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EUROPEAN SINGLE MARKET:

COMPARATIVE STATE PRACTICE

Legal Memorandum

January 2013


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EUROPEAN SINGLE MARKET:COMPARATIVE STATE PRACTICE

Executive Summary

The purpose of this memorandum is to determine how the European singlemarket is defined, and how states in the European Economic Area (EEA) and

Switzerland have implemented the requirements associated with the European

single market domestically.

The European single market is comprised of EEA states (European Union

member states plus Iceland, Norway, and Liechtenstein) and Switzerland.

Norway, Liechtenstein, Iceland, and Switzerland also make up the European Free

Trade Association (EFTA). The European single market requires four freedoms:

(1) the freedom of movement of goods, (2) the freedom of movement of services,

(3) the freedom of movement of people, and (4) the freedom of movement ofcapital.

The freedom of movement of goods within the European single market requires

the lifting of all physical, technical, and tax obstacles to trade within the single

market member states, including the prohibition of customs duties on imports and

exports. The freedom of movement of services has two components: (1) the

freedom of establishment, and (2) the freedom to provide cross-border services.

These freedoms permit nationals from any single market member state to conduct

economic activities in the territory of any other single market member state underthe same conditions set forth for that states citizens. The freedom of movement of

people provides that a citizen from any single market member state must be able to

study, work, or retire in any other single market member state. Lastly, the freedom

of movement of capital requires the removal of domestic restrictions on capital

within the single market. Capital includes direct investments, investments in real

estate, operations in securities and in current and deposit accounts, and financial

loans and credits.

In implementing the European single market, all single market member states

must incorporate EU Directives and other rules governing the single market intonational legislation and practice. The EEA EFTA member states (Iceland,

Norway, and Liechtenstein) incorporate the Directives into the EEA Agreement,

while Switzerland implements the Directives pursuant to bilateral agreements with

the EU. The European Commission (EC) and the EFTA Surveillance Authority

are responsible for monitoring such implementation. If states are noncompliant,

the EC can begin infringement proceedings and refer the case to the European


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Court of Justice (ECJ). Similarly, the EFTA Surveillance Authority can submit a

case to the EFTA Court. This type of monitoring serves to identify and lift

national barriers to the four freedoms.

While policy concerning the single market is largely the same in the EU andEEA, states supply different reasons for selecting membership in one over the

other. In the case of Switzerland, which is not an EU or EEA member, the single

market is implemented through a series of bilateral agreements with the EU.

Moreover, while states employ different laws and practices for implementing EU

Directives and other policies concerning the four freedoms, it is essential that

individual approaches to implementation function together for a working single

market.


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European Single Market, January 2013

GLOSSARY OF ACRONYMS

EC European Commission

ECJ European Court of Justice

EC Treaty Treaty Establishing the European

Community (1992)

(Formerly the EEC Treaty; now

the Treaty on the Functioning of

the European Union)

EEA European Economic Area

(EU states plus Iceland, Norway,

and Liechtenstein)

EEA EFTA Member States Iceland, Norway, and

Liechtenstein

EEC Treaty European Economic Community

Treaty (1957)

EFTA European Free Trade Association

(Iceland, Norway, Liechtenstein,and Switzerland)

EU European Union

Single Market Member States EU states plus Iceland, Norway,

Liechtenstein, and Switzerland


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TABLE OF CONTENTS

Statement of Purpose 1

Introduction 1

Definition of the Single Market 3

Freedom of Movement of Goods 3

Freedom of Movement of Services 5

Freedom of Movement of People 8

Freedom of Movement of Capital 9

Implementation of the Single Market Comparative State Practice 11

Freedom of Movement of Goods 12Germany 12

France 13

Iceland 14

Freedom of Movement of Services 16

Spain 16

Belgium 18

Germany 19

Freedom of Movement of People 21

Belgium 22Iceland 23

United Kingdom 23

Freedom of Movement of Capital 24

Norway 24

Germany 25

The Single Market and Differences Between EEA and EU Membership 26

Iceland 27

The Case of Switzerland and Bilateral Agreements 28

Conclusion 30


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1

EUROPEAN SINGLE MARKET:COMPARATIVE STATE PRACTICE

Statement of Purpose

The purpose of this memorandum is to determine how the European singlemarket is defined, and how states in the European Economic Area (EEA) and

Switzerland have implemented the requirements associated with the European

single market domestically.

Introduction

Since the Treaty of Rome established the European Economic Community

(EEC) in 1957, the ultimate establishment of a single European economic space

with a common market was on the agenda of many European states.1 In the

1980s, the European Commission (EC) resolved to remove all physical, technical,and tax obstacles to trade and other areas of free movement within the Union.

2

These efforts culminated in the 1987 Single Market Act, which provided a 1992

goal of merging national markets to create a frontier-free single European

market.3 The EU adopted nearly 280 pieces of legislation, which the EU member

states internalized, to make the single market a reality by 1993. In addition, the

EU evoked the mutual recognition principle to ensure that EU member states

recognize one anothers standards as their own, particularly with regard to

technical, quality, and safety specification of products, the provision of services,

and professional qualifications.

4

The formation and functioning of the singleEuropean market revolves around four freedoms.5 These include the freedom of

1Nicholas Moussis, ACCESS TO EUROPEAN UNION:LAW,ECONOMICS,POLICIES 19

THED. (2011), available at

http://www.europedia.moussis.eu/books/Book_2/3/6/index.tkl?all=1&pos=62.2Europa, Single Market Act Frequently Asked Questions, (April 13, 2011), available at

http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/11/239&format=HTML&aged=0&language=EN&guiLanguage=en.3Europa, Single Market Act Frequently Asked Questions, (April 13, 2011), available at

http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/11/239&format=HTML&aged=0&language=EN

&guiLanguage=en.4European Commission, The Mutual Recognition Principle in the Single Market(June 6, 2007), available at

http://europa.eu/legislation_summaries/internal_market/internal_market_general_framework/l21001b_en.htm.5Nicholas Moussis, ACCESS TO EUROPEAN UNION:LAW,ECONOMICS,POLICIES 19


http://www.europedia.moussis.eu/books/Book_2/3/6/index.tkl?all=1&pos=62; European Commission, General

Policy Framework, (June 26, 2012), available athttp://ec.europa.eu/internal_market/top_layer/index_en.htm.


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2

movement of goods, people, services, and capital.6 The EU continues to improve

the functioning of the single market.7

To expand the reach of the European single market, the EU member states

entered into the European Economic Area (EEA) Agreement with three of theEuropean Free Trade Association (EFTA) member states (Iceland, Liechtenstein,

and Norway) in 1994.8 The EEA Agreement serves to integrate these three EFTA

states into the European single market9The EEA Agreement provides for the same

essential four freedoms that are at the center of the European single market.10

Parts

I, II, III, V, and VI of the Agreement pertain to the freedom of movement of goods,

services, persons, and capital through the EU and Iceland, Liechtenstein, and

Norway.11

The EEA Agreement does not, however, provide for a common

customs union, foreign and security policy, justice and home affairs, or a monetary

union.12

Because the EEA Agreement excludes some areas of cooperation with

EU member states, Iceland, Norway, and Liechtenstein receive advantages as wellas face challenges with regard to their position in Europe and its economy.

Switzerland, which is not part of the EU or the EEA, governs its economic

relations in Europe through a series of bilateral agreements, which cover the four

freedoms central to the European single market. Switzerlands first major treaty

was the Free Trade Agreement of 1972.13

Switzerland rejected EEA membership

in 1992 and confirmed as recently as 2010 that bilateral agreements are thepreferred method for serving Swiss interests in Europe.

14

The EU continues to improve the functioning of the single market by issuingdirectives, regulations, and guidance.

15 The EEA EFTA member states (Iceland,

Norway, and Liechtenstein) incorporate the directives into the EEA Agreement,

6Nicholas Moussis, ACCESS TO EUROPEAN UNION:LAW,ECONOMICS,POLICIES 19


http://www.europedia.moussis.eu/books/Book_2/3/6/index.tkl?all=1&pos=62; European Commission, General

Policy Framework, (June 26, 2012), available athttp://ec.europa.eu/internal_market/top_layer/index_en.htm.7European Commission, The EU Single Market: Historical Overview, (June 26, 2012), available at

http://ec.europa.eu/internal_market/top_layer/historical_overview/index_en.htm.8EFTA,EEA Agreement, (2012) available athttp://www.efta.int/eea/eea-agreement.aspx.

