Market Place Europe

Market Place Europe

Market Place Europe Fifty years of public opinion and market integration in the European Union European Outlook 5

Paul Dekker Albert van der Horst Henk Kox Arjan Lejour Bas Straathof Peter Tammes Charlotte Wennekers

Netherlands Institute for Social Research The Hague, July 2007

Netherlands Bureau for Economic Policy Analysis

© Netherlands Institute for Social Research/Netherlands Bureau for Economic Policy Analysis, The Hague 2007 Typesetting and interior layout: Textcetera, The Hague Figures: Mantext, Moerkapelle Cover design: Bureau Stijlzorg, Utrecht isbn 978-90-377-0306-1 nur 740 This report is printed on chlorine-free paper. Insofar as reprographic reproduction of parts of this publication is permitted under Article 16h of the Copyright Act 1912 the fees payable by law therefore should be remitted to Stichting Reprorecht (P.O. Box 3060, 2130 kb Hoofddorp, The Netherlands, www.repro-recht.nl). ermission for reproducing (a) selection(s) of this publication for anthologies, readers and other compilations (Article 16 Copyright Act 1912) may be sought from Stichting pro (Stichting Publicatie- en Reproductierechten Organisatie, P.O. Box 3060, 2130 kb Hoofddorp, The Netherlands, www.cedar.nl/pro). Netherlands Institute for Social Research Parnassusplein 5 2511 vx The Hague The Netherlands Telephone +31 (0)70 340 70 00 Fax +31 (0)70 340 70 44 Website: www.scp.nl E-mail: [email protected]

Netherlands Bureau for Economic Policy Analysis Van Stolkweg 14 2585 jr The Hague The Netherlands Telephone +31 (0)70 338 33 80 Fax +31 (0)70 338 33 50 Website: www.cpb.nl E-mail: [email protected]

Table of contents Preface

7

Part A

Public opinion on Europe

Outline and major findings

9 9

A1 1.1 1.2 1.2.1 1.2.2 1.2.3 1.3 1.3.1 1.3.2 1.4 1.4.1 1.4.2 1.4.3 1.4.4

European integration in the Dutch press The first post-war decade First referendum in the Netherlands in 1952 Run-up to the referendum The day of the referendum Result and responses The Treaty of Rome in 1957 ‘Essential to survival’ or ‘leap in the dark’? Dutch business: threats and opportunities Enlargement to 27 members 1973: ‘the Six’ become ‘the Nine’ The eighties: three southern member states join 1995: newcomers Austria, Finland and Sweden Start of the 21st century: ‘big bang’ to the east

11 11 13 14 16 17 18 19 20 21 22 23 24 24

A2 2.1 2.2 2.3 2.4 2.5

Developments in public opinion in the eu-member states The period 1952-1975 The period 1973-2006 Differences between generations The Treaty of Maastricht and the European constitution Concluding remarks

27 27 29 33 36 38

A3 3.1 3.2 3.3 3.4 3.5 3.6

Current public opinion in Europe Cultural diversity National and European orientations Involvement with the eu Support for the eu Preferences for common policy Concluding remarks Appendix tables to chapter 3

39 39 41 43 44 46 47 50

A4 4.1 4.2 4.2.1 4.2.2 4.3 4.3.1 4.3.2 4.3.3 4.4

Current public opinion in the Netherlands Stable support for the eu Correlation between support for the eu and support for eu issues A positive or negative role for the eu National interest or self-interest Social and cultural backgrounds of support for the eu National identity and economic factors Support for Dutch eu membership Comparison of support in 1996 and 2006 Concluding remarks

55 55 58 59 60 61 61 62 63 65

A5

Conclusion

66

Literature

69

6 Market Place Europe

Part B

The internal market

Findings

71 71

B1 1.1 1.2 1.3

One market, four freedoms A brief history of the internal market The freedoms of the internal market Outline of study

75 75 78 80

B2 2.1 2.2 2.2.1 2.2.2 2.2.3 2.2.4 2.3

Market integration and economic policy Determinants of market integration National regulation and European policy Free movement of goods Free movement of services Free movement of capital Free movement of labour Concluding remarks

82 82 85 85 87 88 89 90

B3 3.1 3.1.1 3.1.2 3.1.3 3.1.4 3.2 3.3

Fifty years of market integration Trade, investments and migration The goods market The services market The capital market The labour market One Union, one price? The Netherlands and the internal market

91 91 92 95 96 97 99 100

B4 4.1 4.2 4.3 4.3.1 4.3.2 4.3.3 4.3.4 4.4 4.5 4.6

The economy of the internal market Means and objective Market integration and production Dynamic effects of market integration Competition Investment and innovation Knowledge Size of dynamic effects Distribution effects Market integration and diversity Free movement or free policy

103 103 104 106 106 106 107 108 108 109 110

B5 5.1 5.2 5.3 5.3.1 5.3.2 5.4 5.5 5.6 5.7

Outlook for new internal market policy Introduction Freer movement of goods Freer movement of services Financial services Network industries Freer movement of capital Freer movement of labour Free movement and knowledge Concluding remarks

112 112 113 114 115 116 116 118 119 120

Literature

122

Publications by the Netherlands Intittute for Social Research and Netherlands Bureau for Economic Policy Analysis

127

Preface European countries have been working for fifty years to establish a single market. In at least one respect they have succeeded spectacularly: the number of participating countries has grown enormously since 1957. In this European Outlook we examine the question whether the internal market has also succeeded in another respect, that is, in improving free trade, free investments and free migration between the participating countries. Looking back, the common market has clearly contributed to prosperity in Europe over the past fifty years. Looking ahead, there is scope for further market integration in Europe. The theme part is preceded, as in previous European Outlooks, by a section on public opinion on the eu. Marking the fiftieth anniversary of the Treaty of Rome, we look back this time to the fifties, and do so by considering not only the results of surveys but also newspaper reports and commentaries. At the same time, the differences in public opinion in the 27 member states and backgrounds to views expressed on Europe in the Netherlands are extensively highlighted. Both the current figures and the historical perspective to some extent mitigate the feeling of crisis concerning Europe. In the fifties there were likewise major doubts on European unification. The same arguments are enjoying a re-run in different wordings. Comparing across time and across countries, Dutch public opinion at present is certainly not negative. This is the fifth European Outlook prepared jointly by the Netherlands Bureau for Economic Policy Analysis (cpb) and the Netherlands Institute for Social Research (scp). It has been written in the light of fifty years of European treaties. This anniversary is the reason for publishing this European Outlook on Europe Day, 9 May, instead of on Budget Day (Prinsjesdag), on which European Outlooks were published until now as an annex to the State of the European Union. The intention is to continue publishing this document on Europe Day in the coming years. The scp is primarily responsible for part A (Paul Dekker, Peter Tammes and Charlotte Wennekers), while the cpb is primarily responsible for part B (Albert van der Horst, Henk Kox, Arjan Lejour and Bas Straathof). The authors from the cpb wish to thank Ali Aouragh, Casper van Ewijk, Henri de Groot, Michiel van Leuvesteijn, Paul Veenendaal and Twan Verschaeren for their contributions. On behalf of ourselves and the authors, we would also like to thank the members of the interdepartmental sounding board group for their useful suggestions. We thank the staff of the Netherlands Ministry of Foreign Affairs’ Forward Strategy Unit (dg European Cooperation) for the active encouragement they have provided in commissioning the publication and for the support they have contributed towards completing the publication. The responsibility for the content of the Outlook rests with the cpb and the scp. This survey therefore does not necessarily represent the views of the Dutch government. Prof. Dr. Paul Schnabel Director of the Netherlands Institute for Social Research (scp)

Prof. Dr. Coen Teulings Director of the Netherlands Bureau for Economic Policy Analysis (cpb)

9

Part A

Public opinion on Europe

Outline and major findings The Treaty of Rome was signed fifty years ago in 1957. This is ample reason for us to go back further in time in this fifth European Outlook than we are used to doing. Our starting point will be the first referenda on Europe held in the Netherlands: in 1952 the residents of Bolsward and Delft voted overwhelmingly in favour of a united Europe with a constitution of its own. This is followed by a look at the main milestones on the way to the current European Union of 27 member states. Various series of European survey data tell us how the eu was viewed by the public since those earliest years. For information on public opinion in the Netherlands, we also drew on newspaper reports.1 Chapter A1 examines developments in Dutch public opinion on European integration. We looked at what the newspapers wrote at major junctures: the first referendum on Europe in the Netherlands in 1952, the signing of the Treaty of Rome in 1957, and the six dates of enlargement by the accession of new member states. Whereas during the referendum in 1952 the arguments voiced in favour and opposition were predominantly socio-cultural, responses to the Treaty of Rome mainly had an economic basis. After the signing of that treaty, the newspapers focus mainly on economic aspects when discussing Europe. They also accompany almost every enlargement of the eu with a chorus on the need for new European working methods to prevent the community from becoming a lame duck. These views are particularly pronounced in response to the big-bang enlargements in the 21st century. Finally, we can conclude that Dutch newspapers tended to greet each enlargement with critical comments. Chapter A2 considers developments in public opinion in Europe during the past 2 fifty years. It does this on the basis of population surveys. In general, there was substantial public support for the process of unification in the first decades of European cooperation. This cannot be viewed in isolation from the Second World War and the Cold War. As a next step, we chart public opinion from 1973 in nine member states against major European events. The Treaty of Maastricht in 1992, the accession of ten Central and Eastern European countries in 2004 and the public debate on the European constitution in 2005 coincide in many member states with waning public support. But overall, member states appear above all to follow divergent paths of development, which is probably connected to the economic cycle and domestic events. Changes in public opinion within a country cannot be attributed to succession by new generations; rather, generations appear to move in line with overall trends. In most countries, younger sections of the population always appear to be more pro-eu than older citizens. 1

2

In earlier Outlooks we supplemented survey data with information from focus groups. We are not doing so this year, although we may resume that practice in future. We also hope to be able to make more use of media data then. These additions allow a richer, more stratified picture of public opinion to be drawn than using only surveys. We mainly use the Eurobarometers, population surveys that are conducted regularly for the European Commission (see http://ec.Europe.eu/public_opinion). An important reservation in using this data is that for most countries we have to assume, owing to a lack of time and insufficient knowledge of all the languages involved, that translations of questions and statements in the surveys are not only correct but also equivalent in terms of associations and emotional connotations. The European Commission has been kind enough to give us early access to the data of the Eurobarometers of 2006 for this Outlook.


We conclude this chapter by juxtaposing views on the Treaty of Maastricht at the beginning of 1993 and support for the European constitution at the end of 2005. The figures are not strictly comparable but they provide no reason to suggest that there is significantly greater euroscepticism among the population in 2005. Chapter A3 maps the diversity in public preferences in the current Union of 27 member states in a number of domains. We start out with matters that do not have to do with Europe: satisfaction with life (very high in the Netherlands and Sweden, but even higher in Denmark) and support for a number of general ideological and moral statements. Next, national and European views are compared. There appears to be a positive correlation between them: people and countries tending to voice favourable views about their own country often also do so about Europe; there are no communicating vessels here. By way of commitment to Europe (moderate in the Netherlands) and support for Europe (substantial as a rule in the Netherlands, but not where enlargements are concerned) we focus on preferences for national or common European policy in a number of policy fields. The citizens of the eu-member states, as in previous European Outlooks, prove to be massive proponents of a common approach to terrorism, while preferring to leave the welfare state and taxation to national governments. In Chapter A4 we outline recent developments in support for the eu in the Netherlands. The views that eu membership is a good thing and that it is beneficial to the Netherlands do not show any marked increase or decrease. The decrease in support for enlargements appears to have come to a halt. Support for eu membership is informed by the expected correlation with more specific views on the eu, with benefits to the country, however, showing stronger correlations than personal benefits. A majority of Dutch people feel that the eu plays a positive role in addressing cross-border issues: crime, economy, defence and foreign affairs, immigration, environmental protection and, especially, terrorism. The role attributed to Europe on issues such as prices/inflation, taxes and unemployment is largely negative. We have analysed the social and cultural backgrounds of people who place a positive value on eu membership. This shows that younger people, people with secondary or higher education and people who experience prosperity in their own families and country and moreover expect that to remain so, are more often in favour of eu membership. In the concluding observations in chapter A5 we reiterate that analysis of public opinion both in Europe and in the Netherlands shows that national pride had hardly any or no influence on the extent of support for the eu voiced by citizens. By contrast, a favourable assessment of people’s own (welfare) position and perspectives and even more so of those of their country do appear to boost support for the eu. Those results do not provide any actionable indication of what Dutch politics can do to break through the stagnation in the wake of the referendum of 1 June 2005. The findings do, however, promote a sense that as the climate of opinion in the Netherlands appears to be becoming more positive and optimistic again, there is growing scope for politics to act in a European perspective.

11

A1

European integration in the Dutch press

On 1 June 2005 Dutch voters expressed their views on the European constitution in a referendum. This was, however, by no means the first referendum on Europe in the Netherlands. On 17 December 1952 a referendum was held, on the initiative of the European Movement in the Netherlands (Europese Beweging Nederland), in Bolsward, a small town in the north of the Netherlands, and Delft, a somewhat larger town between Rotterdam and The Hague, on the very same issue. At that time, the residents of Bolsward and Delft replied overwhelmingly in the affirmative to the question whether a united Europe with a European constitution was desired. More than fifty years later, views on the proposed European constitution are clearly less positive. With a turnout of 63%, only 38% 1 of the Dutch people voted in favour. In this chapter we will trace the development of Dutch public opinion on European integration in the past decades as reflected in newspaper reports. Kleinnijenhuis et al. (2005) analysed newspaper reports on the referendum in 2005 on the proposed European constitution. We spotlight the reports at the time of the first Dutch referendum on a united Europe in 1952, the signing of the Treaty of Rome in 1957 and during the enlargements of the European Union with new member states. Which views and statements on European integration are voiced in the reports at these junctures? For the referendum in Bolsward and Delft in 1952 we made use of the reports in regional and national newspapers in the collection of the National Library of the Netherlands (Koninklijke Bibliotheek – KB). A major stepping-stone on the way to European unification was the Treaty of Rome in 1957. This treaty enabled the creation of Euratom and the European Economic Community (eec). The reports in national newspapers were screened to find which views on the treaty prevailed in the Netherlands at the time. We then provide an overview based on reports in national newspapers of opinions during the times when the eec expanded from originally six member states to ultimately 27. To that end we use the reports in national newspapers in the kb-collection and the electronic daily newspaper archive LexisNexis. First, we will outline European integration in the first post-war decade and the position and approach of the Netherlands in that period.

1.1

The first post-war decade

Even during the Second World War, various European resistance movements were starting to think about a Europe of the future without war. One of the members of the resistance was the Italian Altiero Spinelli who wrote the ‘Ventotene Manifesto’ on cigarette paper during his imprisonment on the isle of Ventotene. The manifesto was smuggled to the mainland, where it was soon translated and disseminated. This document is generally regarded as the first step on the way towards a European constitution. Spinelli also founded the European Federalist Movement (Europese Federalistische Beweging) in 1943. After the Second World War, European federal movements arose in various countries; their supporters were convinced that a next World War could be averted if countries cooperated more closely. In 1948 a conference took place in The Hague that gave birth to the foundation of the Council of Europe in 1949. The Council 1

The official term is not constitution but constitutional treaty for the European Union. The dissenting vote did not relate to the treaty, but the approval by the Netherlands with the treaty to adopt a Constitution for Europe.


of Europe was primarily aimed at promoting unity between the member states, in particular by the establishment of treaties between them. Three years later, Belgium, France, Italy, Luxembourg, the Netherlands and West Germany 2 formed the European Coal and Steel Community (ecsc). The ecsc was not the first post-war platform for cooperation in Europe, however. Even before and during the Second World War Belgium, Luxembourg and the Netherlands had entered into agreements on the foundation of a customs union. In 1948, the Organisation for European Economic Cooperation (oeec) was founded on the initiative of the United States to implement the Marshall plan. us circles believed that organisations for European cooperation were essential to future stability, and senior us diplomats were accordingly actively involved in setting up the oeec. The organisations for cooperation had no federal ambitions and lacked a body capable of developing an autonomous pan-European policy, according to the federalists striving for a kind of United States of Europe. This lack was addressed by the creation of an independent High Authority; the precursor of today’s European Commission. Robert Schuman, the French Foreign Minister, proposed instituting a High Authority together with the joint production of coal and steel in a speech on 9 May 1950. This speech is considered to be the starting point of European unification and 9 May is sometimes celebrated as ‘Schuman day’ (Livestro 2006: 201-203). In the Netherlands, there was already resistance from prime minister Willem Drees and the majority of the ministers during the design phase against the supranational nature of this High Authority. Minister of Economic Affairs Jan van den Brink therefore proposed to institute a Council of Ministers in addition to the High Authority. This Council would be able to consider the High Authority’s proposals in the light of the economic interests of the individual member states. This Council did in fact emerge following some major bluffing on the part of the director-general for Foreign Economic Relations, Dick Spierenburg. Spierenburg threatened to break off negotiations if this council of ministers was not instituted. The expectation was that Belgium would likewise leave the negotiations, leaving the French to continue with Italy; that was something the French would not want, was the Dutch government’s assessment (Harryvan et al. 2001: 268-269). In these first years of incipient European integration the Netherlands was not averse to being difficult now and again. That changed in 1952, when Lower House elections led to changes in personnel at ministries and the Netherlands would on a sustained basis develop into one of the driving forces of further cooperation and integration in Europe. In the third Drees cabinet there were to be two Ministers of Foreign Affairs during a period four years. This unusual situation sprung from a compromise on the allocation of seats between the four intended government parties PvdA, kvp, chu and arp and Drees’s fear of a ‘Vatican 3 Europe’; in addition, parliament harboured a wish to appoint a separate Minister for European Affairs. Drees wanted to prevent Foreign Affairs from falling into the hands of the kvp. In the compromise that emerged, the kvp-man Joseph Luns was responsible for non-European matters and a second minister was appointed to be responsible for European integration; this post went to the independent Jan Willem Beyen (Brouwer 1999: 201). The eurosceptic Drees hoped to have appointed a watchdog in Beyen, but Beyen turned out to be a proponent of a federal Europe (Harryvan et al. 2001: 22; Livestro 2006: 204-205). 2 3

http://www.grondweteuropa.nl/; http://nl.wikipedia.org/wiki/Altiero_Spinelli Drees feared a Europe dominated by catholic federalists. In the five other ECSC countries the foreign ministers were catholic and Drees therefore wanted to prevent this post from going to the KVP (Brouwer 1999: 201; Livestro 2006: 204).

A1 European integration in the Dutch press

13

After the new French prime minister had let the proposal to set up a European Defence Community (edc) wither on the vine, Beyen saw his chance in 1954 to purposefully advance the process of European integration. Beyen proposed creating a project for Economic cooperation – a common market – that would lead to solidarity between the member states. Political integration would then follow naturally (Livestro 2006: 206-207). In contrast with the ecsc and the edc, which involved only vertical or sectoral integration, this proposal centred on horizontal or general economic integration (Brouwer 1999: 204). This plan to achieve European integration had been expounded by Beyen as newly appointed minister of Foreign Affairs in a speech before the Lower House in December 1952: ‘Political integration cannot be an end in itself; what matters is to make military and economic cooperation possible. The European Defence Community and the Coal and Steel Community represent a start to political integration. We have to deepen and build on what is already in place. But cohesion cannot be brought about just by setting up a political authority. Cooperation has to arise from economic integration.’4 In this way Beyen married the Dutch goal of a form of cooperation directed at economic benefits with the federalist goal of a united Europe (Livestro 2006: 207). Beyen had to overcome no little resistance to his plan in The Hague, however. For instance prime minister Drees, who propagated cooperation in the oeec, twice threatened to resign if there were to be no economic but only political integration. Abroad, France constituted the main obstacle; the French were not interested in economic integration. A turning point occurred when the French government rejected the plan for the edc and thereby also the plan for a European Political Community (epc). The end to the discussion on political and military integration cleared the way for initiatives in the economic field. The ‘Beyen plan’ initially led to a Benelux memorandum. Then the Benelux countries combined Beyen’s proposal for general economic integration with the French plan for the formation of a European Atomic Energy Community. After this, the French no longer rejected economic integration. These treaties formed the basis for the Treaty of Rome in 1957 (Brouwer 1999: 203-205; Harryvan et al. 2001: 22). The role of the Dutch politician Beyen in the creation of the ec has long been neglected. Nowadays, he is increasingly seen as an architect or founder of the ec (Brouwer 1999: 209; Milward 1992: 185).

1.2

First referendum in the Netherlands in 1952

The European Movement in the Netherlands organised a number of test referenda in the fifties to sound out views on a united Europe among the population. There were such referenda in Germany, the Netherlands and Belgium. The very first referendum took place in the summer of 1950 in the German towns of Breisach and Castrop-Rauxel, where 96% voted in favour of further-reaching European integration.5 Bolsward and Delft were the third and fourth municipalities in Europe to hold test referenda. These referenda were news for the regional and national newspapers. The arguments of the proponents of a united Europe were widely covered, but there were also counter-arguments. Who was in favour and who was opposed, and what were their arguments? How did preparations and the referenda themselves go; what were the turnout, result and interpretations of this result?

4 5

Delftsche Courant, 12 December 1952, ‘Europa moet politiek en economisch een zijn’. Delftsche Courant, 6 December 1952, ‘Het Europa-referendum’.


1.2.1

Run-up to the referendum

On 17 December 1952 the residents of Bolsward and Delft were asked to express their views in a referendum on a united Europe. The question put to the residents was the following: ‘Do you take the view that the European nations should from now on serve certain interests jointly, and do you for that purpose want: a united Europe, under a European government, and with democratic representation, to be laid down in a European constitution?’ Bolsward and Delft had been chosen for this referendum by the Dutch Council of the European Movement because the residents of these two towns presented a reflection of the Dutch population. Statistics show that Delft was slightly ‘redder’ in comparative terms and more secularised, while Bolsward housed comparatively more Reformed and Dutch reformed inhabitants and fewer cpn 6 (Communist Party) voters than on a national level. In the run-up to the day of the referendum, the proponents in particular engaged in a great deal of propaganda. The Delftsche Courant newspaper presented ‘classes’ on a united Europe from the end of November and carried various themed articles.7 In the weeks prior to the referendum virtually every political grouping organised a well-attended lecture by a reputable speaker on a united Europe. Ms J. Schilthuys, member of the executive council of the Union of Christian Democrats in the European Assembly in Strasbourg, held a lecture before the members of the Delft catholic group on the desirability of a United Europe. The European federalist principle does not contravene the catholic principle and 8 Schilthuys ‘substantiated this by statements by the Pope, among others’. The women of the liberal party (vvd) held a meeting at which Ms Schalij, member of 9 the Dutch Council of the European Movement, gave a lecture. As early as the end of November, Christine Wttewaal van Stoetwegen expressed her conviction before the Christian Historical Youth Group (Christelijk Historische Jongerengroep) that sacrifices needed to be made to resolve differences in terms of economic and colonial interests, but that those sacrifices could not be too much for a united Europe.10 During a joint members meeting of the ch and ar electoral association held later, Lower House member for the chu (Christian Historical Union) Mr J.J.R. Smal stated that a European unity had only been connected with Christian unity and stated that ‘we will contribute our share to a supranational European authority’. The ar (Anti Revolutionary Party) member Mr A. Veerman pointed towards the Russian threat, the American danger and the need to hold the recovery of German industry on a reliable course. These protestant groupings did not so much see the danger of a loss of sovereignty, a feeling that prevailed strongly among politically Reformed citizens: ‘We remain Dutchmen with a […] healthy national consciousness and a strong European consciousness […]’.11 Gereformeerd Gezinsblad devoted a major front page article to the ‘Delft Oracle’ on 16 December: ‘In the town of the family of Orange [the royal family] the 6 7

8 9 10 11

Delftsche Courant, 6 December 1952, ‘De verhouding in Delft en Bolsward’; Nieuwsblad van het Noorden, 16 December 1952, ‘Bolsward en Delft stemmen morgen over Europa’. Delftsche Courant, 29 November 1952, ‘Een verenigd Europa en zo ja: waarom?’; Delftsche Courant, 6 December 1952, ‘Waarom een verenigd Europa? Harde lessen der wereldgeschiedenis kúnnen niet worden misverstaan’. Delftsche Courant, 11 December 1952, ‘De wenselijkheid van een verenigd Europa. Mej. J. Schilthuys sprak voor de r.k. standsorganisaties’. Delftsche Courant, 10 December 1952, ‘De VVD-vrouwen en Europa’. Delftsche Courant, 1 December 1952, ‘De Europese integratie. Jkvr. Wttewaal van Stoetwegen sprak voor CH-jongeren’. Delftsche Courant 9 December 1952, ‘De protestants-christen en Verenigd Europa’.


15

population will be invited to express its wishes: whether our legal, god-given government will or will not become a figurehead government’. The test vote was ‘roundly’ rejected in the article and readers’ attention was drawn to a meeting 12 on the referendum on that same evening. This meeting, organised by a committee of Reformed voters, was well-attended and denounced the propaganda as one-sided and demagogical. This element of demagogy was reflected in the formulation of the question itself, the speaker Mr H.J. Verburgh opined; anyone would want to serve common interests, as the first part of the question said, but not everyone wanted a European constitution and a European executive body. Verburgh called on those present to remain faithful to God, the Netherlands and the family of Orange and advised them to abstain from voting.13 Earlier that week, the reverend Peter Zandt reiterated his objections against a federation of Europe in the Lower House during the consideration of the budget of the Ministry of Foreign Affairs. This leader of sgp (Reformed Political Party) pointed out that whereas reference was made to European unity only six countries were involved; in addition, Germany, France and Italy were internally divided and England and the Scandinavian countries were staying on the sidelines. Moreover, proponents in the Netherlands disagreed with each other in various respects. Zandt also emphasised that our fathers had fought eighty years for 14 sovereignty, which was now to be simply surrendered. Another opponent of a united Europe, the communist party, remained silent for a long time. Only in the night of 16 to 17 December were pamphlets distributed with an appeal not to vote; too late for supporters to publish a rejection of the 15 communist views, as one journalist from Delftsche Courant complained. The only article on the test referendum in the communist party journal De Waarheid appeared the day after it had been held. This article criticised the way in which the notices on the referendum had been sent out, which was officially, by the municipality, leading many to think they were obliged to vote, and labelled the 16 referendum question as ‘vague and misleading’. In addition to the emphasis on sovereignty and an independence fought hard for in the Eighty Years’ War, Delftsche Courant also presented a number of other critical voices. Some, for example, asked whether Papa Drees (‘Vadertje Drees’) would have to step down if there were to be a European government and a 17 European parliament. Also, a united Europe met with resistance if it spelled the end of the monarchy. A businessman sighed: ‘Lieftinck, van de Kieft, they’re all the same and any European Minister of Finance will surely not be much better’. Additionally, there was scepticism about yet another new international project, such as the League of Nations or the United Nations, which were seen 18 as failures. Well-attended end-of-campaign evenings had been organised both in Delft and in Bolsward. A number of national big guns urged people to vote ‘yes’. Marga Klompé, chairwoman of the political committee of the Dutch Council of the European Movement criticised the sovereignty argument in Delft. Sovereignty 12 13 14 15 16 17

18

Gereformeerd Gezinsblad 16 December 1952, ‘Het Delfts Orakel’. Delftsche Courant 17 December 1952, ‘Waarom wij ons van stemming onthouden’. Delftsche Courant 13 december 1952, ‘Parlement van Praatsburg. Ds. P. Zandt kan niet geloven in de Europese integratie’. Delftsche Courant 18 December 1952, ‘Het pamflet van de CPN’. De Waarheid 18 December 1952, ‘Bijna 12.000 Delftenaren stemden niet voor “Nieuw Europa”’. Prime minister Drees was known as ‘Papa (Vadertje) Drees’ and was much admired in the fifties, Market and Opinion Research Institute NIPO-surveys of the time attest (NIPO 1995: 24). Delftsche Courant of 6 and 13 December 1952.


was, in her eyes, a hollow term, as the Netherlands was overly dependent on other countries. Another speaker was André Donner, professor in general political science. He reminded listeners that the Dutch provinces had previously been autonomous small states that united in the sixteenth century. Donner also predicted that it would take a mere fifteen to twenty years before 19 the united Europe would become a reality. In Bolsward, both the RomanCatholic Minister Herman Witte and the member of the Lower House for the PvdA (Labour Party) Gerard Nederhorst pointed out the importance of retaining your own culture in a united Europe. Member of the Lower house for the vvd Henk Korthals told his audience that the world was on fire and ‘Europe 20 was still terribly divided’; as the Second World War had only ended seven years ago, the Soviet Union had erected the Iron Curtain, while the Korean War had broken out in 1950. The information meetings ahead of the referendum were strongly pro-Europe. In addition, flyers had been distributed door-to-door in Bolsward that spoke of the threat of declining prosperity if a united Europe were to be rejected.21 Opponents, members of sgp and communists in particular, were not given much room or failed to make themselves widely heard. Nieuwsblad van het Noorden reported somewhat triumphantly on the eve of the referendum that the first citizen of Bolsward to vote ‘no’ had yet to be found.22 An elderly farmer however complained about the one-sided information: ‘I am voting for a United Europe 23 but I still feel it’s a pity that no one told me the arguments why perhaps not to.’

1.2.2

The day of the referendum

Under extensive coverage by the national and foreign press, the population of Bolsward and Delft made their way to the polling stations. In Bolsward, Belgian, West-German, English, Luxembourg, American and even Arab report24 ers anchored transmissions to their country. The American press in par25 ticular was well-represented. As if these journalists wanted to show the us taxpayers that those Marshall dollars for Europe were well-spent.26 For recent surveys had shown that people in the us still supported providing financial and military aid to Europe.27 Moreover, the United States were in favour of further28 reaching European organisations for cooperation. A large number of Europe flags were flown in the two towns. These flags had been designed by Churchill jr. and were a gift from the us embassy to the organiser of the referendum.29 To give the citizens every opportunity to cast their vote, the polling stations were open from eight in the morning to eight at night. In Delft, 22 polling stations had been set up, and there were also two mobile polling stations to enable the staff and patients of hospitals and nursing homes to vote. It was possible to identify this group separately thanks to the recent mechanisation of population records. Owing to this mechanisation, the entire preparation of the 19 20 21 22 23 24 25 26 27 28 29

Delftsche Courant, 16 December 1952, ‘Europa heeft een taak in de wereld’. Nieuwsblad van het Noorden, 17 December 1952, ‘Bij kaarslicht werd Bolsward voorgelicht’. de Volkskrant, 21 May 2005, ‘Bolsward, centrum van Europa’. Nieuwsblad van het Noorden, 16 December 1952, ‘Bolsward houdt zich niet aan de klokvan-tien’. De Telegraaf, 18 December 1952, ‘Delft en Bolsward vóór een Verenigd Europa’. Nieuwsblad van het Noorden, 17 December 1952, ‘Bij kaarslicht werd Bolsward voorgelicht’; Delftsche Courant, 17 December 1952, ‘Bolsward verwacht grote opkomst’. Delftsche Courant, 17 December 1952, ‘Opkomst is boven verwachting’. Nieuwsblad van het Noorden, 16 December 1952, ‘Bolsward en Delft stemmen morgen over Europa’. Delftsche Courant, 6 December 1952, ‘Meeste Amerikanen vóór steun aan Europa’. Zie bijvoorbeeld Delftsche Courant, 19 December 1952, ‘Krachtig vermaan tot Europese Eenheid’. De Telegraaf, 18 December 1952, ‘Delft en Bolsward vóór een Verenigd Europa’.


17

referendum cost only a fraction of the time required in the past.30 In Bolsward, red buses with green-and-white flags for Europe took the elderly to the five poll31 ing stations. Despite snow and icy conditions, Nieuwsblad van het Noorden felt the overwhelming majority would vote in favour of Europe.32 Around noon, turnout in Bolsward was already 38% and in Delft it was estimated at 20 to 25%.33 Although proponents and opponents did not propagate their views at the polling stations, the European Movement carried out a final initiative at the end 34 of the working day at offices and factories in Delft. It cannot be established whether this actually moved people to vote, but it is a fact that in the last hours people were queuing in front of the polling stations and the turnout percentage 35 rose significantly.

1.2.3

Result and responses

The result exceeded the most optimistic expectations and was a major surprise to the European Movement, Delftsche Courant reported. The turnout percentage was higher than expected in both towns, and for Delft especially: 88 in Bolsward and almost 75 in Delft. Turnout percentages were also high in areas of Delft with communist inhabitants, Delftsche Courant reported.36 The difference in terms of turnout between the two towns was attributed to the fact that Delft is a larger municipality and for that reason less ‘manageable’, and that in this town the communists and a comparatively large group of protestant Christians had not voted,37 while Bolsward numbered few industrial workers and a great many elderly citizens.38 In Bolsward 96.6% and in Delft 93.1% were in favour of a united Europe.39 Delftsche Courant claimed it would be possible to speak of an ideal of a united Europe if the outcome of the referendum did not reflect party lines, i.e. if the percentage of no-voters was lower than the percentage of the parties opposed to Euro40 pean unification. The parties sgp and cpn were opposed to a united Europe. In Bolsward these parties obtained 2.5% of the votes in the elections for the Lower House in 1952. The percentage of those voting ‘no’ was slightly higher in Bolsward. In Delft, 9.6% of the voters had voted for these parties; the percentage of those voting ‘no’ was lower. Were party lines broken in Delft? That would appear to be a premature conclusion, as sgp and cpn had only advised their members to abstain from the vote. The chairman of the Council of the European Movement, the reverend Tjeerd Hylkema, expressed his satisfaction about the fact that the outcome ‘by far exceeded every expectation’ and felt that this vote proved that ‘democracy in the

30 31

32 33 34 35 36 37 38 39 40

Delftsche Courant, 17 December 1952, ‘De rijdende stemlokalen’. Nieuwsblad van het Noorden, 18 December 1952, ‘Bolsward en Delft stemmen voor Verenigd Europa’; De Telegraaf, 18 December 1952, ‘Delft en Bolsward vóór een Verenigd Europa’. Nieuwsblad van het Noorden, 17 December 1952, ‘Bij kaarslicht werd Bolsward voorgelicht’ Delftsche Courant, 17 December 1952, ‘Opkomst is boven verwachting’, ‘Bolsward: 38% om twaalf uur!’. Delftsche Courant, 17 December 1952, ‘Opkomst is boven verwachting’; Delftsche Courant, 18 December 1952 ‘In de rij voor de stemlokalen’. Delftsche Courant, 18 December 1952, ‘In de rij voor de stemlokalen’. Delftsche Courant, 18 December 1952, ‘Europa heeft geen wachtkamer’. Delftsche Courant, 18 December 1952, ‘Europa heeft geen wachtkamer’. De Waarheid, 18 December 1952, ‘Bijna 12.000 Delftenaren stemden niet voor “Nieuwe Europa”’. Nieuwsblad van het Noorden, 18 December 1952, ‘Bolsward en Delft stemmen voor een Verenigd Europa’. Delftsche Courant, 6 December 1952, ‘De verhoudingen in Delft en Bolsward’.


