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The EU internal market

EUROPEAN UNION (EU) MARKET: OPERATING PRINCIPLES AND LEGAL FRAMEWORK

The EU market, which is also called “the internal market”, offers an area devoid of national borders and barriers so that people, goods and services can move freely under the Treaty establishing the European Community. The internal market is essential for prosperity, growth and employment in the EU, helping to achieve the Union’s main goals in the context of the Lisbon Strategy. Since it is an integrated, open and competitive space, it promotes mobility, competitiveness and innovation in interaction, in particular, with sectoral Community policies. In order to ensure that every citizen or organization can reap the full benefits of the unique market, the EU focuses on removing obstacles that still obstruct its functioning. EU seeks to harmonize the various laws to face the challenges of globalization and to better adapt to developments such as new technologies.[1]

Basic principles of the EU market:

- Free movement of goods (each entity has the right to export to the most convenient market);
- Free movement of services (each can provide services where the market seems to be more attractive);
- Free movement of labor force (everyone has the right to work in any EU country);
- Free movement of capital (everyone has the right deposit his/her own money where he/she believes that it is more profitable and safe).

The notion of duty in its traditional understanding (in the sense of national duty) represents all norms of law governing relations reffered to:

- General customs rules (common customs territory, transport and temporary storage in customs, appearance, chargeability and customs debt forgiveness, rights redemption or returning, etc.);
- Basic customs instruments (tariffs, customs value, origin of goods);
- Applying the Common Customs Tariff (tariff classification, tariff derogations, exemption from payment);
- Specific customs rules (movement of goods, economic customs regimes);
- Penalties (settlement of customs disputes, prevention of Community law infringements);
- International customs cooperation.

The EU customs law includes:

- Primary legal documents (statutory agreements of the European Communities and the European Union);
- Secondary legal documents (normative acts of the EC institutions);
- Decisions of the Court of Justice of the European Communities;
- International agreements between the Community and the Member States.

1. The primary legal documents

The Primary legal documents include the EEC primary statutory agreements, the European Atomic Energy Community, the Single European Act, the Treaties of Maastricht, Amsterdam, Nice and agreements of new members integration into the European Community.

The acts of the respective group have higher legal power in the European legal system.

In 1950 the French Foreign Minister Robert Shuman proposed the creation of a Coal and Steel Industries union in Western Europe. The next year his ideas were implemented in the Paris Agreement and the EU predecessor appeared – the European Coal and Steel Community. Since then, the EU had been regularly introducing corrections and modifications in the agreements, in order to improve the policies implementation and decision-making processes. The Paris Agreement, under which the European Coal and Steel Community emerged, was signed on 18 April 1951 and entered into force in 1952. Its validity term expired in 2002.

- Treaty of Rome[2] is the treaty which established the creation of the European Economic Community (EEC) and was signed by France, West Germany, Holland, Italy, Belgium and Luxembourg on 25 March 1957.

Initially, the full name of the treaty was - Treaty establishing the European Economic Community. However, the Maastricht Treaty amended it, eliminating, among other things, the word "economic" as from the name of the community as well as from the Treaty. For this reason, the treaty is often called the Treaty establishing the European Community or the EC Treaty.

On the same day a treaty establishing the European Atomic Energy Community (EAEC, Euratom) was also signed: the two treaties, together with the Treaty establishing the European Coal and Steel Community, which expired in 2002, became the Treaties of Rome. Both the Rome Treaty and the EAEC Treaty entered into force on 1 January 1958.

- Treaty of Maastricht[3] was signed on 7 February 1992 and entered into force in 1993. According to the Maastricht Treaty, the European Union is consists of three pillars:

Pillar I: The European Communities, which include the three existing communities: the European Coal and Steel Community (ECSC), the European Atomic Energy Community (EAEC or Euratom) and the European Economic Community (EEC), whose name is changed in the Community;
Pillar II: Common Foreign and Security Policy (CFSP);
Pilonul III: police and judicial cooperation in criminal matters (JHA).

Cooperation levels are various. If the first pillar institutions play an important role in decision making, being taken by qualified majority in many areas, then in the frames of the second and third pillars intergovernmental cooperation is instituted and the role of the EU institutions remains limited.

