The essence of the EU’s internal market

What is the essence of the internal market, often (aspirationally) called the single market in English (although this distinction not made in all of the official languages of the European Union)?

Social market economy

Among the aims of the European Union we find “a highly competitive social market economy” in Article 3(3) of the Treaty on European Union (TEU):

3.   The Union shall establish an internal market. It shall work for the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment. It shall promote scientific and technological advance.

Free movement x 4

Instead of being confined to the national markets, the factors of production are supposed to move without obstacles in the internal market. Article 26(2) of the Treaty on the Functioning of the European Union (TFEU) expresses the goal in the form of four - not only one - freedoms of movement, also known as the four freedoms:

2.   The internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of the Treaties.

Non-discrimination

Non-discrimination on the grounds of nationality is central to the tearing down of obstacles in the union generally and the internal market specifically. From Article 18 TFEU:

Within the scope of application of the Treaties, and without prejudice to any special provisions contained therein, any discrimination on grounds of nationality shall be prohibited.

CJEU

These basic principles, other treaty provisions and the rest of the EU legislation (acquis) have been brought to life by the Court of Justice of the European Union (CJEU).

EEA

The European Economic Area (EEA) extends the internal markets to three of the four EFTA states: Iceland, Liechtenstein and Norway. Switzerland, the fourth member of the European Free Trade Area (EFTA), has more limited access to the internal market based on bilateral agreements with the EU.

Brexit

According to Eurostat the population of the internal market was 515,640,100 at the beginning of 2016 (EU + EEA). If Brexit means that the population of the whole United Kingdom (about 65 million) leaves the internal market (not only the EU, but the EEA as well), about 450 million would remain, somewhat smaller than the combined 480,516,824 population (2016 estimate) of the less integrated North American Free Trade Agreement (NAFTA) countries Canada, Mexico and the USA.

 

Summary

The aim of the internal market, which consists of 31 countries with a total population of 515 million, is a highly competitive social market economy by the free movement of goods, persons, services and capital and the prohibition of all discrimination on grounds of nationality.

Ralf Grahn

Help EPP group leader Joseph Daul defend media freedom

The leader of the European People's Party group in the European Parliament had this to say on Facebook with regard to fundamental rights of EU citizens, especially the Hungarian media law:

Let's see what the Commission says after it has examined the law. You remember the Roma case ? The Commission concluded that there was no breach of Eau law. But very few reported about that decision. So if this law contains dispositions contrary to EU law or international conventions, it will be changed. Let's see. But don't be naive: it is not purely because of their preoccupation for the rights of the media that socialists, liberals and greens atrack an EPP government.

Selective memory

Despite the conspicuous lack of support for the Commission, with regard to the Roma issue, Daul forgot to mention that the European Commission dropped the threat of infringement procedures after the French government submitted detailed documentation to the Commission, including draft legislative measures and a credible calendar for putting the procedural safeguards required under the EU's Free Movement Directive into French legislation by early 2011. When the demolition instruction to target Roma camps had leaked, the government had hastened to change it. France is still under Commission scrutiny.


Party political arguments - whose?

Scores of media reports and blog posts about the contents of the Hungarian gag law have seemed unequivocal enough to allow for clear condemnation long before now.

How much is still unclear after an article such as Slugger O'Toole ”Draconian press laws in the EU's new Presidency” (1 January 2011)?

Is it possible, in good faith, to avoid the impression that Daul is procrastinating or worse?

I feel offended when Daul equates criticism of the Hungarian censorship law with party political schemes to discredit an EPP government. I try to base my evaluation of the actions of the EU institutions and political actors on principles, primarily the interests of the citizens of the EU.

If various Europarties come out differently, it is not necessarily my fault.

I hope that I could see the EPP as an active protagonist for free speech, but I wonder if Daul's argument can be seen to be exempt from party political bias and cronyism. (Various Hungarian government representatives have dismissed criticism as party politically motivated.)

For me the European Convention on Human Rigths (ECHR), the founding values of the European Union (Article 2 TEU), the rights, freedoms and principles set out in the Charter of Fundamental Rigths of the European Union (Article 6 TEU) and the process to determine a serious breach of the founding values (Article 7 TEU) are the cornerstones of European integration and for the citizens of the European Union.

I would like to see the biggest Europarty, the EPP, taking the greatest responsibility for our basic values.

Dear readers, even if we are aware of the troubled history of the rule of law in France regarding freedom from political interference, please enlighten EPP group leader Joseph Daul about founding principles, non-discrimination and fundamental rights, as if the EU was intended to serve its citizens first.


Non-discrimination

Since the Treaty of Rome (1957), any discrimination on grounds of nationality is prohibited (now Article 18 TFEU).

Time enough for the basic principle of non-discrimination to sink in, methinks.

The Hungarian government of Viktor Orban is under fire for a number of controversial policies, including Commission scrutiny for alleged discrimination. According to the Wall Street Journal, thirteen large companies from France (Daul's country of origin, a founding member of the EEC), Germany, Austria, the Netherlands and the Czech Republic complained to the EU Commission, saying Hungary is targeting "select sectors and foreign companies in particular, to balance the state budget."