9EFTA,EEA Agreement, (2012) available athttp://www.efta.int/eea/eea-agreement.aspx.10EFTA,EEA Agreement, (2012) available athttp://www.efta.int/eea/eea-agreement.aspx.

11Agreement on the European Economic Area (1994), available athttp://www.efta.int/~/media/Documents/legal-texts/eea/the-eea-agreement/Main%20Text%20of%20the%20Agreement/

EEAagreement.pdf.12EFTA,EEA Agreement(2012) available athttp://www.efta.int/eea/eea-agreement.aspx.13

Integration Office FDFA/FDEA, Swiss Policy on the European Union (last accessed Dec. 20, 2012), available athttp://www.europa.admin.ch/themen/00499/index.html?lang=en.14

Integration Office FDFA/FDEA, Swiss Policy on the European Union(last accessed Dec. 20, 2012), available at

http://www.europa.admin.ch/themen/00499/index.html?lang=en.15

European Commission, The EU Single Market: Historical Overview, (June 26, 2012), available at

http://ec.europa.eu/internal_market/top_layer/historical_overview/index_en.htm.


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while Switzerland implements the directives pursuant to bilateral agreements with

the EU.16

The EEA has a Joint Committee that issues decisions about

incorporating EU directives into the EEA. EEA member states are obligated to

implement the directives into national legislation, but are free to choose the method

and form of implementation.

17

The bilateral agreements between the EU andSwitzerland, on the other hand, do not contain any mechanism for automatically

transposing the EU directives into Swiss national law. Moreover, the agreements

do not cover every aspect of the internal market; for instance, there is no agreement

directly covering the free movement of services.18

It is therefore more difficult to

compel Switzerland to remove all barriers to the single market in the same waythat the EEA member states do.

19

Definition of the Single Market

The European single market provides direct access to a number of Europeanstate economies for businesses, service-providers, consumers, and migrants. At the

foundation of the European single market are the four freedoms: (1) the freedom of

movement of goods, (2) the freedom of movement of services, (3) the freedom of

movement of people, and (4) the freedom of movement of capital.

Freedom of Movement of Goods

Since 1993, the freedom of movement of goods within the EU has been

largely unrestricted and without customs tariffs.20

The movement of most products

depends on the mutual recognition principle, which requires that products from one

16EFTA Surveillance Authority,Internal Market Scoreboard, 4 (March, 2011), available at

http://www.eftasurv.int/media/scoreboard/Scoreboard-No.-27---March-2011.pdf; European Parliament,European

Parliament resolution of 7 September 2010 on EEA-Switzerland: Obstacles with regard to the full implementation of

the internal market, 2009/2176(INI), 2 (Sept. 7, 2012), available at

http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P7-TA-2010-

0300+0+DOC+XML+V0//EN.17

EFTA Surveillance Authority,Internal Market Scoreboard, 4 (March, 2011), available at

http://www.eftasurv.int/media/scoreboard/Scoreboard-No.-27---March-2011.pdf.18European Parliament,European Parliament resolution of 7 September 2010 on EEA-Switzerland: Obstacles with

regard to the full implementation of the internal market, 2009/2176(INI), 2 (Sept. 7, 2012), available at

http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P7-TA-2010-0300+0+DOC+XML+V0//EN.19European Parliament,European Parliament resolution of 7 September 2010 on EEA-Switzerland: Obstacles with


http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P7-TA-2010-0300+0+DOC+XML+V0//EN.20

Europa,Free Movement of Goods: General Framework, available at

http://europa.eu/legislation_summaries/internal_market/single_market_for_goods/free_movement_goods_general_fr

amework/index_en.htm; European Commission, The EU Single Market: A Single Market for Goods, (September 13,

2012), available athttp://ec.europa.eu/internal_market/top_layer/goods/index_en.htm.


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single market member state should be able to move through any other single

market member state.21

Both the EEA and EU regulations contain requirements

regarding the movement of goods.

The EEA Agreement provides that customs duties on imports and exports,and any charges having equivalent effect shall be prohibited.22

Additionally,

quantitative restrictions (minimum or maximum quotas) on imports and exports are

not permitted between the parties to the EEA Agreement.23

Exceptions on

restrictions may be allowed, however, for public morality, public policy or public

security; the protection of health and life of humans, animals, or plants; the

protection of national treasures possessing artistic, historic, or archeological value;

or the protection of industrial and commercial property.24

Furthermore, internal

taxation by one state on products from another state must be similar to those taxes

on comparable domestic products, to avoid any undue preference that would

inhibit the free trade principle.25 To facilitate trade, parties must commit tosimplify border controls and formalities.

26 Chapters 2, 4, and 5 of the EEA

Agreement provide sector specific provisions on the free movement of goods,

including measures regarding agricultural and fishery products, coal and steel

products, and arrangements concerning energy.27

EU legislation provides more detailed requirements for the movement of

goods. For the EU to facilitate cooperation among single market member states,

initiatives such as Regulation No. 765/2008 provide requirements for accreditation

and market surveillance in relation to marketing of products for all member

21European Commission, The EU Single Market: A Single Market for Goods(September 13, 2012), available at

http://ec.europa.eu/internal_market/top_layer/goods/index_en.htm.22

Agreement on the European Economic Area art. 10(1994), available athttp://www.efta.int/~/media/Documents/legal-texts/eea/the-eea-agreement/Main%20Text%20of%20the%20Agreement/

EEAagreement.pdf.23

Agreement on the European Economic Area art. 11-12(1994), available athttp://www.efta.int/

~/media/Documents/legal-texts/eea/the-eea-agreement/Main%20Text%20of%20the%20Agreement/

EEAagreement.pdf.24Agreement on the European Economic Area art. 13(1994), available athttp://www.efta.int/


EEAagreement.pdf.25Agreement on the European Economic Area art. 14(1994), available athttp://www.efta.int/


EEAagreement.pdf.26

Agreement on the European Economic Area art. 21(1994), available athttp://www.efta.int/~/media/Documents/legal-texts/eea/the-eea-agreement/Main%20Text%20of%20the%20Agreement/

EEAagreement.pdf.27

Agreement on the European Economic Area ch. 2, 4, 5(1994), available athttp://www.efta.int/


EEAagreement.pdf.


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5

states.28

Some restrictions still may be imposed on products that present major

risks to consumers, public health, and the environment, such as pharmaceuticals

and construction products.29

In order to address the movement of high-risk

products, EU legislation harmonizing technical regulations has been proposed.30

Freedom of Movement of Services

The freedom of movement of services is addressed in the Treaty on the

Functioning of the European Union, the EEA Agreement, and EU legislation.

There are two core principles expressed in the Treaty on the Functioning of the

European Union that lay out the foundation for the freedom of movement of

services in the single market. The first is the freedom of establishment, which

allows for a company or person to conduct an economic activity in another single

market member state on a temporary or intermittent basis without being

established.31 However, when individuals and businesses begin to participate inother member states on a stable and continuous basis, for instance by setting up

agencies, subsidiaries, or branches, they are considered established according to

the jurisprudence of the European Court of Justice (ECJ).32

The second essential

component is the freedom to provide cross border services.33

The freedom to

provide cross border services means that a service provider in one single market

member state may offer to provide services in another single market member state

on a temporary basis, without being considered established. In other words, a

service provider cannot be required to set up agencies, subsidiaries, or branches in

another single market member state in order to offer services in that state.

34

28Europa,Free Movement of Goods: General Framework, available athttp://europa.eu

/legislation_summaries/internal_market/single_market_for_goods/free_movement_goods_general_framework/l3324

8_en.htm.29

European Commission, The EU Single Market: A Single Market for Goods, (September 13, 2012), available at

http://ec.europa.eu/internal_market/top_layer/goods/index_en.htm.30

European Commission, The EU Single Market: A Single Market for Goods, (September 13, 2012), available at

http://ec.europa.eu/internal_market/top_layer/goods/index_en.htm.31European Commission, The EU Single Market: General Principles: Freedom to Provide Services/Freedom of

Establishment, available athttp://ec.europa.eu/internal_market/services/principles_en.htm.32European Commission, Guide to the Case Law on the European Court of Justice: Freedom of Establishment, 24,

available athttp://ec.europa.eu/internal_market/services/docs/infringements/art49-establishment_en.pdf;

Commission v. Portugal, Case C-171/02, 24-25, European Court of Justice (Apr. 29, 2004), available at

http://curia.europa.eu/juris/document/document.jsf?text=&docid=49103&pageIndex=0&doclang=en&mode=lst&dir=&occ=first&part=1&cid=1463863.33

European Commission, The EU Single Market: General Principles Freedom to Provide Services/Freedom of

Establishment, available athttp://ec.europa.eu/internal_market/services/principles_en.htm.34


Establishment, available athttp://ec.europa.eu/internal_market/services/principles_en.htm.


