Freedom of provision of services, freedom of establishment and freedom of movement of labor in the law of the Eurasian Economic Union

Ishchenko Natal'ya Gennadievna PhD in Law 119048, Russia, g. Moscow, ul. Trubetskaya, 12, kv. 22D ischenko.natalia@gmail.com

The creation of the Eurasian Economic Union in 2015 (hereinafter referred to as the EAEU, the Union) was a logical result of the development of a number of geopolitical and geo–economic initiatives aimed, inter alia, at achieving economic integration of the post-Soviet countries. Today, the EAEU members are five states that are members of the Customs Union: Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia. The creation of a single economic space implies the provision of four economic freedoms – the freedom of movement of goods, services, capital and individuals. The purpose of this article is to analyze the legal regulation of interrelated freedoms within the framework of the Eurasian Economic Union: freedom to provide services, freedom of establishment and freedom of movement of labor.

In Article 1 of the Treaty on the Eurasian Economic Union (hereinafter referred to as the Treaty)^[1] It is claimed that within its framework "the freedom of movement of goods, services, capital and labor is ensured." Article 4 of the Treaty proclaims as one of the goals of the EAEU "the desire to form a single market for goods, services, capital and labor resources within the Union." Thus, without any doubt, within the framework of this integration association, the need to ensure the above-mentioned economic freedoms is declared.

To achieve the purpose of this study, I would like to refer to the definitions of key concepts. The common (single) market, based on Article 2 of the Treaty, is understood as "a set of economic relations within the Union, in which freedom of movement of goods, services, capital and labor is ensured." Paragraph 3 of Article 66 of the Treaty states that the EAEU member states "strive to create and ensure the functioning of a single market for services." Thus, the Agreement does not provide separate definitions for the common and single market. At the same time, as is well known, there are different points of view regarding the definition of these concepts. Nevertheless, most researchers agree that these concepts are not synonymous, based on the analysis of the constituent agreements of such an integration association as the European Union. Thus, the term "common market" is enshrined in the 1957 Treaty of Rome in its original wording. Article 2 does not contain a definition of this term, however, from its meaning it can be established that the "common market" served as a means to achieve the goals of the Community^[2]. Thus, "it was the common market that was the law-forming element of the Community"^[3]. The term "single market" has not been consolidated in the constituent agreements and is used rather as a synonym for the "internal market", although some researchers include the "common" and "internal" markets in the "single market"^[4]. According to paragraph 2 of Article 28 of the EAEU Treaty, the "internal market" covers the economic space in which the free movement of goods, persons, services and capital is ensured. We assume^[5] that P.A. Kalinichenko's point of view is legitimate. The author considers the terms "common market" and "internal market" as economic concepts that "cannot be objectively distinguished"^[6]. Thus, these two terms are synonymous in P.A. Kalinichenko's interpretation. In his opinion, the "single market" is a concept neutral in relation to the first two^[7]. R.A. Kasyanov, in his work on the regulation of the financial services market under EU and EAEU law, writes that "The Common Market/The internal market and the single market < > – these are close but independent concepts in EU law"^[8]. Based on the meaning of the definition contained in Article 2 of the EAEU Treaty, the terms "common" and "single" market appear to be synonymous, identical concepts. In this case, it is not entirely clear why Article 4 of the Treaty, which declares the goals of creating the Union, as well as Article 66 (see above), refers to the desire to create a single market? But this hardly means that these concepts are separated in the Agreement, and the term "single market" means, for example, deeper forms of economic unification. The "internal" market, as follows from paragraph 2 of Article 28 of the Agreement, is understood rather as a spatial sphere ("economic space"). It is impossible not to agree with R.A. Kasyanov, who in the already mentioned work argues that "The EAEU Treaty proceeds from the equivalence and unified semantic load of the concepts of "common market", "single market" and "internal market"^[9]. In any case, both in the law of the European Union and the law of the Eurasian Economic Union, these concepts exist simultaneously, it is almost impossible to draw clear boundaries between them, and all four economic freedoms are their components.

