Perspective of the EU Common Market after Switzerlands Referendum - Coursework Example

 EU Common Market and Switzerland Introduction A common market refers to a stage in a multinational integration process that has an objective of removing all barriers to the intra-community trade to merger national markets into only a single market creating conditions related to an internal market. Establishment of the European Union common market initially required elimination of all export and import duties that existed between the member states before foundation of European Economic Community. In addition, it entails free establishment of companies and people in all territories of member states, in order to exercise business or professional activities. In my opinion, a common market should involve the existence of four main fundamental freedoms between the member states. These freedoms include; freedom of movement for goods, freedom of movement associated with non-salaried and salaried workers, freedom of establishing companies and persons in a territory of any involved member state and provision of services in a host country, and freedom of movement of capital for personal or business purposes. In addition, I feel that, these four classes of freedoms are basic elements to a common market since it enables free movement of people, money, goods, and services across all 28 countries in the European Union. This minimizes barriers within the countries allowing organizations, consumers, and individuals to make use of opportunities presented to them as they have direct and free access to the twenty-eight nations in the European Union. From these reasons, am able to conclude that, the key idea of a common market is actually freedom. Moreover Taborda (2014, p.28) suggests that, Establishing a common market that resembles an internal market not only implies liberalization of trade within the member states who are participants but also requires free movement of factors associated with production such as capital, labour and services. Mark (2014) pointed out that, with the elimination of barriers to trade for EU common market, many companies have expanded and exports and imports have increased greatly. Costs of trading have significantly decreased hence more customers and minimal overheads for the businesses in which to trade their services or products. He also reported that the costs may be passed on to improve profits for organizations which helps improve the economy. In reference to Colomer (2010, p.78), the costs may also be reinvested and this contributes to creating more employment from a profitable firm. Moreover, Mark (2014) argued that, the EU common market has increased competition for companies, causing formation of rivals from nations outside the market too. In my opinion one of the benefits of having a single market is that customers enjoy advantages of lower prices, wider choice and better quality of goods and services. So basically, an EU citizen can buy services and goods from any firm in the EU market without worrying about external taxes. Middleton (2011, p.235) argued that, the common market has also promoted freedom of every citizen in choosing where to work study or live as European Union citizens have an opportunity to seek employment in any part of the EU. Negative impact of the EU common Market Even though the European market is appreciated for expanding the economy, it also presents some negative impacts. Middleton (2011, p.235) suggested that, from an environmental approach this single market is actually not very sustainable. Most countries are importing products from other countries and exporting similar products to other countries. This is basically unnecessary because these countries spend a lot on crude oil instead of investing these funds on other resources. Moreover, the crude oil is a natural resource which is running out at a fast rate. Mark (2014) gave out an example that he felt it would fit in this clause where he mentioned the United Kingdom. According to the studies conducted by Glencross and Trechsel (2010, p.87), in the year 2013 alone, the UK exported pig meat of more than 255,000 tones and imported an estimated 855,000 tones of the pig meat. Mark felt that if the UK kept theses exports within, then the UK would be importing pig meat of 255,000 tones less. This would have a vast positive impact on the United Kingdom’s environment. However Mark (2014) still pointed out that, with economic and trade agreements put in place, it may be an almost impractical task of cutting down on exports and imports to and from the United Kingdom. According to Mark’s (2014) opinion, from this example, it is clear that most governments of different nations across the globe are very much obsessed with monetary and economic gains making them fail to see long term troubles they are actually getting themselves into. This however, in my opinion, does not put the European Union in a more disadvantage position since the benefits of the single market are more than the disadvantaged. Although a lot of work still has to be done to ensure that Europe’s businesses, citizens and consumers gain maximum benefits from the European Union common market. Hence the reason why I feel that the European Union adopted a Single Market Act to help create jobs and boost the economy of the European Union countries. However, movement of people from one country to another is controversial. I also feel that, in some cases, workers who are immigrants can leave people in a nation they enter without jobs which puts strains on the government budgets because of benefit payments. In reference to the studies conducted by Pardo and Peters (2012, p.45), the benefit payments can actually prevent growing of the economy and increase unemployment levels. Moreover, Mark (2014) said that this freedom of people may create strains on resources of a country that is more favorable to live in. He gave out an Example involving the UK having several problems associated with immigrants because of the appeal of National Health Service that gives free health care, which is paid for by tax payers in the UK. According to Taborda (2014, p.28), as immigrants take a lot of low skilled and less paid jobs, citizens from a country with higher taxes pay for the immigrant health care services. However Mark (2014) said that, in nation like Switzerland, most immigrants are paid well and highly skilled. He further argued that the immigrants contribute as much to government’s budget as most citizens of the country. In addition to this the UK also has restrictions on people to come and work in the UK as much as most people from the United Kingdom migrate to different countries in the European Union. Taborda (2014, p.28) noted that, the EU migrants, who go to the UK with an aim of taking advantage of the UK’s benefits system, today face a barrier to accessing state benefits. This is so because, according