Netherlands was very much alive’.41 Koos Vorrink, chairman of PvdA, feared that too many ‘specialists’ had spoken during the information campaign and that the large majority would not understand what was at stake. But now Vorrink had to conclude that the European Movement had wider support among the Dutch people than had been assumed. Foreign Minister Luns reached a similar conclusion. He said, standing in for minister Beyen, that the outcome encouraged the government to continue on the chosen path ‘because it could be certain that the idea of a European federation would not give rise to psychological resistance among the population’. Member of the Lower House for PvdA Siep Posthumus was likewise pleased with the high turnout. He did say he hoped a distinction would be drawn between people who were consciously 42 opposed and people who had not turned up owing to a lack of interest. The communists drew no such distinction and interpreted the outcome in a different way. De Waarheid emphasised that in Delft, almost one third of those entitled to vote had abstained or voted against and hence not in favour of a united 43 Europe. Gereformeerd Gezinsblad hardly devoted any coverage to the outcome and concluded in a small report that the majority of the citizens in Delft and Bolsward were prepared to surrender national sovereignty.44 ‘What is the opinion of those places worth?’, a journalist from De Telegraaf wondered. Because ‘in general it was felt to be difficult to adopt a position of one’s own in a matter of such importance and far-reaching significance’. But still, this journalist stated, the voice of the public at large was not to be underestimated: ‘It sometimes responds with the logic harboured by simplicity’.45 A journalist from Delftsche Courant observed that no vote had been taken on parties, but on an ideal formulated in a specific question.46 The referendum in 1952 was one on ‘a constitution’. A special meeting of the ecsc was already working on drafting a European constitution.47 A few days after the test referendum, this committee presented the draft constitution.48 This accorded a central place to cooperation in the field of defence. General Charles de Gaulle, who had just won the French elections, did not want to know about a common European defence. As a result, plans for a European constitution were shelved for almost thirty years. Until the European Parliament took up the challenge again in 1979.49 It was not until fifty years later that the people had an opportunity to vote on this again, this time in a national, consultative and non-binding referendum on ‘the European Constitution’ in 2005. In Delft 53% and in Bolsward 60% voted against this constitution.50

1.3

The Treaty of Rome in 1957

A major step on the way to European unification was the Treaty of Rome. On 25 March 1957 the foreign ministers of Belgium, France, Italy, Luxembourg, the Netherlands and West Germany signed two treaties; one treaty for the creation of a European Economic Community and one treaty for the formation of a European 41 42 43 44 45 46 47 48 49 50

Delftsche Courant, 18 December 1952, ‘Referendum stimulans voor regering’; De Telegraaf, 18 December 1952 ‘Delft en Bolsward vóór Verenigd Europa’. Delftsche Courant, 18 December 1952, ‘Referendum stimulans voor regering’. De Waarheid, 18 December 1952, ‘Bijna 12.000 Delftenaren stemden niet voor “Nieuw Europa”’. Gereformeerd Gezinsblad, 20 December 1952, ‘De meerderheid in Delft en Bolsward bereid onze nationale zelfstandigheid prijs te geven’. De Telegraaf, 17 December 1952, ‘Delft en Bolsward naar stembus’. Delftsche Courant, 18 December 1952, ‘In de Raadszaal’. Nieuwsblad van het Noorden, 12 December 1952, ‘Economische eenwording’. Delftsche Courant, 22 December 1852, ‘De politieke grondwet voor Europa’. http://www.grondweteuropa.nl/ http://www.verkiezingsuitslagen.nl/verkiezingsuitslagen.aspx


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Atomic Energy Agency. What opinions were voiced on these treaties in reports at the time of the signing of the Treaty of Rome? We looked at reports in De Telegraaf, Nieuwe Rotterdamse Courant (nrc), Trouw, de Volkskrant, Gereformeerd Gezinsblad and De Waarheid. These two last publications, representing respectively Reformed Christians and communists, proved to be opposed to European integration during the test referendum in 1952. The reports and opinions in the newspapers primarily discussed the treaty for a common European market, given its significant consequences for the Dutch economy. The signatories of the Treaty of Rome optimistically spoke of an end of the age 51 of war between divided European nations. And they emphasised that this treaty was absolutely essential for the continued existence of Europe.52 The Dutch Foreign Minister Luns said that if Europe ‘wanted to continue to occupy an independent position in the world and remain capable of developing and increasing its standard of living or even maintaining it, it had no other choice 53 than to form larger economic and political units’.

1.3.1

‘Essential to survival’ or ‘leap in the dark’?

While Luns felt on his return from Rome that the treaty had been somewhat hastily drafted, he was satisfied with the result: ‘Politics is the art of making the right choices. The alternative is definitely much less attractive for most countries and especially for the Netherlands.’ Luns stated that during the negotiations between the countries the underlying common approach had been that 54 close economic cooperation was essential to Europe’s survival. De Waarheid did not endorse this necessity and identified an alternative. It typified the treaty as ‘a leap in the dark’ to the benefit of the West-German Chancellor Konrad Adenauer, in which a large number of important specifics had not been worked out and in which the Netherlands felt that West Germany and 55 Belgium had let it down in its aim for further liberalisation. A week earlier, De Waarheid had written prominently and extensively about a proposal put forward by the Soviet Union for European cooperation in economic matters and on atomic energy. While de Volkskrant dispatched this Russian proposal in a small report as a ‘Soviet attack’ and nrc described the Russian proposal in slightly greater detail and impartiality, De Waarheid presented it as a serious alternative to the Treaty of Rome. The communist party paper emphasised that the Soviet government was prepared to examine every proposal for cooperation.56 Another to doubt the need for the Treaty of Rome was Karel van der Mandele, chairman of the Chamber of Commerce in Rotterdam. His observations in the magazine Economisch-Statistische Berichten garnered much attention in the press. nrc agreed with Van der Mandele’s view that anyone who was not prepared to consider the possibility of non-acceptance could not reach an objective judgement on the treaty.57 The Euromarket treaty was ‘sub-par’ and a ‘leap in the 51 52

53

54 55 56

57

Trouw, 26 March 1957, ‘Klokgelui verwelkomde Europese markt’. De Telegraaf, 26 March 1957, ‘Europese markt plechtig gestart’; Gereformeerd Gezinsblad, 27 March 1957, ‘Euromarkt en Euratom thans gestart’; de Volkskrant, 26 March 1957, ‘Europa’s eenwording levensbelang’. Gereformeerd Gezinsblad, 27 March 1957, ‘Euromarkt en Euratom thans gestart’; Nieuwe Rotterdamse Courant, 26 March 1957, ‘Verdragen inzake Gemeenschappelijke Markt en Euratom ondertekend’. Nieuwe Rotterdamse Courant, 28 March 1957, ‘Minister Luns voldaan over de Europese verdragen’. De Waarheid, 23 March 1957, ‘Sprong in het duister ten bate van Adenauer’; De Waarheid, 26 March 1957, ‘Nederland stort zich in Klein-Europa-Avontuur’. de Volkskrant, 18 March 1957, ‘Sovjet-aanval tegen Euromarkt and Eurotom’; Nieuwe Rotterdamse Courant, 18 March 1957, ‘Sowjetunie voor Europese samenwerking’; De Waarheid, 18 March 1957, ‘Sowjet-Unie stelt “Europact” voor’. Nieuwe Rotterdamse Courant, 27 March 1957, ‘De verdragen van Rome’.


dark’, De Waarheid and De Telegraaf paraphrased Van der Mandele’s view.58 It appears wrong to him for us to be led by a kind of ‘vague fear of isolation’; after all Switzerland, Denmark, Norway and Sweden also ‘freely determine their positions as small, prosperous and highly export-dependent nations’. But if the treaty could not be rejected for political reasons, a trial period with a period of notice could provide a safeguard; that would mean it was just a provisional careful step and no leap in the dark. For the general opinion in the Netherlands, according to Van der Mandele, was that the treaty was a bad thing in economic terms.

1.3.2

Dutch business: threats and opportunities

While the bells of the Capitol were ringing in Rome when the ministers signed the treaties, a number of groups in the Netherlands sounded a warning note. They did believe that Europe would increase its prosperity by cooperation and more efficient use of its labour and capital, but, as nrc wrote on the day after 59 the signing, ‘will these treaties produce that result?’. While the newspaper felt the treaties to be completely acceptable, they did not entirely express the spirit of free trade that was strongly prevalent in the Netherlands. The Dutch liberal stance in the field of manufacturing and trade was less staunchly sup60 ported by the other countries than was originally surmised. This was a thorn in the side of representatives of a number of industries in the Netherlands. The chairman of both the Reformed Social and Economic Association (Gereformeerd Sociaal en Economisch Verbond) and the Reformed Social Association (Gereformeerd Maatschappelijk Verbond) raised the criticism that the treaty had been prepared at the very highest government level without the Dutch people and industry and trade having been able to gain sufficient understanding of the consequences of further integration.61 Hans Linthorst Homan, head of the Dutch delegation with the intergovernmental committee on the Common Market and Euratom, defended the lack of consultation with business by pointing out that the government could not publicise its strategy while it was still in 62 negotiation. Under the heading ‘The economy in danger’, De Waarheid listed a number of representatives of business and several experts who were con63 cerned about the Euromarket treaty, while De Telegraaf in particular picked out economically unfavourable aspects. The objections of two economic sectors were most widely covered in the press, namely those of the Association of Metal Industries (Vereniging van Metaalindustrieën) and the Association of Dutch Grain Trade (Vereniging de Nederlandse Graanhandel). The Association of Metal Industries pointed out that the metal industry was by far the most important sector of business that would in future provide employment for the rapidly-growing Dutch working population. This important function for employment would be harmed if the Netherlands signed the treaty on the common market. The metal industry feared declining exports to countries outside the community owing to cost increases that would result from raising social measures to the French level and the increase of the external tariffs for raw materials and semi-finished products. Within the community, the Dutch metal industry particularly feared the powerful Ruhr area and the strong 58 59 60 61 62 63

De Telegraaf, 23 March 1957, ‘Euromarktverdrag blijft beneden de maat’; De Waarheid, 22 March 1957, ‘Europese gemeenschappelijke markt een sprong in het duister’. Nieuwe Rotterdamse Courant, 27 March 1957, ‘De verdragen van Rome’. Nieuwe Rotterdamse Courant, 22 March 1957, ‘Europese Economische Gemeenschap en Euratom nu naar de parlementen’. Trouw, 19 March 1957, ‘Nadelige gevolgen van de Europese integratie?’ Nieuwe Rotterdamse Courant, 23 March 1957, ‘Dr. J. Linthorst Homan over de Gemeenschappelijke Markt’. De Waarheid, 26 March 1957, ‘Onze economie in gevaar’.


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French and German chauvinism towards buying products from their own country. The Dutch government would therefore be well advised to insist that the 64 industrialisation in the Netherlands should not be endangered by integration. A few days before the signing of the treaty, the Association of Dutch Grain Trade informed the ministers of Agriculture and Economic Affairs that ‘the contents and import of the treaty on the Common Market caused it grave concern’. While this association realised that the Netherlands could not, in view of the significance of the political context, abstain from signing the treaty, it pointed out that trade in grains and seeds could only develop if free trade was maximised. The high external tariffs would weaken the competitive position of the Dutch egg farmers for instance and the transit market, which was of the greatest importance for the Dutch economy, would suffer ‘a serious blow’.65 But the papers did not just report negative or concerned stories. de Volkskrant in particular wrote about the opportunities the treaty could offer. For instance, on 25 March the paper carried the headline ‘Europe embarks on new era’. A day later the newspaper was full of positive reports on the treaty: ‘Six countries take major step’ and ‘Europe creates its own sources of strength’. Under the heading ‘Dutch business welcomes Euromarket’, entrepreneurs called the treaty an adventure with dangers and opportunities – a completely different sentiment than in De Telegraaf. Minister Luns felt that the signing of the two treaties was a major step towards European unification. With these treaties the Netherlands, said Luns, saw ‘a future that will bring its citizens more material welfare and will also make a stronger growth of spiritual and cultural values possible’.66 That was the prevalent view among the political elite. The newspapers focused especially on the Euromarket treaty. The stance adopted by business was not unqualified positive, and even tended towards concern and criticism. The treaty entailed costincreasing measures and did not offer the liberalisation of trade between the participating countries that had been hoped for. Business therefore expected a poorer export position and declining domestic sales for Dutch products in the European area.

1.4

Enlargement to 27 members

In six steps, the ec grew in to a European Union (eu) with 27 countries. The first countries acceded in 1973 and the most recent expansion took place in 2007.67 We outline the views on the accession of new member states on the basis of reports in de Volkskrant, Trouw, nrc Handelsblad, De Telegraaf and Algemeen Dagblad (ad).

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65 66 67

De Telegraaf, 20 March 1957, ‘Metaalindustrie bezorgd over Euromarkt’; Nieuwe Rotterdamse Courant, 22 March 1957, ‘Bezwaren van de Nederlandse graanhandel’; De Waarheid, 22 March 1957, ‘Metaalindustriëlen ongerust’. Nieuwe Rotterdamse Courant, 22 March 1957, ‘Bezwaren van de Nederlandse graanhandel’; De Waarheid, 22 March 1957, ‘Metaalindustriëlen ongerust’. Gereformeerd Gezinsblad, 27 March 1957, ‘Euromarkt en Euratom thans gestart’; Trouw, 26 March 1957, ‘Klokgelui verwelkomde Europese markt’. http://www.Europe-nu.nl/9353000/1/j9vvh6nf08temv0/vg9pktppo1xz. We are not including the accession of East Germany to the European Union by way of reunification with West Germany in 1990.


1.4.1

1973: ‘the Six’ become ‘the Nine’

Following the signing of the Treaty of Rome, French Foreign Minister Christian 68 Pineau stated that he regretted that England was not taking part. On the day after the signing, prime minister Drees was pleased to announce a potential expansion of a free-trade zone for which the United Kingdom had taken the initiative.69 The United Kingdom was one of the first countries that were to join the European Community (ec; formerly eec). The first official enlargement of the ec took place on 1 January 1973: the United Kingdom, Ireland and Denmark. This meant that a long-cherished wish on the part of Denmark to accede together with the United Kingdom was realised. A majority of the population in Denmark, the United Kingdom and Ireland had 70 voted in favour of joining in a referendum. Norway had also wanted to join but the Norwegian people rejected that idea in a referendum.71 Ireland, one of the economically most underdeveloped regions in Western Europe, saw ec membership as an enormous impulse for its industrialisation.72 The British accession was not entirely whole-hearted and was prompted above all by hopes of an economic recovery.73 De Telegraaf carried a special supplement on the accession of the United Kingdom. This ‘historical event’ meant that the ec had more inhabitants than the United States, an enormous advantage for Dutch business. In addition the United Kingdom, like the Netherlands, was a vociferous proponent of free trade; and the British had wealth, a technological advantage and a respectable diplomacy. All of which were qualities from which the Dutch economy stood to 74 benefit, in the judgement of De Telegraaf. According to Trouw the ec became an ‘economic giant, but with political feet of clay’. Because, this newspaper wrote: ‘The eec has in the past often shown little unity and the question is how decisively the economic superpower will operate’.75 That things did not proceed more smoothly as soon as the United Kingdom had joined, is evident from the boycott by the Labour party in its tenacious rejection of British accession, as a result of which 16 of the 36 seats allocated to the United Kingdom in the European Parliament remained empty.76 According to nrc not much would change in Brussels initially in political terms: French was expected to remain the working language and the right to veto would continue to exist for some time yet. The more so as the new member states had indicated they wanted to obtain some experience with the existing organs first before considering changes. And the new member states put their views across concisely, in contrast with the ‘eloquent’ members such as France and Italy, which would save time. Also, the British accession represented a

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69 70

71 72 73 74 75 76

Nieuwe Rotterdamse Courant, 26 March 1957, ‘Verdragen inzake Gemeenschappelijke Markt en Euratom ondertekend’; Trouw, 26 March 1957, ‘Klokgelui verwelkomde Europese markt’. de Volkskrant, 26 March 1957, ‘Euromarkt en Euratom bieden kansen’. Greenland, which became fully autonomous in 1979 within the Kingdom of Denmark, decided to withdraw from the European Community in 1985. Source: http://nl.wikipedia.org/wiki/Uitbreiding_European_Unie. Trouw, 29 December 1972, ‘De Gaulle waart over Denemarken’. Trouw, 29 December 1972, ‘Ierland kiest voor goed belegde boterham’. Trouw, 29 December 1972, ‘Engeland hoopt op herstel van patiënt’. De Telegraaf, 19 December 1972, ‘Met Engeland groter dan Amerika’. Trouw, 29 December 1972, ‘EEG: En toen waren er negen’. De Telegraaf, 18 December 1972, ‘Labour blijft EEG boycotten’.


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good chance that the neglected field of regional politics would be readdressed 77 and ties with developing countries strengthened.

1.4.2

The eighties: three southern member states join

The accession of Denmark, the United Kingdom and Ireland in 1973 made the ec considerably less ‘meridional’, in nrc’s view.78 The North-South balance was restored when Greece, Portugal and Spain became members in the eighties; all three of these happened to be former dictatorships. The West-German Foreign Minister Hans-Dietrich Genscher called the accession of Greece in 1981 ‘a first 79 part of the expansion of the ec to the South’. Membership for Portugal and Spain had first been envisaged in 1983, but eventually came about in 1986. Greece had already been associated with the eec from 1961, with a view to acceding, but a military coup in 1967 (the junta was to rule until 1974) temporarily suspended proceedings.80 When Greece eventually joined in 1981, grave doubts prevailed in the newspapers as to whether this would be a success. De Telegraaf for instance held that Greece, with its high inflation, agricultural economy and large but neglected trade fleet was hardly ready to join.81 nrc also felt that Greece had already hamstrung the ec even before joining. A less propitious time for joining was hardly conceivable owing to the cash shortages of the ec and the economic crisis, this paper wrote.82 Trouw cited a research report that warned of a new wave of workers engulfing the rich northern countries.83 de Volkskrant looked to Greece’s motivation for joining and admittance for the source of the persistent doubts. While the other nine countries joined mainly for economic reasons, Greece’s accession was politically motivated: Europe would return to its roots, Greece’s status would be enhanced and its fragile democracy shored up.84 The New Year’s festivities were marked by modest joy in Spain and Portugal on joining the ec. According to Spanish Foreign Minister Francisco Fernando Ordonez, Spain’s accession coincided with a time when the ideal of European unity was reasserting itself.85 Spain’s initial motivation in joining was to protect the young democracy by strengthening ties with Europe.86 To become an equal partner in economic and social terms, Spain had to make up ground in the economic field but also in that of animal welfare. Spanish animal protection organisations and a few members of the European Parliament expressed their disgust at the cruelty against animals during Spanish festivities and hoped that accession to the ec would lead to an end of bullfighting.87 ec membership for Spain also involved introducing a vat rate that would make all kinds of products more expensive and would restructure the economy after forty years of protection under Franco’s regime. The Dutch state secretary of Economic Affairs Frits Bolkestein in particular challenged the Spanish government on the state monopoly of the oil company Campsa; for this monopoly was to be gradually eliminated. According to Bolkestein it was misguided to expect that ‘everything 77

78 79 80 81 82 83 84 85 86 87

Nieuwe Rotterdamse Courant, 29 December 1952, ‘Uitbreiding EG zal in Brussel voorlopig niet al te veel veranderen’; NRC Handelsblad, 30 December 1972, ‘1973: een belangrijk jaar voor Europa’s externe betrekkingen’. Nieuwe Rotterdamse Courant, 29 December 1952, ‘Uitbreiding EG zal in Brussel voorlopig niet al te veel veranderen’. de Volkskrant, 2 January 1981, ‘Athene begroet als lid van EG’. Trouw, 31 December 1980, ‘De ‘tiende’ van Europa’. De Telegraaf, 3 January 1981, ‘Griekenland nauwelijks voorbereid op Europa’. NRC Handelsblad, 30 December 1980, ‘EG beschouwt Griekenland nu al als een blok aan het been’. Trouw, 31 December 1980, ‘De ‘tiende’ van Europa’. de Volkskrant, 31 December 1980, ‘Grieken twijfelen te laat aan EG-mythe’. De Telegraaf, 2 January 1986, ‘Bescheiden vreugde in Spanje en Portugal over toetreding tot de EG’. de Volkskrant, 4 January 1986, ‘Europa is voor Spanje een ware onthulling’. Trouw, 19 December 1985, ‘Spanje’s dierenbescherming put hoop uit toetreding tot de EG’.


would go by the book’.88 He also opened a Holland promotion in Madrid organised by the Ministry of Agriculture to give the Spanish people a taste of Dutch products. Because, as De Telegraaf observed: ‘A market of 36 million consumers 89 was being unlocked for Dutch products’. Minister of Housing, Spatial Planning and the Environment Pieter Winsemius also expected to run into some problems with Spain: the country might support the United Kingdom in its 90 resistance to environmental measures.

1.4.3

1995: newcomers Austria, Finland and Sweden

A majority of the population in Austria, Sweden and Finland voted in favour of what was now called the European Union (eu) in referenda in 1994. The people of Norway, as they had previously in 1972, rejected accession in a referendum.91 While the economic and financial identity of the eu was not set to change ‘dramatically’ with the advent of Austria, Finland and Sweden, these countries each presented very different propositions, nrc wrote. Austria came close to the ideal of a new member state: a growing budget deficit, to be sure, but mated to healthy economic growth and low unemployment. Austria, moreover, provided the eu with important contacts with Eastern Europe. Sweden had a moribund financial sector, substantial public debt and modest economic growth, but comparatively low unemployment. Finland was battling with a significant budget deficit but enjoyed reasonable economic growth. Overall, three rich but struggling new members, in the assessment of nrc.92 According to Algemeen Dagblad Sweden’s accession meant it would be investing much more in the Netherlands,93 while the Dutch agricultural sector would be able to sell much more products in Sweden.94 With the accession of Austria, Finland and Sweden, the eu numbered fifteen member states. Brussels was not euphoric about the enlargement, wrote ad.95 There was a sense that the European engine was not running smoothly; something was not right in the way the extensive apparatus operated and there were concerns about the outlook for further integration. The eu proved to be a ‘paper tiger’, as was manifest during armed conflicts in former Yugoslavia, after this federal state had fallen apart in 1991. The German Foreign Minister Klaus Kinkel accordingly argued for a change in the original working methods of the ec. The expansion into fifteen member states required the European institutions to be 96 adapted. If nothing were to change, the eu would be paralysed by indecision. Relations with Eastern Europe were also decisive for the future of Europe, nrc wrote.97 Trouw held that the eu would indeed expand eastwards, now that the Norwegians had again voted against joining. There was in fact an expectation in Brussels that a number of East European countries would accede before the close of the 20th century.98 Eventually, that became a reality in the early 21st century.

1.4.4

Start of the 21st century: ‘big bang’ to the east

Someone looking back at European unification a hundred years from now, wrote nrc, might well conclude that it was driven by ‘a director with impe88 89 90 91 92 93 94 95 96 97 98

NRC Handelsblad, 19 December 1985, ‘Bolkestein: monopolie Spaanse olieconcern vereist opheldering’. De Telegraaf, 17 December 1985, ‘“Holland Manifestatie” moet Spanje openbreken’. NRC Handelsblad, 24 December 1985, ‘Winsemius verwacht problemen met Spanje’. http://www.noorwegen.nl/policy/europe/policy/policy.htm NRC Handelsblad, 4 January 1995, ‘Nieuwkomers Europese Unie hebben huis nog niet op orde’. Algemeen Dagblad, 8 December 1994, ‘Nederland wordt Zweeds knooppunt’. Algemeen Dagblad, 9 December 1994, ‘Zweedse boeren geven het goede voorbeeld’. Algemeen Dagblad, 30 December 1994, ‘Verlamming grootste bedreiging voor Europa van de 15’. Algemeen Dagblad, 30 December 1994, ‘Verlamming grootste bedreiging voor Europa van de 15’. NRC Handelsblad, 12 December 1994, ‘Adempauze voor Europa’. Trouw, 3 November 1994, ‘Na Noors nee richt EU de blik op het Oosten’.


25

rial ambitions’: from six to 25 member states in thirty years.99 Russia was not exactly overjoyed with the enlargement of the eu on 1 May 2004 by ten countries predominantly from the former Soviet block, and a new treaty was required between Brussels and Moscow.100 The ten new members were: Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovenia, Slovakia and the Czech Republic. The ‘big bang’ to the east was welcomed by celebrations in Europe; by popular festivities in the new member states and mainly by conferences for executives in the old ones.101 The official accession ceremony took place, perhaps symbolically, in Dublin; Ireland, like Spain, was seen as a success story within the eu. But perhaps just as symbolic was the confirmation of the expan102 sion, which was hermetically sealed off from the outside world. A wall of police officers kept the Irish and activists anxiously separated from government 103 leaders. Spirits were dampened by the result of the referendum in the new member Cyprus, where the Greek Cypriots unexpectedly voted against reunification with the Turkish part of the island.104 eu politicians generally considered the expansion as a ‘bargain’. The new members had to settle for far fewer subsidies than earlier newcomers. The advent of generally poor former Eastern block countries meant that the southern eu members had to expect their role as low-wage countries to be taken over.105 In the Netherlands, the flower trade saw major export opportunities, to Poland especially, with the ‘elimination of a great deal of red tape’.106 Trouw expressed the expectation that with the new member states the European Parliament would shift towards the centre-right, although conservatives and Christian democrats would remain the largest groups.107 In addition, anti-Semitism might increase, nrc reported; in most new member states, dealing with the collaboration with the Nazis had not even started yet, while the extreme right was on the rise in precisely these countries.108 In the Netherlands, the expansion was not ecstatically celebrated on the day after Queens Day.109 One month before the accession, a quarter of the Dutch population was not yet aware that the eu would be joined by ten new members, reported de Volkskrant.110 There was no real cause for celebration, ad felt; its own survey showed that almost half of the Dutch people took the view that the 111 drawbacks outweighed the benefits of the expansion. de Volkskrant likewise concluded on the basis of its own research that only a small majority continued to advocate a unified Europe.112 While euroscepticism might have been on the increase in the Netherlands, most spokespersons on Europe of the Lower House party delegations saw excellent opportunities in a growing Europe. Several groups of the parliamentary opposition did voice objections. sp (Socialist Party) argued that the Netherlands overestimated its own role and lpf’s (List Pim

99 100 101 102 103 104

105 106 107 108 109 110 111 112

NRC Handelsblad, 17 April 2004, ‘Big bang kan leiden tot sociale ontwrichting’. Algemeen Dagblad, 27 April 2004, ‘Groei Europa maakt Moskou wantrouwend’. NRC Handelsblad, 30 April 2004, ‘In het oosten feesten de burgers, het westen confereert’. NRC Handelsblad, 1 May 2004, ‘Europa niet van de burger’. Trouw, 1 May 2004, ‘Gescheiden feesten in Dublin’. Trouw, 22 April 2004, ‘Cyprus ontpopt zich als ettertje van Europa’; de Volkskrant, 24 April 2004 ‘Verdeeld Cyprus wordt wespennest voor EU’; NRC Handelsblad, 26 April 2004, ‘Speelruimte EU zeer beperkt’. NRC Handelsblad, 24 April 2004, ‘Uitbreiding Europese Unie moest op een koopje’. Algemeen Dagblad, 4 May 2004, ‘Bloemenexport ruikt kansen na uitbreiding EU’. Trouw, 14 April 2004, ‘Voorspelling: Europees Parlement schuift op naar rechts’. NRC Handelsblad, 29 April 2004, ‘Vrees voor antisemitisme in grotere EU’. NRC Handelsblad, 30 April 2004, ‘In het oosten feesten the burgers, het westen confereert’. de Volkskrant, 2 April 2004, ‘Kwart Nederlanders weet niets over uitbreiding EU’. Algemeen Dagblad, 1 May 2004, ‘Burgers vrezen grotere EU’. de Volkskrant, 1 May 2004, ‘Enthousiasme voor Europa neemt af’.


Fortuyn) concerns included ‘the import of crime’.113 The paradox between the politicians’ zeal and the growing scepticism among the population was reflected by nrc which juxtaposed the government’s promotional slogan ‘Europe pretty important’ and the slogan ‘Europe pretty scary’. Unsurprisingly, this growing 114 negative sentiment on the eu cast its shadow over the accession. Chapter and verse, these had not been provided on the arrival of the new members, NRC’s comments page said. Additionally, the eu was in danger, owing to the lack of clear European borders, ‘to grind to a halt in diversity and ungovernability; an integration machine gone haywire’. This was causing unification to 115 trigger xenophobia and waste the opportunity for peace and safety. To keep a 25-country Europe governable, the eu had already started to produce a European constitution.116 But a commentary in de Volkskrant highlighted the damage the eu had suffered in Brussels ‘high-minded ideals and weighty policy concepts […] as part of which European politicians frequently believe that the citizens are wearing the wrong glasses’.117 In 2007 the eu’s expansion continued with the addition of Bulgaria and Rumania. ‘Are even more countries going to join the eu?’, an astonished resident of Brussels responded when a journalist asked him about this imminent expansion. In fact, it seems these two crept in unnoticed through the backdoor, as de Volkskrant put it. In order not to strain public opinion excessively, most countries, including the Netherlands, had decided to keep their borders closed to the expected stream of jobseekers.118 The accession of these two countries, so the consensus went in the eu, was to be the last round of ‘old-style’ enlargement; in effect, neither of these countries met the conditions and on top of that, the ‘big bang’ in 2004 had not proved successful. Candidate member states, whose first rank was expected to include Croatia and Macedonia, would have to be assessed more critically and each individually, especially with regard to reforms of the government and the judiciary. Nor would the candidate 119 member states be given a specific date for accession any longer. But even if the candidate countries were ready, the question is whether the eu itself is ready for them. For the eu treaty is effective as long as its members number no more than 27.120 The new constitution was designed to remedy this shortcoming but the Dutch and French people had recently rejected it. In addition, as de Volkskrant put it, there was ‘expansion fatigue’.121 Trouw reported that ‘a mere 45 percent of the inhabitants of the Union’ wanted its enlargement to continue, and concluded that the inhabitants of the eu were increasingly turn122 ing inwards and closing themselves off to the world. An even larger majority, the same newspaper reported, was opposed to Turkey’s accession, which enjoyed majority support solely in Spain. France had already stated its wish 123 to hold a referendum on this first. Trouw expected these continuing negative sentiments to play into the hands of those opposed to Turkish accession.124 113 114 115 116 117 118 119 120 121 122 123 124

NRC Handelsblad, 30 April 2004, ‘Merendeel Kamer positief over uitbreiding van de EU’. NRC Handelsblad, 1 May 2004, ‘Europa niet van de burger’. NRC Handelsblad, 1 May 2004, ‘Grenzeloos Europa en Nederlands belang’. NRC Handelsblad, 1 May 2004, ‘Europese Unie uitgebreid tot 25 staten’. de Volkskrant, 1 May 2004, ‘Herenigd maar onzeker’. de Volkskrant, 30 December 2006, ‘Komen er weer wat landen bij de EU?’ Algemeen Dagblad, 16 December 2006, ‘Europa wordt strenger’. NRC Handelsblad, 5 January 2007, ‘Europa herijkt uitbreidingsstrategie’. de Volkskrant, 14 December 2006, ‘Europa trekt lering uit problemen met Turkije’. Trouw, 15 December 2006, ‘Achter de schermen hoopte men dat dit het begin van het einde van het Turkse toetredingsavontuur is’. de Volkskrant, 30 December 2006, ‘Komen er weer wat landen bij de EU?’ Trouw, 15 December 2006, ‘Achter de schermen hoopte men dat dit het begin van het einde van het Turkse toetredingsavontuur is’.

27

A2

Developments in public opinion in the eu-member states

We described in chapter A1 how European unification was received in the Dutch newspapers. We will now consider how public opinion on European cooperation has developed in the eu member states in the past fifty years. We will compare public opinion in European countries insofar as they were members of 1 the eu at the time concerned. In addition to providing a factual description, we will also endeavour to interpret these developments against the background of major events in the history of the eu. And we will also examine whether differences between generations provide an explanation for support for the eu. In section 2.1 we will discuss public opinion on European integration in the fifties, sixties and the first half of the seventies. In section 2.2 we will extend this to the period 1973-2006, exploring links between developments in public opinion and major European events. In section 2.3 we consider whether people who experienced the war are more positive about Europe than others. In conclusion, in section 2.4, we compare views on the Treaty of Maastricht with those on the European constitution.

2.1

The period 1952-1975

There is scant quantitative data on citizens’ views on European integration in the fifties and sixties. The reason may be that European unification started out as a project by and for the elite; only gradually more attention is devoted to citizens. From the time of the launch of the Eurobarometer in 1973, quantitative data on public opinion in all member states is available on a systematic basis. Prior to that time, we are forced to make do with occasional questions in other surveys, and with questionnaires that were not presented in all member states. Janssen (2001) undertook an extensive search for this type of material, and was on that basis able to compile the table set out below, with survey data from 1952. That material is based on the question whether people supported the unification of Western Europe. The gaps in the table show that opinion data were only 2 collected in France, West Germany, Italy and Great Britain on a systematic basis. Only two assessments are available for the Netherlands and Belgium from before 1970. Among the other shortcomings of these data are the fact that the formulation of the questions was not the same across all the years concerned, and that Janssen reports in a way that differs from that usually adopted in the European Outlook. He measures support for European integration by the percentage of proponents less the percentage of opponents, i.e. by reporting differential scores. The European Outlook has traditionally reported the percentage of supporters. We are presenting this data despite these shortcomings as they represent a unique set of quantitative material for that period.

