EU TFEU: Avoiding new distortions in the internal market

The Irish polling stations have closed, but the counting of the referendum votes has not yet started, and the results of the Lisbon Treaty referendum in Ireland are not expected before early evening.

With the verdict formulated, but as yet unannounced, it feels strange to dissect yet another Article of the EU Treaty of Lisbon, but the treaty reform process needs to be recorded, at least for the sake of the 18 EU member states that already have fulfilled the essential requirements of ratification.

Article 117 of the Treaty on the Functioning of the European Union (TFEU) aims to prevent new distortions in the internal market.


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Article 117 of the Treaty on the Functioning of the European Union (TFEU) is found in the consolidated version of the Treaty on European Union and the Treaty on the Functioning of the European Union, published in the Official Journal of the European Union, OJ 9.5.2008 C 115/96:

Part Three Union policies and internal actions

Title VII Common rules on competition, taxation and approximation of laws

Chapter 3 Approximation of laws

Article 117 TFEU
(ex Article 97 TEC)

1. Where there is a reason to fear that the adoption or amendment of a provision laid down by law, regulation or administrative action may cause distortion within the meaning of Article 116, a Member State desiring to proceed therewith shall consult the Commission. After consulting the Member States, the Commission shall recommend to the States concerned such measures as may be appropriate to avoid the distortion in question.

2. If a State desiring to introduce or amend its own provisions does not comply with the recommendation addressed to it by the Commission, other Member States shall not be required, pursuant to Article 116, to amend their own provisions in order to eliminate such distortion. If the Member State which has ignored the recommendation of the Commission causes distortion detrimental only to itself, the provisions of Article 116 shall not apply.

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In Article 2, point 83 of the Treaty of Lisbon (ToL) the IGC 2007 amended Article 96 of the Treaty establishing the European Community (TEC), and in point 84 it inserted a new Article 97a on intellectual property rights. Thus, no specific amendments were made to Article 97 (OJ 17.12.2007 C 306/70).

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The TFEU table of equivalences confirms that Article 97 TEC first became Article 97 TFEU (ToL) in the original Treaty of Lisbon, and it tells us that it was later renumbered Article 117 TFEU in the consolidated version (OJ 17.12.2007 C 306/211).

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The current Article 97 of the Treaty establishing the European Community (TEC) is found under Title VI ‘Common rules on competition, taxation and approximation of laws’, Chapter 3 ‘Approximation of laws’, in the latest consolidated version of the treaties in force (OJ 29.12.2006 C 321 E/81).

Here is the current Article 97 TEC:

Article 97 TEC

1. Where there is a reason to fear that the adoption or amendment of a provision laid down by law, regulation or administrative action may cause distortion within the meaning of Article 96, a Member State desiring to proceed therewith shall consult the Commission. After consulting the Member States, the Commission shall recommend to the States concerned such measures as may be appropriate to avoid the distortion in question.

2. If a State desiring to introduce or amend its own provisions does not comply with the recommendation addressed to it by the Commission, other Member States shall not be required, pursuant to Article 96, to amend their own provisions in order to eliminate such distortion. If the Member State which has ignored the recommendation of the Commission causes distortion detrimental only to itself, the provisions of Article 96 shall not apply.

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We have seen that the only difference between Article 97 TEC in force and Article 117 TFEU is the numbering of the Article itself and the preceding Article it refers to.

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For the sake of systematic comparison, we look at the Article during the intervening treaty reform stages.

First, we turn to the European Convention, the closest thing to a constituent assembly EU citizens have had. The Article in question is located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter I ‘Internal market’, Section 7 ‘Approximation of legislation’.

Article III-67 of the draft Treaty establishing a Constitution for Europe inserted the word ‘national’ before provision in the first sentence, which makes the meaning clearer at one go. The other differences were minimal. See OJ 18.7.2003 C 169/39.

Article III-67 Draft Constitution

1. Where there is a reason to fear that the adoption or amendment of a national provision laid down by law, regulation or administrative action may cause distortion within the meaning of Article III-66, a Member State desiring to proceed therewith shall consult the Commission. After consulting the Member States, the Commission shall address to the Member States concerned a recommendation on such measures as may be appropriate to avoid the distortion in question.

