The significance of the harmonisation of legislation
of the associated countries of Central and Eastern Europe (ACCEE)
with the legislation of the European Community (EC) was already
underlined by the European Council in Copenhagen (21-22 July 1993).
The approximation of the Bulgarian legislation with that of the EC
is one of the fundamental tasks of the strategy for the preparation
of the countries of Central and Eastern Europe to join the Union,
adopted at the meeting of the European Council in Essen on 9-10
December 1994. The conclusions made at the European Council in
Essen underscore the fact that in order to be ready to participate
in the internal market from the moment of its association, the
ACCEE should make their legislation compatible with that of the EC,
i.e. to develop a system of laws and normative acts, standards and
methods of certification compatible with those of the European
Union.
The approximation of legislation is a basic
obligation under the Europe Agreement (EA). By virtue of Art. 69
and Art. 70 of the EA which entered into force on the 1 February
1995 our country is obliged to make all efforts to ensure that its
legislation will be gradually made compatible with that of the EC.
Art. 70 specifies the areas for approximation of laws, including
rules of competition, customs law, company law, bank law,
protection of workers at the workplace, environment protection,
protection of intellectual property, consumer protection, technical
rules and standards.
The harmonisation of our legislation with that of
the EC is not only a treaty obligation but it is also an economic
imperative. As a short-term objective the compatibility of the
Bulgarian legislation with that of the EC is a substantial factor
which helps attract investment from the EU, facilitates access to
the markets of the EU and guarantees equitable and mutually
profitable trade. In the long-term, the approximation of laws is a
necessary condition for the future integration of Bulgaria with the
EU. Obviously this is a long and complicated process which should
embrace not only the present EC legislation but also its future
development (an often used comparison is aiming at a moving
target). The harmonisation of legislation is also a prerequisite
for the establishment of a common market after the expansion of the
EU, without which such expansion would not be possible. Because the
establishment of a common market after the expansion means a
successful integration of the ACCEE to the so-called internal
market of the EU, it is evident that the harmonisation includes
first of all approximation of our legislation to that of the
EC.
Certainly the approximation of legislation is not a
sufficient condition for the successful integration of Bulgaria
with the common market of the EU. The European Council in Essen
emphasised that a reasonable macro-economic policy would be of
decisive importance for the success of the economic reforms and the
realisation of the integration strategy. Such a policy, oriented
towards the gradual levelling with the requirements of the internal
market of the EU, would enhance the competitiveness of the
Bulgarian economy and may shorten the transition period, thus
contributing to the attainment of macro-economic stability. The
immediate requirement for the realisation of this process, however,
is finding an adequate sequence and an adequate rate of the
approximation of the legislation of Bulgaria to that of the EC.
This will help ensure that the process contributes to the
acceleration of the economic reform. In other words, the most
urgent task is to set the priority areas of approximation, the
stages of approximation and specific time-tables and periods.
Obviously the process of approximation of laws will have stages. It
will not and cannot end with the integration of Bulgaria as a full
member of the EU. Many of the present members of the Union continue
to harmonise their legislation in certain areas. It is important to
identify what should be implemented prior to the integration in
order to protect our economy, after all obstacles are done away
with, against the strong competition which exists within the
internal market.
In this sense the approximation of our legislation
to that of the EC goes further than the accomplishment of the
reforms necessary for the creation and functioning of a market
economy. The aim of the legislation approximation process is to
facilitate the integration of our economy with the developed
industrial economies of theEU member states. That is why it is
necessary not only to adopt normative acts but also to organise
institutions and mechanisms for their application. Therefore, the
approximation process of Bulgarian laws to those of the EC includes
the building of relevant structures and mechanisms for the
application of these laws. The successful accomplishment of the
legal and judicial reform is also part of this process. Without the
necessary institutional changes the adoption of the legislation of
the internal market of the Union would remain just a process of a
formal reproduction of norms which will not ensure attainment of
the necessary economic effect.
The building of mechanisms for the Bulgarian
legislation approximation to that of the EC, the setting of
priorities and rates of approximation and the accomplishment of the
process of approximation demand a clear answer to a number of
questions including the following:
-to what extent the existing laws and normative acts
(possibly divided into economic areas) are compatible with EC
legislation;
-what are the priorities with respect to the future
norm-creating activity aimed at approximation of our legislation to
that of the EC;
-what organisation and infrastructure should we
build in order to accomplish the approximation of our legislation
with that of the EC;
-what technical and financial assistance will be
necessary from the European Commission.
