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[MUSIC].Welcome to week three and part two ofthis course.In which we are going to put somesubstantive flesh on the bones of theinstitutional framework of the union thatwe have discussed previously.In the previous weeks we looked at theUnion and how it developed and at it'sinstitutional framework.We also looked at how EU Law is made andit's relation to national law.And importantly, how it can be enforced,both before national courts, and EU lawcourts.Now in the next two weeks, the focus isgoing to shift from the institutional tothese substantive dimension.We're going to look at how EU law impactson the lives of citizens and companieswithin the Union.For this purpose, the focus is going tobe on the free movement rules of the

treaty and on the competition provisionsin the treaty.In this particular video, we're going tofocus on the goals of the Unions internalmarkets.We're going to distinguish between thevarious stages of economic integration.We're going to assess at which stage ofeconomic integration the Union findsitself at the moment.And finally we're going to identify thevarious methods of integration.Turning now to the goals of the Unions

internal market.Article 3, of the Treaty of the EuropeanUnion stipulates, amongst others, thatunion shall work for the sustainabledevelopment of Europe.Based amongst others on a highlycompetitive social market economy.Aiming at full employment and socialprogress.Moreover, it shall promote, promoteeconomic, social and territorialcohesion, and solidarity between memberstates.

In other words, the establishment or thefoundation of the Union is premised onthe desire to promote integration and tocreate a Single Trading Block.A single, unified market within theUnion.Article 26 of the Treaty on theFunctioning of the Union defines theinternal market as an area withoutinternal frontiers.

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Within which the free movement of goods,persons, services, and capital is Inshort.Now, importantly, these free movements,these fundamental freedoms, arecomplemented with competition law policy.The observance of the free movement rulesWould not be effective.If it were possible for private parties,for private companies to evade orcircumvent these free movement rules byerecting their own barriers to trades.By adopting anti-competitive behavior.The competition law rules are there for avital and indispensable instrument to therealization that completion or thefunctioning of the internal market.In theory, we can distinguish betweenfour stages of economic integration.The first stage is that of the free tradearea.The free trade area is based on thefoundational principle of free movementof goods.

Goods which are lawfully manufactured incountry A, can circulate freely in allthe other participating countries of thefree trade area.Importantly, each participating countryof the free trade area adopts still itsown external tariff for goods coming fromthird countries.Once this tariff has been paid, thesegoods are in free circulation within thefree trade area.A good example of a free trade area isNAFTA, the North American Free Trade

Agreement.Secondly, we have the Customs Union.Also in the Customs Union we depart fromthe principle, or we start from theprinciple of free movement of goods.Goods lawfully made, manufactured,produced in one member states can freelycirculate in all the other participatingmember states.In addition, we now also have a commoncustoms tariff, a common external tariff.So goods coming from third countries aresubject to the same external tariff, the

same common customs tariff.Regardless of whether they entered thecustoms union in country A, B, or C.Once the goods have passed the commoncustoms wall, so as to say, they are infree circulation.Thirdly, we have the stage of the commonmarkets, the single market or theinternal market as these terms are usedinterchangeably.

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In addition to free movement of goods andthe adoption of a common customs tariff.We now also see adoption of the freemovement of the other factors ofproduction, namely persons, services, andcapital.In addition, further, we also see theadoption of competition law provisions.Fourthly, we have the stage of economicunion.Here we have free movement of persons,services, goods, and capital.We have competition, in addition we seenow the harmonization of economicmonetary and fiscal policies of theparticipating countries.As well as the adoption of a singlecurrency under a centralized authority.Possibly the Economic Union can evolveinto a political union as well.Now, the $1 million question is now orthe 1 million Euro question is now to seeand to determine at which stage ofintegration the European Union finds

itself.It is beyond doubt that the union hasmoved beyond the stage of a free tradearea or a customs union.Since the adoption of the single Europeanact it is also clear that the 31st ofDecember 1992 was seen as the final datefor the completion of the internalmarket.Now we can debate about whether theinternal market is fully completed atthis moment.And certainly in the field of services we

can identify further possibilities foroptimization or liberalization for theliberalization of the internal market.But nevertheless, it is reasonable to saythat the internal market is functioningreasonably well at EU level.Is the Union now also at the stage of theEconomic Union?Well we do have a single currency ofcourse, the Euro is the single currencyof 17 of the 20 member states.At the same time monetary policy is anexclusive policy, is an exclusive

competence of the Union.On the other hand it can not be deniedthe the economic competence the economicpolicy are still firmly in the hands ofthe member states.Just as is the case with the fiscalcompetences, most of the fiscalcompetences.So all in all it is reasonable toconclude that the union finds itself

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somewhere between the third and thefourth stage of economic integration.Turning to the methods of integration, wecan distinguish between positive andnegative integration.Positive integration entails theharmonization or approximation of thelegal systems of the participatingcountries through the adoption of commonrules.An example in this respect is secondarylegislation adopted at EU level by meansof regulations or directives.The chocolate Directive or Directive2000/36 related to cocoa and chocolateproducts intended for human consumption.Lays down specific rules concerning thecomposition and the labeling of chocolateproducts for human consumption.To give an example, in the directive itis stipulated that Gianduja hazelnutchocolate.each hundred grams of this product mustcontain not less than 20 grams and not

more than 40 grams from finely groundhazelnuts.This rule, laid down in this directiveapplies in all 27 member states of theEuropean Union.Besides positive integration we also havenegative integration.Negative integration means to approachthe legal systems of the participatingcountries, through negative or to common,through common prohibitions.The best example is the case law of thecourt of justice of the European Union.

When the courts, it is in any given caseof the opinion that a national rulecontravenes, a treaty rule, for example,in the context of free movement of goods.This national rule will have to be putaside.This is negative integration.In practice, we see that integrationnormally begins at a negative level.Often we also see that negativeintegration in itself is not sufficientto eradicate or get rid of all obstaclesto access to the markets.

Meaningful integration, therefore,requires and, and a nice mix of negativeand positive integration.And concerning the EU internal market, wewill see that this entails both negativeintegration.Through the case of the court of justiceand positive integration through theadoption of secondary legislation at EUlevel.

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[MUSIC]. [MUSIC]