A more recent version of these Free Movement Of Goods notes – written by Cambridge/Bpp/College Of Law students – is available here.
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Free Movement of Goods _______________________________________________________
The Internal Market Treaty Basis Art 3??
TEU 3(1): 3(2): 3(3): o
Union's aims of peace & wellbeing for its people an area of 'freedom, security and justice without internal frontiers' 'the Union shall stablish an internal market': 'It shall work for the sustainable development of Europe based on balanced economic growth and price stability, o 'a highly competitive social market economy,' o 'aiming at full employment and social progress,' o 'and a high level of protection and improvement of the quality of the environment. ' o 'It shall promote scientific and technological advance.' One of the most basic integration mechanisms is a market. A customs union is a more advanced structure of integration, with internal policies and customs for foreign trade. An internal market is the most sophisticated form, with internal & external laws.
Art 26 TFEU
? Competence to adopt measures to establish the internal market - the Union's institutions will actually intervene & introduce conditions which will lead to an internal market. Not just the removal of obstacles, but positive intervention. Art 27 TFEU
? 'Commission shall take into account the extent of the effort that certain economies showing differences in development will have to sustain for the establishment of the internal market and it may propose appropriate provisions.' Art 28 TFEU
? Customs union applying to products from MS & third countries Art 29 (ex Article 24 EC)
? Free circulation of products after import formalities o Once a product has been imported from a 3rd country to a MS, and has been subject to customs & trade rules in that MS, it is assimilated to domestic products
? It doesn't make a difference whether it was produced here or another country Art 30 TFEU (ex Article 25 EC)
'Customs duties on imports and exports and charges having equivalent effect shall be prohibited between Member States. This prohibition shall also apply to customs duties of a fiscal nature.' Art31 TFEU (ex Article 26 EC)
? 'Common Customs Tariff duties shall be fixed by the Council on a proposal from the Commission.' Art 32 TFEU (ex Article 27 EC)
? Guiding aims for the Commission: o Promoting trade o Developing competition o Supply of raw materials & semi-finished goods - avoiding distorting conditions of competition in this regard o Avoiding serious disturbances in MS economies
Harmonisation of the Market Emerging themes:
? Incremental, evolving set of principles: going from broad to narrow to broad
? Drastic principles of Dassonville & Cassis de Dijon (below) must be seen in their political contexts: the Commission was finding it very hard to adopt legislation (and when they were successful it was adopted on the lowest common denominator), so the CoJ took it upon itself to implement EU objectives
? Deregulatory measures (creation of competition): by being forced to accept other MS's standards, the market is being deregulated
? The role of national courts: the CoJ is viewed as deeply political and there can be conflict, however there is often complicity between the domestic &
EU courts through preliminary references
? Limited trade freedom: Art 36, for instance, defines that it is permissible to restrict free movement to protect a non-economic interest. Note also the inventions of CoJ - mandatory requirements This is negative harmonization i.e. national rules have been harmonized by removing obstacles. It works from the bottom up; on an ad hoc basis with the CoJ gradually removing restrictions. Positive harmonization is not from the CoJ but from the legislature. It is from the top down. The implementation of one set of rules which stretches throughout the EU would get rid of the need for mutual recognition. However this is a bold political move (especially considering the EU's tumultuous present condition):
? This is both deregulatory and reregulatory: it removes 28 legal structures, but replaces them with one
? In order for it to work, it requires the Union to pick and choose regulations worthy of protection and make sweeping legislative changes that may affect different national environments differently
? Two practical difficulties: o Substantive limitations: the Union may only adopt measures in an area where they have competence
Procedural constraints: how to implement measures & at what standard? QMV? Normal legislative procedure? At present our textual basis in Art 115 TFEU gives the Union power to harmonise the free market unanimously
? Robert Schuman, 9 May 1950: "Europe will not be made all at once, or according to a single plan. It will be built through concrete achievements which first create a de facto solidarity. The coming together of the nations of Europe requires the elimination of the age of old opposition of France and Germany...The pooling of coal and steel production should immediately provide for the setting up of common foundations for economic development as a first step in the federation of Europe. ... The solidarity in production thus established will make it plain that war between France and Germany becomes not merely unthinkable, but materially impossible'.