1 2

Where we refer to the EU, we also mean its precursors: ECSC, EC, etc. In the interests of readability, we refer to EU for the entire period. We customarily report on the United Kingdom (Great Britain plus Northern Ireland) in the European Outlook. As Janssen’s data in table 2.1 relate to Great Britain, we will refer to Great Britain here but use United Kingdom in the rest of the chapter.


year/quarter

France

Belgium

The Netherlands West Germany

Italy

Great Britain

1952-3

44

60

43

43

1954-4

54

78

54

74

1955-1

34

66c

44c

57c

33

63c

42c

52c

1956-1

39

c

59

49

1956-4

60

77

1957-2

46

68

52

1962-1

64

77

56

1962-2

62

73c

61c

25c

1964-1

75

73

75

41c

1965-2

69

79

61

58c

1967-2

65

85

64

48c

1955-3 1955-4

73 72

60

83

73

c

60c 52c

b

62

61

63

70

72

b

64

56

58

72

66

7

1975-2b

73

52

57

74

74

29

1975-4b

73

53

57

68

74

28

1970-2

1973-4

Question a: Taking everything into consideration, are you for or against the unification of Western Europe? Question b: Taking everything into consideration, are you for, against or indifferent to the unification of Western Europe? Question c: Taking everything into consideration, are you for or against the unification of Western Europe, including [country of the respondent]? Source: Janssen (2001: 128)

Table 2.1 shows that support for European integration sometimes fluctuated heavily in the early years. This is partly due to the method of reporting. People were asked to respond in favour of or against unification, without offering a neutral category (this was only provided from 1970). 5% more proponents and 5% fewer opponents results in 10% more support (differential scores are reported). At the same time there may also be substance-based explanations for these differences, which we will discuss at the end of this section. Viewed across the entire period, support was strongest in West Germany. This is obviously partly attributable to the origins, the consequences and the aftermath of the Second World War. The desire to prevent a new war (and to remove the fear of one with the other member states) and to seek alignment with Western Europe was probably most keenly felt in West Germany. But there was substantial support for European integration in all member states: proponents amply exceed opponents. In Great Britain, traditionally a country marked by euroscepticism, support for European integration is not much below that in the other member states in the period 1952-1967. At that time Great Britain was not yet a member of the (precursor of the) eu, but the question that had been put to the Britons at that time concerned European unification including Great Britain. As soon as Great Britain actually joined the eu (1973), support for European integration declined sharply. Whereas in 1967 proponents had 3 still exceeded opponents by 48%, in 1973 this had declined to 7%. The same development was seen in Denmark: although the Danes had in the sixties still been vociferous proponents of eu membership, this consensus proved to be much smaller when they actually joined (Janssen 1992:12). In 1975, support in Great Britain recovers to 29%. Nonetheless, this appears to be when the difference between Great Britain and the other member states arose; in France, 3

Note that this can also be due to a change in the formulation of the question: a neutral reply category is provided from 1970 onwards.

Table 2.1 Public support for European unifi cation (percentage of supporters less percentage of opponents), 1952-1975 (question a unless stated otherwise)

A2 Developments in public opinion in the EU-member states

29

Belgium, the Netherlands, West Germany and Italy the difference between proponents and opponents is between two to three times as large as in Great Britain. In France and Italy, support actually grew over the years; they head the list in 1975, followed closely by West Germany. In the Netherlands and Belgium, countries for which we only have a few sets of data over time, support for European integration appears to have declined slightly between 1955 and 1975, but nonetheless the proponents still heavily outnumber the opponents in 1975. It is worth noting that this decline may in part have been caused by a change in the formulation of the question (the addition of a neutral reply category). How can fluctuations in public opinion in these pioneering years be explained? According to Janssen (2001: 19) it is impossible to view the start of European cooperation in isolation of the aftermath of the Second World War and the Cold War. The need for cooperation is born from an uncertain balance of power in the world at that time. Europe was divided into two spheres of influence: a western part under American influence and an eastern part under Russian influence. ‘The severe escalation of tension between the two spheres after 1947 led to the creation in both in Western and Eastern Europe of numerous organisations in which Western and Eastern European countries respectively embark on economic, military and political cooperation’ (Janssen 2001: 20). Fear of Russian dominance may also have contributed to more goodwill among the public for West-European cooperation. The swell of public support for instance in France and England in 1956 (of respectively 21% and 11%) may well have been a consequence of the Hungarian uprising and the Hungarian occupation by Russia. The Cuban missile crisis (1962) and the Prague Spring (1968) may likewise have affected public opinion on West-European cooperation. In addition, events during the process of achieving European cooperation are likely to have affected public opinion as well. Inglehart (1967: 98) argues that in 1954/1955 the failure of the European Defence Community project led to a fall in support for European cooperation. Conversely, the swift implementation of the common market (1962) ushered in an optimistic climate of opinion. The position taken by the French president Charles de Gaulle (an emphatic supporter of intergovernmental cooperation, and opponent of supranational elements) hampered European cooperation in the second half of the sixties. De Gaulle no less than twice expressed his veto on the accession of the United Kingdom to the eu. Inglehart (1967:100) claims that De Gaulle’s first veto (14 January 1963) adversely affected public opinion on Europe in all member states of that time. Table 2.1 does not reflect this effect but that may accord with Inglehart’s reasoning that De Gaulle’s veto did not cause people suddenly to be opposed to European cooperation, but rather that they chose not to answer. ‘They were discouraged, but they did not go so far as to register an opinion against European integration, however. Instead, they abstained from answering. This is reflected in the substantial and consistent increase in ‘no answer’-responses in each country’ (Inglehart 1967: 100).

2.2

The period 1973-2006

European Outlook 3 (cpb/scp 2005: 12-14) presents an overview of developments in public opinion during the past thirty years in the six founding fathers of the eu (Belgium, the Netherlands, Luxembourg, France, Germany and Italy), supplemented with the countries joining in 1973 (United Kingdom, Ireland and Denmark). In that survey we looked at the percentage of respondents that considered the eu membership of their own country a good thing, that saw more


benefits than drawbacks to eu membership, and that would be disappointed if the eu were to be abolished. Public opinion in these nine countries turned out to have developed along distinctly diverse paths, but the three indicators did develop more or less in parallel within the member states. We therefore repeat the most frequently used indicator of the three – it is a good thing that their own country is a member of the eu – and supplement the timelines with recent years. For developments on this indicator prove to reliably forecast developments on the other two indicators. We include our earlier findings in the text. The presentation of the figures departs to some extent from European Outlook 3: this time we present the rolling average over three measurement dates. This means that the percentage stated for the spring of 2006 is the average of the measurements of autumn 2005, spring 2006 and autumn 2006. This has the advantage that sudden spikes at any one survey date are tempered by the surveys of six months earlier and later. For it is often difficult to explain why, for instance, in the spring of 1983 support in Belgium suddenly declined sharply, only to rise again half a year later. Protracted decreases (or increases) do remain visible, however. This makes the long-term trends we are focusing on in this document easier to identify. Another difference compared to European Outlook 3 is that we have added a timeline mapping a number of important European events. That makes it possible to relate developments in public opinion to those events (although we are, of course, unable to establish any causal connection). The most striking result is that the level of support for the eu differs strongly between the member states. Support in Luxembourg and the Netherlands is comparatively stable at a high level during the entire period (falling slightly in the Netherlands in line with the trend from the nineties), and from the mideighties the same applies to Ireland as well. In Denmark a trend of gradually rising support emerged in the mid-eighties, as result of which the country has in recent years no longer been among the eurosceptics but in the middle range.4 In the United Kingdom, support for the eu is lowest during the entire period. In Italy and France, there appears to be a declining trend in support from the end of the eighties. Germany and Belgium by contrast display sharp falls in support in the nineties especially. In European Outlook 3 we related those to declines in institutional and political confidence, which in Germany would be a consequence of the unification with the former German Democratic Republic, and in Belgium of a series of political and judicial affairs. In recent years, we can see a slight decline in support in the Netherlands and France, probably in the wake of the referenda on the European constitution in 2005. A steady decline in support commenced in Italy at the beginning of this millennium and is still continuing. In Luxembourg we have recently seen a comparatively strong fall in support. In Belgium, by contrast, support has been growing in the past year. Support has gradually been growing since 2004 in the United Kingdom, Ireland and Denmark.

4

At the beginning of the eighties the inhabitants of Greenland, which had joined the EU as part of Denmark, voted for withdrawal from the EU in a referendum (source: www.europa-nu.nl). Since 1985 Greenland has no longer formed part of the EU. This meant that a eurosceptical portion of the population was eliminated from the Eurobarometer, which may provide a partial explanation of why public opinion in Denmark became more positive from the mid-eighties onwards.


31

What picture emerges if we relate developments in public opinion to a number of major European events? In Belgium, the Netherlands and Luxembourg, support is relatively low at the time of the first oil crisis in the early seventies, and increases after that. Around the time of the second oil crisis, at the end of the seventies, a decline sets in again in Belgium and the Netherlands, and a little later in Luxembourg. In all three countries, support rises slightly from 1982/83, upon the Fall of the Wall in 1989, which inaugurates a fall in Luxembourg. In the Netherlands and Belgium, support only starts to decrease at the time of the Treaty of Maastricht in 1992. This decline continues throughout the nineties in all three of these countries. With the start of the new millennium support stabilises or even increases again. Around the time of the introduction of the euro in 2002 we see hardly any changes in public opinion in these three countries. In recent years there have been declines around the time of the accession of ten Central and Eastern European countries and the referenda on the European constitution. In France, Germany and Italy, by contrast, support climbs out of a trough around the time of the second oil crisis. In the eighties, support is growing everywhere. The Fall of the Wall in Germany is accompanied by an increase in Germany but a decrease in France and Italy. Around the time of the Treaty of Maastricht support is waning in all three of these member states. As in Belgium, the Netherlands and Luxembourg, the nineties are marked by that decline. The introduction of the euro coincides with a rise in support in Germany and Italy, while support in France remains more or less stable. The accession of ten Central and Eastern European countries is accompanied in all three of these member states by a decline in support. We also see a decrease in France and Italy following the referenda on the European constitution. In Denmark, Ireland and the United Kingdom, finally, there are no notable developments in the period surrounding the two oil crises. The first half of the eighties saw a decline. Support recovers again around the time of the accession of Spain and Portugal. During the Fall of the Wall there is increasing support in these three countries. In the United Kingdom and Denmark we see a decreasing trend during the Treaty of Maastricht and the accession of Austria, Finland and Sweden. An increase occurs in that period in Ireland, by contrast. Support peaks slightly around the introduction of the euro, but this is followed by a decline reaching a low at the accession of the ten Central and Eastern European countries. Since then, support has been increasing slightly in all three of these member states. It is not easy to identify a clear pattern in these developments. The accessions of Greece, Spain, Portugal, Austria, Finland and Sweden do not have a distinct effect on public opinion. These accessions were probably not very controversial (see also section A1 for Dutch newspaper reports written during the accessions). That is different for the accession of the ten Central and Eastern European countries on 1 May 2004. This appears to lead to a Europe-wide decline in support. Also, at the start of the nineties, when the Treaty of Maastricht is signed, support decreases in virtually all member states. The public debate on the European constitution appears to have an adverse effect on public opinion in some of the countries (we will come back to both events in § 2.4). The oil crises and the Fall of the Wall are met with varying responses in the countries studied here.


DK , IE

90 80

70

60

50

40

30

20

90 80

70

60

50

40

30

20

90

80

70

60

50

’73 ’74 ’75

’73 ’74 ’75

oil cris is

40

st

30 20

and UK acc ede ;1

ele

2 nd

oil

cris

’79

is

ece

acc

ede

’80

’80

s

’79

Gre

’78

ns;

’78

ctio

’77

’77

t EP

’76

’76

firs

ctio

ns

’82

’82

ele

’81

’81

EP

tug

’85

al a

cce

de

’85

Por

’84

nd

’84

in a

’83

’83

Spa

ctio

ns;

he

Wa

’89

’89

ll

’88

of t

’88

fall

’87

’87

ele

’86

’86

EP

tric

ctio

ht

ns

, Fi

nla

ms

’96

terd

’95 ’97 ’98

’98

’99

’99

’00

’00

’01

’01

’02 ’04 ’05 ’06

Luxembourg

Belgium

Germany

France

Ireland

’05 ’06

Denmark

’04

United Kingdom

’03

Source: Eurobarometers

The Netherlands

Italy

’02

’03

am San EP ter ele Com ctio m ns issi De on nm ste ark ps reje dow cts Tre n; aty EM of N U i c e; 0 intr odu 9/1 cio 1 no f Eu dra ft c ro ons titu 10 tion E acc ast ede ern Eur ope refe an ren cou da ntri Eur es ope an con stit utio n

of A

’97

in

’96

n jo

’95

aty

Sw

ede

Tre

’94

and

’94

nd

’93

tria

’93

Aus

’92

aas

ele

’91

of M

’92

EP

’91

aty

’90

’90

Tre

Figure 2.1 Support for the EU: percentage of the population of 15 years and above that considers its own country’s EU membership to be a good thing, combined with European events, 1973-2006


33

The introduction of the euro, contrary perhaps to expectations, also does not have an unambiguous effect on public opinion. All in all, the member states mostly experience different developments. The influence of European events is not evident at all times. No causality can be established, developments around European events can also have other causes, such as the economic developments or the national context and national events. Various authors (e.g. Díez Medrano 2003 and Janssen 2001) point to the importance of national events and national history for positions taken on Europe. We will come back to this in the concluding part of this section.

2.3

Differences between generations

In section 2.2 we focused on changes in public opinion in each member state. What causes these changes? One of the reasons could be demographical changes. It is easily conceivable that people who experienced the Second World War tend to have more favourable views on European integration than others, because peace on the European continent is not something they take for granted. Pre-war generations should then be more pro-European than post-war generations. With the passage of time, progressively fewer people will have lived through the war, and that could explain why public opinion in a country becomes more negative overall. That would reflect a generation effect: it is not so much that people’s views on Europe have changed, but that older generations have been succeeded by younger generations. Other generation effects are conceivable as well. This section will focus on the extent to which generations differ in terms of their views on the eu, and on how such differences develop over time. Table 2.2 reflects views on eu membership for each member state for four generations, in 1975, 1985, 1995 and 2005. The two youngest generations are included only in 1985 and 2005 respectively, either because they had not been born earlier or because they were aged under 15 years. We report deviations from the average score for each survey date. The assumption that views on Europe are more favourable among the pre-war generations than among the post-war generations is borne out only to a very limited extent. It holds true in Denmark, but the gap between the pre- and post-war generations narrows over time, and has virtually closed in 1995. In the United Kingdom and Ireland pre- and post-war generations in 1975 are roughly equally Europe-minded; in subsequent years post-war generations are more positive than pre-war generations. While in some of the other six member states (the founding fathers of the eu) there is no difference between the generations, in most it is the post-war generations who are more positive on Europe 5 than pre-war generations.

5

This is not completely true for Luxembourg, where pre-war generations expressed the most favourable views on EU membership in 2005.


1975

1985

1995

2005

38

33

52

57

4

5

1

–1

– 1941-1960

–5

–4

–1

–8

– 1961-1980

.

–1

1

3

– 1981-1990

.

.

.

13

United Kingdom

48

37

42

35

1

–1

–6

–9

– 1941-1960

–2

–1

4

–3

– 1961-1980

.

2

4

4

– 1981-1990

.

.

.

8

58

54

77

75

2

–4

–5

–2

– 1941-1960

–3

0

1

–2

– 1961-1980

.

4

2

2

– 1981-1990

.

.

.

–2

66

79

81

74

–2

–6

–6

–3

– 1941-1960

3

5

1

–2

– 1961-1980

.

3

3

1

– 1981-1990

.

.

.

2

58

65

62

63

–6

–4

–4

–7

– 1941-1960

9

1

1

–6

– 1961-1980

.

7

3

4

Denmark – born before or in 1940

– born before or in 1940

Ireland – born before or in 1940

The Netherlands – born before or in 1940

Belgium – born before or in 1940

– 1981-1990 Luxembourg – born before or in 1940

.

.

14

82

77

83

–1

1

1

6

– 1941-1960

2

–4

2

–4

– 1961-1980

.

5

–2

0

– 1981-1990 Germany – born before or in 1940

.

.

.

3

61

55

55

56

–3

–5

–5

–4

– 1941-1960

5

7

2

–2

– 1961-1980

.

2

4

–1

– 1981-1990 Italy – born before or in 1940

.

.

.

10

74

73

71

53 –12

–1

–4

–6

– 1941-1960

0

2

2

0

– 1961-1980

.

7

3

5

– 1981-1990

.

.

.

4

65

67

55

49

–1

–5

–4

–3

– 1941-1960

1

4

0

–4

– 1961-1980

.

3

3

0

– 1981-1990

.

.

.

8

France – born before or in 1940

a

. 70

Percentage that states that they consider their own country’s EU membership to be a good thing, and therefore does not opt for ‘a bad thing’, ‘neither good nor bad’ or ‘do not know’.

Source: EB 3, EB 4 (1975), EB 23, EB 24 (1985), EB 43.0, EB 43.1, EB 43.1B, EB 44.0, EB 44.1 (1995), EB 63.4, EB 64.2 (2005)

Table 2.2 Views on EU membership by generation, deviations from country average per measurement date (cells show percentage that believes EU membership to be a good thing a )


35

Inglehart (1970; 1997) proposes an explanation for this difference between the generations in his theory on the Silent Revolution concerning people’s political values. He draws a distinction between materialists and post-materialists. Post-materialists are people who value matters such as self-realisation, freedom of speech and democracy, while materialists attach value to economic security, safety and maintaining public order. The Second World War constitutes a watershed between these two groups. Inglehart argues that people born before the Second World War belong predominantly to the category of materialists, while post-materialists were usually born after the Second World War. Early socialisation, Inglehart claims, largely determines the position people adopt later in life. Accordingly, people who grew up in prosperity will more often tend to have post-material values (since material matters can be taken for granted), while people who lived in poverty in their youth will more often tend to prioritise material values. This theory proposes that the post-materialists will be more frequently inclined to support European integration than the materialists, because the post-materialists see European integration as a means for social reform, and because they are much more open to intellectual challenges, which also means that their political perspective is wider (Inglehart 1971; Janssen 1992). Up to the early nineties, Inglehart’s Silent Revolution theory was the theory of choice to explain support for European integration, and as such it has also been tested on several occasions (Janssen 1991; Gabel 1998). Those examinations show that Inglehart’s theory holds up only if certain parameters are in place. It is found to offer an explanation of views on the eu only in the original six member states, and the effect is limited compared to other explanatory factors. The explanatory power of Inglehart’s theory appears to have faded over the years. We will consider more recent explanations of views on the eu, such as utilitarianism and feelings of identity, in subsequent sections. Contrary to our expectations, experience of the Second World War does not produce more favourable views on European integration. Other studies (Renselaar et al. 2006) do show another effect of the experience of war. People who experienced the war are found to associate Europe with peace far more strongly than people born later. ‘Younger generations hardly associate Europe with the original ideal of peace any longer’ (Renselaar et al. 2006: 19). In sum, changes in public opinion appear not to be attributable to generation effects. In many countries the generations appear to move in line with general trends. In Ireland, for instance, there is an overall increase from 58% to 75%. The various generations in Ireland are very close to that country average, as is attested by the low differential scores. People of all generations appear to have developed more favourable views on the eu, and therefore the difference cannot be explained in terms of the replacement of generations. What is true, however, in many countries is that the position of generations in respect of the country average is more or less stable across the entire period. For example, the older generation appears to be somewhat more negative about European integration at all times than the average (with a tendency for the divergence from the average to increase somewhat in later years), while the youngest two generations are, by contrast, somewhat more positive. There are distinct differences between generations, but these do not account for the full spectrum of changes in public opinion.


2.4

The Treaty of Maastricht and the European constitution

This section focuses on views on two specific matters: the Treaty of Maastricht and the European constitution. In 2005 a number of member states put the European constitution to the population in a referendum. A majority of the population of Spain and Luxembourg voted for it, a majority of the Dutch and French voted against it. This was, however, not the first treaty on which people 6 were able to vote. In 1992/93 the Treaty of Maastricht was put to the vote in Denmark, Ireland and France. In France and Ireland, a majority of the population voted in favour of it. Denmark voted against the treaty in the first instance and interim negotiations (Edinburgh) were necessary to make the treaty more palatable for the Danish. Table 2.3 summarises how citizens of the eu member states at the time in 1993 (a few months after the referenda) felt about the Treaty of Maastricht. Did they know of the treaty and would they vote in favour or against it in a (hypothetical) referendum? In addition, we assessed views on individual proposals in the treaty. Finally, a column has been added showing views on the European constitution. This assessment was likewise carried out a few months after the referenda (autumn of 2005).

Table 2.3 Views on the Treaty of Maastricht as a whole (spring 1993), on various proposals in the Treaty of Maastricht (spring 1993), and on the European constitution (autumn 2005), deviations from the country average a (in percent)

1993

country average Denmark United Kingdom

for Maastrichtb 45

knowledge of Maasfor single trichtc currencyd 18 57

for common for common policy on immigraforeign policye tionf 66 75

2005 for common policy on drugs and crimeg 90

for more power for for EuroEuropean pean govParliamenth ernment i 60 53

for subsidiarityj 57

9

25

–28

–7

–3

3

–14

–25

12

–4

–16

–6

–25

–13

–3

3

–9

–12

5

–10

Ireland

17

9

11

–6

–4

–3

0

–4

–1

3

The Netherlands

13

3

1

3

10

4

9

11

–5

5

2

–6

12

4

0

–2

4

10

–9

21

–1

Belgium Luxembourg

0

–1

6

7

7

1

–1

8

Germany

–4

–6

–28

4

8

0

–1

2

6

Italy

–2

1

23

7

0

3

10

6

–6

Greece

0

3

14

7

0

–3

–1

4

7

France

0

–1

1

1

–4

–1

1

3

–2

–8

–12

11

0

–2

–2

–1

4

–9

–11

–13

2

–7

–13

–2

–2

–6

–3

Spain Portugal

a Average of the twelve member states without taking account of number of inhabitants per member state. b Percentage that would vote in favour of the Treaty of Maastricht in a hypothetical referendum. c Percentage that states they are very familiar or fairly familiar with the Treaty of Maastricht. The following questions concern individual proposals in the Treaty of Maastricht: d Percentage that is in favour of an Economic and Monetary Union with a single currency to replace all currencies of the EC countries. e Percentage that is in favour of a common foreign policy in respect of countries outside the EC. f Percentage that is in favour of common rules on political asylum, refugees and immigration. g Percentage that is in favour of close cooperation in combating dealing in drugs and organised crime. h Percentage that considers that the directly elected European Parliament should have a greater say on European legislation. i Percentage that is in favour of a European government that is accountable to the European Parliament and the European Council. j Percentage that considers that the EU should only be responsible for matters that cannot be effectively dealt with by the national governments. k Percentage that is fully or partially in favour of the European constitution. Source: EB 39.0 (spring 1993); EB 64.2 (autumn 2005)

6

for the constitutionk 52

The Treaty of Maastricht (Denmark, Ireland and France) and the Treaty of Nice (Ireland) were the subject of referenda. Other referenda concerned matters including accession to the EU, continuing EU membership, the Single European Act and participation in the Economic and Monetary Union.

6 3


37

A quick scan shows us that the proposals from the Treaty of Maastricht were well received, in general. There is significant support for joint policy on unmistakably border-crossing areas such as immigration and organised crime. Procedural proposals (power of European Parliament, European government, subsidiarity) are somewhat less popular although they too enjoy majority support (on an eu-wide basis). Support for a single currency varies strongly, from 29% in Denmark and Germany (strong currency of their own) to 80% in Italy (weak currency of its own). The call for subsidiarity is notably strong in the United Kingdom and Denmark, the eurosceptic countries. Knowledge of the treaty is greatest in Ireland and Denmark, where respectively 27% and 43% say they are very familiar or fairly familiar with the Treaty of Maastricht. This is likely to be due in part to the fact that these member states actually held a referendum on the treaty (this also applies to France). Knowledge of the treaty is scarcest in Portugal, where only 5% say they are very familiar or fairly familiar with the treaty. On the basis of these figures, the Treaty of Maastricht would only have been approved by referendum in Denmark, Ireland and the Netherlands, while at the same time the individual proposals enjoy majority support in almost all member states. Janssen, in 1992, expresses the expectation that the Dutch, if they had been given an opportunity to do so, would in fact have voted in favour of the Treaty of Maastricht (Janssen 1992: 12). Comparing support for Maastricht and support for the constitution is very difficult owing to the differences in the formulation of the questions. In 1993, an average of 45% of respondents stated they would vote in favour of the Treaty of Maastricht in a hypothetical referendum. In 2005, 52% fully or partly support the European constitution.7 The strongest support for the constitution is voiced in Belgium (73%) and the weakest – though still substantial – in the United Kingdom (42%). In France and the Netherlands, where the population had earlier in the same year voted against the constitution by a majority, there are nonetheless majorities ‘fully or partly’ in favour of the constitution (58% and 57% respectively).8 In a favourable-to-negative ranking of member states where the question on the constitution was put to the people, the Dutch occupy third place. And second place for the Treaty of Maastricht. These figures to some extent place in perspective the assumed euroscepticism supposedly manifesting itself in the referenda on the European constitution. Comparison of the outcomes of the referenda actually held on the Treaty of Maastricht and the European constitution9, does not appear to indicate that enthusiasm for the constitution in 2005 is lower on average than for Maastricht at the time. The relative position occupied by the Dutch in table 2.3 concerning the constitution is more or less in line with their position on Maastricht twelve years earlier. At that time, the votes on the treaty did not result in citizens turning away from Europe. According to Janssen (1992:1) the Danish ‘no’ on the treaty in the first instance produced both astonishment and panic and indignation in the other member states (a response we saw again after the French and Dutch ‘no’ on the constitution), but did not result in lasting euroscepticism; not even in Denmark itself, where public opinion has over time in fact become more favourable. In section 2.2 we saw that support for eu membership declined in 7

8

9

In respect of the Treaty van Maastricht, this reflects respondents’ intention of voting in favour in a (hypothetical) referendum, and in respect of the European constitution it reflects their being ‘fully or partly’ in favour. Nonetheless, it is difficult to explain why majorities are ‘fully or partly’ in favour of the constitution in France and the Netherlands. Apart from the fact that in both referenda other issues apart from the proposals in the constitution played a role, being ‘partly’ in favour may not be sufficient reason for voting in favour. Spain (77% for), France (45% for), the Netherlands (38% for) and Luxembourg (57% for).


most countries around the time of the Treaty of Maastricht but recovered in subsequent years. While past events provide no guarantees for the future, present developments might mirror the past here. Support declined following the referenda on the constitution in a number of member states (though less strongly than at the time of Maastricht), but appears to be recovering in most cases. In any case, the past teaches us that public opinion is resilient and that treaties not unanimously welcomed need not have lasting consequences for public opinion. Views on European treaties appear to be correlated with general views on the eu. People who take a positive view on their country’s own eu membership more often express the intention in 1993 to vote in favour of the Treaty of 10 Maastricht in a (hypothetical) referendum, and more often support individual proposals from the treaty. Views on the subsidiarity principle in France, Belgium, Italy and the United Kingdom are the exception to this rule. In this area, people with favourable views on eu membership tend to be less in favour of the subsidiarity principle. This might be interpreted to mean that these ‘euroenthusiasts’ would prefer to see more rather than less eu. In 2005, views on the constitution are positively correlated with views on eu membership. The more favourable the views expressed by people on eu membership, the more often 11 they support the constitution.

2.5

Concluding remarks

Public opinion has developed along very different lines in each of the member states. European events prove to lead to similar developments in member states at some times, but also to divergent ones at others. All in all it is important not to overestimate the influence of European factors on public opinion and not to underestimate the influence of other factors. The great importance of national developments for public opinion on Europe is emphasised in the literature. In 2005 we wrote on this that ‘[...] historical national events have a major impact on public opinion on the eu. Research by Díez Medrano (2003) shows a wide range of potential motives for support for the eu. He relates the high level of support for the eu in Spain to the drive to modernise the country and break with a centuries-old tradition of isolation. Support in Germany is said to be related to the wish to remove other Europeans’ fear of the holocaust and the Second World War. The meagre support in the United Kingdom is related to the emotional ties with the British Empire. On the basis of Eurobarometer and other data, which reach up to fifty years back in time, Janssen (2001) likewise emphasises the importance of national factors in explaining changes in public support for the eu. “The nation states continue in one form or another – political context, communication structures, culture, history, etc. – to be of major significance for the development of public opinion on the eu” (Janssen 2001: 139). In view of the continuing differences in national developments, country-transcending (eu-related) factors still appear to be of subordinate importance’ (cpb/scp 2005: 11-15). The data in this section likewise suggest that the national context affects the way in which European events are received in public opinion. In the next few sections, we will examine to what extent assessments of national interest and feelings of national identity affect views on the eu.

10 11

This correlation is strongest in Denmark (r = 0.64) and weakest in Luxembourg (r = 0.26). The correlation is strongest in Denmark (r = 0.56), and weakest in Ireland (r = 0.26).

39

A3

Current public opinion in Europe

This chapter outlines current public opinion in the eu of 27 member states, by reference to country data derived from surveys among the population. We are using Eurobarometers from 2006, when Bulgaria and Romania had not yet joined. Since we often do have data on those countries however, we will nonetheless discuss the Europe of the 27 member states. We will start in section 3.1 with a number of indicators for satisfaction and general values to say something about the cultural diversity of the eu. Section 3.2 focuses on indicators that map differences in views on people’s own country and the eu. Section 3.3 looks at differences in terms of involvement in and information about the eu. In section 3.4 we consider current views on support for European integration. In section 3.5 we examine preferences for European cooperation in different policy areas. Finally, in section 3.6 we explore to what extent support for the eu depends on satisfaction with people’s own lives and developments in their own country, and feelings of national pride. In doing so we consider not only correlations between country averages but also relations at an individual level. As there is neither a limited number of homogenous groups of countries nor a set of conclusive criteria for the selection of a limited number of countries for comparison, we will provide the figures for all 27 member states. That results in large tables which we have therefore included in the appendix to this section. Country averages of the percentages with a specific feature are stated, followed by deviations from those of the countries in percentage points. This method immediately pinpoints which countries are sharply different and whether there are groups of adjoining countries with more or less the same deviations. Notable differences and the position of the Netherlands will be discussed in the body text and charts will illustrate a number of interesting relations between indicators.

3.1

Cultural diversity

Diverse Europe. European Outlook 4 (cpb/scp 2006) had cultural diversity as its main theme. Survey measurements of general values and social and institutional confidence were used to portray a complex picture of intersecting separating lines. We identified, among other things, higher levels of avoidance of uncertainty and power distance in the new member states, greater conservatism in more religious/catholic countries and higher levels of social and institutional trust in the North-West. Supplementing those analyses we provide figures in appendix table B3.1 on people’s satisfaction with the lives they lead and agreement with a number of general undesirable or desirable social and political matters. These are not views on the eu per se, but they do provide scope for assessing the diversity of opinions on the eu. There are major differences in terms of people’s satisfaction with their own lives. The Danes are most satisfied (64% very satisfied), followed by the Dutch and Swedes (50%). In general, satisfaction is significantly lower in the new member states (Bulgaria 2%, Romania 4%). Portugal, with a mere 5% of very satisfied respondents, again scores very poorly in terms of satisfaction. The figures in the first column of table B3.1 agree to a very significant extent with previous measurements (Dekker 2007: 153).


The nine ideological, political and moral views in the table are not easily subsumed into more general categories. Therefore two statements are selected in figure 3.1 as representing dominant moral and ideological debates in Europe: support for homosexual marriages and support for free competition. Figure 3.1 Ideological and moral diversity: free competition and homosexual marriage

homosexual marriage should be allowed in Europe 90 NL

80 SE DK

70

BE LU

60

ES DE

CZ FR

50

AT

FIUK IE

40 SI

IT

PT

30

HU

20

MT EL

SK BG

CY RO

EE PL

LT LV

10 0 40

50

60 70 80 90 free competition is the best guarantee for prosperity

Source: appendix table B3.1 (row 2 and 10); also see that table for the country abbreviations

Diversity is greater in terms of views on homosexual marriages than in views on free competition. In line with the findings in European Outlook 4, the new member states prove to be more conservative. They are also slightly more convinced of the advantages of free competition. To what extent do the citizens of the eu themselves see a common European culture or shared standards and values? After the statements presented in table B3.1 had been submitted, the autumn 2006 Eurobarometer survey directly asked about this: ‘With regard to shared values are the member states of the European Union in your opinion …?’ Respondents could choose from four answers: ‘very close to each other’, ‘fairly close to each other’, ‘fairly far from each other’, ‘very far from each other’ and ‘do not know’. Figure 3.2 illustrates the distribution of replies. The differences are most clearly pronounced in Latvia, and the similarities in Bulgaria. Probably, the other values are taken as reference and the question what is close and what is far will be answered differently, depending on the diversity perceived outside Europe or experienced in other countries. Notably, no greater internal homogeneity is perceived in the new member states or at the borders of the eu than in the old member states or the centre.

A3 Current public opinion in Europe

Figure 3.2 The perceived distance between EU member states in terms of common values

41

FI SE DK UK IE NL BE LU DE AT IT EL FR ES PT EE LV LT PL CZ SK HU SI RO BG CY MT 80

70

60

very far

50

40

30

fairly far

20

10

0

10

do not know

20

30

40

fairly close

50

60

70

80

very close

Source: Eurobarometer 66.1 (October-November 2006) weighted results

3.2

National and European orientations

Appendix table B3.2 contains questions gauging similar issues for people’s own country and for the eu or Europe: do they feel things are going in the right direction in their own country and in Europe, are they proud of their own nationality and as Europeans, and are they interested in national and in European news. The correlations between comparable indicators are positive: the more pride people of a country take in their own nationality, the more pride 1 they take in feeling European, etc. We foreground two relations in figures. Figure 3.3 shows to what extent people feel things are going in the right direction in their country and in the eu, and figure 3.4 maps the correlation between national and European pride.2 A dotted line in these figures delineates the average correlation. In countries above the line, citizens are comparatively strong proponents of the view represented by the vertical axis, in countries under the line the view on the horizontal axis is 1

2

There are not only positive correlations between country figures but also at an individual level in all 27 countries: People who claim to be proud of their own nationality will also more often tend to be proud as Europeans, etc. This reflects the percentage of people who are ‘very proud’; adding the category ‘fairly proud’ would have lifted percentages for the own country to around 90% and sometimes far beyond.


relatively popular. In countries above the dotted line, then, people feel relatively more often that things are going in the right direction in their own country or 3 that they can take pride in their own nationality. things are going in the right direction in the EU 60

RO

PL

Figure 3.3 Satisfaction with developments in own country and in the EU

LT

SI CZ

BG

IE

SK EE

50

LV

EL PT

40

HU BE MT CY AT

FI

SE

NL

IT

30

DK

ES

LU

DE UK FR

20 10

20

30 40 50 60 things are going in the right direction in own country

Source: appendix table B3.2 (row 1 and 2)

is very proud to be European 25

Figure 3.4 National and European pride

LU MT SI SK

EL

IE

SE

HU

20

BE

CZ

BG AT

15

FI

DK

IT

PL FR CY

ES RO

EE

LV

UK

PT

10

LT

DE NL

5 15

25

35

45

55

65 75 85 is very proud of own nationality

Source: appendix table 3.2 (row 3 and 4)

3

Relatively, that is to say in comparison with the average relationship between the characteristics in all 27 member states. The dotted lines are regression lines and not diagonals (Note: the scales of the axes usually differ as well).


