European Single Market

EUROPEAN SINGLE MARKET:
COMPARATIVE STATE PRACTICE

Legal Memorandum

January 2013

EUROPEAN SINGLE MARKET: COMPARATIVE STATE PRACTICE

Executive Summary

The purpose of this memorandum is to determine how the European single
market 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 of
capital.

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 under
the 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 into
national 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
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 and
EEA, 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.
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

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 12
Germany 12
France 13
Iceland 14
Freedom of Movement of Services 16
Spain 16
Belgium 18
Germany 19
Freedom of Movement of People 21
Belgium 22
Iceland 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


1
EUROPEAN SINGLE MARKET: COMPARATIVE STATE PRACTICE

Statement of Purpose

The purpose of this memorandum is to determine how the European single
market 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 single
European market revolves around four freedoms.
5
These include the freedom of

1
Nicholas Moussis, ACCESS TO EUROPEAN UNION: LAW, ECONOMICS, POLICIES 19
TH
ED. (2011), available at
http://www.europedia.moussis.eu/books/Book_2/3/6/index.tkl?all=1&pos=62.
2
Europa, 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.
3
Europa, 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.
4
European 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.
5
TH
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 at http://ec.europa.eu/internal_market/top_layer/index_en.htm.
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 the
European 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 market
9
The 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 well
as 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 the
preferred method for serving Swiss interests in Europe.
14

The EU continues to improve the functioning of the single market by issuing
directives, regulations, and guidance.
15
The EEA EFTA member states (Iceland,
Norway, and Liechtenstein) incorporate the directives into the EEA Agreement,

6
TH
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 at http://ec.europa.eu/internal_market/top_layer/index_en.htm.
7
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.
8
EFTA, EEA Agreement, (2012) available at http://www.efta.int/eea/eea-agreement.aspx.
9
10
11
Agreement on the European Economic Area (1994), available at http://www.efta.int/
~/media/Documents/legal-texts/eea/the-eea-agreement/Main%20Text%20of%20the%20Agreement/
EEAagreement.pdf.
12
EFTA, EEA Agreement (2012) available at http://www.efta.int/eea/eea-agreement.aspx.
13
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.
14
Integration Office FDFA/FDEA, Swiss Policy on the European Union (last accessed Dec. 20, 2012), available at
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.
3
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 and
Switzerland, 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 way
that the EEA member states do.
19

Definition of the Single Market

The European single market provides direct access to a number of European
state 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

16
EFTA 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.
18
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
19
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 at http://ec.europa.eu/internal_market/top_layer/goods/index_en.htm.
4
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 to
simplify 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

21
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.
22
Agreement on the European Economic Area art. 10 (1994), available at http://www.efta.int/
EEAagreement.pdf.
23
Agreement on the European Economic Area art. 11-12 (1994), available at http://www.efta.int/
EEAagreement.pdf.
24
EEAagreement.pdf.
25
EEAagreement.pdf.
26
EEAagreement.pdf.
27
Agreement on the European Economic Area ch. 2, 4, 5 (1994), available at http://www.efta.int/
EEAagreement.pdf.
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 in
other 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

28
Europa, Free Movement of Goods: General Framework, available at http://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
30
European Commission, The EU Single Market: A Single Market for Goods, (September 13, 2012), available at
31
European Commission, The EU Single Market: General Principles: Freedom to Provide Services/Freedom of
Establishment, available at http://ec.europa.eu/internal_market/services/principles_en.htm.
32
European Commission, Guide to the Case Law on the European Court of Justice: Freedom of Establishment, 24,
available at http://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
34
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,
39
the 2006 EU Services Directive was enacted to
facilitate 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

35
36
37
European Commission, Guide to the Case Law on the European Court of Justice: Freedom of Establishment, 69,
available at http://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.
39
European Commission, Services Directive Frequently Asked Questions, available at
http://ec.europa.eu/internal_market/services/services-dir/faq_en.htm#3.
40
Directive 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-
42
Directive 2006/123/EC, art. 9-10 (European Parliament, 2006), available at http://eur-
43
7

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 the
United 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 freedom
will not be restricted.
50
In particular, services under the EEA Agreement include