? COM (86) 310 final, Commission White Paper on the Internal Market, "The reason for getting rid entirely of physical and other controls between Member States is not one of theology or appearance, but the hard practical fact that maintenance of any internal frontier controls will perpetuate the costs and disadvantages of a divided market.' Art 114 TFEU (ex Article 95 TEC)
? Competence for EP & Council to adopt measures in order to establish the internal market using the ordinary legislative procedure
? This uses the ordinary legislative procedure via QMV - they have the competence to establish the internal market o Para 1: most fundamental change as this makes it much easier o Para 2: exceptions remain in the competence of Art 115 (unanimity), as these are the most sensitive elements of market integration o Para 3: limitations on the opening up of the market; this provision takes note of the non-economic interests that make MS cautious about unrestricted trade o Para 4: potential exemptions for MS to maintain some national restrictions o Paras 5-6 (added at Amsterdam): extends previous para 4 exceptions & leaves ultimate adjudicative powers with the CoJ Art 115 TFEU (ex Article 94 TEC)
? 'Without prejudice to Article 114, the Council shall, acting unanimously in accordance with a special legislative procedure and after consulting the European Parliament and the Economic and Social Committee, issue directives for the approximation of such laws, regulations or administrative provisions of the Member States as directly affect the establishment or functioning of the internal market.' Naturally, in the 50s-70s there was not much legislation going on according to the special legislative procedure; this threshold being too high to push through directives in any real sense. Thus the CoJ took it upon itself to give traders
access to the free market in practical terms, on an ad hoc basis and rooting principles therefrom. (Cassis de Dijon below) Tobacco Advertising Case Study Directive 98/43 effectively banned tobacco advertising. At the time 8 MS were tobacco producers. This was adopted by majority voting. Austria & Germany voted against; Spain & Denmark abstained; and UK voted in favour. Germany then challenged the directive under an annulment action: Germany v European Parliament and Council (Tobacco Advertising) The argument for the directive was that there was inconsistency in the Union on tobacco advertising, and traders would be attracted to those MS with the least onerous laws in that regard, and this would distort the market Germany said that the measure, at its root, was actually about public health: the Union has no competence to adopt measures on public health Held: it upheld the provision; but also suggested that it would be unrealistic to suggest the measure would not affect public health. It confirmed that Art 114 does not give a general power to regulate the market: rather, the provision is there to:Establish the internal marketTo improve the functioning of the internal market
This can be done by adopting harmonising measures that eliminate obstacles to the internal market; these obstacles may be actual, or potential (but future obstacles must be likely). Thus different rules across MS must be proved to be obstacles i.e. significant distortions. This has an important constitutional dimension: it limited the Union's power, and also establishes the CoJ as the final arbitrator of the Institutions & MS. Thus, the Court held that, though advertising in magazines had a direct effect, the advertising in poster form was too remote an effect on the market, and therefore the Union had no competence to adopt the measure. Accordingly they annulled the measure. British American Tobacco Argued that the Union had no competence to adopt this measure Held: measure was perfectly legal & within competence of Art 114. They held that there was growing public concern regarding tobacco health risks; it would be likely to affect the market when MS responded to such public concerns, and such responses would likely be inconsistent This is a different approach: no references were made to the limits of conferred competence. Rather it focusses on principles of significant market distortion, and
uses the information given by the legislature to justify this i.e. the legislature says there is growing public concern, and this 'fast' forms part of the CoJ's justification Swedish Match Banning the sale of 'snus' (oral tobacco) because there were growing scientific reports connecting it with throat cancer. Swedish Match challenged the national implementation of the directive. Held: within the Union's competence to ban this type of tobacco. Many MS had already banned it and many more were about to; so Sweden's continuing supply would likely distort the market.
? "the Community legislature must be allowed a broad discretion in an area such as that concerned in the present case, which involves political, economic and social choices on its part, and in which it is called on to undertake complex assessments. Only if a measure adopted in this field is manifestly inappropriate in relation to the objective which the competent institutions are seeking to pursue can the lawfulness" of this measure be assessed" Germany v European Parliament and Council Held: the diversity of the MS' approach to tobacco advertising bans warranted the intervention of the Union, and ad hoc negative harmonisation would be too slow.
