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Custom Economic Governance and the Internal Market Essay

A single market refers to a form of trade bloc as a result of intergovernmental concurrence which is characterized by a free business area for products with similar policies. The policies relate to product regulation, freedom of movement of labour and capital, as well as services enterprise. The single market, also referred to as the internal market, explains the European Union (EU) project to come up with a free trade community and shape Europe into a solitary economy. This is undoubtedly one of the most considerable and wide-ranging symbols of the European’s integration, composed of numerous policy sectors where EU is most dominant. These symbols include use of a similar currency, European Customs Union, the Schengen Convention plus many others designed to unite all the economies in Europe. Despite the fact that it has been developing since the foundation of the European community in 1957, the internal market has only managed properly take off in the recent years. Currently, there has been a view that the Court of Justice has introduced a strict market access test, the effect of which is to replace or at least severely restrict the Keck doctrine. This document discusses this issue in-depth outlining some of the major areas that affect the EU Single Market either partly or wholly.

Overview of the European Internal Market

In 1957, The Treaty of Rome set forth four major economic freedoms that it felt ought to be established in Europe. These include free movement of goods, unrestricted movement of people, free movement of individuals as well as free movement of capital. The initial stage of this yearn was achieved with absolute hastiness in 1968 when the European Customs Union was formed. The second step involved forming of a European Court of Justice (ECJ) decree that resulted to the emergence of code mutual recognition. There was however a languid progress on the other sectors till 1986 when a deadline was set that by 1992, there should be a full completion of the internal market. Full completion meant harmonizing the national standards, removing barriers to facilitate free movement of the people, set rule on how authorities ought to purchase goods and services, liberating all the financial institutions, setting levels of Value Added Tax (VAT) rates as well as European trade laws.

In 1992, the final stage which involved creating an Economic and Monetary Union that would unite the entire region began and was completed in 1999. Since then, the commission has strived on slackening the market and heightening competitiveness through the support of the Europe 2020 strategy. The commission is also aware of the fact that some sectors, such as those relating to energy, are yet to be slackened, and regulations, like those covering patents have not been harmonized. To boost growth, the commission implemented the Single Market Act in April 2011. This was composed of twelve projects to facilitate growth, take care of issues like worker mobility and safety of the customers, competitiveness and social development for the year 2012. It was also referred to as the Keck doctrine.

New Approach to the Single Market

Following the constant growth of consumer indulgence in information communication technology (ICT) products, the necessity of ICT standards in the customers’ market also increase. Unlike some years ago when standards for the processed products were designed to serve markets at the national levels, nowadays they are developed to serve the global market (Gilles & Jean-Noël, 1986). This creates new challenges for national consumer protection laws.  In efforts to create a single market, the EU created an innovative and a successful kind of “coregulation” commonly known as the “New Approach”. This monitored the duty of the lawmakers and standard developers to minimize the technical obstructions to business in the Internal Market (Gilles & Jean-Noël, 1986).

Though it is not an easy task to harmonize technical levels with regulatory requirements, the “New Approach” has shown success in this area. The approach played a very significant role in breaking the obstacles that hindered cross-border business among the European communities. In the earlier decades before the introduction of the new approach in 1985, technological obstacles were identified as the major barriers to economic integration but efforts to come up with harmonized European standards had ever been dreaded. Finally, the new approach changed the situation and after its adoption, the new standards differed from the existing ones.

The new approach made clear the partition of the duties between the commission, which was entrusted the responsibility of outlining major directives, and the role of developing technical standards was retained to the European standards bodies. It additionally shifted the outlook of EU level standard-creation to lesser harmonization of only the necessary requirements putting weight on the standards of performance as opposed to design standards (Gilles & Jean-Noël, 1986).

After this, implementing the resulting standard was voluntary, granting a safe harbour of assumed conformity with the needs of the connected directive for the producers if their products were approved acquiescent with the EU standard. In spite of this fact, the manufacturers still have the right of establishing their conformity with the law in case their products do not adhere to the referenced technological standards, though proof of conformity may at times be difficult. In case a New Approach reference standard gets outdated, replacing it can simply be done by withdrawing the initial standard in the Official Journal, exclusive of making changes to any associate of the state or the directive entrusted the role of implementing legislation.

Additionally, the new approach demanded that all Member States to give notice of any plans to improve standards that could have some effect on the internal market, enabling the other associates to request that the work be stopped or be transferred to the EU rank to prevent situations that would create barriers to the business. Despite the fact that the new approach is considered a success, the authenticity of such a coregulatory system can be questioned on the grounds that the representatives of industries control the standard-developing course and might fail to think about the broader communal interests that will eventually be affected after the implementation of the standards (Svetlana & %u0110or%u0111e, 2011).

