Topic 3; European Union Law (2017)

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Universidad Universidad Pompeu Fabra (UPF)
Grado International Business Economics - 1º curso
Asignatura Introduction to business law
Año del apunte 2017
Páginas 18
Fecha de subida 02/08/2017
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Introduction to Business Law Topic 3: The EU Law and Monetary Integration TOPIC 3: THE EU LAW AND MONETARY INTEGRATION THE LONG EUROPEAN JOURNEY OF INTEGRATION: FROM THE TREATY OF ROME TO THE PRESENT • HISTORICAL CONTEXT: WWII Never again 1951 FOUNDING MEMBERS: •  •    Belgium France Germany Italy Luxembourg Netherlands Most institutions of EU are in those countries, but there are also institutions in other countries.
Treaty of Rome 1957: European economic community (EEC)→ the main idea is to ensure that goods, services, capital and labour can move freely between the countries in the union; creating a single market. They created a custom union, so goods could move freely.
SCHENGEN RULES started in 1995(it was signed in 1985) Treaty of Lisbon 2009 → Treaty of the Functioning of the European Union (TFEU) (from now on it's called European Union) EURATOM: Sought to promote collaboration between Member States and a common market in the nuclear energy sector.
EEC and Euratom were given four main institutions: • • • • A Commission (equivalent to the ECSC High Authority) Council of Ministers → Council of EU Assembly → Europe Parliament Court of Justice 1973 → +Denmark, Ireland, UK → Now, UK and Ireland that had common law had to accept civil laws.
1979 → a creation of the European monetary system. The idea was to link the currencies of the European unions to avoid big fluctuations relative to one another. Creation of the European Monetary Cooperation Fund.
1981 → Greece 1986 →+ Portugal+Spain 1 Introduction to Business Law Topic 3: The EU Law and Monetary Integration The Single European Act: it revises the Treaty of Rome + Amend the rules governing the operation of the European institutions and expands community powers + ONE MARKET ONE MONEY THE PROCESS OF CATCHING UP • • • • • Poor countries need capital and “knowledge”→ knowledge about how to make business, how o avoid corruption, how to organize their institutions Capital und knowledge flows into poor countries via direct investments (investment of creating a company, etc… indirect: buying stocks of a existing country) and technology transfers Preconditions: political and economic stability Aid might speed up the catching-up process The rich countries benefit from increasing trade → there's a bigger market, they can sell more "The level of Romania is not the same economic level of France. " THE DEEPENING OF EUROPEAN INTEGRATION With every treaty that was written, the European Union won more and more power.
THE EUROPEAN MONETARY SYSTEM I, 1979-1998 • • the preparation of the currency union dominant role of the German Central Bank THE TREATY OF MAASTRICHT, 1992 • • step by step to the Euro since then no exchange rate realignments → the exchange rate of the old currencies/the euro didn't change THE EUROPEAN STABILITY AND GROWTH PACT • single currency and rules for fiscal deficits (the country spends more than what they gain with taxes) THE TREATY ON EUROPEAN UNION We cannot be as united as the United States because we still have a long way to go: we don't have a "single law", each countries has their own The treaty on European union (Maastricht treaty; 1992) The European union had three pillars: 1. The three European Communities: EU as today 2. Second pillar: common foreign and security policy (they will talk and cooperate, but every country will have its own sovereignty) 2 Introduction to Business Law Topic 3: The EU Law and Monetary Integration 3. Police and judicial cooperation in criminal matters (not EU deciding, member states decided, even though there was cooperation. The police and the judicial system are not EU matters, the sovereignty is still in the members and not in the community) The point of the 2 and 3rd pillar is that the members were cooperating together, but the EU didn't have jurisdiction.
CHANGES TO THE EC TREATY: • • • • Broader Community aims and wider Community competencies (Arts 2 & 3) Timetable for Economic and Monetary Union (EMU) Introduced concept of European Citizenship Increased powers of the European Parliament in law making procedures Every single treaty that was ever enacted enlarged the competences of EU.
1995 → + Austria, Finland, Sweden When the new countries enter, they have to comply with all the EU law that had already been complied. These countries had their own law, and then entered the community, they had to make sure that all their laws complied with EU law.