43

The lower left part of figure 3.3 shows us ‘pessimistic’ countries where assessment of both the eu and the own country is negative (France, the United Kingdom, Denmark, Italy), contrasting with the top right part of ‘optimistic’ countries (Ireland, Estonia, Latvia, Romania and Slovenia). That last group is populated to a notable extent by new member states (with the exception of Ireland), and the first by older member states. In addition, the belief that things are going in the right direction in the eu is voiced more often in the new member states than in the old. The Dutch score above average on the view that things are going in the right direction in their own country and below average on the view that things are going in the right direction in the eu. The lower left part of figure 3.4 shows the countries where people are fairly proud of their own nationality and of being European, and the top right part shows the countries where people are especially proud of both. The Dutch, together with the Germans, score particularly poorly on both counts, in marked contrast to the Greeks. The people in Luxembourg are most frequently proud to be European. Cypriots score very highly in terms of their own nationality but below average on being European.

3.3

Involvement with the eu

Based on self-assessment the Dutch are highly involved in Europe (see appendix table B3.3), and outscored on that count only by Denmark. Finland and the United Kingdom have the fewest people reporting that they feel highly involved with the eu. The Dutch again score very highly in terms of perceived insight, second only to the people of Luxembourg. A simple test of knowledge puts that picture into perspective to some extent: the Dutch score slightly above average in this respect. Figure 3.5 shows the divergences between perceived and actual knowledge in the member states, i.e. the extent to which inhabitants of the various member states correctly gauge their own knowledge of the eu.

Figure 3.5 Actual and assumed knowledge of the EU

rates own knowledge of the EU as sufficient 50

LU

40

NL EL AT

SE

RO

30

DK

SK

DE

MT

SI

CZ FI LV IT

CY PT

EE

PL LT

20

BG

ES UK

IE BE

HU FR

10 5

15

25

35

45

demonstrates knowledge of the EU Source: appendix table 3.3 (row 2 and 3)

55


Perceived insight is lowest in France, Spain, Hungary and the United Kingdom. These member states also score poorly on actual knowledge, but they do not make up the tail end. These countries appear to underestimate themselves to some extent. The Danes and the Cypriots especially are too modest in assessing their own knowledge. The tendency towards over-estimating themselves is the most pronounced in Italy, Romania, Germany and Slovakia. The highest scores on actual knowledge are turned in by Luxembourg, Greece, Cyprus and Denmark. The Netherlands does not do too badly overall. We discern a slight tendency towards over-estimation in terms of perceived knowledge but scores on actual knowledge are nonetheless slightly above average. Notably, there is not a single member state in which a majority of the population rates its knowledge on the eu as sufficient. That knowledge is limited in general was repeatedly found in previous Outlooks as well. In chapter A1, in which we analysed reporting on the eu in Dutch newspapers, we found, as had others, that this reporting was often rather sceptical and up to a few years ago also quite limited in scope. How do the people in our country and others view media coverage of the eu? This is reflected in the last rows of appendix table B3.3. We examined views on coverage in terms of quantity and tone on television and in written media. On average, inhabitants of the eu feel that the eu is underexposed in the media, and that the tone of the coverage is too favourable. The Dutch most frequently state that there is insufficient coverage of the eu on television, a view expressed by 55% of Dutch respondents. Only 2% of the Dutch consider television coverage of the eu excessive. The written media is thought to provide insufficient coverage of the eu by 33% of the Dutch population (excessive: 2%). Only the Greeks score higher in this area. Bulgaria is the only country where people feel there is excessive (20%) rather than insufficient (19%) coverage of the eu on television. This is likely to be partly due to their accession to the eu, as the survey was held at the end of 2006. The Romanians, who joined at the same time as the Bulgarians, take a different view: 9% considers television coverage of the eu to be excessive, and 34% feel it is insufficient. Overall, the tone of coverage of the eu, both on television and in the newspapers, is considered to be too positive. That is most often the case in Austria, Latvia and Lithuania. The Dutch view is different; they feel, on the contrary, that the tone of the coverage is too negative (television: 17% too positive versus 22% too negative; newspapers: 9% too positive versus 18% too negative). In the United Kingdom, a majority likewise feel that the tone of coverage is too negative. All in all, the Dutch occupy a special position in their view of the media. They seem to feel a need for more and more positive coverage of the eu. We have found before that the Dutch feel not enough information is available on the eu. At the same time it was found that the many brochures available around the time of the referendum were hardly able to capture the attention of the Dutch (see for instance cpb/scp 2005; 2006). Researchers also found that eu coverage by the Dutch public broadcasters is very limited (see for instance ‘Publieke omroep verwaarloost “Europa”’, nrc Handelsblad, 2 August 2003).

3.4

Support for the eu

After looking at involvement in the eu, we will now consider support for it (see appendix table 3.4). First, there are the general support indicators, chapter A2 already discussed the developments in these. Indicator combinations as at the end of 2006 are presented in figure 3.6.


Figure 3.6 General support for the EU by two standards

considers that own country benefits from EU membership 90

45

IE

80

LT EE

DK

EL SI

70

PL SK LU

BE

CZ ES

LV

NL

PT

60

MT

FR

50 FI

DE IT

CY

AT UK

40

HU

SE

30 30

40

50 60 70 80 considers own country’s EU membership to be a good thing

Source: appendix table B3.4 (rows 1 and 2)

The number of inhabitants who feel their own country’s eu membership is a good thing varies substantially among member states. In Ireland, Luxembourg and the Netherlands, around three-quarters of the population agree with this statement, while in the United Kingdom, Finland, Austria and Hungary this drops to only one third. With the exception of Hungary and Cyprus, scores in the new member states are around average. With the same exceptions, they do, however, comparatively often believe that their own country benefits from eu membership. In most of the old member states people tend to believe that their country’s eu membership is a good thing. The predominant view, however, is of a strong correlation between both indicators for support for the eu, with clear opposites on the scale being represented by the neighbours the United Kingdom (34% good thing and 39% benefit) and Ireland (77% good thing and 86% benefit). Figure 3.7 depicts the combinations of agreement with two contentious issues: further enlargements and ‘a’ constitution for the eu. The correlation between support for both issues is weak. Strong support for enlargements does not also 4 mean that there is much support in a country for a constitution. There are majorities in favour of a constitution in most member states; exceptions are the United Kingdom, Sweden and Denmark, while Austria and Finland are doubtful. As in previous years (cpb/scp 2006: 11) there is again a majority of those voting ‘no’ in the Netherlands (59%) and France (66%).5

4 5

At an individual level there is a positive correlation in all countries, which ranges from weak in Belgium and Luxembourg (0.18) to substantial in Bulgaria and Romania (0.54). Views on ‘the’ constitution were also solicited in a number of member states. The number of supporters of ‘the’ constitution proves to be hardly any smaller than the percentage of supporters of ‘a’ constitution: among the French and the Dutch 59% and 56%, respectively, state that they are ‘fully or partly’ in favour of the constitution (see also § 2.4).


Figure 3.7 Support for further enlargements and for EU constitution

is in favour of constitution BE

80

SI HU CY

DE

EL LU

70

IT

LT SK

FR

RO PL BG

ES MT

PT

60

NL

LV

IE EE

CZ

FI AT

50 DK SE UK

40 20

30

40

50

60 70 80 is in favour of further enlargements

Source: appendix table B3.4 (rows 3 and 4)

With regard to the desirability of further enlargements, figure 3.7 shows a clear division between old member states (shown on the left, with at most a slight majority in favour) and the new member states (on the right, with majorities of between 55% and 80%). The Greeks constitute an exception, as they side with the new member states on this score. Viewed purely in economic terms, it is remarkable to see the new member states providing greater support for more enlargements. European support for (poorer) new members will presumably be at the expense of countries that have recently joined. Possibly the greater support could in part be due to feelings of solidarity owing to cultural proximity and an expectation, nonetheless, of economic (enlargement of internal market in the own region) or political (more stability in the own region) benefits from enlargement. The new member states also tend on average to view the internal market more favourably than the old member states, but substantial differences between countries that are close to each other can be found in both groups. For example, 64% of the Irish take a favourable view of the effect of the internal market on the competitive position of businesses in their country, as opposed to 33% of the British and 26% of the French. 53% of the Hungarians take a favourable view of more competition, among Slovenes and Poles this is 79% and 81% (appendix table B3.4, row 5 and 6).

3.5

Preferences for common policy

Appendix table B3.5 states to what extent the public deems joint policies desirable for sixteen selected policy issues instead of national policy only (or has no opinion on this). Again, fighting terrorism is at the top of the list: 82% of eu citizens are in favour of a joint approach. The general outcome is a stable preference to act jointly on cross-border challenges (such as terrorism, defence and the environment), and a reluctance to adopt joint policies on traditional tasks of the welfare state. This is a conclusion we have drawn previously (cpb/scp


47

2003: 35; 2004: 16; 2005: 43; 2006: 14). Support for joint policies is more widespread in the new member states than in the old. The Fins, as they did last year, are notable for their resistance to joint policy in the field of defence and foreign affairs (only 22% are in favour, as against an average of 64%). If preferences in all policy areas are added up, support for joint policies is weakest among the Fins and the British and strongest among the Cypriots. Figure 3.8 6 shows a weak correlation of this preference with overall support for the eu. Figure 3.8 Support for the EU and support for common European policy

support for common European policy 70 CY

PL LT

60

HU

MT

EL

LV PT CZ IT

SI DE

BE SK ES

50

FR

NL IE

EE LU DK

AT

40

SE UK

FI

30 30

40

50 60 70 80 considers own country’s EU membership to be a good thing

Source: appendix table B3.4 (row 1) and B3.5 (row 17)

The Dutch, as they did last year, turn in average scores on all policy areas, but do diverge clearly in some areas. Support in the Netherlands is notably strong for joint environmental protection and support for weak regions, and there is a very clear preference for retaining control over pensions, health and social security.

3.6

Concluding remarks

This chapter focused, in succession, on cultural diversity, comparisons between people’s own country and the eu, involvement in Europe, support for European integration and views on the desirability of joint European policy. The appendix tables present a substantial amount of data and the text commented on significant differences and graphically illustrated interesting connections. It is not possible to distil these into a definitive summary in terms of a number of groups of countries that consistently clustered differences. As in considering value patterns in European Outlook 4 (cpb/scp 2006: 39 ff), differences sometimes emerge between north and south, sometimes between west and east and sometimes between old and new member states. There are, however, always exceptional countries (for which the possibility that difficult formulations and mediocre translations have taken their toll cannot be excluded) and striking 6

Again, at an individual level there is a positive correlation in all countries, ranging from weak in Slovenia (0.14) to substantial in Denmark and the United Kingdom (0.41).


contrasts between neighbouring countries, for instance Spain and Portugal in figure 3.1 on support for homosexual marriages. On homosexual marriages and the legalisation of cannabis consumption, the Netherlands stands out in appendix table B3.1 owing to its higher level of tolerance. In terms of views on the eu, Dutch public opinion is on average favourable, certainly in comparison with other old member states. The Dutch tend to overestimate their own knowledge of the eu somewhat, but at the same time they want to be informed comparatively more often and less negatively on Europe via the television. We will limit the summary of all figures presented in the appendix tables to the presentation of a top 10 of the most significant differences between the old fifteen and new ten or twelve member states in table 3.1.

old 15

new 10 or 12

difference old-new

homosexual marriage should be allowed in Europe (appendix table B3.1 row 10)

50

20

30

in favour of further enlargements (B3.4 row 3)

45

67

–23

very satisfied with life (B3.1 row 1)

31

14

17

things are going in the right direction in the EU (B3.2 row 2)

34

49

–15

personal consumption of cannabis should be legalised (B3.1 row 9)

26

15

10

internal market has improved competitive position (B3.4 row 6)

45

54

–10

free competition is the best guarantee for prosperity (B3.1 row 2)

63

72

–9

television coverage in own country is too positive about the EU (B3.3 row 6)

20

28

–8

preference for European policy (B3.5 row 17)B

48

55

–7

the state intervenes too much in our lives (B3.1 row 7)

59

52

7

a

The separate preferences for common policy have not been taken into account; otherwise these would strongly dominate the top 10.

Source: all appendix tables

Old and new members states differed most sharply from each other on the issue of homosexual marriages, for which there is substantially more support in the old member states (see figure 3.1). In second place is the greater support for enlargement in the new member states and in third place is the greater satisfaction of people with their own lives in the old member states. Five of the ten views are derived from table B3.1 and are unrelated to the eu. The eu is apparently not a very controversial issue between the old and new member states. The new member states do adopt a more pronounced pro-Europe stance, although they also feel that television coverage of the eu is too positive. Surfing through the chapter we close by focusing on the extent to which support for the eu is determined by people’s satisfaction with their own lives, by satisfaction about the developments in their own country and by national pride. These factors are derived from the literature, which does assume that on the one hand, utilitarianism (to what extent do people themselves or their country benefit from eu membership) and on the other, national feelings of identity affect support for the eu (see § 4.3). The first column of figures in table 3.2 shows the results of a macro-analysis of the country data in this chapter. Support for eu membership in a country proves to be greater in line with its people’s satisfaction with their own lives

Table 3.1 Top 10 of largest differences in country averages between old and new member states: agreement with views (in percent) and differences (in percentage points)


49

and the development of their country and inversely proportional to how often they say they are proud of the country. However, the effects are not strong (and none of them would survive a standard significance test).

individual datab

is highly satisfied in general with the life they lead considers that in general things are going in the right direction in their own country is very or fairly proud of own nationality adjusted R2/Nagelkerke pseudo-R2 (n) a b c d

country data 0.24

EU of 25c 1.34

EU of 25d 1.45

25 countries individually 0.96–2.61

The Netherlands 1.33

0.28

3.35

3.51

1.75–10.30

2.20

–0.19

0.94

1.06

0.58–1.66

0.88

0.08

0.10

0.15

0.03–0.34

0.05

(25)

(23.323)

(23.323)

(± 1000)

(981)

Linear regression analysis using data from appendix tables B3.1, B3.2 and B3.4; standardised regression coefficients. A positive value indicates a positive effect on support for EU membership, a negative value a negative effect. Logistic regression analysis of individual features; relative opportunities. A value greater than 1 indicates a positive effect on support for EU membership, a value lower than 1 a negative effect. Significant (p < 0.05) values are in bold. Without taking account of countries. If country effects are also taken into account.


Table 3.2 Backgrounds of support for the national EU membership, 2006: results of regression analyses

The table has been supplemented with analyses of the same relationships, but on the level of individuals instead of countries. To what extent are the three factors capable of accounting for differences in the chance that people will consider their own country’s eu membership to be a good thing? In the eu of 25 at the end of 2006 (i.e. without Bulgaria and Romania) as a whole, the two satisfaction standards reveal a positive effect, in line with the country analysis, while national pride has an adverse effect on support. However, the effects are not very pronounced. Adding national differences by taking account of the county of interviewees leads only to a moderate improvement in explanatory power. However, the effect of national pride is eliminated in that case. The next column, which reports on analyses per member state, clearly shows why. National pride does not have the same effect everywhere on support 7 for the eu. In all countries, however, the view that the country is developing well is accompanied by greater support for eu membership. People’s satisfaction with their own lives also often proves to have a positive effect, albeit a smaller one. In the final column, the Netherlands proves to be an average European country in terms of explanatory patterns: eu membership is considered a good thing more often in line with people’s satisfaction, especially with how matters are going in the country. Feelings of substantial national pride neither add to nor subtract from that. We will discuss the explanation for the differences in support in the Netherlands in greater detail in section 4.3 of the following chapter.

7

There are negative effects in the United Kingdom and Malta, and positive effects in Italy, Spain, Portugal, Latvia, Czech Republic and Hungary.

21

37

9 personal consumption of cannabis should be legalised throughout Europe

10 homosexual marriage should be allowed throughout Europe 34

–12

3

16

–5

10

4

–2

5

27

SE

32

1

–11

–8

–16

–1

–1

–16

4

41

DK

9

11

10

14

2

0

6

–5

–2

11

UK

–6

27

NL

4

9

0

0

1

0

6

45

28

–11

1

–4

0

–12

6 –22

3

13

IE

25

5

0

8

4

–5

–2

7

3

10

BE

21

–1

–6

–11

3

0

–19

–3

–9

22

LU

15

–2

–9

9

0

7

–25

–1

7

–2

DE

12

7

2

6

–7

1

–1

–4

5

–6

AT

–6

7

21

11

1

2

2

17

–2

–11

IT

–22

–2

–9

10

–1

12

15

1

–10

–8

EL

11

7

1

6

–7

5

–10

–2

–15

–6

FR

19

19

6

–4

–5

–9

14

–10

–21

1

ES

–8

6

8

5

0

–3

–9

9

–21

–18

PT

–16

–7

–22

–29

0

3

15

–12

12

–15

EE

–25

–9

–15

–20

–2

6

0

–1

12

–14

LV

–20

–5

–1

–14

1

7

–16

6

14

–13

LT

–20

–10

12

0

2

–12

–6

9

8

–11

PL

15

11

–15

2

9

1

6

–7

1

–10

CZ

–18

–5

14

8

7

–4

10

14

6

–10

SK

–19

–8

–11

17

3

–8

12

16

–12

–17

HU

–6

1

13

16

3

–3

7

6

13

4

SI

–26

–12

–5

–9

4

–4

–19

14

6

–19

RO

–22

–10

–22

–13

6

1

–18

7

1

–21

BG

–9

38

–6

11

4

17

–3

2

6

CY

–23


Example: the average of the country percentages of the populations of the 27 member states that are highly satisfied with the life they lead is 23. The percentage in the Netherlands is 50 (23 + 27) and that is less than in Denmark (23 + 41 = 64) and significantly more than in Bulgaria (23 – 21 = 2).

b c

8

–13

–19

–15

–3

–7

10

–22

–3

13

FI

–19

–6

28

–1

–5

–7

11

–3

–2

3

MT

The fifteen old and twelve new member states are listed more or less from north to south: Finland (FI), Sweden (SE), Denmark (DK), United Kingdom (UK), Ireland (IE), The Netherlands (NL), Belgium (BE), Luxembourg (LU), Germany (DE), Austria (AT), Italy (IT), Greece (EL), France (FR), Spain (ES) and Portugal (PT) / Estonia (EE), Latvia (LV), Lithuania (LT), Poland (PL), Czech Republic (CZ), Slovakia (SK), Hungary (HU), Slovenia (SI), Romania (RO), Bulgaria (BG), Cyprus (CY) and Malta (MT). ‘Do not know’ replies have in this chapter always been included in the complementary category as not involved, false and disagree. The percentages for highly satisfied are given because with a slightly wider border between highly satisfied and fairly satisfied, percentages above 90% are achieved in Northwest Europe. Agree ‘completely’ or ‘more’ instead of disagree ‘completely’ or ‘more’ and ‘do not know’; the nine statements have been selected from a series of thirteen. See: EC 2006b: 37 ff.

42

8 the place of religion in our society is too important

a

86

80

5 citizens should take part more actively in politics in [own country]

56

52

4 more importance should be given to spare time than to work

7 the state intervenes too much in our lives

39

3 economic growth should be a priority in [own country], even if it is at the expense of the environment

6 there is too much tolerance nowadays. Criminals should be punished more severely

67

23

2 free competition is the best guarantee for economic prosperity

agreement with the following statements: c

1 is in general highly satisfied with the life they leadb

country average

Satisfaction with life and several general preferences, population aged 15 and above in 2006 (country averages in percent and deviations from them in percentage points a )

Table B3.1

Appendix tables to chapter 3

50

48 16 63 47

3 is very proud to be Finnish, Swedish, Danish, British etc.

4 is very proud to be European

5 is highly or fairly interested in national politics

6 is highly or fairly interested in European affairs

26

29

0

15

15 –8

FI

–8

7

5

4

12 –9

SE

–4

11

10 –14

18 –12

0

1

12 –12 –5 –16

DK UK 4 –9

NL

5

11

6

1 5

–7

15 –14

–9

LU

DE

AT

IT

17

6

8

5

–1

–7

10 –25

0

–6

4

–8

2 –13

–1

–6

–3 4 –14 –1 –14 –3 –11 –12 –10 –11

BE

23 –19 –14

20 12

IE

FR

15

20

8

31

–3 1

PT

–2

–6

–4 –16

1 –5

ES

–5

–9

16 10

EE

–4 –7 –22 –12

PL

–9 –10 –11

–6

–7

4 12

CZ

24

19

0

–4

8

1

5

7

5

–3

–8

5

–6

2 –24 11 –3

SK HU

5 –10 –10

14 –16 17 15

LT

–1 –13

3 8

LV

–6 –33 –23 –15 –11

–2

–3

–5 –16 2 –18

EL

11 17 –4 2

–7

4 –16

7

CY

2

2

0

–4

1

–3

30

–3 –14 12 –8

RO BG

22 –16 –17

11 16

SI

Source: Eurobarometer 66.1 (October – November 2006) weighted results

–4 –5

MT

4

9

7

22

Example: the average of the country percentages of the populations of the 27 member states that consider things are going in the right direction in their own country is 37. The percentage in the Netherlands is 41 (37 + 4) and that is much less than in Ireland (37 + 20 = 57) and much more than in Hungary (37 – 24 = 13).

37 41

1 considers things are generally going in the right direction in own country 2 considers things are generally going in the right direction in the EU

country average

Table B3.2 Views on own country and the EU, population aged 15 and above in 2006 (country averages in percent and deviations from them in percentage points)

Appendix tables to chapter 3 51

27 28

2 rates own knowledge of the EU, its institutions and policy as sufficient (6-10)

3 demonstrates actual knowledge of the EUa

8 4 –2

8

–6

4

–9

6

–3

2

–6

3

7

–2

–9

4

5

6

0

2

–4

2

20

–8

15

–2 –10

1

–2

–1

–3

22 –10

7 –12

10

SE DK UK 8

–6

4

–4

0

–4

–1

–7

11

–7

14

–6

–2 12

–1

–9 23

–1

4

1

–4

0

–5

0

–3

6

–4

5

–5

6 5

5

1

–2

2

–7

–9

–2

–1

–3

0

0

0

–1

2

–3

–3

8

IT

8

6

0

7

–1

10

–5

1

–7

2

–9

4

–2

5

–3

8 –16

8

3

2 –11

–3

17 –10

15

5

NL BE LU DE AT

–4 12

–1

IE –2

5

8

8

7

15

2

17

1

18

–9

3

–8

4

–4

10

–1

5

–3 4

–2

5

–1

–3

–3

4

–2

–3

–3

0

–8

1

–4 –11

–2

2

15 –10

–1

–4

–1

FR ES PT

11 –12

1

EL

–3

1

–5

–1

–5

–1

–9

–4

–9

–2

1

EE

–3

7

–2

8

–7

0

–5

–2

–8

–2

2

LV

–4

7

–5

6

–3

–2

–3

–2

–5

–6

–5

LT

–5

–2

–4

2

–3

–2

–2

–1

1

–4

–4

PL

6

2

–6

–4

3

–5

3

3

0

–5

5

–6

7

–6

0

2 –11

–1

–8

1

–5 –10

–1

–3

1

–3

0

–3

3

–6

–7

5

5

–4

5

–5

1

–6

12

–4

1

–5

–1

4

0

–5

3

–6

11

–8

3

2 –13

1

1

2

2

7

5

2

0

6 –4 –6

0

–2 –5

3 11

2

6

14

5

19

–2

11 –11

RO BG CY MT

8 –15 –17

2

0

SI

–6 –14

0

–4

–8

5

CZ SK HU

At least three correct answers to four questions: ‘The European Union currently consists of fifteen member states’ (false), ‘The members of the European Parliament are elected directly by the citizens of the European Union’ (true), ‘A different member state assumes the presidency of the EU every six months’ (correct), and choosing ‘agriculture’ from seven options as the EU’s most important budget expenditure. Eurobarometer 65.2 (the other questions come from Eurobarometer 66.1); the two answers per question together with ‘do not know’ and ‘exactly correct’ and ‘objective’, respectively, add up to 100% per country.

7

– too negative

–2

4

–1

–2

–6

–4

7

1

–11

FI

Source: Eurobarometer 65.2 (March – May 2006) and 66.1 (October – November 2006) weighted results

Example: the average of the country percentages of the populations of the 27 member states that feel involved in European affairs is 19. The percentage in the Netherlands is 27 (19 + 8) and that is perhaps slightly less than in Bulgaria (19 + 11 = 30) and certainly more than in Finland and Cyprus (19 – 11 = 8).

b

a

16

– too positive

7b likewise for the written [national] media:

23

– too positive

– too negative

6 considers the portrayal of the EU by [national] television:

b

6 21

– excessive

– insuffi cient

5b likewise for the written [national] media:

8 32

– excessive

– insuffi cient

4b in general considers coverage of the EU by [national] television

19

1 tends to agree rather than disagree with the statement ‘I feel highly involved in European affairs’

country average

Table B3.3 Involvement with and knowledge of the EU, population aged 15 and above in 2005/2006 (country averages in percent and deviations from them in percentage points)


49

6 believes that the international competitive position of [national] businesses has improved owing to the internal marketb

–2

10

5

1

5

–10 –19

–12

UK

18

–16

12 –10

–16 –20

–7 –18

14 –21

6 –20

DK

2

17

NL

15

7

–5

2

7

–4

–7 –10

26

23

IE

7

20

LU

AT

–11

–9

3

18

–17

–7

7

–5

–9 –10

10 –12

–7

–3

IT

–17

–6

6

–8

–17 –13

3 –18

DE

–8 –23 –25 –24

7

15

BE –5

FR

–1

–4

3

8

ES

–9

–3

–1

0

–5

PT

5 –13

–17 –10

3

–9 –23

–7

10

17 –20

13 –10

2

EL

29

7

–8

5

12

1

EE

15

9

–4

8

2

–11

LV

19

10

6

13

16

8

LT

14

15

1

22

13

7

PL

8

3

–7

10

6

–4

CZ

HU

10 12

4 –20

9 –13

4

14

11 –20

7 –15

SK

14

13

16

20

10

3

SI

–8

0

4

14

.

.

RO

–6

–11

1

13

MT

11

–3

4

12

1

0

–2

11

–3

–8 –10

CY

. –15

.

BG


Example: the average of the country percentages of the populations of the 27 member states that consider their own country’s EU membership to be a good thing is 54. The percentage in the Netherlands is 71 (54 + 17) and that is slightly less than in Ireland (54 + 23 = 77) and much more than in the United Kingdom (54 – 20 = 34).

b

–6

SE

–14 –20

–16

FI

‘The common market has increased competition in a number of areas, such as transport, telecommunications, banking and insurance. In general, would you say that this has a highly positive, fairly positive, fairly negative, or highly negative effect?’ The two answers together with ‘do not know’ and ‘neither positive nor negative’ add up to 100% per country. ‘Compared to 10 years ago, do you think that owing to the common market the international competition of [national] businesses is now better, worse or the same?’ The two answers together with ‘do not know’ and ‘same’ add up to 100% per country.

66

5 considers that the effect of greater competition owing to the internal market is in general positivea

a

55 63

4 is in favour of a constitution for the EU

60

2 taking everything into consideration, considers that own country has benefited from EU membership

3 is in favour of enlargement of the EU to include other countries in future years

54

1 in general considers own country’s EU membership a good thing

country average

Table B3.4 Support for and views on the EU, population aged 15 and above in 2006 (country averages in percent and deviations from them in percentage points)

Appendix tables to chapter 3 53

3

–6

5

SE

UK

–5

–2 –17

–17

9 –21

DK

5

–7

–9 –7

–5

8 –19

1

5

–4

–5

8

–11

4

–8

–6

11

10

–2

–5 –12

–2

8

3

6

–5

0

16

–7

13

2

6

NL

–17 –19

–16 –13

–9

–11

–5 –16

–17 –21 –20

–11

–5

–1

0

3 –15

1

–20 –14 –13 –12 –10 –10

–21 –23 –22

–17

–2 –12

18 –13

–18 –19 –14

–8 –12

–29

IE –7

–1 –32 –21

5 –15

6

–34 –31 –14 –23

5 –23

–18 –10

–8

–42 –26 –12 –26

–12

–12

0

FI

–4

8

–2

5

11

6

2

LU

4 –6

–3

–9

5

–4

–4 –14

0 –15

–1 –15

–3

2 –10

6

13

10

12 –14

6

8

7

11

2

3

4

BE

AT

IT –4

–9

–8

–4 –7

–8

–3

–1

–7

–5

–9

2 –10

–9

–1

1

–6

–3

8

10 –10

1

0 –16

14

6 –19

14 –14

6

3

8

10

14

8

6

0

–2

0

13

4

4

–4

9

–7 –12 –14

–6 –16

5 –13

DE

EL 5

–3

0

4

6

–11

8

8

7

6

16

15

13

18

–2

–6

–4

–6

–9

13 –10

14

3

4

–2

–7

10

3

–6

ES

–1

7

2

2

0

2

–3

1

–6

11

7

–5

–3

1

–5

–8

1 –13

FR

1 –24

3

–8

–1

–4

–4

7

–1

3

6

EE

–7 –6

3

11

9

3

9

16

–3

1

–8

0

6

–1

2 –16

1

–1

5 –16

–1

–2

–3

3

5

0

–5

PT

5

12

10

5

13

4

3

–2

1

2

8

9

–11

9

7

6

5

LV

8

17

16

13

19

9

4

10

2

9

6

4

–3

9

10

5

5

LT 4

7

CZ

10

16

10

2

12

16

13

13

4

14

12

2

8

8

3

4

1

15

1

7

9

–11

–9

5

16

–8

5

10

9 –12

9

8

PL

3

–4

–9

2

–5

9

3

–8

0

14

13

–8

–4

15

3

11

9

SK

7

3

9

6

5

12

3

8

7

12

12

9

8

11

2

4

3

HU –4

RO 0 –1

4

–9 –12

–2

–1

–1

BG

–8

6

–4

2

2

3

15

–1

–3

2

–4

3

–1

–5

6

–1

–11

–1 –13

–1

9

4

–3

4

–5

–6

–2

–3

–7

–7

–3

7

–7

0 –13 –12

–8

4

–2

2 –13

2

SI

15

18

13

19

35

11

20

21

15

8

6

24

11

7

17

16

–1

CY

6

2

11

4

5

11

–1

1

1

22

–2

12

1

14

14

3

3

MT


Example: the average of the country percentages of the populations of the 27 member states that think fighting terrorism should be dealt with at a European level is 82. The percentage in the Netherlands is 88 (82 + 6) and that is much more than in the United Kingdom (82 – 21 = 61) but perhaps slightly less than in Denmark and Slovakia (82 + 9 = 91).

‘For each of the following areas, do you think that decisions should be made by the [national] government, or made jointly within the EU?’ 16 policy areas and topics were presented in random order. They are included here in order of decreasing support for joint policy. ‘Do not know’ answers were not included.

51

17 average preference for European policy

a

26 24

16 pensions

14 education system

15 taxation

31 29

13 health and social welfare

40

12 fighting unemployment

8 immigration

45

56

7 fighting crime

11 consumer protection

59

6 energy

55

60

5 protecting the environment

48

61

4 defence and foreign affairs

10 agricultural and fishing policy

64

3 support for regions facing economic difficulties

9 competition

73 65

2 scientific and technological research

82

1 fighting terrorism

country average

Table B3.5 Preferences for European policy, population aged 15 and above in 2006 (country averages in percent and deviations from them in percentage points) a


55

A4

Current public opinion in the Netherlands

In this chapter we will look more closely at the views adopted and their development in the Netherlands. We will first show how support and involvement have developed over the past few years (§ 4.1). In section 4.2 we will outline the correlation between general support for the eu and more specifically eu-related issues. In section 4.3 we endeavour to explain support at an individual level and juxtapose socio-cultural characteristics and economic characteristics.

4.1

Stable support for the eu

In European Outlook 4 (cpb/scp 2006) we examined whether the referendum on the European constitution had left permanent traces in Dutch public opinion on Europe. The general views on the eu were found to be slightly more negative immediately after the referendum, but they improved again six months later. There was no pervasive mood of euroscepticism. We did find, however, that the Dutch were increasingly reluctant on the issue of further enlargement of the eu. This reluctance was not just found among eurosceptics, but also in people who were generally in favour of the eu. The proposed accession of Turkey triggered resistance in many people.1 What about current views on Europe among the Dutch?2 Has general support for the eu indeed stabilised, and how do the Dutch currently feel about enlargement of the eu? Figure 4.1 shows Dutch public opinion on three issues: is Dutch eu membership a good thing, does the Netherlands benefit from it, and are further enlargements of the eu desired. The view that Dutch eu membership is a good thing and that the Netherlands benefits from it have usually gone hand in hand, even if there are more supporters of the first than of the second. A large majority of the Dutch consider eu membership to be a good thing. In the autumn of 2006 almost three quarters of the population supported that view, roughly the same as five years earlier. Three new surveys have been carried out since the referendum, sufficient to indicate developments. Overall, the referendum appears to have had little effect on general views on eu membership (and the view that the Netherlands benefits from it). While support since then has been slightly lower than just before the referendum, in comparison with the developments of 2003/’04, when support declined sharply, the differences are not all that pronounced. There does not appear to be any sign of broadly supported euroscepticism, despite the negative result of the referendum. Immediately after the referendum we commented as follows (cpb/scp 2005:38): ‘[…] There is little reason to assume that the existing trend was broken prior to the referendum and much reason to assume that support for European integration in the Netherlands is still substantial. [...] It has become clear that the rejection of the constitution was not the result of one uniform belief, let alone of mass ignorance and 1

2

To place matters in perspective, it has to be said that Turkey often achieves low scores in surveys, but not extremely so (and slightly better than Albania), and that the country does not do significantly worse in focus group comparisons with other potential candidates for accession (CPB/SCP 2006: 32). We are focusing in this introductory section on developments in support for and involvement in the EU over the past years. In part this entails a repetition of information from the previous Outlook (CPB/SCP 2006), supplemented with new figures for recent survey dates.


irrationalism. […] The outcome of the referendum should therefore not be dramatised as an eruption of a long-standing dissatisfaction. Rather it should be viewed as the outcome of a combination of circumstances, including a mood of low political confidence, and especially of a largely autonomously dynamic process towards formation of public opinion. The tone adopted in debates on specific issues can, at least in the first instance, perhaps turn out to be more critical than that in surveys of attitudes “in general” on principles and institutions.’ What has gradually become more negative, however, is public opinion on further enlargement of the eu, support for which has dwindled by 13 percentage points in the past five years (from 58% to 45%). The sharpest decline occurred between autumn 2002 and spring 2003: from 58% to 48%. Support was at its lowest ebb in spring 2006: only 43% of respondents supported further enlargements. In spring 2004, around the time of the accession of ten Central and Eastern European countries, it had risen only very slightly, to 44%. Support for further enlargement edged up again to 45% in autumn 2006. Does this mean that the corner had been turned? Resistance to further enlargements, as evidenced in various studies (e.g. Renselaar and Bom 2006, Anker 2006, cpb/scp 2006), cannot be simply made to vanish, but perhaps the percentage of opponents is now stabilising. At any rate that appears to be the overall indication: a stabilisation of support for the eu. Figure 4.1 Developments in support for EU membership and for enlargements, 2001-2006 a (in percent)

80 75 70 65 60 55 50 45 40 autumn spring autumn spring autumn spring autumn spring autumn spring autumn 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 good thing a

advantage

for enlargement

The three indicators are the percentages of positive answers to the questions ‘generally speaking, do you think that the Netherlands’ membership of the EU is a good thing?’ ‘Taking everything into consideration, would you say that the Netherlands has benefited from being a member of the EU?’ and ‘Are you for further enlargement of the EU to include other countries in future years?’