A fundamental prerequisite for answering these
questions is knowledge of the legal principles on which the
internal market of the European Union functions. As was already
mentioned, integration with the EU would be impossible without
integration with the internal market. The internal market of the EU
is defined by Art. 7a of the Treaty Establishing the European
Economic Community (further called the Treaty - in its current
version as amended by the Treaty on European Union) as space
without inner frontiers, in which the freedom of movement of goods,
people, services and capital is ensured. The basic characteristics
of the internal market is guaranteed free and active competition is
within its boundary. The internal market functions on the basis of
the following legal principles contained in the treaty:
- discrimination between the member states of the EU
and between their citizens on grounds of their nationality is
forbidden (Art. 6);
- freedom of movement and choice of residence within
the Community (Art. 8a);
- elimination of customs duties and charges with an
equivalent effect in the economic exchange between the member
states (Art. 9-12);
- elimination of quantitative restrictions and
measures with equivalent effect on trade with goods, as well as
establishing conditions for exceptions (Art. 30-36)
- ban on discrimination with respect to state
monopolies (Art. 37);
- freedom of movement of workers (Art. 48-51);
- freedom of movement and freedom of establishment
of self- employed persons (Art. 52-57) and firms and companies
(Art. 58);
- freedom of supply of services (Art. 59-66);
- elimination of restrictions on the free movement
of capital (Art.73b);
- ensuring of fair competition (Art. 85, 86 and
90);
- strict conditions for rendering assistance to
companies on behalf of the state (Art. 92)
- ban on discrimination in the field of taxation
(Art.95)
In addition to the principle of the Treaty there are
the principles formulated by the decisions of the Court of Justice
which are interpretive. A characteristic example is the principle
of reciprocity/mutual recognition, formulated by the decision of
the Court, known as "Cassis of Dijon" in 1979. According to this
principle each good, which is circulating free in the market of one
member-state shall be allowed to circulate in the markets of other
member states. On this basis freedom of circulation of all goods
and services is guaranteed within the Community. The decisions of
the Court of Justice include interpretations of important terms of
the Treaty as measures having an "equivalent effect" of
quantitative restrictions (Art. 30) as well as the conditions for
imposing of restrictions on the freedoms. As a result of the
adoption and application of these principles to the functioning of
the internal market natural, technical, taxation and customs
barriers have been abolished.
Certainly the building of an internal market is a
complex and difficult process. It cannot be regulated only on the
principles formulated by the Treaty and the decisions of the Court
of Justice. The functioning of the internal market is subject to
various and detailed rules adopted by the Community bodies - the so
called "secondary legislation." When differences of legislation of
the member states are too big and, as a result the principle of
freedom of movement cannot apply directly, there arises the
necessity of legislation adopted by the Community bodies. The
adoption of such normative acts is demanded in areas where rules
and practices of the member states differ so much that they hinder
the exercise of enumerated freedoms. Such areas are, for instance,
health protection, labour protection, consumer protection,
safeguard of the public trust in the financial sector, and
guarantees of high level qualification of certain professions, etc.
The adoption of "secondary legislation" is necessary to ensure
equal conditions for economic activity, thereby guaranteeing fair
competition. This means for instance, the necessity to regulate
expenses imposed by governments on the economic activity, including
measures for environment protection, consumer protection measures,
measures in the social field etc. Such regulation process pursues
two objectives. First, requirements for economic activity are
equalised thereby opening possibilities for the abolition of
frontiers and allowing the functioning of the common market.
Second, equalising the requirements and of the standards inevitably
leads to the introduction of greater protections in the field of
protection of health, the environment, the consumer, etc.
The secondary legislation of the Community has
different forms. By virtue of the Treaty the greater part of the
legislation of the Community referring to the functioning of the
internal market is adopted in the form of directives. The
directives are mandatory for the member states with regard to
result, leaving to the states the adoption of the necessary
measures to ensure the accomplishments of these results. They
require that the national bodies adopt rules (or amendment of the
existing ones) in accordance with the aims set in the directive
(sometimes within a prescribed period of time). In other words, the
state has the choice of form and method of implementation of the
directive. The directives can be short and can simply show the
result and the time limit for its attainment, but often they are
quite detailed and leave little space for the national legislation.