Now let's turn to economic freedoms themselves. Article 57 of the Treaty on the Functioning of the European Union (hereinafter – the TFEU)^[10] establishes that services are considered services because they are not subject to the provisions on the free movement of goods, capital and persons. But this does not mean that there is a certain hierarchy of these freedoms in the law of the European Union, which has been repeatedly emphasized in Court decisions^[11]. It does not affect the hierarchy of freedoms and the order of their enumeration either in EU law or in the law of the EAEU. For example, the already mentioned Article 1 of the EAEU Treaty refers to the freedom of movement of goods, services, capital and labor, and Article 28 of the same Treaty refers to the free movement of goods, persons, services and capital, but it is hardly worth looking for a hidden meaning in the order of enumeration of these freedoms. More important, from our point of view, is what terms these freedoms are designated in different articles of the Treaty. First of all, it is about the freedom of movement of persons. Articles 1 and 2 of the Treaty refer to this freedom as "freedom of movement of labor", article 4 refers to "labor resources", and article 28 refers to "freedom of movement of persons". To accurately characterize this freedom, it is necessary to determine to whom exactly this freedom is applied in accordance with the Treaty on the Eurasian Economic Union, in other words, who exactly is its subject. The answer to this question is given by Article 96 of the Treaty ("Labor migration"). Paragraph 5 of this article contains a definition of the concept of "worker of a member State", which means "a person who is a citizen of a member State, lawfully located and lawfully engaged in labor activity in the territory of the State of employment, of which he is not a citizen and in which he does not live permanently." The same paragraph contains a definition of the term "family member", which means "a person married to workers of a Member State, as well as dependent children and other persons who are recognized as family members in accordance with the legislation of the State of employment." No other categories of persons that could fall under the definition of "labor resources", "labor force" or "persons" are mentioned. Thus, the EAEU Treaty provides for the provision of this freedom in relation to these two categories.

It is interesting to analyze who is the beneficiary of the freedom of the same name in EU law. Removing obstacles to the free movement of goods, persons, services and capital is a means to achieve the economic and social goals of the European Union. Paragraph 2 of Article 26 of the TFEU contains the definition of an "internal market", which "covers a space without internal borders, in which, according to the provisions of the Treaties, the free movement of goods, persons, services and capital is ensured". Further, section IV of the Agreement "Free movement of persons, services and capital" contains several chapters. Regarding the freedom of movement of persons, chapter 1 "Employees" and chapter 2 "The right of establishment" are important. In a narrow sense, freedom of movement of persons refers to the freedom of movement of migrant workers and members of their families. In a broad sense, this freedom can also include the freedom of the institution. Chapter 2 "The right of establishment" follows immediately after the first chapter of the section "Employees", and the section itself, as already mentioned, is called "Free movement of persons, services and capital", without singling out the freedom of establishment separately. After the entry into force of the Maastricht Treaty^[12], the content of this freedom was enriched by a non–economic aspect - citizenship of the European Union (Articles 20-25 of the TFEU). The Schengen Agreements of 1985 and 1990 also played an important role in the development of this freedom in the European Union. Thus, in the broadest sense of the word, freedom of movement of persons in the European Union includes: freedom of movement of employees (and their family members), freedom of movement of non-working persons (students and pensioners), visa-free movement of persons in the Schengen area, freedom of movement of third-country nationals and freedom of establishment^[13]. Some scientists consider this freedom more broadly, including the freedom of persons engaged in the provision of services.^[14]

The legal basis for the freedom of provision of services and freedom of establishment within the Eurasian space is Section XV of the EAEU Treaty "Trade in Services, establishment, activity and investment"^[15], supplemented by one of the 33 annexes to the Agreement – the Protocol on Trade in Services, Establishment, Activities and Investments (Annex No. 16). The freedom of movement of labor resources ("workers of the Member States"), as mentioned above, is regulated separately by section XVI "Labor migration". The freedom to provide services is much more difficult to distinguish from the freedom of establishment than from the freedom of movement of workers. From our point of view, regulating the freedom of service provision and freedom of establishment separately from the freedom of movement of workers is very logical and justified. In order to determine the content of each of the freedoms we study in this article, it seems advisable to begin consideration with the mechanisms for regulating the freedom to provide services in accordance with the Treaty on the Eurasian Economic Union.

