Internal Market Law
Summary
Table of Contents
Lecture 1: Introduction......................................................................................................................1
Lecture 2: Free Movement of Goods I............................................................................................6
Lecture 3: Free Movement of Goods II........................................................................................11
Lecture 4: Freedom of Establishment.........................................................................................15
Lecture 5: Freedom to Provide Services.....................................................................................19
Lecture 6: Free Movement of workers and of EU citizens....................................................27
Lecture 7: Free movement of capital and Recap of the previous topics.........................37
Lecture 1: Introduction
Subjects
Introduction to the four freedoms: free movement of goods, persons, services and capital
Benefits of free trade and David Ricardo’s theory of comparative advantage
Stages of economic integration
Positive versus negative integration
Harmonisation
Readings
Articles 3, 4, 26, 114 and 115 TFEU
P Craig and G de Burca, EU Law, Text, cases, and materials (Oxford University Press 2020),
Chapter 18 ‘The Single Market’ p. 641 - 671
Case C-376/98 Germany v Parliament and Council [2000] ECR I-8419 (Tobacco Advertising I)
Internal market in a nutshell (single or common market)
the internal market sets out the four freedoms
Free movement of goods
Goods can move around the EU without barriers
No custom duties on the border
No unfair taxation
No quotas
No restrictions on size, shape, packaging etc.
Basically, no restriction within the EU
o E.g., product manufactured in France can be sold without any
taxes/customs/duties in e.g., Italy.
o French cheese bought in Netherlands not a high price, NL cannot
restrict the sale of this cheese
Free movement of people (workers)
EU citizens can easily go from one EU country to another for family, study or
work purposes
EU citizens do not need a visa to relocate to another EU MS
1
, o E.g., a cook in Spain wants to work at restaurant in Denmark, this cook
can work there for the same price and under the same condition as
Danish citizens
Freedom of establishment and the provision of services
One company registered in the EU MS can provide services in another EU
MS without arranging additional permissions etc.
o E.g., company in France can be contracted to Germany to provide
construction services, does not need many procedures etc.
A company or a self-employed person can fully move their business to
another EU MS (right of establishment)
o E.g., self-employed person decides to do this business somewhere
else, Italian pizza baker can go to NL to make pizza there.
Free movement of capital
You can invest your money anywhere in the EU
European Monetary Union
David Ricardo Theory of Comparative Advantage
No trade between two countries
NL: 5hrs = 1m of cloth / 10hrs = 5L wine / cloth is more efficient
FR: 10hrs = 1m of cloth / 5hrs = 5L wine / wine is more efficient
Total productivity in 40 hours working week: 6m of cloth, 30 L of wine
What happens if trade is introduced
Countries can specialize, so that they can up their maximum efficiency
o Less time more product
NL 5h = 1m cloth
FR 5h = 1L wine
Total productivity in 40 hours working week: 8m cloth and 40L of wine
More product of both which allows them to trade for how much they need.
NL & FR become interdependent on each other
Suppose they invite other countries, and they decide to set up common
institution to make sure everybody plays by the rules.
o Establishment of EU
EU in a nutshell
Established by the Treaty of Rome as the EEC (1957)
Before the SEA (Single European Act, 1987) difficult to achieve the
harmonization of laws between the MS
Adoption of the SEA in 1987 introducing QMV (qualified majority voting)
Subsequent Reform Treaties culminated in 2007 with the conclusion of the
Treaty of Lisbon
Creation of the EEC
2
,The main purpose of the EEC was the creation of long-term normalized, friendly
relations between European nations after WWII through the liberalization of trade.
The EU has never been just a free trade area despite the pro-Brexit narrative
Main goal was preventing wars
Core idea was to live peacefully rather than just free trade
Six stages of economic integration
1. Preferential Trade Agreements (PTA)
An agreement to reduce or remove tariffs on particular goods traded between
two or more nations
2. Free Trade Area (FTA)
An agreement to completely remove tariffs on all goods and some services
between member nations
3. Customs Union
A free trade agreement in which MS also adopt common external tariffs on
non-member nations goods
4. Common Market
A customs union in which members allow for free flow of labour and capital
between MS (with common external tariffs and completely free trade in goods
and services
5. Currency Union
A common market in which MS also share a currency and a central bank.
Each MS forgoes the freedom to determine its own policy. Each MS
determines its own fiscal policy.
6. Complete Economic integration
A currency union in which MS enjoy completely free flow of goods, services,
labour and capital across borders and in which single fiscal autonomy
determines the level of government spending for the economy as a whole.