You can comment on this blog, tweet @JosephDaul or comment on Daul's new year wishes on Facebook for 2011 to become a better year.



Ralf Grahn


P.S. The Swedish MEP Gunnar Hökmark has shown that high profile EPP members can take a principled approach, as he has done in his blog posts ”Det blev ett nytt år – om Ungern, Estland och Sarkozy” with regard to the media law and ”Dåliga signaler från EU:s ordförandeland” concerning discrimination. Respect.

EU customs duties: Associated overseas countries and territories

The asymmetric relationship between the EU member states and the associated overseas countries and territories (OCTs) is illustrated by the provisions on customs duties.

Customs duties are prohibited with regard to goods imported and originating from an OCT into an EU member states (paragraph 1).

Customs duties are prohibited with regard to imports from an EU member state or another OCT into an OCT (paragraph 2), but with the sizable exception that non-discriminatory customs duties which meet thee needs of its development and industrialisation or produce revenue for its budget (fiscal nature) are allowed (paragraphs 3 and 5).

Article 25 TEC referred to comprises not only to customs duties on imports and exports, but also to charges having equivalent effect.

The current Treaty establishing the European Community (TEC) sets out the principles concerning customs duties with regard to the non-European associated countries and territories in Article 184:




Article 184 TEC

1. Customs duties on imports into the Member States of goods originating in the countries and territories shall be prohibited in conformity with the prohibition of customs duties between Member States in accordance with the provisions of this Treaty.

2. Customs duties on imports into each country or territory from Member States or from the other countries or territories shall be prohibited in accordance with the provisions of Article 25.

3. The countries and territories may, however, levy customs duties which meet the needs of their development and industrialisation or produce revenue for their budgets.

The duties referred to in the preceding subparagraph may not exceed the level of those imposed on imports of products from the Member State with which each country or territory has special relations.

4. Paragraph 2 shall not apply to countries and territories which, by reason of the particular international obligations by which they are bound, already apply a non-discriminatory customs tariff.

5. The introduction of or any change in customs duties imposed on goods imported into the countries and territories shall not, either in law or in fact, give rise to any direct or indirect discrimination between imports from the various Member States.


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Consolidated Lisbon Treaty


Article 184 TEC underwent no specific amendments, so we move on to the consolidated version of the Treaty on the Functioning of the European Union (TFEU, where the corresponding provision is Article 200 (OJEU 9.5.2008 C 115/138):

(PART FOUR
ASSOCIATION OF THE OVERSEAS COUNTRIES AND TERRITORIES)


Article 200 TFEU
(ex Article 184 TEC)

1. Customs duties on imports into the Member States of goods originating in the countries and territories shall be prohibited in conformity with the prohibition of customs duties between Member States in accordance with the provisions of the Treaties.

2. Customs duties on imports into each country or territory from Member States or from the other countries or territories shall be prohibited in accordance with the provisions of Article 30.

3. The countries and territories may, however, levy customs duties which meet the needs of their development and industrialisation or produce revenue for their budgets.

The duties referred to in the preceding subparagraph may not exceed the level of those imposed on imports of products from the Member State with which each country or territory has special relations.

4. Paragraph 2 shall not apply to countries and territories which, by reason of the particular international obligations by which they are bound, already apply a non-discriminatory customs tariff.

5. The introduction of or any change in customs duties imposed on goods imported into the countries and territories shall not, either in law or in fact, give rise to any direct or indirect discrimination between imports from the various Member States.


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OCT background and perspectives




The Commission’s Green Paper on future OCT relations. The Communication Future relations between the EU and the Overseas Countries and Territories, Brussels, 25.6.2008 COM(2008) 383 final, presents the existing relations between the European Union and the OCTs as well as questions about the future:

http://ec.europa.eu/development/icenter/repository/1_EN_ACT_part1_v8.pdf

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Overview legal framework


Annex III The Overseas Association Decision of 27 November 2001 (page 28 to 31) of the Commission Staff Working Document accompanying the Green Paper Future relations between the EU and the Overseas Countries and Territories, Brussels, 25.6.2008 SEC(2008) 2067, presents a summary of legal framework ruling the relationship between the EU and the OCTs, both the development assistance aspect and the economic and trade relations:

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=SEC:2008:2067:FIN:EN:PDF


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Trade relations overview

Annex IV Working document on the trade arrangements between the Community and the OCTs (page 32 to 38) of the Staff Working Document discusses regional integration, rules of origin, trade-related issues and transhipment.


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Overseas Association Decision


The more exact arrangements are set out in the Overseas Association Decision 2001/822/EC, as amended and extended until 31 December 2013.



Ralf Grahn

EU procurement: Exclusive rights and non-discrimination

When a contracting authority (a body governed by public law) grants a special or exclusive right to carry out a public service activity to another entity, which is not a contracting authority, the latter must comply with the principle of non-discrimination on the basis of nationality.

The EC (EU) Procurement Directive 2004/18/EC tries to ensure this through Article 3. The act by which the special or exclusive right is granted shall provide that the entity complies with the principle of non-discrimination on the basis of nationality, when it awards contracts to third parties as part of its activities:


Article 3
Granting of special or exclusive rights: non-discrimination clause

Where a contracting authority grants special or exclusive rights to carry out a public service activity to an entity other than such a contracting authority, the act by which that right is granted shall provide that, in respect of the supply contracts which it awards to third parties as part of its activities, the entity concerned must comply with the principle of non-discrimination on the basis of nationality.


