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1. Reinventing Europe’s Single Market: A Way Forward to Align Ideals and Action

Author:
Matthias Bauer, Dyuti Pandya, Vanika Sharma, and Elena Sisto
Publication Date:
06-2024
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
It is essential for EU institutions and Member State governments to shift their focus from the abstract concept of the “Single Market” to the concrete objective of “legal harmonisation in the EU.” This transition represents a strategic realignment towards more pragmatic policymaking. Adopting a 28th regime to address national regulation discrepancies would align with this goal and enhance the Single Market’s effectiveness in promoting economic growth and competitiveness. Given the EU’s ongoing loss of relative global economic clout, it is crucial to establish an ambitious timeline for implementing the most critical Single Market reforms. The Letta Report serves as a wake-up call to revitalise the EU’s Single Market, emphasising the need for decisive action. Its vision largely hinges on legal harmonisation within Europe, building on early efforts to liberalise markets and establish a truly integrated European market. Despite efforts, “integration fatigue” remains a significant challenge due to legal fragmentation across European economies. Previous reports, from the Cecchini Report in 1992 to the Europe 2020 Strategy, have highlighted persistent issues like regulatory divergences and declining political support for market integration. Despite numerous proposals, progress has been limited, and many challenges persist or have worsened (see Section 2). An analysis of EU reports reveals a shift in policy priorities over time. Initially, there was a strong focus on liberalisation and market opening, with less attention given to state aid and industrial policymaking. The Letta Report highlights the importance of regulatory convergence and harmonisation, reflecting a deeper understanding and recognition of the drivers of EU competitiveness. The rise of nationalism and a shift towards “Strategic Autonomy” within the EU have hindered crucial market reforms. This highlights the importance of aligning laws across Member States to strengthen and reinforce EU’s economic resilience and international competitiveness (see Section 3). EU institutions and Member State governments should set specific goals for “legal harmonisation in the EU.” This shift would address real challenges faced by businesses and citizens, and build political will for necessary reforms. Prioritising legal harmonisation would enhance internal cohesion and align national laws with Union-wide goals. An actionable roadmap – potentially with a 2028 deadline – is crucial to address the substantial gap between ambitious EU strategies and Europe’s economic realities. (see Section 4). Implementing sector-specific and horizontal policies in a new regulatory regime would improve cross-border operations and competitiveness. The Letta Report advocates for a European Code of Business Law to establish a unified regulatory framework, introducing a 28th legal regime to address national regulation discrepancies. Extending this regime to include tax and labour market policies would significantly enhance cross-border operations. The EU and Member State governments can eliminate substantial internal barriers by prioritising key horizontal policies affecting all businesses, such as fragmented tax laws, labour market policies, and social security systems. Simplifying and harmonising these policies on the basis of the facilitation of four freedoms is crucial for unlocking the Single Market’s potential for businesses and workers, boosting the EU’s global competitiveness. Allowing coalitions of willing countries to advance in certain areas of legal integration provides a viable solution to the long-standing Single Market “fatigue”. By enabling smaller groups of Member States to pursue integration in specific areas, the EU can bypass the constraints imposed by rigid voting requirements and achieve greater agility, accountability, and acceptance in EU law-making. This approach not only fosters flexibility but also upholds the fundamental principles and objectives of the EU. To ensure the integrity of the EU legal order and prevent unjustified barriers or discrimination against non-participating members, it is essential to establish safeguards and oversight mechanisms. These measures would maintain cohesion within the Union while allowing for progressive legal integration among willing Member States.
Topic:
Markets, European Union, Digital Economy, and Economic Integration
Political Geography:
Europe

