, individual consumers and employees is
also clear.
A
Single Market for business
One of the main aims
of the Single Market has been to create an environment
in which businesses can flourish. And in a number of
small but practical ways, it has been achieving its
aim. For example, copyright regulations introduced recently
protect copyright owners whilst still ensuring that
innovation and creativity are not hampered. They also
promote technology transfer between developed and developing
countries.
Regulations
setting up the Community Trade Mark and the Community
Design have enabled UK companies to protect their trade
marks and designs throughout the EU by making a single
application for EU-wide registration. This cuts down
bureaucracy - avoiding the need for trade marks or designs
to be examined in 25 different jurisdictions each with
its own rules. In (2003), UK firms made 6,300 such
trade mark applications. Registration of designs at
the Office for Harmonization in the Internal Market
(OHIM) was introduced on 1 April 2003 and by the end
of the year UK firms had also applied to register around
12,000 designs.
The Single Market has
also brought concrete benefits across certain sectors:
Automotives
The
sheer size of the Single Market makes it viable for
manufacturers to develop new models and bring them to
market in the EU. Car manufacturers can also capitalise
on economies of scale and opportunities for co-operation
across the Single Market. In 2002, two thirds of all
UK car exports went to other EU countries, worth a total
of £6.1billion
Civil Aerospace
The
collective strength of the Single Market has brought
real benefits in terms of trade relations – especially
when competing for contracts with the US. In addition,
the UK Aerospace industry benefits from research &
technology grants under the EU Framework programme by
winning back to the UK more funding than we contribute
– approximately €4billion [£2.6 billion] per annum.
Pharmaceuticals
The Single
Market provides easy access for trade within the EU:
In
excess of £5 billion of pharmaceuticals were exported
to the EU in 2003. A recent review of EU medicines
legislation has now provided a harmonised framework
of medicines legislation across the EU – as a result,
companies need only get one set of authorisations for
new products, not twenty-five.
E-Commerce
The Electronic
Commerce Directive has helped establish a level playing
field for e-economy companies trading across the EU,
whilst also stimulating innovation and competitiveness.
Importantly, the Directive limits the liability of Internet
Service Providers who unknowingly carry or store unlawful
content. It also simplifies the informational and contractual
requirements required on selling goods and services
online.
A Single Market for
Consumers
Consumers
now enjoy far greater protection thanks to the Single
Market. As a result of membership, British consumers
are guaranteed rights similar to their UK statutory
rights when buying products elsewhere in the EU, including
products bought from other EU countries over the Internet.
Greater consumer confidence throughout the EU has, in
turn, helped build market confidence, providing a positive
environment in which business can flourish.
Consumers are also better informed about the products
they buy and those products are safer. The CE marking
guarantees that products meet certain minimum standards,
regardless of where they were produced. In addition,
Single Market laws require that degradable products,
such as food and medicines are labelled with “best
before” dates and that they carry a list of ingredients,
colourings and additives.
The EU is also actively engaged in ensuring that the
opportunities of the internal market are not undermined
by rogue traders operating across borders. Enforcement
agencies have agreed to act – where ever possible
- in the name of all EU consumers, not just those in
their own Member State, And European Consumer Centres,
based in Citizen's Advice Bureaux, can offer everyone
advice about shopping in Europe and give access to alternative
dispute resolution schemes, such as ombudsmen and arbitration,
in other EU countries, if things go wrong.
A few examples
of the Single Market making a difference for consumers
are:
Timeshares
- UK consumers are among the chief beneficiaries
of the Timeshare Directive which ensures the provision
of adequate information and a 10 day cooling-off period,
during which advance payments are outlawed.
Product liability
– thanks to EU regulation, consumers who are injured
by defective products have the right to sue for compensation
without having to prove the producer was negligent,
provided that they can prove that the product was defective
and the defect in the product caused the injury.
Air transport
– liberalisation has meant that any airline can operate
on any route in the EU. This meant an increase in the
number of carriers from 119 in 1992 to a peak of 140
in 2000. The number of routes linking Single Market
countries has risen by 46% since 1992 boosting choice
to passengers. Fares at the lower end of the market
fell by 41% between 1992 and 2000. In addition, if
a passenger is denied a seat because the airline has
overbooked, they can demand compensation and have the
right to a refund or else a seat on the next appropriate
flight – all thanks to the Single Market.
Cars - Recent changes to EU competition rules in respect of
car distribution and servicing promise to deliver greater
choice for consumers as to where they get their cars
serviced and to provide for more effective competition
between garages and the supply of spare parts.
Telephony
- charges have fallen substantially – thanks
to Internal Market legislation. On average, business
users have been paying 30% less since 1992 and residential
users are paying 16% less in call charges and subscriptions.
Overall, the market increased by 30% between 1998 and
2002.
A
Single Market for Employees
Employees’
rights have been greatly strengthened thanks to EU regulations.
For example:
Workers
(apart from those in a small number of specific industries)
cannot be asked to work more than 48 hours per week,
unless they wish to. They are entitled to a rest break
of at least 11 hours each day and a further break if
the working day is longer than six hours. In addition,
they are entitled to one day off per week and annual
paid holiday of at least four weeks each year.