Watch whole video still
The EEC was a customs union
The EU has a common market
o Higher level of integration
The MS sharing the Euro have entered into a Currency Union (5 th stage) and
there are talks of a Fiscal Union (6th stage)
o Not all MS use same currency
o There also is no fiscal union
Different techniques to achieve economic integration
Negative integration
The founding treaty was largely based on a negative integration approach
o About integration achieved by prohibition to e.g., discriminate
o Annul to diff treatment to products from diff countries
i.e., Mutual recognition – to eliminate obstacles of fundamental freedoms &
remove distortions of competition
In order to enhance and strengthen the objective laid down in treaties there is
a need to harmonize laws on the restriction of free movement
o a textbook illustration of how negative integration works.
3
, o Cassis dijijon case
Positive integration – harmonisation
Positive integration: - I.e.: harmonization or approximation: creation of a common
sovereignty through the modification of existing institutions and the creation of new
ones.
Harmonisation
Art. 114(1) TFEU – can be used to eliminate obstacles to exercise of fundamental
freedoms and be used to remove distortions of competition
Full harmonization
Eu lays down detailed rules entirely replacing MS legislation
Rarely used why? shared competence
Minimum harmonization
Eu sets the minimum threshold under which it is not possible to go under. MS are
free to impose higher standards
Main disadvantage?
Potential race to the bottom (+ so-called ‘Brussels effect’ observed)
Case C-376/98 Germany v Parliament & Council – Tobacco advertising, I
• Parties to the dispute
• Germany (plaintiff)
• Parliament and Council (defendants)
• Legal action
• Action for annulment
• Legal problem
• Did the EU have competence to adopt the Directive on the advertising
of tobacco products?
• Article in question: 114 TFEU
• Art. 100a is mentioned because the decision of the Court was adopted
before the Lisbon Treaty. Therefore, the numbers of articles are
different.
• What did Germany want
• Prohibition to advertise tobacco products in periodicals, magazines and
newspapers
• Prohibition to advertise tobacco products on posters, parasols,
ashtrays and other articles
• What were the plaintiff’s arguments?
• The chosen legal basis (art. 114 TFEU) is not appropriate
• Para 13: Tobacco advertising is an internal issue
• Para 29: Art. 114 TFEU should be available as a legal basis only in
cases where obstacles to the exercise of fundamental freedoms and
distortion of competition are considerable
• Para 34: The center of gravity of the measure is public health
protection
• What were the defendant’s arguments?
• Para 37: Not a purely national matter: there is an internal market in the
tobacco products advertising sector in which advertising campaigns are
4
Summary
Table of Contents
Lecture 1: Introduction......................................................................................................................1
Lecture 2: Free Movement of Goods I............................................................................................6
Lecture 3: Free Movement of Goods II........................................................................................11
Lecture 4: Freedom of Establishment.........................................................................................15
Lecture 5: Freedom to Provide Services.....................................................................................19
Lecture 6: Free Movement of workers and of EU citizens....................................................27
Lecture 7: Free movement of capital and Recap of the previous topics.........................37
Lecture 1: Introduction
Subjects
Introduction to the four freedoms: free movement of goods, persons, services and capital
Benefits of free trade and David Ricardo’s theory of comparative advantage
Stages of economic integration
Positive versus negative integration
Harmonisation
Readings
Articles 3, 4, 26, 114 and 115 TFEU
P Craig and G de Burca, EU Law, Text, cases, and materials (Oxford University Press 2020),
Chapter 18 ‘The Single Market’ p. 641 - 671
Case C-376/98 Germany v Parliament and Council [2000] ECR I-8419 (Tobacco Advertising I)
Internal market in a nutshell (single or common market)
the internal market sets out the four freedoms
Free movement of goods
Goods can move around the EU without barriers
No custom duties on the border
No unfair taxation
No quotas
No restrictions on size, shape, packaging etc.
Basically, no restriction within the EU
o E.g., product manufactured in France can be sold without any
taxes/customs/duties in e.g., Italy.
o French cheese bought in Netherlands not a high price, NL cannot
restrict the sale of this cheese
Free movement of people (workers)
EU citizens can easily go from one EU country to another for family, study or
work purposes
EU citizens do not need a visa to relocate to another EU MS
1
, o E.g., a cook in Spain wants to work at restaurant in Denmark, this cook
can work there for the same price and under the same condition as
Danish citizens
Freedom of establishment and the provision of services
One company registered in the EU MS can provide services in another EU
MS without arranging additional permissions etc.
o E.g., company in France can be contracted to Germany to provide
construction services, does not need many procedures etc.
A company or a self-employed person can fully move their business to
another EU MS (right of establishment)
o E.g., self-employed person decides to do this business somewhere
else, Italian pizza baker can go to NL to make pizza there.