In accordance with Article 28 of the EAEU Treaty, freedom of movement of services is guaranteed within the framework of the internal market. The EAEU Treaty does not define the term "service". In the Russian doctrine, it is possible to find various definitions of this term. For example, A.V. Zhurova argues that what distinguishes a service from a product is the material result of existence, which is necessary in the case of a product, and not in the case of a service^[16]. Therefore, for the existence of a service, only action is enough. G.D. Otyukova believes that the service, unlike the product, does not physically cross the border, but can, like the product, be freely sold and bought on the common market covering the territories of the member states of the Eurasian Economic Union^[17]. The latter interpretation is allowed by the content of Article 65 of the Treaty on the EAEU, which provides that the purpose of the Eurasian Economic Union is to ensure freedom of trade in services and freedom of action in this area. This article, as well as Article 2 of the Law of the Russian Federation No. 164-FZ of December 8, 2003 "On the Basics of State Regulation of Foreign Trade", defines a service as a product that can be exported and imported.

Despite the fact that the term "service" is not defined in the constituent act of the Eurasian Economic Union, the definition of "trade in services" is contained in Annex No. 16 to the EAEU Treaty, in the Protocol on Trade in Services, Establishment, Activities and Investments (hereinafter – the Protocol on Trade in Services, Protocol). According to the above-mentioned Protocol, trade in services is understood as the provision of services that include the production, distribution, marketing, sale and delivery of services: 1) from the territory of one Member State to the territory of another Member State; 2) to the territory of one Member State by a person of that Member State to a recipient of services of another Member State; 3) a service provider of one Member State by establishment in the territory of another Member State; 4) a service provider of one Member State by the presence of natural persons of this Member State in the territory of another Member State (subparagraph 22, paragraph 6). The Protocol also defines the territory of a Member State as a territory, together with an economic zone and a continental shelf zone, over which it exercises sovereign rights and jurisdiction in accordance with international law and its domestic legislation (subparagraph 20, paragraph 6).

In addition, the Protocol defines the concept of a service recipient and a service provider. The recipient of the service is "any person of the Member State to whom the service is supplied or who intends to use the service" (subparagraph 12, paragraph 6). The status of a service provider in accordance with Eurasian legislation is assigned to an individual or legal entity from a member State of the Eurasian Union providing the service (subparagraph 13, paragraph 6 of the Protocol).

The EAEU member States have committed themselves to a phased reduction of exemptions and restrictions in accordance with national lists, which were approved by Decision of the Supreme Eurasian Economic Council (hereinafter referred to as the EEU) No. 112 dated December 23, 2014^[18].

In accordance with the Decision of the EEC dated December 23, 2014 No. 110^[19], sectors (subsectors) of services are established, which are provided in the single market mode (more than 40 service sectors). WEEC Decision No. 30 of October 16, 2015^[20] approves the sectors (subsectors) of services, the provision of which in the single market regime will be carried out in the future in accordance with liberalization plans (more than 20 service sectors). The last transition periods for the provision of all types of services in the single market regime expire on January 1, 2025. For some types of services, the legal regime has been changed, which means that this type of service is included in the list of sectors (subsectors) of services in which the single market of services already operates. For example, cartography services were classified as service sectors in which a single market operates by the Decision of the SEEC dated 05/29/2019^[21].

What, in accordance with the law of the Eurasian Economic Union, is meant by the "functioning of the single market of services"? In other words, what exactly is the difference between the provision of services in the single market regime and the provision of services for which the formation of a single market "will be carried out in accordance with liberalization plans (during the transition period)"? The single market of services means that "each Member State provides equal (non-discriminatory) conditions on its territory for trade in services, institutions and activities to legal entities and individuals of all other member States"^[22]. The Protocol on Trade in Services provides for the provision of national and most-favored-nation treatment to services, suppliers and recipients of services of another Member State, with the possibility of applying restrictions specified in national lists or Annex No. 2 to the Protocol. In addition, the single market of services implies: the non-application of quantitative and investment measures (paragraphs 30 and 32 of Appendix No. 16 to the Treaty on the Union); the supply of services on the basis of issued permits without additional confirmation (paragraph 3 of paragraph 38 of Appendix No. 16 to the Treaty on the Union); the supply of services without additional establishment of a legal entity (pp. 2 paragraph 38 of Annex No. 16 to the Treaty on the Union); recognition of qualifications (experience, education) without passing the recognition procedures (paragraph 4, paragraph 38 of Annex No. 16 to the Treaty on the Union). The main difference between the legal regime of the services market, in respect of which the formation of a single market will be carried out in accordance with the liberalization plans, from the single services market is that, firstly, in respect of the former, Member States have the right to apply restrictions to the extent permitted by the Protocol, and secondly, in the fact that individual national lists of restrictions, exemptions, additional requirements and conditions apply to them. As soon as a single market is created for the relevant sector (subsector) of services, the restrictions contained in the national lists, as opposed to horizontal restrictions relating to all sectors and types of activities (Annex No. 2 to the Protocol), cease to apply.