Source: Eurobarometer 56.2, 57.1, 58.1, 59.1, 60.1, 61.0, 62.0, 63.4, 64.2, 65.2 and 66.1; weighted results

After the referendum the Dutch government concluded that European integration was moving ahead ‘too quickly’ for citizens. In European Outlooks 3 and 4 (cpb/scp 2005; cpb/scp 2006) we showed, perhaps contrary to general expectations, that the desired speed of integration has been higher for several decades than the perceived speed of integration. In other words: on average, people wish that European integration would move ahead more quickly than Kan jij de noot en it currently does (in their own perception). Over the years, the gap between bron goed krijgen, desired and perceived speed has narrowed however. In the past few years, the

Anne??

A4 Current public opinion in the Netherlands

57

perceived speed of integration has stabilised. The desired speed declined in the same period, in fact quite sharply around the time of the referendum. However, the desired speed has edged up again slightly in the past year. Other calcula3 tions show that at the end of 2005 no fewer than 26% of the population felt that integration was proceeding too swiftly (that is to say: the perceived speed of integration exceeded the desired speed). At the end of 2006 that percentage had declined to 21. In this regard too, things appear to be improving. Figure 4.2 Perceived and desired speed of European integration, a 1986-2006 (in percent)

75 70 65 60 55 50 45 40

desired speed a

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

35

perceived speed

The perceived speed and desired speed of ‘the process of building Europe’ were measured on a seven-point scale, visualised as seven little men ranging from ‘standing still’ to ‘running as fast as possible’.

Source: Eurobarometer 26.0, 28.0, 34.0, 37.0, 39.1, 40, 41.0, 42, 43.1, 44.1, 46.0, 48, 52.0, 53.0, 54.1, 55.0, 56.2, 58.1, 60.1, 61.0, 62.0, 63.4, 64.2 and 66.1; weighted results

What about the involvement of the Dutch with the eu? Table 4.1 presents a summary of a number of self-assessments of knowledge and insight. The percentage for (self-awarded) scores of sufficient knowledge on the eu has fluctuated between 31% (autumn 2003) and 53% (spring 2006) over the past five years. In the spring of 2006 people are for some reason quite positive about their own knowledge and insight, but by autumn the responses have already aligned themselves more closely with previous developments. All in all (people’s own assessment of) knowledge of and insight into the eu is limited in the Netherlands, although the scores are higher than in some other eu countries. On tests of knowledge, the Dutch score around average compared to other Europeans (see also table B3.3). The Dutch appear to display a slight tendency towards overestimating themselves in this respect. It is not entirely clear whether the referendum has led to greater involvement with the eu. On average, the scores in early 2005 to the end of 2006 do appear to be slightly higher than in the preceding years. The question is, however, whether knowledge and insight have actually increased, or whether their social desirability is more keenly felt.

3

Not visible in figure 4.2.


autumn spring 2001 2002 rates personal knowledge of the EU as sufficient/good

autumn spring 2002 2003




autumn 2006

34

32

38

34

31

38

41

50

35

53

39

reports an understanding of how the EU works

.

.

.

43

.

45

51

.

53

57

52

reports familiarity with at least seven out of nine EU institutions

30

27

30

20

27

26

20

.

21

.

27

Source: Eurobarometer 56.2, 57.1, 58.1, 59.1, 60.1, 61.0, 62.0, 63.4, 64.2, 65.2 and 66.1; weighted results

4.2

Correlation between support for the eu and support for eu issues

In this section we will discuss views on a number of specific eu issues and correlate these to views on eu membership in general (is people’s own country’s eu membership a good thing). We do so to establish whether perceived benefits of eu membership lead to a more favourable assessment of such membership, and to what extent support for eu membership produces a more favourable assessment of proposals for specific cooperation. The first part of table 4.2 provides a summary of specific benefits of eu membership. Views on this would appear to predetermine the general assessment of eu membership: you think that membership brings benefits, and therefore you support it. The second part of table 4.2 reflects views on specific forms of cooperation, such as a joint foreign policy or a European constitution. In this area, causality appears to be reversed: you think Dutch eu membership is a good thing, and therefore you also support cooperation in various areas of policy. We will state first how many people express a particular view, and then the net effect of that view on the position that Dutch eu membership is a good thing. By way of example: 62% of the Dutch population believe that on balance the Netherlands benefits from eu membership (column 2). People who believe that the Netherlands benefits from eu membership score 50 percentage points higher on ‘good thing’ than people who believe the Netherlands does not benefit from membership (column 3). The net effect therefore provides insight into the correlation between a view on a specific issue and the general view that eu membership is a good thing. All views in table 4.2 appear to be marked by positive correlations with ‘good thing’, but there are differences in their strength. ‘Benefits for the own country’ appear to have a much greater effect on the general view on eu membership than ‘personal benefits’. We will return to this at the end of this section. Also, people who believe that the Netherlands enjoys greater economic stability as a result of eu membership score much higher on ‘good thing’ than people who do not think so (+34%). With the exception of the statement on the creation of a ‘leading group’ (countries working on Europe faster than others), all specific proposals for cooperation are strongly correlated with the general view on eu membership. This effect is most clearly pronounced on the euro (+41%), the development towards a European political union (+37%) and a European constitution (+34%).

Table 4.1 Knowledge of and insight into the EU, 2001-2006 (in percent of the population aged 15 and above)


Table 4.2 Specifi c views on the EU (in percent) and net effect on good thing (in percentage points)

%

net effect on good thing (percentage points)

considers that, taking everything into consideration, the Netherlands has benefited from its EU membership (autumn 2006)

62

+50

considers to have benefited personally from the euro (autumn 2006)

32

+23

considers to have benefited personally from the rights of EU citizens (autumn 2006)

31

+16

considers to have benefited personally from no or less controls at borders when travelling (autumn 2006)

78

+28

considers to have benefited personally from working or studying in another EU country (autumn 2006)

55

+12

considers to have benefited personally from consumers’ rights (autumn 2006)

36

+14

feels safer because the Netherlands is an EU member (spring 2006)

29

+22

considers that we have greater economic stability because the Netherlands is an EU member (spring 2006)

53

+34

considers that the interests of the Netherlands are properly taken account of in the EU (spring 2006)

36

+24

is in favour of an EU with a single currency, the euro (autumn 2006)

74

+41

is in favour of a joint foreign policy of the European member states (autumn 2006)

68

+25

is in favour of a joint defence and security policy of the member states (autumn 2006)

78

+27

is in favour of further enlargement of the EU (autumn 2006)

45

+25

is in favour of a constitution for the EU (autumn 2006)

59

+34

is in favour of the fact that one group of countries is outpacing others in building Europe (autumn 2006)

42

+12

is in favour of development towards a European political union (autumn 2006)

51

+37

59

Source: EB 65.2 (spring 2006) and EB 66.1 (autumn 2006) weighted results

4.2.1

A positive or negative role for the eu

The exercise underlying table 4.3 is similar to the above. People were asked to state, for a range of problems in the Netherlands (such as fighting crime, the economic situation etc.), whether the eu played a positive, negative or neutral role. In column 2 we show the extent of the difference between people who ascribe a positive role to the eu and people who ascribe a negative role to the eu. Positive numbers in column 2 mean that more people opt for a positive role than a negative one, negative numbers mean the opposite. In addition, we again calculated the net effect on ‘good thing’ (column 3). People who ascribe a positive role to the eu in fighting crime score 19% higher on the view that eu membership is a good thing than people who ascribe a negative role to the eu in this respect.


role of the EU in the following problems in The Netherlands

positive role less negative role

net effect on good thing

fighting crime

+35

+19

economic situation

+19

+32

rising prices/inflation

–23

+12

taxation

–19

+17

fighting unemployment

–10

+24

fighting terrorism

+57

+21

defence and foreign affairs

+32

+19

immigration

+5

+15

healthcare

0

+20

education

+21

+21

environmental protection

+32

+8

Source: EB 65.2 (spring 2006); weighted results

A majority of people ascribe a positive role to the eu in fighting crime, the economic situation, fighting terrorism, defence and foreign affairs, immigration, education and environmental protection. People are the least divided on the role of the eu in fighting terrorism: a positive role scores 57 percentage points higher than a negative one. A largely negative role is found on rising prices/ inflation, taxation and fighting unemployment. In all cases a positive assessment of the role of the eu is connected with a higher score on ‘good thing’. A favourable view on the role of the eu for the economic situation has the greatest effect; people who ascribe a positive role to the eu in this area score 32% higher on a ‘good thing’ than people who ascribe a negative role to the eu. The view on the role of the eu in environmental protection has the most limited effect on ‘good thing’ (+8%). Another analysis (not in table) shows that lower educated people somewhat more frequently consider the role of the eu to be negative, and somewhat less frequently consider it to be positive. In addition, this group somewhat more often tick the category ‘do not know’ than higher educated people. The greatest difference in views between these two groups is on the role of the eu in immigration: according to the latter, this role is positive, according to the former it is negative.

4.2.2

National interest or self-interest

We stated above that if people see benefits for their own country this appears to be more important for the general assessment of eu membership than personal benefits. To test this assumption, we performed a regression analysis with ‘good thing’ as the variable to be explained, and ‘benefits for the own country’ versus ‘personal benefits’ as explanatory variables. The variable ‘personal benefit’ is a factor score in which the five personal benefits from table 4.2 are incorporated, supplemented by two others.4 The variable ‘benefit for the own country’ is the answer to the question whether, taking everything into consideration, people believe the Netherlands benefits from eu membership. Regression analysis shows that both variables have a significant effect on the view that Dutch eu membership is a good thing. The more often people feel that the Netherlands benefits from eu membership, and the more often people 4

Specifically: feel they have benefited from a greater variety of products from other EU countries, and feel they have benefited from the right to bring proceedings before the Court of Justice of the European Communities (EB 66.1, autumn 2006). These seven questions can be distilled into 1 factor ‘personal benefit’, KMO value is 0.84.

Table 4.3 Perceived role of the EU in various problems and net effect of a positive role on good thing (both in percentage points)


61

believe they derive personal benefits from eu membership, the more often people support this membership. The effect of ‘benefit for the own country’ 5 is, however, more than 2.5 times as large as the effect of ‘personal benefit’. Evidently, identifying a national interest plays a greater part in views on eu membership than identifying a personal interest. This outcome is in line with findings in the literature on national versus personal interests. McLaren (2006: 48) for instance concludes that sociotropic utilitarism (national interest) in particular provides an explanation for views on the eu, and that egocentric utilitarism (self-interest) does not appear to matter very much. Her explanation is that people are often not able to assess reliably to what extent they do or do not benefit from eu membership.

4.3

Social and cultural backgrounds of support for the eu

In section 4.1 we outlined the development of public opinion and perceived knowledge in the Netherlands on the eu over the past years. For instance, figure 4.1 showed that in the autumn of 2006 support for Dutch eu membership had returned to the pre-2003 level after a dip in 2003. In section 4.2 we looked at specific views on the eu and how these were correlated with support for Dutch eu membership. Now we will look at social and cultural backgrounds of support for membership.

4.3.1

National identity and economic factors

Until recently, support for the eu was often explained in the literature on the basis of economic self-interest: people would display greater support for European integration if they identified personal or national benefits in connection with it. In the past few years, however, support for the eu is increasingly frequently correlated with feelings of national identity and pride. Marks et al. (2003) argue that stronger feelings of national identity can go hand in hand with a negative assessment of European integration. They make a distinction between two types of feelings of identity: inclusive and exclusive. The first type of feelings of identity does not affect assessments of the eu. People with a strongly inclusive feeling of national identity are able to stack identities: they can feel Dutch and European simultaneously. This is also known as multiple identities. Matters are different for exclusive feelings of national identity. These leave no room for other feelings of identity, tending instead to partly define themselves by differentiation from them. Exclusive feelings of national identity often go hand in hand with a negative assessment of the process of European integration, report Marks et al. McLaren (2002, 2004) argues that a perceived threat of the nation state affects attitudes to the eu. Similarly, De Vreese (2004) states that anti-immigration feelings play a part in explaining support for European integration. He uses the social identity theory to explain the correlation between attitudes towards immigrants and attitudes towards the eu. This theory assumes that group membership provides people with a social identity. This is accompanied by positive feelings for their own group (in-group) and negative feelings for other groups (out-group). This idea is reminiscent of the exclusive national identity of Marks et al. De Vreese also argues that negative feelings for out-groups go hand in hand with a negative assessment of European integration. 5

As self-interest is incorporated as a factor score in the regression analysis, whereby all scores between 0 and 1 are possible, and national interest as a dichotomous variable (with only 2 possible scores), self-interest is more likely to produce a greater effect even if only for methodological reasons. In reality, then, the difference between the effect of national interest and self-interest is likely to be even greater. In the current analysis national interest has a beta of 0.44 and self-interest a beta of 0.17.


According to Marks et al. (2004) the explanatory power of national identity outstrips that of economic factors. McLaren (2004) argues the opposite case: according to her, the fear of a loss of national identity does play a part in determining views on European integration, but the role of economic factors is much greater. In particular, she sees a strong effect of national interest (identifying benefits for the own country); the effect of self-interest (identifying personal benefits) is much smaller.

4.3.2

Support for Dutch eu membership

Prompted by Marks et al. (2003) we endeavour, using Dutch survey data from 2006, to explain individual differences in support for eu membership on the basis of feelings of national identity and pride, political characteristics and economic perceptions. The following ideas play a part in this. As regards national feelings: we expect citizens who are very proud of the values and symbols of their country to see interference from ‘Brussels’ in predominantly national matters as a threat, leading to a negative view of eu membership. On the other hand, empirical relations sometimes also display a positive correlation between national pride and support for the eu (see figure 3.4 in chapter A3). This may depend on what is understood by pride and what is measured: a threatened national selfhood or national self-confidence. In terms of political characteristics: we expect those who are interested in politics to feel less remote from and hence also less resistant to the political complexities in Brussels. We also expect that the overall political preference (which is still best summarised in terms of left and right) will have an effect that depends on the dominant national political balance of power. Those tending towards the left of the spectrum would support eu membership less strongly in a social-democratic system, while greater support is to be expected from those tending towards the right. The opposite expectations would apply in a liberal market system (Marks et al. 2004). We cannot specify that expectation for the Netherlands, but we do examine the effects for those placing themselves on the left of the political spectrum. As regards economic perceptions: we expect that people who are better off or whose assessment of their own family’s and country’s economic position is favourable will be more inclined to express support. They will feel less threatened and may also more often feel their prosperity is due to European economic integration. Table 4.4 sets out the results of an analysis of support for Dutch eu membership. The data are derived from the survey ‘Cultural changes in the Netherlands 2006’. In this survey, 64% of respondents stated their support for Dutch eu membership. It shows odds ratios: a value greater than 1 means that the characteristic mentioned goes hand in hand with greater support for eu membership, a value lower than 1 means that the characteristic mentioned goes hand in hand with lower support, taking account of the effects of the other characteristics mentioned.


Table 4.4 Backgrounds for support for Dutch EU membership, 2006 (odds ratios) a

1. socio– demographical

2. 3. + national pride + politics

4. + prosperity

woman instead of man

0.95

0.95

0.86

1.01

16–25 years old instead of 66+

2.09

2.01

2.03

2.03


1.28

1.23

1.24

1.36


1.11

1.08

1.07

1.14

lower secondary/higher secondary/ pre-university and intermediate vocational education instead of lower education (primary/lower vocational education)

1.90

1.88

1.83

1.58

higher vocational/university instead of lower education (primary/lower vocational education)

3.28

3.19

3.04

2.33

1.07

1.06 0.87

1.06 0.85

0.96 0.82

places him/herself on the political left instead of in the centre and right

0.90

0.96

states ‘normal’ or ‘strong’ interest in politics

1.20

1.11

works over 15 hours per week in paid employment demonstrates great national prideb

considers own family to be prosperous

1.45

considers our country to be prosperous

1.46

believes prosperity will continue for time being

1.50

Nagelkerke pseudo–R2 a

b

0.09

0.09

0.09

63

0.12

A value above 1 indicates that a characteristic is accompanied by greater support for EU membership, a value below 1 indicates that a characteristic is accompanied by weaker support. Significant (p < 0.05) values are printed in bold. Highest 1/3 scores on a scale of agreement with the statements ‘Instilling patriotism in pupils is an important task of education’, ‘Every Dutch national should show the required respect for our national symbols such as the flag and the national anthem’ and ‘In striving for international cooperation we have to make sure that no typical Dutch customs and habits are lost’ (Cronbachs alpha = 0.72).

Source: SCP (CV’06)

The first numeric column reflects the aggregate effects of gender, age, level of education and paid work. Gender and paid work provide no explanation for support for Dutch eu membership. We do find, however, that younger people are more positive about eu membership than older people, as we had already seen in chapter A2. Also, support tends to grow in line with people’s level of education. ‘National pride’ does not lead to greater or lesser support for eu membership, nor do political preference or interest in politics. Matters are different for ‘prosperity’: a positive assessment of the prosperity of people’s own family and country, and the expectation that the latter will continue, are all associated with greater support for eu membership. That also explains why support among the more highly educated in the last numerical column is lower than in the preceding columns: the more highly educated tend to enjoy greater prosperity. The measure of statistical explanatory power grows from 0.09 to 0.12 if ‘prosperity’ is added.

4.3.3

Comparison of support in 1996 and 2006

According to the survey ‘Cultural changes in the Netherlands’ support for Dutch eu membership was greater in 1996 than in 2006: 75% and 64% respectively. Has support declined mainly in certain groups? Table 4.5 shows the deviations from various categories in both years. Notably, all social and cultural criteria


deviate from the population figure in the same direction in both years. What does differ sometimes is the degree of deviation of specific groups. Young people are relatively more positive about eu membership in 2006 than in 1996; less highly educated people are relatively more negative in 2006 than ten years earlier.

1996

2006

population aged 16 and above (%)

75

64

woman

–3

–2

man

+3

+2

16–25 years

+4

+13

26–45 years

+4

+4

46–65 years

–3

–2

> 65 years

–10

–12

lower education

–13

–17

intermediate education

+3

+1

+11

+13

performs paid work

+7

+5

national pride

–6

–7

on the political left

+5

+2

strong/normal interest in politics

+7

+5

considers family to be prosperous

+3

+4

considers the Netherlands to be prosperous

+4

+5

believes the Netherlands to be prosperous in near future

+7

+6

+16

(+20)

+5

+15

ChristenUnie (before 2000 GPV and RPF)

+1

+13

VVD

+8

+8

CDA

+5

+4

does not yet know which party

–3

+1

PvdA

+3

–2

higher education

party preference: b D66 GroenLinks

SP

–15

–9

SGP

(–33)

(–29)

a b

See Table 4.4. for an explanation of the groups. Response to the question which party respondents would vote for if elections for the Lower Chamber were held at the time of the survey. The parties are listed in order of decreasing support for EU membership in 2006; party preferences voiced by fewer than 30 respondents are bracketed.

Source: SCP (CV’96, ’06)

We added political party preference to the criteria used previously. Those stating a party preference in 2006 for D66, GroenLinks or ChristenUnie tend to support Dutch eu membership more strongly than the Dutch population does on average. In 2006 around eight out of ten voters for these three parties support eu membership. Although support for Dutch eu membership among the Dutch population as a whole has declined, support among voters for GroenLinks and ChristenUnie remained as high in 2006 as in 1996. Those stating a political party preference for vvd show greater support both in 1996 and 2006 for eu membership compared to the Dutch population overall; this greater support among vvd voters is at the same level in both years. The same applies to a greater or lesser extent to cda voters. This does mean, however, that support for eu membership among voters for these two parties has declined

Table 4.5 Support for Dutch EU membership in various groups in 1996 and 2006, deviations from the population percentage (in percentage points) a


65

in 2006 compared to 1996. There is slightly lower support for eu membership among those stating a political party preference for PvdA in 2006 than the Dutch population overall. That was different in 1996; at that time there was slightly more support, in relative terms, than on average for eu membership. Lower support for eu membership is likewise to be found among sp voters. The difference between sp voters and the average among the Dutch population is less marked in 2006 than in 1996. The lowest support for eu membership is to be found among voters with a preference for sgp, among whom only a minority supports eu membership, both in 1996 and in 2006. This is in line with the conclusion in chapter A1 that sgp had from the very outset, whenever a united Europe was mentioned, actively made its dissenting voice heard, for which a loss of sovereignty and loyalty to ‘the House of Orange’ were important arguments.

4.4

Concluding remarks

Dutch support for the eu appears to have stabilised again after the ‘referendum dip’. The most recent figures reveal no or minor deviations in trends of support. The perceived level of knowledge about the eu has increased slightly, even though this appears to be difficult to interpret. At any rate, people see a positive role for the eu in various policy areas, especially on distinctly cross-border problems. Both national interest (benefits for the Netherlands) and self-interest (personal benefits) play a part in positive assessments of eu membership, but the effect of national interest is greater by far. Support for Dutch eu membership proved to be unrelated to national pride, but related to age, level of education and prosperity. Young people are more positive about eu membership, as are the more highly educated and people who consider their family and country to be prosperous. If we also factor in political preferences, support for eu membership is particularly strong among voters for GroenLinks and ChristenUnie.

66

A5

Conclusion

A major motivation for the spiritual fathers of the ecsc and the Treaty of Rome was the aim of stabilisation of the post-war relations between the nation states in Europe. The establishment of the ecsc was the first step in that direction. The plan for the creation of a European Defence Community was sidelined but European integration was given a new impulse by the idea of economic integration put forward by the Dutch Foreign Minister Jan Willem Beyen. Beyen’s proposal is considered to be a first initiative for the Treaty of Rome. Accordingly, the Netherlands became a long-term driving force for European cooperation, although our country did not hesitate to be a ‘difficult partner’ in negotiations if necessary either. That role of ‘troublemaker’ is again being played by Dutch politics and public opinion at the start of the twenty-first century, for instance on the European constitution or financial relations between the member states. As early as 1952, when the first steps were taken towards a united Europe, a referendum took place in Bolsward (a small town in the north of the Netherlands) and Delft (a somewhat larger town between Rotterdam and The Hague). A very large majority of the inhabitants voted in favour of a united Europe with a European constitution. In the weeks leading up to this referendum, it was mainly supporters who succeeded in making themselves heard. Regional and national newspapers quoted speakers at various meetings who considered European integration to be important. They based their arguments on the threat of war; the recovery of Germany accordingly needed to be carefully piloted. A united Europe was also considered necessary to preserve or increase prosperity in the Netherlands. Others pointed out that the creation of the Netherlands had been a process of integration of provinces and a unification of European countries was accordingly not a strange notion. Catholic and other Christian parties especially stated that European integration was in line with Christian unity and principles. An exception was formed by the politically Reformed. They feared an erosion of sovereignty and the monarchy, and were therefore opposed to a united Europe, as were the communists. At the time of the establishment of the Treaty of Rome in 1957 dissenting voices were heard far more frequently than during the referendum in 1952. While the arguments at the time of the referendum had been mainly of a socio-cultural nature, supplemented with economic issues, the responses to the Treaty of Rome were largely based on economic considerations. It was accordingly mainly businesses and industry organisations who voiced scepticism on the treaty. They feared their competitive position would be impaired and employment and prosperity in the Netherlands would decline, reports in national newspapers show. The prevailing spirit of free trade in the Netherlands was not fully expressed in the treaty and in addition various countries had negotiated protectionist conditions. When the eu expands in six steps into an organisation of 27 member states, media coverage is again dominated by economically tinted subjects. At the same time, almost every enlargement is accompanied by demands for modifications of European institutions and procedures to prevent the eu from becoming ungovernable. These concerns about the eu organisation are voiced even more clearly during the enlargements in the 21st century. In addition there are economic doubts and articles are published voicing concern about the shift of the eu to the right due to the enlargement with countries from the former

A5 Conclusion

67

Eastern Bloc. As at the time of the signing of the Treaty of Rome, there is a call for more information and explanation and dialogue with citizens. While there were differences in tone between the national daily newspapers, reporting in Dutch newspapers was in fact critical upon every enlargement. nrc commentator Jan Sampiemon wrote in connection with this in 2004 that it had ‘become customary to accompany the process of European unification with much shak1 ing of heads and raised eyebrows’ . On the occasion of the ‘big bang’ to the East in 2004 the newspapers also diagnosed ‘enlargement fatigue’ in the Dutch population. And the Eurobarometer data for 2003 had in fact already indicated that support for further enlargements was declining (cpb/scp 2003: 11; 2006: 15-16). Comparison of European opinion data from the time of the Treaty of Maastricht in 1992 and the referenda on the European constitution in 2005 (§ 2.4) puts the euroscepticism that is said to have manifested itself in the referenda into perspective. The mood in 2005 was not all that bad, and the past has shown that public opinion is resilient and any negative effects of a treaty on which opinions were divided did not necessarily have lasting consequences. In September 2005 we wrote in this publication (cpb/scp 2005: 38-39) that Dutch public opinion on Europe might become more negative owing to the debates at the time of the referendum on the constitution. The hope was expressed that on the other hand the increased involvement with Europe could be preserved. We are able to repeat last year’s conclusion here that neither our expectation nor our hope materialised. The Dutch are still comparatively positive in their views on the eu, even if support for enlargements has clearly declined and is not showing any signs of recovery. No animated social debate materialised on Europe nor was there an increase in public interest in eu affairs. The silence on Europe in the campaigns for the elections for the Lower Chamber in November 2006 was symptomatic. Note that the lack of politicisation cannot be attributed by default to politicians and campaign leaders: attempts were made but European issues are often too complex to lend themselves to achieving party political leverage and the media (and the public) are usually not very interested in them either. Even if it promises no electoral gains, politicisation does continue to be an important priority. ‘The old method of “top-down agreements” is no longer effective. [...] Creating grassroots support, on the basis of a “minimum” involvement, [has] become an important condition for future policy on Europe. […] The most important responsibility for the method and outcome of that politicisation and hence for the European project is borne by national politicians’ (Van Grinsven et al. 2006: 30). Politicisation, however, is not the same as intoning collectively that Europe is ‘quite important’ (the slogan of an earlier eu consciousness raising campaign of the Dutch government). It means seeking out and propagating controversies, and that will increase citizens’ involvement (even if some will in fact, conversely, give up because of the ‘infighting’), but certainly no more support for European integration can be expected of it. Nor is politicisation without risks for politicians performing government and administrative tasks, as the likelihood of being able to realise internationally what is appealing at a national level – or conversely, of being rewarded in national politics for what is internationally effective – is not all that great. Dutch support for European cooperation is pragmatic rather than idealistic and has traditionally been firmly rooted in economics. This is evident both from newspaper reports and survey data. The Dutch see an important role 1

NRC Handelsblad, 7 May 2004, ‘The moeizame taak in Europe welvaart te brengen’.


for the Union in cross-border and large-scale problems such as international terrorism, the environment and scientific research, but not in education and certainly not in pensions. Other Dutch studies show substantial support for the eu in the field of economic cooperation (more highly educated people) and joint fighting of terrorism and crime (less highly educated; Renselaar and Bom 2006: 18). The suggestion in recent research literature that feelings of (threats to) national identity play a major part in attitudes towards the eu was not borne out by our analyses. That might be a consequence of the limited measurement of national identity as national pride, but our results are in line with other studies. McLaren (2004) for example finds in a European study that support for the eu depends to a lesser extent on whether or not people’s own national identity is considered to be threatened and to a greater extent on weighing up the advantages and drawbacks. Her own studies also show that the advantages and drawbacks for people’s own country prove to be of greater importance than those for the people themselves. Thomassen (2007) argues that feelings of identity and solidarity do not form part of Dutch support for the eu. He concludes from his studies that Dutch support for the eu is based mainly on utilitarianism and that there is no basis for feelings of solidarity in the Netherlands. The arguments he adduces for the last statement are that the Dutch see themselves as European citizens to a much lesser extent than inhabitants of the other five founding fathers, and that the Dutch want to protect their labour market more forcefully against employees from other eu member states.2 We have found that a positive assessment of people’s own lives and especially a positive opinion of the situation and development of their own country contribute to a favourable attitude towards eu membership. These findings can support the utilitarianism thesis if it can be plausibly argued that the prosperity and welfare are attributed to the eu on a massive scale. However, that is probably only done to a limited extent. The findings therefore may perhaps point in the direction of another vulnerable basis of support for the eu: the general climate in society. If people experience a feeling of well-being, they will more readily enter into relationships with others and get more out of them, precisely because they are less anxious to ensure they are not short-changed themselves. That is probably not all that different for countries either. A more optimistic general mood and a mood of confidence in the public opinion make it easier for politicians to operate in a relaxed and not overly calculating manner within larger organisational contexts. With restored economic confidence and what appears to be growing attention for global problems and a decline in popularity for political cynicism, public opinion is offering scope for policies to develop initiatives to break through the stagnation on the constitutional treaty and institutional reforms in the eu.

2

‘[...] the traditional positive view of the Dutch towards Europe was of a strong utilitarian nature and hardly led to a sense of European identity. Utilitarian support as the only source of legitimacy is a very weak and vulnerable basis’ (Thomassen 2007: 40).

69

Literature Anker, H. (2006). NederlandinEuropa.nl. Amsterdam-New York: Anker Solutions. Brouwer, J.W. (1999). Architect van de Europese Gemeenschap? Jan Willem Beyen (1952-1956). In: D. Hellema, B. Zeeman and A.C. van der Zwan (ed.), De Nederlandse ministers van Buitenlandse Zaken in de twintigste eeuw (p. 199-210). The Hague: Sdu. cpb /scp (2003). Social Europe (European Outlook 1, appendix to the State of the European Union 2004). The Hague: Netherlands Bureau for Economic Policy Analysis/Netherlands Institute for Social Research. cpb /scp (2004). Destination Europe (European Outlook 2, appendix to the State of the European Union 2005). The Hague: Netherlands Bureau for Economic Policy Analysis/Netherlands Institute for Social Research. cpb/scp (2005). European Times (European Outlook 3, appendix to the State of the European Union 2006). The Hague: Netherlands Bureau for Economic Policy Analysis/Netherlands Institute for Social Research. cpb/scp (2006). Diverse Europe (European Outlook 4, appendix to the State of the European Union 2007). The Hague: Netherlands Bureau for Economic Policy Analysis/Netherlands Institute for Social Research. Dekker, P. (2007). Zeer tevreden Nederlanders in Europees perspectief. In: P. Schnabel (ed.), Veel geluk in 2007; scp-nieuwjaarsuitgave 2007 (p. 152-158). The Hague: Netherlands Institute for Social Research. Díez Medrano, J. (2003). Framing Europe. Attitudes to European integration in Germany, Spain and the United Kingdom. New Jersey: Princeton University Press. ec (2006a). Internal market – Opinions and experiences of citizens in eu 25 (eb 65.1). Brussels: European Commission (http://ec.europa.eu/public_opinion/index_ and.htm). ec (2006b). Eurobarometer 66 – Public opinion in the European Union. Brussels: European Commission (http://ec.europa.eu/public_opinion/index_and.htm). Gabel, M. (1998). Public Support for European Integration: An Empirical Test of Five Theories. In: The Journal of Politics, vol. 60, no. 2, May 1998, p. 333-354. Grinsven, P. van, M. van Keulen and J. Rood (2006). Over verkiezingen, politisering and het Nederlands Europa-beleid. The Hague: Netherlands Institute for International Relations Clingendael. Harryvan, A.G., J. van der Harst and S. van Voorst (2001). Voor Nederland and Europa – Politici and ambtenaren over het Nederlandse Europabeleid and de Nederlandse integratie 1945-1975, Amsterdam: Boom. Hooghe, L. and G. Marks (2004). Does identity or economic rationality drive public opinion on European integration? In: ps Online, July 2004. Inglehart, R. (1967). An end to European integration? In: American Political Science Review, vol. 61, no. 1, p. 91-105. Inglehart, R. (1971). The silent revolution in Europe: Intergenerational change in post-industrial societies. In: The American Political Science Review, vol. 65, no. 4, p. 991-1017. Janssen, J. (1991). Postmaterialism, cognitive mobilisation and public support for European integration. In: British Journal of Political Science, vol. 21, no. 4, p. 443468. Janssen, J. (1992). Een Nederlands ‘nee’ tegen Maastricht? In: Bestuurskunde, vol. 1, nr 7. Janssen, J. (2001). Publieke steun voor de Europese Unie. Analyse van de publieke opinie in 12 lidstaten, 1952-1998 (proefschrift). Maastricht: Universiteit van Maastricht. Kleinnijenhuis, J., Takens, J. and W.H. Atteveldt (2005). Toen Europa de dagbladen ging vullen. In: K. Aarts and H. van der Kolk (ed.), Nederlanders and Europa. Het referendum over de Europese grondwet (p. 123-144). Amsterdam: Bert Bakker. Livestro, J. (2006). De adem van grootheid. Nederland in de jaren vijftig. Amsterdam: Bert Bakker. McLaren, L. (2002). Public Support for the European Union: Cost/Benefit Analysis or Perceived Cultural Threat? In: The Journal of Politics, vol. 64, no. 2, p. 551-566. McLaren, L. (2004). Opposition to European Integration and fear of loss of national identity: Debunking a basic assumption regarding hostility to the integration project. In: European Journal of Political Research, no. 43, p. 895-911. McLaren (2006). Identity, interests and attitudes to European integration. Hampshire/ New York: Palgrave MacMillan.


Marks, G. and L. Hooghe (2003). National identity and support for European integration, Berlin: Social Science Research Center Berlin. Milward, A.S. (1992). The European rescue of the nation state. London: Routledge. nipo (1995). Typisch Nederlands(s). Vijftig jaar opmerkelijke opinies. Amsterdam: Kluwer Bedrijfswetenschappen. Renselaar, C. and G. Bom (2006). Quo vadis Europa? Amsterdam: De Nederlandsche Bank. Thomassen, J. (verwacht in 2007). Citizens and the legitimacy of the European Union. In: Europe in the Netherlands. The Hague: Scientific Council for Government Policy. Vreese, C. de (2004). Why European citizens will reject the eu constitution. Cambridge, ma: Harvard University, Center for European Studies (Working Paper no. 116).

