A more recent version of these Free Movement Of Goods 2 Non Fiscal notes – written by Cambridge/Bpp/College Of Law students – is available here.
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EU Law: Free Movement of Goods 2 - Non-fiscal Key points to learn
? Understand the prohibitions on quantitative restrictions, and on MEQRs under Art 34 TFEU (imports).
? Distinguish between distinctly applicable and indistinctly applicable MEQRs. (they have different defences).
? Understand the defences to Art 34 TFEU.
? Understand when selling arrangements fall outside Art 34. Non-fiscal measures: key articles??
Article 34 deals with imports Article 35 deals with exports. Article 36: deals with one form of defence, derogations, justifying a restriction. What are non-fiscal barriers? Include: Bans; quotas; restrictions on sales; rules specifying physical characteristics of goods; even rules regulation promotion of goods.
Who is bound by these articles?
? Public Bodies: The State is bound by Articles 34 & 35. So typical State bodies (exec, legislature , judiciary).
? But also, for Art 34, quasi-Public bodies : R v Royal Pharmaceutical Society of GB, ex p. API: this was held to be bound by Article 34, a quasi-public body, the Royal Pharmaceutical Society. The body responsible for regulating the pharmaceutical profession in the UK. So measures adopted by professional bodies, on which a MS has conferred regulatory powers, may fall under Art 34.
? Purely private bodies and individuals remain outside the Article, but 2 points: o Commission v Ireland ('Buy Irish'): MSs cannot circumvent their obligations under Art 34 simply by relying on a private company. In this case, the Irish gov had established a company called Irish Goods Council to promote Irish goods launched by the Irish gov. The gov established the company, appointed its management, granted it public subsidies, defines its aim. EC: Irish gov could not rely on the fact the campaign was conducted by a private company. Campaign was in breach of Art 34 (as influenced traders' choice). o Commission v France ('Spanish strawberries'): MS will breach Art 34 where it has failed to take necessary &
appropriate measures to prevent the free movement of goods being obstructed by private individuals. This case: ECJ found that, for over a decade, French authorities had failed to take adequate measures to prevent certain groups of French farmers engaging in violent 1
campaigns directed at agricultural products from other MSs, eg strawberries from Spain, tomatoes from Belgium. Eg attacking lories, threatening wholesalers etc.
Article 34 TFEU
? All article 34 actually says: "Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States."
?????Breaks down into 2 prohibits: o 1. Quantitative Restrictions o 2. Measures Having Equivalent Effect (MEQRs).
1. Quantitative Restrictions
? Defined in Geddo:
? Geddo: measures which amount to a ' . . . a total or partial restraint . . . of imports, exports or goods in transit'.
? What does this actually mean? It's a restriction on the quantity of goods that can be imported into the State. It's about how many units you can import into the state. The ultimate quantitative restriction would be a ban: you can import no units at all. Or quotas: a set number that can be imported. Ban or quota. o Can be a ban: R v Henn & Darby: Ban on importation of pornographic material into UK. o Can be a quota: International Fruit. A licencing system that only allows importers to import a specific quantity of a product.
? A QR causes the most harm to free movement---can only be lawful if one of the derogations in Art 36, an exhaustive list.
?????Egs of MEQRs: national rules that regulate the physical requirements that a product has to satisfy, eg shape or packaing, before it may be sold.
?????2 sources to consider: 1. Directive 70/50; 2. ECJ definition in Procureur du Roi v Dassonville.
?????1. Directive 70/50 (only applies to pre-EEC Treaty measures), EEC Treaty came into force in 1958: o Only applies to national measures in place at the time the EEC Treaty was signed (Rome, 1957). o Creates a distinction between 2 types of measures: o 1. Distinctly applicable MEQRs, Article 2: measures which do not apply equally to domestic and imported goods. They discriminate against imports (eg, Article 2 Directive 70/50---national rules that demand higher standards of imported than domestic goods).
2 o 2. Indistinctly applicable MEQRs, Article 3: measures which apply equally to domestic and imported goods. o Temporal limitation built into the Directive: only applies to preEEC treaty measures. So doesn't apply to all the measures enacted after EEC treaty date (1957). Those measures would have to be dealt with by Article 34 itself.
?????So given temporal limits to above, ECJ had to come up with its own definition of MEQRs, in Dassonville.