THE TREATY OF AMSTERDAM 1997 EU is really sensitive politically. The Maastricht Treaty had not covered all the issues raised during the debates of the 1980s.
• • • • • • • • • Social chapter → EU starts developing its own social policy.
Prospect of enlargement of the EU to include the former communist countries of Eastern Europe Concerns about the lack of democratic accountability within the EU: the so-called democratic deficit Creation of the European Central Bank Incorporation into EC Treaty of large parts of the former third pillar on Justice and Home Affairs (now found in Articles 61-69 EC Treaty) General tidying up of the Treaty and subsequent renumbering of articles Widened scope of EC competencies Introduction of broadly stated anti-discrimination provision (Art13) → you cannot discriminate between goods/services/labours of the different country members Extension of use of co-decision law making procedure (strengthens role of EP) → they had more decision making powers than before The competences were broad, the Euro was already planned in 1992, even though there were 3 pillars in Maastricht, these two pillars were quickly brought into the first one, broadening the competences.
The parliament is elected by direct election, and they confirm the laws that come from the Commission (the "government"). Here we managed to put part of the third pillar onto the first pillar.
3 Introduction to Business Law Topic 3: The EU Law and Monetary Integration ECONOMIC CONTENT OF THE TEU MONETARY UNION Conditions to be enter the euro 1. INFLATION RATES: no more than 1.5% higher than the average of the three best performing (lowest inflation) Member States of the EU 2. GOVERNMENT FINANCES:  Government deficit: the country cannot spend more than 3% more than what they generate in the year  Government debt cannot be higher than the 60% of the GDP 1. EXCHANGE RATE: exchange rate mechanism for 2 years previous to admission 1. Phase 1: 2.25% (up or down) for all and 6% for Italy for it what was determined. They were determining the fluctuation of the prices.
2. Phase 2: +/-15% 4. LONG TERM INTEREST RATE (payment to borrow money. if it's too high, you are impedimenting the growth of the economy and the companies): 2% points of the lower inflation rate Introduction of the euro always causes big inflation, prices can double form one day to another.
THE TREATY OF NICE (2001) Vacatio Legis: the time between when a treaty/law is signed and when it enters into force In the treaty of Nice, it was signed in 2001 and enforced in 2003, so it was a Vacatio Legis of 2 years → It takes that long because it's hard to establish a law in all EU •Enlargement and consolidation → +10 countries (2004) enter the EU •Reformed the institutional structure of the European Union to withstand eastward expansion. → they changed things in the treaties to allow the entrance of those 10 countries 2007→ Romania and Bulgaria 2013 → Croatia THE TREATY OF LISBON 2009 Reformulated version of the failed European Constitutional Treaty of 2004 and amended the EU and the EC Treaties (without replacing them) → what changed from the Constitution to Treaty of Lisbon is the name. Countries didn't want to firm a "European Constitution", because they didn't want to accept that EU had constitution.
Reform/Lisbon Treaty: finally ratified in 12/2009 (in 2nd attempt in Ireland) →the Irish Parliament didn't confirm it because people in the referendum voted against it.
Takes in most aspects of the constitution (minus flag, anthem, constitution-wording, Minister) , the rest remains equal.
Overall objective: enable the EU to face new challenges and give the EU a better institutional and political basis to meet the expectations of its citizens.
4 Introduction to Business Law Topic 3: The EU Law and Monetary Integration THE TREATY OF LISBON Making European Union: • • • • • More efficient: Simpler processes, full-time president for the Council, etc.
More democratic: Stronger role for the European Parliament and national parliaments, "Citizens initiative", Charter of Fundamental Rights (European Convention of Human Rights, which EU signed as an union, they signed it as a country, apart from the members own their own), etc.
More transparent: Clarifies who does what, greater public access to documents and meetings, etc.
More united on High Representative for Foreign Policy, etc. the world stage: More secure: New possibilities to fight climate change and terrorism, secure energy supplies, etc.
