What is a Single Market?

In a single market, there is a free flow of goods and services, free movement of labor and physical and intellectual properties for all concerned and freedom of movement. A working single market encourages competition and exchange, improves efficiency, increases quality and leads to price reductions.

The European single market, internal market or common market, is a single market that strives to preserve the freedom of movement of products, resources, services, and labor, as "four freedoms" within the European Union (EU). 

The European Single Market is a structured agreement between sovereign states giving participants free access to their respective markets may also be described as the single market. 

What is the History of the Single Market?

The Single Market was created by the Treaty of Rome in 1957 in the former European Economic Communities (EEC). In 1986, with the Single European Act (SEA), the first significant reform in the original Treaty was made. 

The EU, which constituted the former EEC, was established in 1992. Single markets typically grow gradually, often with only a few countries involved and then expand as neighboring countries see the advantages of accession and the costs of non-adhesion. The formation and extension, depending on the number of participants and their levels of development, usually involves highly complex negotiations. In less developed economies, the spectrum may be broader, relative to the single market, of goods and services as well as underdeveloped capital and credit markets. The primary objectives of the Single Market include:

• Passing rules that encourage the free movement and competitiveness of goods and services.
• Eliminating barriers to trade within the EU and prevent new ones from being established.
• Promoting a business-friendly environment focused on open, easy and consistent legislation providing a straightforward legislative framework.

During the processes of trying to meet the above objectives, the EU has provided benefits such as:

• Creation of trade in which free market access promotes trade.
• The exploitation of economies of scale by local firms as their markets expand.
• Lower production costs due to economies of scale.
• Technology transfer resulting from increased flows of investments among members.
• Transfer of skills across the single market.
• Mobility of labor.

Drawbacks to the Single Market

Despite the many benefits the single market poses, it has the following setbacks:

• Diversion of trade can result from a single market member, as more efficient non-members from local markets are overwhelmed.
• Lower wages earned as migrant labor may drive down local wages.
• Increasing negative externalities linked to freedom of movement, including infrastructure pressures, and insufficient supply of commodities such as healthcare and education.
• The trade rules may favor some members over others and some industries and sectors over others.
• The lost possibilities of exploiting closer relations with non-members through free trade deals (allowed at least in the European Single Market) between individual members and non-members.
• Members may look inward and their businesses can not adapt to global economic changes.

Leadership of the Single Market

The European Commission, responsible for supervising the application of EU legislation and acting on non-compliance under the Single Market Act, oversees the Single Market. In order to evaluate the implementation of policies and to evaluate areas in which policy development needs to be carried out, the Commission also collects information. The EU also publishes economic reports on the basis of research which are used to analyze and provide the basis for future recommendations on the effects of the implementation of legislation in various sectors. These studies frequently identify areas for development, as well as places where barriers have been faced by the commission.