?????2. Dassonville formula---ECJ definition in Dassonville (Procureur du Roi v Dassonville ): 'All trading rules enacted by MS which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade' are to be considered as MEQRs. o VERY WIDE DEFINITION, includes even 'potentially'. o It does not define MEQRs in terms of distinct or indistinct applicability. Simply requires that the trading rule must be capable of hindering trade between MSs to be an MEQR. o Applies to indistinctly applicable measures (Cassis de Dijon)---Dassonville definition obviously caught distinctly applicable measures; but was not initially clear whether ECJ would consider indistinctly applicable measures as capable of hindering trade. This was settled in Rewe-Zentral AG v Bundesmonopolverwaltung (1979) ('Cassis de Dijon')---an indistinctly applicable measure (relating to alcohol content) was an MEQR prohibited by Art 34. o So the distinctly applicable/indistinctly applicable distinction remains important, because of the different defences for each category (see below).
? NB, only 'potential': the Dassonville formula specifies that the hindrance to trade can be indirect and/or merely potential. Hence ECJ made clear in Buy Irish that there is no need for trade between MSs to have actually been hindered, so long as there was the potential for this to occur.
? NB, must hinder trade between MSs: Art 34 won't apply to hindrances that are purely internal, and no potential for it to affect trade between MSs.
? Includes 'all' trading rules--Wide interpretation of 'measures' by ECJ: o Not just binding measures, includes eg promotional campaign (Buy Irish); failure to prevent violence (Spanish Strawberries). o Commission v France ('Spanish Strawberries'): failure of France to take measures to prevent private individuals using violence to obstruct free movement of goods was held to be an MEQR. This included failure to mount criminal prosecutions, and failure of French police in some instances to be present despite being forewarned.
3 Case examples of distinctly applicable MEQRs (i.e. do not apply equally to domestic and imported products)---widening concept of a 'measure':
? (a) Imposing additional requirements on imported goods : Firma Denkavit. Milk-based Feeding-stuffs of animal origin, could only be imported into West Germany if they satisfied two conditions: (1) had to produce a certificate from exporting MS that had undergone a heating process; (2) samples were subject to an inspection by West German veterinary institute. Both held to be MEQRs. Inspections for foreign products, which domestic products don't have to undergo. [[ECJ left it to national court to determine whether the requirements could be justified under Art 46 derogation]].
? (b) restricting the channels through which goods can be imported, Dassonville, re certificate of origin for imported goods eg Scotsh whiskey: restricting channels through which imports can be brought into the country (even though the measure doesn't apply to domestic products). Dassonville itself involved Scotch whiskey (which only comes from Scotland). To sell them in Belgium, you needed certificate of authentication that it was authentic Scotch whiskey. But Dassonville's had got their whiskey from France, they forged their certificate. Their defence was that the requirement for certificate fell under Article 34, hindering imports. ECJ upheld this, said it hindered imports. ECJ: the requirement to obtain certificates of origin for imported goods was an MEQR, as the certificates could only be obtained with great difficulty if the goods were not imported directly from the country of origin.
? (c) National rules giving preference to domestic goods o Commission v Ireland ('Buy Irish'): if you are encouraging domestic goods, you are disadvantaging imported goods. Irish Gov promotion campagn to promote Irish goods. Irish gov argued that Art 34 was not concerned with promotional campaigns, only with binding measures. But HELD to be an MEQR. So Art 34 not confined purely to binding measures adopted by a MS, but extended to a promotional campaign launched by the Gov of that MS to promote Irish products, which had a potential effect comparable to that resulting from binding measures, by potential of influencing the conduct of traders and consumers in Ireland. o NB: Irish gov pointed out that the proportion of imported goods sold in Ireland had actually increased! But didn't matter, because the campaign still had a potential to affect the volume of imports into Ireland from other MSs. o Irish Souvenirs: if a souvenir sold in Ireland was not made in Ireland, they had to have a label (saying 'foreign') indicating they were made abroad, and the country it was made in. Irish souvenirs didn't have to have a 4
label. Held to be an MEQR. ECJ: buyers didn't need to know where the particular product came from. It added that there was nothing in Art 34 to stop domestic manufacturers marking a product with the place of manufacture. So in these cases, the rules don't apply equally to domestic goods and imports, disadvantaging the imports.
Exclusive rights for foodstuffs of a particular origin
? EU now has a scheme for ensuring that agricultural products &
foodstuffs which originated from a particular place/region, and are produced there, retain the exclusive rights to be identified with that place/region: First established in Ref 2081/92, now governed by Regulation 1151/2012. o Provides for granting of PGI status (Protected Geographical indication)---protects a geographical source, eg Scottish beef; o and PDO status (Protected Designation of Origin) which protects a particular method of manufacture, eg Blue Stilton cheese. o These are granted to products whose quality/characteristics are essentially attributable to their geographical origin. Eg Parma ham, feta cheese, Kalamata olives, Dortmunder Bier, and Newcastle Brown Ale. o MSs are required, under Reg 1151/2012, to ensure that only products which have been granted PGI or PDO status are able to use the product name protected by that status. Case examples of indistinctly applicable MEQRs (these apply equally to imports and domestic goods)
? Remember, under directive 70, Dassonville didn't draw a distinction between distinctly and indistinctly applicable MEQRs.