- Treaty of Amsterdam[4] was signed on 2 October 1997 and entered into force on 1 May 1999. This Treaty amended the Maastricht Treaty, still, without replacing it. Its initial goal was to ensure empowerment to the EU after enlargement to the east as well. Unfortunately, the deep EU reforming failed, requiring other measures (Treaty of Nice and the European Constitution). The Treaty extended the European Parliament’s rights aimed at its co-participation in the decision-making process.

- Treaty of Nice was signed on 26 February 2001 and entered into force in 2003. The objective of the Treaty of Nice, considered indispensable for future enlargements, is providing proper institutional activity when the Union will have almost 30 members, following therefore the spectrum of institutional reforms whose three main axes are: organizing and functioning of European institutions, decision procedure of the Council of Ministers and strengthening cooperation between institutions.

- Treaty of Lisbon[5] was signed on 13 December 2007 and entered into force in 2009. Treaty of Lisbon amends the Treaty on European Union and EC Treaties (without replacing them) and provides the Union with legal framework and tools necessary to meet future challenges and citizens’ expectations. A more democratic and transparent Europe, where the European Parliament and national parliaments shall enjoy an enhanced role, where citizens are more likely to be heard and which states more clearly what is to be done at European and national level and by whom.

2. Secondary legislative documents

The most important acts defining the EU customs legislation are:

- Regulations - binding legislative acts applied in their entirety across the EU. The most important instrument of the European law is the Regulation (EEC) No. 2913 of 12 October 1992 establishing the Community Customs Code – a fundamental document that establishes persons’ rights and obligations regarding the European Communities customs regulations and unique customs tariff.

- Decisions - Decisions are binding acts which may have general application or may apply to a specific addressee. Addressees may be EU member states as well as legal entities (private) or certain categories of people.

- Directives - similar to the Regulation, is mandatory for the State or the number of countries covered. However, national competent authorities establish forms and methods of implementation for the tasks imposed by the Directive. In some instances, more frequently in the field of customs law, directives include details on how to apply them, making the Commission responsible for their implementation. Directives are widely used as tools for harmonization the European countries’ national legislation, particularly in the area of customs policy.

- International agreements - the international-legal acts represent basic sources for the European customs law. They fall into two types:

a. International agreements which are concluded by Communities or by Communities and Member States;
b. International agreements concluded by Member States with third countries or international organizations, which have jurisdiction of the Communities.

The first type primarily concerns the General Agreement on Tariffs and Trade (GATT) 1994, signed by the European Community as a Contracting Party in 1994 under the Agreement establishing the World Trade Organisation (WTO).

The International Convention on Harmonized Commodity Description and Coding System of 14 June 1983, which served as basis for the Combined Nomenclature of the European Union, is also included into the above mentioned category.

The Customs Convention on International Transport of Goods under cover of TIR Carnets (T.I.R. Convention) of 14 November 1975 was signed by the Community and its Member States.

Among the secondary documents of international law, which serve as sources for the EU customs law, the following can be mentioned: The International Convention on Simplification and Harmonization of Customs Procedures signed in Kyoto in 1973 and the Convention of December 6, 1961 regarding the ATA carnet for the temporary admission of goods, concluded in Brussels in December 1961 (ATA Convention).

A number of international agreements between the Member States govern the operating territorial aspects of the EU customs law. The customs union represents a basis for the EU, which covers all trade and assumes the prohibition of import and export duties and any equivalent payments in trade between Member States and the establishment of a single customs tariff in relations with the third countries.

The EU Customs Union operates according to the following principles:

- elimination of customs duties and equivalent payments between Member States;
- elimination of quantitative restrictions and any equivalent measures in the Member States‘ mutual trade;
- adoption of indirect taxation conditions that impact on the movement of goods within the Community;
- adoption of a single external tariff.

[1] www.europa.eu
[2] www.europa.eu
[3] www.europa.eu
[4] www.europa.eu
[5] www.europa.eu

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This website has been prepared by the EU-funded project "Support to the DCFTA process in the Republic of Moldova" and implemented by the European Profiles S.A. led Consortium.
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