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ECJ Case C-275/98.


In the Case C-275/98 Unitron Scandinavia A/S and 3-S A/S, Danske Svineproducenters Serviceselskab v Ministeriet for Fødevarer, Landbrug og Fiskeri, the ECJ’s preliminary ruling based on the old Directive 93/36 neatly laid out two principles. The tendering procedures need not apply, but the principle of non-discrimination on grounds of nationality cannot be interpreted restrictively (and it implies an obligation of transparency):


30 A systematic interpretation of that provision therefore shows that the contracting authority is not required to demand that the body in question comply with the tendering procedures laid down by Directive 93/36.
31 It should be noted, however, that the principle of non-discrimination on grounds of nationality cannot be interpreted restrictively. It implies, in particular, an obligation of transparency in order to enable the contracting authority to satisfy itself that it has been complied with.



Ralf Grahn

EU procurement: Equal treatment, non-discrimination and transparency

Cavalier or corrupt contracting authorities are a menace to the public purse, taxpayer value and competitive businesses.

Is the European Community (European Union) concerned with public procurement only above certain threshold levels?

For those interested in good public governance and value for money, it is a relief to know that some common principles apply to all public contracts within the European Economic Area (EEA).




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Article 2 principles

Article 2 of the Procurement Directive 2004/18/EC reminds us of three principles, which apply to public procurement, namely equal treatment, non-discrimination and transparency:

Article 2
Principles of awarding contracts

Contracting authorities shall treat economic operators equally and non-discriminatorily and shall act in a transparent way.


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Recital 2

Recital 2 of the Procurement Directive 2004/18/EC, also known as the Classic Directive, explains that the provisions of the Treaty establishing the European Community (TEC) apply to all public procurement contracts. However, above certain threshold levels more detailed harmonised EC (EU) secondary legislation kicks in:


(2) The award of contracts concluded in the Member States on behalf of the State, regional or local authorities and other bodies governed by public law entities, is subject to the respect of the principles of the Treaty and in particular to the principle of freedom of movement of goods, the principle of freedom of establishment and the principle of freedom to provide services and to the principles deriving therefrom, such as the principle of equal treatment, the principle of non-discrimination, the principle of mutual recognition, the principle of proportionality and the principle of transparency. However, for public contracts above a certain value, it is advisable to draw up provisions of Community coordination of national procedures for the award of such contracts which are based on these principles so as to ensure the effects of them and to guarantee the opening-up of public procurement to competition. These coordinating provisions should therefore be interpreted in accordance with both the aforementioned rules and principles and other rules of the Treaty.


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Treaty provisions


Here we look briefly at some of the main treaty provisions, which apply to public procurement contracts. (More detail can be found, in the light of the Lisbon Treaty, in previous blog posts on individual Articles.)


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Article 2 TEC Common market

Article 2 of the Treaty establishing the European Community (TEC) states:

The Community shall have as its task, by establishing a common market…


The common market is the original concept enshrined in the Treaty of Rome (EEC Treaty). Since the Single European Act (SEA) it has gradually been replaced by the term internal market in the treaty and secondary legislation. (The Commission seems to favour the single market.) The Treaty of Lisbon would replace the common market by the internal market throughout.


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Article 3 TEC Community activities


Article 3 TEC sets out Community activities based on the objectives (tasks) mentioned in the previous Article. At least the following are relevant to the common market (internal market) and consequently to public procurement:

Article 3 TEC (parts)

1. For the purposes set out in Article 2, the activities of the Community shall include, as provided in this Treaty and in accordance with the timetable set out therein:

(a) the prohibition, as between Member States, of customs duties and quantitative restrictions on the import and export of goods, and of all other measures having equivalent effect;

(b) a common commercial policy;

(c) an internal market characterised by the abolition, as between Member States, of obstacles to the free movement of goods, persons, services and capital;

(d) measures concerning the entry and movement of persons as provided for in Title IV;

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(g) a system ensuring that competition in the internal market is not distorted;

(h) the approximation of the laws of Member States to the extent required for the functioning of the common market;

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Four freedoms

The four market freedoms – free movement of goods, persons, services and capital – meet the material scope of the Procurement Directive, which concerns the execution of works (buildings and civil engineering works), the supply of products (goods) and the provision of services.

The ECJ has given the fundamental treaty principles concrete meaning based on the specific treaty provisions.


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Free movement of goods

TEC Articles 23 to 31 contain the main principles regarding the free movement of goods.

Article 28 TEC prohibits all restrictions on imports an all measures having equivalent effect between member states.


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Free movement of services

The free movement of services is set out in Articles 49 to 55 TEC.

Article 49 TEC prohibits restrictions on the freedom to provide services in another member state.


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Right of establishment

Restrictions on the freedom of establishment of nationals of a member state in another member state are prohibited according to Article 43 TEC (to Article 48 TEC).


