The European single market, also known as the European internal market or the European common market, is the single market comprising mainly the member states of the European Union (EU). With certain exceptions, it also comprises Iceland, Liechtenstein, Norway (through the Agreement on the European Economic Area), and Switzerland (through sectoral treaties). However, it does not include the special territories of members of the European Economic Area. The single market seeks to guarantee the free movement of goods, capital, services, and people, known collectively as the four freedoms of the European Union. This is achieved through common rules and standards that all participating states are legally committed to follow.
Any potential EU accession candidates are required to make association agreements with the EU during the negotiation, which must be implemented prior to accession. In addition, through three individual agreements on a Deep and Comprehensive Free Trade Area (DCFTA) with the EU, Georgia, Moldova, and Ukraine have also been granted limited access to the single market in selected sectors. Turkey has access to the free movement of some goods via its membership in the European Union–Turkey Customs Union. The United Kingdom left the European single market on 31 December 2020. An agreement was reached between the UK Government and European Commission to align Northern Ireland on rules for goods with the European single market, to maintain an open border on the island of Ireland.
The market is intended to increase competition, labour specialisation, and economies of scale, allowing goods and factors of production to move to the area where they are most valued, thus improving the efficiency of the allocation of resources. It is also intended to drive economic integration whereby the once separate economies of the member states become integrated within a single EU-wide economy. The creation of the internal market as a seamless, single market which the Commission consider to be "one of the European Union's most significant achievements"Eur-Lex, Communication from the Commission to the European Parliament, the Council, the European Economc and Social Committee and the Committee of the Regions: A Common European Sales Law to facilitate Cross-Border Transactions in the Single Market, COM/2011/0636 final, "Context" section, published on 11 October 2011, accessed on 25 October 2025 is also an ongoing process, with the integration of the service industry still containing gaps.European Commission, Completing the Single Market, archived on 17 February 2012 According to a 2019 estimate, because of the single market the GDP of member countries is on average 9 percent higher than it would be if tariff and non-tariff restrictions were in place.
History One of the core objectives of the European Economic Community (EEC) upon its establishment in 1957 was the development of a common market offering free movement of goods, service, people and capital. Free movement of goods was established in principle through the customs union between its then-six member states.
However, the EEC struggled to enforce a single market due to the absence of strong decision-making structures. Because of protectionist attitudes, it was difficult to replace intangible barriers with mutually recognized standards and common regulations.
In the 1980s, when the economy of the EEC began to lag behind the rest of the developed world, Margaret Thatcher sent Lord Cockfield to the Delors Commission to take the initiative to attempt to relaunch the common market. Cockfield wrote and published a White Paper in 1985 identifying 300 measures to be addressed in order to complete a single market. The White Paper was well received and led to the adoption of the Single European Act, a treaty which reformed the decision-making mechanisms of the EEC and set a deadline of 31 December 1992 for the completion of a single market. In the end, it was launched on 1 January 1993.
The new approach, pioneered at the Delors Commission, combined positive and negative integration, relying upon minimum rather than exhaustive harmonisation. Negative integration consists of prohibitions imposed on member states banning discriminatory behaviour and other restrictive practices. Positive integration consists of approximating laws and standards. Especially important (and controversial) in this respect is the adoption of harmonising legislation under Article 114 of the Treaty on the Functioning of the European Union (TFEU).
The commission also relied upon the European Court of Justice's Cassis de Dijon jurisprudence, under which member states were obliged to recognise goods which had been legally produced in another member state, unless the member state could justify the restriction by reference to a mandatory requirement. Harmonisation would only be used to overcome barriers created by trade restrictions which survived the Cassis mandatory requirements test, and to ensure essential standards where there was a risk of a race to the bottom. Thus, harmonisation was largely used to ensure basic health and safety standards were met.
By 1992, about 90% of the issues had been resolved, and in the same year, the Maastricht Treaty set about to create an Economic and Monetary Union as the next stage of integration. Work on freedom for services took longer, and was the last freedom to be implemented, mainly through the Posting of Workers Directive (adopted in 1996)Directive 96/71/EC and the Directive on services in the internal market (adopted in 2006).Directive 2006/123/EC
In 1997, the Amsterdam Treaty abolished physical barriers across the internal market by incorporating the Schengen Area within the competences of the EU. The Schengen Agreement implements the abolition of border controls between most member states, common rules on visas, and police and judicial co-operation.