• Signed in December 2007 – and entered into force on 1 December 2009 The Treaty of Lisbon is constructed by: 1. Treaty of the European Union; TEU: basic rules of institutions 2. Treaty on the Functioning of European Union; TFEU: the rest of rights of the population BASIC ELEMENTS OF THE STAGES OF ECONOMIC INTEGRATION 1. Free Trade Agreement (FTA) → Zero tariffs between member countries and reduced non-tariff barriers 2. Customs Union (CU)→ FTA + common external tariff → importing something from china cost the same if you do it from Spain, or from Germany or from France.
3. Common Market (CM) → CU + free movement of capital and labour, some policy harmonization → it builds on custom unions, people can move between countries 4. Economic Union (EU) → CM + common economic policies and institutions FUNDAMENTAL PRINCIPLES OF EU 1. THE PRINCIPLE OF NON-DISCRIMINATION:  Art 18 TFEU prohibits "any discrimination on grounds of nationality“; it is prohibited to treat imported goods differently to domestic goods etc.
 Discrimination is understood as meaning different treatment, on the basis of nationality, under the same circumstances and vice versa; if you are selling something with a thing, and another country has a product with the same characteristics, you have to sell both of them under the same "name"; same treatment in the same situation 2. MUTUAL RECOGNITION (derives from the case law; EU Court of Justice is a mixture between common and civil law, it has to take into account the rule and act according it, and while doing that, it creates a new rule , they say that "this means there is a principle of mutual recognition) 5 Introduction to Business Law Topic 3: The EU Law and Monetary Integration  The principle claims that the legislation of another Member State is equivalent in its effects to domestic legislation → if somebody is an accountant on Spain, you shouldn't be able to prevent him from working as an accountant in France. It works the same for products, and recognition of diplomas. This principle was laid down by the Court of Justice in the Cassis de Dijon judgment.
 Although this principle of mutual recognition applies chiefly to products, it has also had an impact on the other freedoms, particularly those involving the performance of services, where it underlies the concept of the recognition of diplomas.
3. EU LEGISLATION (in addition to the principle of mutual recognition): Treaty provisions, regulations and directives.
INSTITUTIONAL ORGANIZATION OF THE EU • • • • • • European Commission → 28 members European Council → Presidents of the states, is a political organ, not legislative, 28 presidents + president of the Commission + President of the EC Council of the European Union → part of EU government, it makes decision, it enacts legislation, it makes the same things as a government in a country does. 28 ministers, one from each country member, gather together to discuss about a matter. It's always going to be the minister that knows about the topic discussed, so it changes.
European Parliament → 751 members. They are directly elected by the people.
 No separation of powers but representation of interests European Court of Justice →One court of justice deciding on the most important matters 1 general court deciding on intellectual property maters and 1 court of first instances, for disputes on labor law from those who are working in EU for their lawsuits against EU European Central Bank COUNCIL OF EU • • • FUNCTION: voice of EU member governments, adopting EU laws and coordinating EU policies MEMBERS: government ministers from each EU country, according to the policy area to be discussed PRESIDENT: Each EU country holds the presidency on a 6-months rotating basis EUROPEAN COUNCIL → Not the same as the council of the European Union! COMPOSITION: • • • The heads of state or government of the 28 EU Member States The president of the Council of European Union The President of the European Commission MAIN TASK: defining the EU’s overall political direction and priorities 6 Introduction to Business Law Topic 3: The EU Law and Monetary Integration Makes its decision by consensus without the Council of EU President and the Commission President (the political voices count).
EUROPEAN COMMISSION •COMPOSITION: → 28 members: president, 1st vice-president (High Representative of the Union for Foreign Affairs and Security Policy ) and six vice-presidents TASKS: • • • • • Initiating Union legislation Monitoring observance and proper application of Union law Administering and implementing Union legislation Representing the EU in international organizations It can and DOES sue member states → they can be reluctant to implement EU law or implement it wrongly Monopoly over legislative initiative → they are the only ones that decide what can be enacted Council and Parliament can ask to submit a text but it is the Commission who decides whether to initiate action.
Usually meets in Brussels except when Parliament holds its plenary sessions in which case it meets in Strasbourg.
EUROPEAN COURT OF JUSTICE (CJEU/ECJ) The European Court of Justice (CJEU) is the ultimate interpreter of Community law and to ensure that parties comply with their obligations under the EU law. Sits in Luxembourg.
