Question

Research and discuss the impact of the European Economic Area on business in Europe which guarantees the four pillars of the free flow of trade, capital, goods, and labor within member-states.

Answer 1

The European Economic Area (EEA) brings together the EU Member States and three of the EFTA States (Iceland, Liechtenstein and Norway). It was established by the EEA Agreement, an international agreement which enables these three EFTA States to participate fully in the Single Market. It covers the four freedoms, i.e. the free movement of goods, capital, services and persons, plus competition and state aid rules and horizontal areas related to the four freedoms

The objective of the EEA Agreement is to create a homogenous European Economic Area. All relevant EU legislation in the field of the Single Market is integrated into the EEA Agreement so that it applies throughout the whole of the EEA, ensuring uniform application of laws relating to the Single Market.

The free movement of goods and capital has had significant effects on the European economic landscape. Trade in goods and flows of investments have increased since the creation of the single market in 1992, leading to a greater variety of available products for consumers and tougher competition. Furthermore, the EU members of Eastern Europe have been able to attract foreign capital to a great extent after joining the EU. Consequently, economic growth has been positively affected.
The free movement of services does, however, not seem to have been practically realised yet.
So far, there have been no significant indications that trade in services has increased, and neither has competition in services sectors. It remains to be seen whether the Services
Directive will change this. The free movement of persons has also not had any large economic effects, primarily due to the fact that there has not been much intra-EU movement.
Those EU citizens that do move within the union have, however, been shown to be more educated and more likely to work than natives. Fears of negative effects on public finances,wages and employment have been proved unfounded.
The single market has entailed the expected positive effects where it has been properly implemented. The efforts for a deeper integration of the single market for services and enhanced possibilities for people to move across Europe should therefore continue. The single market has come a long way in removing barriers across Europe, but more can still be done.