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Why an Internal Market was created?
• The internal market comprises of the customs union (no custom duties between MS’s) and the free movement
provisions.
• The Free movement provisions are central to the creation of the single/internal market – the treaty protects the free
movement of goods, services, capital and persons (economic-workers, and non-workers).
- This requires/demands significant re-orientation of national regulatory policy.
• Ascertaining the purpose of the internal market, because it is inextricably connected to how the market is regulated.
• Economic: rules can be understood from an economic perspective – as fostering the most efficient allocation of
resources – this is more relevant to goods and services.
• Ricardo’s Theory of comparative advantage = the notion that countries should provide the goods or products which
they are most efficient/effective at creating, and then trade with each other in their specialities. This creates more
economic value/wealth for each of the domestic systems.
• Ordo-Liberal Theory = Internal market important because it provides ‘individual freedom’ to economic actors in the
market.
• Spaak Report = Encourages economic actors to move to places where they will be most economically productive.
• Social: Or from a more social and political perspective – aiming towards the integration of European societies – this
is more relevant to free movement of workers and citizenship.
• Notion that the internal market provides an integration of different peoples – and therefore creates an ever-closer
union of the people. The internal market serves as an instrument to achieve more social integration in EU.
• This is a more normative or aspirational ambition of European integration
• Constitutional: Internal market is a deliberate attempt or ensures control and constrains the MS’s economic
policy/choices, to prevent inter-state conflict. The compromise position whereby the EU control economics, whilst
the MS’s control more socially or politically sensitive issues.
• However, this does not reflect reality any more and the EU’s continual expended competence has undermined MS
autonomy in these area’s as well, whilst the economy (such as free movement of persons) is inextricably connected
to socially sensitive issues.
- EU Criminal Law
- EU citizenship
- Fundamental rights.
Who should regulate the ‘internal market without borders’
• There is an inherent debate over who should regulate the internal market.
• Whilst the Union legislator, may be more efficient, the regulation from individual MS’s is much more democratic and
sensitive to the domestic concerns of social culture and nature.
• Harmonisation Model (Spaak Report) → re-regulation of the economic sphere through supranational norm-setting,
taking national regulation to the supranational level. These involves political actors (such as the commission).
• This is a positive form of integration – positive integration.
• Advantage: is a political decision rather than a judicial decision – so has more democratic legitimacy.
• Article 114 TFEU → outlines that ‘provisions…which have as their object the establishment or functioning of the
internal market’ are within the EU competence.
- Limit – EU competence only expands to area’s which stimulate the functioning of the internal market, such that
they cannot harmonise or apply to area’s such as public health or gambling.
- Limit – there are intrinsic institutional constraints because it is very difficult to agree on one form of regulation
for 28 different MS’s, with different traditions, policies and idea’s. Therefore, it can be incredibly time consuming.
- Limit – the high threshold is for legitimation is almost impossible to achieve because the political economy is
fundamentally different between MS’s – so harmonisation may also be impossible to achieve.
• Main problem therefore is that it has significant institutional constraints – a lot of time, veto players, and difficult to
come to agreement, because the market encompasses so many pieces of national legislation.
These legal principles (home and host state rule) – allow FM despite differences across MS’s.
• Host state Rule → Non-discrimination between MS’s. This operates to prevent discrete or hidden protectionism,
because it can prioritise or give an unfair advantage to a certain MS. Regardless of where the product is produced,
you must apply the rules in the country of which you sell it – negative integration.
- Products are treated equally within separate markets.
• Advantage: enables the MS to keep its own rules/autonomy upheld and NP’s remain in charge of making the rules
and sensitive to national citizens. Therefore, the market is regulated in a way which is sensitive to the different
economic regulation between countries
- Insulates MS control and they can decide rules as long as they don’t discriminate.
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