Articles 3 paragraph 1, 14 and 43-55 of the EC Treaty - (Freedom of establishment, freedom to provide services and mutual recognition of diplomas)

The EC Treaty lays down the principle that the self-employed

Self-employment

Self-employment is working for one's self.Self-employed people can also be referred to as a person who works for himself/herself instead of an employer, but drawing income from a trade or business that they operate personally....

 (whether working in commercial

Commerce

While business refers to the value-creating activities of an organization for profit, commerce means the whole system of an economy that constitutes an environment for business. The system includes legal, economic, political, social, cultural, and technological systems that are in operation in any...

, industrial

Industry

Industry refers to the production of an economic good or service within an economy.-Industrial sectors:There are four key industrial economic sectors: the primary sector, largely raw material extraction industries such as mining and farming; the secondary sector, involving refining, construction,...

 or craft occupations
or the liberal professions) the economic operators, established in the territory of a member state, may exercise an economic activity in all member states in two ways. Self-employed person and professionals or legal persons, within the meaning of
article 48 EC Treaty, who are legally acting in one member state, may carry on an economic activity in a stable and continuous
way in another Member State (freedom of establishment: Article 43) or offer and provide their services in other Member States
on a temporary basis while remaining in their country of origin

Country of origin

Country of origin , is the country of manufacture, production, or growth where an article or product comes from...

 (freedom to provide services: Article 49). This implies eliminating discrimination on the grounds of nationality

Nationality

Nationality is membership of a nation or sovereign state, usually determined by their citizenship, but sometimes by ethnicity or place of residence, or based on their sense of national identity....

 and, if these freedoms are to be used effectively, the adoption of measures to make it easier to exercise them, especially harmonisation of national access rules or their mutual recognition.

German Crafts and Trade - their Special Feature: License to Market Access

An Overview

— The Crafts and Trade Code (HWO/CTC) defines the license to craftsmanship. This means that the Master Craftsman’s diploma is mandatory for self-employment. (Adequate quali-fications are recognized through special permission). [ 1 ]

— The legislator regulates the practice of the profession. It defines the activities which are considered to be crafts and trade. It demarcates the career profiles and regulates the professional training.

— Moreover, the tasks of the crafts and trade organizations are specified. [ 2 ]

—The Crafts and Trade Code (CTC) thus restricts the free choice of profession expressly given by the Article 12

Article 12

Article 12 was a youth-led children's rights organisation based in England. Its main aim was to ensure the implementation of the United Nations Convention on the Rights of the Child UNCRC.- About :...

 and the Article 3 (Equality before the law) of German Constitution

Basic Law for the Federal Republic of Germany

The Basic Law for the Federal Republic of Germany is the constitution of Germany. It was formally approved on 8 May 1949, and, with the signature of the Allies of World War II on 12 May, came into effect on 23 May, as the constitution of those states of West Germany that were initially included...

 called Basic Law

Basic Law

The term basic law is used in some places as an alternative to "constitution", implying it is a temporary but necessary measure without formal enactment of constitution. A basic law is either a codified constitution, or in countries with uncodified constitutions, a law given to have constitution...

 (GG). According to the said Article 12, all Germans have the right to freely choose their trade or profession, their place of work and their place of training. The said Article 3 (Equality before Law) says, that the practice of trades and professions may be regulated by law.

— As per the constitutional law

Constitutional law

Constitutional law is the body of law which defines the relationship of different entities within a state, namely, the executive, the legislature and the judiciary....

 and from the constitutional-economic point of view, the gov-ernment interventions in the rights of an individual to freedom and to equality before law have to be explained.

— Accordingly, only those restrictions are generally acceptable, which serve the public interest.

— Laws are in accordance with this criterion, which are independent of the changing social and-political conditions capable of getting the approval in the long run.

What does the Master Craftsman’s Diploma certify?

— As a kind of "Brand product image", it certifies that the craftsman

a) has the professional and mercantile knowledge, abilities and experience, to carry out the respective work orders independently
b) so that the corresponding technical and entrepreneurial standards are guaranteed to protect the interests of the consumers (Consumer protection

Consumer protection

Consumer protection laws designed to ensure fair trade competition and the free flow of truthful information in the marketplace. The laws are designed to prevent businesses that engage in fraud or specified unfair practices from gaining an advantage over competitors and may provide additional...

