Memo to EU: The single market began 30 years ago. Let’s finally complete it.

The European Union is changing. But in the digital era, what will Europe look like and what should the European Union be doing? In the third in our series of articles by Burson-Marsteller’s senior advisors on the future of Europe, John Higgins argues that the EU should focus on completing the single market.

Businesses that speak out on public policy tend to focus on a limited range of issues. Not surprisingly, they usually call for measures that make their life easier: deregulation, harmonisation, free trade, and even infrastructure building. The reason is simple: businesses do business, and they want ways to continue doing business.

When it comes to the European Union, businesses mostly stay out of the grand vision politics, like Treaty change and institutional reform. This March, as the EU celebrated six decades since its founding Treaty of Rome, there was a flurry of ideas about how to reinvigorate the project, notably with the European Commission’s White Paper on the Future of Europe. There was an added frisson to this exercise, as it came on the back of one of the lowest moments in EU history, just a few months after Britain’s vote to leave the bloc, and a year or so after the migration and euro crises.

While the White Paper was mostly about political architecture, the Commission’s reflection paper on globalisation, published in May, had some interesting ideas on spurring entrepreneurship. It recognises the importance of digitisation and how new technologies will affect the economy as well as public services like health care. In the digital era, we need to think hard about what Europe will realistically look like, and the impact technologies like artificial intelligence and robotics will have on the workforce.

The digital single market is one of the priorities of the current Commission, and that is more than welcome. National laws still inhibit the flow of non-personal data across national borders and hold back effective cooperation on European standards for automated vehicles. This reflects a bigger issue for the EU: more than three decades after the European single market programme was launched, it is still not completed.

1992 deadline

The Single European Act was signed in 1986 and came into effect in July 1987, with the aim of creating a single market by 1992. At the time, people would often just say it was the 1992 programme. But despite the long run-in, and a full quarter of a century since the deadline, there are still glaring areas where the single market is non-existent.

The single market is arguably the EU’s greatest achievement, more significant than even the euro. Like much of what the EU does, its benefits are not instantly noticeable: most people don’t notice the effect of smoother trade and less red tape. It is not easy to show the benefits. The effects are felt behind the scenes, and most people don’t make the connection with the EU. But those who do business beyond their national borders notice it.

Globalisation has already created efficiencies in business. But the digital transformation has shone a light on old fashioned national barriers and needless variations in regulation from member state to member state.

The single market is about benefits and standards. Digital technology lights the flame under it, and exposes its holes. The very concept of the digital single market is perhaps inappropriate: it would be better to refer to a single market fit for the digital age. Recent technological developments have shown that there is still a long way to go. For example, can I open an online bank account in Germany like I can in the UK? This is an issue that should have been resolved by the EU long ago. Digital makes the failure to have true European scale obvious.

These single market issues also affect trade. Modern trade deals are no longer about tariffs, but about regulatory convergence. Industry doesn’t always mind higher standards and tougher regulations: it even accepts them, if they are across a bigger market. The benefits outweigh the downsides. That also explains why trade deals are in the public eye more than ever: there are always fears that matching standards on food hygiene, for example, leads to acceptance of a lowest common denominator (even though the opposite usually happens).

But in recent years, the EU has lost sight of this. Too much of its work has been on issues that have marginal value for citizens. Instead of working to fix the single market, and deliver obvious benefits for consumers and businesses, it has been regulating for the sake of it.

Even the Commission has recognised this scope creep. Commission Vice-President Frans Timmermans has been leading the drive to reduce the regulatory impulse: the Commission withdrew 100 proposals in its first two years of office. Its annual work programmes had just 23 new priority initiatives and packages in 2015 and 23 again in 2016.

Do only what you can do

I am driven by the mantra that you should do only what only you can do: concentrate on the areas where you can add value. If you apply that logic in Europe, you get to the principle of subsidiarity: decisions should be taken as close as possible to the citizen. If the EU does only what only it can do, then the focus should be on improvements made by working at a pan-European level.

It is ironic that the UK’s review of the balance of competences – which preceded the ultimately doomed UK renegotiation last year – reached the conclusion that the balance was about right. Other member states should go through this review exercise to see what they can do together.

Europe should be about member states deciding what they want to do together, rather than the Commission trying to impose its agenda on member states. The member states need to be in the driving seat. The EU could act more like a club that member states have joined where they can do those things that are better done together than as nation states. There’s little appetite for the grand federal vision from the time of Robert Schuman.

So, what makes sense to do at a European level now? Obviously, the single market. That includes issues like common standards such as for automated cars and shared approaches to defence and security, the environment, and border control.

National capitals need to drive towards and then communicate a Europe that is more about member states, regions and even cities working together to achieve things at scale. The model of Europe based on rules devised and imposed by Brussels needs to be consigned to history.

The EU has been good for business: common ground rules, liberalisation of previously regulated sectors, and the biggest single market in the world. If the EU is threatened, as it seemed in 2016, there would be huge economic consequences. We need the EU to continue working efficiently.

I’m a systems person, a pragmatist. I think of the most effective way of achieving desired outcomes. Not about visions and politics. Europe needs a new pragmatism. It needs to focus on what only it can do, and do it well.

John Higgins is Burson-Marsteller’s Senior Advisor on digital technology. He has spent more than 30 years dealing with high tech and public affairs, including as Director General of Digital Europe. Before that, he spent 20 years as the chief executive for TechUK, the UK’s digital industries’ association. He was also President of the European Commission’s Strategic Policy Forum for three years.

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