to my opinion, for a European migrant to gain access to most of UK’s state benefits he or she should have been earning one hundred and fifty pounds a week for a period not less than three months. The European Union Commission In reference to Magstadt (2011, p.499), the EU single market act was adopted by the European Union Commission and since the time of this adoption there has a driving force behind the EU’s economic development and the act has remained to be the best asset required to face the crisis of immigration. In support of this Moshlina (2014) said that there have also been twelve key drivers for competitiveness, social progress and growth including facilitating workers’ financing consumer protection for medium and small size enterprises including taxation, facilitating employees’ mobility, energy networks, transport and most importantly the digital market in Europe. Moshlina (2014) also suggested that, to help finance small businesses the commission’s goal has always been to create an easier environment for the twenty two million small businesses in the EU to gain access to finances to grow. This is so because in my opinion finance is key criteria in assisting small businesses to strengthen their infrastructure, take on more workers, and launch new products. Moshlina (2014) further suggested that, to accomplish the goal the commission has found new methods of financing for instance the commission has used an approach of creating a single European Union passport used for venture capital. In reference to Glencross and Trechsel (2010, p.87), this allows businesses to raise funds needed for investing across the European Union countries. Moshlina (2014) also pointed out that, the money associated with venture capital is actually money from investors for starting up small businesses and firms with a perceived potential for long-term growth. Most of these funds are raised from financial institutions requiring such partnerships or investments such as investment banks and from wealthy investors. According to studies conducted by Church and Head (2013, p.252), there is a need for the venture capital for markets to be active since active markets are important drivers for a more entrepreneurial, competitive, dynamic and innovative European economy which is trying to be achieved by European Union’s Lisbon strategy. However, the venture market has many disadvantages for instance; there are naturally occurring obstacles that occur due to differences in legal, language, and regulatory requirements. Nevertheless, Moshlina (2014) also argued that the main challenge is lack of consistency between twenty-seven tax systems across European Union that may lead to tax treatment uncertainties, administrative obstacles, and double taxation. This has resulted in restrictions of the venture capital to the domestic national markets instead of extending across international markets and the European Union. Setbacks of the European Union Single market Oliver (2014) said that, in many cases the common market has provided opportunities that may have been hard to achieve pre common markets for example transparent and fare competition policies, free trade, the world’s biggest market and a single market. He also reported that the common market has indirectly impacted the economy in terms of health care in the majority of member states including; Portugal, Greece and Spain. Oliver (2014) also challenged that, although creation of a single market was mainly by all means possible not the only reason of the EU commission’s trouble but majority of the stress came about during the crisis of global economy. Oliver (2014) also pointed out that the European Union regulatory body did little in terms of protecting these vulnerable nations. In reference to the studies conducted by Barnard (2013, p.9), it is only currently after losing thousands of jobs these nations are beginning to gain progress, in which by coincidence the countries were able to achieve this via assistance from the European Union. Switzerland’s issue of immigration curb Oliver (2014) reported that, Switzerland actually voted to initiate a cap regarding immigration. However, in my opinion the EU common market has been negative and positive to the UK. The positive effects include free movement, free trade, competition laws and low tax. The negative effects include costs of staying EU and no immigration cap. However, Church and Head (2013, p.252) pointed out that the UK is taking certain measures to recover from the negative effects some of which are tighter spending and welfare reforms. A good example is the cap on benefits that can possibly prevent people from immigrating into the United Kingdom as it is harder to get money. Alexander (2014) said that, trade is an important matter that Switzerland as a nation will face if they make a decision of going ahead with the proposed laws regarding immigration. However I fell that a review of votes may create change regarding this decision therefore there is no much point to go ahead with the voting. Alexander (2014) thinks that it is because the country relies heavily on immigrant workers. Switzerland has actually had an increase in trade particularly in the pharmaceutical and chemical industries. He further pointed out that, even though immigration issues don’t surround Switzerland as a nation, its reputation is likely to stop other countries from trading with Switzerland and this may eventually amount to other nations sourcing products like the pharmaceutical and chemical products from elsewhere. Moreover Alexander (2014) argued that, if Switzerland re-voted on the immigrant issue, it would perhaps create some uproar that in many ways may be justified. A re-vote would probably be an evident bias to Switzerland in terms of keeping as it is. Chalmers et al. (2010, p.782) suggested that, it would have been wise for Switzerland’s government to set a clear percentage gap with an aim of identifying a clear looser or winner. Mark (2014) argued that, if the percentage gap between a yes vote and no vote would be ten percent then re-voting would be favorable. He further said that this would actually mean that the final verdict would be determined by the majority than a lesser percentage of the Swiss citizens who may proper guidance regarding the effects of this referendum. Moreover, he felt that with Switzerland still not officially part of European Union, it could be difficult to implement their decisions. However, according to the opinion from Alexander (2014), implementing this percentage gap may have some negative impacts for instance, if Switzerland was to export approximately 50-55% of their products to the European Union countries, it would be difficult to afford not backtracking and coming to an agreement with other countries with an effort of fixing this issue. Magstadt (2011, p.499) pointed out that, the initial voting process of the new immigration curb in