Legislative Harmonization: The 'Four Freedoms' and Beyond
Legislative harmonization seeks to reduce obstacles to trade through eliminating differences in state measures which distort the relative costs of trade. Within the EC Treaty framework such harmonization proceeds on the basis of acts, usually Directives, adopted by the Community institutions.1 According to Article 189(3) of the Treaty, a Directive shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods.
The substantial difference between such harmonization and operation of trade liberalization provisions lies in the capacity of the two processes to reach different conclusions as to the need for reduction of trade obstacles and as to the appropriate relationship between meeting this need and respecting other requirements embodied in the EC Treaty.2 Harmonization may not only promote respect for the latter requirements through incorporating them into harmonized national policies. By simultaneously lessening divergences between such policies it may also tend towards equalizing competitive conditions and, hence, towards reducing trade obstacles. In other words, reduction of 'market failures' and reduction of trade obstacles may simultaneously be achieved through harmonization.3
More particularly, while sensitivity for national sovereignty may limit the capacity of the Court of Justice to secure domestic trade liberalization through interpretation of liberalization provisions in the Treaty as applying to domestic trade, the same consideration need not inhibit the Community legislature from securing reduction of obstacles to such trade through a harmonization process in which representatives of each Member State participate. As a result, harmonization may go beyond simply prohibiting public or private conduct which makes Community trade more difficult than purely domestic trade and____________________