Part-time
workers and those on fixed term contracts are entitled
to the same benefits pro-rata as those on permanent
contracts including the same rates of pay, the same
access to sickness benefit and the same access to company
pension schemes, unless differences in treatment are
objectively justified.
Employees
with parental responsibilities have a right to a minimum
thirteen weeks leave to enable them to take care of
a child up to the age of five years, or eighteen weeks
leave in cases of a disabled child under the age of
18.
A Single Market means greater competition
Much has been done to eliminate
anti-competitive practices since 1993 – all thanks to
the single market. The EU has been able to tackle many
anti-competitive practices such as cartels, monopolies,
excessive and unnecessary regulation. For example:
An investigation
into price fixing in the UK for replica football kits
resulted in large price reductions and wider consumer
choice;
Deregulation in the UK retail opticians sector, allowing
entry and advertising, saw a significant rise in the
number of new players in the market, improved product
quality and consumer choice;
The price of books have fallen, thanks to the ending of the
Net Book Agreement. Indeed the quantity of books and
number of titles published increased, despite fears
to the contrary.
Where
next for the Single Market?
In
a global economy, markets never stay the same for long.
So in turn, the Single Market has had to change, and
continues to change, in response to new economic developments.
In the future, the Single Market has the real potential
to help raise EU productivity and growth further. Work
going on at the moment includes:
·
extending Single Market rules to apply to the services sector;
·
improving working conditions for agency workers, or “temps”;
·
extending the scope of anti discrimination laws; and
·
bringing in patenting rules which would
apply across the EU.
In terms of competition, there
is a lot more that the EU can do together. Global competition
is already here and firms cannot shelter behind tariffs
or local monopolies. If the EU wants strong companies
that deliver jobs, higher wages and high profits, they
need to compete effectively by being productive and
innovative. This is why the UK has strongly supported
the European Commission in its work towards a “proactive
competition policy”.
This is about using competition
policy to make markets work – so they bring about productivity
gains and innovation, rather than its more traditional
role as a “policeman” of anti-competitive measures i.e.
illegal cartels. This way, competition policy will further
increase Europe’s competitiveness globally and promote
long term economic growth.
The
DTI looks forward to taking work to develop the single
market forward during the UK Presidency of the EU from
1 July to 31 December 2005.
UK
Presidency of the EU
The UK will hold the Presidency of the EU in the second half
of 2005. DTI has been working with other Government
Departments to prepare for this and has identified four
priorities in the area of competitiveness:
Leaving
the European Union would put at risk many of the advantages
the UK gets from membership of the Single Market.
However, as the destination for more than half our exports,
accounting for some three million UK jobs, we would
still need to co-operate with the EU. If we were to
leave we would no longer automatically enjoy the benefits
of Single Market membership. For example:
1.
basic Single Market freedoms such as the right
to live, study and work in Europe might be jeopardised;
2.
we might lose the advantages that economies of
scale bring to pan-European industries such as car manufacturing
or aerospace;
3.
we would have to bear the costs of renegotiating
bilateral trade agreements
4.
we would lose out on EU funding for research,
which currently outweighs our contributions, and would
no longer be able to influence the development of the
Framework Programme.
5.
guarantees of important protections for consumers
could be lost;
6.
workers’ rights could be eroded, making it harder
for employees to find a satisfactory work-life balance;
7.
one of the strongest voices for reform in EU
would be lost, with the result that new EU rules would
be more likely to be damaging to British interests;
8.
we would risk losing direct inward investment
from companies which see the UK as a gateway to the
EU.
9.
our negotiating strength internationally would
be substantially diminished if we stood alone.
10. If we wished to continue trading
with the EU – for example as a member of European Free
Trade Area (EFTA ) (like Switzerland) or the European
Economic Area (EEA) (like Norway) - we would still have
to comply with EU laws, while having no say in negotiating
them. We might even have to keep up contributions to
the EU budget as the price of continued access to the
Single Market, but get nothing in return.
Two
common questions and answers regarding leaving the EU
are as follows:
Why not follow The Norwegian
model?
Norway
is a member of both EFTA and the EEA. As such, it is
not subject to EU tariffs and quotas and can benefit
from the free movement of goods, services, people and
capital. Nonetheless, Norwegian goods are still subject
to customs requirements and a certificate of origin
is needed, adding to the cost of exporting. Norway
is still subject to “horizontal” EU policies, such as
consumer or environmental legislation, but it is not
represented in the Council of Ministers and therefore
has no input into EU law making. Norway still has to
contribute to the EU budget – for example as part of
the EEA-Enlargement Agreement, but gets little back
in return. Whilst not subject to the Common Agricultural
Policy or Fisheries policies, Norway has signed up to
the EEA Co-operation Agreement, which has a similar
effect.
The Swiss Model?
Switzerland
is a member of EFTA, but not the EEA. Like Norway,
it is subject to customs checks, although not to EU
tariffs and quotas. Switzerland also contributes to
the EU Budget under the Enlargement agreement. Trade
with the Single Market is governed by bilateral agreements.
However agreements – for example in the field of aviation
– demand in effect that Switzerland applies EU laws,
but like the EEA countries, it has no say in negotiating
them. Switzerland only has limited access to the Single
Market in other areas – for example services.
