There are 4 stages and the EU has only got to 3rd stage.
Free trade area- prohibition of customs duties and quotas between participating states.
Customs union- prohibition of customs duties, and quotas and common customs tariffs (CCT). These are normally based on value- quantative restrictions.
Common market- no customs duties/quotas and CCT and free movement of other factors of production (internal market, services and workers).
Economic union- no customs duties/quotas and CCT and free movement of other factors of production and harmonisation of monetary and fiscal policy. (This would entail common banks, budgets, interests etc, this hasnt even happened in the Eurozone.)
The internal market of the EU- free movement of goods, services, freedom of establishment, free movement of workers, and free movement of capital and payment.
Free movement of goods- removal of customs duties, quantative restrictions, mandatory requirements, derogations and post Cassis and post post Cassis jurisprudence.
Duties and charges-
A28(1) TFEU- 'the union shall comprise a customs union which shall cover trade in goods and which shall involve the prohibition between MS of customs duties on imports and exports and of all charges having an equivalent effect and their adoption of a common customs tariff in their relation to third countries.' This is the ideal of a customs union.
A30 TFEU- 'customs duties on imports and exports and charges having equivalent effect shall be prohibited between MS.' A prohibtion was unanimously decided.
The Treaty doesnt define goods or charges having equivalent effect to a customs duty. Had to go to the CJEU to find out.
Case 7/69- Arts Treasures- Italy imposed a charge on the export of works of artistic value. Italy argued that arts treasures are not covered by the notion of goods in A28 TFEU. ECJ disagreed and said that goods were 'products which can be valued in money and which are capable of forming the subject of commercial transactions.' As the works of art had commercial value they came within the scope of A28. There arent many exceptions to the definition. 'The... shall also apply to products originating in MS and to products coming from third countries which are in free circulation in MS.'
Duties and charges
Goods in free circulation A29 TFEU- '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.'
Charges having equivalent effect (CEE): background- in practice there are no blatant customs duties. CEE are measures that occur in practice. As there is no definition in the TFEU the jurisprudence of the CoJ is vital.
Quantitative restrictions: definition- any measure of a MS that restrains the import, transit or export of a certain good (according to quantity or value). Comes from C7/73 Geddo. For example cannot say only can import £9 million or a million bars off butter a year.
A clearer definition is not necessary because the notion of 'measure having equivalent effect to a quantitative restriction' (MEEQR) includes the quantative restriction in this strict sense.
In real life a quantitative restriction is the strict sense is very rare.
Examples given in Art 2 Council Directive 70/50/EEC (old instrument, demonstrations only)-
- Minimum or maximum prices specified for imported products
- Conditions in respect of packaging, composition, identification, size, weight, which only apply to foreign goods
- Limiting publicity in respect of imported goods as compared with domestic products.
- Making it mandatory for importers of goods to have an agent in the importing MS.
Case 8/74 Dassonville- D imported Scotch Whisky from France to Belgium without having a certificate of authentication required by Belgium. Such a certificate was difficult to obtain when the product was already in free circulation in a third country. This was an MEEQR.
Dassonville formula for finding MEEQR's- '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 measures having equivalent effect to quantative restrictions.'
5 points to emphasise- the measure only has to be capable of hindering intra community trade, the measure doesnt have to be discriminatory, doesnt have to affect the import of the good, the measure has to be a state measure or attributable to the state.
Definition of CEE- C24/68 Statistical Levy and 2 and 3/69 Diamond Workers- '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 custom duty in the strict sense, constitutes a charge having equivalent effect.' This is extremely wide definition and prohibition.
'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.' Hardest regime, no exceptions, justifications, no excuses.
Internal taxation- A110 TFEU- 'no MS shall impose, directly or indirectly, on the products on other MS any internal taxation of any kind in excess of that imposed directly or indirectly on 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.' This is the only way out but doesnt always work.
Tax applies equally to domestic and non domestic goods. Internal taxation is almost entirely within the competence of the MS. The crucial question is only whether the tax discriminates between domestic and non domestic goods.
Free movement of goods
Removal of customs duties (incl CEE), removal of quantitative restrictions (incl MEEQR), mandatory requirements (Cassis), derogations and post Cassis and post post Cassis jurisprudence.
Prohibition of quantitative restrictions and MEEQR- A34 TFEU (formally A28/30 EC)- 'quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between MS.' Most important. From the Treaty of Lisbon.
A35 TFEU (formally A29/34 EC)- 'quantitative restrictions on exports and all measures having equivalent effect, shall be prohibited between MS.'
Essential for Brits to sell abroad. All restrictions were decided by main 6 countries and every other one that joined understood and agreed.
Point 1- effect of the MEEQR- the measure only has to be 'capable of hindering intra Community trade.' The effect does not have to be proven. The mere possibility of an effect on intra Community trade is sufficient.
Point 2: discrimination- the measure does not have to be discriminatory ('all trading rules'). A34 TFEU is therefore more than a prohibition of discrimination against 'foreign goods'. The objective is the total liberalisation of the movement of goods. Trade as a whole is effected. 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 extremely wide. Also included are measures concerning the circumstances of sale (origin markings on goods, packaging, promotion.) This is very wide.
Point 4: State measure- The measure has to be a state measure. The measure does not have to be legally binding. (Case 249/81 Buy Irish Influenced decisions not to buy foreign goods.) When the acts of a private entity are attributable to a State they are also covered (Buy Irish). Acts of private persons or entities are also attributable when the State has a duty to stop them. (C265/94 French Farmers- stopped trucks of produce. Had a duty to establish order.)
