D. Freedom of movement in the economy – four freedoms (Article I.4)

Movement of goods, services, capital and persons

There shall be freedom of movement throughout Bosnia and Herzegovina. Bosnia and Herzegovina and the Entities shall not impede full freedom of movement of persons, goods, services, and capital throughout Bosnia and Herzegovina. Neither Entity shall establish controls at the boundary between the Entities.

Article I.4 of the BiH Constitution guarantees free movement of goods, services, capital and persons in the whole territory of the state. It is quite clear that, in this regard, the Framer of the Constitution has relied on Article 14 of the Treaty Establishing the European Community (TEC)³⁵⁶ and, at the same time, that fact tells a lot about the position and prognosis of the Framer of the Constitution (or of its international protectors) when it comes to the freedom of movement in the post-Dayton Bosnia and Herzegovina. The political and social division of the state caused by the armed conflict was also reflected in the economic field. In addition to several goods’ smuggling routes, the state was also economically divided, and thus it found itself in an initial situation similar to that which the countries establishing the European Community had been faced with. In a small country such as Bosnia and Herzegovina, securing free economic flow and creating a single market was even more important than it was for those much bigger and much more populated states of the European community.

Given the fact that there is no definition of terms in the BiH Constitution, neither is there any distinction with respect to fundamental freedoms, the Constitutional Court, when interpreting Article I.4, pointed to the Treaty on Establishing the European Community and to the relevant jurisprudence of the European Court of Justice.³⁵⁷ So far, the Constitutional Court and Human Rights Chamber have rarely dealt with the issue of fundamental freedoms of a single market. As to freedom of movement, the issue was dealt with in the following cases: U 27/03;³⁵⁸ U 68/02,³⁵⁹ U 14/04,³⁶⁰ AP 792/06³⁶¹ and U 14/04.³⁶² As to the freedom of movement of services, the issue was dealt with by the Human Rights Commission within the Constitutional Court of BiH in cases: CH/02/12468 et al.³⁶³ and CH/98/375 et al.³⁶⁴

The aforementioned four (economic) fundamental freedoms make a complete constitutional frame for the freedom of market economy in the country, which is stipulated by the Constitution, for instance, in the fourth line of the Preamble³⁶⁵ and in Article II.3(k) (property protection). In view of the above, the Constitutional Court points to the obligation of the State to establish an operational economic system and to ensure full economic balance.³⁶⁶

The guarantee of the freedom of movement in Bosnia and Herzegovina has been positively and generally defined in the first sentence of the regulation. What comes in the second sentence is a precise definition of the guarantee from the first sentence, which is defined as a restriction: Bosnia and Herzegovina and the Entities shall not impede the full freedom of movement of persons, goods, services, and capital throughout Bosnia and Herzegovina. Finally, the third sentence refers to the prohibition of activities that would flagrantly violate these freedoms: namely, controls on the Entity boundary lines have been prohibited. Such a systematic scheme clearly indicates that the prohibition of control on Entity boundary lines is not, at the same time, a permit to perform some other activities not restricting the freedom of movement on the mere boundary line between the Entities but perhaps restricting it in some other way.³⁶⁷ Moreover, in the first sentence, reference has been made to the obligation of the State to act in a positive direction for the purpose of ensuring freedom of movement in the whole country, so the State shall not be limited to mere compliance with the restrictions referred to in the second and third sentence.³⁶⁸ An effective means for providing freedom of movement is harmonization of the Entities’ legal systems, which differ in many fields,³⁶⁹ including removal of regulations preventing economic exchange, such as indirect taxes existing next to uniformly regulated indirect taxes.³⁷⁰

Also, the Entities, within their competencies, may and must act for the purpose of ensuring freedom of movement.³⁷¹ However, it may be required that some competencies for passing laws, which are mainly assigned to the Entities and the Brčko District, should cease to be decentralised if it would lead to a restriction of the freedom of capital flow.³⁷²

The Constitutional Court and the Human Rights Commission within the Constitutional Court of BiH have grasped the guarantee of freedom of movement in its connection with the prohibition of discrimination under Article II.4 of the Constitution of BiH, which is not only against any measure preventing freedom of movement, but it also encourages the state to create institutional guarantees for the freedom of movement in order to prevent discriminatory practice.³⁷³ According to the opinion of the Human Rights Commission within the Constitutional Court of BiH, for establishing that there is a violation of freedom of movement it is not necessarily required that a measure should have a discriminatory character. It is sufficient that the limiting measure burdens one group more than another even if such differential treatment would not result in a discriminatory factual state.³⁷⁴

Abolition of customs duties in the trade business between the Entities is a prerequisite for the creation of a single market. Therefore, it is not only that customs duties have been forbidden, but it also includes all other restrictions in the turnover of goods within the state, which might be imposed by the State or by any other lower level of authority. The same rule applies to the restrictions concerning quantity or any other measure that would have such an effect, including all discriminatory levies or practices.³⁷⁵ In this respect, it is irrelevant whether the legislative authority,³⁷⁶ the administration³⁷⁷ or the judiciary³⁷⁸ are responsible for restriction of free movement. When it comes to excises on sale, if it happens that both the seller from one Entity and ultimate purchaser from the other Entity are obliged to pay excise on the same goods, it will mean that a prohibited administrative measure relating to restriction of goods’ movement is in place. This rule applies even when the seller, by submitting proof that the excise was paid by the purchaser, is entitled to make a request for return of the paid excise. The excise should be paid by the ultimate consumer. Therefore, it is forbidden to request payment of excises from the seller who sells his goods in the other Entity.³⁷⁹ Every person, through the ordinary judiciary, may reach the decision granting him the exercise of the right to freedom of movement for that is a directly applicable right.³⁸⁰