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Free movement for workers

Articles 39 to 42 TEC aim at securing the free movement for workers within the Community.


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Non-discrimination

The four freedoms can be seen as expressions of a principle of equal treatment of all economic actors and persons within the internal market.

Equality comprises both (active) equal treatment and (passive) absence of discrimination.

Normally, acts in breach of the specific market freedoms also constitute discrimination on grounds of nationality, but in any case the fundamental prohibition against discrimination on grounds of nationality stands as a reminder to contracting authorities and as an anchor for economic operators from other member states:


Article 12 TEC

Within the scope of application of this Treaty, and without prejudice to any special provisions
contained therein, any discrimination on grounds of nationality shall be prohibited.

The Council, acting in accordance with the procedure referred to in Article 251, may adopt rules
designed to prohibit such discrimination.


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Interpretative Communication

If a public contract falls within the scope of the Procurement Directive 2004/18/EC, the detailed rules apply to the award procedure above the thresholds.

The Commission has offered guidance on public procurement procedures in cases where the specific rules of the Directives do not apply:

Commission Interpretative Communication on the Community law applicable to contract awards not or not fully subject to the provisions of the Public Procurement Directives (OJ 1.8.2006 C 179/2).


The Interpretative Communication refers to the EU-wide competitive tendering procedures set up in the Procurement Directive 2004/18/EC and the Utilities Directive 2004/17/EC, but refers to two kinds of contracts that are not or only partially covered by the Directives:

— Contracts below the thresholds for application of the Public Procurement Directives;

— Contracts for services listed in Annex II B to Directive 2004/18/EC and in Annex XVII B to Directive 2004/17/EC that exceed the thresholds for application of these Directives.


(Concessions are a third such category, mentioned in footnote 3 on the first page.)


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Obligation of transparency

After summarizing the EC Treaty rules and the basic standards for the award of contracts, the Communication reminds the contracting entities (authorities) of the obligation to evaluate if an intended contract might potentially be of interest to economic operators located in other member states.

The Commission proceeds to deal with adequate advertising:

According to the ECJ, the principles of equal treatment and of non-discrimination imply an obligation of transparency which consists in ensuring, for the benefit of any potential tenderer, a degree of advertising sufficient to enable the market to be opened up to competition.

The obligation of transparency requires that an undertaking located in another Member State has access to appropriate information regarding the contract before it is awarded, so that, if it so wishes, it would be in a position to express its interest in obtaining that contract.


Ralf Grahn

EU TFEU: Tax provisions

The EU Treaty of Lisbon leaves the tax provisions (fiscal provisions) of the current Treaty establishing the European Community essentially unchanged.

Article 110 of the Treaty on the Functioning of the European Union prohibits tax discrimination within the internal market and imposes a requirement of neutrality on the member states’ governments.


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Article 110 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 115/93:

Part Three ‘Union policies and internal actions’

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

Chapter 2 Tax provisions


Article 110 TFEU
(ex Article 90 TEC)

No Member State shall impose, directly or indirectly, on the products of other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products.

Furthermore, no Member State shall impose on the products of other Member States any internal taxation of such a nature as to afford indirect protection to other products.

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In Article 2, point 78 of the Treaty of Lisbon (ToL) the IGC 2007 amended Article 88 of the Treaty establishing the European Community (TEC) and in point 79 it dealt with Article 93 TEC. This means that no specific amendments were made to Article 90 TEC. Cf. OJ 17.12.2007 C 306/69.

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The TFEU table of equivalences tells us that Article 90 TEC first became Article 90 TFEU (ToL) in the original Treaty of Lisbon, but later renumbered Article 110 TFEU in the consolidated version (OJ 17.12.2007 C 306/211).

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The current Article 90 of the Treaty establishing the European Community (TEC) is found under Title VI ‘Common rules on competition, taxation and approximation of laws’, Chapter 2 ‘Tax provisions’, in the latest consolidated version of the treaties in force (OJ 29.12.2006 C 321 E/78).

No specific amendment and no horizontal amendment; the wording of Article 90 TEC is exactly the same as Article 110 TFEU.

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We have now seen that 90 TEC in force and 110 TFUE are exactly the same.

Still, for the sake of systematic comparison, we look at the arcana of 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 6 ‘Fiscal provisions’.

Article III-59 of the draft Treaty establishing a Constitution for Europe was exactly the same as Article 90 TEC (OJ 18.7.2003 C 169/37).

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In the Treaty establishing a Constitution for Europe the tax provisions were located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter I ‘Internal market’, Section 6 ‘Fiscal provisions’.

Even if the first paragraph of Article III-170 was the same as Article III-59 proposed by the European Convention, the IGC 2004 created an Article with three paragraphs by housing Articles III-60 and III-61 of the draft Constitution under the same roof (OJ 16.12.2004 C 310/73. Cf. OJ 18.7.2003 C 169/37–38):

Article III-170 Constitution

1. No Member State shall impose, directly or indirectly, on the products of other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products.

Furthermore, no Member State shall impose on the products of other Member States any internal taxation of such a nature as to afford indirect protection to other products.

2. Where products are exported by a Member State to the territory of another Member State, any repayment of internal taxation shall not exceed the internal taxation imposed on them whether directly or indirectly.