), of the crafts and trade (Quality of the craft and trade) and of the craftsmen themselves (Bankruptcy risk).

— Till the amendment of the law in January 2004, the regulatory purpose of the obligation to have the Master Craftsman’s Diploma (Big Certificate of Competency) was that “this should guarantee the level of efficiency, productive power of the crafts and trade and the younger talent for the whole trade and industry.

— Since this amendment in the law, the purpose of the obligation to have the Master Craftsman’s Diploma is to repel “the risks for the health or the life of the third party” in the Crafts and Trade

— A direct impact on the wording of the legal text cannot be inferred. However, the law must be interpreted according to the regulatory purpose intended by the legislator, because many things are not clearly regulated through the Crafts and Trade Code, so that the inter-pretation plays a very great role.

Quality Assurance

— The reason given by its proponents for retaining the Master Craftsman’s Diploma as a license to market access

Market access

Market access for goods in the WTO means the conditions, tariff and non-tariff measures, agreed by members for the entry of specific goods into their markets. Tariff commitments for goods are set out in each member's schedules of concessions on goods. The schedules represent commitments not to...

 is that the vendors and customers are differently informed about the quality of the services offered (asymmetric information).It can otherwise initiate an unwanted competition downwards, if only the prices are compared.[ 3 ]

— The proviso of the existing Master Craftsman’s Diploma would be then in the public inter-est, when it was to compensate for the shortcomings of the market or for a market failure

Market failure

Market failure is a concept within economic theory wherein the allocation of goods and services by a free market is not efficient. That is, there exists another conceivable outcome where a market participant may be made better-off without making someone else worse-off...

 (for instance due to asymmetric information

Information asymmetry

In economics and contract theory, information asymmetry deals with the study of decisions in transactions where one party has more or better information than the other. This creates an imbalance of power in transactions which can sometimes cause the transactions to go awry, a kind of market failure...

 in the Crafts and Trade sector).[ 4 ]

Partly, these reservations are to a certain extent already clarified through the reality (e.g. Internet), because due to the lack of purchasing power, the customer still strives more for getting a more favourable price for a product or for a service. On the whole, the market segments and prices for services in the crafts and trade are becoming more transparent through the Websites such as "undertool.de.

— As per the argumentation, a negative breed is emerging among the vendors and a ruinous competition is emerging in the crafts and trade markets.[ 5 ]

This trend of competition is anyway going to increase in Germany due to the EU-expansion towards the East, even if it is till date the case only in some small domains. Since due to a judgment of the European Court of Justice (ECJ) the obligation for registration according to the § 9 of the Crafts and Trade Code (CTC) has been abolished for the foreign companies, which would like to offer a service in Germany, a large part of the German Crafts and Trade is itself ousting this market access regulation in the long term.[6]

— The Counter argument is: There is an unequal distribution of the information in many markets, not only within the domain of the crafts and trade. [ 7 ]

— But a special obligation of the state for a welfare service to the crafts and trade can not be derived from this. [ 8 ]

— It can be assumed that the customers can judge the quality latest after the service has been delivered and can, in case of discontent, change the vendor.

— One can also fall back on the experiences of the others (Reputation), be it through the recommendations or through expert knowledge (as this also works for the illicit work

Illicit work

Illicit work is an illegal employment. The working contract is made without social security costs and without paying income taxes. Illicit work is part of the informal economy or so called "shadow economy".-External links:*...

).

— On the other hand, the crafts and trade companies can present the consumers the differences in quality through

• a) voluntary warranty of quality
• b) service offers
• c) the Master Craftsman’s title as a voluntary comprehensive characteristic of quality [ 9 ]

Prevention of Danger

— Consumer protection from injuries to health through faulty products and services is in general interest.

— Specifications for the Trade, Commerce and Industry Regulation Act, the technical standards, prescribed qualifications and the liability law can be derived from this.

— Especially in comparison with the overseas, high standards of technical training for the final examination of the apprentices already offer a preventive protection to the crafts and trade.