The provisions of the EAEU Treaty do not apply to services that are supplied in the performance of public authority functions. The Protocol on Trade in Services does not regulate state (municipal) purchases, services in the field of energy and transport, and services of natural monopolies. The latter are clearly defined (Annex No. 20 to the EAEU Treaty) and represent:

− transportation of gas and oil through pipelines; transmission and distribution of electricity;

− railway transportation, storage and transportation of commercial gas; air transportation services;

− services of transport terminals and airports;

− public telecommunication services and public postal services.

Other sections of the EAEU Treaty are devoted to the legal regulation of the provision of these services. Financial services (insurance services, banking services and securities market services) stand out, the provision of which within the framework of the Eurasian Economic Union is regulated by Article 70 of the EAEU Treaty, as well as the Protocol on Financial Services (Appendix No. 17 to the Agreement). It is noteworthy that the EAEU Treaty provides for the phased construction of a single financial services market. R.A. Kasyanov characterizes the stage of development that the financial services market in the EAEU is currently undergoing as "the stage of harmonization of the national law of the member states"^[23]. A new stage in the development of the single market for this service sector should begin in 2025 with the creation of a supranational regulatory body.

Freedom of establishment, as already noted, is regulated by the same section of the EAEU Treaty "Trade in Services, Establishment, activity and Investment" (Section XV), as well as the Protocol on Trade in Services, Establishment, Activity and Investment (Annex No. 16). In accordance with the Agreement, an institution is understood as "the creation and (or) acquisition of a legal entity (participation in the capital of an established or established legal entity) of any organizational and legal form and form of ownership provided for by the legislation of the Member State in whose territory such a legal entity is created or established" (paragraph 24, paragraph 6). Possible There are also other ways of establishing: acquiring control over a legal entity; opening a branch, representative office, or registering as an individual entrepreneur. It is especially important to emphasize that the Protocol states that the establishment is also carried out for the purposes of trade in services (paragraph 24, paragraph 6). Freedom of activity in the Eurasian Economic Union is closely related to the freedom of the institution, which means "entrepreneurial and other activities (including trade in services and production of goods) of legal entities, branches, representative offices or individual entrepreneurs" (clause 2, clause 6 of the EAEU Treaty). Thus, it is obvious that freedom of establishment and freedom of activity are necessary for the realization of freedom to provide services. Without the freedom of establishment and freedom of activity, the freedom to provide services within the EAEU would be impossible with respect to such a method of service delivery as the provision of services by a supplier of one Member State through establishment on the territory of another Member State. In addition, the freedom of establishment in the EAEU implies, as already noted, registration as an individual entrepreneur. Accordingly, this involves the movement of individuals, which is also necessary to hire employees of established legal entities, branches and representative offices. According to paragraph 35 of the Protocol, Member States do not impose restrictions related to the employment of such workers. Restrictions are also not imposed on the movement of individuals to provide services on the territory of another Member State by presence (paragraph 37 of the Protocol). The main criterion for distinguishing the freedom to provide services from the freedom of the institution is most likely the factor of the length of stay in the country in which the service is provided. In the event that the service provider is temporarily located in a Member State, the regulation of its activities falls under the provisions of the Freedom of Service Agreement; in the case of a long stay with the establishment of infrastructure and official registration, it will be about the freedom of the institution.