44
45
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.
46
EFTA Surveillance Authority, Report on the Implementation of Directive 2006/123/EC in the EFTA States, 8 (Jan.
26, 2011), available at http://www.eftasurv.int/media/internal-
market/Report_on_the_implementation_of_the_Service_Directive.pdf.
47
48
Agreement on the European Economic Area art. 31(1) (1994), available at http://www.efta.int/
EEAagreement.pdf.
49
EEAagreement.pdf.
50
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 that
provide 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 contracting
states in matters regarding employment, remuneration, and other conditions of

EEAagreement.pdf.
51
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.
53
54
55
Your Europe, Retiring: EU-Pensions, Healthcare and Taxes for Pensioners Who Live in Another Country,
available at http://europa.eu/youreurope/citizens/work/retire/index_en.htm.
56
European Commission, Free Movement of Professionals, (September 11, 2012), available at
http://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
9
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 EEA
Agreement 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 enable
the 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

59
EEAagreement.pdf.
60
EEAagreement.pdf.
61
EEAagreement.pdf.
62
EEAagreement.pdf.
63
Directive 88/361/EEC, Preamble (European Parliament, 1988), available at http://eur-
64
Agreement 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-
66
Directive 88/361/EEC, art. 3 (European Parliament, 1988), available at http://eur-
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, and
payment 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 the
exchange 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 or
individuals 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

67
Europa: 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.
69
European Commission, Financial Services-General Policy (December 20, 2011), available at
http://ec.europa.eu/internal_market/finances/index_en.htm.
70
EEAagreement.pdf.
71
EEAagreement.pdf.
72
EEAagreement.pdf.
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 provides
an 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 single
market through restrictions, practices, or legislation, the EC and the EFTA
Surveillance Authority may begin infringement proceedings against that particular

73
European Commission, Making the Single Market Deliver: Annual Governance Check-Up 2011, 9 (2011),
available at ec.europa.eu/solvit/site/docs/single_market_governance_report_2011_en.pdf.
74
EFTA Surveillance Authority, 2011 Annual Report, 10 (2011), available at http://www.eftasurv.int/media/
annual-reports/AR2011_EN_WEB_CH2.pdf.
75
76
available at ec.europa.eu/solvit/site/docs/single_market_governance_report_2011_en.pdf;
76
EFTA Surveillance
Authority, 2011 Annual Report, 11 (2012), available at http://www.eftasurv.int/media/annual-
reports/AR2011_EN_WEB_CH2.pdf.
77
78
EFTA Surveillance Authority, 2011 Annual Report, 11 (2012), available at http://www.eftasurv.int/media/annual-
79
European Commission, Making the Single Market Deliver: Annual Governance Check-Up 2011, 9-10 (2011),
12
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 are
overseen 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 the
EEA 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

80
European Commission, Infringements, (Jan. 26, 2012) available at
http://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.
81
European Commission, Infringements, (Jan. 26, 2012) available at
http://ec.europa.eu/internal_market/infringements/index_en.htm.
82
EFTA Surveillance Authority, 2011 Annual Report, 11 (2012), available at http://www.eftasurv.int/media/annual-
83
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 OF NONCOMPLIANCE 48-51 (2011).
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 could
be 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 to
the common European market, France has not always complied with its obligations

85
Scott Nicholas Siegel, THE POLITICAL ECONOMY OF NONCOMPLIANCE 55 (2011).
86
Rewe-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
available
88
available at
89
available at
90
Scott Nicholas Siegel, THE POLITICAL ECONOMY OF NONCOMPLIANCE 76 (2011).
91
Treaty of Rome (1957), available at
http://ec.europa.eu/economy_finance/emu_history/documents/treaties/rometreaty2.pdf.
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 from
obstructing 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 measures
to 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

92
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.
93
94
95
96
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
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 by
Regulation 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 EEA
Agreement 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 and
industries 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

98
http://ec.europa.eu/enlargement/pdf/iceland/key-documents/ch_1_free_movement_of_goods.pdf.
99
100
101
EFTA Surveillance Authority, 2011 Annual Report, 28 available at http://www.eftasurv.int/media/
102
103
104
16
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 of
movement 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 some
legislation 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

105
Zsfia 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
at http://ec.europa.eu/internal_
market/services/docs/services-dir/mileu-study/es-national-report-part_I_en.pdf.
106
Government 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 National
Report for Spain, 1 (2011), available at http://ec.europa.eu/
internal_market/services/docs/services-dir/mileu-study/es-national-report-part_I_en.pdf.
108
17
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 state
legislation 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 with
representatives 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 autonomous