Switzerland has received criticism from Switzerland nationals and also from the European Union countries. According to Magstadt (2011, p.499), the European Union has strongly warned Switzerland that it will reconsider all its other ties like its imports and exports. In other words, according to studies conducted by Bjarnason (2010, p.27) if the Swiss suspends immigration from European Union, then it may not have the ability to count on trade and economic benefits which it is actually enjoying currently. Therefore, in the end of it all re-voting on the issue of immigration would be the best solution for Switzerland. Furthermore, , currently Switzerland has invalidated a Swiss-EU agreement involving the freedom of movement. Alexander (2014) added that, this will in turn create a major impact regarding trade from the Swiss to European Union leading to a huge setback for Switzerland since over half of its exports are to the European Union countries. In my opinion, it is important to note that, as the referendum is being disputed by the Swiss nationals including its invalidation, the United Kingdom is likely to lose out on several benefits it currently has as a member. The current stand of The Swiss on the EU single market Hussein (2014) said that, bearing in mind the current situation in which the Swiss is in, a re-vote would be probably be the best in which to work towards. However according to studies conducted by Bjarnason (2010, p.27), Switzerland is likely to be in a position of loosing out multibillion Euros in terms of education and research scheme, especially their involvement in the Erasmus program in Europe. According to views from Hussein (2014), the Swiss does not have the capability to choose and pick which agreements it would lie to pursue in relation with the mutual agreement. However, I feel that the Swiss has an opportunity of re-assessing their current stance on immigration quotas. Hussein (2014) argued that although they really haven’t specified accordingly the immigration quotas, the Swiss has a three year period of negotiating with Brussels about the current situation of immigration curb and from severe implications and the current threats which the European Union is vindicating the Swiss. Impact of the immigration curb on companies in Switzerland In my opinion, the current immigration issues are clearly a difficult challenge because of the agreement that the Swiss has with the European Union. However, in the opinion from Mark (2014), Britain cannot be excluded from the European Rules which leaves them with only a solution of an EU reform although it is unlikely. According to the studies conducted by Schwok (2009, p.180), it is a difficult case to deal with due to the fact that it is not a member of the EU officially. Mark (2014) thought that maybe the solution would be to allow all nations in the EU to enforce a small quota. In addition, he said that Switzerland should focus more on becoming one of the full members of European Union common market. Oliver (2014) said that there are actually 15 fortune five hundred firms with headquarters in the Swiss. He also reported that everything from food giants, to the global banks and other financial services such as UB Band Credit Suisse are but a few fortune companies with headquarters in the Swiss. The existing weakness in the European Union According to Oliver (2014), the Swiss nationals who support quotas are blaming rising costs in housing, cramped systems of public transport and decreased salaries on the increased number of the immigrants who reside in the country. Oliver (2014) concluded that the negative effects clearly show that the voters of the Swiss are focusing more on the direct benefits of the immigration cap instead of the long term problems it may actually cause. In my opinion, the new immigration curb in Switzerland is simply a short term resolution for supporters of the new immigration curb since it would create more employment for the Swiss nationals. Jovanovic (2011, p.287) suggested that, the problem that arises is that, theses supporters do not realize that there would be an increased cost of living because they will actually not have the ability of taking advantage of the European Union single or common market in future. I also feel that, because of increased import of the products with taxes, prices of these products are more likely to rise in the future. This will then create a long term problem which Switzerland will have to deal with. Also the companies that have head quarters in the Swiss will heavily suffer from the increased taxes on the export and import of their services and products to and from the European Union. Alexander reported that the tax laws in the Swiss are actually different compared to the tax laws in the United Kingdom and this affects most companies in the Swiss that depend on Switzerland and other countries in the European Union for financial benefits. He gave out an example of Vodafone Company that recently based their headquarters at Luxembourg with an aim of avoiding to pay high tax rates although their main operating area was actually based in the United Kingdom. He reported that the company eventually was able to decrease that figure was paid back substantially. He also added that the Vodafone Company is also currently being chased for 1.6 billion pounds from the government of India. Alexander (2014) then concluded that, from his example it clearly shows some level of weakness that exists within the European Union common market and its authority. In support of the fact that most of the Swiss nationals are actually looking at short term effects like the idea of the Vodafone Company, Grande-Bretagne (2004, p.50) in his studies he noted that there was a huge difference among the Swiss voters. Also according to the opinion from Alexander (2014), votes clearly showed who were not or were actually in support of the referendum. He reported that the areas of French-speakers actually voted heavily not to favor the quotas while in areas with Italian speakers in canton of Ticino voted firmly in favor of the quotas. Conclusion For the European Union common market and its agenda the Switzerland referendum may actually turn out to become a taste of popular protests in the future. If the Swiss after the renegotiations involving its relationship with European Union ends boundless migration for European Union nationals, other countries like the United Kingdom may follow suit. The EU has always had a relationship with democracy that is strange, not least since doesn’t always generate outcomes that EU officials may like to see. The Swiss referendum is actually the case in point. References Barnard, C. (2013). The substantive law of the EU: the four freedoms. Bjarnason, M. (2010). The Political Economy of Joining the European Union. Amsterdam, Amsterdam University Press. Bewes, D. (2010). 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