---

EU: Single Market (EUC Report)

My Lords, I am conscious that I am the first speaker in this debate who has not been a member of Sub-Committee B and that I should congratulate the chairman and the members on their hard work. A great deal of effort has gone into this report. I am delighted to support the view expressed by my noble friend Lord Haskel that the elimination of trade barriers between member states has probably been the most widely praised and successful objective of the European Union, as it was of the EEC before it. It has been like a golden thread running through the five decades since the Treaty of Rome. As this report from the Select Committee shows—I am repeating what the noble Lord, Lord Freeman, said—the whole thing received a significant boost from the relaunch of the single market and the Single European Act 1986. I very much agree with the dancing partner analogy part of the subtitle. It is a very significant dancing partner with whom we wish to have further involvement over a very long period. It has always been clear that ending tariffs and quotas would never be enough to create a common market. All sorts of measures would be necessary, including—dare I say?—against the anti-regulatory bans across the way. There has to be regulation for common standards of consumer protection, the health and safety of workers and so on, without which enterprises in countries with lower standards would clearly have an unfair competitive advantage over the others. As someone who has previously been involved with competition authorities, I would say, in a somewhat biased way no doubt, that the competition authorities of the European Union—I mean the Commission in Brussels and the Court in Luxembourg—have played a major part in combating various restrictions on competition, whether they arise from state aids or price fixing and other cartels, but they can so readily distort free movement of goods and services, with which the single market is concerned. National competition authorities have also played their part. I am glad that it was this Labour Government, from 1997 onwards, who put through the Competition Act 1998 and the Enterprise Act 2002, which were designed not only to strengthen national competition laws, but also to align them with the competition laws in Articles 81 and 82 of the treaty. The noble Lord, Lord Freeman, also mentioned co-ordination as important, between the different countries, as distinct from imposing a super regulator for the EU as a whole. Co-ordination between the EU Commission and the national competition authorities has existed now successfully for some years through what is called the European Competition Network. There has been, as the Select Committee recognises, a growing trend towards economic protectionism in a number of member states and evidence of support for so-called national champions in several member states, which is always a risk of any attempt to create an internal market. That is a worry. It was also referred to my noble friend Lord Haskel. The committee is too discreet, if I may say so as the first non-member of the committee to speak in the debate, to name and to shame those member states that are either bad or in some cases hopeless at implementing the various requirements of the internal market. However, it records the concern of a number of witnesses that national regulatory authorities in certain member states, particularly the accession states, are not sufficiently resourced or independent of their Government to carry out their regulatory functions satisfactorily. Evidence from the EU Commission was that increased divergence among the 27 member states constitutes a ““challenge””—it puts it in a modest way—to the proper functioning of the single market, particularly because agreement on legislation, its transposition into national law and, above all, enforcement have become more difficult. The EU Commission’s internal market scoreboard does name names, which I cannot help but refer to because it makes an outstanding point. It specifically mentions the Czech Republic’s performance as ““very worrying””, as its deficit is about three times the EU average. I will not repeat the other specific points made. I hope that I have sufficiently indicated that I am supportive of the internal market and glad that it has been largely successful despite some of the important deficiencies. However, it is easy to exaggerate the importance to UK trade of the EU internal market; in a debate like this, there is an inevitable risk that we do just that. However, the internal market is, and will remain, significant, if only because our proximity to the continent means that trade in goods is facilitated by low transport costs. Often, however, transport costs are less important in trade than used to be the case. They are largely irrelevant where the trade is not so much in physical export or import of the goods, but in design, intellectual property and other intangibles. Trade in services, to which several speakers have already referred and in which the United Kingdom excels, is hardly dependent on geographical propinquity of the trading nations concerned at all. It is in the UK’s interest to have open trading relations with the rest of the world as well as the EU, and I want to put the debate in that context, to take advantage of all the possibilities: traditional ties with the Commonwealth and the growing prosperity of India, China and other countries well beyond the boundaries of the EU; let us not forget trade with them. Of course, I realise that it is not practical to build a co-ordinated system of competition policy, effective employment and consumer standards into free trade across the world, to create a single internal market as we are trying to do in the EU. However, it is in the UK’s interests to do what we can through the World Trade Organisation, the Doha round and so on, and to combat the protectionist tendencies within the UK which sometimes come from leading countries such as France. We must promote the further development of the EU single market, but not as if the EU were our only trading partner. We should be outward facing to the world as a whole, encourage the EU to do likewise and, to paraphrase Commissioner Peter Mandelson, we need open European markets and open global markets.