109
Government 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
111
112
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.
113
114
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.
18
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

Belgium
The 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

116
European 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: National
Report 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.
119
120
Business.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/.
121
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-
19
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 a
horizontal 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

Germany
Beginning 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

123
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.
124
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.
125
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
Belgium, 1-2 (2010), available at
128
Belgium, 3 (2010), available at
129
Report for Belgium, Parti I, 12 (2011), available at http://ec.europa.eu/internal_market/services/docs/services-
130
Association of Charity Lotteries in the European Union, Charity Lotteries in the EU Member States: Germany
(2010), available at http://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 at http://ec.europa.eu/internal_market/services/docs/gambling/comm_121023_onlinegambling_en.pdf.
20
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 the
Communication.
133
Moreover, the Working Paper addresses challenges faced
throughout 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 sports
betting 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

132
European Commission, Towards a Comprehensive European Framework for Online Gambling (Oct. 23, 2012),
available at http://ec.europa.eu/internal_market/services/docs/gambling/comm_121023_onlinegambling_en.pdf.
133
European 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.pdf
134
European 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.pdf
135
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.
136
Markus Stob and Others v. Wetteraukreis and Kulpa 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:HTML
137
+German+Market.
138
+German+Market.
139
Dr. Volker Heeg, The 2011/2012 Schleswig-Holstein Legislation on Gambling, Weinert Levermann Heeg (Jan.
2012), available at http://www.slideshare.net/fredericengel/the-2011-2012-schleswig-holstein-legislation-on-
gambling-analysis-from-dr-volker-heeg-weinert-levermann-heeg-jan-2012.
21
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 its
compatibility 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 of
movement 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 the
Netherlands.
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

140
Jocelyn 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/.
141
+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
22
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 implemented
policies 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 put
forth 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 and
therefore 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

144
145
Union 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 at http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:61993CJ0415:EN:PDF.
146
415/93, 13, European Court of Justice (Dec. 15, 1995), available at http://eur-
147
148
23
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 employees
in the sense of the single markets guarantee of the free movement of peoples.
150

Norway
The 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 infringement
proceedings 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 Directives
effectiveness. The United Kingdoms General Dental Council, for instance,
submitted an experience report to the EC evaluating the Professional Qualifications

149
415/93, I-581 1, European Court of Justice (Dec. 15, 1995), available at http://eur-
150
European Commission, European Union and Sport, 23 THE MAGAZINE: EDUCATION AND CULTURAL IN EUROPE,
9 (2004), available at ec.europa.eu/languages/documents/publications/23_en.pdf.
151
annual-reports/AR2011_EN_WEB_CH2.pdf
152
Directive 2005/36/EC, Preamble (European Parliament, 2005), available at http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:2005L0036:20110324:EN:PDF.
153
EFTA Surveillance Authority, 2011 Annual Report, 16 (2011), available at
http://www.eftasurv.int/media/annual-reports/AR2011_EN_WEB_CH2.pdf.
154
http://www.eftasurv.int/media/annual-reports/AR2011_EN_WEB_CH2.pdf..
155
156
24
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 join
the 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 direct
investments, 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

157
European Commission, Evaluating the Professional Qualifications Directive: United Kingdom Response, 1
(December 2010), available at http://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 at http://ec.europa.eu/internal_market/qualifications/
docs/evaluation/additional_reports_12_2010/uk_experience_report_dentist_en.pdf.
25
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 some
exceptions 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

Germany
Germany has likewise experienced issues implementing policies that
promote free movement of capital. In a 2007 case, the ECJ held that Germanys
1960 law privatizing Volkswagen gave special rights to German authorities in
violation of the Treaty on the Functioning of the EUs Provisions on the Free
Movement of Capital.
165
The 1960 law required mandatory representation of
German public authorities on the Volkswagen Board, among other practices in
favor of German authorities.
166
This enabled German authorities to stop
transactions, including EU cross-border investments, which violated the freedom

