Structure of the Internal Market
Article 26 TFEU
• Article 26 TFEU establishes the foundational goal of the EU internal market:
• Objective: "The internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services, and capital is ensured.”
• Scope: It encompasses the removal of barriers to trade and aims to create a unified market within the EU.
Three Models of Market Integration:
• These models represent different ideals of market integration and have varying implications for the EU's power structure:
1. Common Market:
◦ Historical Background: Conceptualised in the Spaak Report (1956), the Common Market aimed to create a single market by harmonising economic policies and removing barriers.
◦ Implementation: Achieved through legislative actions, including treaties and regulations designed to eliminate tariffs and non-tariff barriers among member states.
◦ Focus: Emphasis on eliminating restrictions to free movement and ensuring equal treatment of economic operators.
2. Single Market:
◦ Development: Emerged in the 1970s and 1980s with significant input from the European Court of Justice (ECJ), which played a crucial role in shaping market integration.
◦ Key Milestone: The Single European Act (1987) introduced significant reforms, including allowing legislation to pass by qualified majority voting (QMV) rather than unanimity.
◦ Principle: Beyond mere non-discrimination, the principle of mutual recognition was adopted, allowing products and services legally sold in one member state to be sold in others without additional requirements.
3. Economic Union:
◦ Context: Post-2007, especially after the financial crisis and the UK's departure from the EU, there has been a shift towards a more integrated Economic Union.
◦ Focus: Increased interest in financial regulation and economic policy coordination, with moves towards a centralised approach and a single rulebook for financial institutions.
◦ Objective: Aimed at deeper economic integration and stability within the Eurozone and beyond.
Two Engines of the Internal Market:
1. Negative Integration:
◦ Concept: Achieved by removing national laws and regulations that hinder trade and the free movement of goods, services, persons, and capital.
◦ Mechanism: Focuses on eliminating barriers and restrictions that prevent the seamless operation of the internal market.
2. Positive Integration:
◦ Concept: Involves the creation of EU-wide standards and regulations to replace disparate national rules.
◦ Mechanism: Establishes harmonised rules and regulations to facilitate smooth operation across member states, adding new standards to the EU legal framework.
Proportionality Principle:
The principle of proportionality is a final stage in assessing whether national measures comply with internal market rules:
1. Legitimate Aim:
◦ Requirement: The measure must pursue a legitimate policy objective, such as public health, safety, or environmental protection.
2. Suitability:
◦ Assessment: The measure must be appropriate for achieving the stated objective. It should effectively contribute to the aim.
3. Necessity:
◦ Evaluation: There must not be a less restrictive but equally effective alternative available. The measure should be the least restrictive option to achieve the objective.
4. Balancing:
◦ Consideration: The benefits of the measure should outweigh the costs. This involves a balancing act between achieving the policy objective and minimising the impact on free movement and competition.
Conclusion: The structure of the internal market reflects a progression from a Common Market focused on removing trade barriers to a Single Market characterised by mutual recognition and enhanced integration. The shift towards an Economic Union highlights the need for deeper economic coordination and regulatory uniformity, particularly in the financial sector. The principles of negative and positive integration, alongside the proportionality principle, provide a framework for evaluating compliance and ensuring that national measures align with the goals of the internal market.