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6

Single market member states must ensure that their national laws and

policies are in compliance with the Treaty, and do not obstruct other members

freedom of establishment and freedom to provide services.35

There are some

exceptions where national restrictions are in place to safeguard against threats to

national interests, such as risks to public policy, public health or public security.

36

For instance, the ECJ has held that freedom of establishment may be restricted

where it threatens public interests such as the interests of creditors, employees, and

minority shareholders, the fairness of commercial transactions, or the effectiveness

of fiscal supervision.37

Additionally, the conceptions of the freedom of

establishment and the freedom to provide services have been developed through

the case law of the ECJ.38

Because barriers to the freedom of movement of services still exist in

practice, such as the need for clarification of the legal requirements to set up

services in another member state,39the 2006 EU Services Directive was enacted tofacilitate the provision of cross-border services, and to remove legal and

administrative barriers to service activities.40

The Directive obliges single market

member states to simplify procedures and formalities for service providers.41

In

particular, single market member states must eliminate any and all unjustified or

disproportionate obstacles to the establishment of businesses and the cross-border

provision of services.42

The Directive provides that single market member states

must install single points of contact within their governments to communicate all

relevant information for administrative purposes.43

35European Commission, The EU Single Market: General Principles Freedom to Provide Services/Freedom of

Establishment, available athttp://ec.europa.eu/internal_market/services/principles_en.htm.36European Commission, The EU Single Market: General Principles Freedom to Provide Services/Freedom of

Establishment, available athttp://ec.europa.eu/internal_market/services/principles_en.htm.37

European Commission, Guide to the Case Law on the European Court of Justice: Freedom of Establishment, 69,available athttp://ec.europa.eu/internal_market/services/docs/infringements/art49-establishment_en.pdf; SEVIC

Systems AG, Case C-411/03, 24, European Court of Justice (Dec. 13, 2005), available at

http://curia.europa.eu/juris/document/document.jsf?text=&docid=57066&pageIndex=0&doclang=en&mode=lst&dir

=&occ=first&part=1&cid=1463388.38


Establishment(last accessed Dec. 12, 2012), available at

http://ec.europa.eu/internal_market/services/principles_en.htm.

39European Commission, Services Directive Frequently Asked Questions, available athttp://ec.europa.eu/internal_market/services/services-dir/faq_en.htm#3.40Directive 2006/123/EC, Preamble, para. 116 (European Parliament, 2006), available at http://eur-

lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32006L0123:EN:HTML. 41

Directive 2006/123/EC, art. 5 (European Parliament, 2006), available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32006L0123:EN:HTML.42

Directive 2006/123/EC, art. 9-10 (European Parliament, 2006), available at http://eur-

lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32006L0123:EN:HTML.43

Directive 2006/123/EC, art. 6 (European Parliament, 2006), available at http://eur-

lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32006L0123:EN:HTML.


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Single market member states were required to implement the Services

Directive into their national systems by the end of 2009.44

All EU member states

have confirmed domestic implementation of the Services Directive, although

challenges remain. For instance, the EC has expressed doubt that legislation in theUnited Kingdom and Belgium conforms to the Directives principle that

authorization to operate within a state means that a business should be able to

operate within the entire territory of that state, and not just those areas specified by

the state.45

Though the EEA EFTA member states have likewise implemented the

Services Directive, challenges remain for these states as well. A 2010 report by

the EFTA Surveillance Authority showed that each of these states had put forward

justifications for remaining obstacles to implementation that lacked specificity and

inadequate bases for necessity.46

As of September 2010, Switzerland had not

implemented the Services Directive, in part because there is no bilateral agreement

comprehensively addressing services.47

Freedom of establishment and the freedom to provide cross-border services

are also an integral part of the EEA Agreement. Under the EEA Agreement,

freedom of establishment means the right of an individual or company to conduct

an economic activity in another contracting state under the same conditions as

those in its home state.48

Restrictions on the freedom of establishment concerning

public policy, public security, or public health, however, are permissible.49

The

EEA Agreement declares that nationals from contracting states are allowed the

freedom to provide services in all contracting states territory, and this freedomwill not be restricted.50

In particular, services under the EEA Agreement include

44Directive 2006/123/EC, art. 44 (European Parliament, 2006), available at http://eur-


European Commission,Implementation of the Services Directive: A Partnership For New Growth in Services2012-2015 Frequently Asked Questions(June 8, 2012), available at http://europa.eu/rapid/press-release_MEMO-

12-429_en.htm?locale=en.46

EFTA Surveillance Authority,Report on the Implementation of Directive 2006/123/EC in the EFTA States, 8 (Jan.

26, 2011), available athttp://www.eftasurv.int/media/internal-

market/Report_on_the_implementation_of_the_Service_Directive.pdf.47European Parliament,European Parliament resolution of 7 September 2010 on EEA-Switzerland: Obstacles with


http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P7-TA-2010-0300+0+DOC+XML+V0//EN.48Agreement on the European Economic Area art. 31(1) (1994), available athttp://www.efta.int/


EEAagreement.pdf.49Agreement on the European Economic Area art. 33 (1994), available athttp://www.efta.int/


EEAagreement.pdf.50

Agreement on the European Economic Area art. 36 (1994), available athttp://www.efta.int/



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8

activities of an industrial or commercial character, and the activities of craftsmen

and professionals.51

Freedom of Movement of People

The freedom of movement of people has been an objective of many

European states since the creation of the European Community, and it remains of

fundamental importance to the functioning of the EU today.52

The removal of

internal border controls has facilitated movement throughout the European single

market.53

Citizens of single market member states are entitled to study, work, or

retire in any member state.54

However, this does not mean that nationals of one

member state are necessarily entitled to the retirement benefits or pension rights of

another member state.55

Moreover, EU legislation governs different aspects of the

recognition of professional qualifications, ranging from temporary mobility to

automatic recognition.56 Every single market member state has contact points thatprovide information with regard to the recognition of professional qualifications in

its state in accordance with EU law.57

Single market member states continue to

face obstacles, however, that threaten the free movement of people, such as legal

and practical challenges to residing in another member state and the need to ensure

public security and prevent cross-border crime.58

The EEA Agreement provides for the freedom of movement of people by

establishing the freedom of movement of workers among the contracting states.

Contracting states may not discriminate against nationals of any other contractingstates in matters regarding employment, remuneration, and other conditions of



EEAagreement.pdf.52

European Commission,Living and Working in the Single Market, (June 26, 2012), available at

http://ec.europa.eu/internal_market/top_layer/living_working/index_en.htm.53European Commission,Living and Working in the Single Market, (June 26, 2012), available at

http://ec.europa.eu/internal_market/top_layer/living_working/index_en.htm.

54European Commission,Living and Working in the Single Market, (June 26, 2012), available athttp://ec.europa.eu/internal_market/top_layer/living_working/index_en.htm.55Your Europe,Retiring: EU-Pensions, Healthcare and Taxes for Pensioners Who Live in Another Country ,

available athttp://europa.eu/youreurope/citizens/work/retire/index_en.htm.56

European Commission,Free Movement of Professionals, (September 11, 2012), available athttp://ec.europa.eu/internal_market/qualifications/index_en.htm.57

European Commission,Free Movement of Professionals, (September 11, 2012), available at

http://ec.europa.eu/internal_market/qualifications/index_en.htm.58

European Commission,Living and Working in the Single Market, (June 26, 2012), available at

http://ec.europa.eu/internal_market/top_layer/living_working/index_en.htm.


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work and employment.59

While allowing for exceptions based on public policy,

public security, or public health, workers from contracting states are entitled to

accept offers of employment, move freely within all contracting states for

employment purposes, stay in a contracting state for employment, and remain in a

contracting state after having been employed there.