159
European Parliament, European Parliament Fact Sheets: European Economic Area (last accessed Oct. 21, 2012),
available at http://www.europarl.europa.eu/factsheets/6_3_2_en.htm.
160
161
162
163
164
EFTA Court, Press Release 9/2012, (July 16, 2012) available at http://www.eftacourt.int/images
/uploads/9_11_PR_EN.pdf.
165
Commission of the European Communities v. Federal Republic of Germany, Case C-112/05, European Court of
Justice (Feb. 13, 2007), available at
http://curia.europa.eu/juris/document/document.jsf?text=&docid=66386&pageIndex=0&doclang=EN&mode=lst&di
r=&occ=first&part=1&cid=5033170.
166
European Commission, Free Movement of Capital: Commission Refers Germany Back to Court for Failure to
Comply With the Volkswagen Law Judgment, (November 24, 2011), available at
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/11/1444&format=HTML&aged=0&language=en&guiL
anguage=en.
26
of movement of capital.
167
Germany revised the law in 2008 in accordance with
the ECJs decision.
168
In 2011, the EC voted to have the case go back to the ECJ to
require further compliance from Germany.
169
Germany plans to aggressively
defend the law at the ECJ going forward.
170

The free movement of capital throughout the European single market is
encouraged through policies such as direct investment in foreign states. However,
disagreements still arise in the system, as demonstrated by Norways violation of
the EEA Agreement and Germanys violation of the Treaty on the Functioning of
the EUs Provisions on the Free Movement of Capital; therefore, the importance of
judicial bodies such as the EFTA Court and the ECJ cannot be overestimated.

The Single Market and Differences Between EEA and EU Membership
As demonstrated above, Iceland, Norway, and Liechtenstein largely follow
the same laws and policies governing the four freedoms and the single market that
EU member states do. Yet EU and EEA EFTA member states do not work
together in all legal and policy areas. The EEA Agreement allows for economic
cooperation via the implementation of the single market without political
integration in the EU.
171
However, while EEA EFTA member states link with
Europe economically, they do not share in monetary integration.
172
EEA EFTA
member states do not get involved in EU decision-making, but they do take part
in EU decision-shaping of EEA-relevant legislation.
173
Decision-shaping

167
anguage=en.
168
Alex Webb, Germany Will Defend VW Law in European Court, Handelsblatt Says, BLOOMBERG, Mar. 21, 2012,
available at http://www.bloomberg.com/news/2012-03-21/germany-will-defend-vw-law-in-european-court-
handelsblatt-says.html.
169
anguage=en.
170
anguage=en.
171
Alfred Tovias, The EU Models of External Relations with EEA Countries and Switzerland in Theory and in
Practice: How Relevant for Israel?, The Centre for the Study of European Politics and Society, 2-3 (2003),
available at http://www.yifc.org.il/info/External/tovias.pdf.
172
Practice: How Relevant for Israel?, The Centre for the Study of European Politics and Society, 2-3 (2003),
available at http://www.yifc.org.il/info/External/tovias.pdf.
173
EFTA, EEA Decision-Shaping and Comitology, (2007), available at
http://www.efta.int/~/media/Files/Publications/Fact%20sheets/EEA%20factsheets/FS_DecShaping.pdf.
27
refers to the ECs preparatory stage of creating legislative proposals.
174
During this
process, EEA EFTA experts contribute to EC Committees, submit comments, and
implement resolutions in response to EC initiatives.
175
Additionally, for new EU
legal acts to become part of the EEA Agreement, Iceland, Norway, and
Liechtenstein must agree and each have a reciprocal right of veto.
176
While
cooperation among the three EEA EFTA member states can be difficult, these
states also realize some benefits from not being held to full EU membership. The
Icelandic case provides insight into the states position as a member of the EEA
reluctant to join the EU.
Iceland
Iceland did not apply for EU membership until July 2009, after the financial
collapse, and accession talks began in 2010.
177
Because Iceland is part of the EEA,
relatively few areas of policy are left for negotiation.
178
Indeed, the ECs 2010
Progress Report declared that, because Iceland is part of the EEA, it is in line with
membership in most economic sectors, although progress remains to be made in
agriculture, fisheries, and free movement of capital and financial services.
179

Moreover, Icelands participation in other international and regional organizations
like the United Nations, the North Atlantic Treaty Organizations, the Organization
for Economic Co-operation and Development, the Organization for Security and
Co-operation in Europe, and the Council of Europe has helped to align its policies
with the EU.
180
Pro-EU arguments also assert that the EEA Agreement does not
allow Iceland to act as a sovereign nation, and EU participation would facilitate
more independence and influence in this regard.
181