In future, one of the major roles that an updated form of the new approach may play could be shrinking the effects of indirect network by making easy the changing to electronic signatures. This is a more improved form of online verification with sketching of the Electronic Signature Directive. This attempt to develop an E-signature has not been met with much achievement despite the fact that it was also structured the same way as the New Approach was. This can be attributed to the shortcomings of the new of the e-signature technology as opposed to the limitations in the regulatory process (Nicolas & Jane, 2008).

Mutual recognition

Mutual recognition is the law that a product that is being legitimately marketed in a given Member State and it is not subject to the Union management should also be allowed to be traded n other Member States, irrespective of whether the product fully complies with the technical policy of the Member State of the end target (Vancauteren & Henry de Frahan, 2006). There is no exemption to this rule: an associate state might refuse the selling of a product in its current nature only where it can illustrate that it is absolutely necessary for the safety of, for instance, environment, public safety or health. In such an instance, the associate state of destination is also expected to show that its measure is the smallest business-restrictive measure (European Commission, 2012). The treaty of Rome had, and has up to date, two conditions necessary for the founding of a single market. Firstly, Article 30 of the Treaty states that, “Quantitative restrictions on imports and all measures having equivalent effect shall, without prejudice to the imports and all measures, be prohibited between Member States” (Swingbank, 1993). Article 36 concurred with this declaration hence allowing constraints on imports, for instance on bases of public security, public morality, public policy, or protection of the lives of plants, animals or humans. In spite of this fact, such restrictions or prohibitions should not act as a channel for subjective discrimination or veiled prohibition among the Member States.

Secondly, with the undisputed concurrence of the Council, Article 100 of the EEC Accord provided for the estimate of the principles of the State Members to the level necessary for the appropriate running of the common market. In the early years, there were controversies on which article should be adhered to with some people having the feeling that Article 100 should be preferred to Article 36 when it comes to establishing a single market (Edwards, 2008). Nevertheless, in the early 1970s cut-off dates had been missed and the synchronization program was embraced in disrepute. The law of mutual recognition emerges from the Commission’s notion of the pointlessness of practicing an al-embracing food principle synchronization program and a succession of issues through the European Court. In 1985, the commission came up with a new approach that sought to draft structure of EC food law formulated to secure the public health and ascertain that there is fair business interactions among all the Member States.

Impact on food manufacturers

It is good to understand that the principle of mutual recognition does not topple the already set national rules; it only implies that products that have been legitimately produced and sold elsewhere in the society must be accepted to the markets of the associate states. National laws continue to control products manufactured and sold within a Member State and especially those that are produced from the third world nations. As such, a manufacturer in a third country aspiring to export to the EC has to produce 12 dissimilar products, one for sale in every associate state. Equally, on sale within the member states there can be twelve different products matching the specifications set by each of the associates (Michelle & Carlo, 2010).

Positive and Negative Integration

Acquisition of the difference between positive and negative integration has had a fundamental role in clarifying the changes of the EU’s common market. Negative integration which refers to removal of barriers to free and uninterrupted competition has been advantaged over positive integration which refers to the re-introduction of usual regulatory standards. The ECJ Cassis De Dijon ruling in 1979 has been a target in this regard. Since that ruling, the negative integration needed the synchronization of regulatory standards and was thus acutely hampered by cumbersome decision-making within the Council (Wagner, 2012).

Without harmonized European standards, State Members retained the freedom to restrict market access on the grounds of national regulations. In Cassis de Dijon, ECJ advanced common market authorities by stating that the free movement did not need synchronized authoritarian standards. Rather, a principle of mutual recognition would be used to the common single market where all the associates were required to open their products for goods that were legitimately marketed in one member state (Internet Law and Policy Forum, 2012). While establishing of the common market was aided, the adoption of measures to correct market remained hampered by the need of agreement in the Council. Consequently, the stability between the state ands the market, between social-democratic interventionism and neoliberal deregulation, changed towards the previous at the expense of the latter.

The New Approach to Technical Harmonization

This decree intends to recast technological harmonization in the European Union (EU) on new grounds by only harmonizing the necessary requirements of products and by adopting the “general reference to standards” formula and the rule of mutual recognition for the sake of eliminating technical barriers to the free movement of products. The resolution aspires to set out an approach developing rules that are applicable to families or sectors of products and types of hazard. It establishes a several primary principles for a European standardization policy some of which have been mentioned below.