60

Additionally, the EEAAgreement requires mutual recognition of diplomas, certificates, and other

evidence of formal qualifications.61

The EEA Agreement provision on social

security in the area of the freedom of movement of workers provides for

aggregation, and payment of benefits to those working in the contracting states.62

Freedom of Movement of Capital

EU legislation and the EEA Agreement likewise provide guidance on

freedom of movement of capital within the single market. Following the 1987

Single Act, the 1988 EU Council Directive 88/361/EEC was put in place to enablethe lifting of restrictions and the liberalization of capital movements within the

EU.63

Annex XII of the EEA Agreement also provides for the adaptation of the

Directive with minor modifications.64

The term capital movements describes

direct investments, investments in real estate, operations in securities, operations in

current and deposit accounts, credits related to commercial transactions, and

financial loans and credits.65

In light of the fact that capital movements can

disturb foreign-exchange markets and monetary and exchange rate policies, the

Directive also allows EU member states to establish protective measures.66

59Agreement on the European Economic Area art. 28(2) (1994), available athttp://www.efta.int/


EEAagreement.pdf.60

Agreement on the European Economic Area art. 28(3) (1994), available athttp://www.efta.int/~/media/Documents/legal-texts/eea/the-eea-agreement/Main%20Text%20of%20the%20Agreement/





EEAagreement.pdf.63Directive 88/361/EEC, Preamble (European Parliament, 1988), available at http://eur-

lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31988L0361:EN:HTML. 64Agreement on the European Economic Area Annex XII (1994), available at

http://www.efta.int/~/media/Documents/legal-texts/eea/the-eea-agreement/Annexes%20to%20the%20Agreement/annex12.pdf.65

Directive 88/361/EEC, Annex I (European Parliament, 1988), available at http://eur-


Directive 88/361/EEC, art. 3 (European Parliament, 1988), available at http://eur-

lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31988L0361:EN:HTML.


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10

The introduction of the Euro in 2000 was seen as a crucial step towards the

merging of economic and monetary goals within the EU.67

More recently,

following the 2008 financial crisis in Europe, the EUs financial services policy

aims to ensure consistency in the EU in areas of banking, insurance, securities, and

investment funds, financial market infrastructure, retail finances services, andpayment systems.68

Financial sector reform remains a high priority for the EU and

the functioning of the European single market.69

The EEA Agreement requires that there shall be no restrictions on the

movement of capital belonging to nationals of the contracting states, and no

discrimination based on nationality, residence, or state where the capital is to be

invested.70

The lifting of restrictions on current payments connected with the

movement of goods, persons, services, or capital within the single market member

states is also provided for under the EEA Agreement.71

If free movements of

capital disrupt the functioning of the capital market, or an alteration to theexchange rate distorts competition, or a crisis in the balance of payments occurs,

the contracting states may take protective measures to safeguard against such

disturbances.72

As illustrated, the European single market strives to provide benefits to the

individuals, corporations, and businesses that utilize its single market structure.

The freedom of movement of goods allows for goods to travel without restrictions

throughout the single market without facing customs tariffs or quantitative

restrictions. The freedom of movement of services allows companies orindividuals without fixed establishments in a certain single market member state to

provide services in that state; it also allows for the provision of cross-border

services. The freedom of movement of people permits citizens of single market

member states to study, work, and retire in any member state, though recognition

67Europa: Summaries of EU Legislation, Single Market for Capital(last accessed Oct. 21, 2012), available at

http://europa.eu/legislation_summaries/internal_market/single_market_capital/index_en.htm.68

European Commission,Financial Services-General Policy(December 20, 2011), available at

http://ec.europa.eu/internal_market/finances/index_en.htm.69European Commission,Financial Services-General Policy(December 20, 2011), available at

http://ec.europa.eu/internal_market/finances/index_en.htm.70Agreement on the European Economic Area art. 40 (1994), available athttp://www.efta.int/


EEAagreement.pdf.71

Agreement on the European Economic Area art. 41 (1994), available athttp://www.efta.int/~/media/Documents/legal-texts/eea/the-eea-agreement/Main%20Text%20of%20the%20Agreement/

EEAagreement.pdf.72

Agreement on the European Economic Area art. 43 (1994), available athttp://www.efta.int/


EEAagreement.pdf.


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11

of professional qualifications varies from state to state. Finally, the freedom of

movement of capital prohibits restrictions on and discrimination against capital

belonging to nationals of single market member, regardless of where that capital is

to be invested.

Implementation of the Single Market Comparative State Practice

The EC monitors EU member states and Switzerlands implementation of

the single market.73

The EFTA Surveillance Authority monitors Iceland, Norway,

and Liechtensteins implementation of the single market.74

The way in which the

EC and the EFTA Surveillance Authority accomplish this task is by ensuring that

internal market rules are applied correctly and are reflected in national

legislation.75

To evaluate their member states implementation of EU Directives

and laws pertaining to the single market, both the EC and the EFTA Surveillance

Authority annually issue an Internal Market Scoreboard. The Scoreboard providesan outline of the member states enforcement performances, including their

transposition deficits.76

The transposition deficit is the gap between the number

of internal market laws adopted at the EU level and those in force in the member

states.77

In a February 2012 report from the EFTA Surveillance Authority,

Iceland, Norway, and Liechtenstein had an average deficit of 0.5%, with all three

states below the deficit target of 1%.78

As of 2011, the European Commission

reported that eleven EU member states met the EUs 1% transposition deficit

target, and sixteen member states fell short of this goal.79

Moreover, if EU

member states, Iceland, Norway, or Liechtenstein violate the rules of the singlemarket through restrictions, practices, or legislation, the EC and the EFTA

Surveillance Authority may begin infringement proceedings against that particular

73European Commission,Making the Single Market Deliver: Annual Governance Check-Up 2011 , 9 (2011),

available atec.europa.eu/solvit/site/docs/single_market_governance_report_2011_en.pdf.74

EFTA Surveillance Authority, 2011 Annual Report, 10 (2011), available athttp://www.eftasurv.int/media/

annual-reports/AR2011_EN_WEB_CH2.pdf.75EFTA Surveillance Authority, 2011 Annual Report, 10 (2011), available athttp://www.eftasurv.int/media/

annual-reports/AR2011_EN_WEB_CH2.pdf.

76European Commission,Making the Single Market Deliver: Annual Governance Check-Up 2011 , 9 (2011),available atec.europa.eu/solvit/site/docs/single_market_governance_report_2011_en.pdf; 76EFTA Surveillance

Authority, 2011 Annual Report, 11 (2012), available athttp://www.eftasurv.int/media/annual-

reports/AR2011_EN_WEB_CH2.pdf.77

European Commission,Making the Single Market Deliver: Annual Governance Check-Up 2011 , 9 (2011),available atec.europa.eu/solvit/site/docs/single_market_governance_report_2011_en.pdf.78

EFTA Surveillance Authority, 2011 Annual Report, 11 (2012), available athttp://www.eftasurv.int/media/annual-


European Commission,Making the Single Market Deliver: Annual Governance Check-Up 2011 , 9-10 (2011),

available atec.europa.eu/solvit/site/docs/single_market_governance_report_2011_en.pdf.


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state.80

The EC also has the discretion to refer an infringement situation to the

ECJ.81

Similarly, the EFTA Surveillance Authority may submit an infringement

case to the EFTA Court.82

Each of the bilateral agreements between the EU and Switzerland areoverseen and enforced by Joint Committees comprised of representatives from the

EU and Switzerland. For instance, the bilateral agreement on the free movement

of persons has a Joint Committee that may refer to the relevant case law of the ECJ

in reaching its decisions regarding the agreement.83

The comparative state practice sections below analyze how different states

have handled and experienced the implementation of the single market with regard

to the freedom of movement of goods, services, people, and capital.

Freedom of Movement of Goods

Under both the EEA Agreement and certain EU Directives, the movement of

goods throughout Europes single market structure is devoid of customs tariffs and

quantitative restrictions. Though member states may impose restrictions for

reasons such as public safety, public policy, and national security, the general lack

of restrictions allows for an evenhanded approach to trading within the single

market. However, such a broad system is often difficult to implement; state

practice from Germany, France, and Iceland shows that even when states adopt

laws regulating goods for public interest purposes, these laws can run afoul of theEEA Agreement and EU law and Directives.

