INTRODUCTION

With this report, I will analyze the European Union internal market that was created to improve the economic growth of the European Union. I will also explain the four fundamental freedoms that were laid down during the Maastricht treaty, defining how it works and the restrictions that come with the freedoms. In addition, I will touch on the EU tourism policy and how the four freedoms have helped the tourism growth in European countries.

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THE EUROPEAN UNION INTERNAL MARKET

In 1992 the European Internal Market was formed through the Maastricht treaty. The purpose of its creation was to preserve and enhance the economic activity of the European Union through the free movement of inputs and outputs among the European countries and to also create opportunities and boost economic growth. Therefore, we can define the European Union internal market as a single market that allows the free movement of capital, goods, services, and labor. It gives people the freedom to work, live, study and travel freely with the European Union countries. The market includes the 28 EU member states, but by agreement such as the European Economic Area and bilateral treaties, countries such as Iceland, Lichtenstein, Norway, and Switzerland are involved in the single market. Also, post-soviet countries like Moldova, Ukraine, and Georgia have access to the single market in certain areas.

The goal of the internal market is to rouse competition and trade, improve efficiency, increase value, and help cut prices. To achieve these goals costs of businesses were reduced by removing internal charges and standardizing regulation, but due to poor decision making, it proved problematic to make progress.

There are four fundamental principles that uphold the European Union and its internal market. The four freedoms were first laid down during the Maastricht treaty in 1992 and were reformed during the Lisbon treaty in 2007. With the four freedoms, European citizen can freely move among themselves.  In the following paragraphs I will explain in debt the four freedoms how it works and the restrictions it imposes.

THE FOUR FREEDOMS

 During the Rome treaty in 1957, the principal of the free movement of goods was established. But it became effective with the Maastricht treaty. The free movement of goods opens doors for producers of the Member States and offers a wide variety of goods for consumers. Once a product has been produced and placed on the market in a Member State it can be traded in the whole EU. With the free movement of goods, countries of the European Economic Community (EEC), remove customs barriers between each other and apply common customs policy towards third countries. Thus, traders do not have to pay duty to export product to other EU countries. Although customs tariffs were abolished, other barriers made it difficult for a free movement of goods. To eliminate these barriers harmonization directives were appointed and they have the job of converging national regulations. To properly define the phrase free movement of goods we would say that countries of the EU must not enforce any kind of duties on goods produced in the EU when crossing borders and neither goods produced in the third country once imported to the EU. Because of the single market, EU Member States negotiate jointly in the frame of the World Trade Organization (WTO), where the regulations of the international trade are laid down. However, decision-makers must take into consideration that customs duties do not only reduce competitiveness, but it also reduces other kinds of measures. i.e. if a country enforces limitations on the importable amount of a certain product, or on the quantity of the ingredient, or on the label, they also hinder free movement. Consequently, any charge that has an equal outcome on trade or quantitative restrictions on imports are similarly forbidden, any discrimination must be justified by non-economic considerations, like public morality, policy, security or order and environmental protection of cultural heritage and intellectual property.

The second freedom that was established is the free movement of capital. This freedom was established because at the beginning of the European it was said that financial crisis was caused by capital flows. Thus, free movement of capital was liberalized only to favor the free movement of goods. The Council Directive presented a complete freedom for capital movements only when the idea of Monetary Union became an objective. However, under the safeguard clause, countries could take certain restrictive measures when capital movements could disrupt monetary policy. The Maastricht treaty consolidated the freedom by asserting the prohibition of any kind of constraint on capital transactions and payments between the Member States and between the member states third countries. Therefore, to define what free movements of capital, we will say it is a supplementary element of the other three freedoms. It contributes to the introduction and consolidation of the European currency and the European Monetary Union. It allows a better distribution of resources within the EU, enables trade across borders, favors workers mobility, and makes it easier for businesses to raise the money they need to start and grow. With this European citizen have access to benefits services such as loans, insurances, and securities and can conduct numerous financial operations. It is also beneficial for the government as the can borrow on lower rates.

The third freedom I will be touching on is the free movement of workers. it is one of the fundamental principals in the European law. It enables European Union citizens the right to enter and circulate within the territory of another EU country without complications. The EU citizen has the right to equal treatment to national workers regarding working and employment conditions, social and tax benefits. It gives opportunities to workers and makes the labor markets more flexible. At its initial development, the free movement of workers was quite successful because the European Union countries were less and the participating countries at that time had similar economies. However, as the European Union expanded it brought by certain debates. The debate was roused because the expansion of the European Union led to a large number of migrants from low-income European countries to high-income countries. This phenomenon shows that the law imposed has benefited the newer Member states. Even though the idea behind the free movement of workers is purely economic it creates many tensions in the social realm. Social issues such as transfer of pensions, the entitlement of migrant workers to unemployment’s, social security and other benefits. These issues are dealt with under the economic rubric of the free movement of workers which generates an unbalanced situation between the economic and social view of the free movement of workers.

The free movement of services can be divided into two types: the freedom to provide services to the Member States and the freedom to be able to establish a business between the Member States. Thus, it allows professionals who are legally in a Member State to continue their economic activity in another Member State. Self-employed people can also offer and provide services in another Member State. The freedom to provide services refers to all the services that bring by remuneration. Restrictions on the freedom to provide services within the EU is prohibited in respect of nationals of the member states who are established in a different Member State to the end user of the services. However, despite the enforcement of the law regarding the free movement of services, in comparison to the other freedoms, there hasn’t been a smooth realization due to national barriers. To solve this problem service directives were appointed to limit the barriers that hinder the trade of services. Though, these barriers do not relate to the service itself. The barriers may range from different rules regarding authorizations, employment, and qualifications.

EFFECT OF THE EUROPEAN INTERNAL MARKET ON TOURISM

Tourism is among the main resources in the European Union community. It aids in the progress, social development and services in the European countries. The goal is to uphold Europe as a top destination while ensuring that the tourism sector influences the development and employment in the EU countries as an exercise of good practice. With the laws that were laid down during the Lisbon treaty, the EU can fund, manage and boost the of the Member States. For example, since EU citizen does not need a visa while traveling to other European Countries, this practice opens doors to travel around the European Union zone without having to face restrictions. 

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