The single market is an essentially liberal economic project
A Report
Table of Contents
Introduction
Overview of the Topic
Discussion
Definition of Single Market
Benefits from the Single Market
It’s Significance to Economy
Conclusions
Reference
Introduction
The single market is a type of customs union which has common rules and policies concerning regulation of products and he four aspect of production. (, 2007).
Every business organization or company has different internal organizations, having a variety of functions. The internal organizations that comprise the whole business are interrelated and are working together to ensure the company’s success in profiting from the market. The more functions each of the organization perform; the better is the performance of the company as a whole. This gives each of the companies their corresponding advantages and benefits from the market and their consumers.
Also, every company has a need to be overseen by something much greater. This is where corporate governance comes in. In this paper, we shall view the different theories that are part in explaining and proving the connection between effective corporate governance to the behavior and performance of the company.
Overview of the Topic
Competition, typically the most powerful external force, is increased by the advent of globalization. The number of companies and the number of countries where these companies operate and the way governments are dealing with the impacts of globalization is accelerating. The interaction of changes in government policy and business innovation has actually made globalization even faster. If a company does not become a global, it would simply be shut out of new markets. This is what pushed firms around the world to adopt Corporate Governance. Also, a company must be able to make contact with its consumers. According to most theories on strategic management, the customer is the ultimate judge of competitiveness; that is, by buying the products of a firm, the customer indirectly decides which firms will continue to exist and which firms will go bankrupt. (2002). The reasons for the turmoil are numerous: a sputtering economy, increased global competition, the implementation of new technologies that displace jobs, the deregulation of certain industries, and the general consolidation of other industries, such as banking and health care. Observers will see a continuing progression in the ruinous steps which have forced the industry into a socio-politico-economic corner. The industry is likewise linked closely to the policies of governments, the earnings of banks. The industry’s approach to dealing with political institutions has not always been brilliant. It tends to be good on technical issues, although it has not always fully presented the longer-term options, in order to make the choices and their implications clear.
In this paper, single market will be subjected to research.
But before tackling the topic of about single market, first, one must define what single market is. Again, as was defined earlier, single market is a type of customs union which deals with the four factors of production and regulation of products. (, 2007).
According to BBC news, the single market started to move at around 1993, regulating the production, the freedom of movement in the goods, the people and services. (, 2001).
According to Wikipedia, there are at least three (3) existing single markets as of today:
Ø The European Union (EU) – started out as the European Economic Community in 1957 and legally became a single market in 1992.
Ø The European Economic Area – includes EC, Norway, Iceland and Liechtenstein.
Ø The Caribbean Community Single Market
And there are at least six (6) proposed single markets:
Ø Economic Community of the West African States (ECOWAS)
Ø Central African Common Market of the Economic Community of Central African States (ECCAS)
Ø Gulf Cooperation Council (GCC), due in 2007
Ø Southern African Development Community (SADC), due in 2012
Ø ASEAN Economic Community (AEC), due in 2020
Ø African Economic Community (AEC), due in 2023
(2007).
Discussion
Definitions of Single Market
Again, as was mentioned before mentioned, the single market is a type of customs union which has common rules and policies concerning regulation of products and he four aspect of production. (2007).
The single market was established in 1993 in the hopes to regulate all the essential factors in the union. According to BBC, the single market was set-up for four main reasons:
Ø Goods: companies can sell their products anywhere in the member states and consumers can buy where they want with no penalty.
Ø People: citizens of the member states can live and work in any other country and their professional qualifications should be recognised.
Ø Capital: currencies and capital can flow freely between the member states and European citizens can use financial services in any member state.
Ø Services: professional services such as banking, insurance, architecture and advertising can be offered in any member state. (2001).
These factors are somehow related to the factors that helped the setting up of the European Union (EU), or any customs union, for that matter.
But what is a customs union? A Customs Union is and International organization whose goal is to remove all trading barriers for members of the organization and to have an unvarying tariff for nations who are not members of the said organization. Usually, countries set up customs unions to speed up economic efficiency and to strengthen ties between member nations. According to the Mission Statement of the European Union (EU), “One of the primal roles of the Customs is to facilitate trade and to protect the interests of the community and its citizens. “
Part of the mission statement of the European Union (EU) is stated in the following:
“Customs in the European Union – A Joint Mission Statement:
Customs is responsible both for protecting society and facilitating international trade through the management of external borders and by ensuring overall supply chain security. We are committed to:
Ø Ensuring the safety and security of citizens
Ø Protecting the financial interests of the Community and its Member States
Ø Protecting the Community from unfair and illegal trade while supporting legitimate business activity
Ø Increasing the competitiveness of European Business through modern working methods supported by an easily accessible electronic customs environment.
Ø To carry out these duties, we shall co-operate nationally and internationally to combat fraud, organized crime and terrorism in collaboration with other authorities, notably with other law enforcement agencies. Our aim is to operate with integrity and provide the highest possible level of service.” ( EU).
Benefits from the Single Market
According to the DTI in the UK, here are some benefits that a member country can receive from a single market:
- The Single Market is a wider market for UK goods comprising nearly 380 million consumers and making up almost 40% of world trade. Such a huge market gives consumers greater choice.
- The greater competition and liberalisation the Single Market has helped bring about has led to lower prices. Take air fares for example: cheap airlines such as Easyjet would not have been possible without the Single Market. Also airlines can now fly where they want, without national restrictions. This has helped British Airways become the second largest domestic airline in France.