— Existing laws such as the Law of product liability

Product liability

Product liability is the area of law in which manufacturers, distributors, suppliers, retailers, and others who make products available to the public are held responsible for the injuries those products cause...

 or the German Construction Contract Procedures (GCCP) are sufficiently respected.

— Indeed the question arises, whether additional subjective restrictions for licensing such as the Master Craftsman’s Diploma and/or six-year professional experience, are appropriate for getting the special permission (4 years experience of apprentice in a key position

Key position

In the sport of Australian rules football, a "key position" refers to positions on the ground that are considered vital to the structure of a team.Key position players make up what is known as the "spine" of a team...

 ac-cording to the § 7b of the Crafts and Trade Code). This question is actually important because in the rest of Europe, such a restrictive law does not exist (Exceptions are Austria and Luxembourg with a similar, but moderate restriction).

— To find the right measure is a normative decision and can ultimately be taken only on political level [10].

— However, the proof of "masterly" professional knowledge and talents can in this context only be justified with the prevention of danger.

— Knowledge of industrial management and pedagogy, which is also a part of the examina-tion for the Master Craftsman’s Diploma, must be ignored because it is not relevant. After all, there is no mercantile examination for a Restaurant owner, but the bakers and confectioners have to undergo such an examination.

— Qualifications such as the Master Craftsman’s Diploma, once acquired lose their special meaning due to the rapid technical change

Technical change

A technical change is a term used in economics to describe a change in the amount of output produced from the same amount of inputs. A technical change is not necessarily technological as it might be organizational, or due to a change in a constraint such as regulation, input prices, or quantities...

, if one does not keep on undergoing some ad-vanced training.

— A 100% protection from injuries due to a human or technical failure can’t be warranted even through additional qualifications. Mostly, the problems are caused by the bungling during the execution or inappropriate handling of the materials or machines and devices.

— Despite the public welfare, which has been highlighted above, no standards for industrial and environmental safety have been, for example, incorporated in the Crafts and Trade Code.

Equality before Law

— Regulations for a license to a profession and for practicing a profession need to also be regularly scrutinized, because they are related to the Basic principle of equality in the Article 3 of the German Basic Law (GG).

— Especially due to the changing economic framework, there is often a danger of discrimi-nation (the so-called discrimination of natives, i.e. German craftsmen have a disadvantage over the other European craftsmen because of the hard market access).

— We should not ignore the fact that the Crafts and Trade Code (CTC) of 1953 with its cur-rent regulation is based on a judgment of the Federal Constitutional Court of 1961 and for its decision, this court had that time relied upon the conditions and data of the 1950s[ 11 ].

— The court has justified the Big Certificate of Competency as a regulation for the choice of profession and not for practicing the profession.

— After considering the multitude of the factors, which are independent of the constitutional state and substantiate the special position of the class of craftsmen in the whole economy (e.g. turnover, number of employees, promotion of young people for the trade and industry, significance for the medium scale industry and the social set-up), the Honorable court came to the conclusion that these public interests constitute community goods of such high value that they justify a restriction on the free choice of profession.

— In the course of the freedom of service in the member states of European Union

European Union

The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...

, the pressure of reforms has increased regarding this factor, especially through the expansion to-wards the East.

— With a relaxation of the laws for the entry to the market, the problem of the so called discrimination of the natives would get defused.

— Due to the fall of the market access barrier, more and more people would be starting their own business and beside a favourable development in the job market, it could also lead to more dynamics in this market segment

Market segment

Market segmentation is a concept in economics and marketing. A market segment is a sub-set of a market made up of people or organizations with one or more characteristics that cause them to demand similar product and/or services based on qualities of those products such as price or function...

, since many jobs, which were earlier not carried out or executed only in the DIY- (Do-it-yourself

Do it yourself

Do it yourself is a term used to describe building, modifying, or repairing of something without the aid of experts or professionals...

) procedure or were illicit works, would be now onwards demanded on the official job market

Labour economics

Labor economics seeks to understand the functioning and dynamics of the market for labor. Labor markets function through the interaction of workers and employers...

.