To start with, all the associate states embark on keeping a steady check on the technological policies which are applied in order to do away with all those that are considered obsolete or irrelevant. The second policy is the mutual recognition principle where all the members ascertain mutual recognition of the products of tests and set harmonized policies on the action of documentation bodies. Thirdly the members concur to early societal consultations where the national authoritarian proposals or processes may create a threat on the smooth running of the single market. There is also the need to expand the general reference to standards if possible to European but if obligatory national standards, and to describe the role of standardization as the formula of technological characteristics of goods. These were mainly those that pertained to safety and health protection.

There is also the need to hastily reinforce the capability to standardize, if possible at the European level. This ensures that all the products traded within the EU are of high quality and that Member states do not con each other by trading with illegal or substandard goods. This consequently strengthens the bonds between the Member States. Finally, the European standards ought to be submitted to the European regularity bodies for authorization.

There are four main policies that are established by the Council (Europa, 2012). Firstly, legislative harmonization is restricted to basic safety needs with which goods put on sale must adhere and hence enjoy free movement all through the European Union. Secondly, the role of drafting technical production guidelines is entrusted to bodies that have competence in industrial standardization. This takes the current state of technology to yet a higher level (Asim, Erica, & Koliba, 2011). Thirdly, the technical specifications retain their status of intentional standards implying that they are not compulsory.

Finally, the rulers are expected to note that goods developed in compliance with harmonized standards are assumed to conform to the basic requirements set by the directive (Europa, 2012). However, if the producer fails to conform to the set standards, he or she has the obligation of proving that his products adhere to the set requirements. For this system to effectively operate, there are two basic conditions to be met: the set standards have to pledge the quality of the product and the public authorities have to ensure that there is protection of safety in their regions. This is crucial in order to institute reciprocated trust among the Member States (Europa, 2012).

The Management and Governance of the Internal Market

Market management and governance basically refers to the way a market is directed and controlled. The commission has currently implemented a Green Paper regarding corporate governance and this is consequently launches an overall consultation on the various methods that can be embraced to improve the existing governance mechanisms (European Commission, 2012). The paper is composed of three chapters which include boards, shareholders and the comply principle. The chief aim of the paper is to have an open debate on the raised issues. It enables all the interested members have a glimpse on the sectors that have been identified by the commission as in the realm of corporate governance (Zechner, Wu, & Dangl, 2008). This also offers a chance for everyone to express his or her opinions in regards to the posed queries, and also give any necessary material (Baron & Armstrong, 2005). The Green Paper also enables to ensign the various items that the commission has not been able to consider.

Initially, business management was ever controlled by various rules but this is not the case currently. Nowadays, corporate governance as well as the contributions of various companies has to be directed towards the development of the entire society (Ohemeng & Frank, 2011). Adopting governance codes was necessary for the internal market in order to maintain harmony within the internal requirements of the business. Governance of the market is solely entrusted to a board of directors who have the duty of serving the interests of the market rather than their personal interests (Brandas, 2011).

The action of the board and the payment of the executive directors are important in maintaining and protecting the welfare of the various stakeholders. In the internal market, corporate governance is mainly concerned with reinforcing the relationship between the management and the shareholders (Guthrie & Messersmith, 2010). Apart from change in the ownership structure of the companies, corporate governance is also importance due to the pivotal role of social responsibility. The board of directors has the obligation of protecting the employees, shareholders, customers, suppliers and the local community. Preventing scam is yet another reason as to why corporate governance is important. Due to the rising cases of fraud and corruption, it is important to take care of this situation by adopting corporate governance (Kalyan City Life, 2012).

The Monti Report and the Single Market Act 2011

In October 2009, the EU’s president, Jose Manuel Barroso, requested Mario Monti to explore options available for re-launching of the internal market. After carrying out the investigation, his report, A new strategy for the Single Market, was printed in May 2010. It had the inference that the Single Market was composed of a high number of limitations and lacked links and set out a number of ways that would address those gaps a well as means to enforce the rules supporting it (Parliamentary Business, 2012).

Monti insisted that re-establishing the single market would demand both regulatory and non-regulatory modifications. He also observed that the internal market was suffering from “market fatigue”, associated with a low fatigue in the duty of a single market. By giving his recommendations, Monti hoped that the internal market would be revived as a way of boosting growth in the EU, hence re-establishing trust and maintenance for it among citizens and businesses (Mia, Sands, & Iselin, 2011).

On 27 October 2010, the commission responded to Monti’s report by publishing a communication, “Towards a Single Market Act”, composed of fifty proposals to improve the Single Market. The commission hopes to implement this Act in 2012 as a way of commemorating its 20th anniversary. It also anticipates that by releasing the act, EU will pull through from the financial crisis and raise GDP up to 4 per cent in the next ten years (Parliamentary Business, 2012).

