Building a New Scotland: an independent Scotland in the EU

Annex 2: The Four Freedoms

The EU aims to enable EU citizens to study, live, shop, work and retire in any EU country and enjoy products from all over Europe. To do this, it ensures free movement of people, goods, services and capital in a single EU internal market. Increasing integration through these channels, known as the ‘four freedoms’, is the driver of economic growth. By removing technical, legal and bureaucratic barriers, the EU also allows citizens to trade and do business freely. These four fundamental freedoms are the cornerstones of the single market.

Free movement of people

Free movement is a reciprocal right enjoyed by all EU citizens and members of the European Economic Area (EEA), which Scottish citizens will enjoy again when Scotland becomes a member state. There are rules and controls built into the EU Treaties which determine how an EU citizen is able to exercise their right to free movement.

For stays of fewer than three months (90 days), the only requirement for citizens of a country inside the European single market to move and reside in other member states is that they possess a valid identity document or passport.

If EU and EEA citizens choose to exercise their right to freedom of movement for stays of more than three months, they must be:

• employed,
• self-employed,
• seeking work
• studying,
• self-sufficient, or
• a family member of a citizen exercising those rights.

These requirements are to prevent placing an undue burden on the social protection systems of host nations. Generally, however, EU citizens have equal access to benefits and public services as nationals, although there are some restrictions. In the UK before Brexit, for example, jobseekers had limited access to job seekers allowance, and could only claim after their three-month initial period of residence – during those first three months, it was the responsibility of their home nation to provide jobseekers support.

EU member states may refuse entry to or, in certain cases, remove EU citizens of other member states on grounds of public policy (such as criminality), public security or public health; or in the event of abuse of rights or fraud.

Free movement of goods

There are no customs duties or restrictions on the volume of goods travelling between any EU member state. Free movement of goods may only be restricted on a number of limited grounds such as a threat to public health or the environment.

To allow goods to circulate freely throughout the EU, all goods must meet specific technical, safety and labelling standards as defined by EU laws. The EU market surveillance system ensures that non-food products on the EU market do not endanger European consumers and workers. It also ensures the protection of other public interests such as the environment, security and fairness in trade. It includes actions such as product withdrawals, recalls and the application of sanctions to stop the circulation of non-compliant products and/or bring them into compliance.

As a member state, Scotland’s businesses would re-gain access to the EU market and be able to export goods directly to anywhere in the EU without the additional costs and barriers brought on by Brexit.

Free movement of capital

The free movement of capital involves lowering the restrictions and controls on funds moving between EU member states, with the aim of completely removing these. The free movement of capital underpins the single market and complements the other three freedoms. It also contributes to economic growth by enabling capital to be invested efficiently and promotes the use of the euro as an international currency, thus contributing to the EU’s role as a global player.

The purpose of free movement of capital is to enable an efficient cross-border deployment of physical and financial capital for investment and financing purposes. This enables individuals to carry out many transactions, including

• opening bank accounts abroad
• buying shares in non-domestic companies
• investing where the best return is
• purchasing property in another country

For businesses, it enables

• investing in, and owning, other European businesses
• raising finance where it is cheapest

With Scottish EU membership, businesses and individuals in Scotland would benefit from increased opportunities offered by the free movement of capital within the single market.

There are certain exceptions to the free movement of capital within the EU member states and also within those countries having trade agreements with the EU. These are mostly in relation to taxation, prudential supervision of financial institutions, public policy considerations and financial sanctions agreed under the Common Foreign and Security Policy. Specifically, sanctions and strict controls have been put in place to monitor suspicious transactions which may involve the movement of criminal funds through money laundering. If such transactions are found by financial institutions they are required to notify the requisite authorities of any such transactions.

The European Commission enforces the free movement of capital by monitoring capital flows and ensuring EU countries properly apply the relevant rules.

Free movement of services

Under the free movement of services, companies from any EU member state can establish themselves in another EU member state and provide services in another EU member state other than the one where the company is established. The freedom of establishment and the freedom to provide services guarantees mobility of businesses and professionals within the EU. Scotland’s EU membership would provide the Scottish services sector with increased opportunities for growth and increased mobility for Scottish professionals to work in the EU as well as EU professionals to work in Scotland.

Certain requirements can still be imposed on service providers but only when they are non- discriminatory, justified for reasons of public policy, public security, public health or the protection of the environment and do not go beyond what is necessary to achieve their objective.

Given the increasing economic importance of the services sector, the EU has issued a number of Directives including the Services Directive and the Professional Qualifications Directive which are designed to further simplify cross-border provision of services within the EU and recognise professional qualifications across the EU. For example, the European professional card (EPC) is an electronic certificate for the recognition of qualifications for five professions – general care nurses, physiotherapists, pharmacists, real estate agents and mountain guides. It might be extended to other professions in the future.