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Can the Single European Market Weather the Storm and Thrive Amidst Global Turbulence?

By Anna Modestou, Ridens Public Affairs


Having marked its 30th anniversary in 2023, the single European market is often hailed as the driving force behind European integration and the cornerstone of EU global influence. Emerging from the common market that preceded it, the inception of the single market in the mid-1980s responded to economic stagnation within European member states and a growing loss of competitiveness in an increasingly interconnected global economy. Over several decades, the expansion and deepening of the single market facilitated economic liberalization both within and beyond the EU, playing a pivotal role in shaping a globalized economy and supporting the multilateral trading system. This approach, known as double 'debordering' (Schimmelfennig, 2021), involved simultaneously reducing internal and external barriers to cross-border trade, which was viewed as the most effective strategy for managing globalization domestically and promoting a liberal international order.

 

However, the very pillars of the liberal international order that facilitated the growth and influence of the EU's market and global regulatory power appear to be showing signs of strain. Various indicators suggest a gradual unraveling, from the escalating systemic rivalry between the United States and China, to challenges facing multilateral trade agreements and the increasingly contentious forms of resolving disputes through legal channels. Concerns are mounting regarding the security and strategic implications of economic interdependence, a concern highlighted prominently by events such as the Covid-19 pandemic and Russia's full-scale war against Ukraine. While it remains uncertain whether this heralds the dawn of a new 'geoeconomic order', the onset of a 'de-globalization' era, or simply a prolonged 'interregnum' between world orders, as suggested by the EU High Representative (Borrell, 2022a), it is clear that the single market faces fresh challenges.

 

Domestically, mounting pressures to soften competition regulations and advocate for more interventionist industrial policies might exacerbate economic disparities among EU regions and undermine efforts to deepen market integration in key sectors like digital technology, energy, finance, and defense. Externally, the EU finds itself in a quandary, needing to safeguard its internal market while reevaluating its dependence on global value chains and foreign investment, all while advocating for a continued commitment to an open global economy. The concept of 'open strategic autonomy' emerging as the EU's new trade policy doctrine (European Commission, 2021) encapsulates these mounting tensions and potential contradictions.

 

Speed, scale, and adequate financial resources are the way forward?

 

Going a step further, it is now undeniable that the EU will be guided by three key strategic directions in the years ahead. Firstly, there's a steadfast commitment to ensuring a fair transition towards a greener and more digital future. Secondly, there's a clear decision to actively pursue enlargement. And thirdly, there's a recognized imperative to strengthen the EU's security.

 

The EU's success hinges on free trade and openness, making it imperative to preserve these foundations amidst global uncertainties. Addressing the intricate international landscape requires a commitment to peace, adherence to the rule-based order, and the protection of economic security. Investing in European standards, strengthening the Single Market, and promoting sustainable development are crucial aspects of this endeavor.

 

Moreover, reexamining the boundaries of the Single Market is essential. Sectors initially excluded from integration, such as finance, electronic communications, and energy, now require a European-scale approach due to global competition and strategic imperatives. Even within the existing perimeter, barriers to the provision of intra-EU services hinder the Single Market's full potential. To adapt to this changing landscape, a renewed political commitment is necessary to empower a revitalized Single Market that upholds fundamental freedoms, ensures a level playing field, and supports dynamic industrial policies.

 

And in the end, achieving these ambitious objectives requires speed, scale, and adequate financial resources to drive meaningful change in Europe's economic and regulatory landscape.

 

 

 

Borrell, J. (2022a) Europe in the Interregnum: Our Geopolitical Awakening After in Ukraine. 24 March. Available from: https://www.eeas.europa.eu/eeas/europe-interregnum-our-geopolitical-awakening-after-ukraine_en

 

Schimmelfennig, F. (2021) ‘Rebordering Europe: External Boundaries and Integration in the European Union’. Journal of European Public Policy, Vol. 28, No. 3, pp. 311–330.

 

European Commission. (2021) Trade Policy Review - An Open, Sustainable and Assertive Trade Policy, COM/2021/66 final, 18 February 2021.

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