2. Anti-fragmentation: an incomplete diagnosis and wrong solution

Author:
Marek Dąbrowski
Publication Date:
03-2023
Content Type:
Case Study
Institution:
Center for Social and Economic Research - CASE
Abstract:
A study by Marek Dąbrowski (CASE) entitled “Anti-fragmentation: an incomplete diagnosis and wrong solution”, requested by the European Parliament's Committee on Economic and Monetary Affairs (ECON), was published in the Monetary Dialogue Papers series in September 2022. Since the 1990s, the public debt-to-GDP ratio has gradually increased in almost all current euro area member countries. In most of them, it now exceeds the Maastricht reference value of 60%, in several of them – 100%, and in a few cases – even more. It creates a severe challenge to the stability of public finances, the entire financial system and monetary stability in the euro area being also the primary cause of the so-called fragmentation. The study begins with an analysis of the excessive public debt in the euro area. An overview of the fiscal stance in the euro area as a whole and, separately, in individual Member States from 1997 to 2021 is complemented with the analysis of mechanisms of fiscal discipline – again on the EU/euro area level and the national level separately. Three causes of the ineffectiveness of these mechanisms are then identified: (1) political economy factors at the national level; (2) political economy factors at the European level; and (3) fallacies of economic science. The next part concerns ECB involvement in the sovereign debt market in the euro area. A historical analysis is conducted starting from the period of the EFC (2010–2015) to quantitative easing of 2014-2022. Two important periods from recent history are detailed - additional quantitative easing of the pandemic era (2020–2022) and the turn towards monetary policy tightening in 2022. In the last part of the study, the author argues that the problem of “fragmentation” is wrongly formulated. It is a secondary symptom of the excessive sovereign indebtedness in some euro area economies. It should be remedied by fiscal policy measures (fiscal consolidation) rather than by the ECB’s quasi-fiscal activities. The latter is not consistent with its legal status, compromises its independence (and credibility of the euro), and undermines its ability to deliver on its price stability mandate. When a targeted market intervention is necessary, it should be provided by the European Stability Mechanism, the institution created for this purpose in 2012, instead of the ECB.
Topic:
Globalization, European Union, Finance, Trade, and Economic Integration
Political Geography:
Europe

3. Global value chains: Potential synergies between external trade policy and internal economic initiatives to address the strategic dependencies of the EU

Author:
Agnieszka Skowronek and Jan Hagemejer
Publication Date:
03-2023
Content Type:
Case Study
Institution:
Center for Social and Economic Research - CASE
Abstract:
Global value chains enable two-thirds of international trade, notably for the EU. The EU wants to preserve its commercial links with third countries and organisations to make up for trade disruptions. This study examines sustainable supply of raw materials, commodities, and critical goods using the EU's Open Strategic Autonomy concept. It examines which raw material are crucial for sustainable supply and necessary for the green transition. The paper examines EU internal legislation and international cooperation instruments to determine the EU's disruption risk. It evaluates the economic impact of EU preferential trade agreements on raw material availability. The study illustrates the political and economic relevance of raw material partnerships and plurilateral and bilateral trade agreements. It analyses the EU's toolbox for safeguarding its interests and making independent trade choices to counteract other actors' unfair practices and intervention. Finally, the paper examines regulatory frameworks, international alliances, and activities to find ways to strengthen global value chains in critical EU industries.
Topic:
Globalization, European Union, Trade, Global Value Chains, and Economic Integration
Political Geography:
Europe

