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Summary - Integration and Disintegration within EU
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Integra(on/disintegra(onTutorial 1 (notes)
Conferral
⁃ Principal of conferral
⁃ Member states have all the powers given
⁃ Federal countries
⁃ Exclusive (the eu is the only who can act and the meter states cannot - monetary
policies)/ shared competences (both eu and member states can legislate unCl the union
decided not to act - environment)
⁃ ArCcle 4 (shared) & 5 TEU (exclusive)
⁃ CoordinaCve/supporCve confidence
Legal bases
⁃ Provision of the treaCes that allows the union to act
⁃ The treaty, arCcle (114 Leu - harmonizaCon arCcle -> objecCve: establishment and the
funcConing of the internal market & procedure: ordinary legislaCve procedure)
⁃ Art 352 - residual
Subsidiary
⁃ The acCon should be taken as close to the ciCzen (the member states or union by the
reasons of scale)
⁃ Who checks? The court of jusCce but aWer the decision was taken. Ex ante. Yellow/red
card procedure (2nd protocol on the applicaCon of principal of subsidiary and
proporConality)
⁃ Art 5 teu
⁃ Areas: shared competences (the Prince of subsidiarity does not apply to the exclusive
confidence)
⁃ Importance? DemocraCc control & legiCmacy.
ProporConality
⁃ Eu takes acCon only to achieve the union goals and only - achieving objecCves of the
treaCes (proporConality test - arCcle 5)
⁃ ProporConality test
⁃ RestricCve needs
⁃ Charter of fundamental rights (eu) -> Human rights, etc (arCcles 51 - applied only when
union law is implemented by the member states)
⁃ ArCcle 53: the level of protracCon provided by the charter
Duty to respect naConal idenCty of the member state
⁃ Art 4 paragraph 2 (teu)
⁃ The eu has to respect naConal idenCty of the member states
,Week 2 Regula(ng the Internal Market: Forces of Integra(on and Disintegra(on
Readings
Jukka Snell
1. IntroducCon
• It is unclear what is the exact nature of the European market; which treaCes call the
internal market today
• The nature of the internal market – contested, lacks, clarity, varied Cme to Cme
• ArCcle 26(2) TFEU: 'the internal market shall comprise an area without internal fronCers
in which the free movement of goods, persons, services and capital is ensured'.
Unfortunately, the definiCon is somewhat circular.
• Arrangement of internal market – 3 models -> host country control, the harmonized
model, home country control.
2. The nature of the internal market: three models
• In the EU, the four freedoms of goods, services, persons, and capital provide this.
However, all markets also need rules and the European internal market is no excepCon.
2.1. three models of integraCon
• Three different ideal models of organizing (in theory)
• The host country control: the rules of the country where economic acCvity takes place
apply.
o the normal situaCon when it comes to trade between independent countries.
However, by commidng to the internal market, the EU has decided to move
further
o the host country control is restricted by a rule of non-discriminaCon (the naConal
rules apply but only those that don’t discriminate against things or people from
the other state members
• a harmonized model: the condiCons of a single unitary State are replicated at the EU
level. For each issue, there is only one rule, which has been produced by the EU. All
products and factors of producCon must comply with it but can then be sold and bought
freely in the territory of the enCre Union.
• Home country control: the mirror image of host country con- trol. The rule that applies
to any given product or input is the rule of its country of origin, not the rule of the
country where it is sold.
o there is an EU rule of mutual recogniCon. For this kind of model to work, there
has to be a significant level of trust between the countries
o n the real EU, such absolute trust does not exist. Instead, where mutual
recogniCon does apply, it is tempered with excepCons that allow the host
country to deny recogniCon in certain cases.
2.2. the implicaCon of the different models
• consequences of sovereignty
, o host country control: fewer constraints on autonomy -> each states regulates its
own affairs (depends on the applicaCon of a non-discriminaCon rule).
o Harmonized model: a verCcal transfer of power (state level -> eu level) ->
member states lose their power to regulate their own affairs -> laws come from
the eu (but member states are well-represented in the eu legislature) -> under
the harmonized model the Member States to a degree are pooling their
sovereignty: they exercise it jointly.
o Country control model: a reassignment of sovereignty between the member
states. Each states loses their powers to regulate magers within its own territory
(circumstances mager haha). At the same Cme, the rules of each country extend
further than they did before and now apply to circumstances outside its borders.