? But court in Cassis de Dijon confirmed that indistinctly applicable MEQRs can be prohibited under Article 34 (if they are discriminatory in effect).
? Cassis de Dijon, confirmed applicability of Art 34 to indistinctly applicable MEQRs: law in West Germany, minimum alcohol content required of 25% for fruit liqueurs. Cassis de Dijon, blackcurrant liqueur made in France, was below this alcohol content, so couldn't be sold lawfully. o ECJ: the rule was an MEQR, said it hindered trade. It was not distinctly applicable because it applied equally to domestic and imported liqueurs; but it had the effect of impeding the importation of French cassis. o Reaches conclusion by imposing the first principle: the presumption of mutual recognition. Hence, Cassis de Dijon, because it was produced and marketed lawfully in
5 ?France, was entitled to be sold in Germany without further restrictions. First Cassis principle: Presumption of Mutual Recognition---
forces each state to recognise and trust the regulatory regimes enforced in other states: o 'There is . . . no valid reason why, provided they have been lawfully produced and marketed in one of the MSs, alcohol beverages should not be introduced into any other MS'. o Goods lawfully in circulation in one MS can be marketed and sold in other MSs. So long as goods are manufactured and sold in one MS, all other MSs have to allow the goods to be sold there without any further restrictions. o Why? Rationale: Dual Burden on importer. If you manufacture and sell goods in one state, you have to comply with that State's regulatory regime. This will increase your costs, imposes a burden on you. If you import those goods into a second state, you will have to comply with its regulatory regime as well. That imposes a second burden on you, you will encounter a dual burden. The importer will be at a disadvantage versus domestic producers who only have a single burden. o So principle of mutual recognition: only requires imported goods to comply with regulatory regime of their home MS. So direction that if importers satisfy regulation regime in their home state, they don't have to satisfy the regulatory regime of another state they import into. NB, second Cassis principle is 'mandatory requirements', discussed below.
Defences?If you are dealing with a quantitative restriction, or an MEQR, that's not the end of the story: there are defences, if there is a legitimate reason for doing so. Two types of defences, called derogations;
1. Article 36 derogations: These derogations are available to all types: (1) quantitative restrictions; (2) distinctly applicable MEQRs; and (3) indistinctly applicable MEQRs.
2. Mandatory requirements: Indistinctly applicable MEQR derogations only: So different defences, hence ned to be able to distinguish between distinctly applicable & indistinctly applicable MEQRs.
Defences 1. Article 36 Derogations (applies to all types---applies to QRs, dis app MEQRs and indist app MEQRs)---this is an exhaustive list
6 ? ?? ? Grounds:
1. Public morality
2. Public policy: usually criminal.
3. Public security
4. Protection of health & life of humans, animals, plants
5. Protection of national treasures possessing artistic, historic or archaeological value;
6. Protection of industrial & commercial property
? ?? ? AND, PROVIDED that: o Not arbitrary discrimination. o Not disguised restriction on trade. o Is proportionate (the restriction must be proportionate---i.e. (1) 'necessary and suitable' to attain the objective; and (2) must not go further than is necessary)). Art 36: Public morality (and requirement of Not arbitrary discrimination)
?????Lawful: Henn & Darby: a UK ban on pornographic magazines and films. This was a quantitative restriction (a ban). o ECJ: said justified on grounds of public morality, public morality derogation of Art 36. o ECJ: 'it is for each MS to determine in accordance with its own scale of values and in the form selected by it the requirements of public morality'. o Not arbitrarily discriminating against imported goods, as there was no lawful trade in such goods in the UK.
?????CF Arbitrary: Conegate v HM Customs & Excise: love dolls being imported into UK. UK banned them (a quantitative restriction). UK tried to rely on public morality grounds. This time it failed. Because such dolls could be lawfully manufactured in the UK itself. ECJ: so there was no rational basis for insisting that imports of these dolls had to be prevented in order to protect public morality. The ban arbitrarily discriminated against imported goods.
?????So arbitrary discrimination if that product is legally allowed to be produced domestically in the MS itself, thus discriminating arbitrarily against imported products of the same nature Art 36: Public policy
? This derogation is very narrowly construed by ECJ.
? Only successful once, R v Thompson: (concerned Article 35), deals with restrictions on exports. Concerned a ban in the UK on export of silver coins, to prevent them being melted down. ECJ: accepted that the ban on exports stemmed form the need of the State to protect the right to mint coinage---so ban justified on ground of public policy as it involved a fundamental interest of the State.
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