The European Council approved the plan, and the goal of achieving a single European market by December 31, 1993, accelerated reforms with the EC and increased cooperation and integration among member states. Ultimately, it led to the formation of the European Union.

One obstacle to full economic integration was the Common Agricultural Policy (CAP). During the 1980s the CAP accounted for about two-thirds of annual EC expenditures (revenues were gained from levies on imports and up to two per cent of the value-added tax collected by member states). The CAP encouraged the production of large surpluses of some commodities that the EC was committed to buy, resulting in subsidies to some countries at the expense of others. At an emergency summit meeting in 1988, EC leaders agreed on mechanisms to limit these payments; under the 1989 budget, agricultural subsidies comprised less than 60 per cent of total EC spending for the first time since the 1960s.

Single European Act

The fixed timetable for achieving the single market exposed the EC's need for greater power in order to resolve all the issues surrounding the elimination of trade barriers in time for the deadline. The Council of Ministers had to reach unanimous agreement on every decision, effectively giving any one member state veto power and thus slowing the political process. The Single European Act, introduced in December 1985 and approved by all 12 members by July 1987, established the first major changes to EC structure since the already established Treaties of Rome of 1957. Among the changes was the introduction of the weighted majority system which helped speed up the process of implementing the single market.

The Single European Act also made other important changes. The European Council, which had provided much of the impetus for the single market, was given formal status; the European Parliament was given greater voice and influence; and member states agreed to adopt common policies and standards on matters ranging from taxes and employment to health and the environment. In addition, the Court of First Instance was established to hear appeals of EC rulings brought by individuals, organizations, or corporations; and each member state resolved to bring its economic and monetary policies in line with its neighbours, using the EMS as a model.

Changes in Europe and the EC

Supporters of an economic and monetary union argued that there could not be a single market as long as restrictions on money transfers and exchange premiums limited the free flow of capital. A three-stage plan for achieving EMU was suggested. At the same time, the commission proposed a social charter on human rights.