The provisions regulating the freedom of movement of labor, as already noted, are contained in section XVI "Labor migration", as well as in the Protocol on the Provision of Medical Care to Workers of the Member States and Family Members (Annex No. 30 to the Treaty on the EAEU). According to paragraph 5 of Article 96 of the Treaty, in order to qualify as a "working Member State" under the legislation of the EAEU, as already mentioned, a person must be "a citizen of a member State lawfully residing and lawfully carrying out work in a State of employment of which he is not a citizen and in which he does not permanently reside." Thus, according to the legislation of the EAEU, being a worker means to carry out labor activities, that is, activities carried out under an employment contract, or to perform work (services) under a civil law contract "in accordance with the legislation" of the relevant member state.

Compared to the case law of the Court of Justice of the European Union, this approach seems much more formalistic. The EU Court recognized that the main feature of an employment relationship is that "for a certain period of time, a person performs services for and under the direction of another person, for which he receives remuneration"^[24]. Thus, for the Court of Justice of the European Union, a person can be considered an employee even without an employment contract, provided that he can demonstrate that his activities are "effective and genuine". The EAEU Court, on the contrary, is bound by the definition contained in paragraph 5 of Article 96 of the EAEU Treaty. Thus, when considering whether professional sports should be considered an occupation, the Court examined the relevant national laws of the Member States and found that in all Member States, relations between players and professional sports clubs are regulated by employment contracts^[25].

Another obvious problem with the definition of a "working Member State" given in the EAEU Treaty is that it limits the scope of the term to those who temporarily reside in the Member State in which they work. Does this mean that as soon as a person obtains the right of permanent residence in a Member State, he is automatically excluded from the scope of the Treaty? Such a narrow interpretation seems to contradict the objectives of the Treaty. In addition, the definition of a "State of permanent residence" in article 96(5) of the Treaty defines this State as the State of nationality of the employee concerned, effectively equating permanent residence and citizenship. Thus, it seems that the authors of the Treaty intended to exclude from its scope a certain category of persons, namely permanent residents. It can be assumed that the emphasis on the temporary nature of residence is intended to emphasize that the Treaty does not create a right to permanent residence and that Member States should define the conditions for obtaining this right in their national legislation. In the EU, on the contrary, the right to remain in a member State after obtaining a job in that State was introduced back in 1970 in relation to workers and members of their families.^[26] The preamble of the relevant decree states that this right is a consequence of the right to residence acquired by employees engaged in active work.

Article 97 (2) of the EAEU Treaty establishes strict restrictions on exceptions to the provisions on free movement. The measures of the Member States should be aimed at ensuring national security, including in sectors of the economy of strategic importance, and public order. The EAEU Court confirmed that state measures should be proportionate, that is, they should contribute to achieving the goals provided for in paragraph 2 of Article 97, and should be limited to actions necessary to achieve such goals^[27].

Ensuring the freedom of movement of labor implies the abolition of restrictions: quotas, patents, more favorable conditions for citizens of the state of employment. Workers from the EAEU member States do not need to obtain a work permit, and the principle of automatic recognition of educational documents also applies, with the exception of documents related to pedagogical, legal, medical or pharmaceutical activities (paragraph 3 of Article 97 of the EAEU Treaty). In addition, documents on academic degrees and titles are recognized in accordance with the national legislation of the Member States.

As for the period of stay of the worker and his family members in the territory of the State of employment, it, as follows from paragraph 4 of Article 97 of the Contract, is determined by the validity period of the employment or civil law contract.

Article 98 of the EAEU Treaty enshrines the rights and obligations of workers of the Member States. The rights, in particular, include: the right to own, use and dispose of one's property, the right to property protection, to unhindered transfer of funds, the right to social security, to receive medical care (in accordance with Annex No. 30 to the Agreement), to join trade unions, to receive from state bodies the right of the State of employment to receive information concerning the conditions of stay and employment, etc. The obligations of workers from the EAEU member States include: the obligation to comply with the legislation of the state of employment, respect for the culture and traditions of the peoples of the state of employment, the obligation to bear responsibility for committed offenses in accordance with the legislation of the state of employment.