3. In the case of charges other than turnover taxes, excise duties and other forms of indirect taxation, remissions and repayments in respect of exports to other Member States may not be granted and countervailing charges in respect of imports from Member States may not be imposed unless the provisions contemplated have been previously approved for a limited period by a European decision adopted by the Council on a proposal from the Commission.

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What has anyone been able to say about the unchanged Article 110 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 indicated the changing numbering of Article 90 TEC and TFEU (ToL), to be renumbered Article 110 TFEU in the consolidated version, without comment (page 28).

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 110 TFEU, Article 90 TFEU (ToL) in the original Lisbon Treaty (page 12):

“Unchanged from Article 90 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 taxation on page 60 (although the heading ‘2. Taxation’ continued with (tax) harmonisation from page 60 to 61).

Because this blog post is an introduction to the tax provisions, we reproduce the comments on Articles 90 to 93 TFEU (ToL), later renumbered Articles 110 to 113 TFEU in the consolidated version:

“Articles 90–93 (Constitution Articles III-170 – III-171) concern taxation. They incorporate the existing tax provisions set out in Articles 90 to 93 TEC. There is a considerable body of European law concerning the harmonisation across Member States of indirect taxes: that is, VAT and excise duties on alcoholic drinks, hydrocarbon oils and tobacco products. At present the Treaty base for this legislation is Article 93 TEC, which states:

The Council shall, acting unanimously on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, adopt provisions for the harmonisation of legislation concerning turnover taxes, excise duties and other forms of indirect taxation to the extent that such harmonisation is necessary to ensure the establishment and the functioning of the internal market within the time limit laid down in Article 14. (122)

The new Article 93 (Constitution Article III-171) has one substantive change. Legislation for harmonising indirect taxes may be adopted (emphasis added) “provided that such harmonisation is necessary for the establishment or the functioning of the internal market and to avoid distortion of competition.” It remains the case that any such legislation must be agreed by the Council acting unanimously.”

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Footnote 122 stated: Article 14 refers to the establishment of the single European market on 1 January 1993.
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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 110 TFEU (Article 90 TEC and ToL).

The report is accessible at:

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

In case anyone wants to dig deeper, taxes, unanimity and harmonisation are discussed ‘passim’ in Volume II of the report ‘Evidence’.


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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

The Swedish government’s draft ratification bill ‘Lagrådsremiss – Lissabonfördraget’, was 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.

Tax provisions are dealt with on page 179 in a section called ‘Bestämmelser om skatter’. The government of Sweden remarks on the essentially unchanged nature of the tax provisions in general and it then explains the clarification of Article 93 TFEU (ToL):

”Bestämmelser om skatter

Bestämmelserna om skatter är i princip oförändrade. I artikel 93 i EUF-fördraget om harmonisering av lagstiftningen om omsättningsskatter, punktskatter och andra indirekta skatter eller avgifter på den inre marknaden görs ett förtydligande. Som nödvändig förutsättning för att harmonisera lagstiftning anges som tillägg “att undvika snedvridning av konkurrensen”. Rådet ska, i likhet med nu gällande EG-fördrag, fatta beslut med enhällighet i skattefrågor efter att ha hört Europaparlamentet. (Se artikel 2.79 i Lissabonfördraget.)”

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

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

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Finland

The 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), offers an introductury comment on taxes and charges (Veroja ja maksuja koskevat määräykset) and a brief statement on the unchanged nature of Article 90 TFEU (ToL), renumbered Article 110 TFEU (page 208):

”Määräykset koskevat veroihin ja maksuihin sovellettavia pääperiaatteita sekä neuvoston toimivaltaa niiden osalta ja ne vastaavat määräysten sanamuodon teknisiä tarkistuksia lukuun ottamatta pääasiallisesti nykyisen EYsopimuksen kolmannen osan VI osaston 2 luvun määräyksiä samoin kuin perustuslakisopimuksen III-171 ja III-172 artiklan määräyksiä.

90 artiklaa (uusi 110 artikla), joka kieltää jäsenvaltioita määräämästä muiden jäsenvaltioiden tuotteille korkeampia välillisiä tai välittömiä sisäisiä maksuja kuin kotimaisille tuotteille, 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), presents the same introductory remark on fiscal provisions under ’Bestämmelser om skatter och avgifter’ and the comment on the unchanged nature of Article 90 TFEU (ToL), the future Article 110 TFEU, on page 211:

”Bestämmelserna gäller de huvudprinciper som ska tillämpas på skatter och avgifter samt rådets befogenheter i fråga om dem och de motsvarar de tekniska anpassningarna av bestämmelsernas ordalydelse med undantag i huvudsak för bestämmelserna i avdelning VI kapitel 2 i det nuvarande EG-fördragets tredje del liksom även bestämmelserna i artiklarna III-171 och III-172 i det konstitutionella fördraget.

Artikel 90 (blivande artikel 110), som förbjuder medlemsstaterna att direkt eller indirekt på varor från andra medlemsstater lägga interna skatter eller avgifter som är högre än de skatter eller avgifter som direkt eller indirekt läggs på liknande inhemska varor, ändras inte.”