71

Part B

The internal market

Findings The Treaty of Rome of 1957 aims for free movement of goods, services, capital and workers in the European Economic Community (eec). Cross-border movements must be impeded as little as possible and certainly not encounter any formal impediments. At the start of the European Union (eu) in 1992 the internal market is declared completed, in the sense that discriminating impediments between member states have been removed. Differences in national regulation between the member states however still hinder free movement in all four markets today. The eu aims to eliminate differences in regulation between member states by harmonisation, or to bridge them by mutual recognition. Chapter B2 shows that significant steps have been taken for the free movement of goods, capital and financial services. Major institutional differences between member states, which are in part culturally determined, form an obstacle that is difficult to overcome for free movement of workers and of (other) services. Differences in national regulation are still found even today for all four freedoms. The objective of the internal market is to promote cross-border trade, investments and labour migration, to intensify competition between member states and eventually, to increase prosperity in the eu. Chapter B3 provides a numerical illustration of the development of trade, investments and migration in the eu as a whole and in the Netherlands in particular. Trade in goods and services has grown strongly over the past few decades, both between member states and outside. The development of trade in goods is in step with total trade, while for services the increase in trade is in line with the growth in the services economy. A notable aspect in terms of the free movement of labour is above all the small percentage of workers from other eu member states (less than 1% of the working population). In addition to national regulation, economic factors and language and cultural differences play a major part in this. The Netherlands is notable as a country that trades extensively with European partners, has substantial direct foreign investments, but relatively few migrant workers. In the past fifty years market integration has contributed to prosperity in the eu. Around 10% of the gross domestic product (gdp) in the eu can, via the increase in trade, be attributed to the internal market. The contribution of future improvements of the internal market is expected to be significantly smaller. The biggest steps, such as eliminating import tariffs, are already behind us and future measures will be more complex. Examples of current and future steps are the services directive, better integration of share and bond markets in Europe and free migration from the Central and Eastern European member states. Each of these steps can potentially increase gdp by 0.5% to 1.0%. Chapter B4 weighs up these economic advantages against potentially unequal income distribution effects and against the differences between member states that need to be overcome if further integration of markets is to be achieved. Chapter B5 looks ahead to the steps the eu can still take to promote free movement of goods, services, capital and labour. These steps are often not simple. The differences between member states – in culture, language, regulation – and


the wish on the part of member states to operate policies at their own discretion, form hard-to-abate and recalcitrant political obstacles on the way to free movement of goods, services, capital and labour. Mutual recognition in trade in goods and services and harmonisation of supervision for cross-border movement of capital are examples of policies which, taking account of the differences between countries, can contribute to prosperity in the eu. The internal market has not always been pursued equally vigorously for all four freedoms. Since the creation of the eec the emphasis has been on free movement of goods while free movement of capital has only gathered momentum since the Treaty of Maastricht in 1992. We outline the main developments in policy and trade for each freedom. We also look ahead to the future, in which free exchange of knowledge is expected to be a policy priority.

Goods Important steps for the free movement of goods had already been taken in the sixties by the elimination of import tariffs. Stable exchange rates and eventually monetary union provided an impetus to competition between countries. This has led to a halving of price differences between the euro countries in the past forty years. Further steps were taken in the form of the harmonisation of regulation and mutual recognition of each others’ technical regulations. The import and export of goods is however still a laborious procedure, still marked by major differences between member states, both between the six founders of the eec and between the 27 present member states. Trade in goods within the eu has increased sharply, hand in hand with the increase in world trade. The effect of the internal market is visible especially in the increase of trade through the enlargement of the Union and though intensification of the trade in the years after accession. The internal market for goods has led to higher levels of production in the eu, through the utilisation of relative advantages and increase in competition between member states. The differences in technical standards continue to constitute an important impediment to the free movement of goods, as the principle of mutual recognition is not always properly applied and harmonisation often slow in coming. A new proposal from the European Commission can reduce these impediments. In addition improved foreign access to public tenders for government projects can promote the integration of the goods markets.

Services Trade in services is much smaller than in goods. Trade has increased substantially over the past few decades, but has not outpaced growth in added value in the services sector. Better accessibility of foreign services has only been worked on seriously since the Treaty of Maastricht. Progress in reducing and coordinating regulation is still minor, except on financial services. The major mutual differences in regulation form a significant obstacle for trade in services. The services directive represents a first step in this area but is still far from utilising the economic potential. Given the major differences between the many service sectors, sector-specific policies are required. Accordingly, the choices made between harmonisation, mutual recognition, or even maintaining the status quo may differ per sector.

Findings

73

In financial services, standing still is not an option, given the onmarch of internationalisation in equity trade and insurances. The supervision of banks and other financial institutions establishing themselves abroad is one of the issues requiring better regulation in this international market environment.

Capital Following a peak around the millennium change, foreign direct investments fell sharply, but in 2002-2004 they still form over 10% of the total investments in the eu. In addition the share of foreign direct investments from other eu member states has risen in the past ten years. Capital market integration was given a major impetus by the creation of Economic and Monetary Union and the introduction of the euro. This is visible in the convergence of the interest rates in the euro area. There are however still major differences in interest rates, caused in part by differences in regulation and market structure between the member states. Important obstacles for foreign establishment by businesses are formed by the differences in both tariffs and in the methods of calculating corporate income tax. Harmonisation of corporate income tax can cause an increase in investments and production in the eu, but progress is hampered by the desire of member states to retain autonomy in taxation. In addition the economic effects of harmonisation will be unevenly distributed between the member states. A major part of the services directive is the opening of a single desk at which all information and procedures for foreign businesses in the services sector can be handled. This can result in significant costs savings for businesses.

Labour Workers tend to stay put even within countries, let alone between them. Some 4% of workers come from abroad, and one quarter of these come from other eu member states. Only major differences in wages may induce workers to migrate in significant numbers, as the recent influx of workers from the new member states to the British Isles attests. The expected immigration has led in other countries to a formal, but temporary impediment of free movement by the introduction of quotas and qualification requirements for migrants from the new member states. Improving the free movement of migrant workers can be effected in a number of ways, by removing restrictions on migration and by grants for students and researchers. The idea is that students who study abroad will tend to be more willing to work abroad. Other barriers to migration, such as those relating to the portability of pension entitlements and those relating to transaction costs for housing, are harder to remove. The trade-off between the advantages of market integration and the differences in regulation between member states is clearly manifested in this respect.

Knowledge The exchange of knowledge is clearly important for further economic growth. A free exchange of knowledge is to a great extent determined by the free movement of the four traditional freedoms. The effectiveness of innovation policy and policy to increase productivity therefore partly depends on internal market policy. In chapter B5 we set out a number of policy options. A community patent can lead to cost savings for businesses and hence increase the incentive for innova-


tion. Research and higher education policy can to a greater extent be determined and financed at a European level.

Conclusion Europe can still achieve further progress with the internal market. Harmonisation of regulation and mutual recognition can remove part of the barriers to cross-border movement. Prosperity may increase as a result but it will be harder to eliminate the remaining impediments. New times produce new challenges, one of which is a free exchange of knowledge.

75

B1

One market, four freedoms

Citizens in the European Union (eu) in principle have the right to work in another member state, businesses can establish themselves there and invest and both goods and services can be procured from other member states. That is, in a nutshell, the free movement of labour, capital, goods and services through which European countries are working towards one market, the internal market. From the creation of the European Economic Community (eec) in 1957 this right to free movement was a spearhead. To set things in perspective we will provide a brief impression of the market in Europe, fifty years ago and now. Fifty years ago the Dutch required a visa for Italy, migration meant saying farewell for ever, exchanging currencies was expensive and the price of a packet of butter varied from the equivalent of twenty dollar cents in Denmark to fifty cents in France. Today, eu citizens can go on holiday in Southern Italy without passport control, inhabitants from the new member states find work in the United Kingdom or Ireland, there is a single currency and differences in prices have declined dramatically. The intervening period has seen the creation of the internal market. In this introductory chapter, we will briefly discuss the origins of the internal market, outline the four freedoms and conclude by summarising the approach taken in this study.1

1.1

A brief history of the internal market

Following the Second World War a political climate emerged in Western Europe in which far-reaching cooperation between European countries was upheld as an ideal for the future. For instance, the British prime minister Winston Churchill in 1946 called for ‘a kind of United States of Europe’. As far as he was concerned, the first step towards that end had to be cooperation between Germany and France. And that is what came about a few years later, with the proposal advanced by the French Foreign Minister Robert Schuman for a common market for coal and steel. The Schuman plan led to the signing of the Treaty of Paris and the creation of the European Coal and Steel Community (ecsc). Also, the Benelux countries and Italy signed the treaty. It was clear very soon that a common market required more than a customs union. The ecsc was therefore based on the following five principles:2 1 gradual but full elimination of tariffs, quotas and restrictions on payment transactions; 2 no unilateral introduction of new trade restrictions; 3 joint action to resolve transition issues and to ensure optimum use of the available economic potential; 4 some degree of harmonisation of socio-economic and tax policies; 5 free, or at least freer, movement of capital and labour. The economic arguments in favour of a common market were already well known ahead of the Treaty of Rome: not just better utilisation of factors of production, but also economies of scale and increased competition:

1 2

We have made use of Kapteyn (2003) and Pelkmans (1997) in this chapter. Gehrels and Johnston (1955: 277).


Treaty of Paris

Treaty of Rome

1951

1957

European Coal and Steel Community

European Economic Community

Single Euro- Treaty of pean Act Maastricht 1968

all internal import tariffs are eliminated

1986

1992

preparation internal market

European Union

common agricultural policy

European Monetary Union

2002

introduction of euro notes and coins

completion internal market

‘On examination, the prospective gains from an economic union of the six Schuman Plan countries seem very great. The replacement of inefficient domestic sources of supply with lower-cost sources in other member countries would lead to an important saving of resources. The more rational organization of European production would permit for the first time a full realization of the economies of large scale and thereby important additional cost savings. Finally, the widening of national markets in one single market would intensify competition and compel more efficient performance on the part of producers everywhere.’ (Gehrels and Johnston 1955). The importance of the ecsc for further European cooperation is greater than it may perhaps seem at first sight. The ecsc was a unique experiment because for the first time autonomous states transferred part of their autonomy to a supranational organisation. Moreover, the institutional structure of the ecsc formed the basis for the current European Union. For example the ecsc had a High Authority (precursor of the European Commission), a Council of Ministers, a Court of Justice and an Assembly (precursor of the European Parliament). This heavy institutional structure was intended to lay a foundation for further cooperation. Accordingly it did not take long (1956) before a committee chaired by the Belgian Foreign Minister, Paul-Henri Spaak, put forward a proposal for a radical widening of the scope of the common market to encompass the free movement of persons, goods, capital and services. And so in 1957 the six ecsc countries signed the Treaty of Rome, which established the European Economic Community (eec). Improving prosperity and closer cooperation between member states are its main aims as stated in its Article 2, and a common market and harmonisation of policy of the member states its main means. The period after 1958 is characterised by numerous initiatives to strengthen cooperation. The first regulation on the free movement of workers enters into force in 1961. Citizens of member states can from that moment on in principle work in another member state with the same rights and obligations as inhabitants of that country. From 1967, the free movement of goods was simplified by the gradual reduction of differences in systems of indirect taxation. The adoption of the French vat

Figure 1.1 Timeline for internal market

2007

B1 One market, four freedoms

77

system by the other members played a major role in that respect. The levels of national vat rates however continued to differ. In 1968 a customs union is put in place between the six eec countries – a year earlier than agreed in the Treaty of Rome – eliminating import duties on imported goods from other member states. Free cross-border trade is now really possible. In addition, a common import tariff applies for imports from third countries. Now that the customs union is in place, a lack of policy harmonisation proves to be an impediment to further integration. Although the Treaty of Rome enshrines the free movement of goods, the member states develop few new initiatives. In a number of cases the European Court of Justice enforces mutual recognition however. A well-known example is the Cassis de Dijon ruling of 1979.3 Cassis de Dijon is a liqueur, for which a minimum alcohol content of 25% applies in Germany. Because the French Cassis de Dijon contains between 15% and 20% alcohol, it was therefore not allowed in the German market under German legislation. The Court ruled that Germany could not prohibit the import of French Cassis de Dijon. With the white book on the completion of the internal market the European Commission in 1985 endeavoured to revitalise the process of integration: all barriers to trade between the member states were to be removed by 1992. The Single European Act of 1986 paves the way for measures to realise the internal market, as now a qualified majority of votes is sufficient and unanimity is no longer required. Proposals for harmonisation of product regulation could therefore no longer be stopped by a single member state. Six years later a new milestone was reached, the Treaty of Maastricht (1992), which comes into force on 1 November 1993 and which establishes the eu to succeed the eec. One year later the European Economic Area (eea) is created, when the member states of the European Free Trade Association (efta) take part in the internal market.4 The Treaty of Maastricht also provides for the creation of Economic and Monetary Union, the foundation for the euro. The first plan for a joint currency dates as far back as 1970. To preserve monetary stability, the six member states of that time decided that the exchange rates between their currencies could only fluctuate to a limited extent. This exchange rate mechanism from 1972 is a first step towards the introduction of a single currency, thirty years later.5 The eurozone currently comprises thirteen member states. The simplification of payment transactions in the eurozone forms a major stimulus to all four freedoms in the first years of this century.

3 4 5

http://europa.eu.int/eur-lex/lex/LexUriServ/LexUriServ.do?uri=CELEX:61978J0120:NL: HTML Switzerland did not formally join the internal market but has adopted many directives. See http://europa.eu/abc/history/1960-1969/index_nl.htm. In 2002 the euro was also introduced for coins and notes, after it had been introduced for the financial markets in 1999.


1957 Belgium France Germany Italy Luxembourg The Netherlands 1973 Denmark Ireland United Kingdom 1981 Greece 1986 Portugal Spain 1995 Austria Finland Sweden 2004 Cyprus Czech Republic Estonia Hungary Latvia Lithuania Malta Poland Slovenia Slovakia 2007 Bulgaria Romania

1.2

The freedoms of the internal market

The market forms a forum where people exchange goods and services with each other to improve their prosperity. Some as consumers, others as producers, and others as intermediaries. This dates back a very long time in human history. In the original meaning of the term markets literally stood for a forum (Latin for ‘square’). Markets were bound to a specific place, region or country and often also to a specific time, as weekly markets or annual fairs. Economic theory often tends to refer to markets in an abstract sense of a universal forum for exchange where: – transactions take place without disruptions, frictions or loss of time; – parties do not incur additional costs in completing transactions; – all market parties are fully knowledgeable.

Figure 1.2 Enlargement of the European Union


79

In reality, very few markets meet this ideal. If even local markets are not perfect, an international market cannot be expected to be either. The internal market represents the endeavour of the eu to ensure that transactions between the member states proceed as smoothly as possible. What are the impediments in markets in the eu? Distances – physical, as well as cultural – are an important cause of incomplete exchanges of information between buyers and sellers, and generate transaction costs as well as lost time. Regulation and other forms of policy constitute a second impeding factor, both within countries and internationally. Think of the permits a company needs before being able to open a branch in another country; sometimes this is even required for another region within a country. How can these impediments be reduced or even eliminated to allow markets to operate more effectively? Progress can come from technological improvements, but also from specific policy changes. Policy for eliminating regulation that is directly targeted at foreign businesses is referred to here as ‘direct policy’. We term the resulting effect on the internal market ‘negative integration’. We describe harmonisation of national regulation as ‘indirect policy’, and the resulting effect as ‘positive integration’. The statement ‘the internal market has been completed’ applies with some justification for negative integration: tariffs, quotas and other direct impediments have often been eliminated.6 This is not true, however, for indirect policy: for each of the four freedoms differences in national policy, or in national regulation, form an impediment to free movement. Figure 1.3 The four freedoms in the internal market capital

labour

knowledge

production

location

goods

services

free movement

6

payment transactions

The temporary limitation of migration from the new member states is an example of a quota that directly impedes the free movement of workers.


The internal market is about four freedoms: of goods, services, capital and 7 labour. Figure 1.3 shows the interrelations between the freedoms. Capital and labour are primary factors of production, with labour representing all human efforts in the production process; capital is an overarching term for the other (physical) means of production.8 Capital and labour make the production of goods and services possible. The solid line reflects the movement of both production factors and both products between supplier and customer, and the issue in the internal market is how easily this movement crosses national borders. How do other oft-quoted freedoms such as freedom of payment transactions, of establishment and of knowledge fit into this scene? Payment transactions are indicated in the figure by dotted arrows: where transactions take place, payments will as a rule follow in the opposite direction. This applies especially to the export of goods and services, and to a lesser extent to foreign investments and migration. Free payment transactions are therefore inherently connected to all four freedoms. Knowledge is often mentioned as a production factor alongside labour and capital. It determines how efficient both primary factors of production can be deployed. But knowledge is difficult to obtain in isolation, it is often coupled to labour or capital: knowledge comes as part of the highly educated immigrant or is embodied in an advanced machine. The freedom of establishment determines that free entrepreneurs, businesses and independent professionals cannot be subjected to restrictions in establishing themselves in another member state. This freedom of establishment has been placed in the diagram near the free movement of services, as it plays a particularly important role in many service sectors.

1.3

Outline of study

There can be no doubt that the internal market is a success in terms of the number of countries that have acceded since the creation of the eec, and certainly since 1992. Intensifying market integration between member states is a completely different matter however. That is about issues such as the volume of trade, migration and movement of capital between member states and price differences of tradable goods. This study explores how successful the internal market is in intensifying market integration. We will approach this question from three angles. In chapter B2 we will look at factors that determine the extent to which citizens and businesses engage in transactions beyond national borders. We will consider both economic and institutional factors. The eu and the eec as its precursor have taken numerous steps to eliminate these institutional impediments to market integration. What are those steps, and what is the status of policy on the internal market after fifty years? In chapter B3 we will examine the degree of market integration in the eu, in terms of the development of trade, the relative importance of trade within the eu as a whole, and the development of price differences within the eu. We will focus especially on the position of the Dutch economy.

7

8

The free movement of persons comprises more than just labour. We will nonetheless restrict ourselves to labour in this study since this is the decisive factor in the production process. A third production factor is land, but that is not mobile by definition.


81

The third angle is the question whether market integration in general and internal market policy in particular have contributed to economic growth in the past few decades. This contribution to economic development is an important element in the considerations that are and were significant in the future and the past in the development of the internal market. In chapter B4 we will discuss the differences in regulation between member states that can impede further market integration and the desired extent of policy coordination between the member states. In chapter B5 we will explore the possibilities for further market integration. In the familiar metaphor the question is: where does the fruit hang that can be picked with further market integration, and can it be reached easily? The low-hanging fruits have long been picked, for instance in 1968 on eliminating import tariffs. But still more fruit is within reach, to be sure. Movement between member states is certainly not yet as free as movement within member states. Where are the opportunities for Europe in the next fifty years?

B2

Market integration and economic policy

This chapter concentrates on policy for the integration of the markets for goods, services, capital and labour. Fifty years ago these four freedoms formed a central element in the Treaty of Rome. With regard to goods trade, the goal was to have a customs union with free trade within the eec and with uniform external tariffs. Free movement of persons had to be guaranteed, restrictions on trade in services eliminated and impediments to capital prevented. Three decades later, these four freedoms received a new impetus with the completion of the internal market. In section 2.1 the concept of market integration takes centre stage, directed by the question which factors determine the extent to which citizens and businesses enter into transactions across national borders. Section 2.2 describes the development of the internal market and outlines current impediments for each freedom.

2.1

Determinants of market integration

Moving goods or services to another member state costs time and money. The same applies to foreign investments and migration. Which factors play a part in trade, investments and migration to other member states? Briefly summarising the extensive literature on this, international trade in both goods and services is determined by:1 – distance: greater distance between countries means less trade; – gdp: the larger the economies of both the originating and the receiving country, the greater the trade between both countries; – common border: trade is more extensive between neighbouring countries; – language and culture: countries with the same language and related cultures trade more extensively with each other; – policy: both the differences between countries and the degree of regulation play an important part in international trade. These factors also affect foreign direct investments (fdi) and migration. Some form an impediment for cross-border transactions. In table 2.1 we draw a distinction between five types of factors.2 The first three, physical obstacles (a) cultural and ethnic differences (b) and institutional differences (c) are constants as it were. In general they do not change within one generation and are difficult to influence by means of policy.3 For policy-sensitive factors we differentiate between policy that is explicitly discriminating for foreign businesses and persons (e), and policy that is not explicitly discriminating but does form an obstacle for international transactions (d).

1 2 3

On this see the CPB studies: Belot and Ederveen (2007), CPB/SCP (2006), Kox and Lejour (2006a). This typology of impediments is based on Anderson and Wincoop (2004), Hoekman (2006), Baldwin (1988), Das et al. (2001) and Kox and Lejour (2006a). Exceptions are events such as wars, revolutions and uprisings in Central and Eastern Europe, which can have a substantial impact on existing institutions.

B2 Market integration and economic policy

Table 2.1 Barriers to cross-border transactions between two countries

nature of obstacle

potential relevant factors

a. physical obstacles

physical distance

83

common border geographical features, for instance bordering on sea b. cultural and ethnic differences

linguistic differences religious differences degree of ethnic kinship differences in dominant standards and values

c. institutional differences

mutual historical relations difference in centralisation of domestic regulation legal system differences in quality of governance

d. non-discriminatory regulation

monetary differences taxation differences differences in labour market regulation different intensity of regulation heterogeneity of product market regulation

e. discriminatory regulation

import tariffs quantitative restrictions on import

Distance and other physical obstacles especially affect trade in goods, since transport costs depend on weight and volume. Countries accordingly trade more extensively with each other if they have a common border and if their economic centres are less distant from each other. Kox and Nordås (2007) conclude that two countries with a common border on average trade 1.6 times as many goods with each other as countries that do not have a common border. This effect is less pronounced for services: a common border leads to 1.2 times as much trade. Language plays the most important role in terms of cultural-ethnic differences. Language differences can lead to mutual misunderstanding, communication problems, translation costs, and on balance to fewer cross-border transactions. Kox and Nordås (2007) found that countries with a common language on average trade 1.9 times as many services between them. The cpb and scp (2006) conclude in European Outlook 4 that cultural differences hamper mainly bilateral direct investments between European countries and trade to a lesser extent. Differences in political structure, legal systems and quality of governance can 4 affect the volume of business transactions between two partner countries. In a political structure that devolves many responsibilities to local government – as Germany does to its Länder – a multiplicity of different rules can arise that impede imports and direct foreign investments. Empirical research shows that differences in legal systems between countries can likewise lead to extra information costs and to extra costs for legal aid in business disputes.5 For both trade in services and foreign investments those costs can form a major impediment. 4

5

In addition to differences between member states, the quality of institutions in a member state is also important for trade, investments and migration. For instance De Groot et al. (2004) show how countries with a reputation for good and transparent governance are more successful in the export of services. Turrini and Ypersele (2002); De Sousa and Disdier (2002).


Discriminatory regulation is expressly intended to protect domestic markets and market parties (businesses, workers), as a result of which the operations of foreign suppliers are made difficult or impossible. This type of political rule applies double standards: one for the domestic market parties and one for foreign market parties. As to discriminatory regulation it is useful to draw a distinction between quantitative restrictions and measures that increase the costs of economic movement between countries. Quantitative restrictions are prohibitions or instructions that fully or partly forbid cross-border transactions. They can vary from a prohibition of labour migration to, for instance, a prohibition for foreign businesses to operate in energy production or banking without a licence from the national government. Many discriminating impediments, such as import duties and charges, result in higher variable costs per cross-border transaction. In service sectors, impediments to trade rarely have the form of import tariffs. Non-tariff trade impediments dominate. Non-discriminatory regulation refers to national policies that hinder crossborder transactions, not by applying double standards within a country, but by the fact that different member states apply different policy instruments. This encompasses a wide range of national regulations, often deriving from strictly national debates without considering, let alone taking into account, the effects on potential foreign market parties. Each country has shaped its national nondiscriminating policy in a different way owing to historical coincidence or a divergent economic starting situation. Non-discriminatory regulation can lead to a reduction in cross-bordereconomic transactions in two ways: 1 More rules equals more costs. If a business from a liberal country (little product market regulation, ‘light’ social policy, free regime for capital) does business with a more interventionist country (much product market regulation, ‘strong’ social policy, strictly regulated regime for capital transactions), this will as a rule lead to more costs. 2 Different rules equals more costs. Because countries have shaped their policies independent from each other, major differences occur between them in terms of measures, institutions and communication. This policy heterogeneity applies both between two liberal countries and between two interventionist countries. Recent research by the cpb and the oecd has found that both elements of nondiscriminating regulation have a significant adverse effect on trade in services between eu countries and between oecd countries.6 Both trade in services and fdi were found to be lower if the rules for competition differ significantly between two countries. The same holds for differences in regulation that constitute explicit barriers to trade in services. Table 2.2 provides an example of discriminating and non-discriminating regulation as already described in the Treaty of Rome. Discriminating regulation played an important role in the free movement of goods in particular, in the form of import tariffs and quotas. Such policies also exist for the other three freedoms. An example of this are the restrictions on access of workers from the new member states to West-European labour markets.

6

Kox and Lejour (2006a) and Kox and Nordås (2007).


goods

services

labour

capital

obstacles

instruments

mutual tariff barriers to trade

elimination of mutual import tariffs (1958-1968)

quantitative import and export restrictions

reduction of quotas

national interventions in agricultural markets

common agricultural policy

non-tariff barriers

policy harmonisation

barriers to commercial, professional and artisan services

elimination of discriminating restrictions policy harmonisation

barriers to network services

common transport policy

quantitative restrictions

elimination of restrictions on free delivery of services

discrimination of workers on the basis of nationality

elimination of discrimination in employment, pay and working conditions

quantitative restrictions

allowing free movement, stay, job application and exercise of profession (except public sector)

barriers to establishment of businesses

reduction of restrictions

barriers to portfolio capital movement

elimination of discrimination of foreign providers of capital

barriers to current payments

coordination of exchange rate policy

restrictions on cross-border banking and insurance activities

gradual liberalisation

Table 2.2 Specifi c measures in the Treaty of Rome in respect of the four freedoms

2.2

85

National regulation and European policy

Fifty years ago it was already recognised that eliminating discriminatory regulation would promote market integration in the eec. Important steps were taken in the Treaty of Rome (1957), the Single European Act (1986) and the Treaty of Maastricht (1992). How far has the internal market progressed since? We will answer this question for each freedom by outlining the degree of regulation in the member states and the main developments in eu policy.

2.2.1

Free movement of goods

The Treaty of Rome provided for a reduction to zero of mutual import tariffs in four phases. That objective was attained in 1968, eighteen months ahead of schedule. In addition, quotas for import and export between the member states were eliminated. Success was also achieved in the field of the internal market for agricultural products in the sixties. When the treaty was drafted, one in five adults was still working in agriculture, and agricultural products represented one third of all exports in the Netherlands. According to European commissioner for agriculture Sicco Mansholt (1963) it would have been impossible in practice to create an internal market for goods without including agriculture. In its final form the policy comprised three elements: free intra-eec-movement in agricultural products; agricultural producers from within the eec were to receive preferential treatment; and joint financing of price support by the eec budget. Not everyone understood immediately that this would become a drain on eu finances, but the free movement of agricultural products had been arranged. Non-tariff impediments to mutual goods trade were targeted in the seventies. A portion of those impediments is part of national technical product standards. That also applies to requirements for terms and conditions of employment,


safety, packaging and the environment. This project progressed only with difficulty. Many national regulations are not evidently discriminating for foreign products. Non-tariff measures were required to be shown to impede the free movement of goods from other member states. The heterogeneity in national policy – and often its historically developed nature – produced difficult debates between national governments. The Single European Act (1986) incorporates the principle of mutual recognition of regulation. This principle means that the sale of a product lawfully produced or introduced into trade in a member state may not be forbidden in another member state, not even if the product has been manufactured to technical or quality requirements that differ from those applying to the country’s domestic products. The regulations of the originating member state are in general decisive.7 The principle of mutual recognition makes the free movement of goods and services possible without requiring harmonisation of the national legislation of the member states. In addition, the rule of a qualified majority replaced unanimity rule in decision-making on the harmonisation of technical requirements. This has aided progress in the process of adopting eu-wide requirements. The discriminatory obstacles from table 2.1 have been eliminated for goods. A number of non-discriminating factors that can be influenced by the member states or the Union continue to exist however. Table 2.3 provides a number of examples of still-existing differences in regularity between groups of member countries. All policies in the table refer to trade in goods, with no distinction between intra-eu-trade transactions and other transactions. Therefore the table cannot be interpreted as a direct measure for the internal market. Table 2.3 shows that there are major differences between the member states in terms of regulation for the import and export van goods. The time required to export a product to Greece, Spain and Portugal for instance is three times as long as the average for exports to Austria, Finland and Sweden. Even within the customs union, with a common external tariff and internal free movement, the differences between member states are significant. Simplification of regulation for imports and exports by individual member states can reduce those differences and make it easier to trade with and within the eu. This table clearly confirms the Netherlands as a trading nation. Both for import and export the time and number of documents required are comparatively low. In this area the Netherlands turns in a score comparable to that of the United Kingdom, Denmark and Ireland and the later accessions Finland, Austria and Sweden.

7

Member states can still impose requirements on products from other member states provided these are non-discriminating, proportional and necessary to protect noneconomic interests (public health, environment, public order and safety).


EU accession groupsa

total group of countries

indicatorsb number of documents required for import

EU 6 9

EU 7-9 4

EU 10-12 8

time required for import (in days)

13

11

21

7

6

4

5

4

11

9

18

7

number of documents required for export time required for export (in days) a

b

87

EU 13-15 4

EU 16-27 9

EU27 total 8

other OECD 7

21

16

16

8

7

6

6

5

18

14

13

7

The Netherlands 4

The EU accession groups are composed as follows: EU6 are Belgium, Germany, France, Italy, Luxembourg and the Netherlands; EU7-9 are the United Kingdom, Ireland and Denmark; EU10-12 are Greece, Spain and Portugal, EU13-15 are Finland, Austria and Sweden; EU16-27 are the 12 countries that acceded in 2004 and 2007: Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovenia, Slovakia, Czech Republic, Bulgaria and Romania. The reference group of other OECD countries consists of Japan, South Korea, New Zealand, Australia, Mexico, Turkey, the United States, Norway and Iceland. All indicators relate to the procedural import and export requirements for a standardised cargo. Every official procedure and the time required for it is counted between the preparation of the transaction and the time when the cargo is in the customer’s warehouse. For details, see World Bank (2006: 87).

Source: World Bank, Cost-of-Doing Business database, update 2006

Table 2.3 Regulation compliance costs for businesses in cross-border movement of goods, 2005

2.2.2

Free movement of services

The Treaty of Rome also announced measures for better mutual coordination of transport policy. Initially this related mainly to intra-European transport by rail and river, to which roads were subsequently added. Intra-European road transport however only received its greatest impetus when customs controls were eliminated. Only from 2000 onwards did the European Commission focus in full on the free movement of services. First, financial services for businesses were addressed: the conditions for integration of movement of capital. This was followed by 8 measures to facilitate intra-European trade in professional services. In these usually heavily regulated services, cross-border trade was tightly hamstrung by issues concerning the recognition of qualifications. In 2008 a directive will come into force that to some extent alleviates the information requirements and the recognition of national qualifications for these professional services (European Commission 2005). After examining the remaining impediments the European Commission 9 proposed the Services Directive. The adopted Services Directive (European Commission 2006) provides that national regulation must not contain any directly discriminating provisions for service providers from the rest of the eu. Also, there will be a single desk in each country for foreign service providers to arrange compliance with their obligations. The Services Directive applies to commercial services, with the exception of network services (telecommunication, energy companies), transport and financial services. Table 2.4 illustrates the differences in eu regulation of professional services, retail trade and network sectors (Conway and Nicoletti 2006). The range of variations between the (groups of) member states is striking, and these in themselves already can form an impediment to providing cross-border services. For the eu7-9 and eu13-15 the degree of regulation is below the average for the eu. These services are more extensively regulated in the Mediterranean countries. The regulation often imposes access barriers and requirements in terms of conduct and qualifications of entrepreneurs. In The Netherlands these services are regulated to a lesser extent than in most other old eu member states. 8

9

For example, legal issues, accountancy, tax consultants, engineering and architect firms, testing and certification agencies, but also commercially operating medical specialists. This generally refers to knowledge-intensive services in which the customer could encounter problems with quality control (information asymmetry). See SER (2005) for an extensive analysis of the Directive.


EU accession groupsa EU 6 2.6

indicators professional services

EU 7-9 1.1

EU 10-12 2.6


EU 13-15 1.3

EU 16-27 2.7

EU27 total 2.2

other OECD 1.9

The Netherlands 1.6

retail

3.0

1.9

3.3

2.1

2.0

2.5

1.9

1.6

network sectors

2.2

1.9

2.9

2.2

-

2.3

2.1

1.6

a

The composition of the groups of countries is the same as in Table 2.3. The indicators have been prepared by the OECD on the basis of questionnaires completed by the member states. The indicator for professional services is an unweighted average for legal services, architects, engineering and accounting. The indicator for network sectors is an unweighted average of the sectors electricity, gas, road transport, railways, aviation, post and telecommunications. All indicators for the groups of countries are unweighted averages of the available OECD countries belonging to that group. For EU16-27 the average for Poland, the Czech Republic, Slovakia and Hungary was used where available.

Source: Conway and Nicoletti (2006)

2.2.3

Table 2.4 Degree of regulation of services, 2003

Free movement of capital

The internal market, especially the introduction of the euro, has eliminated a number of factors hampering the free movement of capital. Currency exchange risks no longer exist for the movement of capital within the eurozone but persist between the United Kingdom and the euro countries. Direct capital restrictions have been lifted since the second phase of emu in 1994. This made a major contribution to reducing transaction costs between the eu member states. Indirect restrictions however continue to exist; for instance cross-border payments involve more risks, time, expense and less standardisation than domestic payments.10 The freedom of movement of capital encompasses among others the right to free establishment in other member states. In that respect, businesses are faced with national regulations that are in principle non-discriminating but that do hamper business operations beyond national borders. The differences in national rules still represent a major expense item for European businesses wishing to establish, acquire or expand a business in other member states. Table 2.5 sets out for each eu accession group a number of indicators such as the registration of a plot of land and a building as property, obtaining a building licence for a warehouse, and the rights of minority shareholders. This last indicator primarily measures the protection of investments and thereby serves as a measure for the freedom of financial movement of capital.

EU accession groupsa EU 6 6

EU 7-9 4

EU 10-12 7

time required (days) for registration of property

78

34

number of procedures for building licensec

14

12

200 5.4

indicators number of procedures for registration of propertyb

time required (days) for building license rights of minority shareholders a b c d

d

10


EU 13-15 2

EU 16-27 6

44

16

16

13

122

260

7.5

4.7

Danthine et al. (2000).

The Netherlands 2

EU27 total 5

other OECD 6

110

74

38

5

19

16

17

18

122

224

198

138

184

4.6

5.4

5.5

6.3

4.7

The composition of the groups of countries is the same as in Table 2.3. The procedural requirements for the registration as property of a standardised plot of land with a warehouse on it. Application for building license for standardised warehouse by medium-sized company. Composite indicator between 0 and 10 with 10 reflecting the strongest minority shareholder rights.

