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week 2/lecture 4/5: the free movement of goods - Coggle Diagram
week 2/lecture 4/5:
the free movement of goods
Economic integration
:star: as we move through these concepts, the rate of integration increases, along with ambitiousness:::
free trade area
= prohibition of customs duties and quotas between participating States in this area (most basic form). This means that, at least with respect to goods and products, there are two elements involved;
the abolition of customs duties between states
the abolition of quotas
ALL
those who participate in this free trade area abolish or stop these practices; sometimes immediately, but in most cases this is phased out. This involves losing some money, but at the same time the produces inside your country can export without paying the other participants to do so (making them more competitive and increasing their markets).
customs union
= prohibition of customs duties and quotas AND common customs tariff (CCT). This essentially has all of the elements of a free trade area, but with CCT; this is a regime for customs for countries outside of the customs union (those who do not participate). A customs union would mean that you can no longer have free trade agreements that you negotiate yourself with other countries
Internal Market
= no customs duties/quotas + CCT + free movement other factors of production. This again consists of all the elements of a free trade area and customs union, all together with additional free movement of production and services, establishment, capital, workers etc. The EU most definitely has this.
economic union
= no customs duties/quotas + CCT + free movement of other factors of productions + harmonisation of monetary and fiscal policy. This means that participating countries also have a common currency, central bank and the budgets of these countries are harmonised and coordinated, subject to the same rules etc. Parliaments of these states are no longer allowed to completely independently set their fiscal policy
Free movement of goods
This consists first of the removal of customs duties (including CEE), and also the removal of quantitative restrictions, including measures having equivalent effect to quantitative restrictions, which include;
mandatory requirements (Cassis)
derogations
post-cassis jurisprudence and post-post cassis jurisprudence (Keck)
Custom duties and Charges having equivalent effect to custom duties (CEE)
:checkered_flag: Article 28(1) TFEU:
"The Union shall comprise a customs union which shall cover all trade in
goods
and which shall involve the
prohibition between Member States of customs duties on imports and exports
and of all
charges having an equivalent effect,
and the adoption of a common customs tariff in their relation to third countries."
:checkered_flag: Article 30 TFEU:
"Customs duties on imports and exports and charges having equivalent effect shall be
prohibited
between Member States"
This is directly prohibiting the 27 member states from introducing any customs duties on imports and exports and charges of a similar nature. Technically, this appears a treaty, but the member states put this into the 'treaty' itself by agreeing to it.
Customs duties
What is the definition of 'goods' in the treaty? What about 'charges having equivalent effect to a customs duty?'
Goods:
:red_flag: Case 7/69, "Arts Treasures" (official name is
Commission v Italy
) Enforcement case:
:checkered_flag: Article 28 TFEU covers "all trade in goods"
Italy imposed a charge on the export of works of artistic value (unusual; usually imposed on an import rather than export). Italy argued that arts treasures are not covered by the notion of goods in Art.28
ECJ disagreed with Italy and formulated a broad definition of 'goods' to include:
"products which can be valued in money, and which are capable of forming the subject of commercial transactions"
As the works of art had a commercial value (Italy had even valued them for the purposes of imposing the duty), they came within the scope of Art.28
:red_flag: Case 110/05 - Other Commission v Italy:
concerned an italian prohibition on the towing of trailers by motorcycles and mopeds. The prohibition applied even where the motorcycle or moped had been specifically designed for this purpose.
what did the court conclude?
that the italian prohibition on the towing of trailers by these vehicles was justified on the grounds of public safety
that measures adopted by MS with the object of effect of treating products coming from other MS less favourably than domestic products were to be regarded as MEEQR on imports
Goods in free circulation (Art 28)
"The [...] shall also apply to products originating in [MS] and to products coming from third countries which are in free circulation in [MS]."
:star: This is essentially a concept whereby all products that are produced in one of the member states and to goods that are from outside the EU
:checkered_flag: Article 29:
"products coming from a third country shall be considered to be in free circulation in a MS if the import formalities have been complied with and any customs duties or charges having equivalent effect which are payable
have been levied in that MS
and if they have not benefited from total or partial drawback of such duties or charges"
:star: This is saying that where a good is coming from outside the EU (ie. China) into a country inside the EU, all customs duties must have been paid. So, from that moment on, the good is now in free circulation without having to pay customs duties as if it was produced in the member state (only have to pay the duty once)
charges having equivalent effect (CEE): background
in practice there are no blatant customs duties anymore
CEE are the measures that occur in practice
as there is no definition in the TFEU the jurisprudence of the Court of Justice is vital
:red_flag: Statistical Levy case 24/68, 'Diamond Workers case'
ECJ:
'[...] any pecuniary charge, however small and whatever its designation and mode of application, which is imposed unilaterally on domestic or foreign goods by reason of the fact that they cross a frontier, and which is not a customs duty in the strict sense, constitutes a charge having equivalent effect[...]'