The Requirement of Prior Notification of Technical Standards

Article 88 (3) sets forth a duty on the member states to inform new aid schemes before their implementation and they should not implement such schemes if they have been disapproved by the commission. The article clearly states that:

The Commission shall be informed, in sufficient time to enable it to submit its comments, of any plans to grant or alter aid. If it considers that any such plan is not compatible with the common market having regard to Article 87, it shall without delay initiate the procedure provided for in paragraph 2. The Member State concerned shall not put its proposed measures into effect until this procedure has resulted in a final decision (Reckon, 2012).

Warning to the manufacturers not to implement any aid without the commission’s consent has a direct consequence. It has been interpreted as the duty to secure the compensation of aid that had been provided before the commission’s approval and that it deems compatible with the Article 87 policies. It can be used in legal action in a national court to protect refund of unlawful state aid.

These procedure permits the other state members and the economic operators to become aware of the requirements of the new product and to give their opinions in case the product does not adhere to the Technical Barriers to Trade (TBT) agreement (European Commission, 2012). Such notices take place at the very early stages of drafting when the technical conformity evaluation process has not been implemented and amendments from the other State Members can still be introduced and be taken into account. The member making the notification has to do it early enough for the members to forward their comments in writing.

This process is an important and a unique feature for transparency (Löffler & Bovaird, 2009) as it initiates international dialogue to discuss the new product necessities. It also makes the economic operators as well as the community to get informed on proposals of the third world countries, something that might have major impacts on community exports (European Commission, 2012). The procedure also allows for opinions to be given on a planned measure in case there are complains that the product may be not in accord with the regulations of the TBT agreement.

Notification of Derogations from the Free Movement of Goods Principle

Article 95 (4-6) EC explains the option to derogate from the synchronized measures relating on Article 95 EC (Fleurke, 2008). The possibility was introduced in the Single European Act of 1987 when decision making of the majority was passed to enable all the members to participate in the decision making process concerning all the internal market proceedings. This sought to ensure that Member states could no longer refuse proposals due to lack of an environmental derivation. Permitting Member States to introduce or retain stricter rules gave them a chance to be more defensive than the other members of the EU. Nonetheless, an in-depth scrutiny of an excessively lenient like such derogation may also result fragmentation of the single market, as the harmonization rules may be set aside if the necessary requirements were accomplished (Zander, 2010).

Free Movement of Goods

Free movement of goods is the basic principle of the internal market of the EU whose objective is removing all the barriers in order to facilitate an easy and a quicker movement of persons, products, services as well as capital between the Member States. Irrespective of this fact, there are regulations that ensure that competition between nations is not interrupted and that the policies of the Member States are shaped to the extent that they are compulsory for the proper functioning of the internal market. Another major advantage of the market is that it facilitates efficiency in production. Due to the fact that all the nations in the free trade area with each other for sales, competence in the manufacturing sector is improved. Industrial efficiency consequently reduces the cost of labor and other raw materials.

There is also increase in productivity. When the borders are liberalized between the State Members, the capacity at which each associate can reach is broadened. This has the implication that each nation will strive to boost its industrial manufacturing in order to meet the escalating demand of goods and services. Another advantage is that there are reduced consumer prices. The heightened competition for sales in the free trade zones translates to competition among the manufacturers. This results to reduced prices as companies strive to compete for customers and win their loyalty.

Additionally, there is increased job creation as such regions encourage new job creation. Since the new jobs are in the industrial sector, they are well paying and the people in the region enjoy them. Though movement of people within free trading areas is not restricted, movement within these regions is normally not permanent. Within the internal market, some conditions are drafted to control the movement of people across nations. As such, any member of the EU can move to any country of his or her choice but can only live there for a designated number of days (eHow, 2012).

The Keck Doctrine

The European Council of Justice in its renowned Dasonville ruling from amid 70s deduced Article 28 of the EU-Treaty as one to do away with any policy that would restrict any intra-community trade (Springerfile, 2012). This judgment was later imported to the region of the free movement services. Obviously, the appropriate prohibition to the Gourmet-case is composed of both the ban of imports in Sweden and a ban to facilitate cross-border services. This would be considered a breach under the EU law (Fleurke, 2008). For this reason, the Council shifted its opinion in 1990s in its Keck judgment claiming that, contrary to what had been inferred earlier on, national policies prohibiting some selling arrangements are not within the capacity of Article 28, provided that the policies apply to the appropriate entrepreneurs operating in the same region and they have the same impact. This was meant to put some restrictions on the movement of products so that there could not be illegal trade (eHow, 2012).

Custom Economic Governance and the Internal Market Essay

Code: Sample20

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