4. The Labour Market Entry and Integration of Refugees and Other Migrants in Austria

Author:
Stefan Jestl and Maryna Tverdostup
Publication Date:
11-2023
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper analyses the labour market entry of refugees and other (non-humanitarian) migrants originating from middle- and low-income non-European countries that arrived in Austria in 2014-2016. Specifically, we analyse factors that shaped the transition to and out of the first job in the Austrian labour market, document the characteristics of the first job and explore job stability in Austria. Even though refugees took longer to find a job, individual and household characteristics, as well as labour market indicators, are associated with the time between arrival and the first job in Austria, similar to other migrants. Refugees and other migrants also found similar job types as their entry jobs, which tended to be located in low-wage segments. The results, however, suggest that other migrants held their first job, on average, for a longer time than refugees. Although other migrants quit their first job relatively quickly when it was marginal employment, refugees tended to hold marginal jobs as long as full-time and part-time jobs. Finally, our results suggest that entry jobs with a higher quality in terms of working hours and wages (i.e. full-time jobs) tended to be linked with job stability, while entry jobs with a lower quality (i.e. marginal jobs) tended to be associated with job instability for both refugees and other migrants. The results of the paper showcase the importance of immediate access to various training and re-education programs for refugees to improve the quality of their entry jobs and their long-term prospects in the Austrian labour market.
Topic:
Migration, Refugees, Labor Market, Economic Integration, and Jobs
Political Geography:
Europe and Austria

5. From Enlargement to the Unification of Europe: Why the European Union needs a directorate general Europe for future members and association countries

Author:
Srđan Cvijić, Marie Jelenka Kirchner, Iskra Kirova, and Zoran Nechev
Publication Date:
06-2019
Content Type:
Special Report
Institution:
Open Society Foundations
Abstract:
The need for the European Union’s involvement in the Western Balkans, Georgia, Moldova, and Ukraine has never been more acute. The European Commission’s structures are not up to the job. A new approach is needed to respond to the realities on the ground and in member states. The European Union needs to boost the tools of the European Commission to move the process on from enlargement and move decisively towards the unification of Europe. This means creating a directorate general that would have the resources to drive forward the accession process with the Western Balkans countries and the ambitious trade and reform agenda in Ukraine, Georgia, and Moldova. A new directorate general Europe could play this role.
Topic:
Regional Cooperation, Treaties and Agreements, Europe Union, Trade, and Economic Integration
Political Geography:
Europe, Ukraine, Moldova, and Balkans

6. Involuntary migration, inequality, and integration: National and subnational influences

Author:
Rachel M. Gisselquist
Publication Date:
12-2019
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Across the world, we observe different experiences in terms of inequality between migrant and ‘host-country’ populations. What factors contribute to such variation? What policies and programmes facilitate ‘better’ economic integration? This paper, and the broader collection of studies that it frames, speaks to these questions through focused comparative consideration of two migrant populations (Vietnamese and Afghan) in four Western countries (Canada, Germany, the UK, and the US). It pays particular attention to involuntary migrants who fled conflict in their home regions beginning in the 1970s. The paper builds in particular on the literature on segmented assimilation theory, exploring new linkages with work on horizontal inequality, to highlight the role of five key sets of factors in such variation: governmental policies and institutions; labour market reception; existing co-ethnic communities; human capital and socioeconomic characteristics; and social cohesion or ‘groupness’.
Topic:
Migration, Inequality, Displacement, and Economic Integration
Political Geography:
Afghanistan, United Kingdom, Europe, South Asia, Canada, Vietnam, Germany, North America, Southeast Asia, and United States of America

7. Civil Society Voices: How the EU Should Engage Its Eastern Neighbours

Author:
Iskra Kirova and Sabine Freizer
Publication Date:
05-2015
Content Type:
Policy Brief
Institution:
Open Society Foundations
Abstract:
The EU’s “eastern neighbourhood” is an increasingly complicated and contested space. The challenge of Russia’s resurgence and regional elites’ resistance to reform are forcing the EU to reevaluate its policies. With the launch of its Eastern Partnership six years ago, the EU was ready to offer its neighbors to the east—Armenia, Azerbaijan, Belarus, Georgia, Moldova, and Ukraine—integration into the EU market, mobility of people, and close political ties in exchange for rule of law and democratic and economic reforms. Today, it questions whether this policy has secured its strategic interests and political influence. The Eastern Partnership reinforced domestic constituencies for change in at least three partners—Georgia, Moldova, and Ukraine—that in 2014 signed association agreements. It has not lost the potential to contribute to democratic processes and support reformers in the other three: Armenia, Azerbaijan, and Belarus. The Eastern Partnership remains the EU’s most effective foreign policy instrument to build accountable and stable institutions and states, and uphold the EU’s commitment to its neighbors’ sovereignty and right to make independent foreign policy choices. This policy paper—the result of extensive discussions with experts and civil society leaders—highlights local concerns and expectations about the EU’s role in the region and its support for stability and democracy. As the EU rethinks its policies in the area, this paper offers recommendations on how to make the Eastern Partnership more effective and relevant to people, societies, and government, and to secure the EU’s interests in an increasingly polarized and unstable region.
Topic:
Civil Society, Nationalism, Regional Cooperation, European Union, Democracy, Economic Policy, Elites, and Economic Integration
Political Geography:
Europe, Ukraine, Moldova, Armenia, Azerbaijan, Georgia, and Belarus