Actually comprised of the General Court, the Civil Service Tribunal (formally called the Court of First Instance) and the Court of Justice.
Is the ultimate authority to interpret the European law (what was meant with what law), and also is the ultimate authority to make sure that the members oblige with their responsibilities→ in front of the CJE the countries/the member states are the parties: they are in a court system with international treaties.
Us as individuals cannot go to the court and demand our justice, if an individual wants to enforce an European law, we must go to national courts.
COURT OF JUSTICE COMPOSITION: 28 judges and 11 Advocates General appointed by the Governments of the Member States by common accord for a term of six years.
Advocates General have an extremely important role: they prepare all the previous case law, analyzes it and suggests a solution, they do the intense research, and courts decides 7 Introduction to Business Law Topic 3: The EU Law and Monetary Integration with this in mind. The majority of break through cases (cases where the decision was not what was expected), come due to the opinion of the advocate general. They had the most important rule when European Law was underdeveloped (1992) WHAT DOES CJEU DO? 1. They must interpret the law as it stands through VEHICLE OF PRELIMINAR RULINGS. The rationality behind is: EU makes a rule, EU members must implement the law → directive gives them free hand on how to do that. Lots of times, members interpret the law differently, because they're heavily influenced by the "box of their own laws", the laws that they know. Through preliminary rules, Court of Justice tries to fight that, because one the preliminary court decides how to interpreted a law everyone must interpret it the same way 2. They must enforce the law → they bring EU states to the law, the Commission sues members in front of the Court of Justice.
3. They can annul EU legal acts → if an EU law is believed to violate human rights or the EU treaties, the court can override it. The EU council, European parliament and EU commission can ask the CJEU to annul laws.
TYPES OF PROCEEDING: • • • • • Actions for failure to fulfill obligations under the Treaties (Article 258 TFEU) Member State vs. Member State (Article 259 TFEU) Actions for annulment and action on grounds of failure to act brought by a Union institution or a MS in connection with an illegal act or failure to act (Articles 263 and 265 TFEU) Cases referred from national courts for preliminary rulings to clarify the interpretation and validity of Union law (Article 267 TFEU) Appeals against decisions of the General Court (Article 256 TFEU) EUROPEAN UNION POWERS EU is not a country, but an agreement between countries, so there's no real separation between powers because they don't share them the same way.
POWERS AND RESPONSIBILITIES ARE SHARED: • • Horizontally: among independent institutions at the EU level Vertically: between the EU and the Member States EXECUTIVE POWER: the Council of the EU, the council of Ministers and the Commission LEGISLATIVE POWER: the Council of the EU and the European Parliament; responsibility for the policy implementation between the Commission and the Member State administrations JUDICIAL POWER: EU level courts (ECJ, General Court, Civil Service Tribunal) and national courts. National courts are the one using, enforcing and interpretation the EU law.
The problem is that national judges are old people, and EU laws is really young, so it isn't easy for them to implement EU law 8 Introduction to Business Law Topic 3: The EU Law and Monetary Integration No SEPARATION OF POWERS but representation of interests: each European institution is the bearer (the one supposed to take care off)of particular, national or supranational interest, which it strives to protect and promote.
Problem with enlargements → every single time the EU wanted to enlarge for one more member, there must be a change of treaty.
In 1992 there were the 3 pillars; for the 1st pillar, the community method applied. For the second and third pillar, the governments of specific states cooperated between themselves and the EU didn't have powers. With the new treaties, the EU has been wining powers: EU is cooperating with the governments in the second and third state Community method versus cooperation: • • COMMUNITY METHOD: the Commission proposes and the Council disposes TREATY OF THE EUROPEAN UNION: Commission retains its monopoly over policy initiation in the first pillar but shares the right with member governments in the second and third pillars; common foreign and security policy and justice and home affairs respectively.
THE EUROPEAN CENTRAL BANK • • • • • Administers the monetary policy of the 17 Euro-zone member states.
Established by the Treaty of Amsterdam. (97) Headquarters in Frankfurt.