Germany

Since the Treaty of Rome in 1957, Germany has been supportive of

European economic integration efforts, including the free movement of goods.84

Despite Germanys support of the single market and the removal of restrictions on

imports and exports, many specific firms and sectors experienced loss as Germany

80European Commission,Infringements, (Jan. 26, 2012) available athttp://ec.europa.eu/internal_market/infringements/index_en.htm; EFTA Surveillance Authority, 2011 Annual

Report, 11 available at http://www.eftasurv.int/media/annual-reports/AR2011_EN_WEB_CH2.pdf.81European Commission,Infringements, (Jan. 26, 2012) available at

http://ec.europa.eu/internal_market/infringements/index_en.htm.82EFTA Surveillance Authority, 2011 Annual Report, 11 (2012), available athttp://www.eftasurv.int/media/annual-


Agreement on the Free Movement of Persons, art. 16 (European Union and Switzerland, 2002), available at

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:22002A0430(01):EN:HTML.84

Scott Nicholas Siegel, THE POLITICAL ECONOMY OFNONCOMPLIANCE48-51 (2011).


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13

conformed to the new practical and legal framework.85

Germany has passed laws

that allow for local monopolies in certain sectors, and, in response, the ECJ or

similar bodies have enforced many of the European single market regulations

through judicial decisions.

The principle of mutual recognition, for instance, which holds that there is

no reason why products lawfully produced and marketed in one single market

member state should not be introduced in another single market member state, was

established in a 1979 ECJ case regarding the German law on the monopoly in

spirits.86

The German law set a minimum alcohol content for liquor, and, though it

appeared to apply neutrally to all liquors, it had the effect of excluding French

cassis from the German market.87

The ECJ struck down the monopoly law as

violating Article 30 of the European Economic Community (EEC) Treaty, which

prohibited quantitative restrictions on goods.88

The ECJ ruled that while

Germanys interest in protecting the health of consumers was legitimate, it couldbe satisfied through means other than banning all liquors below an identified

minimum amount of alcohol.89

Though some small German industries experienced

difficulty complying with aspects of the free movement of goods in the European

single market, the government favored the long-term gains of EU legal integration

and eventually adjusted its laws.90

France

France, like Germany, has encouraged European economic cooperation

since becoming a party to the Treaty of Rome in 1957.

91

Despite commitment tothe common European market, France has not always complied with its obligations

85Scott Nicholas Siegel, THE POLITICAL ECONOMY OFNONCOMPLIANCE55 (2011).86Rewe-Zentral AG v Bundesmonopolverwaltung fr Branntwein, C-120/78, 664, European Court of Justice (1979),

available at

http://curia.europa.eu/juris/showPdf.jsf?text=&docid=90055&pageIndex=0&doclang=EN&mode=lst&dir=&occ=fir

st&part=1&cid=4937983.87

Rewe-Zentral AG v Bundesmonopolverwaltung fr Branntwein, C-120/78, 660, European Court of Justice (1979),

available


st&part=1&cid=4937983.88Rewe-Zentral AG v Bundesmonopolverwaltung fr Branntwein, C-120/78, 660, European Court of Justice (1979),

available athttp://curia.europa.eu/juris/showPdf.jsf?text=&docid=90055&pageIndex=0&doclang=EN&mode=lst&dir=&occ=fir

st&part=1&cid=4937983.89Rewe-Zentral AG v Bundesmonopolverwaltung fr Branntwein, C-120/78, 664, European Court of Justice (1979),

available at


st&part=1&cid=4937983.90

Scott Nicholas Siegel, THE POLITICAL ECONOMY OFNONCOMPLIANCE76 (2011).91

Treaty of Rome(1957), available at

http://ec.europa.eu/economy_finance/emu_history/documents/treaties/rometreaty2.pdf.


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14

to facilitate the four freedoms in practice, particularly with regard to disturbing the

lives of private individuals.

In 1995, the Commission of the European Communities filed suit against

France in the ECJ for neglecting to take measures to prevent private persons fromobstructing the free movement of fruits and vegetables in violation of Article 30 of

the Treaty Establishing the European Community (EC Treaty), which is an

amended version of the original EEC Treaty.92

Beginning in 1993, French farmers

campaigned to limit the supply of agricultural products from other EU member

states by issuing threats to wholesalers and retailers to sell French products and

imposing a minimum price for those products.93

Even after French authorities

asserted that they looked into the matter, French farmers violently protested against

the importation of Spanish vegetables in the South of France in 1995, and the

police did not intervene.94

Article 30, in conjunction with Article 5 of the EC

Treaty, calls for EU member states to take all necessary and appropriate measuresto ensure that [freedom of trade] is respected on their territory.

95 The ECJ found

France in violation of this tenet. In light of the ample time given to the French

government to take necessary and proportionate measures to prevent private

individuals from tampering with the transport of produce from other EU member

states, the Court rendered judgment against France for violating Articles 30 and 5

of the EC Treaty with regard to common markets in agricultural products.96

Iceland

According to a Screening Report released by the EC in December 2011,Iceland frequently and adequately inserts EEA Agreement provisions and EU

directives into Icelandic law.97

Certain topic areas, including market surveillance

and accreditation, have easily translated into national standards. Act No. 134/1995

on Product Safety and Official Market Control, for instance, which is updated by

the newer EU Directive 2001/95/EC concerning general product safety and market

92Commission of the European Communities v. French Republic, Case C-265/95, European Court of Justice (1997),

available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:61995CJ0265:EN:HTML.

93Commission of the European Communities v. French Republic, Case C-265/95, European Court of Justice (1997),available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:61995CJ0265:EN:HTML.94Commission of the European Communities v. French Republic, Case C-265/95, European Court of Justice (1997),

available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:61995CJ0265:EN:HTML.95

Commission of the European Communities v. French Republic, Case C-265/95, European Court of Justice (1997),available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:61995CJ0265:EN:HTML.96

Commission of the European Communities v. French Republic, Case C-265/95, European Court of Justice (1997),

available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:61995CJ0265:EN:HTML.97

European Commission, Screening Report: Iceland, 3 (Dec. 22, 2011), available at

http://ec.europa.eu/enlargement/pdf/iceland/key-documents/ch_1_free_movement_of_goods.pdf


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15

surveillance, is fully incorporated into Icelandic legislation.98

In situations where

single market related EU directives are rewritten or replaced, the necessary

Icelandic bureaus work closely together to ensure that Icelands laws fully comply

with the new standards. Such a situation occurred in 2008, when EU Regulation

No 339/93/EEC (dealing with product safety) was repealed and replaced byRegulation 765/2008.99

To guarantee the states conformity with the EUs single

market regulations, Iceland declared that Regulation 765/2008 would be included,

in its entirety, within a new law concerning a market surveillance program being

passed by the Icelandic Parliament.100

Though Iceland has fully implemented EEA Agreement provisions and EU

directives in its domestic laws, problems still arise in their practical application. In

July 2011, for instance, the EFTA Surveillance Authority issued a letter to Iceland

concerning its prohibition of food products containing caffeine (other than

drinks).101 The Surveillance Authority claimed that the ban violated EEAAgreement provisions on the freedom of movement of goods.

102 Moreover,

Iceland had failed to justify the restriction as a concern for the protection of public

health.103

The Surveillance Authority has spent much time evaluating Icelands

response and determining the proper measures Iceland must take to reach

compliance with the EEA Agreement.104

Implementing policies that permit the free movement of goods is often more

complex than states anticipate. As German state practice demonstrates, states often

grapple with protecting the health and safety of their own populations andindustries at the expense of the single market structure. Oftentimes, this protective

mindset requires judicial decisions by the ECJ or the EFTA Court to generate

policy change. Indeed, the ECJ stepped in to address Frances struggle with

intervention into farmers affairs to ensure the freedom of movement of goods.

Icelands method of consciously rewriting its domestic laws to include European

98European Commission, Screening Report: Iceland, 6 (Dec. 22, 2011), available at

http://ec.europa.eu/enlargement/pdf/iceland/key-documents/ch_1_free_movement_of_goods.pdf.99European Commission, Screening Report: Iceland, 6 (Dec. 22, 2011), available at

http://ec.europa.eu/enlargement/pdf/iceland/key-documents/ch_1_free_movement_of_goods.pdf.

100European Commission, Screening Report: Iceland, 6 (Dec. 22, 2011), available athttp://ec.europa.eu/enlargement/pdf/iceland/key-documents/ch_1_free_movement_of_goods.pdf.101EFTA Surveillance Authority, 2011 Annual Report, 28 available athttp://www.eftasurv.int/media/

annual-reports/AR2011_EN_WEB_CH2.pdf.102

EFTA Surveillance Authority, 2011 Annual Report, 28 available athttp://www.eftasurv.int/media/annual-reports/AR2011_EN_WEB_CH2.pdf.103

EFTA Surveillance Authority, 2011 Annual Report, 28 available athttp://www.eftasurv.int/media/

annual-reports/AR2011_EN_WEB_CH2.pdf.104

EFTA Surveillance Authority, 2011 Annual Report, 28 available athttp://www.eftasurv.int/media/

annual-reports/AR2011_EN_WEB_CH2.pdf.