8. EU cooperation with non-member neighboring countries: the principle of variable geometry

Author:
Marek Dabrowski
Publication Date:
09-2014
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
In this study the author analyzes the experience of the European Union in cooperation with non-member neighboring countries, to which the EU’s integration process and institutions are both available. On the one hand, several non-member countries are interested in close cooperation or integration with the organization because of their future membership aspirations or simply because they consider the EU an important economic and political partner. On the other hand, the EU itself is also interested in building such close relations, for economic but often also for geopolitical and security reasons.
Topic:
Globalization, European Union, Trade, and Economic Integration
Political Geography:
Europe, Central Asia, Caucasus, and Eastern Europe

9. Economic Policy Coordination in the EMU: From Maastricht via SGP to the Fiscal Pact

Author:
Jørgen Mortensen
Publication Date:
08-2013
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
The present paper first takes a step backwards with an attempt to situate the adoption of this Treaty in discussion of the SGP and the “Maastricht criteria” (the criteria for EMU membership fixed in the Maastricht Treaty) in a longer perspective of the sharing of competences for macroeconomic policy making within the EU from the initial Treaty to the Maastricht Treaty and the Stability and Growth Pact (SGP). It then presents the main features of the Fiscal Treaty and its relation to the SGP and draws some conclusions as regards the importance and relevance of this new step in the process of economic policy coordination. It concludes that the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union does not seem to offer a definitive solution to the problem of finding the appropriate budgetary-monetary policy mix in the EMU already well identified in the Delors report in 1989 and regularly emphasised ever since and now seriously aggravated due to the Crisis. Furthermore, the implementation of this Treaty may under certain circumstances contribute to an increase in the uncertainties as regards the distribution of the competences between the European Parliament.
Topic:
Globalization, Treaties and Agreements, Economic Growth, Macroeconomics, Eurozone, Trade, Economic Integration, and Economic Stability
Political Geography:
Europe

10. Is Free Trade with the EU Good for Ukraine?

Author:
Marek Dabrowski and Svitlana Taran
Publication Date:
03-2012
Content Type:
Policy Brief
Institution:
Center for Social and Economic Research - CASE
Abstract:
The negotiations on the Association Agreement (AA) between the European Union (EU) and Ukraine, including its trade component, i.e., the Deep and Comprehensive Free Trade Agreement (DCFTA), were completed in December 2011. The agreement is practically ready to be signed, if the EU’s concerns related to the deteriorating political freedoms in Ukraine are addressed. The ball is now in Ukraine’s court and the correct and rapid response is crucial for the country’s future. Both the AA and the DCFTA offer Ukraine an opportunity to deepen its political and economic relations with the EU and modernize its own economy and state institutions. However, if fundamental economic, political, and institutional reforms are not accelerated and conducted in a more comprehensive and consistent way, the prospect of implementing the DCFTA (and its potential benefits) will come under question.
Topic:
Globalization, European Union, Free Trade, Trade, and Economic Integration
Political Geography:
Europe, Ukraine, and Eastern Europe