2. If a Member State desiring to introduce or amend its own provisions does not comply with the recommendation addressed to it by the Commission, other Member States shall not be required, pursuant to Article III-66, to amend their own provisions in order to eliminate such distortion. If the Member State which has ignored the recommendation of the Commission causes distortion detrimental only to itself, Article III-66 shall not apply.

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In the Treaty establishing a Constitution for Europe, ‘ratified’ by 18 member states, the provisions on approximation (harmonisation) were located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter I ‘Internal market’, Section 7 ‘Common provisions’.

The IGC 2004 replaced ‘a national provision’ by ‘a provision … of a Member State’ without changing the meaning.

Article III-175 is found in OJ 16.12.2004 C 310/75:

Article III-175 Constitution

1. Where there is reason to fear that the adoption or amendment of a provision laid down by law, regulation or administrative action of a Member State may cause distortion within the meaning of Article III-174, a Member State desiring to proceed therewith shall consult the Commission. After consulting the Member States, the Commission shall address to the Member States concerned a recommendation on such measures as may be appropriate to avoid the distortion in question.

2. If a Member State desiring to introduce or amend its own provisions does not comply with the recommendation addressed to it by the Commission, other Member States shall not be required, pursuant to Article III-174, to amend their own provisions in order to eliminate such distortion. If the Member State which has ignored the recommendation of the Commission causes distortion detrimental only to itself, Article III-174 shall not apply.

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The IGC 2007 avoided adding to the size of the Lisbon Treaty by retaining the text of the current Article 97 TEC.

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What has been said about Article 117 TFEU?


United Kingdom

Professor Steve Peers covered the Treaty of Lisbon in a number of Statewatch Analyses. ‘EU Reform Treaty Analysis no. 3.3: Revised text of Part Three, Titles I to VI of the Treaty establishing the European Community (TEC): Internal Market and competition’ (Version 2, 23 October 2007) includes the current Title VI Common rules on competition, taxation and approximation of laws.

Peers presented the text and numbering of Article 97 TEC and TFEU (ToL), to be renumbered Article 117 TFEU in the consolidated version, without comment (page 31).

The analysis 3.3 and other useful Statewatch analyses are available through:

http://www.statewatch.org/euconstitution.htm


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The Foreign and Commonwealth Office (FCO) offers a convenient source of brief annotations on Lisbon Treaty amendments in ‘A comparative table of the current EC and EU treaties as amended by the Treaty of Lisbon’ (Command Paper 7311, published 21 January 2008). It offers the following comment on Article 117 TFEU, Article 97 TFEU (ToL) in the original Lisbon Treaty (page 12):

“Unchanged from Article 97 TEC.”

The FCO comparative table is available at:

http://www.official-documents.gov.uk/document/cm73/7311/7311.asp

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The UK House of Commons Library Research Paper 07/86 ‘The Treaty of Lisbon: amendments to the Treaty establishing the European Community’ (published 6 December 2007) discussed the approximation of internal market laws on page 60 (under the heading ‘2. Taxation’).

The Research Paper commented briefly on the harmonisation of internal market laws, before moving on to tax harmonisation:

“Articles 94–97 (Constitution Articles III-172 – III-176) are on the approximation of internal market laws. The general aims are unchanged and the Council will adopt measures for the approximation of laws, regulations or administrative provisions of the Member States that directly affect the internal market. The out-dated term “common market” is removed and replaced with “internal market”.”

The Library Research Paper 07/86 is available at:

http://www.parliament.uk/commons/lib/research/rp2007/rp07-086.pdf

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The House of Lords European Union Committee report ‘The Treaty of Lisbon: an impact assessment, Volume I: Report’ (HL Paper 62-I, published 13 March 2008) is a valuable resource on the Treaty of Lisbon, but I found no reference to Article 117 TFEU (Article 97 TEC and TFEU ToL).

