3. Community Legislation concerning the Internal Market

3.1 The Annex of this White Paper provides a comprehensive and detailed presentation of current Union legislation relating to the Internal Market. Twenty three different areas of legislative activity are examined in turn. The present chapter explains the Commission's approach and draws attention to certain aspects of the presentation of the information in the Annex.

3.2 The Commission's presentation of the detailed legislation covered in the White Paper has been based on four principles:

Delimitation of internal market legislation

3.3 In preparing the White Paper, it was necessary to decide on the limits of the "internal market" in legislative terms. As explained in the preceding chapter, the successful operation of the internal market not only rests on a comprehensive framework of detailed legislation to remove formal barriers, but also assumes the fulfilment of a wide range of basic economic conditions. These include in particular the existence of open and fair competition between economic operators. This depends on the introduction of formal and transparent competition rules and also on a common framework which ensures that minimum social standards and adequate protection of the environment apply across the whole territory of the Union.

3.4 The Treaty itself represents a careful balance between different objectives and policies with the result that no part of the "acquis communautaire" can be separated in practice from the rest. The Treaty expressly underlines this interdependence, for example in Article 130r which provides that environmental protection requirements must be integrated into the definition and implementation of other Community policies. Eventual accession negotiations with the CEEC will cover the entire body of Community legislation. Work to approximate legislation across the board is therefore important. The Europe agreements already provide for approximation and identify a large number of areas, including competition policy, environmental protection, social policy and consumer protection, for particular attention.

3.5 The White Paper adopts a focused approach to describe the relevant legislation. The Treaty articles and secondary legislation referred to in the Annex are those which directly affect the free movement of goods, services, persons or capital. It is legislation without which obstacles to free movement would continue to exist or would reappear. Other legislation which indirectly affects the operation of the single market, for example because it affects the competitive situation of firms, has not been covered in the detailed presentation.

3.6 This approach offers practical advantages, in particular given the volume of secondary legislation involved. It will allow approximation to be more systematically organised within a coherent work programme and supported by specialised technical assistance. Approximation in other areas will continue to be the subject of separate initiatives within the pre-accession strategy.

3.7 In identifying the legislation which is essential to the the functioning of the internal market, it has been necessary to look particularly closely at social policy and environment policy in order to strike the right balance. In other areas too the dividing line requires some explanation.

3.8 The social dimension is an essential element of internal market policy. This is explicit in the Treaty. Moreover, much social legislation has an internal market reasoning among its justifications. An uneven approach in national legislation concerning workers' rights or health and safety in the work place could result in unequal costs for economic operators and threaten to distort competition. For this reason, much social legislation adopted before 1985 has Article 100 of the Treaty as its legal base.

3.9 At the same time, certain social legislation is not aimed exclusively at achieving a level playing field. High levels of social protection are a fundamental aim of the Union. They are served by, among other things, the economic benefits arising from the internal market. The White Paper's presentation of internal market related legislation includes those parts of social legislation which affect the functioning of the internal market or which are a necessary complement to other measures identified as key instruments, in particular in the area of company law. Previous European Councils have made clear that approximation in the social area must not be neglected by the associated countries and forms an essential part of their preparations for accession to the Union.

3.10 Similar considerations apply to legislation concerning the environment. Environment policy and the internal market are mutually supportive. The Treaty aims at sustainable growth and high levels of environmental protection and provides that environmental requirements be integrated into the definition and implementation of other policies. An integrated approach to allow a more sustainable path of social and economic development is not only vital for the environment itself, but also for the long-term success of the internal market.

3.11 The White Paper includes legislation that directly affects the free movements of goods and services, leaving out legislation which relates to pollution from stationary sources and to processes rather than products and which therefore relates only indirectly to the internal market. The result is that most environmental legislation is not covered. Important legislation concerning quality standards for air and water and nature protection is not included at all and waste strategy is only covered to a limited extent. The present exercise concerning the internal market will therefore need to be complemented by a more comprehensive approach in the environment field, which is an important objective in its own right.

3.12 So far as the energy sector is concerned, approximation in this field , cannot be disconnected from the application of competition rules. For example, the Community framework concerning state aids is essential if distorsions of competition are to be avoided in an integrated energy market. The legislation in the field of price transparency also needs to be accompanied by the application of competition rules, including sanctions. Energy policy is also closely linked with environmental and other policies. It will be difficult, for example, to accept electricity import if electricity production in the exporting country does not respect the same levels of environmental protection or nuclear safety.

3.13 Agriculture is another important area, in terms both of the extent of legislation and of its place in the economy in many of the CEECs. Many aspects of agricultural policy and legislation have not been covered in this White Paper, because they relate to market support arrangements rather than the free movement of goods. Although the extent and means of support for agriculture have an impact on the internal market for agricultural products, they are not essential for the purposes of achieving and maintaining free movement. The Commission will present a separate communication on agriculture in the framework of the pre-accession strategy before the end of the year. The White Paper therefore covers the fields of veterinary, plant health and animal nutrition controls, as well as marketing requirements for individual commodities. The purpose of such legislation is to protect consumers, public health and the health of animals and plants.

