Why Member States not complying with Article 2 TEU values such as the rule of law is not just an issue of morality for those States and the EU, but an economic problem and threat to the integrity of the EU internal market. An (explainer) thread. /1

I’ll start with a sad and cynical observation: not everyone hears or cares about appeals that rely solely on moral values such as democracy, the rule of law, and rights. Some issues have to be reduced to economics before they will be heard. /2

In this thread, I make the case that Member States, such as Poland and Hungary, that breach fundamental EU values, and face no real consequences for doing so, constitute an economic problem for the EU and a danger to its Internal Market. /3

The breaches are well catalogued, but for the purposes of this argument, my main focus is on interference with the independence of national courts. /4

The purpose of the EU Internal Market is to remove barriers to the movement of persons, goods, services, and capital between Member States. The achievement of this aim depends to a large extent on the uniformity and effectiveness of EU law throughout all 27 Member States. /5

Uniformity means that EU rules mean the same thing in each Member State and effectiveness means that there are consequences and remedies where there are divergences that serve to punish and deter such divergence. /6

The uniformity and effectiveness of EU rules depends on a functioning judicial network. The CJEU in Luxembourg is the ultimate interpreter of the meaning of EU rules and national courts have a role in ensuring compliance with EU rules and CJEU rulings at national level. /7

A key procedure for this functioning judicial network is the Article 267 TFEU preliminary reference procedure. This allows national courts to refer questions on the interpretation/validity of EU rules (in some cases, final instance courts are under an obligation to refer). /8

In order to make a reference, a national court or tribunal must, among other things, be independent (so that it can apply the ruling without fear of national executive interference). Where such independence is not assured, the CJEU is not obliged to rule on the reference. /9

Where national courts can no longer be regarded as independent, a problem occurs, since the system relies heavily on voluntariness as regards the decision to refer to the CJEU and to comply with the CJEU ruling. /10

Where references aren't made or rulings aren't complied with due to executive interference, uniformity/effectiveness break down. This doesn't happen immediately, but over time. An EU Directive that means one thing in 25 Member States might mean something else in Hungary. /11

Differing standards or expectations as to what EU law might mean or as to whether it will be enforced creates a trade barrier and makes it more difficult for economic actors to sell their goods and services or to invest in the recalcitrant Member State with confidence. /12

Now, you might counterargue as follows: wait a minute, western govts and citizens do business with confidence in some truly brutal autocracies, with little regard for judicial independence, the rule of law, or for rights, and it works out fine for them. /13

You might continue: it’s fine as long as an autocratic govt confines its immorality to purely internal rights issues, doesn’t threaten its neighbours, respects its international economic obligations and provides a stable economic environment for investors. /14

So, you might go on, as long as Hungary or Poland confine their recalcitrance to purely social or cultural matters, and follow the economic rulebook, business has nothing to worry about. /15

The response of course is that in a closely integrated system like the EU’s, what appear *to some* as purely internal social/cultural issues aren’t always easily separated from economics... /16

Take what constitutes beer in Germany, or Sunday trading rules in the UK, or recognition of foreign same-sex marriages in Romania, etc, etc. There is so much Internal-Market case law to draw upon in this context. /17

This is why, economically, the threat to EU values in Member States is serious, not just from a moral value pov; it constitutes a serious economic problem also. And all of that is ignoring the issue of contagion and erosion. /18

I don’t mean to imply that aren't ways through which the EU can respond; there are where there's the will to do so. I’m merely pointing out that it should be more than just the usual bleeding hearts that concern themselves with this issue; chambers of commerce should too. /19

And finally, I am not an economist or even an economic lawyer, so excuse what I shall assume is crass simplification in some areas. 20/20