PRESIDENT: Mario Draghi (since November 2011) The minimum term of office for a national central bank governor is 5 years and members of the executive board have a nonrenewable 8 year term.
They decide for the monetary policy in the all EU (Euro) → they cannot decide in monetary policy on countries that do not have Euro.
Monetary policy: policies that decide about the money supply and the interest rate TASKS OF THE EUROSYSTEM          To conduct foreign exchange operations To define and implement monetary policy To promote the smooth operation of payment systems To hold and manage the official foreign reserves of the participating EU Member States International Cooperation Contribution to prudential supervision and financial stability Collection and compilation of statistics Issuance of banknotes Advisory functions ECONOMIC AND MONETARY UNION (EMU) 1999: Austria Italy Belgium Luxembourg Finland Netherlands France Portugal Germany Spain Ireland 9 Introduction to Business Law Topic 3: The EU Law and Monetary Integration Greece (2001) Slovenia (2007) Cyprus and Malta (2008) Slovakia (2009) Estonia (2011) Latvia (2014) Lithuania (2015) *States with Special Status: the country didn't want to take the Euro **Derogation: The country wasn't strong enough to get the Euro ADVANTAGES OF MONETARY INTEGRATION Facilitation of International Trade • frequently changing exchange rates are bad for imports, exports and direct investments → all the time is risk involved, uncertainty involved, and the trade suffers Macroeconomic Stability • monetary stability and fiscal discipline: without Maastricht fiscal deficits would be higher and price stability would be endangered → without those, macroeconomic stability wouldn't be that strong International Confidence • Germany after World War II, Eastern Europe today → is also US doing business with EU; the same country helps with integration ISSUES OF MONETARY INTEGRATION Eurosklerosis • • high and persistent unemployment since the eighties, low economic growth since the nineties → Why do we have persistent unemployment? In US they don't have "minimum wage", they don't need a reason to fire someone, in EU you have more strong labour law: in Europe is harder to get rid of the workers these are problems of the member countries, not problems of globalization and European Integration We tries to fight this wit implementing the Euro, but it didn't work.
Integration within – Trade Barriers outwards • ” trade war” with the USA: The View from the Outside Internally, the EU is attempting to lower trade barriers, adopt a common currency, and move towards convergence of living standards. Internationally, the EU aims to bolster Europe’s trade position and its political and economic power. → How does that happen from the outside? EU has higher taxes than US, Subsidies, Bureaucracy and Regulation • coal and steel, agriculture → a problem since the fifties → a problem with respect to enlargements 10 Introduction to Business Law Topic 3: The EU Law and Monetary Integration Fiscal Discipline • the European Stability and Growth Pact: large fiscal deficits in many member countries in the recent years and in the near future → We spend a lot in public administration MICROECONOMIC BENEFITS OF COMMON CURRENCY The Euro is important in realizing some of the gains from a functioning single market 1. Potential Gains for consumers • • • Lower prices because of increased competition/ greater price transparency (this is more likely with easily transportable goods) Reduction in the transactions costs of travelling within Europe (e.g. costs of currency exchange) Easier to live and work in different EU countries 2. Potential gains for businesses • • • Invoicing can be done with one currency Lower transactions costs – some people argue that staying out of the Euro is equivalent to exporters facing a tariff when they trade inside the EU Gains for the tourist industry in attracting overseas visitors – Businesses might be able to fund their capital investment at lower real interstates MICROECONOMIC DISADVANTAGES OF COMMON CURRENCY 1. Changeover Costs from joining the Euro: • • • • • Costs of changing accounting systems Menu Costs (vending machines, catalogues, franking machines, postage) Installation of new payments systems Customer confusion (imperfect information) when you go from national currency to euro, prices rise 2. Higher prices: Potential loss of consumer welfare if suppliers increase prices when converting from sterling to euro 3. The vast majority of consumers will continue to buy locally – what matters more is the effectiveness of competition policy in targeting anti-competitive behavior MACROECONOMIC DISADVANTAGES OF COMMON CURRENCY 1. Entering the Euro means losing an instrument of policy adjustment • • A “one-size fits all” monetary policy may work against a country if their cycle is not convergent with Euro Zone Retaining the option of making an exchange rate adjustment is useful 2. Fiscal Policy constraints • The EU Growth and Fiscal Stability Pact → they cannot imopse the level of taxes they want 11 Introduction to Business Law • • Topic 3: The EU Law and Monetary Integration Limits on government borrowing But now largely ignored – especially with the effects of the credit crunch /fiscal bail-outs etc OBJECTIVES OF THE EUROPEAN CENTRAL BANK • ”the primary objective of the ESCB shall be to maintain price stability” • “Without prejudice to the objective of price stability, the ESCB shall support the general economic policies in the Community with a view to contributing to the achievement of the objectives of the Community as laid down in Article 2.” (Treaty Article 105.2) Article 2 of the Treaty on European Union states the objectives of the Union are a 1. High level of employment 2. Sustainable and non-inflationary growth If prices are stable (inflation is low), competition is stable and non changeable, so they don't need new workers, so those three are not compatible at the same time PRICE STABILITY: keeping inflation low (around 2%) • Federal reserve has multiple objectives • Promote maximum employment • Stable prices • Moderate long-term interstates PRIMARY FUNCTIONS OF THE EUROPEAN CENTRAL BANK 1. Definition and implementation of monetary policy for the euro area.