? "Recourse to Article [114 TFEU] as a legal basis does not presuppose the existence of an actual link with free movement between the Member States in every situation covered by the measure founded on that basis. As the Court has previously pointed out, to justify recourse to Article [114 TFEU] as the legal basis what matters is that the measure adopted on that basis must actually be intended to improve the conditions for the establishment and functioning of the internal market"
Fiscal Restrictions on Trade Fiscal restriction = usually things that traders will be required to pay. Customs & Duties Art 30 TFEU is primary legislation enacting the prohibition against customs duties & charges of equivalent effect & Van Gend en Loos established that Art 30 is directly Definition of 'customs charges' and charges of 'equivalent effect' Commission v Italy (re: art treasures) Italian official imposing customs on art treasures. Held: the court clarified the following aspects of the provision:
? Scope: Italian government argued that this provision wasn't engaged because art is too important. Where the article refers to 'goods', this
means any product which can be the subject of a commercial transaction. The definition of goods is broad.
? Purpose: Italian government argued that by imposing duties it had a worthwhile purpose in mind. The court held that the purpose of the customs duty is irrelevant
? Exceptions from the prohibition rule: the court held that the article provides for no exceptions
? "the fundamental principle of the elimination of all obstacles to the free movements of goods between Member...In view of the difference between the measures referred to in Article 16 and Article 36, it is not possible to apply the exception laid down in the latter provision to measures which fall outside the scope of the prohibitions referred to in the chapter relating to the elimination of quantitative restrictions between Member States." Commission v Italy (re: statistical data levy)
? "It follows from the system as a whole and from the general and absolute nature of the prohibition of any customs duty applicable to goods moving between Member States that customs duties are prohibited independently of any consideration of the purpose for which they were introduced and the destination of the revenue obtained therefrom. The justification for this prohibition is based on the fact that any pecuniary charge, however small, imposed on goods by reason of the fact that they cross a frontier constitutes an obstacle to the movement of such goods". Sociaal Fonds voor de Diamantarbeiders v SA CH Brachfeld & Sons Belgian legislation imposing duties on diamonds, in order to protect the social pension scheme of the diamond industry. Held: the purpose of the domestic measure was irrelevant. Though the amount of money imposed was low, the court felt that this was irrelevant. Upholding a very strict approach to Art 30 NB: the court interprets a very sparse provision in very broad terms - customs touch to the very core of the ideals behind the internal market. Charges for Services Commission v Italy (re: statistical data levy) Imposed a levy to draw some stats data about trading patterns. Italian government said that this would be useful to traders: they argued that they were charging for services rendered, not customs. Held: if there was a benefit specific to a trader then he would have to pay for it. However the benefit in this situation was not specific to the trader; they had no choice in the mater. The data was only useful to the industry as a whole.
? "The statistical information in question is beneficial to the economy as a whole and inter alia to the relevant administrative authorities. Even if the competitive position of importers and exporters were to be particularly improved as a result, the statistics still constitute an advantage so general, and so difficult to assess, that the disputed charge cannot be regarded as the consideration for a specific benefit actually conferred." W Cadsky SpA v Istituto Nazionale per il Commercio Estero
Import of salad vegetables. Italian argument that they provide very clean produce in return for their charges. Held: this was not a specific benefit
? "this benefit relates to the general interest if all exporters, so that the individual interest of each of them is so ill-defined that a charge imposed in payment for this inspection cannot be regarded as consideration for a specific benefit actually and individually conferred". Bresciani v Italian Finance Administration Public health inspections argued to be needed to be held at the border, and these were charged. Held: not specific benefit and so there was no justification for the charge NB: the courts are not suggesting that states should not protect their public policy interests, but that importers should not be the ones to pay for this. Services must be:
? Specific to individual
? Not mandatory
? Proportionate Charges in accordance with EU law It is assumed that when the EU imposes a requirement, this is in the interests of the internal market, and importers will be expected to pay Bauhuis v Netherlands Held: EU imposed charges are not unilateral "but have been made obligatory and uniform" - they have not been "prescribed by each MS in order to protect some interest of its own but by the Council in the general interest of the Community" Charges relating to requirements under international law This is similarly an exception to the prohibition (see Commission v The Netherlands) Tax States have fiscal autonomy however this is combined with the EU principle of fiscal neutrality Art 110 TFEU (ex Article 90 EC)
? 'No Member State shall impose, directly or indirectly, on the products of other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products. Furthermore, no Member State shall impose on the products of other Member States any internal taxation of such a nature as to afford indirect protection to other products.' Aims of Art 110 Commission v France
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