Saturday, 5 April 2008

EU TFEU: Legislating freedom of establishment

To make the freedom of establishment a living reality, more is needed than the prohibition of discrimination. Obstacles have to be removed by European Community (European Union) legislation.

The Treaty of Lisbon retains the ‘directives’ as legislative acts, and in this field.


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The Treaty of Lisbon (ToL) briefly mentions Article 44 of the Treaty establishing the European Community (TEC). Here is what the intergovernmental conference (IGC 2007) wants changed in the Treaty on the Functioning of the European Union (TFEU), as it is to be called (OJ 17.12.2007 C 306/54):

FREEDOM OF ESTABLISHMENT

52) In Article 44(2), the words ‘The European Parliament,’ shall be inserted at the beginning of the paragraph.

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Some of us think that readable legal acts are a cornerstone of openness and transparency. The IGC 2007 did not, so we have to turn to the latest consolidated version of the existing treaties to find the words meant to surround the insertion at the beginning of Article 44(2) TEC (OJ 29.12.2006 C 321 E/59-60):

Article 44 TEC

1. In order to attain freedom of establishment as regards a particular activity, the Council, acting in accordance with the procedure referred to in Article 251 and after consulting the Economic and Social Committee, shall act by means of directives.

2. The Council and the Commission shall carry out the duties devolving upon them under the
preceding provisions, in particular:

(a) by according, as a general rule, priority treatment to activities where freedom of establishment makes a particularly valuable contribution to the development of production and trade;

(b) by ensuring close cooperation between the competent authorities in the Member States in order to ascertain the particular situation within the Community of the various activities concerned;

(c) by abolishing those administrative procedures and practices, whether resulting from national legislation or from agreements previously concluded between Member States, the maintenance of which would form an obstacle to freedom of establishment;

(d) by ensuring that workers of one Member State employed in the territory of another Member State may remain in that territory for the purpose of taking up activities therein as self‑employed persons, where they satisfy the conditions which they would be required to satisfy if they were entering that State at the time when they intended to take up such activities;

(e) by enabling a national of one Member State to acquire and use land and buildings situated in the territory of another Member State, in so far as this does not conflict with the principles laid down in Article 33(2);

(f) by effecting the progressive abolition of restrictions on freedom of establishment in every branch of activity under consideration, both as regards the conditions for setting up agencies, branches or subsidiaries in the territory of a Member State and as regards the subsidiaries in the territory of a Member State and as regards the conditions governing the entry of personnel belonging to the main establishment into managerial or supervisory posts in such agencies, branches or subsidiaries;

(g) by coordinating to the necessary extent the safeguards which, for the protection of the interests of members and other, are required by Member States of companies or firms within the meaning of the second paragraph of Article 48 with a view to making such safeguards equivalent throughout the Community;

(h) by satisfying themselves that the conditions of establishment are not distorted by aids granted by Member States.

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If the Lisbon programme has strived towards a knowledge society, the Lisbon Treaty was a step backwards to primitive and wasteful practices. Instead of one centrally made consolidation in each treaty language, we were offered the multiplication of work and effort of disparate attempts in every corner of Europe.

Not only that, but every provision has to be checked from about five different sources before its meaning is clear:

Express amendments
Horizontal amendments
Numbering and renumbering
Numbering and renumbering of referrals
Protocols and declarations

For good measure, we add the location of the Article in question in order to facilitate the reading of a post in isolation.

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Do the member states’ governments still think that an unreadable treaty would be more welcome and cause less trouble than a readable one?

Anyway, a gestation period of about ten months from the IGC 2007 mandate was needed, before the Council finally publishes the consolidated versions of the Lisbon Treaty TEU and TFEU on 15 April 2008.

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Back to DIY consolidation and Article 44 as it should look when the Treaty of Lisbon is in force:

Part Three ‘Policies and internal actions of the Union’

Title III (renumbered Title IV) ‘Free movement of persons, services and capital’

Chapter 2 ‘Right of establishment’

Article 44 TFEU (ToL), renumbered Article 50 TFEU

1. In order to attain freedom of establishment as regards a particular activity, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, shall act by means of directives.

2. The European Parliament, the Council and the Commission shall carry out the duties devolving upon them under the preceding provisions, in particular:

(a) by according, as a general rule, priority treatment to activities where freedom of establishment makes a particularly valuable contribution to the development of production and trade;

(b) by ensuring close cooperation between the competent authorities in the Member States in order to ascertain the particular situation within the Union of the various activities concerned;

(c) by abolishing those administrative procedures and practices, whether resulting from national legislation or from agreements previously concluded between Member States, the maintenance of which would form an obstacle to freedom of establishment;

(d) by ensuring that workers of one Member State employed in the territory of another Member State may remain in that territory for the purpose of taking up activities therein as self‑employed persons, where they satisfy the conditions which they would be required to satisfy if they were entering that State at the time when they intended to take up such activities;

(e) by enabling a national of one Member State to acquire and use land and buildings situated in the territory of another Member State, in so far as this does not conflict with the principles laid down in Article 33(2) [ToL, renumbered Article 39(2) TFEU];

(f) by effecting the progressive abolition of restrictions on freedom of establishment in every branch of activity under consideration, both as regards the conditions for setting up agencies, branches or subsidiaries in the territory of a Member State and as regards the subsidiaries in the territory of a Member State and as regards the conditions governing the entry of personnel belonging to the main establishment into managerial or supervisory posts in such agencies, branches or subsidiaries;

(g) by coordinating to the necessary extent the safeguards which, for the protection of the interests of members and other, are required by Member States of companies or firms within the meaning of the second paragraph of Article 48 [ToL, renumbered Article 54 TFEU] with a view to making such safeguards equivalent throughout the Union;

(h) by satisfying themselves that the conditions of establishment are not distorted by aids granted by Member States.

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The corresponding provision of the draft Treaty establishing a Constitution for Europe was Article III-23. The European Convention named them ‘European framework laws’, but now and still according to the Lisbon Treaty they are known as ‘directives’. The referrals were naturally different, but otherwise the minimal changes were already there (OJ 18.7.2003 C 169/32).


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The difference between the draft and the Treaty establishing a Constitution for Europe Article III-138 is ‘microscopic’.

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One suggestion for further reading is the European Parliament’s factsheet ‘Freedom of establishment, freedom to provide services and mutual recognition of diplomas (last update 27 October 2006):

http://www.europarl.europa.eu/facts/3_2_3_en.htm


Ralf Grahn