Presentation of internal market legislation in the Annex

3.14 Information concerning the relevant Community legislation is presented in a series of analyses under 23 sector headings in the Annex. Some sectors represent broad policy areas which have been divided into sub-sectors. Each policy area is preceded by a general introduction to the sector, describing the underlying objectives and methodology of the legislation. This explains why the legislation is necessary and, in most cases, how it has evolved over time. The relationship between national and Community law is also explained.

3.15 The more detailed presentation in each sector is designed to guide the associated countries in planning their strategy for progressive alignment with Community law and its implementation and enforcement. In particular, each analysis contains indications on the sequence in which the associated countries could tackle approximation and a section on conditions necessary to operate the legislation.

Indicative priorities for approximation

3.16 Although every piece of Community legislation is important in principle, and while accession to the Union can only be achieved by taking over the entire body of Community legislation, the Commission considers that it is appropriate in the pre-accession phase to propose an appropriate sequence in which the associated countries could take over the legislation for each major area. Resources for the approximation exercise are limited in both the Community and the associated countries, whether in terms of legal or technical expertise, Parliamentary time, or the availability of training. These resources should be focused on areas where they will have the greatest effect.

3.17 The Commission has therefore presented the legislation for each area in a way that distinguishes "key measures" from the total number of measures applicable and which then proposes a further breakdown of key measures into two stages. The division into Stage I and Stage II measures shows the indicative priorities which emerge from the logic of the legislation itself and provides a guide to the associated countries for the most effective sequencing of their work programmes for the approximation, implementation and enforcement of legislation.

3.18 Stage I measures have usually been selected using one or more of the following criteria:

In some areas Stage I measures may also include measures that require a particularly long lead-time for effective implementation.

3.19 The following general points should also be noted in respect of the Commission's approach. First, key measures include in some sectors those which have not yet been adopted by the Community, but which are in the legislative pipeline. Many measures are also included, sometimes in Stage I, which have only been adopted recently. The fact that the Community adopted these measures or will only adopt them at a relatively late stage in the internal market's evolution does not necessarily reduce their importance for the CEECs. Measures in the process of being adopted are likely to form part of the "acquis" to be accepted by future Member States.

3.20 Second, the criteria used for establishing the recommended sequence for approximation within each area of legislation are based on a coherent approach to the legislation itself, without reference to the economic costs or benefits of its adoption. The economic dimension is one which each associated State will need to judge for itself in laying down its strategy for approximation.

3.21 Third, the indicative priorities are internal to each analysis or area of legislation. No attempt has been made to produce a global order of priorities, incorporating judgements about the value of early action in different areas of legislation. This is to some extent the logical consequence of the approach described in the previous paragraph. In the absence of an overall economic analysis, there is no evident set of objective criteria that could be used to determine priorities between sectors. Some of the legislation covered by this exercise, however, such as basic company law, must be considered as essential "building-blocks" for the operation of a market-economy and as such has already been tackled by the associated countries in the earlier stages of their economic transition. The priority given by the CEECs to different sectors will depend on the political and economic situation of each associated country. The choice has to be made by those countries rather than by the Union.

3.22 Fourth, in a limited number of areas it is not possible to establish distinct phases because the legislation concerned represents a whole and the adoption of any single part of it could yield no benefit without the rest.

3.23 Fifth, it should be noted that legislation is listed regardless of what has already been accomplished by the associated countries, even in cases where they may all be considered to have enacted the legislation concerned. This is in line with the Commission's approach of producing a general reference document which can be used by all prospective Member States. Moreover, it is not the task of the White Paper to deliver judgements about the conformity of specific national legislation.

3.24 Finally, no timetables have been set. These will be decided by each associated country in the light of its own situation and strategy.

Conditions necessary to implement and enforce the legislation

3.25 The main challenge for the associated countries in taking over internal market legislation lies not in the approximation of their legal texts, but in adapting their administrative machinery and their societies to the conditions necessary to make the legislation work. This is a complex process requiring the creation or adaptation of the necessary institutions and structures, involving fundamental changes in the responsibilities of both the national administrative and judicial systems and the emerging private sector. To help guide the CEECs in this task, the introduction to the Annex gives a summary of the different types of structures which ensure the effective operation of Community legislation. Each analysis identifies the relevant national (or international) structures in its sector, based on relevant experience in the Union.

3.26 The presence of the necessary enforcing authorities is crucial to provide certainty to other members of the Community that legislation is properly implemented. The proper operation of these administrative, judicial or private sector structures in turn depends on training and education facilities for the personnel concerned. The provision of such training and the transfer of relevant Community experience in this area will be one of the main tasks of the approximation exercise and is considered further in chapter 5.

Conclusion

3.27 The Annex contains a set of detailed recommendations to the associated countries on how to proceed with legislative approximation and implementation in each area of Community law governing the internal market. The recommendations are not prescriptive. There may be sound reasons, of a political, economic or commercial kind, for individual associated countries to take a different view about the order in which approximation is to be carried out. The analyses are in any case useful in showing the key measures to be covered and what is needed to make them effective.

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