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single market regulations identifies steps that states might take to fully incorporate

the freedom of movement of goods into their own domestic policies.

Freedom of Movement of Services

The freedom of movement of services is twofold: first, individuals and

industries from single market member states are allowed to conduct business in

other single market member states without being firmly established in those states

for an indefinite period of time; and second, individuals and industries from single

market member states are permitted to provide cross-border services to other single

market member states. Spain and Belgium provide useful case studies to which

states aspiring to join the EEA might look for inspiration in implementing the

freedom of services within their own governmental frameworks. The specific case

study of Germany and the service of online gambling illustrates that uncertainty

about compliance with European single market standards on the freedom ofmovement of services still exists in some sectors.

Spain

The 2006 EU Services Directive, aimed at ensuring more legal certainty for

the exercise of the freedom of establishment and the freedom to provide services

within the EU, was enacted through national legislation in Spain at the end of

2009.105

The primary piece of Spanish legislation enforcing the Directive is Law

17/2009 on Free Access to Service Activities and its Exercise, which provides for

the basic principles as set forth in the Directive.

106

Additionally, there is somelegislation devoted to particular service sectors.107

In Spain, the state is responsible

for laying the general legislation and guidelines for the implementation of the

Services Directive, while Spains 17 autonomous communities conduct special and

more particular administrative procedures regarding implementation.108

The

autonomous communities also instituted sector-specific laws and regulations in

105Zsfia Asztalos, PUBLIC POLICIES OF THE EUROPEAN UNION 34(2008),available at

http://www.upm.ro/proiecte/EuPA/docs/carti/Public%20Policies.pdf#page=17; European Commission, Services

Directive: Assessment of Implementation Measures in Member States National Report for Spain, 1 (2011), available

athttp://ec.europa.eu/internal_

market/services/docs/services-dir/mileu-study/es-national-report-part_I_en.pdf.106Government of Spain,Report on the Transposition of the Services Directive, 2 (Apr. 28, 2010), available at

http://www.minhap.gob.es/Documentacion/Publico/SEEconomia/Pol%C3%ADtica%20Econ%C3%B3mica/Report

%20on%20the%20tranposition%20of%20the%20Services%20Directive.pdf.107

European Commission, Services Directive: Assessment of Implementation Measures in Member States NationalReport for Spain , 1 (2011), available athttp://ec.europa.eu/

internal_market/services/docs/services-dir/mileu-study/es-national-report-part_I_en.pdf.108

European Commission, Services Directive: Assessment of Implementation Measures in Member States National

Report for Spain , 2 (2011), available athttp://ec.europa.eu/

internal_market/services/docs/services-dir/mileu-study/es-national-report-part_I_en.pdf.


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line with the Directive.109

Law 17/2009, however, which gives the freedom to

provide services in all of Spain by service providers in other single market member

states, still overrides regulations from the autonomous communities that would

otherwise deny a service provider from another member state such freedom.110

Additionally, the law has a repealing provision that revokes all prior inferior statelegislation in conflict with the Directive.111

In terms of executing the practical application of the Services Directive,

Spain established a Work Program administered by a working group comprised of

representatives from the Ministry of Economy and Finance and all other Central

Government ministries.112

The group was divided into four points of focus to

address more specialized areas. The four areas include: (1) coordination and

cooperation with public authorities; (2) incorporation of the Services Directive into

internal Spanish law; (3) a single point of contact; and (4) establishment of an

internal market information system.113 The working group also coordinates withrepresentatives from Spains autonomous regions and local authorities from the

private sector to ensure a simultaneously horizontal and sector-by-sector approach

to implementation of the Services Directive.114

Overall, Spain is in compliance with the Services Directive. In some areas,

such as setting up a point of single contact, Spain is considered one of the best

performers in the single market.115

However, a 2011 European Commission report

expressed concern regarding a number of implementation issues, including that

restrictions on service providers still exist in legislation of the autonomous109Government of Spain,Report on the Transposition of the Services Directive, 50 (Apr. 28, 2010), available at

http://www.minhap.gob.es/Documentacion/Publico/SEEconomia/Pol%C3%ADtica%20Econ%C3%B3mica/Report

%20on%20the%20tranposition%20of%20the%20Services%20Directive.pdf.110

European Commission, Services Directive: Assessment of Implementation Measures in Member States NationalReport for Spain , 21 (2011), available athttp://ec.europa.eu/




internal_market/services/docs/services-dir/mileu-study/es-national-report-part_I_en.pdf.112Government of Spain, Ministry of Finance and Public Administration, Work Programme(last accessed Oct. 21,

2012), available at http://www.minhap.gob.es/en-

GB/Areas%20Tematicas/Internacional/Union%20Europea/Paginas/Programa%20de%20trabajo.aspx.113European Commission, Services Directive: Assessment of Implementation Measures in Member States National



Government of Spain, Ministry of Finance and Public Administration, Work Programme(last accessed Oct. 21,2012), available at http://www.minhap.gob.es/en-

GB/Areas%20Tematicas/Internacional/Union%20Europea/Paginas/Programa%20de%20trabajo.aspx.115

European Commission,Implementation of the Services Directive: A Partnership For New Growth in Services

2012-2015 Frequently Asked Questions(June 8, 2012), available at http://europa.eu/rapid/press-release_MEMO-

12-429_en.htm?locale=en.


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communities, in spite of the fact that Spains implementing state legislation trumps

these laws.116

Specifically, the report noted restrictions in the tourism, real estate,

and education sectors.117

BelgiumThe Services Law of 26 March 2010 constitutes the main legislation in

Belgium that implements the Services Directive, and is a framework law that

applies in all of Belgium.118

Belgiums government has three equal levels of

political influence: the federal level, the Community level, and the Regional

level.119

Each level of Belgiums government is responsible for implementing the

parts of the Services Directive in areas over which it has responsibility; thus,

businesses offering services in Belgium must ensure they comply with

requirements at all levels of government.120

The Flemish Government, which

governs the Flemish Community and the Flemish Region, did not choose to

horizontally implement the Services Directive, but rather chose to have sector-specific implementation.

121 The German-speaking Community, Brussels-Capital

Region and the French-speaking Community and Region all implemented the

Directive horizontally and, according to a European Commission assessment report

for Belgium, in a more complete way.122

The reasoning for implementing the

Services Directive horizontally is that the horizontal decree will apply to all current

116European Commission, Services Directive: Assessment of Implementation Measures in Member States: National

Report for Spain ,Part I, 21 (May 2011), avaiable at http://ec.europa.eu/internal_market/services/docs/services-

dir/mileu-study/es-national-report-part_I_en.pdf.117

European Commission, Services Directive: Assessment of Implementation Measures in Member States: NationalReport for Spain ,Part I, 54 (May 2011), avaiable at http://ec.europa.eu/internal_market/services/docs/services-

dir/mileu-study/es-national-report-part_I_en.pdf.118


Report for Belgium,Part I, 12 (2011), available at http://ec.europa.eu/internal_market/services/docs/services-

dir/mileu-study/be-national-report-part_I_en.pdf.119European Commission, Services Directive: Assessment of Implementation Measures in Member States National

Report for Belgium,Part I, 1 (2011), available at http://ec.europa.eu/internal_market/services/docs/services-

dir/mileu-study/be-national-report-part_I_en.pdf.120Business.Belgium.Be, The Services Directive in Belgium (last accessed Oct. 21, 2012), available at

http://business.belgium.be/en/managing_your_business/full_list_of_procedures/.121European Commission, Services Directive: Assessment of Implementation Measures in Member States National

Report for Belgium, 1, 12 (2011), available at http://ec.europa.eu/internal_market/services/docs/services-dir/mileu-study/be-national-report

part_I_en.pdf.122


Report for Belgium,Part I, 1, 12 (2011), available at http://ec.europa.eu/internal_market/services/docs/services-

dir/mileu-study/be-national-report-part_I_en.pdf.