174
http://www.efta.int/~/media/Files/Publications/Fact%20sheets/EEA%20factsheets/FS_DecShaping.pdf.
175
http://www.efta.int/~/media/Files/Publications/Fact%20sheets/EEA%20factsheets/FS_DecShaping.pdf; Agreement
on the European Economic Area part VII ch. 2 (1994), available at http://www.efta.int/
EEAagreement.pdf.
176
Norway Mission to the EU, Outside and Inside Norways Agreements with the European Union, 5 (2012),
available at http://www.eu-norway.org/Global/SiteFolders/webeu/NOU2012_2_Chapter%2013.pdf.
177
Eirkur Bergmann, Iceland and the EEA, 1994-2011, Europautredningen, 19 (2011), available at
http://www.europautredningen.no/wp-content/uploads/2011/04/Rap7-island.pdf.
178
European Commission, Iceland 2010 Progress Report, 1.3 (2010), available at
http://ec.europa.eu/enlargement/pdf/key_documents/2010/package/is_rapport_2010_en.pdf.
179
European Commission, Iceland 2010 Progress Report (2010), available at
http://ec.europa.eu/enlargement/pdf/key_documents/2010/package/is_rapport_2010_en.pdf
180
European Commission, Screening Report Iceland, Part II (Sept. 16, 2011), available at
http://ec.europa.eu/enlargement/pdf/iceland/key-documents/screening_report_31_is_internet_en.pdf .
181
28
However, Iceland remains concerned about its sovereignty. Icelandic
arguments against EU membership claim that Iceland would lose its uniqueness to
a supra-national organization.
182
Additionally, three main issues emerge as major
points of contention for Iceland in considering EU membership: agriculture,
fisheries, and adoption of the Euro.
183
Fisheries are an especially difficult topic
because they are crucial to the economy, and Icelanders see full control over them
as control over their own destiny.
184
This position is in opposition to the EU
Common Fisheries Policy.
185

As a member of the EEA, Iceland maintains control over its fisheries and its
identity as a sovereign state. However, it also deals with the challenge of working
closely with the other two EEA EFTA member states, Norway and Lichtenstein.
Icelands government has proposed revising the EEA Agreement, but the EU and
Norway have refused such revisions.
186
While Iceland continues to grow and
benefit as a member of the EEA, it also continues to evaluate its options in the
European integration process.
The Case of Switzerland and Bilateral Agreements
While Switzerland is not a member of the EU or the EEA, it does participate
in the European single market and other European policies through bilateral
agreements with the EU. The Swiss case shows benefits and challenges to this
unique approach of integration into the EU and its economy.
In 1992, Swiss voters concerned about an influx of foreign workers lowering
wage rates,
187
rejected EEA accession, upholding Switzerlands policy of
neutrality.
188
Instead, Switzerland opted to continue to govern its relations with
Europe through bilateral agreements. These agreements cover the economic topics
related to the single market, in addition to issues of security, research, and cultural

182
183
184
EU Observer, EU Membership Depends on Fishery Superpowers, (June 27, 2011) available at
http://euobserver.com/enlargement/32555.
185
Civitas, Enlargement-Iceland, (Aug. 13, 2012), available at http://www.civitas.org.uk/eufacts/FSMS/MS22.htm.
186
187
Brandon Mitchener, EEA Rejection Likely to Hurt Swiss Markets, New York Times, Dec. 7, 1992, available at
http://www.nytimes.com/1992/12/07/business/worldbusiness/07iht-reax.html.
188
Emma Thomasson and Caroline Copley, Crisis Shows Switzerland Better Off Out of EU-Bloche, Reuters, Oct.
13, 2011, available at http://uk.reuters.com/article/2011/10/13/uk-swiss-blocher-idUKTRE79C0TV20111013; LA
Times, Bern: An End of Neutrality?, (Dec. 1, 1992), available at http://articles.latimes.com/1992-12-01/news/wr-
1518_1_european-economic-area.
29
affairs.
189
The EU has four main agreements with Switzerland: the Free Trade
Agreement of 1972, the Insurance Agreement of 1989, the Bilateral Agreements I
of 1999, and the Bilateral Agreements II of 2004.
190
The Free Trade Agreement
provides for industrial products to be traded without customs duties.
191
The
Agreement does not include agricultural products, and if a product is both
agricultural and industrial, then only the industrial processing is free of customs
duties.
192
The Insurance Agreement allows Swiss and EU insurers to have
agencies and branches in the others territory for direct insurance for damages like
household, vehicle, travel, and liability insurance.
193
The Bilateral Agreements I
consist of seven topics: free movement of persons, technical barriers to trade,
public procurement markets, agriculture, research, civil aviation, and overland
transport.
194
The Bilateral II Agreements cover nine issues: the Schengen and
Dublin association agreements, taxation of savings, processed agricultural
products, media, environment, statistics, anti-fraud, pensions, and education.
195

