Location, (Re) Location, (Dis)Location: What Space for

Harmonization? Seminar 2 – (Re)location – Harmonization in

Multi-Level, Multi-Modal Space Kenneth Armstrong, University of

Cambridge

Harmonization –Relational Dimensions

• Related to time: temporal quality of harmonization.

• Multi-level rulemaking: what scope is and ought there to be for domestic rule-making alongside harmonization?

• Multi-modal governance: harmonization as one mode of governance among others

Temporal Dimension

• Harmonization is a process more than an event: – gradual harmonization over time may increase EU

level authority while decreasing national autonomy. – -ve and +ve integration often co-exist to achieve

market integration: e.g. taxation of alcohol. • Temporal derogations:

– Article 4(6) Directive 2002/46 on food supplements: allowed marketing of supplements already on the market (and not complying with directive) till 2009. From 2010 only minerals and vitamins listed in Annex can be placed on EU market.

Multi-Level Harmonization

• Anxieties about harmonization often revolve around loss of national identity and national political authority.

• Within EU: minimum harmonization versus total harmonzation.

• EU as importer/exporter of norms and standards.

Total/Exhaustive Harmonzation • Anxiety at its highest where EU pursues total or exhaustive

harmonization. MS lose capacity to invoke treaty derogations to protect public interests.

• Classic examples of exhaustive harmonization: – CAP – Case C-1/96 MAFF ex parte Compassion in World

Farming; Case 10/79 Toffoli v Regione Veneto. – Motor vehicles: Case 60/86 ‘Dim-Dip’

• Express legislative provision Reg 1333/2008 (food additives): Art 4: “Only food additives contained in the Community list in Annex II may be placed on the market …” Art 5: “No person shall place a food on the market … if the food additive does not comply with this Regulation.”

Total Harmonization: an outdated approach?

• Easy to think of exhaustive harmonization as belonging to another time.

• But even New Approach directives give rise to total harmonization across families of products.

• And total harmonization can arise even in newer areas where EU competence is often closely circumscribed – consumer protection.

Case Study I – New Approach

• Introduced in 1985 to support internal market programme goal of eliminating technical barriers to trade.

• Reference to standards: – EU legislator enacts harmonized rules reflecting public

interests goals – harmonized standards developed by industry provide

technical means of compliance – Compliance with standards is voluntary but directives

themselves are total harmonization instruments. • ‘Meta-Harmonization’: Decision 768/2008 aims to remove

disparities in terminology and effects across New Approach directives (helping correct application of CE mark).

Case Study II – Unfair Commercial Practices Directive

• All practices listed in Annex are unfair and prohibited in all circumstances.

• Other measures potentially unfair but require case-by-case assessment: bans other than for activities in Annex do not permit such assessment and prohbited: Cases C-261/07, C-299/07, VTB-VAB v Total.

• Art 4: temporal protection to national stricter rules till end of 2013.

• Article 3(9): minimum harmonization for financial services: Case C-265/12 Citroën Belux

Minimum Harmonization

• Not the same thing as ‘partial’ harmonization. • Refers to competence of MS to enact more

stringent rules in areas subject to harmonization.

• Capacity to enact stricter rules: – Provision in treaties (expressly constitutionally

permitted diversity) – Legislative enactment seeks to preserve

regulatory autonomy for MS.

Constitutionally Permitted Diversity

• Consumer protection: – Directives like UCPD can be enacted under Article 114

TFEU and produce total harmonization. – But measures under Article 169(3) TFEU to support,

supplement consumer protection policies of MS allow MS to maintain/introduce more stringent measures.

• Environmental protection: – Again can be pursued under Article 114 TFEU where

measures removes obstacles to trade/distortions to competition.

– But Article 193 TFEU permits MS to adopt more stringent measures than those adopted under Article 192 TFEU.

Minimum Harmonization: Multi-Modal Governance

• Measures with no principal market integration aim can allow for national diversity.

• But diverse national rules on consumer/environmental regulation can inhibit market integration.

• So stricter rules must themselves be compatible with free movement principles (judicial reviewas a limit to diversity arising from minimal harmonization)

• Combination of +ve and –ve integration.

