Mr Justice Nial Fennelly: FROM THE foundation of the European Communities the tension between the visions of a free-trade area, the "common market," on the one hand, and a community with the objective of "ever closer union among the peoples of Europe," on the other, has had important implications for member state power and community competence.
The objective of free movement of goods, services, persons and capital in a market characterised by free competition constituted the essence of the original vision. These purely economic or trade objectives interacted naturally in a complex process with national competences.
The dismantling of all tariff barriers and import quotas between member states had been achieved by the end of the transitional period on 31st December 1969 and prior to the first enlargement of the Community in 1973, when Ireland joined.
There remained, however, the thorny problem of measures having equivalent effect to quotas, proscribed by Article 29EC. These non-tariff barriers were perceived in the 1970s and 1980s as presenting the greatest continuing obstacles to trade. The Court of Justice in 1974 in Dassonville held that measures having equivalent effect included "all trading rules capable of hindering directly or indirectly, actually or potentially intra-community trade. . ." Member States were obliged to rule all these rules "automatically inapplicable."
But should "trading rules" be interpreted narrowly as referring only to restrictions applied at the point of import? The Court gave preferred expanded and dynamic meaning. Measures having equivalent effect, comprised national measures which were transparent and perfectly non-discriminatory, but which, because they were different from the rules applied in other member states, potentially hindered trade.
The Court applied this broader interpretation in two celebrated cases in the 1980s. Germany's "Reinheitsgebot" (beer law) was said to trace its history to the time of Martin Luther. In Germany, a product could legally be sold as beer only if it was manufactured from barley malt, hops, yeast and water. An Italian law required pasta to be manufactured only from durum wheat. Each member state tenaciously defended a historic national rule closely related to deeply-held cultural values.
The Court ruled that both were trade restricting rules that had to be set aside. The beer and pasta laws were not, of course, import restrictions at all. They were indistinctively applicable provisions affecting the sale of German or Italian products respectively, just as much as imported beer and pasta. These court decisions were described by Professor Joe Weiler as representing "the very canon of the economic constitution of Europe."
The Trade Commissioner Lord Cockfield, in the 1980s produced a paper identifying 297 remaining obstacles to trade. This was the precursor to the Single European Act (SEA) of 1987, which established the "internal market" (now in Article 14.2 of the Treaty), which was intended to "comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured . . " The SEA made the big move from unanimous voting and allowed qualified majority voting (QMV) in the Council for the adoption of rules at European level so as to approximate national product rules.
This move to QMV raised the spectre of more rather than less regulation. Mrs Thatcher said, in her speech to the College of Europe at Bruges in September 1988: ". . . . we certainly do not need new regulations which raise the cost of employment and make Europe's labour market less flexible and less competitive with overseas suppliers".
The gist of the complaint was that, through use of QMV, legislation could be enacted at Community level so as to regulate matters in the fields of culture, education, health, social security and the environment, which were properly within member state competence.
But this was all inherent in the internal-market programme set in motion by the Delors Commission under the Single European Act. Advocate General Tesauro, in an opinion in 1991, explained: "I do not see how it is possible to achieve a genuinely single, integrated market without eliminating divergences between national legislation which by having a differing impact on production costs prevents the development of competition on the basis of real equality within the Community."
Article 95 of the treaty provided the means for the elimination of national laws acting as obstacles to completely free trade. The Council and the European Parliament, may adopt measures for the approximation or harmonisation of the laws of the member states "which have as their object the establishment and functioning of the internal market". Furthermore, Article 95.3 provides that proposals for harmonisation "concerning health, safety, environmental protection and consumer protection, will take as a base a high level of protection . . ."
It is immediately clear that the power to harmonise national laws has profound implications for the allocation of competences between the Community and the member states. The Community enjoys "only those powers which have been conferred upon it" by the treaty. Article 5EC lays down the rule of "attributed competence": "The Community shall act within the limits of the powers conferred upon it by this treaty and of the objectives assigned to it therein."
Those powers or competences have been conferred by the member states via the treaties. Any power not conferred is retained by the member states. These are fundamental constitutional principles. Professor Stephen Weatherill has described Article 95 as providing their "the most vivid testing ground" and says that the Court plays for "high constitutional stakes."
Thus any area of member state competence, otherwise unconnected with any treaty objective, may become the subject-matter of Community legislation provided that it has as its objective the "establishment and functioning of the internal market". There is no reserved domain of member state competence in which, subject to that important proviso, the Community may not, in principle, legislate. The scope of Community competence is defined, to quote Advocate General Tesauro again, "by reference to a criterion of a functional nature, extending laterally to all measures designed to ensure the attainment of the single market".
In this context, the supervisory jurisdiction exercised by the Court of Justice becomes crucial. The Court has specifically rejected the claim that Article 95 can act as a general regulatory power free of any trade-liberating objective. In its judgment in the Tobacco Advertising case in 2000, it ruled that Article 95 was "intended to improve the conditions for the establishment and functioning of the internal market". It continued: "To construe that article as [conferring] a general power to regulate the internal market would not only be contrary to the express wording of the provisions cited above, but would also be incompatible with the principle . . . that the powers of the Community are limited to those specifically conferred on it."
The interaction between Community and member state competence is highly complex. Free movement of persons and services has also led to profound change. The Bosman decision of the Court in 1995, to give but one example, has resulted in the transformation of the face of European football by ruling against national restrictions on the number of foreign players playing with professional teams.
At the end of the day, the Court of Justice is the effective constitutional court of the European Community (and now the European Union). Quoting again from Tobacco Advertising, it is obliged, " as the repository of the trust and confidence of the Community institutions, the member states and the citizens of the Union, to perform this difficult function of upholding the constitutional division of powers between the Community and the member states on the basis of objective criteria".
• This is an edited version of a paper delivered at the Irish Centre for European Law 20th Anniversary Conference on 17th November last by President McAleese. The centre was founded by Mary Robinson who also attended and spoke.