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and future legislation that may contradict the Services Directive.123

In other words,

if there is a conflict of laws, the Services Directive will always prevail.124

The federal government has also instituted measures for particular sectors.125

At the federal level, for instance, Belgium requires economic players to utilize ahorizontal authorization scheme in registering their businesses.126

This scheme,

which transcends various service sectors, consolidates pre-existing registers into a

single system, and distinguishes between areas such as tourism, construction, and

retail.127

Belgium also identifies strict requirements at the federal level for self-

employed providers engaging in cross-border services in Belgium, including the

use of specialized safety equipment or prior authorization for recovery of debts.128

Belgian legislators are not required to give reasons for restrictions on the freedom

to provide services, and this makes it difficult to recognize restrictive provisions.129

GermanyBeginning in 2008, Germany has largely prohibited online gambling through

its German Interstate Gambling Treaty (Glcksspielstaatsvertrag GIGT).130

However, as of October 2012, the EC adopted the Communication, Towards a

Comprehensive European Framework on Online Gambling, which focuses on five

areas of cooperation among EU member states.131

Those five areas are (1)

compliance of national regulatory frameworks with EU law, (2) enhancing

123European Commission, Services Directive: Assessment of Implementation Measures in Member States National

Report for Belgium,Part II, 2 (2011), available at http://ec.europa.eu/internal_market/services/docs/services-

dir/mileu-study/be-national-report-part_II_en.pdf.124European Commission, Services Directive: Assessment of Implementation Measures in Member States National

Report for Belgium,Part II, 2 (2011), available at http://ec.europa.eu/internal_market/services/docs/services-

dir/mileu-study/be-national-report-part_II_en.pdf.125European Commission, Services Directive: Assessment of Implementation Measures in Member States National

Report for Belgium,Part I, 12 (2011), available at http://ec.europa.eu/internal_market/services/docs/services-dir/mileu-study/be-national-report-part_I_en.pdf.126

European Commission, Mutual Evaluation Foreseen by the Services Directive - Stakeholders' Consultation:

Belgium , 1 (2010), available at

ec.europa.eu/internal_market/consultations/docs/2010/services_directive/belgium_en.pdf.127

European Commission, Mutual Evaluation Foreseen by the Services Directive - Stakeholders' Consultation:Belgium , 1-2 (2010), available at

ec.europa.eu/internal_market/consultations/docs/2010/services_directive/belgium_en.pdf.

128European Commission, Mutual Evaluation Foreseen by the Services Directive - Stakeholders' Consultation:Belgium , 3 (2010), available at

ec.europa.eu/internal_market/consultations/docs/2010/services_directive/belgium_en.pdf.129European Commission, Services Directive: Assessment of Implementation Measures in Member States National

Report for Belgium,Parti I, 12 (2011), available at http://ec.europa.eu/internal_market/services/docs/services-dir/mileu-study/be-national-report-part_I_en.pdf.130

Association of Charity Lotteries in the European Union, Charity Lotteries in the EU Member States: Germany

(2010), available athttp://www.acleu.eu/static/ACLEU/pdf/CL%20in%20Germany.pdf.131

European Commission, Towards a Comprehensive European Framework for Online Gambling(Oct. 23, 2012),

available athttp://ec.europa.eu/internal_market/services/docs/gambling/comm_121023_onlinegambling_en.pdf.


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administrative cooperation and efficient enforcement, (3) protecting consumers and

citizens, minors and vulnerable groups, (4) preventing fraud and money

laundering, and (5) safeguarding the integrity of sports and preventing match-

fixing.132

These five objectives are also emphasized in the Staff Working Paper,

Online Gambling in the Internal Market, that was issued along with theCommunication.133

Moreover, the Working Paper addresses challenges facedthroughout the EU in complying with the goals set out in the Communication.

134

In 2010, the ECJ issued a ruling concerning Germanys sport betting

monopoly, which complicates the discussion of whether the new German law on

online gambling aligns with EU law with regard to online gaming.135

The ECJ

issued a somewhat ambiguous opinion on the sports betting monopoly that held

that, while the monopoly restricts freedom of services and freedom of

establishment, it could be justified by reasons significant to the public interest.136

German courts have subsequently differentiated the ECJs analysis on sportsbetting from the prohibition on online gambling.137

While most German states agreed to the revised GIGT, the German state of

Schleswig-Holstein passed a new Gambling Act, which allows service providers to

offer online gambling in the area on the condition they obtain a license.138

This

Act constitutes a departure from the GIGT and allows for a more similar approach

to the EU guidelines on online gambling by opening the legal market to private

gaming providers.139

Germany made revisions to the GIGT in December 2011,

which effectively legalized sport betting, in compliance with the ECJs 2010

132European Commission, Towards a Comprehensive European Framework for Online Gambling(Oct. 23, 2012),

available athttp://ec.europa.eu/internal_market/services/docs/gambling/comm_121023_onlinegambling_en.pdf.133European Commission, Online Gambling in the Internal Market(Oct, 23, 2012), available at

http://ec.europa.eu/internal_market/services/docs/gambling/doc_121023_onlinegambling_staffworkingpaper_en.pdf134European Commission, Online Gambling in the Internal Market(Oct, 23, 2012), available at

http://ec.europa.eu/internal_market/services/docs/gambling/doc_121023_onlinegambling_staffworkingpaper_en.pdf135

Stephen Kress, Online Gambling: Is Now the Time to Enter the German Market?, Mondaq (March 9, 2012),

available at http://www.mondaq.com/x/167804/Internet/Online+Gambling+Is+Now+The+Time+To+Enter+The

+German+Market.136Markus Stob and Others v. Wetteraukreis andKulpa Automatenservice Asperg GmbH and Others v. La Baden-

Wurttembergn, Joined Cases C-316/07, C-358/07 to C-360/07, C-409/07, and C-410/07, European Court of Justice

(Sep. 8, 2010), available at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62007J0316:EN:HTML137Stephen Kress, Online Gambling: Is Now the Time to Enter the German Market?, Mondaq (March 9, 2012),

available at http://www.mondaq.com/x/167804/Internet/Online+Gambling+Is+Now+The+Time+To+Enter+The

+German+Market.138

Stephen Kress, Online Gambling: Is Now the Time to Enter the German Market?, Mondaq (March 9, 2012),available at http://www.mondaq.com/x/167804/Internet/Online+Gambling+Is+Now+The+Time+To+Enter+The

+German+Market.139

Dr. Volker Heeg, The 2011/2012 Schleswig-Holstein Legislation on Gambling,Weinert Levermann Heeg (Jan.

2012), available athttp://www.slideshare.net/fredericengel/the-2011-2012-schleswig-holstein-legislation-on-

gambling-analysis-from-dr-volker-heeg-weinert-levermann-heeg-jan-2012.


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decision, while keeping in place the ban on online gambling.140

It remains to be

seen whether the new GIGT will be ratified because the EC has challenged itscompatibility with EU law.

141

The experiences of Spain and Belgium illustrate the complexities of

implementing free movement of services throughout the European single market.The overarching control of the Spanish government allows for single market

policies to be implemented at a national level, while the autonomy of Spains 17

autonomous communities allows for a specialized focus on services that is crucial

to the single market structure. Belgium allows different levels of government to

implement the Services Directive in the corresponding areas over which they have

responsibility. Despite the strides made in states like Belgium and Spain to

implement the Services Directive and European single market policies, the case of

Germany, with the uncertainty of its law in regard to the EU position on online

gambling, demonstrates how the practical implementation of freedom ofmovement of services in the single market can still appear unclear in member

states.

Freedom of Movement of People

The free movement of people throughout the single market is one of the

EUs most treasured policies: demonstrably, recent reductions in border control

have allowed EU citizens to study, work, and retire in any state of their choosing.

The most successful instance of policy implementation is the Schengen

Convention, originally signed by France, Germany, Belgium, Luxembourg, and theNetherlands.

142 The Agreement eliminated border controls between the signing

states, thereby allowing nationals of the European Community to pass freely

between the countries without continuously presenting passports or

identifications.143

As more states join the EU, however, problems arise regarding

states internal security. As a result, new members of the EU must prove that they

140Jocelyn Wood, Germanys Remaining States to Join Anti-Online Poker State Gaming Treaty, POKERFUSE (Nov.12, 2012), available at http://pokerfuse.com/news/law-and-regulation/germanys-remaining-states-join-anti-online-

poker-state-gaming-treaty-12-11/.141Stephen Kress, Online Gambling: Is Now the Time to Enter the German Market?, Mondaq (March 9, 2012),

available at http://www.mondaq.com/x/167804/Internet/Online+Gambling+Is+Now+The+Time+To+Enter+The+German+Market.142

Migration Information Source,Migration Fundamentals: Schengen and the Free Movement of People Across

Europe, (Oct. 2005), available at http://www.migrationinformation.org/feature/display.cfm?id=338.143

Migration Information Source,Migration Fundamentals: Schengen and the Free Movement of People Across

Europe, (Oct. 2005), available at http://www.migrationinformation.org/feature/display.cfm?id=338.


