Single market crucial for European Union survival, says Louis Grech

Grech was discussing the newly re-launched European Single Market and how this will affect both local and European markets and businesses during a debate organised by the Malta Business Bureau.

A report penned by Grech and which formed part of the Commission’s action plan on the future of the EU’s single market was recently approved by the European Parliament.

The report suggested that the EU should pass a "Single Market Act" by May 2011, setting out policy priorities for creating a highly competitive social market and green economy and covering both legislative and non-legislative initiatives.

European Internal Market Commissioner Michel Barnier has said that he will be using parts of the in the drawing up of the Commission's action plan on the future of the EU's single market.

Grech was asked by MaltaToday of the significance of re-launching the single market, which was only successful in establishing a common market across all European Member states at a time when the Eurozone faces considerable pressure from successively-failing European economies such as Ireland, Portugal, and two-time bailout Greece.

Additionally, investor confidence in the Euro is rapidly declining, as speculation that Greece will default on payment of the first bailout loan spreads.

Grech said that both the European Union and the Single Market were already at a crossroads even before the bailout trend took a turn for the worse earlier this year. He said the re-launching of the Single Market represents a bid to “ensure that they will not disintegrate further.”

“The Eurozone is an even worse situation, but the answer is not to give up, but to try harder,” Grech said.

He also said that in the wake of the ongoing and deepening economic and financial uncertainty, European countries will be questioning which countries should receive solidarity, how much, and whether these loans and bail-outs would effectively address the contagion.

“Unless we really try to move towards economy policies that make the single market work, there is no future for the European Union,” Grech said.

He also said that while at this stage, Malta will not be affected much, from a wider perspective the erosion of credibility, trust, and stability of the Eurozone and single market will affect Malta extensively.

“It will affect our economy, our attitude, and even the way we want to achieve progress in certain economy areas,” he said. “There will be significantly more caution and mistrust, which will limit the scope of development.”

Grech said there is already considerable lack of credibility or trust in the single market system, or simply not enough awareness of what the single market actually is or aims to achieve. “The level of trust of EU citizens (both consumers and SMEs) in the single market was low, nonexistent, or lacking in awareness or information."

He added that European Union member states did not have the right “ownership” of the single market. “There was a single market fatigue... it became evident that very few knew what the single market meant," Grech said.

“At the time of investigation, there was a complete mistrust of the system. Many felt that it was not representing them or their interests. Many also felt it was functioning on behalf of the bigger companies, not smaller SMEs.”

Asked how Maltese consumers and SMEs compared with those in other member states in terms of single market trust and awareness, Grech remarked that while it was low, there were other member states who performed similarly. “Malta did not break the trend in that regard.”

He also said that the relaunch required the European Union to consider the single market from a new perspective, and not simply one that concerns itself with the economic reality of the economic union.

“The old definition needs to change. The new single market needs a holistic approach that takes into account the green economy aspect, consumer protection, and consumer issues,” Grech stressed.

“Over the years, the single market lost its necessary momentum. The raison d’etre of the European Union is the single market itself,” Grech said, adding that the Eurozone – an intrinsic aspect of the single market – “is passing through a very bad phase.”

“Unless we are address the single market ‘s issues by putting the citizens in a position that makes them feel that it is working for them - and not the other way around – the single market, and the Union, will die,” Grech warned.

He stressed that the re-launch must consider both the social dimension of the single market as well as its economic dimension. “SMEs are the backbone of the economy, and ultimately must be taken into account.”

He said for this to work, single markets must not simply create work and growth, but must also work towards the creation of a greener economy, and take into account the social component of the economy – “especially in the wake of the financial crisis.”

“The financial crisis brought about so much wealth inequalities and hardships that showed that one cannot discard the social dimension,” Grech stressed.

In this regard trust and accessibility are critical. Grech argued that there will be no trust or “ownership” of the single market if it is not credible or if it is inaccessible through obstacles or bureaucracy. He recognised the need for the EU to tone down the bureaucracy and over-regulation that plagues the single market structure. “There are too many obstructions and obstacles. Too many citizens are saying they are not benefiting from it.”

He added that some viewed the single market as a negative force, linking it to job loss and creating a protectionist attitude in certain member states like Germany and France.

Grech called on the European Commission leadership and EC president Jose Barroso to put their weight behind the re-launch. “If we want to seriously compete with other economies like China and the US, ordinary citizens need to believe in single market. I expect more momentum and energy."