Source: World Bank, Cost-of-Doing Business database, update 2006

Table 2.5 Regulation compliance costs for crossborder capital transactions, 2005


89

In addition, international differences in corporate income tax play an important role for direct foreign investments. De Mooij and Ederveen (2006) have found that this applies predominantly to the volume of the foreign investments, and to a lesser extent to the choice of location. What matters is not just the enacted tax rate but rather the effective tax burden, taking account of the calculation of taxable profit. The differences in tax regimes between member states generate high administrative charges for internationally operating businesses, hamper international tax loss set-offs and produce significant shifts of profits to member states with advantageous tax regimes. Policy to address these differences in corporate income tax is being prepared. It will be discussed in chapter B5. Integration of payments transactions has not progressed equally for all submar11 kets. The European Central Bank (ecb) characterises the present situation in the following way. Since the introduction of the euro the money market is fully integrated. Obviously this applies only to euro countries, not outside them. Payments systems for major transactions (repos) and the market for government and corporate bonds are also well or reasonably well integrated. This holds much less for the international movements of shares. And the markets for life insurance and payment transactions for consumers are still highly fragmented. The Financial Services Action Plan 2000-2005 has given the integration of European financial markets a strong impetus. The action plan has three aims, which are an internal wholesale market for financial services; open and secure retail markets (see chapter B5) and strengthening of business economic supervision. We will briefly address a number of the elements of the action plan. The main steps have been taken for the wholesale market, in which financial institutions are engaged that primarily target large businesses. An important directive in this respect is the Markets in Financial Instruments Directive (Mifid), which is set to become effective in November 2007. It is mainly intended to protect private shareholders. Mifid obliges banks and brokers to issue more prices. They have to guarantee that clients are paying the lowest price for a securities transaction. A key element in Mifid is the home country principle: investment businesses that comply with legislation in their home country are allowed to offer their services in all member states. This requires all member states to coordinate their rules for the protection of investors. The supervision of financial institutions and financial transactions is determined to a large extent by European regulation. The supervision of cross-border institutions and transactions concerns, among other matters, the division of tasks and responsibilities between the different national supervisory bodies involved in cross-border institutions and transactions. Chapter B5 discusses this in greater detail.

2.2.4

Free movement of labour

For labour migration, more than for trade in goods, factors such as distance, language and culture play an important role (Belot and Ederveen 2007 and cpb/scp 2006). Even when all discriminating and non-discriminating impediments to labour migration have been eliminated, the flow of migration between most member states is still expected to be small, because interregional movements are limited even within member states.

11

Based on the speech of Gertrude Tumpel-Geguerell, member of the Executive Board of the European Central Bank, on 12 March 2007, see: http://www.ecb.int/press/key/ date/2007/html/sp070312.en.html.


The discriminating impediments to labour migration between the old fifteen member states of the eu have been eliminated and hence the free movement of workers has been achieved legally. Restrictions on labour migration are however imposed for workers from the new member states from Central and Eastern Europe that joined in 2004 and 2007. These barriers are only temporary however and must be eliminated by 2009 at the latest for member states that joined in 2004. On the accession of the ten countries in 2004, Germany demanded the maximum period of suspension of the freedom of labour. Boeri and Brücker (2005b) predicted that this would lead to a shift of intra-eu-labour migration to the most open member states, especially the United Kingdom and Ireland. All fifteen old member states, with the exception of Sweden and Finland, are uphold12 ing restrictions for migrant workers from Romania and Bulgaria. In the whole eu, as well as within the eu15, non-discriminatory policy barriers to labour migration are important, as labour market policy is mostly the responsibility of national governments. There still are large intra-eu differences in labour market institutions, in tax structure, in entitlements and premium contributions for social insurances, and in healthcare insurance. Although policy is coordinated increasingly in a number of sub-areas, there is a long way to go in this respect.

2.3

Concluding remarks

The internal market policy endeavours has led to the elimination of a great deal of discriminatory regulation over the past fifty years. But non-discriminatory regulation also hampers market integration. Policy initiatives that address the impeding nature of this type of regulation have not yet been developed equally for all four freedoms. Chapter B5 looks ahead to further possibilities of doing so. The core of the next chapter is the question whether the internal market policy, alongside all other developments of globalisation, has led to tighter interrelationships of the markets.

12

Spain is considering lifting the restrictions, says Javier Valles, Immigration and the Spanish economy 1996-2006 (Presentation at workshop Migration Policies in Europe before the New Enlargement, Bocconi University, Milan, November 28, 2006), Madrid: Prime Minister’s Economic Bureau.

91

B3

Fifty years of market integration

This chapter provides a quantitative assessment of the actual economic integration of the eu member states. Section 3.1 examines whether fifty years of market integration have led to an increase in international trade, foreign investments and labour migration. For promoting these cross-border transactions is a direct objective of the internal market policy. Trade, investments and migration are however not the only objective, and certainly not the final goal of internal market-policy; for that is to promote prosperity in the eu. Another objective is to stimulate competition by making national markets more accessible for foreign businesses. A direct consequence of strong competition is that the prices of tradable goods will converge. We address this issue in section 3.2. In section 3.3 we look at trade by and with the Netherlands. The data on which the charts and tables in this chapter are based are described in detail in a separate cpb Memorandum (Straathof 2007).

3.1

Trade, investments and migration

Economic integration is not equally intense for each of the four freedoms. This follows in two ways from figure 3.1. First, the height of each column reflects the volume of international trade, foreign investments and labour migration as compared to domestic production, investments and employment. Then, the relative volume of ‘intra eu25’ indicates to what extent market integration is more intensive within the eu than with the rest of the world. The first column compares the value of the export of goods with the added value for goods.1 The total export value of the eu25 exceeds the added value, which points to a high degree of integration in the goods market.2 The lower part of the column ‘intra eu25’ relates to trade between the member states of the eu, the top part ‘extra eu25’ shows what the member states export to the rest of the world. The European market for goods is clearly visible in this figure: trade within the eu is considerably greater (61% of total trade) than trade by eu countries with non-eu-countries – despite the fact that the gross national product of the non-eu-countries jointly exceeds that of the eu. This illustrates the fact that distance plays an important role in trade: the greater the distance between countries, the more limited trade will be in general (see chapter B2). The market for services is less integrated than the market for goods. The second column in figure 3.1 shows that trade in services is much lower than the trade in goods. In part this is due to the fact that certain types of service are less easily provided across a long distance than goods. The classic example is the services of hairdressers. Many other types of services however are ‘travelling’ better all the time – for reasons including information and communication technology and cheaper airline tickets. Examples are telemarketing and consultancy. Besides the physical characteristics of services, regulation plays an important role in trade in services. This can relate to both regulation directly targeted at foreign businesses and to differences in regulation between countries. The share of intra-eu trade in services is 54% of the total trade in services, a similar proportion as for goods. 1

2

This section largely concerns the outflow (export) of goods, services and capital. The inflows (import) for the EU display a virtually identical pattern to the outflows. Although the difference between import and export can be substantial for individual countries, that is not the case for the EU as a whole. The export value can exceed added value because added value has been adjusted to intermediate supplies and is hence lower than the value of goods production. The re-export of goods from country A to country B via C also affects the level of exports reported by country C.


120

extra EU25 intra EU25

100 80 60 40 20 0 goods

services

FDI

portfolio

migrants

On the basis of the available data, no fully consistent method of comparing the four freedoms is available. Therefore, Figure 3.1 must be interpreted as a rough sketch. The data for goods are from 2005; those for services, foreign direct investment and portfolio investments from 2004; those on migration from 2001 and before. Trade in goods and services is expressed in per cent of the respective value added. Both foreign direct investment and portfolio investments are expressed as a percentage of gross national investments. Migration shows the number of migrant workers among the working population. See Straathof (2007) for an explanation of the charts in this chapter.

The third and fourth column illustrate integration in the area of capital. The third column reflects investments by businesses in a country other than their home country. These fdi comprise the acquisition, establishment or expansion of foreign branches. In figure 3.1 these direct investments are divided by the total gross investments of the eu25. The level of integration of the direct investments is in the same order of magnitude as for services. The fourth column shows the increase in holdings of foreign shares, bonds and other securities compared to total gross investments.3 These cross-border portfolio investments are significantly higher than the foreign direct investments, since it is easier to buy a share than to acquire a business. A notable feature however is that for both direct investments and portfolio investments, the share of intra-eu-investments in the total is virtually equal to that for trade in goods (both 60%). The last column in figure 3.1 reflects the share of migrant workers in the working population. Notably, the share of immigrants from within the eu (25% of the total migration) is much lower than immigration from outside the eu. A reservation needs to be made for the fact that the data for migration for most countries dates from 2001 or earlier. The recent migration from the Central and Eastern European member states to the United Kingdom and Ireland in particular has not been included as a result. We will now turn to a discussion of integration in each of the four markets individually.

3.1.1

The goods market

The integration of the European goods market is not as intensive as that of the United States. The trade in goods between member states of the eu amounts to less than half of the trade between the states of the United States 3

The change in the value of portfolio investments is partly the result of the purchase and sale of securities and partly of changes in the value of securities already held.

Figure 3.1 Trade, investments and migration within and outside the EU

B3 Fifty years of market integration

93

(Delgado 2006).4 Nonetheless, the volume of trade in goods has increased sharply within the eu in the past few decades. A number of developments in the European goods market are outlined below. Figure 3.2 Export of goods by the EU15a (in percent of value added)

120 100 80 60 40 20

intra EU15

2002 2004 2005

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

1972

1970

1968

1966

1964

1962

0

extra EU15

a The enlargement to 25 member states has not been included in this chart.

The trade by eu member states has grown strongly in the period 1962-2005, outstripping growth in added value in the eu by around 3% annually. This applies both for trade within the eu and for export to non-eu-countries. This follows from figure 3.2 depicting the development of the European export of goods since 1962. The bottom part of each column (intra eu15) reflects trade between the fifteen countries that have been a member of the eu since 1995 (see figure 1.2). All fifteen countries are included as from 1962, i.e. including the period when many countries were not yet part of the eu. The top part of each column (extra eu15) depicts the export of these fifteen countries to the rest of the world. Both trade flows are corrected for growth in production and inflation by dividing them by the added value of goods production in the eu. An important question is whether the trade within Europe has been at the expense of trade with the rest of the world. Although the issue of trade diversion is complex, it is clear that figure 3.2 provides no indication that trade to noneu-countries has suffered from the internal market. A possible reason is that trade barriers have not only been eliminated within Europe, but also on a global scale, for instance in the Uruguay-round of the gatt in 1986-1993. A second possible explanation is that trade across greater distances has become cheaper owing to technological progress. The trade in the eec and later in the eu has increased though growth of the trade between existing member states and with new member states, but above all through the growth in the number of member states. Figure 3.3 depicts these differences. The columns in this chart are stacked: eu6 reflects trade between the six founding members of the eu; eu7-9 adds trade with and between the three new member states as from 1973 (Denmark, Ireland and the

4

This takes account of both the size of countries and states and their distance from each other. Lejour and de Paiva Verheijden (2007) show that trade in services between Canadian provinces is on average twice as high as between EU member states as a share of GDP.


United Kingdom), etc.5 The sum of eu6 and eu7-9 therefore depicts the volume of trade between the nine member states from 1973. Figure 3.3 Intra-EU-trade in goods (in percent of value added EU15)

80 70 60 50 40 30 20 10

EU6

EU7−9

EU10

EU11−12

EU13−15

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

1972

1970

1968

1966

1964

1962

0

EU16−25

Enlargement with new member states has two effects. The first, trivial, effect is the increase of the trade between eu-countries as existing trade flows that prior to the enlargement were traded across the eu borders are part of intraeu-trade following the enlargement. The second accession effect is more subtle. In the first years after the accession of three countries in 1973 and two in 1986, trade with and between the new member states increases gradually. This is shown in table 3.1, which shows for major enlargements of the eu by what percentage trade with and between new member states has grown in the subsequent ten years (column 3). This is compared with the growth of trade in the countries that at that time already formed part of the eu (column 4).6 An exception is the accession of Austria, Sweden and Finland in 1995, which did not lead to this integration effect. The reason is probably that they were already strongly integrated with the twelve countries of the eu prior to joining.

growth intra-EU trade in % per year a enlargement

period

acceding member states

old member states

EU6 to EU9

1973-1982

6.2

1.6

EU10 to EU12

1986-1995

6.7

0.8

EU12 to EU15

1995-2004

2.3

2.4

a

Trade as fraction of value added in the EU15.

But we have saved the greatest puzzle from figure 3.3 for last. Why has trade between the six founding countries of the eec increased relatively little (annual growth of 2.4%)? Unfortunately we are unable to provide a conclusive explanation for this. A first possibility is that the accession of new member states has led to a partial shift of trade between eu6 countries to other member states. 5

6

Greece accedes in 1981 (EU10); Spain and Portugal accede in 1986 (EU11-12); Austria, Sweden and Finland follow in 1995 (EU13-15); and Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovenia, Slovakia and the Czech Republic (EU16-25) in 2004. The percentages shown relate to the value of trade divided by the added value of the EU15 to take account of inflation and an increase in trade, directly caused by production growth.

Table 3.1 Growth in trade owing to new enlargements


95

The same may apply to the increase of trade with non-eu-countries as a result of global trade agreements. We cannot exclude the possibility however that the effect of the internal market policy on trade between these countries was slight. This confirms the picture from chapter B2, that regulation for import and export of goods still differs significantly even between the eu6 countries.

3.1.2

The services market

International trade in services currently amounts to around 12% of the added value in services. This percentage is considerably lower than for goods, as was already shown in figure 3.1. Figure 3.4 however shows that the share of the export of services intended for non-eu-countries is comparable with the trade in goods. The figure also provides an overview of the destination of trade in services within the eu. The major portion of intra-eu services exports goes to the original six member states, followed by the United Kingdom, Ireland and Denmark (36%).

Figure 3.4 Destination of export of services by EU25, 2004 (in percent) EU6 (29%) extra EU25 (45%)

EU7−9 (16%) EU16−25 (3%)

EU10 (1%)

EU13−15 (4%) EU11−12 (3%)

Figure 3.5 depicts the development of total exports of eu countries to both eu and non-eu countries since 1970.7 The openness of the services sector is not only less than for goods, but the openness of the services sector is also growing less rapidly. The total export of the eu6, expressed as a percentage of the added value of services, has in fact even remained constant since 1970. This trend therefore deviates from the upward trend for trade in goods (see figure 3.3). Growth can be measured for the eu9 and the eu15, by contrast. This difference is mainly attributable to the development of added value. For services, added value has grown much more rapidly than for goods, while the share of services in the value of the total exports has remained roughly the same (Kox et al. 2004). A second observation to be made on this figure is that these data also encompass government services. For commercial services the ratio of trade to added value is five percentage points higher.

7

Because bilateral trade statistics for services are only available for a limited number of years, we have used data on the total export of services per country.


Figure 3.5 Total export of services by the EU6, EU9 and EU15 (in percent of value added)

14 12 10 8 6 4 2

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

0

EU15

EU9

EU6

Why is it that the export of services hardly grows faster than added value? First, trade in services is determined to a significant extent by constant factors such as distance, culture and language differences. In addition, major steps have only recently been taken in the internal market policy for services. Figure 3.5 confirms that the increase of trade in services, like for goods, was mainly a consequence of the accession of new member states. The export of services by the eu15 indeed appears to have grown more rapidly than the export of services by the eu9. Growth in eu9 exports outpaced that of the eu6.

3.1.3

The capital market

Direct investments are a part of the movement of capital that is particularly relevant for the operation of the internal market as a whole. Figure 3.6 summarises direct investments from and within the eu15 since 1981. Notable features are the strong fluctuations, and especially the peak in 2000. This peak is the result of the global surge in mergers and acquisitions. Regarding figure 3.6 we want to emphasise the relative increase of fdi among eu member states. At the start of the eighties the share of fdi within the eu was less than a fraction of the total. Since the beginning of this century the majority of fdi consists of investments in other member states. European integration in the field of direct investments has therefore intensified in the past few decades. Figure 3.6 Direct investments from within the EU (in percent of gross investments EU15)

70 60 50 40 30 20 10

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

0

intra EU15

extra EU15


97

A qualification is that the increase in fdi is not equally divided between the member states. Investments in the United Kingdom and Ireland in particular have risen sharply. This is evident from figure 3.7 which depicts the contribu8 tion of new member states to fdi within the eu. The direct investments for eu7-9 are around twice as large in most years as investments between the eu6 countries. In 1999 and 2000 the European investment flows from and to the United Kingdom and Ireland were even dominant in absolute terms. A possible explanation for the increase in fdi within the eu is the lifting of restrictions on the movement of capital within the eu since the Treaty of Maastricht (1992) in particular. The special positions of the United Kingdom and Ireland may be connected with the role of London as financial centre and with the low corporate income tax in Ireland.

Figure 3.7 Direct investments in the EU (in percent of gross investments EU15)

35 30 25 20 15 10 5

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

0

EU6

3.1.4

EU7−9

EU10

EU11−12

EU13−15

EU16−25

The labour market

The integration of the European labour market is limited compared to the other three freedoms. Only 4% of the working population in the eu comes from another country. Only 1% of the working population has the nationality of one eu member state but works in another member state. Figure 3.8 shows the nationality of migrant workers in the eu25. Notably, the share of eu12 is greater than for the other freedoms. Portuguese and Spanish are hence overrepresented in terms of labour migration between eu countries. We have to qualify this by observing that the figure is based on data from before the enlargement to 25 member states. The proverbial ‘Polish plumber’ is still hardly included in this figure. To provide an indication of the development of migration to the eu, figure 3.9 depicts the share of the total migrant population in the total population of the 9 eu15 between 1960 and 2000. The share of migrants in the population in the eu6 and eu9 has increased from less than 4% in 1960 to around 8% in 2000. For the eu15 the share of migrants in the population is slightly lower.

8 9

The figure applies the same principle as figure 3.3. Figure 3.9 refers to the total migrant population, whilst figure 3.8 refers to labour migration. This explains the difference in the proportions of migrants in 2000.


Figure 3.8 Origin of migrants in EU25 (in percent) EU6 (11%) EU7−9 (4%) EU10 (3%) EU11−12 (8%) extra EU25 (70%) EU13−15 (2%) EU16−25 (2%)

Figure 3.9 Share of migrants in population (in percent)

9 8 7 6 5 4 3 2 1 0 1960

1970 EU6

EU9

1980

1990

2000

EU15

Migrants form a modest but growing part of the population. Given the high share of migrants from outside the eu it can be concluded that few Europeans make use of the possibilities for migration that the internal market offers to them. To conclude, we compare the development of the four freedoms in the past few decades with each other. The strongest increase of market integration is to be seen for goods, while investments are marked above all by the peak in 2000. Trade in services by contrast matches added value. We found a number of indications of the importance of the internal market for market integration. The enlargement of the eu led to growth of intra-eu-trade in goods and services. More subtle is the increase of intra-eu-trade in goods in the years following the accession of the United Kingdom, Ireland and Denmark (1973) and Spain and Portugal (1986). The elimination of restrictions on movement of capital may have played a role in terms of fdi in the relative increase of investments within the eu.


3.2

99

One Union, one price?

The economic ‘law of a one price’ holds that in an efficient market identical goods must be equally priced. Prices of goods or services that are not tradable or only with difficulty can however differ strongly between member states. In an internal market the law of one price can be expected to become increasingly important, so that price differences between countries are narrowed. A similar effect applies to the factors of production, labour and capital, as the differences between countries will diminish as both factors become more mobile. Has the internal market led to price convergence? The consumer price index (cpi) is often used to measure price trends. This index comprises both tradable and non-tradable goods and services. Faber and Stokman (2005) have shown that the cpi spread between eleven emu countries has halved between 1965 and 2003. The factual openness of the emu countries has contributed significantly to this. The lack of cross-border trade and the as yet relatively weak direct investments of service businesses in other eu member states are causing prosperity losses for consumers and producers in the form of insufficient competition and unnecessarily high prices. The ecb has found that the weak price competition in the European service markets is responsible for the lack of price convergence. The less competition there is, the more service providers apply mark-up prices that are based solely on their own costs (Fabiani et al. 2005). A narrowing of price differences can also be expected of the euro, because a single currency makes it much easier to compare prices between countries. However this effect cannot yet be demonstrated irrefutably in empirical terms, partly because the time elapsed since the euro was introduced is too short.10 Price differences in the eurozone are clearly comparatively small, but this was already the case before the introduction of the euro. Partly because a number of European countries had strongly linked their currency to the Deutschmark, price differences were small even before 1999. The ecb (2006) observes that the euro has contributed to convergence in interest rates within the eurozone. This is an indication that the often strong correlation between national savings and investments is weakening (Feldstein and Horioka 1980). Despite the convergence, interest rates continue to vary between member states. These remaining differences are caused by the heterogeneity of government policy, of the policy of monetary and financial institutions and by natural barriers such as language, culture and distances. Interest differences can additionally result from national demand and supply conditions that depend on the economic performance. The internal market for workers has led to wage convergence between a number of member states but not in the eu as a whole. Wage convergence provided by 11 migration of workers is small, given the limited labour migration in the eu. On the other hand, wages are strongly related to labour productivity. Differences in productivity, even within the eu15, are still large, but owing to trade, outsourcing and the exchange of technology the differences in labour productivity have become smaller. Carvalho and Harvey (2004) sub-classify the eu15 into two groups of member states, within which wages are strongly convergent, 10 11

See the survey by Allington et al. (2005). See Carvalho and Harvey (2004) and Webber (2002). Note that migration is not the only potential source of wage convergence; trade, outsourcing and convergence in technology can also contribute to it, see Egger and Pfaffermayr (2004b).


but between which differences continue to exist even today. The first group includes Germany, France, Italy, Belgium, the Netherlands, Austria and Finland; the second group comprises Spain, Portugal and Greece. Price convergence has been clearly demonstrated within the internal market. We can expect this to continue in the future. The influence of the euro has certainly not exhausted itself and trade relations are capable of further intensification, as will be shown in chapter B5. In terms of wages, a uniform wage basis for workers with comparable knowledge and experience is still very far away, partly because the mobility of workers between member states is low.

3.3

The Netherlands and the internal market

More than the average European country, the Netherlands has traditionally been geared to doing business across borders. Figure 3.10 shows that this applies not just to trade in goods and services, but also to investments (both fdi and portfolio).

goods

services

FDI

portfolio

migrants

400 350 300 250 200 150 100 50 0 EU25

NLD

intra EU25

EU25

NLD

EU25

NLD

EU25

NLD

EU25

NLD

extra EU25

Notably, the share of eu destinations for goods, services and direct investments originating from the Netherlands is significantly higher than it is on average for the other eu countries. For goods, we see that the export to eu countries is relatively high owing to the re-export of goods (wrr 2003). The same holds true for cross-border services, in which the transport sector plays an important role. For portfolio investments, borders and distances play a much smaller role: the market for bonds and shares tends to be global rather than European. As is the case in the Union as a whole, the share of migrant workers in the working population is small (3%). Within that group, the proportion from other eu member states (around half ) is higher than in other member states. Trade with European countries has not always been as important for the Netherlands as it is now.12 Figure 3.11 shows that in the 1960s, over one third of Dutch exports of goods were intended for destinations outside the eu15. Trade with the other eu member states subsequently grew sharply. 12

Trade with non-European countries has influenced the Dutch economy for a long time. The Golden Century for example was in part attributable to trade with the Far East by the VOC.

Figure 3.10 The Netherlands compared with the EU25


101

The member states of the original eu6 form important trade partners for the Netherlands. That was already true in 1962, with Germany being the most important, but in 2005 the ties have become even stronger: exports to Belgium especially have grown forcefully in the past four decades. This is clear from table 3.2, which provides an overview of the top 5 of export destinations in 1962 and 2005. The second and fourth columns reflect the share of the importing country in total Dutch exports. 250

Figure 3.11 Export of goods from the Netherlands (in percent of value added)

200

150

100

50

to EU6

to EU7−15

2002 2004 2005

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

1972

1970

1968

1966

1964

1962

0

to non−EU15

top 5 countries of destination for exports

Table 3.2 Top-5 destinations for export from and originating countries for imports to the Netherlands (in percent)

1962 importer Germany

share of export 20

2005 importer Germany

share of export 19

Belgium United Kingdom

13

Belgium

18

11

United Kingdom

11

France

6

Italy

6

Sweden

5

France

6

top 5 countries of origin of imports 1962 exporter Germany

share of import 22

2005 exporter Germany

share of import 18

Belgium United States

19

Belgium

10

11

United States

8

United Kingdom

7

United Kingdom

6

France

4

France

5

Source: NBER-UN World Trade Data, OECD ITCS

The second part of the table shows the top 5 of originating countries for Dutch imports in 1962 and 2005. Here, the second and fourth columns reflect the share of the exporting country in total Dutch imports. While the ranking of exporters has remained the same, a clear trend is discernible: the largest exporters have become less important, which points to a more diversified import structure. The relative fall in imports from Belgium is a notable feature.


The Netherlands are geared comparatively strongly to trade within the eu, and in particular to trade with the six original member states. For exports, this bias has strengthened rather than weakened in the past fifty years. For Dutch imports, by contrast, the diversity in exporting countries appears to have increased. For the Netherlands as a transit country, European integration has primarily affected the volume of traded goods and to a much lesser extent the provenance and destination of trade.

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B4

The economy of the internal market

The Treaty of Rome describes market integration as a means of promoting prosperity. This chapter outlines the trade-off between the economic advantages of market integration, the distribution effects and the differences between member states that have to be overcome to achieve market integration. Understanding these considerations helps to understand the developments of the past fifty years. In addition, it provides a reference for future steps in the internal market, which are discussed in the next chapter.

4.1

Means and objective

What determines the size of a market? Why are many goods tradable worldwide but is the regional migration of workers limited even within a country? In answering this type of question we emphasise the consideration made in every integrating step between the advantages of a larger market, the necessary changes in policy and the other consequences for the member states.1 It is accordingly a consideration between the means of market integration and the objective, as formulated in the second article of the Treaty of Rome: ‘to promote throughout the Community a harmonious, balanced and sustainable development of economic activities, a high level of employment […], sustainable and non-inflationary growth, a high degree of competitiveness and convergence of economic performance, […] the raising of the standard of living and quality of life, and economic and social cohesion and solidarity among Member States’. The first advantage of market integration is that countries can specialise in the production of goods and services in which they have a relative advantage. For consumers this implies an ample supply of goods and services at a low price. The second advantage is that businesses are able to produce on a larger scale and hence more cheaply. For development costs can be allocated over a large number of products: the price remains low and innovation increases. (Swedish furniture is a good example. Owing to extensive supplies of wood, Sweden has been able to specialise in wooden furniture and owing to the large sales market, prices remained low and innovation proved profitable.) The third advantage of a large market is the spreading of risk. For consumers for instance that means that they are more certain to obtain their products if they can source them from several countries. A similar story applies to integration of the labour market. Workers are able to specialise further in a larger market. For workers, and highly educated workers in particular, free movement means a better chance of finding a job, and for businesses a wider choice of staff. Because workers find jobs that suit them best, a larger market can increase their productivity. Two forms of diversity limit the intensification of the internal market, which are diversity in starting positions and differences in outcomes. Differences between countries can hamper or constrain free movement between countries. These can include differences in culture and language, for instance, as a result of which a foreign employee cannot ‘simply’ be taken on in a domestic company. Another example is differences in institutions and regulation, hampering

1

We derive this consideration from Alesina and Spolaore (2003), who use it to explain the size of countries.


cross-border services and investments. Even more than formal trade barriers, these differences are the main obstacles for free movement today. The second form of diversity that plays a part are differences in outcomes, as part of which one member state can benefit more than another member state. Debates on the accessibility of the labour market for workers from the new member states show the potential importance of this diversity. For instance, new member states often benefit from emigration while prosperity in old member states does not improve at all or only very little.

Figure 4.1 Economic considerations in internal market policy internal market policy

conditions

economic effects

- country-specific factors - culture - institutions and regulation - geography

- efficient market operations - competition - innovation - distribution of knowledge

- national policy freedom

- unequal distribution

In this chapter we will further explore the consideration we have briefly sketched here, by reference to figure 4.1. On the right are the economic effects of free movement and the comment that these effects may be distributed unequally between the member states. On the left are two factors that affect further market integration.

4.2

Market integration and production

The classic effects of market integration, specialisation and upscaling, lead to greater competition, higher productivity and a greater supply of products at a lower price.2 How great is the effect of the internal market on gdp in Europe? Estimates of this differ, if only because the counterfactual ‘what would Europe look like without the internal market’ is not clear. Existing studies of the contribution of the internal market assume different counterfactuals, but all find a favourable effect. The first estimate of the potential effect of the internal market comes from the European Commission (1988) in the Cecchini Report. It concluded that gdp in the eu could increase by 4.5% through further market integration in line with a proposed programme that expired at the end of 1992. A recent estimate by Badinger (2005) pegs the increase much higher, with an increase of gdp in the eu15 and also in the Netherlands by some 25% due to increased market integration since 1950. His counterfactual therefore is a constant level of market

2

Feenstra (2006).

B4 The economy of the internal market

105

integration since 1950.3 However, this overestimates the influence of the eu for two reasons. First, the increased market integration is not just a consequence of eu policy, but also of a reduction in trade costs owing to factors including technological progress for instance. In addition the increase of market integration can be attributed to a significant extent to the integration with non-eu-countries as part of gatt. The cpb (2005) estimates that the intra-eu-trade is 30% to 60% higher than if the fifteen countries at that time had not been members of the eu. As a result of this extra trade the average European is earning around 4 10% more. Notably, these studies consider mainly the importance of increased trade in goods. The free movement of services, capital and labour remains underexposed. This is natural for services because the measures for free movement are fairly recent. The potential effects however are considerable: Kox and Lejour (2006a and 2006b) show that intra-eu-trade in services can rise by 30 to 60% and that bilateral direct investments in services can increase by 20 to 35% if the heterogeneity in regulation is eliminated. This means gdp can increase by some 0.3 to 0.7%. The gdp effects for the Netherlands are slightly more pronounced, due to strengthening of its specialisation in commercial services. Free movement of capital includes foreign investments. fdi can lead to a higher level of production, of both domestic supplier and customer businesses. According to Egger and Pfaffermayr (2004a) the announcement of accession to the internal market produces an increase of foreign direct investments by 20 to 40%. For an acceding eu country this can lift gdp by 2 to 4%.5 After accession however there is no extra growth of foreign investments. Because of the larger internal market the eu can also become more attractive for investors from outside the eu. Mold (2003) however does not find convincing indications of an additional eu effect. According to the London School of Economics (2002) gdp can rise by 1.1% in the long term if the equity and bond markets in Europe are integrated. The gdp increase results from higher investment, greater consumption and more employment. The costs of capital can fall by 0.5%. As regards the free movement of labour Boeri and Brücker (2005a) estimate that 3% of the population in the new member states will relocate to the old member states in the coming 30 years. Because the migrants will work in an environment in which they are more productive, gdp per capita in the eu can increase by 0.5% (100 euros per inhabitant), but as has been stated previously, such a gdp increase could be divided unequally between the member states. This advantage arises only if two conditions have been met (Sinn 2004): labour markets must be sufficiently flexible to be able to guarantee the influx and flowthrough of workers and access to the welfare state must be subject to certain conditions.

3

4 5

His calculation comprises two steps. First he constructs an index of market integration, based on the decline of trade costs and tariffs. This index rose particularly strongly in the years after 1967, when it was agreed under the GATT (the KennedyRound) to reduce the tariffs by 47%. In the second step Badinger shows that this index of market integration made a positive contribution between 1950 and 2000 to production levels in the EU. The intermediate step taken here is based on Lewer and Van den Berg (2003) who estimate that an increase in trade by 1% lifts income by an average of 0.2%. Roy and Van den Berg (2006) show for the US that if the share of FDI is higher by 10 percentage points, this will lead to 0.17% higher growth over a period of 30 years (19702001). If we apply this estimate for the US to a typical EU country with an FDI share in the GDP of around 20%, this leads to 0.07-0.14% higher growth, which leads to the GDP effect of 2-4% over a period of 30 years.


Dynamic effects of market integration6

4.3

‘A dynamic Single Market is the keystone to Europe’s economic growth.’ (Sapir et al. 2004) Can the internal market support a more dynamic, innovative and competitive economy and thereby promote economic growth in Europe? We draw a distinction between three channels through which market integration can lead to greater productivity: more competition, more innovation and a larger market for knowledge. For a detailed overview see Nordas et al. (2006).

4.3.1

Competition

More trade produces more competition, which reduces profit margins and pushes prices down. This leads to higher production by a smaller number of businesses, after the least productive businesses have left the market. Average productivity per employee therefore rises if competition increases due to trade. An empirical fact underlying this effect of trade is that the productivity of businesses and their workers differ. One business produces efficiently at low costs and is profitable. Another produces much less efficiently and is barely able to avoid bankruptcy. More competition as a result of opening up markets leads to a reduction in profit margins, meaning only the more productive businesses survive (Del Gatto et al. 2006; Melitz 2003). This competition effect does not mean that only the most productive sectors survive in an international market. Nor does it mean that a country will only have chances in the international market if it specialises in advanced technology. After all, demand continues to exist even for products with lower added value. Market integration increases demand because businesses do not only produce for the national market but also for foreign markets. For countries, how they produce is more important than what they produce. The Netherlands for instance is competitive in the cultivation of flowers, not because flowers are the high-tech-sector par excellence, but because Dutch businesses apply the latest technology.

4.3.2

Investment and innovation

A number of opposing effects determines the influence of a larger market on innovation.7 A larger sales market means that development costs will fall in relative terms. In addition, competition in a larger market increases the need for businesses to innovate. Greater competition however also leads to lower profits, as a result of which the financial scope for innovation diminishes. Similar arguments also apply to investments: returns per product sold can decline, but total sales can increase. The oecd study by Nordas et al. (2006) concludes that investments are one of the main channels between trade and productivity. If both trade and fdi are possible, a business can select the country with the lowest production costs and start exporting from there. More trade leads to higher returns owing to 6

7

Dynamic effects are the effects on GDP via the change in production structure that is initiated by market integration. The statistical effects assume advantages of trade by reallocation of production factors (given the production structure). Economist often debate whether the dynamic effects lead to permanently higher growth. There is little convincing evidence that growth is permanently increased, but it certainly is temporarily, as the studies in the preceding sections also show. These opposite effects form the basis of the ∩-curve between competition and innovation, whereby increasing competition initially generates more innovation but subsequently impedes it (Aghion et al. 2005).