Nevertheless, the directives set the objectives and formulate the
conditions, while the national legislation can incorporate and
fulfil these aims in a different manner. Such an approach ensures
to the greatest possible degree the preservation of the traditional
national peculiarities. In cases where the member states do not
adopt, within the prescribed period the necessary measures for the
fulfilment of a certain directive or the adopted measures are
incomplete or inadequate, natural and legal persons can invoke
directly the directive, provided its formulations are sufficiently
clear. According to the decisions of the Court of Justice the
member states bear responsibility, including damages to individuals
suffered as a result of non-implementation of a directive within a
certain period.
The regulations are Community acts which are
applied directly by the member states. They can have mandatory
force for each subject of legislation and acquire the state of
applicability for the whole territory of the EU at the time of
adoption by the Council or the Commission. The regulations by their
legal consequences are practically national legal norms which by
the decisions of the Court of Justice have priority over all
remaining norms of the national legislation. This refers not only
to the regulations, but also to the legislation of the EC in
general. It has priority over the national legislation, the
constitution included. This principle is formulated in the decision
of the Court of Justice in the case Costa vr. Enel of 1964.
The principle of direct effect of the EC norms refers not only to
the regulations but to EC legislation in general. As far back as
1963 in its decision in the case Van Gend en Loos the Court
of Justice decided that the clear, precise and unconditional
provisions of the Treaty create rights for individuals too, i.e.
for natural and legal persons and these rights shall be recognised
and defended by national legislation.
The decisions are individual acts - they have
mandatory legal power for the addressee. The latter may be both a
member state or a natural or legal person.
Apart from the decisions described above decisions
of the Court of Justice are considered as acts of the Community
bodies. They have a mandatory nature for the parties of the case
and in different cases parties may be member states, Community
bodies, natural and legal persons. In addition, the Court of
Justice interprets EC legislation on cases considered by a national
court of a member state. Therefore with regard to EC legislation
the Court of Justice stands above national legislation. Both the
Supreme Court and the Constitutional Court must take into account
the decisions of the Court of Justice.
Free movement of goods. The greatest part of
the secondary legislation refers to production and marketing of
goods. These acts regulate fields where the differences between the
member states are so great that they have an "equivalent effect" of
customs and quantitative restrictions - the so called technical
obstacles to trade. In some cases detailed regulations are adopted
which replace national regulations and standards. This is
particularly important for such goods as foodstuffs, drugs,
automobiles, etc. In other cases general requirements are adopted
while the detailed regulation is left to national legislation.
On the basis of this regulation, derived from the
principles of the Treaty and the principle of mutual recognition,
each producer and importer has the necessary guarantees that he can
sell his goods everywhere in the EU without violating the local
regulations. Therefore, a state which participates in the internal
market must not only set up conditions for the production of goods
complying with the standards of the Community, but also must
guarantee that all goods in its market comply with these standards.
An additional requirement is that the state must guarantee the free
movement of goods produced elsewhere in the Community.
Free movement of services. Another very big
part of the secondary legislation refers to the conditions for the
supply of services. The adoption of acts by the Community is caused
by the same reason - differences between the member states quite
often are too great and they cannot guarantee the practical
implementation of the freedom of supply of services. The most
essential part of the legislation in this area concerns the
financial services sector. Another purpose of the secondary
legislation in the field of services is to open markets which have
traditionally been dominated by national monopolies like
telecommunications, certain transport sectors, energy, etc.
Free movement of people. The secondary
legislation of the Community based on the principle of free
movement and the right to choose a residence (Art. 8a of the
Treaty) is divided into two parts. To the first part refer acts of
the Community which ensure harmonic development of the labour
market and fair competition, and to the second acts which define
the conditions of access of citizens from one member state to
another. The second part is considerably more extensive and
regulates such questions as residents' permits and permanent stay,
entry rights, conditions and restrictions of extradition, family
allowances and assistance, etc. Part of the acts of the Community
which refer to the free movement of people are closely connected
with the freedom of supply of services. The regulations and
standards of the Community gradually replace the national standards
concerning exercising of a profession by architects, physicians,
lawyers, etc. The additional regulations for the free movement of
people are necessary in order to guarantee that movement within the
Community does not affect the right of the worker to social
security, medical assistance, education, etc.