The official goal of the Lisbon Treaty was to establish an internal market, which would balance economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment, with also promoting scientific and technological advance. Even as the Lisbon Treaty came into force in 2009, however, some areas pertaining to parts of the four freedoms (especially in the field of services) had not yet been completely opened. Those, along with further work on the economic and monetary union, would see the EU move further to a European Home Market.
In 2010, José Manuel Durão Barroso, then President of the European Commission, asked former Italian Prime Minister Mario Monti to draft a report on revitalizing the European Single Market. The resulting document, known as the Monti Report, was presented in May 2010 and identified barriers to the internal market while proposing measures to strengthen economic integration and competitiveness. The report laid the groundwork for the "Single Market Act", a set of initiatives launched by the European Commission to enhance the functioning of the Single Market.
Following the Monti Report, the European Union continued to commission high-level reflections on the future of its economic integration. Priority actions identified by "Single Market Act II" in October 2012 included actions in the fields of transport, citizen and business mobility, the digital economy and social entrepreneurship.EUR-Lex, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Single Market Act II - Together for new growth, COM(2012) 573 final, page 5, published on 3 October 2012, accessed on 27 October 2025
In April 2024, Enrico Letta, former Italian Prime Minister and President of the Jacques Delors Institute, presented the Letta Report, Much More Than a Market, which called for a strategic renewal of the European Single Market to support the green and digital transitions, enhance economic cohesion, and promote a "fifth freedom" focused on knowledge and innovation. Around the same time, Mario Draghi was tasked with preparing a report on European competitiveness, addressing long-term structural reforms needed to boost productivity, resilience, and the EU's global economic standing.
Four freedoms
The "four freedoms" of the single market are: Free movement of goods Free movement of capital Freedom to establish and provide services Free movement of labour.
Goods The range of "goods" (or "products") covered by the term "free movement of goods" "is as wide as the range of goods in existence".Publications Office of the EU, Free movement of goods: Guide to the application of Treaty provisions governing the free movement of goods, page 9, © European Union, 2010. Reproduction is authorised provided the source is acknowledged, save where otherwise stated. Published 7 July 2010, accessed 3 January 2021 Goods are only covered if they have economic value, i.e. they can be valued in money and are capable of forming the subject of commercial transactions. Works of art, coins which are no longer in circulation and water are noted as examples of "goods". Fish are goods, but a European Court of Justice ruling in 1999 stated that fishing rights (or fishing permits) are not goods, but a provision of service. The ruling further explains that, both capital and service can be valued in money and are capable of forming the subject of commercial transactions, but they are not goods.European Court of Justice, Sixth Chamber, Case C-97/98 Peter Jägerskiöld and Torolf Gustafsson on the interpretation of the rules of the EC Treaty on the free movement of goods and the freedom to provide services, 21 October 1999, accessed 3 January 2021
Council Regulation (EC) 2679/98 of 7 December 1998, on the functioning of the internal market in relation to the free movement of goods among the Member States, was aimed at preventing obstacles to the free movement of goods attributable to "action or inaction" by a Member State. The regulation empowered the commission to request intervention by a Member State when the actions of private individuals were creating an "obstacle" to free movement of goods. A resolution was adopted by the council and member state government representatives on the same day, under which the member states agreed to take action where necessary to protect the free movement of goods and other freedoms, and to issue public information where there were disruptions, including their efforts to address obstacles to free movement of goods.Official Journal of the European Communities, "Resolution of the Council and of the Representatives of the Governments of the Member States, Meeting Within the Council of 7 December 1998 on the free movement of goods", L337/10, accessed 1 January 2024.
Customs duties and taxation
The customs union of the European Union removes customs barriers between member states and operates a common customs policy towards third countries, with the aim "to ensure normal conditions of competition and to remove all restrictions of a fiscal nature capable of hindering the free movement of goods within the Common Market".Case 27/67 Fink-Frucht
Aspects of the EU Customs area extend to a number of non-EU-member states, namely Andorra, Monaco, San Marino and Turkey, under separately negotiated arrangements. The United Kingdom agreed on a trade deal with the European Union on 24 December 2020, which was signed by Prime Minister Boris Johnson on 30 December 2020.
Customs duties