2. The conduct of foreign exchange operations and take care of the foreign reserves of the European system of central banks.
3. Issue euro banknotes ( member states can issue euro coins but their amount must be authorized by the ecb ) 4. The promotion of the smooth operation of payment systems.
SOURCES OF EU LAW 1. Primary Sources 2. Secondary Sources PRIMARY SOURCES: TREATIES As a result of the Lisbon Treaty 2009, the current primary sources of EU law are: • Treaty on European Union (EU Treaty – TEU) • Treaty on the Functioning of the European Union (TFEU) • Treaty establishing the European Atomic Energy Community (EAEC Treaty – EURATOM) 12 Introduction to Business Law Topic 3: The EU Law and Monetary Integration SOURCES OF EU LAW (DE MAS IMPROTANTE MENOS) 1. PRIMARY LEGISLATION: UNION TREATIES – GENERAL PRINCIPLES OF LAW Treaties can be applied directly. SO, if it says that ithere is not abuse of dominance in the EU market, the court (a national one) can use that in a case 2. THE EU’S INTERNATIONAL AGREEMENTS *EXAM 3. SECONDARY LEGISLATION • • • LEGISLATIVE ACTS: Regulations (here the regulation is the law), Directives, Decisions → they can be used by national courts NON-LEGISLATIVE ACTS: Delegated acts, Implementing acts (like regulation in Spanish System) OTHER ACTS o Recommendations and opinions o Interinstitutional agreements o Resolutions, declarations and action programmes → Regulations: they are like Spanish law, they are the rights and obligations of the states, the way they stand it's the law. They apply DIRECTLY throughout the EU; complete harmonization or high degree thereof. No need to be transposed into national law. Member States have no power to derogate Regulations partially or in whole.
→ directives: they need to be transposed in national law. EU sais the goal of the directive, but it the state that implements it and puts the laws that go according to the directive. Binding with respect to the intended result; directly applicable only under particular circumstances. They exist because since EU is a group of really different cultures, you need to give them some powers of decision.
Balance between EU’s goals (harmonization) and respect for national diversity.
Directives are binding on the Member States as regards to the objective to be achieved.
National authorities decide on how to achieve this objective. They have to adapt their domestic legal system in line with EU Law provisions. If they fail to archive this objective, the directive can sue them.
TWO-STAGE LAWMAKING PROCESS: The Directive lays down the OBJECTIVES to be achieved at the EU level. The Directive establishes also a DEADLINE for its implementation (VACATIO LEGIS usually they're long.). National authorities (e.g. the Congress) translates these objectives into the actual legal or administrative rules in the Member States. Is not easy; they fight on the level of EU, the commission enacts a directive, and then it get into national state, but then it has to go through parliament and senate, etc → long period of time Directives are only addressed to the Member States, it cannot be a direction that say what citizens must do. Directives cannot be applied directly; they do not impose obligations or confer rights on EU citizens. They have to be transposed; they have to put a new law to go according to the directive or change the previous law.
