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Overview of the internal market

Previous: Judicial review and the European Union

Historically, the EU (or ECSC) could be said to have been little more than a body representing a trade agreement between six European countries. Over time, however, the EU has developed into a larger, more politicised organisation through the following steps:

  1. A free trade area
  2. The introduction of a customs union – Van Gend En Loos (1963)
  3. The deregulation of the common market (stop Member State interference)
  4. The re-regulation of the common market (harmonisation)
  5. An economic and monetary union (in part)
  6. EU citizenship

This development has led to a semi-constitutional system with more inter-state rules than exist between states in the USA. The 1980s provided a springboard for the EU to develop, courtesy of an economic depression. A report in 1985 entitled “Completing the internal market” suggested how to further develop the EU, with the removal of barriers to trade, minimum harmonisation recommendations, minimum health and safety recommendations, the introduction of mutual recognition and the introduction of qualified majority voting procedures.

There are push and pull factors which affect the functioning of the internal market: push factors simulate competition for consumer benefit and pull factors include over-regulation and the application of non-market values to the market.

The four freedoms

Today, the source of the internal market is s 26(2) TFEU, which states that:

The internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of the Treaties.

There are several principles that support the establishment of the internal market today. This include market access, mutual recognition, non-discrimination, proportionality, fundamental rights, and the strict interpretation of any derogations from the previous principles.

Market access

The market access principle was adequately summed up in the Walloon Government case [2008]: any restriction on the internal market, however minor is prohibited. This principle ensures that EU citizens may maximise their free movement rights.

This principle applies across all of the freedoms, as illustrated by:

Mutual recognition

This principle was described well in Cassis de Dijon [1979] (alcohol restrictions in Germany), providing that where particular types of goods are lawfully produced or marketed in one Member State, there should be no reason why those goods cannot be introduced into another Member State. It is arguable that this principle provides an alternative to harmonisation.

Non-discrimination

As explicitly stated by Art 18 TFEU, discrimination on the grounds of nationality is prohibited. As illustrated by Bosman [1995] (EU vs Belgium football rules), this principle also applies to individuals (direct effect).

The remaining principles shall be discussed as the individual freedoms (excluding capital) are analysed in turn.

Establishing the internal market

The internal market is established by Art 26(2) TFEU (above). Supplementing this paragraph is Art 26(1), which allows the EU to adopt measures facilitating free movement. Although, as the internal market is a shared competence, the principle of subsidiarity will prevent the EU from adopting a measure which could be best adopted at Member State level.

Measures facilitating the internal market are usually based on Art 114 TFEU, the use of which is illustrated by the tobacco cases. Exclusions can be found in Art 114(2), value added options in Art 114(3) and pull effect paragraphs in Art 114(4-10). The approach of the EU to internal market measures has altered over time. Today, minimum harmonisation (as opposed to full harmonisation) is preferred, and it is the intent of the EU to appear more transparent.

Next: The free movement of goods

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