Each of the bilateral agreements between the EU and Switzerland are
overseen 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.
196

These bilateral agreements do not require full EU membership or the type of
cooperation required by the EEA Agreement. The Swiss model allows for the state
to opt out of EU policies or restrictions individually, unlike the collective opt-outs
in the EEA Agreement.
197
Moreover, in 2010, the Swiss Federal Council

189
Integration Office FDFA/FDEA, Swiss Policy on the European Union, available at
190
Integration Office FDFA/FDEA, Bilateral Agreements Switzerland-EU, available at
191
Free Trade Agreement (European Economic Community, Swiss Confederation, 1972), available at http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:21972A0722(03):EN:HTML.
192
Free Trade Agreement (European Economic Community, Swiss Confederation, 1972), available at http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:21972A0722(03):EN:HTML.
193
Agreement Between the European Economic Community and the Swiss Confederation on Direct Insurance Other
Than Life Assurance (European Economic Community, Swiss Confederation, 1989), available at
http://lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:21991A0727(01):EN:HTML.
194
195
196
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.
197
Practice: How Relevant for Israel?, The Centre for the Study of European Politics and Society, 13 (2003), available
at http://www.yifc.org.il/info/External/tovias.pdf.
30
reaffirmed that bilateral agreements are the preferred approach to serve the
interests of Switzerland and the EU.
198

However, the EU-Swiss model is problematic for several reasons. The EU
maintains that Switzerland is required to transpose all single market related EU
legislation into its own domestic law, while Switzerland argues that such a
requirement violates national sovereignty.
199
Switzerlands refusal to
automatically apply all single market related EU laws creates legal uncertainty in
Switzerland, as compared with the EEA, as it is unclear which single market
requirements apply in Switzerland.
200
The EU has grown increasingly frustrated
by the unwieldy and complex nature of the bilateral agreement infrastructure, and
has demanded a new system whereby Switzerland would automatically update its
domestic laws in accordance with any changes to EU law, as the EEA does.
201
In
June 2012, the Swiss Government proposed to the EU that it would create a
national supervisory institution to oversee the bilateral agreements process, but to
date the EU has not responded.
202

Conclusion

States within the EU and the EEA face different challenges in implementing
European single market standards and have different reasons for preferring
membership in one over the other. As comparative state practice of Germany,
France, Iceland, Spain, Belgium, Norway, and the United Kingdom shows, EU and
EEA EFTA member states implement laws and practices concerning the four
freedoms in a variety of ways. The case of Switzerland shows a third option for
participation in the EU and its common economy. These individual procedures of
implementation function together to facilitate a working European single market.
Where restrictions still exist in practice, the ECJ, the EFTA Court, and the EU-
Swiss Joint Committees use enforcement procedures to remove national barriers to
the four freedoms.

198
Integration Office FDFA/FDEA, Swiss Policy on the European Union, available at
199
EU, Switzerland Move to Simplify Complex Bilateral Relations, EURACTIV, Feb. 9, 2011, available at
http://www.euractiv.com/global-europe/eu-switzerland-move-simplify-com-news-501999.
200
201
Matthew Allen, Industry Frets Over Swiss-EU Bilateral Impasse, SWISSINFO.CH, Oct. 20, 2012, available at
http://www.swissinfo.ch/eng/business/Industry_frets_over_Swiss-EU_bilateral_impasse.html?cid=33772774.
202
Andreas Keiser, Swiss Still Prefer Bilateral Accords with EU, SWISSINFO.CH, Nov. 30, 2012, available at
http://www.swissinfo.ch/eng/politics/foreign_affairs/Swiss_still_prefer_bilateral_accords_with_EU.html?cid=34078
538.

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