The European Union was formed after the Second World War to promote cooperation on economic grounds amongst the European countries. The idea was that the nations which do business with one another are reliant on each other economically and will consequently avoid clashes and disagreement amongst themselves.
In the year 1951, six European nations viz. Belgium, France, Germany, Luxembourg, Italy and Netherlands signed an agreement to unite their industries in the coal and steel sector so that there would not be any difference between them in future. After six years, they made a deal of ‘Treaty of Rome’ by forming the European Economic Community (EEC) with the idea of forming a common single market, the community later came to be recognized as the European Union.
The elementary objective of the Treaty of Rome was the formation of a single economic region in Europe based on a universal market. The common market is a phase in the process of international integration which targets to remove all obstructions to intra market trade and plans to merge all the national markets to form a single market which would lead to conditions prevalent in an internal market. The formation of such a market needs liberalisation of business among the Union members and also makes free mobility of certain production factors such as labour, services and necessary capital. It further requires free establishment of business organisations and people in all the regions of the member nations for the purpose of exercising their business and professional activities. (Europa, n.d.). After the Treaty of Rome, the EEC detached all tariffs and duties on the goods which were traded within its territory. However, there were many differences in the requirements of packaging and safety measures followed by each Member nation, these disparities in business practices led to problems in selling the same products all over the European Region. The inability to reach the undisputed agreements required to change the scenario prevented the development of the single European market. In the early 1980s, the national economies of the European nations were disjointed, inflexible and very uncompetitive. European Union adopted ‘The Single European Act’ in 1986 under which certain important unanimous decisions could be taken to construct a boundary-less single market by the end of 1992. During this period, the EU formed one common regulation system for all its members and started following the code of joint recognition. In the early years of its formation, the European Union had crossed two major obstacles to the economic incorporation of Europe. They were the formation of custom union where the custom duties were removed, and the development of a general agricultural plan which was required for the liberal movement of agricultural products between the members of the European Union