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can effectively police their borders and install necessary technological systems

before they eliminate all border controls.144

The free movement of workers has come under especially close attention

from the EU and the EFTA; consequently, a number of states have implementedpolicies oftentimes accompanied by controversial enforcements to ensure that

citizens of single market member states are able to follow employment

opportunities across state lines. As early as 1995, the ECJ addressed these issues

in a case from Belgium concerning the employment of professional sports players

throughout Europe. The examples of Norway and the United Kingdom below

identify how states have successfully dealt with setbacks regarding, specifically,

the Professional Qualifications Directive (2005/36/EC).

Belgium

In 1995, the ECJ considered whether the conditions regarding nationality putforth by sporting associations conflicted with the provisions of the EEC Treaty

prohibiting employment discrimination based on nationality.145

The rules from the

Belgian sporting associations required that when players move to teams in different

EU member states, the receiving team must pay a fee.146

The rules also set

nationality quotas, whereby teams were only allowed to field a certain number of

players from other EU member states during matches.147

Professional Belgian

football player Jean-Marc Bosman brought his complaint to the ECJ when a

Belgian team failed to transfer him to a French team, arguing that the nationality

provisions in question impeded his chances of working for foreign teams andtherefore damaged his career.148

The Court ruled both the transfer fee and the nationality quota violated the

EEC Treaty because they violated the fundamental right of free access to

employment which the Treaty confers individually on each worker guaranteed in

144Migration Information Source,Migration Fundamentals: Schengen and the Free Movement of People Across

Europe, (Oct. 2005), available at http://www.migrationinformation.org/feature/display.cfm?id=338.145Union Royal Belge des Socits de Football Association v. Bosman and Royal Club Ligois v. Bosman, Case C-

415/93, 116-117, European Court of Justice (Dec. 15, 1995), available athttp://eur-

lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:61993CJ0415:EN:PDF.146Union Royal Belge des Socits de Football Association v. Bosman and Royal Club Ligois v. Bosman, Case C-

415/93, 13, European Court of Justice (Dec. 15, 1995), available athttp://eur-

lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:61993CJ0415:EN:PDF.147

Union Royal Belge des Socits de Football Association v. Bosman and Royal Club Ligois v. Bosman, Case C-415/93, 13, European Court of Justice (Dec. 15, 1995), available athttp://eur-


Union Royal Belge des Socits de Football Association v. Bosman and Royal Club Ligois v. Bosman, Case C-

415/93, 44, European Court of Justice (Dec. 15, 1995), available athttp://eur-

lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:61993CJ0415:EN:PDF.


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Article 49 of the Treaty.149

This decision effectively eradicated transfer fees for

foreign players and the practice of imposing nationality quotas in European

football club competitions. It forced football clubs to see players as employeesin the sense of the single markets guarantee of the free movement of peoples.

150

NorwayThe Professional Qualifications Directive (2005/36/EC) was put in place to

facilitate the free movement of peoples as provided for in the EEA Agreement.151

This Directive required that education received in an EEA state would

automatically be recognized in all contracting states.152

Though a seemingly

innocuous measure, the Directive has caused trouble within various employment

sectors. For instance, complaints were made against Norways procedure of

obliging foreign doctors from other EEA states to go through Norways turnus

system of practical training, despite having received such training in their own

states.

153

Consequently, the EFTA Surveillance Authority began infringementproceedings against Norway for violating the Professional Qualifications

Directive.154

As a result, Norway dispensed with the turnus program for foreign

doctors who had received similar training before coming to Norway.155

The state

still puts forth language capabilities and good repute as prerequisites for automatic

recognition of doctors, which is in line with the Directive.156

United Kingdom

The EC has gathered experience reports on the implementation of the

Professional Qualifications Directive from national authorities and coordinators in

different professions across the continent to better understand the Directiveseffectiveness. The United Kingdoms General Dental Council, for instance,

submitted an experience report to the EC evaluating the Professional Qualifications

149Union Royal Belge des Socits de Football Association v. Bosman and Royal Club Ligois v. Bosman, Case C-

415/93, I-581 1, European Court of Justice (Dec. 15, 1995), available athttp://eur-


European Commission,European Union and Sport, 23 THE MAGAZINE:EDUCATION AND CULTURAL IN EUROPE,

9(2004),available atec.europa.eu/languages/documents/publications/23_en.pdf.151EFTA Surveillance Authority, 2011 Annual Report, 16 available athttp://www.eftasurv.int/media/

annual-reports/AR2011_EN_WEB_CH2.pdf

152Directive 2005/36/EC, Preamble (European Parliament, 2005), available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:2005L0036:20110324:EN:PDF.153EFTA Surveillance Authority, 2011 Annual Report, 16 (2011), available at

http://www.eftasurv.int/media/annual-reports/AR2011_EN_WEB_CH2.pdf.154

EFTA Surveillance Authority, 2011 Annual Report, 16 (2011), available athttp://www.eftasurv.int/media/annual-reports/AR2011_EN_WEB_CH2.pdf..155

EFTA Surveillance Authority, 2011 Annual Report, 16 (2011), available at

http://www.eftasurv.int/media/annual-reports/AR2011_EN_WEB_CH2.pdf.156

EFTA Surveillance Authority, 2011 Annual Report, 16 (2011), available at

http://www.eftasurv.int/media/annual-reports/AR2011_EN_WEB_CH2.pdf.


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Directive in UK dentistry. The report explained that the General Dental Council

accepts applications from EU citizens with foreign diplomas.157

For the most part,

the Dental Council automatically recognizes foreign diplomas in line with the

Directive, though sometimes a letter of EEA compliance is needed for recognition

of diplomas earned in Iceland, Norway, or Liechtenstein.

158

The free movement of people is an integral part of the European single

market structure. With the signing of the Schengen Convention and the

Conventions consequent application in a majority of EU and EFTA member states

European citizens find it easier than ever to travel between states. Additionally,

the implementation of regulations such as the Professional Qualifications Directive

(2005/36/EC) has led to free movement of the workforce within the European

single market. The problems faced by Belgium, Norway, and the United Kingdom

demonstrate typical issues that arise relating to the free movement of people within

the European single market and illustrate the measures that states wishing to jointhe single market must take to resolve such issues.

Freedom of Movement of Capital

The fourth prong of the single market structure, free movement of capital,

allows for the freedom of various single market economies to directly invest in

other single market member states. The single market construct prohibits

restrictions on and discrimination against movement of capital belonging to

nationals of single market member states, and focuses on areas such as directinvestments, real estate, and financial loans and credits. Though certainly an open

system, member states are also permitted to install protective measures to ensure

the growth and productivity of their own economies. Norway and Germany

provide case studies on how EEA EFTA and EU member states, respectively, have

dealt with the free movement of capital.

Norway

The EEA Agreement prohibits restrictions on the free movement of capital,

and Norway receives exceptions for investment in fisheries and ownership of

157European Commission,Evaluating the Professional Qualifications Directive: United Kingdom Response , 1

(December 2010), available athttp://ec.europa.eu/internal_market/qualifications/

docs/evaluation/additional_reports_12_2010/uk_experience_report_dentist_en.pdf.158

European Commission,Evaluating the Professional Qualifications Directive: United Kingdom Response , 3

(December 2010), available athttp://ec.europa.eu/internal_market/qualifications/

docs/evaluation/additional_reports_12_2010/uk_experience_report_dentist_en.pdf.


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fishing vessels.159

However, Norway has violated the EEA Agreement provisions

related to movement of capital in other ways. More specifically, Norways

limitations on ownership and voting in financial services infrastructure institutions

were challenged in the EFTA Court.160

Norwegian law prohibits ownership of

shares in stock exchanges and securities depositories above 20%, with someexceptions for special circumstances.161

Norway also restricts voting rights to

20% of the total votes or 30% of the votes represented at a shareholders

meeting.162

The EFTA Surveillance Authority views these regulations as a

violation of EEA Agreement provisions on the free movement of capital because

they limit the opportunity to invest in these activities and take part in their

management.163

The EFTA Court agreed with the Surveillance Authority, and held

that Norways ownership limitations and voting rights violated the EEA

Agreement provisions on the free movement of capital.164

GermanyGermany has likewise experienced issues implementing policies