• InsCtuConal consequences
o Host country control: the naConal legislature plays a dominant role, but courts
can be influenCal as well (applicaCon of a non-discriminaCon rule -> over/direct
discriminaCon = small influence; a far-reaching standard that also outlaws
indirect or covert discriminaCon is adopted, the judiciary may become a much
more important actor
§ In extreme cases, the disCncCon between host and home country control
may even evaporate under the glare of a non-discriminaCon rule: it can
be argued that a failure of a host country to take into account the fact
that a product or an input has already been the subject of regulaCon in its
home State and now must comply with a second set of rules is itself a
form of discriminaCon. AWer all, a product or an input of the host country
has to deal with only one set of rules and can enter the market
unchanged, while one coming from another Member State is subject to a
double burden and needs to be altered to enter the new market
o Harmonized model: the EU legislature dominates. Naturally, a harmonized set of
rules – they are promulgated by the central legislature. the judiciary can also
engage in harmonizaCon, in two ways. It can create a deregulated, liberal, laissez-
faire market by striking down rules in the name of the four freedoms.
AlternaCvely, it can be more selecCve and target naConal rules that differ
markedly from a European consensus.
o Home country control: the judiciary dominates = ensures that mutual
recogniCon takes place -> two ways if the legislature did not do it -> first, which
rules are a mager of mutual recogniCon in the first place. Second, mutual
recogniCon = excepCon that allows the host country to apply its own rules (i.e. in
the name of public policy)
• Welfare consideraCons
o Host country model: allows trade to take place, and basic economic theory tells
us that this makes all parCcipants wealthier + protecCon of other interests.
Example: For example, the host country is free to set whatever environmental or
consumer protecCon standards it sees fit, if it avoids discriminaCon.
o Harmonized model: brings with it significant economic benefits, too - in terms of
economies of scale. There is only one rule that economic actors need to comply
, with, in contrast with the patchwork of naConal rules that host country control
allows. For example, a large factory with a long assembly line may be able to
churn out goods more cheaply than a smaller enterprise. Under the harmonized
model, other interests such as the environment can also be protected by
appropriate rules being adopted at the EU level.
§ Three problems: 1. an EU-wide rule cannot take diversity into account:
one rule has to fit all countries, even if their preferences vary. 2. it can be
doubted whether the EU legislature would in pracCce be capable of
producing rules in sufficient quanCty and quality to afford non-economic
interests, such as the environment, appropriate protecCon. 3. rules
adopted at the EU level may prove inflexible, rigid, and difficult to change.
§
o Home country control: difficult to assess because it introduces a complex of
regulatory compeCCon into the mix." Regulatory compeCCon means that in
addiCon to the compeCCon between firms that all models of internal market
entail there is also compeCCon between legislatures. Each country will try to
agract valuable assets, for example by creaCng policies designed to encourage
investment and prevent capital flight.
§ Advantages: regulatory compeCCon increases choice, discovery
mechanism -> countries produce agracCve rules and policies -> shows
which policies actually work in contemporary world.
§ Disadvantages: compeCCon can also prove detrimental. This is
uncontestable in situaCons where the costs and the benefits of a policy
fall on different jurisdicCon (state A causes polluCon in state B by the
manufacture). In the language of economics, there are externaliCes,
which render regulatory compeCCon harmful. Further, it is someCmes
supposed that regulatory compeCCon leads more generally to an
uncontrolled race to the bogom
• DemocraCc concerns
o Do the models have piLalls from democraCc view?
o Host country model: it is under-inclusive. Laws are formulated by the ciCzens of
the host State, or their representaCves. They do not consider the interests of
outsiders, such as companies or workers of other Member States,
o Harmonized model: vulnerability to democraCc deficit criCcism (the eu is a
subject to it). Vulnerable
o Home country control model: distorCon of naConal democracy via is open to
criCcism as well. A parCcular worry is that it distorts naConal democracy by
favoring capital over workers. Under home country control, actors have the
opCon of exit. A factory owner who does not like the regulatory climate of
country
3. the nature of the internal market (historical experience)
• Different paradigms of the market integraCon: common market (iniCal), single market,
economic union paradigm
3.1. the common market
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