The ratification bill in Swedish can be accessed at:

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



Ralf Grahn

EU TFEU: Transport non-discrimination and direct effect

What’s in a name? When discrimination ‘shall be abolished’ is replaced by ‘shall be prohibited’ in the Treaty of Lisbon, non-discrimination and direct effect appear in a new light.


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Article 95 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 115/86:

Part Three ‘Policies and internal actions of the Union’

Title VI TFEU ‘Transport’

Article 95 TFEU
(ex Article 75 TEC)

1. In the case of transport within the Union, discrimination which takes the form of carriers charging different rates and imposing different conditions for the carriage of the same goods over the same transport links on grounds of the country of origin or of destination of the goods in question shall be prohibited.

2. Paragraph 1 shall not prevent the European Parliament and the Council from adopting other measures pursuant to Article 91(1).

3. The Council shall, on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, lay down rules for implementing the provisions of paragraph 1.

The Council may in particular lay down the provisions needed to enable the institutions of the Union to secure compliance with the rule laid down in paragraph 1 and to ensure that users benefit from it to the full.

4. The Commission shall, acting on its own initiative or on application by a Member State, investigate any cases of discrimination falling within paragraph 1 and, after consulting any Member State concerned, shall take the necessary decisions within the framework of the rules laid down in accordance with the provisions of paragraph 3.

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In Article 2, point 72 of the Treaty of Lisbon (ToL) the intergovernmental conference (IGC 2007) laid out the specific amendments to Article 75 TEC (OJ 17.12.2007 C 306/68):

72) Article 75 shall be amended as follows:

(a) in paragraph 1, the words ‘shall be abolished’ shall be replaced by ‘shall be prohibited’;

(b) in paragraph 2, the words ‘the Council’ shall be replaced by ‘the European Parliament and
the Council’;

(c) in the first subparagraph of paragraph 3, the words ‘the Economic and Social Committee’
shall be replaced by ‘the European Parliament and the Economic and Social Committee’.

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The TFEU table of equivalences tells us that Article 75 TEC first became Article 75 TFEU (ToL), but later renumbered Article 95 TFEU in the consolidated version (OJ 17.12.2007 C 306/210).

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The current Article 75 of the Treaty establishing the European Community (TEC) is found under Title V ‘Transport’ in the latest consolidated version of the treaties in force (OJ 29.12.2006 C 321 E/71–72):

Article 75 TEC

1. In the case of transport within the Community, discrimination which takes the form of carriers charging different rates and imposing different conditions for the carriage of the same goods over the same transport links on grounds of the country of origin or of destination of the goods in question shall be abolished.

2. Paragraph 1 shall not prevent the Council from adopting other measures pursuant to Article 71(1).

3. The Council shall, acting by a qualified majority on a proposal from the Commission and after consulting the Economic and Social Committee, lay down rules for implementing the provisions of paragraph 1.

The Council may in particular lay down the provisions needed to enable the institutions of the Community to secure compliance with the rule laid down in paragraph 1 and to ensure that users benefit from it to the full.

4. The Commission shall, acting on its own initiative or on application by a Member State, investigate any cases of discrimination falling within paragraph 1 and, after consulting any Member State concerned, shall take the necessary decisions within the framework of the rules laid down in accordance with the provisions of paragraph 3.

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We look at the previous stages of the treaty reform process. First, the European Convention.

According to Article III-138 of the draft Treaty establishing a Constitution for Europe, in addition to minor amendments, the cases of discrimination mentioned shall be ‘prohibited’ instead of ‘abolished’ as in the current Article 75 TEC (OJ 18.7.2003 C 169/54):

Article III-138 Draft Constitution

1. In the case of transport within the Union, discrimination which takes the form of carriers charging different rates and imposing different conditions for the carriage of the same goods over the same transport links on grounds of the Member State of origin or of destination of the goods in question shall be prohibited.

2. Paragraph 1 shall not prevent the adoption of other European laws or framework laws pursuant to the first paragraph of Article III-134.

3. The Council of Ministers, on a proposal from the Commission, shall adopt European regulations or decisions for implementing paragraph 1. It shall act after consulting the European Parliament and the Economic and Social Committee.

The Council of Ministers may in particular adopt the European regulations and decisions needed to enable the institutions to secure compliance with the rule laid down in paragraph 1 and to ensure that users benefit from it to the full.

4. The Commission, acting on its own initiative or on application by a Member State, shall investigate any cases of discrimination falling within paragraph 1 and, after consulting any Member State concerned, adopt the necessary European decisions within the framework of the European regulations and decisions referred to in paragraph 3.

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Article III-240 of the Treaty establishing a Constitution for Europe adopted the text of the European Convention with only some terminological change (OJ 16.12.2004 C 310/106–107).

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The current Article 75 TEC depends on implementing measures to abolish discrimination with regard to carriers charging different rates and imposing different conditions for the carriage of the same goods over the same transport links on grounds of the country of origin or of destination of the goods. As such, Article 75 TEC is not directly applicable.

The Treaty of Lisbon (TFEU) has taken over the prohibition concerning discriminatory transport practices, proposed by the European Convention. A prohibition can be applied directly, without the need for implementing rules.

