the case of European integration

Main stages of European integration
- essential question after 1945: how to preserve peace in
Europe? Economics as a tool for a mostly political project
- model: Communauté européenne du charbon et
de l'acier (CECA). The Six (Germany, Belgium,
France, Italy, Luxembourg, Netherlands), 1951:supranational management of strategic industries
- 1957: treaty of Rome on European Economic Community
with those six
- 1960: in competition European Free Trade Area (EFTA)
Austria, Denmark, Norway, Portugal, Sweden, CH and UK
- Creation of 2 concentric circles of different weight (EEC was
twice EFTA in GDP)
- Trade barriers are eliminated inside each zone (1969 for
EEC, before schedule) but not between (bilateral agreements
between each and the EEC)
- 1973: Denmark, Irland and GB get in
- 1970s: « euro-pessimism »; monetary integration fails
No further trade integration (re-fragmentation of the domestic
markets through technical and regulatory barriers)
- 1981: Greece; 1986: Spain + Portugal
mid 1980s: integration process starts again with Delors as
president of Commission
-Single Market program or “1992”
- 1985, « white book » 300 measures are identified to transform
the Common Market into a Single Market
- 4 freedoms of movement: goods, services, persons and capital
- 1) Goods:
- elimination of border formalities
- liberalization of public market procurement
-harmonization and mutual recognition of technical and
sanitary norms
- Some harmonization of VAT rates
-2) Liberalization of factors of production
- integration of capital markets
- liberalization of entry policies of domestic markets
- Freedom of movement for workers in Europe (still not entirely
done in effect)
- 3) Movement of liberalization/deregulation
- elimination of subsidies
- European competition policy
- 4) qualified majority vote at the Council of Ministers on
questions related to the Single Market
- 5) Substantial increase of Structural Funds : regional policies
in favor of poorest regions and poorest countries (Irland,
Greece, Portugal, Spain); 40% of budget
After 1992 other measures of liberalization: transport,
insurance, energy…(services?)
- Treaty on EU: Maastricht, 1992, European Monetary Union
1
Fourth enlargment: End of 1980s, Single market was a pb for
remaining EFTA countries: sign bilateral agreements that
extend the Single Market measures (except CAP and external
trade policy)
- But unbalanced: force them to accept present and future
legislation (« Acquis Communautaire ») with no say
- Austria, Finland and Sweden join in 1995: 15 countries
- 2004: Cyprus, Estonia, Hungry, Leetonia, Lithuania,
Malta, Poland, Slovak + Czech Republic and Slovenia
- 10 years after Single Market: transposition deficit
% of Single Market directives that not transposed as national
law decreases from 21% to 2.1%
- Only 5 (Sweden, Finland, Denmark, Neth., UK) satisfy a
transposition deficit of less than 1.5 %
- Three (France, Greece, Portugal) have more than double
this.
- 30% of legal procedures on Single Market are against
France + Italy
Figure 1: Le déficit de transposition a nettement chuté au cours des dix dernières
années
25
21.4
Pourcentage
20
13.4
15
11
9.6
10
7.8
6.3
3.9
5
3.6
3.0
2.0
2.1
1.8
M
ai
02
No
v.
02
No
v.
99
No
v.
00
No
v.
01
No
v.
92
No
v.
93
No
v.
94
No
v.
95
No
v.
96
No
v.
97
No
v.
98
0
Note: Le déficit de transposition montre le pourcentage de directives «marché intérieur» non
communiquées comme transposées par rapport au nombre total de directives «marché intérieur» qui
auraient dû être transposées au délai prévu.
Figure 2: Deux tiers des États membres n'atteignent pas l'objectif de 1,5 %
AELE
Pourcentage
4
Pourcentage
3
3
2
1
0
2.1
1.4
1.0
LIE
ISL
NOR
2
Objectif
de 1,5 %
1
3.8
3.3
3.1
2.9
2.7
2.6
2.6
2.3
2.0
1.6
1.4
1.3
0.7
F
EL
P
A
D
I
IRL
L
B
E
UK
NL
DK FIN
0.6
0.4
S
nombre de
56
directives
48
46
42
40
38
38
34
30
23
21
19
10
6
0
9
Note: Situation au 1 er octobre 2002. Il existe actuellement 1 475 directives et 324 règlements en vigueur
portant sur le marché intérieur tel qu'il est défini dans le traité.
2
AELE
Affaires
pendantes
Affaires pendantes
250
200
40
30
20
10
0
30
13
8
NOR
ISL
LIE
150
100
50
0
216
190
143
134
133
132
121
107
79
62
51
39
33
33
32
F
I
D
E
EL
IRL
B
UK
A
NL
P
FIN
DK
L
S
Note: Nombre de procédures d'infraction engagées au 31 août 2002.
Figure 14: Le nombre de normes disponibles a grimpé en flèche en dix ans
16000
Normes disponibles
14000
12000
10000
8000
6000
4000
2000
0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Normes européennes
dont: normes harmonisées
Note: Nombre de «normes européennes» disponibles au 1er septembre 2002, c'est-à-dire de normes
européennes (EN) ou de normes équivalentes: normes européennes de télécommunication (ETS,
Did regional integration in Europe increase trade above what
would be expected from growth etc?
what was the effect of integration on the border effect? Use
gravity equations on the determinants of trade flows
Controlling for distance, a common language, size of GDP what is
the effect of crossing a border on trade flows in Europe?
ln M ij = α ln GDPi + β ln GDPj − θ ln Dij
+ z (common language ) − δ (borderij )
Study (Head et Mayer) on 13 000 observations of bilateral trade
(120 industrial sectors, 1976-95, 11 countries)
i and j are regions or countries
δ = 1 if two countries δ = 0 if 2 regions inside same country
3
Results of estimations:
θ (distance) : - 0,9 on the whole period
z (common language): 1,25 on average; multiplies trade by
3,5 (exp (1,25) = 3,5)
border:
δ
78-80
81-83
- 3,2
-3
84-86
-2,8
87-89 90-92
93-95
-2,7
-2,7
-2,6
Decreased but remains large:
78-80: exp (3,2) = 23
Two countries trade 23 times less than two regions inside a
country
93-95 around 15
Fragmentation still important:
- Tariff equivalent of 36% on imports
-Still a strong bias of consumers for Home goods (the border
effect is stronger for final than intermediate goods)
Other result: bilateral trade with US and Japan did not
suffer relatively to what the gravity equation predicts (no
Fortress Europe)
Other studies on border effect:
- Link to single currency (trade between euro countries has
increased a lot)
4