It should be noted that the Contract (clause 5 of Article 96) contains the definition of the employer and the customer of the works (services). An employer is defined as "a person who provides a job to an employee of a Member State on the basis of an employment contract concluded with him." The customer of works (services) is understood as "a person who provides a job to a worker of a Member State on the basis of a civil contract concluded with him." Accordingly, in relation to the customer of works (services), the worker acts as their supplier. And in this sense, it is necessary to determine the difference between the freedom to provide services and the freedom of movement of labor. The main criterion for distinguishing these freedoms is "the absence of a subordination relationship between the provider and the recipient of services"^[28].

To summarize, it is necessary to make the following generalizations:

1. One of the key differences between the Treaty on the Eurasian Economic Union and the Treaty on the Functioning of the European Union^[29] is the abundance of definitions contained in the Treaty on the EAEU, including in the field under study. In addition to the main list contained in Article 2 of the EAEU Treaty, each of the chapters and each Protocol has its own list of definitions. In part, this approach can be explained by the legislative tradition of the EAEU member states^[30].

2. In the law of the European Union and in the law of the Eurasian Economic Union, the concepts of "common market", "single market" and "internal market" exist simultaneously, it is almost impossible to draw clear boundaries between them, and all four economic freedoms are their components.

3. The EAEU already has a single market for services. Sectors (subsectors) of services are established, which are provided in the single market mode (more than 40 service sectors). WEEC Decision No. 30 of October 16, 2015^[31] Approves the sectors (subsectors) of services, the provision of which in the single market regime will be carried out in the future in accordance with liberalization plans (more than 20 service sectors).

4. The main difference between the legal regime of the services market within the framework of the Eurasian Economic Union, in respect of which the formation of a single market will be carried out in accordance with the liberalization plans, from the single services market is that, firstly, in respect of the former, member States have the right to apply restrictions to the extent that they are allowed by the Protocol and secondly, that individual national lists of restrictions, exemptions, additional requirements and conditions apply to them.

5. Freedom of establishment and freedom of activity are necessary for the realization of the freedom to provide services. Without the freedom of establishment and freedom of activity, the freedom to provide services within the EAEU would be impossible with respect to such a method of service delivery as the provision of services by a supplier of one Member State through establishment on the territory of another Member State. In addition, the freedom of establishment in the EAEU also implies registration as an individual entrepreneur. Accordingly, this involves the movement of individuals, which is also necessary to hire employees of established legal entities, branches and representative offices.

6. The main criterion for distinguishing the freedom to provide services from the freedom of the institution is the factor of the length of stay in the country in which the service is provided.

7. The freedom of movement of labor within the EAEU covers the freedom of movement of workers and members of their families. No other categories of persons that could fall under the definition of "labor resources", "labor force" or "persons" are mentioned. Thus, the EAEU Treaty provides for the provision of this freedom in relation to these two categories of persons. In the European Union, in the broadest sense of the word, freedom of movement of persons includes: freedom of movement of employees (and their family members), freedom of movement of non-working persons (students and pensioners), visa-free movement of persons in the Schengen area, freedom of movement of third-country nationals and freedom of establishment. Some scientists consider this freedom more broadly, including the freedom of persons engaged in the provision of services. Accordingly, this freedom within the framework of the European Union covers a wider range of people than within the framework of the Eurasian Economic Union.

8. The main criterion for distinguishing the freedom of service provision from the freedom of movement of labor is the absence of a subordination relationship between the supplier and the recipient of services.

Finally, I would like to draw attention to the fact that the preamble of the EAEU Treaty establishes the requirement of "unconditional observance of the principle of the supremacy of constitutional human and civil rights and freedoms." Despite the fact that the Eurasian Economic Union, as declared in Article 4 of the Treaty, pursues economic goals, including the creation of a single market for goods, services, capital and labor, their achievement is possible only if the supremacy of human and civil rights and freedoms is ensured at the supranational level. Thus, the operation of all economic freedoms in the Eurasian space should be based, first of all, on the recognition, observance and protection of human and civil rights. Referring to the provisions of the preamble on "unconditional respect" for the constitutional rights and freedoms of "man and citizen", the EAEU Court interpreted this provision as follows: "the level of such rights and freedoms guaranteed by the Union should not be lower than the level guaranteed in the member States"^[32].