'[...] even if it is not imposed for the benefit of the state, is not discriminatory or protective in effect and if the product on which the charge is imposed is not in competition with any domestic product.'
:star: here, we have an extremely wide notion of the charge having equivalent effect to a customs duty
NO rule of reason for customs duties and CEEs
no exceptions from the prohibition, no justifications such as public security, policy or health in the TFEU;
once you are covered by this regime of Art.30, you are covered by the prohibition and cannot continue with that practice
No public interest grounds based on case law of the ECJ
Entirely different: quantitative restrictions and MEEQRs
:star:
member states of the EU have essentially, under art.30, no more sovereignty over imposing customs duties (they are completely forbidden), and so it is extremely integrated
Internal taxation:
:checkered_flag: Article 110 and :red_flag: Commission v Belgium [1987]
this case demonstrated that even a discriminatory measure may escape the prohibition of the second paragraph of what is now article 110 TFEU, where the tax difference as an element in the overall price is simply lost in the noise, producing no protective effect
:star: here, instead of handing over all of their sovereignty to the EU, they have hardly done so, and remain almost entirely sovereign in this aspect
"No MS shall impose, DIRECTLY OR INDIRECTLY, on the products of other MS any internal taxation of any kind in excess of that imposed directly or indirectly or similar domestic products"
"
Furthermore, no MS shall impose on the products of other MS any internal taxation of such a nature as to afford indirect protection to other products"
:!: so, as long as the internal applies equally to domestic and non-domestic goods, you can impose whatever tax you want (almost entirely within the competence of the MS)
:!?:
only crucial question is whether the tax discriminates between domestic and non-domestic goods
(lec. 5)
prohibition of quantitative restrictions and MEEQRs
:checkered_flag: Article 34 TFEU (formerly art.28/30 EC):
"Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between MS"
this is contrasted to customs duties in A.30
:!: court has always been firm in stating that there is no de minimum rule in elation to the free movement of goods, which applies just as much to 34 as to the prohibition of charges having equivalent effect to custom duties :!:
:checkered_flag: Article 35 TFEU (formerly 29/34):
"Quantitative restrictions on exports, and all measures having equivalent effect shall be prohibited between member states"
these could easily be merged into one Article
in reality, it is A.34 that is the more important because normally, states will not restrict the export of their goods, but are more interested on regulating goods that come into their markets
Why is there limited case law on A.34?
this is because all of the case law on restricting imports is pre-2010 (Lisbon Treaty) which changed it to A.34.
Older judgments refer to previous versions of the prohibition - exactly the same thing
quantitative restriction: definition
any measure of a MS that restraints the import, transit or export of a certain good [...] according to quantity or value , as provided by :red_flag: Case 7/73, Geddo)
:!:
"according to quantity or value"
is the most important part of this definition! It specifies the rest of the definiton and completes it
i.e. 'imports of butter into Sweden from IRL is limited
to 1 million tons a year
a clearer definition is not necessary because the notion of *"measure having equivalent effect to a quantitative restriction" (MEEQR) INCLUDES the quantitative restriction in the strict sense
in 'real life' a quantitative restriction in the strict sense is very rare
- MS knows what it is and that it is prohibited so they don't really even try it on with a blatant and clear (easily detectable) restriction
MEEQR: Examples in A.2 Council-Directive 70/50/EEC
minimum or maximum prices specified for imported products; a member state is no longer allowed to fix a minimum or maximum price for a good that is imported from another MS
conditions in respect of packaging, composition, identification, size, weight etc. which only apply to foreign goods; a MS can no longer set down trade rules that say how particular products have to be packaged, what ingredients must be used etc. because it is now a MEEQR under A.2
limiting publicity in respect of imported goods as compared with domestic products; i.e. we would say that in Germany, as long as the car is produced there you can use any form of publicity, but if the car is produced in France, you cannot say that it cannot be advertised just because it is imported
making it mandatory for importers of goods to have an agent in the importing MS
definition
:red_flag: Case 8/74, 'Dassonville'
Dassonville was a company which imported Scotch Whiskey from France to Belgium without having a certificate of authenticity required by Belgian Law. Such a certificate was difficult to obtain (in Scotland) when a good was already in free circulation in a third country
PROBLEM: did the Belgian requirement constitute a MEEQR? If it is, it comes under A.34 = prohibited/violating the EEC treaty (as it was at the time) and so Belgian's couldn't require the certificate anymore
This provided us with the Dassonville formula
:
"All trading rules enacted by Member States which are
capable
of hindering,
directly or indirectly
,
actually or potentially
,
intra-[Union] trade
are to be considered as
measures having equivalent effect to quantitative restrictions
"
This remains as the key definition of MEEQRs even after the attempt at categorisation of measures having equivalent effect in the case of :red_flag: Case 110/05, Commission v Italy [2009]
There is no requirement that there be an
intention
on the part of the national authorities concerned to hinder trade, despite many judgements purporting this :!:
HOWEVER,
with regards to de minimum rule, Commission stated that
"a prohibition on the use of a product in the territory of a MS has a considerable influence on the behaviour of consumers which, in turn, affects the access of that product to the market of the MS"
:star: this is not an introduction of de minimum but merely demonstrates that the effect is not hypothetical or so remote that it is unrealistic -
do note that remoteness IS NOT a form of de minimus, this is perhaps just blurring the lines a bit
, and this remoteness test was rejected in :red_flag: Case 67/97, Bluhume [1998];
this case demonstrates that even if the measure covers only a small part of national territory, it can still fall foul of article 34 TFEU = thus no de minimum approach in relation to the internal market
5 points to emphasise
the measure only has to be
"capable of hindering intra-Community trade"
(effect)
the measure does NOT have to be
discriminatory
("All trading rules")
the measure does not have to affect the import of the good (
circumstances of sale
)
the measure has to be a
State measure
or attributable to the state
Changes
: the post-Cassis jurisprudence
Point 1: effect of the MEEQR
the measure only has to be "capable of hindering intra-[union] trade"
:star: this means that the
effect
does not have to be proven. The mere possibility of an effect on intra-[union] trade is sufficient
this is one of the points which makes it quite easy to handle the Dassonville formula because what it ultimately is is an extremely wide definition of a MEEQR
Point 2: discrimination?