Point 5: change of jurisprudence- 'by the beginning of the 1990's A34 TFEU was almost a universal defence of companies against any State measure in another MS affecting their trade activities there. 1993- In C367-8/91 Keck the ECJ changed direction. Not bound by precedent.
Prohibition of quantatitve restrictions and MEEQR's- A34 TFEU (formally A28/30 EC)- 'quantatitive restrictions on imports and all measures having equivalent effect shall be prohibited between MS.'
A35 TFEU (formally A29/34 EC)- 'quantatitive restrictions on exports, and all measures having equivalent effect, shall be prohibited between MS.'
Dassonville formula- '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 measures having equivalent effect to a quantatitive restrictions.'
A36 TFEU- 'the provisions of A34 and 35 shall not preclude prohibitions or restrictions on imports, exports or goods in transit, justified on grounds of public morality, public policy or security, the protection of health and life of humans, animals, or plants, the protection of national treasures possessing artistic, historic or archaeological value, or the protection of industrial and commercial property.'
A36 TFEU grounds-
- 1) public morality
- 2) public policy or public security
- 3) protection of health and life of humans and plants- most important. Stopping animals with diseases etc.
- 4) protection of national treasures possessing artistic, historic or archaeological value- to stop them leaving the country
- 5) protection of industrial and commercial property.
General principles- the list is exhaustive. Cant add others. Objectives are of a non economic nature. The objectives have to be narrowly construed. The measure has to be proportionate. The MS must not abuse the derogation (A36 sentence 2 TFEU). Decision of member states to ensure their public health.
Mandatory requirements- Case 120/78- Cassis de Dijon- German law prohibited the marketing of liqueurs with an alcoholic strength of less than 25%. This made it impossible for the plaintiff to import a consignment of Cassis de Dijon, a French liqueur with a strength of between 15% and 20% to Germany. The liqueur therefore could not compete with the stronger German one.
Cassis de Dijon
This eliminates the market. No restrictions on the production and marketing of the weaker liqueur existing in France.
ECJ- 'Obstacles to movement within the Community resulting from disparities between the national laws relating to the marketing of the products in question must be accepted in so far as those provisions may be recognised as being necessary in order to satisfy mandatory requirements relating in particular...the effectiveness of fiscal supervision, the protection of public health, the fairness of commercial transactions, and the defence of the consumer.' Court relaxed provisions so it gives more to member states. Not an exhaustive list.
Overriding requirements (public interest grounds) in addition to Cassis-
- Protection of the environment- Case 302/86 Danish Bottles
- Preservation of the variety of the media- C368/95 Familiapress
- Peril to the financial balance of the social security system- C120/95 Decker
- Cohesion of the tax system- C204/90 Bachmann
- Prevention of unfair competition- C34-6/95 De Agostim
- Improvement of working conditions- C155/80 Oebel
Cassis de Dijon
Can claim things as should be a mandatory requirement.
Overriding requirements- Cassis- move from the notion of 'mandatory requirements' to 'overriding requirements of general public importance' to 'public interest grounds.' 'Overriding requirements' are not a closed class/not exhaustive: the court may accept new grounds. Inspirations- other EU policies, ECHR.
Only state measures concerning domestic and imported products alike, therefore not having discriminatory characters, are covered. The respective State measures have to be proportionate. Burden of proof on MS. Must be necessary to promote interest.
Mutual recognition- when the product was effectively controlled in one MS, a measure in another MS would violate A34 TFEU. eg poison controls and product safety. If used French law to make safe, UK has to recognise this and is allowed to be marketed in the UK. A36 is a bigger state weapon as discriminatory rules are included.
Why overriding requirements?
Rule of reason: recognition of equitable grounds deserve judicial protection pending EU...
legislation on the matter. Making sure measures are same in all member states.
Concrete manifestation of residual competence- or determine whether the suspect measure falls within the scope of the free movement provisions in the first place. MS's can regulate trade to a certain point.
General principle of EU law- protection of the general interest in connection with the achievement of the freedoms.
Proportionality- two conflicting interests- EU and Member States. Defence of consumer, environment etc. About balance. Need to pass 2/3 stages.
- 1) suitability of the measure for the attainment of the desired objective. Asked in Cassis.
- 2) necessity of the measure. There is no less restrictive measure at the disposal of the MS. Normally enough to prove proportionality. Is there a less harsh measure?
- 3) proportionality strictu sensu of the measure (balance objective/ restriction.) Interests involved. Cant just do anything and claim its proportionate.
Suitability- Measure must be suitable or appropriate or pertinent for achieving the objective it pursues. Measure must be capable of attaining purported objective. Connection between the means and the ends. C240/95 Schmitt. Joined cases 62/1- 63/1 Seco. Prevents MS from covering protectionism.
Necessity- the objective of the measure must not be capable of being achieved by alternative means that are less restrictive of intra EU trade. Where there is a choice between several appropriate measures, the least onerous but equally effective must be selected. Requirements of another MS must not be duplicated. C104/75 de Peijper. C272/80 Biologische Producten.
Proportionality in the strict sense- True proportionality= cost benefit analysis. MS measures pursuing a legitimate aim can be found to infringe the free movement of goods rules if their effects on trade is deemed excessive. Empowers the ECJ and the EU. Problems- lack of expertise and information gathering, ECJ may interpret EU law but may not apply it. ECJ approach to balancing is erratic- marginal review. In recent years the ECJ shied away from the test.