The report is accessible at:

http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdf


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Sweden

The consultation paper ’Lissabonfördraget’ is still valuable as a description of the Lisbon Treaty amendments, and it is available at:

http://www.regeringen.se/content/1/c6/09/49/81/107aa077.pdf

However, my standard reference is currently the Swedish government’s fresh draft ratification bill ‘Lagrådsremiss – Lissabonfördraget’, published 29 May 2008 and sent to the Council on Legislation (Lagrådet) for an expert opinion. The draft deals with the EU’s internal policy areas in Chapter 23 ‘Unionens interna åtgärder’, and section 23.1 presents the internal market (Inre marknaden), on pages 175 to 181.

The Swedish government presents a short background paragraph on the harmonisation of laws in the internal market (page 176):

”Artiklarna 94–97 i EG-fördraget återger möjligheten att harmonisera lagstiftningen på den inre marknaden. Det finns en stor volym sekundärrätt med utgångspunkt i artikel 95 i EG-fördraget samt en omfattande praxis på området. Möjligheten till harmonisering av medlemsstaternas lagar och författningar är en förutsättning för den inre marknadens bibehållande och fortsatta funktion.”

The government later remarks on the essentially unchanged nature of most internal market provisions (e.g. page 176).

The draft bill ‘Lagrådsremiss – Lissabonfördraget’ can be downloaded through:

http://www.regeringen.se/sb/d/5676/a/106277

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Finland

Even the systematic Finnish ratification bill, ‘Hallituksen esitys Eduskunnalle Euroopan unionista tehdyn sopimuksen ja Euroopan yhteisön perustamissopimuksen muuttamisesta tehdyn Lissabonin sopimuksen hyväksymisestä ja laiksi sen lainsäädännön alaan kuuluvien määräysten voimaansaattamisesta’ (HE 23/2008 vp), is brief in its explanation.

Under the heading Approximation of laws (Lainsäädännön lähentäminen), the bill states that Article 97 TFEU (ToL), renumbered Article 117 TFEU is unchanged (page 209):

”97 artiklaa (uusi 117 artikla), jossa määrätään jäsenvaltioiden toimivallasta yhdenmukaistamistoimenpiteiden toteuttamisen jälkeen, ei muuteta.”

The Finnish ratification bill is available at:

http://www.finlex.fi/fi/esitykset/he/2008/20080023.pdf


The Swedish language version of the ratification bill ‘Regeringens proposition till Riksdagen med förslag om godkännande av Lissabonfördraget om ändring av fördraget om Europeiska unionen och fördraget om upprättandet av Europeiska gemenskapen och till lag om sättande i kraft av de bestämmelser i fördraget som hör till området för lagstiftningen’ (RP 23/2008 rd), makes the same remark under ’Tillnärmning av lagstiftning’ on Article 97 TFEU (ToL), the future Article 117 TFEU, on page 212 :

”Artikel 97 (blivande artikel 117), där det föreskrivs om medlemsstaternas befogenheter efter det att harmoniseringsåtgärder vidtagits, ändras inte.”

The ratification bill in Swedish can be accessed at:

http://www.finlex.fi/sv/esitykset/he/2008/20080023.pdf

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Article 116 TFEU addresses existing distortions of the conditions of competition in the internal market. Article 117 TFEU aims at preventing the member states from introducing new distortions.

Article 117 TFEU has the objective of a standstill clause, but the chosen instrument is interesting. According to Article 288 TFEU (ex Article 249 TEC) the institutions shall adopt regulations, directives, decisions, recommendations and opinions. Recommendations and opinions shall have no binding force.

The member state concerned has a treaty obligation to inform (consult) the Commission, but after the consultation, the Commission issues a recommendation without binding force to avoid a new distortion in the internal market.

In spite of the special procedure set out in Article 117 TFEU, the principle of loyal or sincere cooperation applies to the member states, as set out in Article 4(3) TEU (OJ 9.5.2008 C 115/18):

“3. Pursuant to the principle of sincere cooperation, the Union and the Member States shall, in full mutual respect, assist each other in carrying out tasks which flow from the Treaties.

The Member States shall take any appropriate measure, general or particular, to ensure fulfilment of the obligations arising out of the Treaties or resulting from the acts of the institutions of the Union.

The Member States shall facilitate the achievement of the Union's tasks and refrain from any measure which could jeopardise the attainment of the Union's objectives.”



Ralf Grahn