13 Introduction to Business Law Topic 3: The EU Law and Monetary Integration Sometimes MS fail to implement the objectives before the established deadline or mistranslate them into the national legal system. In such cases, the ECJ has decided that national citizens may invoke Directive provisions (DIRECT EFFECT). Conditions (Van Gend en Loos): • • • • Directive provisions must establish RIGHTS for the citizens in a clear and precise way Exercise of rights shall not be conditional, the is a right but there are not conditions on it (it cannot be "you can pass the border IF your are XYZ") National authorities have no margin of appreciation or maneuver regarding the content of the provisions to be implemented; the state cannot say "how much" of the right can be applied The time allowed for implementation of the directive has expired; the state has the right to wait until the last available minute 4. GENERAL PRINCIPLES OF LAW 5. CONVENTIONS BETWEEN THE MEMBER STATES • • Coreper decisions International agreements EU has zero monetary competency on the taxes paid in each countries. But there are treaties between countries, such as the treaties for avoidance of double taxation (double taxation treaty) concluded by member states (they say in special situations, who has the right to tax a person when there are two different countries that could tax the same thing to you) ORDINARY LEGISLATIVE PROCEDURE In the first treaties the Parliament was left out, but since the Lisbon treaty we have "Ordinary Legislative Procedure".
The Commission is the one that makes the proposals, and they go to Parliament, and committees. Only after the Parliament has given its decisions (thanks to the Ordinary Legislative Procedure) the law can go to the Council of European Union (ministers of member states + President of the commission + president of the council (these two have n right to vote)). If there are no amendments by Parliament or there are approval of all the amendments by the Council, it's enacted. If there are changes, it goes back to the Parliament.
14 Introduction to Business Law Topic 3: The EU Law and Monetary Integration NATURE OF EU LAW • • • PRINCIPLES OF SUPREMACY AND AUTONOMY → EU law is above national law PRINCIPLE OF DIRECT EFFECT → When you have a regulation, when you have a treaty, they are worth as much as a national law PRINCIPLE OF STATE LIABILITY FOR DAMAGES → if a state doesn't apply a regulation, or goes against a directive, etc… they can be sued.
SPAIN VS EU Constitution = Treaty of Lisbon Organic Law = Regulation Regular law = Directive Regulation =Recommendation FREE MOVEMENT OF GOODS Main principle in which the EU was conceived.
Obstacles to Inter-State Movement of Goods 1. Custom duties and charges having equivalent effect (Arts. 28-33) 2. Discriminatory taxation (Art.110) → you tax a foreign product different than a national product 3. Quantitative restrictions on imports and exports (quotas) and all measures having equivalent effect (Arts. 34-36) Quantitative restrictions and measures of equivalent effect Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.
Categories of measures possibly caught in violation of art. 34 by the Dassonville Formula: 1. Discriminatory measures on the ground of nationality: you cannot say that this product is better 2. Non-discriminatory measures: so-called product requirements, related to the production and marketing of goods that apply without distinction to both foreign and domestic goods but it is usually more burdensome for foreign companies/goods (if this is brandy in spain, it must be sold as brandy in all countries) 3. Selling arrangements: category created by Keck case C-267/91 related to socio-economic measures as to how goods should be sold The ones that do not discriminate at the beginning, but at the end they affect the sales are considered as discriminatory measures.
15 Introduction to Business Law Topic 3: The EU Law and Monetary Integration CASSIS PRINCIPLES: 1. Mutual Recognition: There is no valid reason why, provided that goods have been lawfully produced and marketed in one MS, they should not be introduced into any other MS.
Real Seat Theory says that if you create a company in one state, the principal place of business must be in that same country. If you move the principal place of business outside that state, you cannot be a "state"ish company no more. (If you start in Ireland, but than you move to Spain, you are not an Irish company) Incorporation Theory: where you put your people working is where the … 2. The Rule of Reason: Certain measures, even if within Dassonville formula, will not breach Art. 28 if they are necessary (proportionality) to satisfy mandatory requirement (objective justification) relating in particular to the effectiveness of fiscal supervision, the protection of public health, the fairness of commercial transactions and the defense of the consumer.
