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# Free Movement #

Free Movement
The greater scheme – When attempting to establish the actual or potential impact of the free movement rules on professional regulation, it is necessary to examine the manner in which they apply to self- and co-regulatory set-ups as well as the leeway given to quality considerations conflicting with free movement. Hence, a first step will be to establish if and when “private” or hybrid regulation can be expected to fall within the personal scope of the provisions on free movement. Subsequently, the substantive scope of these provisions, i.e., the content of ‘a barrier to free movement’ as well as the potential to justify such measures, will be examined in order to ascertain the types of professional rules that can be upheld as well as the level of government that is awarded the competence to regulate or co-regulate. 



## GOALS OF THE FREE MOVEMENT RULES  ##

GOALS OF THE FREE MOVEMENT RULES 
“Removing barriers to free movement” – When attempting to define ‘a barrier to free movement’, it becomes clear that the scope of the free movement provisions is inherently linked to the goals that have, mostly implicitly, been accorded to them. Hence, in this part, a brief overview of the main economic and political objectives that can be suspected to underlie the case law will be provided. These different perspectives and the particular elements in the balance will be dealt with more extensively in the particular titles on the personal, respectively, the substantive scope. Economics of a Common Market



### Free trade theory ###

Free trade theory
“Pure” economic goal of a Common Market –  Notwithstanding the rise of more rights-based approaches, as long as the link between free movement and economic activity remains relevant in the application of these provisions, so does the ultimate economic goal of creating a European Common Market. The clearest description of what is understood under a Common Market[^fn1] is found in the Court’s case law as “the elimination of all obstacles to intra-community trade in order to merge the national markets into a single market bringing about conditions as close as possible to those of a genuine internal market”[^fn2].

Benefits of trade/exchange –  Aside from the well-know political objective of ensuring peace by means of interdependent economies[^fn3], the core goal of a common market is enhancing economic welfare by means of free trade combined with an “integrated production factors market”. Economic theory predicts that free trade will lead to an optimal allocation of scarce resources. If trade is free and products can move freely, competitive pressure will lead countries to specialise in the production of those goods and services for the production of which they have a (relative) comparative advantage.[^fn4]  This improvement in allocative efficiency will lead to more and cheaper products being produced in the European market.  Even more importantly, an integrated European market means that firms are confronted with more competitors as well as a larger market. This will set off a process that causes less efficient firms to be bought up or to merge, and will eventually lead to fewer but larger and more efficient firms who compete more effectively with each other. Consequently consumers will benefit from lower prices and larger output.[^fn5]<span class="annotation" style="color:#FF0000">[VRAAG PAPA: en ook betere kwaliteitassumptie? And quid quality? (Lenaerts steeds herhaald)]</span>

Movement of production factors –  A common market surpasses such a pure free trade model by allowing for the (cross-border) movement of production factors (workers and capital) to the location where they will be valued most. The allocation of production factors to where they can be used most efficiently will then induce additional investment. These extra investments will enhance even more the productive efficiency of the production factors.[^fn6] In this manner, movement of production factors complements the benefits from free trade in products and services. <span class="annotation" style="color:#FF0000">[VRAAG PAPA: verstaat men onder “free trade” ook diensten?]</span>

Political rationale for opposing the medium-term economic effects – Nonetheless, in 1957, many national measures hindered, intentionally or accidentally, the access of foreign products to the national markets of the Member States. Even though free trade is expected to create, in the long term, more wealth for all, its initial effect might be to create visible losers in the course of the industrial restructuring process.[^fn7] Consequently, national politicians often find it in their, “short” term, electoral interest to try to shield certain (less efficient) economic sectors/producers from such fierce foreign competition, thereby beating the object of free trade. Apart from such intentional barriers, the mere presence of disparities between national regulation governing different aspects of “economic” life may prevent or hinder foreign products and production factors from competing with national “produce”.[^fn8] Similarly, certain private and “hybrid” actions could also have the effect of hindering free movement to some extent. [^fn9] 

Scope of free movement rules –  Well aware of the Member States’ protectionist incentives, the drafters of the Treaty included the provisions on free movement to combat such discriminatory state measures threatening market integration. However, since not only protectionist measures, but almost all national regulation, as well as certain private actions, “restricts” trade to some extent, it has to be determined precisely which types of barriers should be removed by means of the provisions on free movement. In other words, which measures should be caught under the personal and substantive scope of the prohibitions in articles 28 EC, 29 EC, 39 EC, 43 EC and 49 EC? 



### Market failure and the Economics of federalism ###

Market failure and the Economics of federalism
The corrective function of regulation and the theory of economic federalism – In Chapter 2 the acknowledgment by economic theory of a certain need for corrective regulatory intervention in case of market failures was discussed extensively. Nonetheless, in the multi-level context which characterizes the Common Market, such market regulation could take place at Member State as well as EU level. Hence, the concretization of the market integration project will also necessarily involve taking stance on the desired allocation of market-regulatory powers. Therefore, the insights of the theory of economic federalism will need to be included in the economic balance. As extensively elaborated upon in Chapter 4 the theory of economic federalism expresses a preference for decision-making at the local level but recognizes the need to complement this with centralized action in case of externalities or a looming race to the bottom.


# Untitled #

[^fn1]: In view of their largely synonymous nature, the terminology of common and internal market is used interchangeably throughout this dissertation. See also Barnard, C., The Substantive Law of the EU (Oxford University Press, Oxford, 2007), 12.

[^fn2]: ECJ, Case 51/81  Schul [1982] E.C.R. 1409, para. 33.

[^fn3]: Market integration (initially only in respect of the coal and steel sectors) was perceived as an important instrument in the overall EU goal of ensuring peace. Indeed, it was assumed that countries whose economies are interdependent are much less likely to go to war. See the Schuman Declaration of May 9, 1950, available at:  http://europa.eu/abc/symbols/9-may/decl_en.htm.

[^fn4]: Baldwin, R. and Wyplosz, C., The economics of european Integration  (McGrw-Hill Education, London, 2006), 234-235.

[^fn5]: See Baldwin, R. and Wyplosz, C., The economics of european Integration  (McGrw-Hill Education, London, 2006), Chapter 6.

[^fn6]: Baldwin, R. and Wyplosz, C., The economics of european Integration  (McGrw-Hill Education, London, 2006), Chapter 7.

[^fn7]: Baldwin, R. and Wyplosz, C., The economics of european Integration  (McGrw-Hill Education, London, 2006), refer to these as medium-term adjustment costs.,

[^fn8]: Note that also national regulation which, at first sight, seems unrelated to economic activity may in fact seriously hinder market integration by, for example, discouraging workers to move. Such discouragement, could flow, for example, from a host state rule limiting high school scholarships to nationals.

[^fn9]: In addition to such “protectionist” government action, firms themselves are likely to try to seek to protect themselves from this increased competition by engaging in anti-competitive practices. In addition, powerful private or semi-public organisations could undertake actions to shield their members from foreign competition.