Free movement of capital
You can invest your money anywhere in the EU
European Monetary Union
David Ricardo Theory of Comparative Advantage
No trade between two countries
NL: 5hrs = 1m of cloth / 10hrs = 5L wine / cloth is more efficient
FR: 10hrs = 1m of cloth / 5hrs = 5L wine / wine is more efficient
Total productivity in 40 hours working week: 6m of cloth, 30 L of wine
What happens if trade is introduced
Countries can specialize, so that they can up their maximum efficiency
o Less time more product
NL 5h = 1m cloth
FR 5h = 1L wine
Total productivity in 40 hours working week: 8m cloth and 40L of wine
More product of both which allows them to trade for how much they need.
NL & FR become interdependent on each other
Suppose they invite other countries, and they decide to set up common
institution to make sure everybody plays by the rules.
o Establishment of EU
EU in a nutshell
Established by the Treaty of Rome as the EEC (1957)
Before the SEA (Single European Act, 1987) difficult to achieve the
harmonization of laws between the MS
Adoption of the SEA in 1987 introducing QMV (qualified majority voting)
Subsequent Reform Treaties culminated in 2007 with the conclusion of the
Treaty of Lisbon
Creation of the EEC
2
,The main purpose of the EEC was the creation of long-term normalized, friendly
relations between European nations after WWII through the liberalization of trade.
The EU has never been just a free trade area despite the pro-Brexit narrative
Main goal was preventing wars
Core idea was to live peacefully rather than just free trade
Six stages of economic integration
1. Preferential Trade Agreements (PTA)
An agreement to reduce or remove tariffs on particular goods traded between
two or more nations
2. Free Trade Area (FTA)
An agreement to completely remove tariffs on all goods and some services
between member nations
3. Customs Union
A free trade agreement in which MS also adopt common external tariffs on
non-member nations goods
4. Common Market
A customs union in which members allow for free flow of labour and capital
between MS (with common external tariffs and completely free trade in goods
and services
5. Currency Union
A common market in which MS also share a currency and a central bank.
Each MS forgoes the freedom to determine its own policy. Each MS
determines its own fiscal policy.
6. Complete Economic integration
A currency union in which MS enjoy completely free flow of goods, services,
labour and capital across borders and in which single fiscal autonomy
determines the level of government spending for the economy as a whole.
Watch whole video still
The EEC was a customs union
The EU has a common market
o Higher level of integration
The MS sharing the Euro have entered into a Currency Union (5 th stage) and
there are talks of a Fiscal Union (6th stage)
o Not all MS use same currency
o There also is no fiscal union
Different techniques to achieve economic integration
Negative integration
The founding treaty was largely based on a negative integration approach
o About integration achieved by prohibition to e.g., discriminate
o Annul to diff treatment to products from diff countries
i.e., Mutual recognition – to eliminate obstacles of fundamental freedoms &
remove distortions of competition
In order to enhance and strengthen the objective laid down in treaties there is
a need to harmonize laws on the restriction of free movement
o a textbook illustration of how negative integration works.
3
, o Cassis dijijon case
Positive integration – harmonisation
Positive integration: - I.e.: harmonization or approximation: creation of a common
sovereignty through the modification of existing institutions and the creation of new
ones.
Harmonisation
Art. 114(1) TFEU – can be used to eliminate obstacles to exercise of fundamental
freedoms and be used to remove distortions of competition
Full harmonization
Eu lays down detailed rules entirely replacing MS legislation
Rarely used why? shared competence
Minimum harmonization
Eu sets the minimum threshold under which it is not possible to go under. MS are
free to impose higher standards
Main disadvantage?
Potential race to the bottom (+ so-called ‘Brussels effect’ observed)
Case C-376/98 Germany v Parliament & Council – Tobacco advertising, I
• Parties to the dispute
• Germany (plaintiff)
• Parliament and Council (defendants)
• Legal action
• Action for annulment
• Legal problem
• Did the EU have competence to adopt the Directive on the advertising
of tobacco products?
• Article in question: 114 TFEU
• Art. 100a is mentioned because the decision of the Court was adopted
before the Lisbon Treaty. Therefore, the numbers of articles are
different.
• What did Germany want
• Prohibition to advertise tobacco products in periodicals, magazines and
newspapers
• Prohibition to advertise tobacco products on posters, parasols,
ashtrays and other articles
• What were the plaintiff’s arguments?
• The chosen legal basis (art. 114 TFEU) is not appropriate
• Para 13: Tobacco advertising is an internal issue
• Para 29: Art. 114 TFEU should be available as a legal basis only in
cases where obstacles to the exercise of fundamental freedoms and
distortion of competition are considerable
• Para 34: The center of gravity of the measure is public health
protection
• What were the defendant’s arguments?
• Para 37: Not a purely national matter: there is an internal market in the
tobacco products advertising sector in which advertising campaigns are
4
