Country-of-Origin and Mutual Recognition Principles – Vehicles for Regulating Market in a Multi-Level-Governance System

The author argues that in a democratic legal system internal market may not be regulated without sufficient attention being paid to national autonomy and diversity. In this light the principle of subsidiarity requires a withdrawal from the ideal internal market goal and orientation towards more workable solutions, which take into account that at the present state of integration European citizens primarily direct their legitimacy at their nation states. As the pure host-state approach, based on the principle of non-discrimination, may obstruct free movement of production factors, the author emphasises the importance of the principles of mutual recognition and state of origin. These guarantee the application of only one set of national rules for a specific product or person (hence guaranteeing free movement), while preserving national competences in the market field. As such they should present an ideal model of market regulation. However, these principles enhance the prisoners' dilemma and horizontal competition between national legal orders. Accordingly, the author concludes that an adequate combination of decentralism and centralism is needed in market law, taking into consideration that the EU is a system of multi-level governance