"There are some areas where EU has not power yet, so we give you some powers to protect that area, even if that means not allowing the import of a product" EXCEPTIONS TO FREE MOVEMENT OF GOODS • Article 36 TFEU: The provisions of Articles 34 and 35 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of: - 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 archaeological value; - the protection of industrial and commercial property •Cassis Principle of Objective Justification Excuses non-discriminatory rules as long as they are proportionate and justified; nonexhaustive list of justifications; see: Danish Bottles 302/86 QUESTIONS FOR DISCUSSION: • Is FMG breached in case a Member State prohibits importation of pornographic magazines? → Yes, under the lines of Article 36 of "Public Morality" • Is FMG breached in case a state trade association promotes buying national products? → Since it's public, the cannot do this, because they are harming other countries sells/import sales. If a private association, there is no problem, but only as long as it is a private.
• Is FMG breached in case a Member State requires all the bycicles on its territory should be in line with that Member State’s technical provisions? 16 Introduction to Business Law Topic 3: The EU Law and Monetary Integration → If Spain has a goo reason (if it’s a matter of public security, or a matter of protection of health of humans), then there's no problem • Is FMG breached in case a Member State prohibits Sunday trading? → Sunday trading: stores are closed on Sunday; It's not, because it's a public policy of letting that day being a free day for everyone • Is FMG breached in case a Member State prohibits advertisements of alcohol? No, because it's a matter of public morality, public policy and a matter of protection of health of humans • Is FMG breached in case a Dutch mayor prohibits other EU-nationals from attending coffee-shops? Since it's providing services, this is not a FMG, because there is no movement of goods between borders.
FREE MOVEMENT OF SERVICES AND FREEDOM OF ESTABLISHMENT There are two ways of movement for a self-employed person: -They can move on the territory of another MS with the purpose to perform economic activity on permanent basis by establishing there (Art 49 TFEU) FREEDOM OF ESTABLISHMENT (a freedom established in the treaty of the European Union) -They can go for fixed period of time to another MS with the purpose of performing a service for appropriate payment and after that they return on the territory of the MS of establishment (Art 56 TFEU) -FREE PROVISION OF SERVICES They are two different freedoms, not the same one.
Why is the distinction relevant? There was an opinion of an advocate general that said that the difference is important because if you are going abroad to provide services, the Spanish government cannot ask you for any more credentials that those that were demanded in your "home state" (if you are a lawyer in Germany, you can be a lawyer in Greece). Freedom of establishment is specific and special, it says that if you go to another MS you need to oblige with that MS' law, the conditions must be the same for Spanish people and for foreigners.
Aspects of the distinction: • • • recognition of professional qualifications → if you're a lawyer here, you're a lawyer everywhere registration, permission to perform → to perform services, you do not have to register, but if you're a company, you must social and tax benefits → if I'm working here, I'm tax according to this taxes, etc.
My situation, even as a foreigner, is the same of a person who was born here. If you are a company here, you'll pay Freedom of establishment: 1. PRIMARY: you can put a company in any MS → it's for persons 17 Introduction to Business Law Topic 3: The EU Law and Monetary Integration 2. SECONDARY: you can do business in other countries with your company → it's for companies BARRIERS TO SINGLE MARKET Single market: the whole EU is one market w/o borders. There are some barriers that you cannot see. This used to be some barriers (and some still are):  Requirement of nationality → you cannot demand someone to be from you country to provide services/establish a company (if you wanna be a lawyer in Spain, you have to have Spanish nationality)  Non-recognition of professional qualifications (you cannot say that you'll only accept qualification from your country (such as a degree)  Single business unit requirement (if you wanna try to create branches of a company or something like that, you must be established in they country where you wanna create them)  Knowledge of language → this one is not prohibited, if it's well argument it can stay (e.g. in the case of professors in university must speak Catalan → he state has the power to protect its culture)  Limiting access to social benefits  Limiting access to various infrastructure (more advantageous loans for nationals; limited access to real estate→ the state cannot do that, on the other hand, a private bank or a private person can, there are no laws for that)  Other barriers to free movement.
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