According to Art. 56 of the Treaty legal persons
enjoy the same treatment as natural persons concerning free
movement. The legislation of the Community eliminates certain
substantial differences in the national legal systems concerning
establishment, registration and functioning of legal persons. Still
full "freedom of movement" of the legal persons remains to be
reached particularly with respect to trans-frontier mergers and
acquisitions and the transfer of a seat from one member state to
another.
Free movement of capital. This freedom is a
"late" acquisition of the Community. Up until the end of 1993 this
principle was formulated very cautiously (Art. 67-73) in the
Treaty, Art. 73 providing a safety mechanism in case of disruption
of the balance of the financial market. Thanks to the secondary
legislation the restrictions on the freedom of movement of capital
which the member -states had the right to impose were gradually
dropped. In 1994 new articles were introduced in the Treaty (Art.
73b-73g) which considerably reduced the possibilities of imposing
restrictions on this freedom and which are rarely applied.
Competition. Fair and just competition is of
exclusive importance for the functioning of the internal market of
the Community. That is why the legislation of the Community has
created a system of norms which regulate competition and safeguards
it from distortion. The behaviour of the states and the individuals
is regulated in four basic areas:
1. In an environment with no state barriers to free
trade, individuals could conclude different sorts of agreements
curtailing competition, for instance division of markets, or abuse
their monopolistic position. This naturally could lead to the
disruption of the principles of free trade and competition.
2. The internal market sets new requirements for
legal persons and they often unite in "strategic unions" by mergers
or acquisitions. This is not unlawful in itself, but the processes
should be regulated in such a manner that the new structures do not
interfere with free competition.
3. In opening their frontiers, governments are often
tempted (or are compelled) to render state aids to their own
undertakings in order to protect their production from the rising
competition. When state aids are oriented toward assistance in
common goals such as research and development, scientific research,
environment protection, reaching a balanced regional development,
etc., it can be attractive. If the achievement of such positive
effects is not within the power of the respective legal person, the
latter can request assistance from the state. Other forms of state
aids are, however, not allowed as it is thought that they hinder
fair competition.
4. The activities of monopolies are strictly
regulated. State monopolies, state undertakings and the
undertakings supplying services to the society create a serious
risk for free competition. When the existence of the natural
monopolist is inevitable, the "distortion" of the market should be
restricted to the level necessary for ensuring the interest of
society.
Bulgaria has undertaken important obligations under
the EA in the mentioned areas. The most fundamental of these,
having direct bearing on the approximation of legislation are the
following:
1. In the field of competition. According to Art.
64, par. 3 of EA, Bulgaria assumed the responsibility to adopt
measures for the implementation of the provisions of the EA in the
field of competition protection within three years of the entry
into force of the agreement.
2. In the field of the protection of intellectual
property. By virtue of Art. 67 of the EA Bulgaria assumes the
responsibility of improving the protection of intellectual property
by assuring within five years of the entry into force of the
agreement a level of protection corresponding to that of the EU
including the appropriate means and mechanisms of enforcement.
3. In the field of company law there is a general
obligation for approximation. According to Art. 62 of the EA within
five years of the entry into force of the agreement Bulgaria is
obliged to adopt measures aimed at the creation of conditions for
the further gradual application of the regulations of the Community
with regard to movement of capital.
The monitoring of the implementation of obligations
under the EA will be carried out by bodies established for this
purpose: an Association Council, an Association Committee and
sub-committees in the respective fields including a special
sub-committee on the approximation of legislation. These bodies
have the authority to monitor the process of harmonisation of
legislation, to define priorities and to control their
implementation, to make recommendations to the respective Bulgarian
institutions.
Within the EU, the European Commission is authorised
to monitor the enforcement of the Community legislation, while
disputes are settled by the Court of Justice. In practice, however,
in most cases the Community legislation, irrespective of whether it
is directly applicable or is incorporated in the national
legislation of the member states, is applied by the relevant
administrative or judiciary mechanisms at national level. After the
integration of Bulgaria to the EU the Bulgarian administrative and
judiciary bodies will be obliged to apply the legislation of the
Community. Failure to fulfil these obligations may bring about
sanctions from the Commission and the Court of Justice. That is why
the process of harmonisation of our legislation with that of the EC
is a basic element in our preparation to fulfil our obligations
ensuing from the necessity to apply the legislation of the EC.
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