107

economies of scale, competition and lower costs of capital goods. This ensures a better capital allocation. For investments the balance of stimulating and impeding effects of trade on productivity is clearly positive. In addition to trade, fdi also generates an increase in productivity. For two reasons: incoming foreign investments are on average more productive than existing domestic businesses in the same market segment, and the knowledge and technology of multinationals can have a beneficial effect on the productivity of competitors (who can adopt the technology), suppliers and customers. Much less is known in the empirical literature on the influence of market integration on innovation. The ambiguity of the stimulating and impeding factors translates into a range of outcomes. An additional problem is that the returns of innovation, for instance in the form of Research & Development (R&D), are often harder to appropriate than the returns on investments. This already applies in a national economy, but the more so in an international context in which intellectual property rights are often provided for on a national basis. Van der Horst et al. (2006) provide an illustration of the potential effects of the internal market for private R&D expenditure. In countries with a larger domestic market the share of private R&D spending in gdp is higher on average. Examples of this are France and the United Kingdom (with an R&D share of respectively 1.4% and 1.3% gdp) and especially Japan and the United States (respectively 2.5% and 1.9% gdp). The private R&D expenditure of the eu, at 1.2% gdp, is lower. This outcome suggests that further market integration in the eu can lead to an increase of private R&D expenditure by 0.5% gdp. According to the simulations of Gelauff and Lejour (2006) this can lead to an increase in gdp in the eu by some 1.5%.

4.3.3

Knowledge

A familiar statement is ‘Two know more than one’. But more importantly: two discover more than one. Knowledge will increase faster in a large country, or a small country in an open world, than in a small closed-off country. In a large market for knowledge there will be a greater exchange of ideas, which will be capable of being applied on a larger scale (unless differences in language and culture limit communication). How can the internal market provide a contribution to the development and exchange of knowledge? The development of knowledge was addressed in the preceding section, the exchange of knowledge has not yet been discussed here. The importance of distance and national borders in the exchange of knowledge depends strongly on the type of knowledge. A portion of the knowledge, especially scientific knowledge, is not bound to specific goods and does not stop at borders. This knowledge is freely accessible to everyone, throughout the whole world. A major portion of the knowledge and technology is embodied however, which is to say it is bound to the product that was developed with that knowledge. Trade is required to import that knowledge. Studies show that the development and application of knowledge (in industry and in services) is often strongly local.8 The empirical literature states that spillovers from R&D efforts are important across short distances, but declines sharply over larger distances (see Brakman et al. 2005). This even applies to the development of information and communication technology, as Silicon Valley 8

See Audretsch and Feldman (2004) and Van der Horst et al. (2006).


shows us. Although a great deal of knowledge can be exchanged simply via the internet worldwide, it nonetheless turns out to be important that the development and application of knowledge is clustered. See for instance financial services: the trade is worldwide but often businesses are established in London and other financial centres.

4.3.4

Size of dynamic effects

What can these dynamic effects produce? Lejour et al. (2006) have shown that the dynamic effects of eu membership are crucial for the new member states to enable them quickly to advance to the average income levels of the old member states. They show that common eu membership increases trade between two member states by around 34%. This extra trade allows income in the new member states to rise by 23%.9 Del Gatto et al. (2006) have identified a significant effect of trade costs on productivity. On average a 5% reduction of the intra-eu-trade costs causes a 2% higher level of productivity.

4.4

Distribution effects

Do all member states profit more or less equally from increasing market integration? On the smallest scale: where two parties trade both of them will benefit, otherwise the transaction would not take place. Does this rule also apply on the larger level, in other words, do all member states benefit from further market integration? The studies on the economic effects of trade referred to in section 4.2, show that all member states benefit. By way of example: Badinger (2005) puts the advantages of economic integration between 1950 and 2000 at 26% of gdp (in 2000) for the eu as a whole. For the member states the advantages vary between 22% in Sweden and 29% in Portugal. The spread in the economic effects of the services directive is larger. With a maximum increase in trade in services (62%) the change in gdp varies from –0.5% for Ireland to 4.9% for the Czech Republic, according to De Bruijn et al. (2007). For most new member states the trade and welfare effects are above average because their trade in services is at present still hampered by comparatively extensive regulation. The Netherlands has not demonstrably benefited more in terms of economic growth from the internal market than other countries. That is surprising because the Netherlands as an open country benefits greatly from free movement. Of course, the Netherlands was already a trade nation even before the creation of the eec and moreover, the services sector in the Netherlands enjoyed relatively strong growth even without trade liberalisation. Unequal effects can arise because market integration offers the option to businesses and consumers to better utilise existing differences. An example of this is Ireland, an attractive location for us multinationals due to its low corporate income tax and other factors. These multinationals did not establish themselves in other member states with less attractive conditions for business location, partly because they judged one location to be sufficient in the integrated European market (Grimes 2003). Ireland, through these direct foreign investments, has benefited more than other member states from the internal market.

9

Lejour et al. (2006) point out that EU membership can also stimulate the quality of the institutions in countries. If these institutions improve, trade increases by another 22% toe, leading to an additional increase in income of 15%.


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Unequal effects can also arise in the migration of workers. The income of the migrants themselves, and to a lesser extent of the population of the originat10 ing country, will generally increase. For the recipient countries there can be a negligibly small adverse effect, according to many studies of the economic effects of immigration. Other studies show a positive effect.11 According to Boeri and Brücker (2005) immigration has a positive effect on per capita income of the recipient country if the labour market is flexible, but can produce negative effects if wages are not able to adapt sufficiently to the inflow of migrants. Lejour et al. (2001) show that per capita income in the destination countries can decline, depending on the level of education of the migrants. The accessibility of and the demands the migrants impose on the welfare state will also determine the effect on the recipient country. The income effect on the recipient country is the net effect of the distribution effects. Migrants themselves, employers and fellow workers performing work dovetailing with that of highly educated migrants benefit from free movement. Empirical studies however show that the labour market prospects of indigenous workers with comparable knowledge and experience decline in the recipient country; especially in the short term but sometimes also in the longer term. For example Noailly et al. (2005) found that the relatively lower salaries for highly educated science and technology graduates in the Netherlands could only be explained by the relatively large inflow of highly educated foreign science and technology graduates. If on average the internal market boosts welfare, does this not apply for everyone?12 At an individual level the welfare state produces redistribution within a country: the immigrant contributes, through taxes and social security contributions, to the income of the unemployed. Redistribution between countries is much more difficult however. In principle the cohesion fund or the net payment position can be used for this purpose. Or new funds that are similar to the globalisation fund can be created to finance the adjustment to free movement (Ilzkovitz et al. 2007). Determining the extent of that redistribution is not easy. The example of the common agricultural policy, where free movement of agricultural products was coupled to price support, shows how difficult such compensation can be in practice and how it can in the end lead to undesired effects. Free movement generally produces advantages, but the examples in this section show that not everyone benefits. Some may even suffer adverse effects. In a heterogeneous union, with major differences between member states, it is more likely for unequal effects to arise than in a more homogeneous union.

4.5

Market integration and diversity

Εσωτερική αγορά is Greek for the internal market and there are 21 other official names for it as well. That these language differences form an impediment to all of the four freedoms, is not something we need to explain here. These and other impediments for market integration bring us to the left side of figure 4.1, the diversity in culture, institutions, geography and national policy freedom. Major differences between countries can hamper market integration. A recent example is the internal market for services. Kox and Lejour (2006a) show that differences in regulation significantly hinder free movement. Eliminating these differences will provide a major impetus to trade in services, but that is still a 10 11 12

The economic development in the emigration countries may however be slowed down if their ‘best people’ leave. Bauer and Zimmermann (1999). Boeri and Brücker (2005a) discuss this question extensively.


bridge too far at the present time, although the modified services directive is a first step. The mutual recognition of national regulation, which preserves the mutual differences, has not proved feasible so far. Another example is the proposal to harmonise corporate income tax in Europe. The proposals are a compromise between the advantages of the internal market (businesses in each member state calculate their corporate income tax return in a uniform manner) and the desirability of not pushing tax policy up to the European level but leaving it with the member states instead. Van der Horst et al. (2007) show that this compromise will provide few gains in terms of production or prosperity. Diversity in culture and regulation can likewise reduce the effectiveness of internal market policy, as discussed in chapter B2. If trade in a certain type of services is primarily determined by cultural and language factors, the decrease of non-discriminating regulation will not lead to a large flow of migration. European Outlook 4 (cpb/scp 2006) qualifies this effect: cultural differences can also lead to extra trade because of the variety in products and services. Although cultural diversity as a rule limits market integration, we do not advocate homogeneity. We consider cultural diversity as a treasure and a fact.13 It will continue to exist in the future, as will geographical differences between member states. But just as developments in transport can reduce the impeding effect of geographical distances on market integration, the impeding effect of cultural distance is not a constant. The question of how policy initiatives can influence this impeding effect however exceeds the scope of this Outlook.

4.6

Free movement or free policy

An intensification of the internal market can in many instances only be realised by the surrender of some national policy freedom.14 It is important in this context to draw a distinction between discriminating and non-discriminating regulation (see table 2.1). Examples of discriminating regulation are trade tariffs, a ban on foreign labour, and checks and restrictions on foreign capital. Reducing or eliminating that regulation is often possible without major intervention in domestic institutions. That is one of the reasons why great progress was achieved in the first years of the eec on the integration of national markets. The current policy initiatives for market integration often concern modifications of non-discriminating regulation (see chapter B2). That makes it more difficult to deepen the internal market. Policy that mainly serves other goals must be revised to stimulate free movement. Often this concerns policy that is closely related to the heritage of a member state or intertwined with its own institutions and culture. Surrendering policy autonomy in these areas, in the service of the internal market, can limit member states in their options for tailoring policy to the national situation or preferences. Ederveen et al. (2006) and European Outlook 4 (cpb/scp 2006) extensively discuss this tension between national and European policy. According to the principle of subsidiarity primacy lies with national policy, which dovetails more closely with country-specific characteristics, while coordination at a European level has to be motivated on the basis of economies of scale and policy externals. 13 14

Article 1 of UNESCO’s Universal Declaration on Cultural Diversity: Cultural diversity is part of our common history and is experienced by every one of us now. If policy comes under the scope of acquis communautaire this reduces the scope for individual member states to follow their own course.


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In the past 50 years first 6 and eventually 30 European countries (including Norway, Iceland and Liechtenstein) let the advantages of a common market weigh heavily and took major steps in that direction. It now seems that the distribution effects and differences in starting positions less readily allow the balance to tilt towards the economic advantages of market integration. The concluding chapter discusses potential steps towards further market integration.

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B5

Outlook for new internal market policy

5.1

Introduction

The preceding chapters showed that for labour and services especially, the national markets are less closely interwoven than for goods and capital. In part that is down to their nature. Services are less readily tradable than goods, due to the often necessary proximity of consumer and producer for a successful transaction. And with regard to labour, citizens are not all that mobile, even if all barriers are eliminated. However, it emerged in chapter B2 that the limits of the free movement of labour and services have not yet been reached. That likewise applies to the free movement of goods and capital. National goods and capital markets are much more closely intertwined, but the full potential for integration has not yet been utilised. In chapter B4 the substantial contribution of the internal market and its precursors to the volume of trade, production and income was discussed. Now that the simpler forms of market integration appear to be exhausted, the question is: do we want to take it even further? Perfect integration in the sense that goods, capital, labour and services should move as easily between the Dutch cities Tilburg and Eindhoven as between Tilburg and the nearby Belgian city of Turnhout appears to be unattainable (if only because of cultural differences). And perhaps it is not even desirable given the policy efforts required and resulting distribution effects. Federal states such as the United States and Canada do not meet the ideal of perfect integration either, although trade among the American states and among Canadian provinces is often greater in relative terms than it is among the eu member states. In the us there is limited integration of financial and insurance services, because the states often apply their own sets of regulation. Another example is the recent Trade, Investment and Labour Mobility Agreement between the Canadian provinces British Columbia and Alberta, which aims to coordinate regulation to promote market integration.1 This chapter looks ahead. Which prospects can we distil from the development of the internal market for the four proclaimed freedoms? According to Article 2 of the Treaty of Rome improving prosperity and closer cooperation are the main goals of market integration. What can further market integration offer and what efforts would that require? For each of the four freedoms we discuss the advantages, drawbacks and conditions, as depicted in figure 4.1, without pretending to be exhaustive or to arrive at a fully balanced final assessment. We will restrict ourselves to policy that is directed at regulation as impeding factor for further market integration. Policy that influences other factors, such as physical distance, cultural, ethnic and political differences, will not be considered. We also consider knowledge. This is sometimes referred to as the fifth element in free movement, but, as stated in chapter B1, that also applies to the freedom of establishment and the freedom of payment transactions. The development and dissemination of knowledge is a crucial element of the Lisbon agenda, the agreement between eu heads of government that the eu should by 2010 be the most competitive and dynamic knowledge economy in the world. The prospect 1

According to The Economist (2007) the treaty is a response to the failure to achieve further market integration in Canada as a whole.

B5 Outlook for new internal market policy

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of further market integration is not just interesting because of the fact that the Treaty of Rome was signed fifty years ago. It is also topical because the European Commission is evaluating its internal market policy in the current year and is likely to generate new policy initiatives.

5.2

Freer movement of goods

Following the elimination of mutual import tariffs, the establishment of common import tariffs for the external borders of the eu and simplified customs procedures, access to foreign goods markets was still marked by impediments. An important barrier was formed by the technical requirements for goods, as described in chapter B2. Harmonisation of technical requirements and mutual recognition have largely eliminated these barriers. The extra costs of multiple assessment of standards can on average amount to 2% to 10% of production costs. But even if mutual recognition operates effectively, double assessment cannot always be prevented. Small and medium-sized businesses in particular have to contend with this for products that are not specifically tailored to the individual client but are also no mass products. Thanks to the active stance of the European standardisation institutes substantial progress has been made on the harmonisation of technical requirements. The standards are largely developed on a voluntary basis and financed by the market parties (European Commission 2001). Today, 80% of standardisation efforts take place at the European or international level. This prevents a proliferation of national standards. It can take up to eight years however before a standard has been developed and agreed (European Commission 2001). The principle of mutual recognition applies to all products for which there are no eu directives and regulation. Around 25% of all intra-eu-goods trading is subject to the principle of mutual recognition. The European Commission (2007) however argues that the principle of mutual recognition does not operate effectively, because: 1 businesses and national governments are insufficiently aware of the principle of mutual recognition; 2 there is a lack of legal clarity as to the scope of this principle and the burden of proof; 3 businesses are exposed to the risk that their product will not be accepted in the recipient country; 4 there is a lack of dialogue between the authorities of the member states, as a result of which there is no common terminology on mutual recognition. In February of 2007 the European Commission presented a number of options to improve the application of mutual recognition. The first is improvement of the provision of information by means of a website for businesses and relevant authorities for all products to which the principle applies. A second option is a decree on the rights, obligations and burden of proof procedures of the countries. A third option is product desks that provide information on technical rules in a member state to businesses and the authorities in other member states.


The European Commission (2007) estimates that intra-eu-trade for products that are subject to the principle of mutual recognition is around 45% lower 2 than in an ideal internal market. This ideal is not attainable because it ignores transport costs and the limited tradability of certain goods and services. If intra-eu-trade for products that are subject to this principle increases by 20%, gdp in Europe can increase by 0.2%.3 In view of the limited costs of the directive and its minimal effect on national policy autonomy this proposal for further integration of the goods markets would appear to have a positive welfare effect. Part of the lack of clarity and information is tackled at the root by this proposal, but the question is whether the solution is sufficient. Harmonisation instead of mutual recognition can lead to greater trade and gdp effects, but this has to be weighed up against the additional efforts to achieve harmonisation. Providing improved foreign access to public tenders for government projects could also promote goods market integration (ser 2004 and Ilzkovitz et al. 2007). The volume of government projects accounted for 16% of European gdp in 2001, of which only a small portion was awarded to foreign suppliers. An effective opening of these markets can considerably increase trade in goods and services. Our conclusion is that further market integration is possible in the goods markets. Further market integration generates positive welfare effects. These will probably be smaller than in the past and require greater effort to achieve. Does the introduction of the aforementioned points lead to full market integration? All direct barriers between the national goods markets do appear to have disappeared, but there are still indirect barriers. Businesses often experience problems in recovering vat paid abroad. With a harmonised vat system with 4 an identical basis and identical rates, these problems are much smaller. A harmonised system however contravenes the national autonomy of taxation policy and therefore does not appear to be a feasible option for the time being.

5.3

Freer movement of services

We will focus here on the free movement of commercial services, such as transport, financial services, retail and wholesale, network sectors and other commercial services. Chapter B4 argues that the benefits of free movement of services can be substantial. The debate on the services directive has however clearly highlighted the tension between community policy and national preferences and cultures. Some member states want to leave more to the market, other countries more to government. Moreover the Directive requires the member states to trust the

2

3

4

This calculation assumes that in an ideal internal market the share of domestically produced goods and services in the consumption in a country is equal to the share of production of that country in the EU. The current trade of this type of goods is 5.4% of the GDP (European Commission 2007). An increase of 20% related to the average elasticity of trade on income of 0.2 leads to a GDP increase of 0.2%. This estimate of the GDP is near the minimum effect presented by the European Commission (2007). See for instance Ilzkovitz et al. (2007) and SER (2004).


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quality of each other’s regulation. Because this trust is insufficiently manifest, the articles in the directive on the acceptance of each other’s regulation (country of origin principle) have been modified. Access to service markets is unequal in Europe. Indicators for product market regulation in table 2.3 reveal that in some eu member states the impediments are much larger than in others. That applies generically for services, but especially for professional services. Market access restrictions not just hamper the inflow of new domestic suppliers, but also of foreign suppliers. More market integration is possible through improved market access and less restrictive rules for entrepreneurs’ conduct. In countries where regulation is more limited, this slackening does not appear to entail major adverse effects. Distribution effects do occur, since the protected suppliers have to face with more competition. For the economy as a whole the advantages of further market integration appear to be present, provided careful regulation is introduced. However the resistance in for instance the Mediterranean countries to liberalisation is sometimes so effective that improved market access is very hard to achieve. Although the amended services directive has been accepted by the European Parliament and the European Council, the limits of market integration have not yet been reached. Yet the debate on freer movement of services has shown that adaptation of regulation is not easy and no significant results should probably be expected from general measures. Further market policy will have to come about above all as a result of specific policy. The World Trade Organisation wto distinguishes around one hundred and sixty sub-sectors in services. We do not want to argue a need for specific policy for each of these sectors, but differentia5 tion does appear to be required. Below we will discuss a number of options for further market integration in financial services and network industries.

5.3.1

Financial services

Financial integration in the form of shares, cash, bonds and foreign investments has been discussed under free movement of capital. The present section looks mainly at services for consumers. Interest rates for consumers differ widely in Europe and also within the emu area. Additionally, costs for international transactions are often much higher than for domestic transactions. The European Commission has proposed the payment services directive, which introduces uniform rules as from 2012 and promotes competition. This should lead to lower transaction costs. In addition there will be directives for mortgage loans and consumer credits that are designed to promote international competition. In the Financial Services Action Plan a number of cautious steps are taken in the direction of an internal retail market, directed at small businesses and private individuals. But on mortgage loans the Commission suffices with 6 a recommendation on the provision of information. The Dutch ministry of Finance accordingly concludes: ‘[…] there continue to be numerous legal, administrative and regulatory impediments that hamper cross-border purchases or sales of such services (a bank account, mortgage loan, etc.)’.7 Ilzkovitz et al. (2007) argue that the interest rate differences are an expression of limited cross-border banking. The ecb (2006) attributes this to differences in 5 6 7

Canoy et al. (2007) also emphasise the importance of a sector-specific approach for internal market policy. See European Commission, Financial Services Action Plan (FSAP) at http://europa. eu/scadplus/leg/nl/lvb/l24210.htm. http://www.minfin.nl/nl/onderwerpen,financiele_markten/marktintegratie


regulation for consumer protection, divergent tax regulations, structural differences in the banking industry, and the level of technology and competition in the national markets. The question is whether the efforts to reduce these differences produce sufficient benefits. The level of consumer protection often reflects national preferences. Owing to these differences harmonisation in this area does not appear to be simple, but perhaps at least minimum standards for consumer protection can be introduced. Efforts to promote (European) competition can produce very extensive benefits for consumers, although a possible restructuring of the financial sector and the potential elimination of bank branches can cause these benefits to be distributed unequally.

5.3.2

Network industries

Many markets in network sectors, such as telecommunication, electricity, gas, post and transport, have been liberalised since the eighties. But the degree to which the member states have liberalised their market varies widely (Conway and Nicoletti 2006). This impedes the European integration of network sectors. Especially in electricity and gas public ownership is often the norm. The division of tasks (such as production, transport and supply) of monopolists often encounters vigorous resistance, which indicates greater trust in the government than in the operation of the market. More competition could nonetheless lead to higher productivity and lower prices (cpb 2006). A necessary requirement is the physical integration of the networks to transport gas and electricity. International connections are exceptions rather than the rule. They can also contribute to security of supply. As Gual (2007) shows, liberalisation and integration of network sectors is certainly not easy. Sound (European) supervision is important for security of supply in the short and long term and the protection of consumers. Gual also outlines the balance between mutual recognition, regulation by the host country and harmonisation. Regulation by the host country is easy to align with preferences in that country. Mutual recognition and harmonisation can contribute to a level playing field for businesses, but harmonisation in particular can lead to rigidity in regulation. Careful regulation is essential for network industries, even more than in other service sectors. But that does not also mean that the potential for harmonisation of regulation has been exhausted. Further European integration in a number of these markets appears to be possible, especially if national networks are better connected with each other and the tasks of monopolists have been further split up.

5.4

Freer movement of capital

A monetary union is the ultimate integration of the currency markets. It was decided to profit from a single currency, even though this was at the expense of the own monetary policy of the participating member states. That this decision can also go the other way is demonstrated in the rejection of the euro by Denmark, Sweden and the United Kingdom. Formal impediments for international movement of capital hardly exist any longer, especially within the eurozone. But just as with the free movement of goods and services differences in regulation between member states play an important role. Also, the implementation of the directives concerning the free 8 movement of capital is inadequate. 8

Almost all news announcements on the website of DG Internal Market and Services on the ‘free movement of capital’ relate to proceedings of the European Commission or the European Court of Justice concerning the introduction or enforcement of European directives.


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The financial sectors still reflect specific national conditions and preferences (Ilzkovitz et al. 2007). These differences have been made manageable for internationally operating businesses through the home country principle: financial institutions that are active in several member states are subject to the solvency supervision of the financial authority of the home country. That entails that institutions from different member states can offer their services at divergent conditions, which creates a tilted playing field (Appelman et al. 2003 and Gual 2007). Supervision of liquidity is subject to the host country principle, meaning that international financial institutions have to comply with multiple systems of regulation, which drives up costs. The volume of the intra-eu-capital transactions can increase if the recommendation of ecb-Director Jean-Claude Trichet (2005) is followed: ‘In the area of financial regulation and supervision, a key objective is to achieve a high degree of regulatory and supervisory convergence across countries.’ The benefits of this increase can exceed the costs of adjusting national regulation, but given the diversity of preferences it is not clear whether the member states want to make any concessions in this regard. Direct foreign investments are hampered by differences in business climate, tax legislation, regulation and explicit restrictions. The latter can consist of conditions on the maximum equity share of a foreign subsidiary, screening and approval procedures or nationality requirements for members of staff and management. Golub (2003) shows that restrictions for eu member states are on average smaller than for other oecd countries. Kox and Lejour (2006a) have shown that these restrictions nonetheless slow down foreign direct investments within the eu. That applies to services in particular, as limitations for foreign investors are on average much more severe than in industry sectors Both the level and the bilateral differences in market regulation between member states slow down foreign direct investments. According to Kox and Lejour (2006a) foreign direct investments in services could rise by 20% to 35% as a result of the services directive. An important element of that directive is a single desk where all information and procedures are available to foreign entrepreneurs. Complete harmonisation of regulation could even double foreign direct investments in services (Lejour 2007). A prerequisite however is that countries give up their own policy, which is not simple. Differences in corporate income tax systems increase the administrative and accounting costs for multinational businesses (Van der Horst et al. 2007). In addition these differences impede international tax loss set-offs and produce significant shifts in profit to member states with favourable tax regimes. This can discourage the establishment of foreign branches. The European Commission (2002) proposes to consolidate the basis for corporate income tax of internationally operating businesses in order to remove this impediment to the free movement of capital. Consolidation means that multinationals (all companies established in two or more member states) only have to submit a single tax return for all their establishments in the eu. The basis for assessment is calculated on all profits and losses achieved in the eu. Following the example of the United States the European Commission is aiming for consolidation while retaining the right for member states to set their own rates for corporate income tax. The differences in rates between the eu member states (varying from 12.5% in Ireland to 39% in Germany) are however much greater


than in the us (a difference of 8% between the highest and lowest rates). Van der Horst et al. (2007) show that these differences are at least as important for the operation of the European capital market as the differences in the basis for assessment. Accordingly they conclude that the greatest improvement in the free movement of capital can be achieved by replacing the current national systems with a European corporate income tax system. Just as the free movement of goods and services is still governed by different vat-systems and rates, the free movement of capital is limited by differences in systems for corporate income tax. This demonstrates that other policies besides internal market policy, in this case taxation policy, affect the operation of the internal market. If further market integration is important for prosperity in the eu, shaping of internal market policy alone will not suffice. National policy in adjoining areas will have to be better coordinated. Given the differences in starting positions and the potential distribution effects it is not a foregone conclusion that this decision will be taken in favour of more market integration.

5.5

Freer movement of labour

Free movement of workers is a basic principle in the eu. As shown in chapter B3, workers appear to be making hardly any use of this. Only when income differences were very substantial, as between the new and old member states, did a large flow of migration emerge. The expected distribution effects have played an important role in the decisions for temporary restrictions for migration from the new member states. European Outlook 4 (cpb/scp 2006) shows that cultural and language differences are limiting migration in Europe. Belot and Ederveen (2007) have shown that the same applies for institutional differences and transaction costs for homes. In addition there are cautious indications that the transferability of pension rights to another country has a positive effect on migration. Wage differences prove in their study to have almost no influence on migration flows, although their sample of oecd countries does not include the new eu member states owing to a lack of data. Lower transaction costs for housing and the transferability of pension entitlements can promote mobility. The current impediments do not make migration impossible but do discourage it (ser 2004). The oecd (2005) concludes that the high transaction costs on house purchases and sales limit regional migration. Adjustment of housing market policy could perhaps promote not only migration between eu member states but also within those member states. However, housing market policy generally aims to meet several national goals, so that adjustment in favour of greater labour mobility in the eu is not likely. The transfer of pension entitlements does not seem simple either, because this depends on the way in which pensions are organised in a country. The allocation system used by many countries hampers the transferability of pensions. Partly owing to the differences in pension systems the member states have failed to reach agreement. Intra-European mobility is greater for the more highly educated than for the less highly educated people. International exchange programmes for students and the scholarships attached to them can contribute to this. Thissen and


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Ederveen (2006) suggest that international student mobility can be a precursor of greater labour mobility. Although there are no conclusive arguments in favour of European coordination of higher education, the effect on the future working mobility of the more highly educated can be a reason for promoting student mobility. Harmonisation of the structure of higher education with Bachelor’s and Masters programmes, as agreed in the Treaty of Bologna in 1999, is a step in that direction. Further initiatives to promote student mobility are a policy option that bring advantages but few drawbacks. In sum, the free movement of workers is limited in practice and is likely to remain limited in the near future. There appears to be little room for policy that substantially increases the free movement of workers without giving rise to tilted distribution effects or intervening in national policy autonomy. Cultural and institutional differences between countries play a large part, especially in reducing non-discriminatory impediments. Before these difficult steps are taken, the temporary restrictions on migration for the new member states can be lifted. The current economic boom with low unemployment can help to absorb potentially negative distribution effects in the recipient countries.

5.6

Free movement and knowledge

Knowledge is often freely (publicly) available, but cannot be disseminated without movement of goods, services, capital and labour. As argued in chapter B4, freer movement can lead to better dissemination of knowledge and growth in productivity. Insofar as free movement leads to better utilisation of knowledge, that is an additional benefit of free movement. An extra argument for free movement of goods and services is that innovations are more profitable in a bigger market (Van der Horst et al. 2006). Moreover, a more accessible market leads to greater competition, which can increase the incentives for innovation. An effective patents system at a European level can likewise contribute to this. Van der Horst et al. (2006) advocate a community patent because patent registration per country and the translation of the patents is disproportionately expensive for businesses. This may explain that 60% of the innovative businesses introduce their new products in national markets, while only 25% do so in other member states (Ilzkovitz et al. 2007). Student mobility was already referred to in the context of the free movement of labour. Other forms of mobility in higher education have not been addressed. Jacobs and Van der Ploeg (2006) advocate higher education and research on a European scale, creating greater competition between European universities. Financing on a European level can help if the amount of the financing depends on the quality of the institution and not on nationality. Van der Horst et al. (2006) conclude that there are economies of scale in financing European research programmes. That also requires mobility on the part of researchers and lecturers. Although the labour market for this type of worker is already partly European or global, culture and language differences, transaction costs and differences in the welfare state limit cross-border migration. Research and development would get an impetus by attracting knowledge workers from outside the union. Today those knowledge workers often go to the us because of its better universities, its larger labour market and English as working language. The limited free movement of labour fragments the European labour market. Labour and residence permits are often issued per country,


which limits the options for high-skilled migrants. The cpb (2007) and the ser (2007) are advocating, for the longer term, a European green card for highly educated migrants under a number of conditions. This initiative could stimulate free movement for highly educated migrants and so make Europe more attractive. The costs appear to be limited, although substantial regulation has to be coordinated at a European level, such as arriving at a common eu definition of ‘high-skilled’. Cornet et al. (2006) conclude that a more friendly access of foreign knowledge workers is a promising option for the Netherlands.

Complementarity in policy The free movement of knowledge is determined to a large extent by the free movement of the four traditional freedoms. The effectiveness of innovation policy and policy to increase productivity therefore depends in part on internal market policy. This complementarity of policy is an important point that needs to be considered in further shaping the internal market. On the one hand, internal market policy influences other policy areas, such as innovation. Conversely, matters such as taxation policy and migration policy influence the operation of the internal market. Moreover, the four freedoms influence each other. Take the freedom of capital. A foreign establishment of a business often requires services and products from the head office. Hence greater international movement of capital leads to greater integration of goods and service markets. But if the movement of goods or services is impeded, the required transactions between head office and foreign establishment cannot take place or only with difficulty. This limits the effectiveness of free movement of capital. This type of complementarity means it is advisable to aim for more integration for all freedoms. Integrated goods, service, capital and labour markets in Europe also contribute to a strong Economic and Monetary Union. Monetary policy in the EMU is calibrated to the economic situation of the EMU area as a whole. As the situation of individual countries can differ from that, monetary policy is not always optimal for them. The more closely countries are integrated with each other, the more economic cycles will run in parallel and differences in economic situation narrow. In addition to more economic integration the effective operation of national product and labour markets is also important. The European monetary policy will then come closer to the optimum policy for individual countries, which will contribute to the acceptance and stability of the euro.

5.7

Concluding remarks

The internal market has not been completed and the question is whether it ever will. Apart from the question what ‘completed’ means in this context and what the benchmark is, circumstances and perceptions change over time. Markets can always be further integrated, but the relevance and desirability of doing so depend on the circumstances. Globalisation, population ageing, the changing role of government and technological developments affect those conditions (Canoy et al. 2007 and Ilzkovitz et al. 2007). But developments within the eu itself (for instance enlargements, the emu, and Schengen) also affect the desired degree of market integration. Further integration can generate prosperity benefits in the form of a higher production and higher economic growth. But not all member states or groups in the population will benefit from these equally and the necessary steps are not easy. Differences between countries also influence the desirability of common policy. Being part of a


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community can impose limitations on their own policy freedom. The tradeoffs between the impacts of further market integration is different for each of the four freedoms, as this chapter has shown. For services in particular, better market integration can contribute to more prosperity. The potential for market integration for goods and capital likewise does not yet appear to be exhausted. A decision in favour of further integration however is not an unchangeable fact. Changing circumstances and changing preferences can lead to other conclusions over time: the internal market therefore is never complete!

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Publications of cpb and scp The following list contains the previous European Outlooks and a selection of recent publications of the Netherlands Bureau for Economic Policy Analysis and the Netherlands Institute for Social Research concerning Europe and the theme of these European Outlooks. A complete list and the pdf versions of publications can be found on the websites of the cpb (www.cpb.nl) and the scp (www.scp.nl).

European Outlooks (by cpb en scp) cpb/scp (2003). Social Europe. European Outlook 1. Paul Dekker, Sjef Ederveen, Gerda Jehoel-Gijsbers, Ruud de Mooij, Arjan Soede and Jean Marie Wildeboer Schut. The Hague: Netherlands Institute for Social Research. isbn 90-377-0155-8 cpb/scp (2004). Destination Europe. Immigration and Integration in the European Union. European Outlook 2. Sjef Ederveen, Paul Dekker, Albert van der Horst, Wink Joosten, Tom van der Meer, Paul Tang, Marcel Coenders, Marcel Lubbers, Han Nicolaas, Peer Scheepers, Arno Sprangers and Johan van der Valk. The Hague: Netherlands Institute for Social Research. isbn 90-377-0198-1 cpb/scp (2005). European Times. Public opinion on Europe & Working hours, compared and explained. European Outlook 3. Paul Dekker and Sjef Ederveen (ed.). The Hague: Sdu/Ministry of Foreign Affairs. cpb/scp (2006). Diverse Europe. European Outlook 4. Paul Dekker, Sjef Ederveen, Henri de Groot, Albert van der Horst, Arjan Lejour, Bas Straathof, Henk Vinken and Charlotte Wennekers. The Hague: Sdu/Ministry of Foreign Affairs.

cpb publications cpb/zew (2006). Liberalisation of European energy markets: challenges and policy options (cpb Document 138). Ederveen, J.P., G.M.M. Gelauff and J.L.M. Pelkmans (2006). Assessing subsidiarity (cpb Document 133). Horst, A. van der, L. Bettendorf and H. Rojas-Romagosa (2007). Will corporate tax consolidation improve efficiency in the eu? (cpb Document 141). Horst, A. van der, A.M. Lejour and S.M. Straathof (2006). Innovation policy: Europe or the member states? (cpb Document 132). Lejour, A.M., H. Rojas-Romagosa and G. Verweij (2007). Opening services markets within Europe; modelling foreign establishments in a cge framework (cpb Discussion Paper 80). Lejour, A.M., V. Solanic and P.J.G. Tang (2006). eu accession and income growth: an empirical approach (cpb Discussion Paper 72).

scp publications Ethnic Minorities and Integration. Outlook for the Future (2005). Mérove Gijsberts. isbn 90-377-0197-3 At Home in the Countryside (Summary) (2006). A. Steenbekkers, C. Simon, V. Veldheer. isbn 90-377-0292-9 Report on the Elderly 2006 (2006). Alice de Boer (ed.). isbn 90-377-0271-6 Visit our site (2006). Jos de Haan, Renée Mast, Marleen Varekamp, Susanne Janssen. isbn 90-377-0296-1 Sport in the Netherlands (2007). Annet Tiessen-Raaphorst, Koen Breedveld. isbn 978-90-377-0302-3