On the other hand, given the general ban on ‘any discrimination on grounds of nationality’ in Article 18 TFEU (currently Article 12 TEC), what is the scope for the special prohibition in the area of transport policy and with regard to certain forms of discrimination?

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We now check our preliminary conclusions against how others who have scrutinised the Lisbon Treaty have informed ratifying parliaments and the public.


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 V Transport.

Peers highlighted the differences between the current Article 75 TEC, the Constitutional Treaty and the Lisbon Treaty, but found no need to comment on Article 75 TFEU (ToL), to be renumbered Article 95 TFEU in the consolidated version (page 21–22).

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). The comment on Article 95 TFEU, Article 75 TFEU (ToL) in the original Lisbon Treaty, focuses of the requirement to consult the European Parliament (page 11):

“In substance the same as Article 75 TEC, with a new requirement to consult the EP.”

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) wrapped up Transport in a brief comment on page 56:

“F. Transport

Title V, Articles 70-80 (Constitution Articles III-236 – 245) are on transport and are based largely on Articles 70 – 75 TEC, but with a change in the voting procedure to the OLP with QMV, except for Article 72, which replaces unanimity in the Constitution Article III-237 with a “special legislative procedure”. Other, minor, changes are Article 75(c), which adds the EP to those bodies to be consulted, and Article 78 (Constitution Article III-243), allowing the Article concerning German unification to be repealed after 5 years.

Present Articles 154 – 156 on Trans-European Networks (TENS) have been moved to Title VII and contain only minor amendments.”

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) made no explicit reference to Article 95 TFEU.

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 of the government of Sweden, ‘Lissabonfördraget; Statsrådsberedningen, Departementsserien (Ds), Ds 2007:48’ published 20 December 2007, bundled together transport and trans-European networks under the headline ‘Transporter och transeuropeiska nät’ (page 280 to 282).

The text offers an overview of the coming Title VI ‘Transport’. Without mentioning Article 75 TFEU (ToL), the future Article 95 TFEU, the consultation paper describes the current rules to abolish discrimination on page 281 and mentions the change that the European Parliament has to be consulted according to Article 75(3) TFEU (ToL):

“Beslutsförfarandet för att genomföra avskaffande av diskriminering vid transporter inom gemenskapen ändras på så sätt att Europaparlamentet ska höras innan rådet fattar beslut med kvalificerad majoritet (artikel 75.3 i EUF-fördraget).”

The consultation paper ’Lissabonfördraget’ is available at:

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

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Finland

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), explains the amendments to Article 75 TFEU (ToL), renumbered Article 95 TFEU, although it does not draw any connclusions from the difference between measures to abolish discrimination and an outright prohibition (page 206):

”75 artiklaa (uusi 95 artikla), joka koskee syrjintää yhteisön sisäisessä liikenteessä tavaroiden alkuperä- tai määrämaan perusteella, muutetaan siten, että syrjinnän poistamisen sijasta käytetään ilmaisua ”Unionin sisäisessä liikenteessä on kiellettyä”.

SEUT 75 artikla vastaa pääosin perustuslakisopimuksen III-240 artiklaa. Perustuslakisopimuksen III-240 artiklan 1 kohdassa käytetään kuitenkin ilmaisun ”tavaroiden alkuperä- tai määrämaa” sijasta ilmaisua ”tavaroiden alkuperä- tai määräjäsenvaltio”. Sen lisäksi perustuslakisopimuksen III-240 artiklan 2 ja 3 kohdassa yksilöidään käytettävät säädösinstrumentit.”

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), offers the same explanation on pages 208–209:

”Artikel 75 (blivande artikel 95), som gäller diskriminering vid transporter inom gemenskapen på grund av godsets ursprungs- eller bestämmelseland, ändras så att man i stället för avskaffandet av diskriminering använder ”vid transporter inom unionen ska all sådan diskriminering vara förbjuden".

Artikel 75 i EUF-fördraget motsvarar i huvudsak artikel III-240 i det konstitutionella fördraget. I artikel III-240.1 i det konstitutionella fördraget används dock uttrycket "godsets ursprungs- eller bestämmelsemedlemsstat” i stället för ”godsets ursprungs- eller bestämmelseland". I artikel III-240.2 och III-240.3 i det konstitutionella fördraget specificeras de rättsaktsinstrument som ska användas.”

The ratification bill in Swedish can be accessed at:

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

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The current Article 75 TEC does not, if I understand correctly, have direct effect, since it depends on implementing measures. But the new TFEU 95 prohibition on discrimination should be directly applicable as ‘lex specialis’. In a concrete case the provision’s scope for non-discrimination and direct effect requires study, with the general ban on discrimination based on nationality (18 TFEU, 12 TEC) as a guiding light for interpretation.

Should my reasoning be correct, I am surprised that my sources have paid so little attention to the proposed change.


Ralf Grahn

EU TFEU: Freedom of movement for workers

Not only goods, services and capital, but humans looking for work are meant to be able to move freely within the European Community (European Union).

We take a brief look at what the freedom of movement of workers looks like at treaty level, when the Treaty of Lisbon has entered into force.

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We continue our study of Part Three ‘Policies and internal actions of the Union’ in the light of the Lisbon Treaty.

