The Single Market and the Economic and Monetary Union

October 27, 2011

Challenges in the 1980s

Economic: Competitiveness Institutional International/Political

How Europe responded

Fontainebleau Summit (1984)Commitment to accelerate European

integrationBBQ resolvedEnlargement to Spain and Portugal

clearedDooge Committee

How Europe responded Two proposals on the table in 1985:

Dooge Report• Restricting unanimity

• Strengthening the EP & Comm.

• More competences for the EC

White Paper on Completing the Single Market

• Achieving SM by removing physical, fiscal and technical barriers (300 measures)

• Timetable: complete SM by Dec 1992

Single European Act (1987)

Tasks: eliminating physical, fiscal and

technical barriers. • Mutual recognition (Cassis de Dijon)

Around 300 proposals to adopt to achieve the single market by 1992

Institutional reform

Europe 1992:

Single European Act (1987)Majority voting in the Council of Ministers

on single market issuesIncreased powers for the ParliamentEuropean Political CooperationNew competences: environment, R&D…

Europe 1992:

Why did the MS agree to delegating more sovereignty (majority voting + more power for the EP and Commission)?Neofunctionalist explanation Intergovernmental explanation

Explaining SEA

Neofunctionalism Role of supranational institutions

• European Parliament• European Court of Justice• European Commission

…And their leaders (Jacques Delors)Role of transnational groups (ERT, UNICE)Success of EMS: SPILLOVER?

Explaining SEA: Intergovernmentalism

Realist roots

European integration as a bargain between states

Argument Member state interests States would resist integration in areas of high politics

Explaining SEA: Liberal Intergovernmentalism

A. Moravcsik Theory of intergovernmental bargaining

AND Theory of national preference formation

Negotiating the Single European Act (Moravcsik 1991)

criticizes the neofunctionalist explanation:Parliament and Commission role

minimalTransnational business groups (ERT,

UNICE) got involved lateSupranat’l elites (Delors, Cockfield)

Negotiating the Single European Act (Moravcsik 1991)

His explanation:SEA rests on interstate bargains Lowest-common-denominator

bargaining and threat of exclusionProtection of sovereignty

• Little role for supranational institutions or actors

Changes in national interests (convergence of preferences)

Developments in and outside of the EC after the SEA

Berlin Wall came downCold War ended German re-unification

Proposals for monetary and political union

Thatcher replaced by Major (1990)

Intergovernmental Conference (1990-1)

Member states negotiate political union and monetary integration in parallel

Treaty on European Union (Maastricht Treaty) signed in 1991

Ratification and the Danish no vote

Treaty on European Union (1992)

The three pillars: First pillar: Economic, Coal and Steel Communities and

the Euratom Second Pillar: Common Foreign and Security Policy Third Pillar: Justice and Home Affairs

Economic and Monetary Union European Parliament strengthened (codecision) Subsidiarity More EU competences European citizenship

Monetary Union and single currency

History of monetary cooperationHague Summit and the Werner Plan

(1970) European Monetary System (1979) Delors Report (1989)

Member state interests in monetary union

Economic and Monetary Union:

1992: TEU: three stage plan confirmed. Convergence criteria:

Price stabilityBudgetary disciplineCurrency stabilityInterest rate convergence

EMU evolution:

December 1995: Madrid Summit Renewed commitment and the “Euro”

1996 Stability and Growth Pact May 1998

Decisions on which member states will participate European Central Bank set up

January 1999 Exchange rates irrevocably fixed Virtual Euro

January 2002: Euro notes and coins start circulation