- The Single Market provides for better consumer protection; for example the Toy Directive means that all toys sold in the EU must be safe for children. Another example is the Fourth Motor Insurance Directive on which political agreement was reached by Member States in December 1998. This Directive will make it easier for those involved in motor accidents in other Member States to make an insurance claim when returning to their state of residence.
- The Single Market principle of mutual recognition of standards means British manufacturers can sell their products all over Europe without expensive re-testing in every country.
- For business there has been a significant reduction in export bureaucracy. The Single Market is in effect a domestic market for European business.
- UK citizens have the right to work, study or retire in all the other Member States – there are around three-quarters of a million Britons living in other countries. ()
It’s Significance to the Economy
The single market has a great impact upon the economy of many countries that participate in the single market.
With the above statement of the EU, we could see that all the member nations, whether exporting or importing, would greatly benefit from forming a customs union. Let’s try to discuss the different points of this proposition.
Ensuring the safety and security of citizens. Here is a feature that will greatly benefit a member nation. The customs is, according to the mission statement of the European Union (EU) the Union ” are in front line in the fight against fraud, terrorism and organized crime.” The customs is not only concerned with business, they are also concerned with the welfare of the citizens of their member nations. This feature of the mission statement is clearly designed to protect the people from illegal businesses that may cause a fall-out on their own businesses and also to protect them from terrorism and other such vicious attacks.
Protecting the financial interests of the Community and its Member States. The union can give people better protection from illegal businesses that may cause problems for their businesses as well. The community or the member nation has a higher chance of having a very good trading partnership with other nations because it may have the capability to solely address the needs of the other member nation. And, the member nation’s interests in trade are protected from illegal traders.
Protecting the Community from unfair and illegal trade while supporting legitimate business activity. As mentioned earlier, the member nation is ensured of a trading partner and is rid of the fear that an illegal trading group may take away its chances of having that trade with that target nation. The business activity of this member nation will eventually flourish with the help and aid of the customs union. Other illegal activity is suppressed in the said union and the member nations are assured of fair and legal trade with each other.
Increasing the competitiveness of European Business through modern working methods supported by an easily accessible electronic customs environment. If this mission statement is applied to other unions as well, it may mean the same thing. Through modern technology, business may further flourish and would be easily accessible by member and even non-member nations. Through the advent of computers and the electronic mailing system, business of unions can be easily brought to the world and further trade would be done through this.
Having customs union is like being part of a group and being sure that you don’t get left out. Customs Unions around the world are facilitating agreements for easier trade with each other and for combating and finally eradicating illegal underground businesses. They are also aiming to suppress terrorism which is, as of the moment, very much at large. Negotiations on countries that have long closed their borders to foreign trade are slowly gaining pace and are well on the way to once again, open to foreign trade.
Commerce existing at the micro level is also benefited from this undertaking. Due to the fact that macro traders depend on small scale industries to provide them with the necessary materials for their own production, micro scale businesses aren’t necessarily left out of the foreign trade industry. Instead, the products that they are producing might be exhibited internationally and may have a potential buyer.
Therefore, as shown in the presentation of the data that I gathered above, customs union is a really very good thing to have for both exporting and importing countries due to the fact that it may not only reduce or even abolish trading barriers within the union, it may even also find for a member country a potential trading partner which will in ways more than one, elevate the state of their economy.
Also, according to Wikipedia,
“A single market has many benefits. The central benefit is the increase of division of labour and the consequent increase in productivity. Other important benefit is, with full freedom of movement for all the factors of production between the member countries, that the factors of production also becomes more efficient allocated, further increasing productivity.”
(2007).
But also, the single market can have its criticisms as well. A single market could lead to further competition since many more potential producers sell the same product.
“A single market can be criticized for a couple of reasons. The transition to a single market from a monetary union can have short term negative impact on some sectors of the economy due to increased international competition, resulting from the loss of sovereign-nation economic control. This loss of control persists, and certain infant industries may no longer be feasible.” (2007)
Also, the single markets works with a set of rules to follow. In the Review of the Single market, we can see the rules to which the participants must abide.
“A framework for ensuring the even and effective enforcement of Single Market rules has been established, involving encouraging co-operation between national administrations, setting up contact points for businesses and citizens, and improving the efficiency of the Commission’s complaints procedure. In the UK, the DTI’s Action Single Market – UK Solvit acts not only as a contact point for UK business and citizens but also as a first port of call for similar units in other Member States when Single Market problems arise.
There are a number of options open to businesses when, in the course of marketing their products in another Member State, they consider that they have encountered trade barriers related to national regulations. This problem solving network seeks to enable businesses to exercise their Single Market rights and various options exist including making a confidential complaint directly to the European Commission, who may, where appropriate, take legal action against the Member State concerned (known as infraction proceedings). “ ()
Conclusions
Therefore, the single market is a very beneficial, and essential factor in the liberal economic project since it deals much with regulation of the four basic factors which are:
Ø Goods: companies can sell their products anywhere in the member states and consumers can buy where they want with no penalty.
Ø People: citizens of the member states can live and work in any other country and their professional qualifications should be recognised.
Ø Capital: currencies and capital can flow freely between the member states and European citizens can use financial services in any member state.
Ø Services: professional services such as banking, insurance, architecture and advertising can be offered in any member state. (, 2001).
Also, the single market would be able to help, not only economically, but culturally as well.
Reference:
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