Title III ‘Free movement of persons, services and capital’ of the Treaty establishing the European Community (TEC), first becomes Title III with the same name of the Treaty of Lisbon (ToL) version of the Treaty on the Functioning of the European Union (TFEU), later to be renumbered Title IV.

Chapter 1 ‘Workers’ retains its name and number throughout. (See OJ 17.12.2007 C 306/207-208.)

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Arriving at Article 39 TEC the intergovernmental conference (IGC 2007) was far from loquacious (OJ 17.12.2007 C 306/54):

FREE MOVEMENT OF WORKERS

50) In Article 39(3)(d), the word ‘implementing’ shall be deleted.

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With one word to delete, we have a certain need to find the precious rest of the provision. The latest consolidated version of the current TEU and TEC is found in OJ 29.12.2006 C 321 E/57-58:

TITLE III
FREE MOVEMENT OF PERSONS, SERVICES AND CAPITAL

CHAPTER 1
WORKERS

Article 39 TEC

1. Freedom of movement for workers shall be secured within the Community.

2. Such freedom of movement shall entail the abolition of any discrimination based on nationality between workers of the Member States as regards employment, remuneration and other conditions of work and employment.

3. It shall entail the right, subject to limitations justified on grounds of public policy, public security or public health:

(a) to accept offers of employment actually made;

(b) to move freely within the territory of Member States for this purpose;

(c) to stay in a Member State for the purpose of employment in accordance with the provisions governing the employment of nationals of that State laid down by law, regulation or administrative action;

(d) to remain in the territory of a Member State after having been employed in that State, subject to conditions which shall be embodied in implementing regulations to be drawn up by the Commission.

4. The provisions of this Article shall not apply to employment in the public service.

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A consolidated Lisbon Treaty version of an Article builds upon the express amendments (here only one), possible horizontal amendments and the future renumbering. Indicating the setting of the provision, we should end up with the following result:

Part Three ‘Policies and internal actions of the Union’

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

Chapter 1 ‘Workers’

Article 39 TFEU (ToL), renumbered Article 45 TFEU

1. Freedom of movement for workers shall be secured within the Union.

2. Such freedom of movement shall entail the abolition of any discrimination based on nationality between workers of the Member States as regards employment, remuneration and other conditions of work and employment.

3. It shall entail the right, subject to limitations justified on grounds of public policy, public security or public health:

(a) to accept offers of employment actually made;

(b) to move freely within the territory of Member States for this purpose;

(c) to stay in a Member State for the purpose of employment in accordance with the provisions governing the employment of nationals of that State laid down by law, regulation or administrative action;

(d) to remain in the territory of a Member State after having been employed in that State, subject to conditions which shall be embodied in regulations to be drawn up by the Commission.

4. The provisions of this Article shall not apply to employment in the public service.

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In Article III-18 of the draft Treaty establishing a Constitution for Europe nothing changed the substance of the provision, but some readers may prefer the plain language of the European Convention in a few details while others may miss the formula ‘freedom of movement for workers’ (OJ 18.7.2003 C 169/31):

SECTION 2
Free movement of persons and services

Subsection 1
Workers

Article III-18 Draft Constitution

1. Workers shall have the right to move freely within the Union.

2. Any discrimination based on nationality between workers of the Member States as regards employment, remuneration and other conditions of work and employment shall be prohibited.

3. Workers shall have the right, subject to limitations justified on grounds of public policy, public security or public health:

(a) to accept offers of employment actually made;

(b) to move freely within the territory of Member States for this purpose;

(c) to stay in a Member State for the purpose of employment in accordance with the provisions governing the employment of nationals of that State laid down by law, regulation or administrative action;

(d) to remain in the territory of a Member State after having been employed in that State, subject to conditions which shall be embodied in European regulations adopted by the Commission.

4. This Article shall not apply to employment in the public service.

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The corresponding Article III-133 of the Treaty establishing a Constitution for Europe repeated the text of the draft word for word, so the Lisbon Treaty can be said to have reverted to the TEC text, as far as there are any differences, and none of them material.

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The reader who wants to begin exploring the right to move freely can start from the Commission’s pages on Employment and Social Affairs, Free Movement of Workers ‘Free Movement of Workers and the Principle of Equal Treatment’ and the links offered:

http://ec.europa.eu/employment_social/free_movement/index_en.htm


Ralf Grahn

Discrimination of EU nationals

One of the most important provisions of the Treaty Establishing the European Community is Article 12, which prohibits discrimination on grounds of nationality:

Within the scope of application of this Treaty, and without prejudice to any special provisions contained therein, any discrimination on grounds of nationality shall be prohibited.

The Council, acting in accordance with the procedure referred to in Article 251, may adopt rules designed to prohibit such discrimination.

This prohibition of discrimination on grounds of nationality is a fundamental principle of the European Community. Without it the exercise of the four fundamental freedoms would be impaired.

EC nationals have a right to expect to be treated in a non-discriminatory manner in other Member States.

On the other hand, we have to treat nationals of other EC countries fairly.

The principle is clear, but as in many other cases it takes a lot of effort to change attitudes and habits.

Ralf Grahn