Case C-169/89 Gourmetterie • Art 14 Birds Directive

1979 • Red grouse hunted and

killed in UK lawfully. • Dutch authorities no

capacity to invoke more stringent protection when bird not native to NL and lawfully hunted in UK.

• Essentially allowed free movement of a dead game bird.

Minimum Harmonization and Internal Market Measures

• In areas of market regulation minimum harmonization but subject to compatibility with internal market rules.

• So, can internal market rules allow for minimum harmonization? – Treaty-based authorization to enact stricter rules

(Articles 114(4)-(6) TFEU) – Express legislative provision.

Articles 114(4)-(6) TFEU • If, after the adoption of a harmonisation measure … a

Member State deems it necessary to maintain national provisions on grounds of major needs referred to in Article 36, or relating to the protection of the environment or the working environment, it shall notify the Commission …

• …if, after the adoption of a harmonisation measure … a Member State deems it necessary to introduce national provisions based on new scientific evidence relating to the protection of the environment or the working environment on grounds of a problem specific to that Member State arising after the adoption of the harmonisation measure, it shall notify the Commission …

• Within 6 months, the Commission decides whether to authorize national rule

Market integration/market regulation

• Obvious that Article 114 measures not only seek to integrate markets but to regulate them.

• MS’s may hold different views on risk and how high level of protection should be. MS must seek to justify its assessment including challenge scientific risk assessment at EU level.

• If authorized, stricter rules apply to all goods on national market whether domestic or imported.

Legislative Minimum Harmonization

• Does the EU legislature have discretion to authorize stricter rules while basing harmonization on Article 114 TFEU?

• Post-Tobacco Advertising: to be lawfully based on Article 114 TFEU must have the object of genuinely improving the operation of the internal market by removing barriers to trade/distortions to competition.

• Minimum harmonization implies a failure to remove barriers/distortions.

• Case C-11/92, Gallaher: stricter rules subject to a free movement requirement – stricter standard can only apply to domestic producers.

Case Study: Tobacco Products Directive 2014

• Article 24: MS may maintain or introduce ‘further requirements applicable to all products placed on its market’ including standardisation of packaging’.

• No explicit authorization procedure but Commission to be notified.

• Case C-547/14 Philip Morris challenge to use of Article 114 TFEU as a legal basis for this provision.

Mutual Recognition

• Vertical dimension: as a potential limit on, and alternative to, harmonization.

• Horizontal dimension: in absence of harmonization, as a means of allocating regulatory responsibiity between Member States.

• External dimension: managing market access despite normative diversity between EU and non-EU states.

Vertical Dimension

• Co-existence rather than rivalry. • EU instruments can mandate mutual recognition:

– Mutual recognition of professional qualifications – Mutual recognition of chemical authorizations.

• MR may operate against backdrop of harmonized rules: eg recognition of testing and certification or banking authorization.

• Gap-filling: where partial harmonization creates space for MR to fill.

Horizontal Dimension: Coordination or Competition

• In absence of harmonization MS remain competent to control market access and to regulate local markets.

• MR as a coordination device. • Strongest version: norms of state of origin

exported to state of import (country of origin principle): – Extraterritorial effects – Risks of regulatory competition – Common EU ‘floor’ standards to limit effects (Deakin

‘reflexive harmonization’)

MR: Coordination as Cooperation

• Softest version is MR as a due process requirement: an obligation to take regulatory history into account.

• Strengthened version is a demand to treat rules as functionally equivalent to local standards to avoid duplication of controls.

• Often linked to processes of administrative/regulatory cooperation and emergence of networks to enhance trust.

External Dimension

• Mutual Recognition Agreements as part of the repertoire of tools to promote market access.

• Focus less on substantive equivalence and more on recognition of ‘conformity assessment’.

• Strong sectoral dimension e.g. pharmaceuticals production (US, EU and Japan cooperate on harmonized production standards).

• Development of more substantive MR part of TTIP negotiations esp on motor vehicles.

Differentiated Integration

• Multi-speed: where MS have options as regards speed of adaptation (e.g. Art 18 Employment Equality Directive 2000/78).

• Legislative opt-outs (e.g. UK opt out from Chap IV of Fiscal Frameworks Directive)

• Enhanced cooperation: harmonization restricted to a group of states (e.g. ‘unitary patent’ or financial transaction tax).