Single European Act (1986): Building the European Single Market

The Single European Act, signed in February 1986, was the first major revision of the Treaty of Rome that had founded the European Economic Community. It set a firm deadline of 31 December 1992 for completing a single market without internal frontiers, and it changed voting rules so that the necessary laws could actually be passed. It relaunched European integration after years of stagnation and paved the way for the European Union.

Background

By the early 1980s the European Community was often described as suffering from “Eurosclerosis”. Although customs duties between members had been removed in 1968, trade was still held back by thousands of national technical standards, border formalities and rules protecting domestic firms. Most decisions required unanimity, so a single government could block progress.

Several developments prepared the way for change. In the Cassis de Dijon ruling of 1979, the European Court of Justice established the principle that a product lawfully sold in one member state should in general be accepted in the others. In 1984 the European Parliament, inspired by the Italian federalist Altiero Spinelli, adopted a draft treaty on European Union. The same year, the Fontainebleau summit settled a long dispute over Britain’s budget contributions.

Delors and the White Paper

Jacques Delors, a former French finance minister, became President of the European Commission in January 1985. He chose the completion of the internal market as the project most likely to win support from all member governments. The British commissioner Lord Cockfield drafted a White Paper, “Completing the Internal Market”, presented in June 1985.

It listed around 300 measures needed to remove physical, technical and fiscal barriers, with a timetable ending in 1992. Business leaders, worried about European competitiveness against the United States and Japan, gave the plan strong backing.

At the Milan European Council in June 1985, the Italian prime minister Bettino Craxi called a vote on holding an intergovernmental conference to revise the treaties. It was carried by a majority over the objections of Britain, Denmark and Greece, an unusual step in a Community that normally worked by consensus. The conference reached agreement at the Luxembourg European Council in December 1985.

Signing and ratification

Spain and Portugal joined the Community on 1 January 1986, bringing its membership to twelve. Nine states signed the act in Luxembourg on 17 February 1986. The remaining three signed in The Hague on 28 February. Denmark first held a referendum on 27 February, after its parliament had rejected the package, and Danish voters approved it. Italy, which had hoped for more ambitious reforms, and Greece signed on the same day.

Ratification was delayed in Ireland, where the Supreme Court ruled in the Crotty case that part of the act required a constitutional amendment. After an Irish referendum approved it in May 1987, the act entered into force on 1 July 1987.

What the act changed

The act defined the internal market as an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured, to be achieved by 31 December 1992. Its main reforms were:

• Qualified majority voting in the Council for most single market laws, so that no single country could block them.
• A cooperation procedure giving the European Parliament a greater say in legislation.
• New areas of Community responsibility, including environmental policy, research and technology, and economic and social cohesion to help poorer regions.
• A legal basis for European Political Cooperation, the coordination of members’ foreign policies.
• Formal recognition of the European Council of heads of state or government, and the creation of a new Court of First Instance.

Consequences

The 1992 programme drove a wave of legislation, and most of the planned measures were adopted by the deadline. Customs formalities between member states largely disappeared on 1 January 1993, and mutual recognition of standards opened markets for goods and, more slowly, services.

The act’s success encouraged further steps. Delors went on to chair the committee that drew up a plan for economic and monetary union, which was written into the Maastricht Treaty of 1992. The free movement of persons, however, proved harder, and much of it was pursued separately through the Schengen Agreement.

Timeline

• 1979, 20 February: The Cassis de Dijon judgment establishes mutual recognition of products.
• 1985, January: Jacques Delors becomes President of the European Commission.
• 1985, June: The Commission publishes its White Paper on the internal market; the Milan summit calls an intergovernmental conference.
• 1985, December: The Luxembourg European Council agrees the text of the act.
• 1986, 17 February: Nine member states sign the Single European Act in Luxembourg.
• 1986, 28 February: Denmark, Italy and Greece sign in The Hague.
• 1987, 1 July: The act enters into force.
• 1993, 1 January: The single market officially comes into being.

Why it matters

The Single European Act turned the old promise of a common market in the Treaty of Rome into a concrete programme with a deadline and the voting rules to deliver it. The single market it created remains the economic core of the European Union, and the act’s institutional reforms began the gradual strengthening of the European Parliament.