the measure does not have to be discriminatory ("All trading rules")
A.34 is therefore MORE than a prohibition of discrimination against 'foreign' goods
the objective is the
total liberalisation
of the movement of goods, meaning that it is exactly what the treaty wants to achieve in this article, but it does not take power away from those MS in all thinkable cases, it's just because there can be certain situations (danger to health or public security) that they can regulate trade
all measures with a restrictive effect need to be
justified
Point 3: only imports?
the measure does not have to affect the good crossing a border
the formula is, again, extremely wide
also included are measures concerning the circumstances of sale (origin markings on goods, packaging, promotion)
Point 4: state measure
the measure has to be a state measure
the measure does NOT have to be legally binding, as per :red_flag: Case 249/81, 'Buy Irish'
when the acts of a private entity are attributable to a State they are also covered ( :red_flag: 'Buy Irish' - trying to make people buy Irish products, but this could be seen as a MEEQR)
acts of a private persons or entities are also attributable when the State has a duty to stop them, as per :red_flag: Case 265/94, 'French Farmers':
stronger tradition of civil unrest in France, especially coming from the French Farming community
these farmers are regularly concerned about imports on agricultural products from other member states and may wreak havoc on those exports from their country = barrier to trade
therefore, this act was seen as a MEEQR. The French tried to argue that these people had nothing to do with the French state and that they were private acts/entities, but the CoJ didn't accept this (reasoning above)
Point 5: change of jurisprudence
NOTE: by the beginning of the 1990s, A.34 TFEU was almost a
universal defence
of companies against any state measure in another MS affecting their trade activities
as soon as a MS took a measure that would restrict a trader's interest from another MS, they would apply A.34 to stop this happening
:star: Article 34 as a very powerful weapon
1993: in :red_flag: Case 367/91, 'Keck' the ECJ changed direction
:red_flag: Commission v Italy [2009]
On some occasions, the court states that a particular provision
"constitutes a measure having equivalent effect to quantitative restrictions on imports within the meaning of Article 34 TFEU, unless it can be justified objectively"
and
"such regulations have the effect of hindering the access to the domestic market in question for those goods and therefore constitute, save where there is a justification pursuant to article 36 TFEU or there are overriding public interest requirements, MEEQRs on imports prohibited by article 34 TFEU"
could be seen as being 'wrongly expressed'
compromised judgement; inconsistency of application to italian motor cycles and foreign registered motors and their application to the prohibition
a measure that is accepted as being 'justified' does not cease to be a MEEQR; it merely ceases to be prohibited. If it were the other way round, there would be no need for :red_flag: Keck, in which the court found that selling arrangements which fulfilled two conditions were, contrary to previous case law, outside the scope of measures hindering, directly or indirectly, actually on potentially, trade between MS for the purposes of the Dassonville case law.
...
In Commission, having confirmed the Dassonville basic principle, the court set out the background to what is now article 34 TFEU, noting that it reflected the obligation to respect the principles of non-discrimination and mutual recognition of products lawfully manufactured and marketed in other MS, as well as the principle of ensuring free access of EU products to national markets.
The court mentioned 3 categories of MEEs:
measures treating imported products less favourably than domestic products,
equally applicable requirements made of products in the absence of harmonisation at EU level,
any other measures which hinder access of products originating the other MS to the market of a MS
This categorisation is merely illustrative, and not intended to be exhaustive.
a majority in the Grance Chamber was (rightly) willing to uphold the line taken earlier in :red_flag: Commission v Portugal, by finding measures governing the use of goods to be caught by the basic principle in Dassonville