INTRODUCTION Lichtenstein, Norway and Switzerland are involved


With this report, I will analyse 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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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 labour.
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. Even though the single market has
formed a new trade within the European Union. There is no substantial division
for Non-European countries. National borders are still important within the
single market but since the introduction of the single market their effect has

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
standardising 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


 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 formation of the European
Union Community, it was said that financial crisis was caused by capital flows.
Thus, free movement of capital was liberalized only to favour 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 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 European Union, enables trade across borders, favours 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. The free movement of capital has significantly contributed to ease
the foreign direct investments activity within, to and from the single market.
i.e. when a firm opens a factory abroad or when a merger or acquisition
occurs.  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 labour 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 last freedom that was established in the European Union
is the free movement of services. the
freedom to provide services can be divided into two parts., 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. European Countries can put in place national regulation
for services to secure a certain standard of consumer protection, environmental
protection and quality. 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 authorisations, employment and qualifications.


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, the European Union can fund, manage and boost the tourism sector of the
Member States. In my opinion, the European internal market has impacted the
tourism sector in a positive way. Through these laws, a wide variety of tourism
product and services has been created. But, there certain obstacles the
European Union Tourism policy must overcome in terms of markets and
competition, technology, economic competitiveness and security and safety.  To deal with all these challenges the created
a new framework that focuses on four main points: promote the development of
sustainable tourism, stimulate competitiveness in the European tourism sector,
be responsible, and offer a high-quality tourism.


The European internal market has had a positive and a
negative impact on it Member states since its creation. With the freedoms that
were laid down trade in goods and the flow of capital have increased in the
Member States. There is now a high range of products available to consumers
making competition tougher but at the same time lowering the prices of the
products. Economic performance has been enhanced for the Members of the
European Union that are poor compared to the others. Nevertheless, the free
movement of services and the free movement workers have not had a smooth
realization due to certain barriers. Statistics show that even with the free
movement of persons European do not travel to other European Countries but the
rather travel within their own countries. However, if the ambiguities in the
single market are fixed, the positive outcome it generates will be higher than
the benefits we see now.