The Fundamentals of the EU’s Institutional Order
There are three levels of law in the EU:
1. Primary law: the EU Treaties
2. Secondary law: the EU regulations, directives and decisions
3. “Tertiary law”: implementing and delegated acts
EU laws are framed and based on their higher level laws.
1. Primary law: introduction to the EU Treaties
The EU is based on 2 foundations:
TEU: The Treaty of European Union
o Contains 55 articles.
o The essence of the EU, incl. institutions like the Parliament, Council, Court of Justice.
o Basic articles on how to become a Member State or withdraw as Member State.
TFEU: The Treaty of the Functioning of the European Union
o Contains 350 articles.
o How they turn objectives into reality.
o Details about the objectives and decision making, with respect to the various EU policy areas.
2. The principle of conferral
The amount of power (competences) that the EU has, is determined by the Principle of Conferral (or Principle of
Attribution of Powers) [TEU art. 5].
Conferral = given to it, attributed it. What powers do Member States hand over to the EU and how?
Starting point: the EU has no powers.
The EU has only those powers, that are conferred by the member states through making TREATIES.
There are several subcategories of EU competences (powers), [TFEU art. 2 § 1-5]
o Exclusive competences
o Shared competences
o Economic and employment policies
o Common foreign and security policy
o Competences for supporting Member States.
,3. The division of competences between the EU and its Member States
There are 3 broader competences: exclusive, shared and supplementary competences.
Exclusive competences
For these competences, Member States attributed the full policy competence to the EU of a certain policy area
They have handed over their sovereignty from national level to European level.
Member States are no longer competent to act on their own in these areas.
There are 5 policy fields of exclusive competence:
a) Customs Union
This is not a Free Trade Area:
- They both eliminate governmental barriers, but
- Free Trade Areas do not have an external component, like the EU Common Customs Tariff
2 components:
Internal component
o No more customs, since 1968
o No more quantitive restrictions, since 1970
o Exception on Most Favored Nation regulation of the World Trade Union,
that determines that privileges given to a country must apply to all countries.
External component
o Common Customs Tariff
o Common Commercial Policy (e)
b) The establishing of the competition rules necessary for the functioning of the internal market
= Competition Policy of the EU, containing 2 policies:
Anti-trust policy
(regulates relationship between companies and their competitors and customers)
o Prohibition to make cartel agreements between companies.
= Agreement to increase prices and limit competition on the internal market.
o Prohibition of abuse of dominant position
State aid policy
(regulations relationship between Member States and companies on their territory)
o What affects state budget and is given to companies.
o Starting point: no state aid,
but there’s a voluminous book with exceptions.
o It’s to make sure that no money goes to lost industry sectors, but to better initiatives like
retraining of workers, R&D, …
o If state aid has to be given, the Member State notifies the Commission, they authorize and
notify the others (transparency).
c) Monetary policy for the Member States whose currency is the Euro
= Policy on the Euro currency – applies to the Euro Zone.
Set by the European Central Bank in Frankfurt
(handed over from member states – ministries of finance or central banks)
Exceptions for countries outside the Eurozone,
f.e.: UK, Sweden, Denmark, …
d) The conservation of marine biological resources under the common fisheries policy
= The annual quota on fishing, fixed on EU level.
, e) Common commercial policy
= External EU trade policy external side of the customs union.
TFEU art. 3 § 2 says that the EU can act in International Agreements if need to.
(f.e. transport on the Rhine between the EU and Switzerland)
Shared competences
For these competences, both the EU and it’s Member States may adopt legally binding acts [TFEU art. 2 § 2].
Member States shall exercise their competence to the extent that the EU has not yet acted in that policy
field.
If in a certain point of time the EU acts in a specific subarea of a policy field, Member States have to put
aside the national legislation and implement the EU legislation instead.
Legal principle of Primacy of EU law over national law (set by the EU Court of Justice in 1964):
If there’s a conflict between both laws, the EU law primes over national law.
The EU may cease (stop) a legislation, but in reality this never happens.
There are several policy fields of shared competence:
a) Internal market
Free movement of goods
- Industrial goods since 1968
- Agricultural goods since 1970
Free movement of services
Free movement of capital
= money
since 1999
Free movement of people
Not all Member States have accepted this policy, f.e. the UK.
b) Social policy (for the aspects defined in the treaty)
c) Economic, social and territorial cohesion
= Attempt to move money from richer Member States to poorer Member States.
Both funds contain 35% of the EU budget. (EU budget = 1% of global EU GDP, so 0.35% global EU GDP)
Cohesion fund
Funds projects to member states with a GDP of < 90% of the EU Member States average.
Possible projects: large infrastructure, transportation, energy, environmental, …
Structural funds
You can find these in any Member State
o European Regional Development Fund (most well-known)
Provides aid to Member States who lack behind in economic terms.
o European Social Fund
o Fund for development of rural areas
o Fund for development of areas who were dependent on fishery
o…
d) Agriculture and fisheries (excl. the conservation of marine biological resources)
Contains 40% of the EU budget.
One of the first developed by the EU.
