Single EU Transport Market Long Overdue

In their exhausting daily struggle to prevent the breakup of the eurozone, Europe’s leaders are in danger of allowing their most successful project, the single market, to stagnate, at best, or unravel, at worst.

The single market, which celebrates its 20th anniversary on Jan. 1, has made significant progress toward the free movement of goods, services, capital and people across its 27 member states. It is the world’s biggest economy with 500 million consumers, 21 million companies and an annual output of almost $18 trillion.

But there’s still a long way to go to remove the regulatory and physical barriers standing in the way of a genuine borderless single market to match the United States, the original goal of its architects.

And transport, which has a key role in breaking down barriers and cutting costs for companies and consumers alike, is a major let down, with many sectors still trapped in a nationalistic mindset.

EU leaders acknowledged the strategic importance of transport in the communique from a Brussels summit in October. “In the field of transport, eliminating regulatory barriers and tackling bottlenecks and missing cross-border links are essential in order to guarantee the effective operation of the single market and promote competitiveness and growth.”

But transport, long a Cinderella in national and EU budgets, is likely to fall further down the pecking order, as Europe grapples with more pressing issues.

True, there have been genuine breakthroughs in some sectors. Inland shipping and trucking have been deregulated, spreading cross-border competition and squeezing previously inflated freight rates. Cross-border and domestic rail freight markets have been liberalized, too, though entrenched state-owned operators have crushed, bankrupted or taken over private entrants in most EU countries. Cabotage also has cut short-sea shipping costs, particularly in peripheral regions. Aviation deregulation has spawned cross-border mergers, boosted budget airlines, slashed fares for business and leisure travelers, and allowed bankruptcies of inefficient feather-bedded flag carriers. 

The outlook for the much hyped Trans-European Networks is looking grim, however, as European politicians plead penury to postpone projects they were never that much interested in even in better times. Earlier this month, French President Francois Hollande pledged to push ahead with a high-speed rail link between Lyon and Turin, one of Europe’s busiest trucking routes. “But a lot will depend on the European budget,” he added, condemning to further delay an urgently needed project that’s already been stuck in the planning pipeline for 11 years.

And with the EU struggling to agree a new seven-year budget through 2020, several other pan-European transport corridors likely will remain on the drawing board for the foreseeable future.

But EU leaders can easily remove the regulatory and technical barriers to the development of a truly single transport market. The single market doesn’t exit on the sea, so a ship sailing from Genoa, Italy, to Barcelona, Spain, is considered as a foreign voyage, which requires time-consuming filing of customs documents, which makes a mockery of the EU’s Motorways of the Sea program aimed at switching goods from CO2-spewing trucks on congested roads to more environmentally friendly ships.

Freight trains still face an array of national technical, safety and labor standards that force them to spend hours at a standstill in “foreign” cross-border rail stations. And regional politicians ensure that local passenger trains get timetable priority over international freight services.

Europe’s port industry also remains fragmented as dockers’ unions, supported by European politicians, killed off a reform program aimed at creating a competitive level playing field by rooting out hidden subsidies. 

The EU’s decade-long effort to create a single European sky has also failed because the majority of member states have failed to cede control of their air traffic control administrations. As a result, aircraft have to fly through 650 airspace sections operated by 60 control systems managed by national governments with minimal cross-border coordination. Europe’s airspace is about the same size as that of the U.S., but it handles half the traffic at twice the cost.

While saving the eurozone is the EU’s top priority going into 2013, its leaders should take time out to strengthen the single market amid fears it could start to unravel as protectionist sentiment takes hold in its economically weaker member states — including Italy and Spain.

And the transport sector is the most obvious place to make a start.

Contact Bruce Barnard at brucebarnard47@hotmail.com.

 

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