This Part analyses the Union as an institutional “creature”, and it equally considers the creation of European (secondary) law. It starts in Chapter 1 with an overview of the four major Union institutions: the European Parliament, the Council, the Commission, and the European Court. Chapter 2 investigates how these institutions cooperate in the creation of European legislation. The Union cannot legislate in all areas of social life; and Chapters 3 and 4 look at two constitutional limits to Union legislation. Based on the principle of conferral, the Union must act within the scope of competences conferred upon it by the Member States. The scope of these competences – and their nature – will be discussed in Chapter 3. Chapter 4 analyses a second constitutional limit to the exercise of Union competences: European fundamental rights. These rights first emerged as general principles of Union law, but have now been codified in the Union's Charter of Fundamental Rights.

This final Part analyses the substantive heart of European law. When the Union was founded, its central aim was the creation of a “common” or “internal” market between the Member States. Such an internal market was to go well beyond a free trade area or a customs union. Its aim was to create an area without internal frontiers to the free movement of goods, persons, services, and capital. To guarantee these four fundamental freedoms, the EU Treaties pursue a dual strategy: negative and positive integration. Negative integration refers to the removal of illegal national barriers to trade, whereas positive integration means Union legislation that “harmonizes” national laws. Chapters 9 and 10 will explore both strategies in the context of the free movement of goods. Chapter 11 then analyses the free movement of persons. Finally, Chapter 12 wishes to offer an “introduction” to EU competition law. The latter is traditionally seen as a functional complement to the internal market.

Introduction

The creation of governmental institutions is the central task of all constitutions. Each political community needs institutions to govern its society; as each society needs common rules and a method for their making, execution, and adjudication. The European Treaties establish a number of European institutions to make, execute, and adjudicate European law. The Union's institutions and their core tasks are defined in Title III of the Treaty on European Union (TEU). The central provision here is Article 13 TEU:

The provision lists seven governmental institutions of the European Union. They constitute the core “players” in the Union legal order. What strikes the attentive eye first is the number of institutions: unlike a tripartite institutional structure, the Union offers more than twice that number. The two institutions that do not – at first sight – seem to directly correspond to “national” institutions are the (European) Council and the Commission. The name “Council” represents a reminder of the “international” origins of the European Union, but the institution can equally be found in the governmental structure of Federal States. It will be harder to find the name “Commission” among the public institutions of States, where the executive is typically referred to as the “government”. By contrast, central banks and courts of auditors exist in many national legal orders.

Introduction

How could the Union create a “single” market out of “diverse” national markets? To create an internal market, the EU Treaties pursue a dual strategy: negative and positive integration. The Union is first charged to “free” the internal market from national barriers to trade in goods. And in order to do so, the Treaties contain a number of constitutional prohibitions “negating” illegitimate obstacles to intra-Union trade. This strategy of negative integration is complemented by a – second – strategy of positive integration. The Union is here charged to adopt positive legislation to harmonize the diverse national laws. For that purpose, the Treaties confer a number of “harmonization” competences to the Union. The most famous provision here is Article 114, which entitles the Union to adopt harmonization measures that “have as their object the establishment and functioning of the internal market”. This Chapter explores the Union's negative integration tools in the context of the free movement of goods, while the next Chapter investigates the Union harmonization competences.

What is the “negative integration” regime governing goods? In order to create an internal market in goods, the Union legal order insists that illegal barriers to intra-Union trade must be removed. Its constitutional regime is however split over two sites within Part III of the TFEU. It finds its principal place in Title II governing the free movement of goods, and is complemented by a chapter on “Tax Provisions” within Title VII. Within these two sites, we find three constitutional prohibitions. Section 1 examines the prohibition on customs duties. These are fiscal duties charged when goods cross national borders. Section 2 moves to the second type of fiscal charge: discriminatory taxes imposed on foreign goods. Section 3 then investigates the legality of regulatory restrictions to the free movement of goods. Regulatory restrictions are not, unlike fiscal duties, pecuniary charges. They simply “regulate” access to the national market by – for example – establishing product or labelling requirements. Finally, Section 4 will look at possible justifications for regulatory restrictions to trade in goods.

Introduction

Classic international law holds that each State can choose the relationship between its “domestic” law and “international” law. Two – constitutional – theories thereby exist: monism and dualism. Monist States make international law part of their domestic legal order. International law will here directly apply as if it were domestic law. By contrast, dualist States consider international law separate from domestic law. International law is viewed as the law between States; national law is the law within a State. While international treaties are thus binding “on” States, they cannot be binding “in” States. International law here needs to be “transposed” or “incorporated” into domestic law and will here only have indirect effects through the medium of national law. The dualist theory is based on a basic division of labour: international institutions apply international law, while national institutions apply national law.

Did the European Union leave the choice between monism and dualism to its Member States? Section 1 examines this question in greater detail, before the remainder of this Chapter explores the doctrine of direct effect for European law. Section 2 starts out with the direct effect of the European Treaties. The European Court indeed confirmed that some Treaty provisions would be self-executing in the national legal orders. Nonetheless, the European Treaties are framework treaties; that is: they primarily envisage the adoption of European secondary law. This secondary law may take various forms. These forms are set out in Article 288 TFEU. The provision defines the Union's legal instruments, and states:

Introduction

The protection of human rights is a central task of many modern constitutions. Fundamental rights are here designed to set protective limits to governmental action(s). This protective task is principally transferred onto the judiciary and involves the judicial review of governmental action. The protection of human rights may be limited to judicial review of the executive. But in its expansive form, it extends to the review of parliamentary legislation.

The European Union follows this wider constitutional tradition. It considers itself to be “founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights”. Human rights are thus given a “foundational” status and constitutionally limit the exercise of all Union competences.

What are the sources of human rights in the Union legal order? While there was no “Bill of Rights” in the original Treaties, three sources for European fundamental rights were subsequently developed. The European Court first began distilling general principles protecting fundamental rights from the constitutional traditions of the Member States. This unwritten bill of rights was inspired and informed by a second bill of rights: the European Convention on Human Rights. This external bill of rights was, decades later, matched by a written bill of rights specifically for the European Union: the Charter of Fundamental Rights. These three sources of European human rights are now expressly referred to – in reverse order – in Article 6 of the Treaty on European Union: