The Concept of Freedom Of Establishment in Relation with Turkey and European Economic Community

location and man-power emigration . In the process of Turkish integration, the approach of the member state countries to Turkey is generally based on maintaining their relations in minimum level with Turkey to secure their national interest. On the contrary from the Turkish perspective, the integration process was regarded as an important instrument to reach the ultimate goal of Turkish modernization project which had been successfully envisioned and implemented by the founder of Turkish Republic, Mustafa Kemal Ataturk.2
The first contractual relationship with then European Economic Community (EEC) dates back to 1963, with the signature of the association agreement. The subsequent decades witnessed a series of ups and downs in EEC – Turkey Relations, mainly as a result of Turkey’s domestic
1 Graham Fuller, New Turkish Republic: Turkey As a Pivotal State in the Muslim World, (United States Institute of Peace Press, Washington DC 2008) Page 148
2 Prof. Dr. Enver Bozkurt , Associate Prof. Dr. Mehmet Özcan and Prof. Dr. Arif Koktas, European Union Law, (4th Edn, Asil Yayın Dagitim Ltd. Sti.,Ankara 2008)p.368
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turmoil. However, even the most difficult moments, Turkey never abandoned its rhetorical goal of moving closer to the Community.3 Ultimately, In 2004, the European Union delivered the historical and long awaited decision to open the formal accession negotiations with Turkey.4
In October 2005, the European Union started the accession negotiation with Turkey. This was a ground breaking event of the long history of the EU-Turkey relations. A close, special relationship is now being built in a constructive manner and with the long-term prospect of EU membership. Yet, the EU has exclusively underlined an ‘open ended’ nature of accession negotiations, ‘outcomes of which cannot be guaranteed beforehand. ‘Therefore question of as to whether EU membership will be the final outcome of the negotiations for Turkey still unclear thus remains to be seen in the foreseeable future.5
EU-Turkey relations have experienced serious difficulties resulting from the essential incompatibility of both parties’ policies with the declared objectives of their association agreement. In particular, it seems unlikely that the ultimate objective of the Association agreement – Turkish accession to the EU will be achieved in the foreseeable future. On the one hand, this is because the EU has always considered Turkey to be an awkward candidate for EU membership: Turkey is different, problematic and thus, by the implication, a more difficult case than any of the other applicants. The EU’s scepticism towards the prospect of Turkish membership can be seen in its policies, which have basically sought to maintain and strengthen the existing association agreement. However, this has been inadequate to prepare Turkey for EU membership.6 Despite of mentioned difficulties, customs union which is envisaged by the Association Agreement was established on 31 December 1995.7 Therefore one of the freedoms of The Community currently functions between Turkey and EU countries. This development must be deemed as an important signal for future integration of Turkey to EU. Association relationship between Turkey and EEC has been also developed by the various decisions of EC-Turkey Association Council which was established as a superior organ of association relation. Certain rights had been granted to Turkish nationals however, these rights were not properly implemented by the member states. This controversial situation is commonly perceived as an unfair and hypocritical by Turkish academicians and also by Turkish public opinion. In this sense, European Court of Justice (Herein after ECJ) played an active and important role to interpret and to improve the rights granted to Turkish nationals by its own decisions.
Firstly, in 1987 legal struggle of Turkish Nationals had become a current issue by decision of Meryem Demirel Case and continued with the improvement of subsequent 37 decisions which
3 Susannah Verney & KostasIfantis, Turkey’s road to European Union Membership : National Identity and Political Change (Routledge,Newyork,2007) p.21 4 Kerim Yildiz& Mark Muller, The European Union and Turkish Accession : Human rights and the Kurds, (Pluto Press,London) p.1 5 Harun Arikan, Turkey and The EU : An awkward candidate for EU membership? (2nd edn, Ashgate, Hampshire, April 2006) p.1 6 Ibid Page 2 7 Decision 1/96 of the EC-Turkey Customs Cooperation Committee laying down detailed rules for the application of Decision 1/95″ (O.J. 1996 L 200/14)
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came until today and which appears as a notable judicial precedent in this particular legal field. The process had been initiated by European Court of Justice recognizing that agreement establishing association between Turkey and EEC is integral part of the Acquis Communautaire and ECJ also considered itself as an authorized body for the disputes concerned. Subsequently, ECJ also considered decisions of EC-Turkey Association Council as integral part of the Acquis Communautaire. In this process, the most significant development was recognition of the direct applicability in relation to the content of the Additional Protocol and decisions of EC-Turkey Association Council.8 When considering the context of the Association Agreement, three main titles such as rights granted to Turkish workers in the framework of the decisions of EC-Turkey Association Council, freedom to provide services and freedom of establishment attract the attention of the media and public opinion in Turkey. Additionally, 37 decisions of ECJ is relevant with this mentioned fields. In this study, the freedom of establishment and the disputes arises from the restrictions in relation to freedom of establishment towards Turkish nationals by EC member states will be evaluated under the legal scope of Association Agreement and annexed protocol. The study will be also touched briefly on the subject of freedom of establishment and its perception in European Community which constitutes necessity to comprehend the concept of freedom of establishment in real terms. 2. Concept of Establishment Article 13 of the Ankara agreement lays down that “The Contracting Parties agree to be guided by Articles 52 to 56 and Article 58 of the Treaty establishing the Community for the purpose of abolishing restrictions on freedom of establishment between them.” Therefore, the agreement underlines the guidance of above mentioned articles of EEC treaty in regard to the freedom of establishment. In this sense, the definition of the concept of the establishment under the EC and EU treaties also requires to be comprehended entirely in order to construe the concept which set out by the Ankara Agreement. 2.1 The Right of Establishment Under EC Treaty
The right of establishment is described by the ECJ as ‘Fundamental Community rights’. The principle on which these rights are based is the principle of non-discrimination on ground of nationality, whether arising from legislation, regulation or administrative practice. The principle is binding on all competent authorities as well as legally recognized professional bodies.9
The principle of freedom of establishment and all the rights connected to it constitute in substance a possibility for individuals (natural persons as nationals of a Member State) and companies (within the Community), without any distinction as regards nationality or residence,
8 Prof. Dr. Haluk Kabaalioglu & Dr. Rolf Gutman,The Freedom of Establishment and Providing Services of Turkish Nationals in the Member States of European Union : The Trend developed out of Standstill Provision Within Association Agreement (December 2007,Istanbul), p.3 9 Josephine Steiner & Lorna Woods, Textbook on EC LAW, (7th edition, BlackStone Press, London,2000) P.329
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to start up with economic activity in any Member State in a stable and continuous way. This applies also to the state owned companies. The freedom of establishment, one of those freedom-principles is provided in the EU Treaty (Articles 43-48, ex 52-58). The freedom itself is a fundamental (right), effective and very broadly interpreted principle. Its restrictions, on the other hand, must be interpreted narrowly and literally. This freedom should be guaranteed as much for companies as it is guaranteed to physical persons.10 ‘Companies or Firms’ means ‘companies or firms constituted under civil or commercial law, including cooperative societies, and other legal persons governed by public or private law, save for those which are ‘non-profit making’ (Article 48(1) (ex 58(2)) EC). Companies or firms formed in accordance with the law of a Member State and having their registered office, central administration or principal place of business within the Community shall, for the purposes of this Chapter, be treated in the same way as natural persons who are nationals of Member States (Article 48(1) (ex 45(1)) EC) The Community nationals may also buy shares of companies in all member States. It may be mentioned too that the Treaty has changed not anything in the system of law of private property of Member States (Article 295 (ex 222)) 2.2 Distinguishing Between Right of Establishment and Right to Provide Services
The criteria for distinguishing between self-employed activities and employment in the labour market are not very clear. The courts have repeatedly established this and insisted on publication of clear criteria. Sometimes they specified that the bearing of entrepreneurial risks and the actual management of the enterprise could be central criteria.11
Title III of the EC Treaty includes chapter 2 on the right of establishment, followed by chapter 3 on services. Commentators frequently consider these to be two aspects of the same right, namely, the right to conduct freely commercial, financial or professional