Free Movement of Goods

Introduction

Van Gend en Loos 'the EEC constitutes a new legal order... the states have limited their soverign rights' 

Creation of new institutions independent from the MS:

European Commission, European Parliament, Court of Justice of the European Union

Article 3 TEU 'the union's aim is to promote peace, its values and the well-being of its peoples, the union shall establish an internal market' 

'eliminations of all obstacles to intra-union trade in order to merge the national markets into a single market' Shul

Article 26 TFEU 'comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of this treaty' = the four fundamental freedoms

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Benefits and Means to achieve the Internal Market

- economies of scale: competitiveness, wider market

- increased consumer choice: cheaper prices 

- increased mobility

- Positive integration: adoption of EU legislation

- Negative integration: removal of obstacles to free movement 

- Law of internal market is interaction between positive and negative integration 

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Back to Basics

Cassis de Dijon judgement:

'in the absence of common rules... it is for the member states to regulate' 

EU law is made up of primary legislation (EU treaties) and secondary legislation (regulations and directives)

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Article 4 TEU

Article 4 TEU - 'competences not conferred upon the Union in the Treaties remains with the Member States' 

Article 5(1) - 'limits of union competences are governed by... conferral. The use...by subsidarity and proportionality' 

Three Key Questions 

1. Does the EU have the power to adopt a measure? - Conferral

2. Should the EU exercise its powers? - Subsidarity

3. What intensity should the EU action take? - Proportionality 

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The Principle of Conferral

Article 5(2) TEU - ' principle of conferral...act only within the limits... conferred upon by the MS... Competences not conferred upon the Union in the Treaties remain with the MS' 

Three Categories of EU competences 

- Art 3 TFEU - exclusive competences 

- Art 4 TFEU - shared competences

- Art 6 TFEU - supportive competences

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Tobacco Advertising

Challenge by Germany of Directice 98/43 adopted on the basis of Art 114 TFEU 'adopt 'measures... which have as their object the establishment and functioning of the internal market' 

Claimed it was a disguised public health measure

Art 168(5) TFEU excludes harmonisation of the laws of the MS in this field - supportive competence only

Only if a measure is genuinely intended to improve the conditions for the establishment and functioning of the IM can Art 114 be invoked even if it also pursues public health objectives 

Art 168(1) - duty to ensure a high level of public health protection

Tobacco Advertising 2 

Validity of new directive upheld 

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Vodafone and Others

Regulation 717/2007 was challenged on its validity 

Regulation adopted on the basis of Art 144, intended to prevent the discouragement of cross-border activites

To rely on Art 144 there must be an 'internal market barrier' resulting from disaprities from the MS measures.

The barrier should 'obstruct the fundamental freedoms' or create 'distortions of competition' 

Should have the object of improving the functioning of the IM

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The Principle of Subsidiarity

Article 5(3) TFEU - 'in areas which do not fall within its exclusive competences, the union shall act only if and insofar... action cannot be sufficiently achieved bythe Member States' 

In some cases better to act at national level, but in others EU action is preferable

'Subsidiarity cuts both ways'- Lyon-Caen

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The Principle of Proportionality

Art 5(4) TFEU - 'Union action shall not exceed what is necessary to achieve the objectives of the Treaties'

2 limbs to the proportionality assessment

1. Legitimacy 

2. Necessity 

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Subsidiarity and Proportionality in practice

Protocol on the application of the principles of subsidiarity and proportionality 

Courts reluctant to interfere with EU legislature 

Vodafone and Others - subsidiarity: roaming is of minor concern to national regulator - proportionality: last resort EU intervention 

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Philip Morris

'human health protection - the proven harmfulness of tobacco... outweighs the interests put forward by the claimant... articles 9 TFEU, 114(3) TFEU and 168(1) TFEU a high level of protection must be... in all the European Union's policies and activities'

AG Kokott - 'economic interest... must be secondary to the protection of human health'

The public health provisions in the Treaties require that the EU take a high level of public health protection in all of its policies. This is a legal obligaiton. 

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Ensuring the Free Movement of Goods

Art 114 TFEU - internal market harmonising legislation 

Arts 28-32 TFEU - prohibition of customs duties and charges having equivalent effect (CEEs) (fiscal)

Art 110 TFEU - prohibition on discriminatory taxation (fiscal)

Art 34 TFEU - prohibiton of quantitative restrictions (QR) on imports and measures having equivalent effect to QRs (MEEQR) (non fiscal)

Art 35 TFEU - prohibiton of QR's on exports and MEEQRs (non fiscal)

Art 36 TFEU permissible derogations from Arts 34 and 35

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The Notion of Goods

Commission v Italy - 'products which can be valued in money and are which are capable, as such, of forming the subject of commercial transactions' 

Commission v Belgium - goods can have negative value

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Fiscal Restrictions

Articles 28, 30 and 110 TFEU - fundmental to the function of IM

Purpose to - 'ensure normal conditions of competition and to remove all restricitons... capable of hindering the free movement of goods' Fink-Frucht 

Articles 28 and 30 are triggered by goods crossing a frontier (imports or exports)

Art 110 applies to charges on imported and domestic products and applies to taxation internally

Art 30 is an absolute prohibition of custom duties and CEE - 'custom duties.. and all charges having equivalent effect shall be phobitited between member states' 

Art 110 allows MS to tax goods if it is not discriminatory nor protective in effect 

Article 28 - 'all trade in goods... shall involve the prohibitions between member states of custom duties... and the adoptiong of a common customs tarrif'

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Custom Duties

A charge determined on the basis of a tariff specifying the rates of duty to be paid by the importer to the host state for example Van Gend en Loos 

Court is concerned with the restrictive effect on trade, not the purpose of the charge

Charges havign equivalent effect 

A CEE is 'any pecuniary charge... imposed unilaterally on domestic or foreign goods by reason of the fat that they cross a frontier, even if it is not imposed for the benefit of the state, is not discriminatory or protective' - Commission v Italy 

'The very low rate of charge cannot change its character' - Commission v Italy

It ides not matter how a MS describes a charge it will be considered a CEE

'prohibited independently of nay consideration of the purpose' - Sociaal Fonds voor de Diamantarbeiders

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Permissible Charges

There is no defence to Art 30 and the charge will not be allowed to stand no matter how beneficial the purpose - Art Treasure

However payment is allowed in 3 situations - 

  • Proportionate payment for genuine situations- Commission v Germany
  • Payment for inspections under EU law
  • Charges relating to internal taxation

These are not exceptions - they fall outside the scope of Art 30 

Payment for services: consideration for a genuine service: Commission v Belguim - Specific Benefit: Commission v Italy - This is for the naitonal court to decide 

Charges for Inspections: Not for inspections required by naitonal law: Commission v Germany - a charge is lawful if it does not exceed the actual cost, inspectionis obligatory and prescribed by the EU 

 

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Art 110 TFEU

'no member state shall impose, directly on indirectly, on the products of other member states any internal taxation... on similar domestic products' - similar goods 

'no member state shall impose on the products of other member states... protection to other products' - goods in competition

Similar Goods

'similar characteristics and meet the same needs from the point of view of consumers... according to whether their use is similar or comparable' - Commission v Denmark 

Goods in Competition - 110(2)

Whether goods can be substituted - Commission v UK 

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Discrimination

Art 110 prohibits direct and indirect discrimination 

Direct = less favourable treatment in law on grounds of nationality - Lutticke

Indirect = does not refer to nationality but imposes a heavier burden on imported goods - Humblot

Indirect discrimination may be justified (proportionality) but direct may not 

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Repayment of Unlawful Charges

A restitutionary claim is available to the trader who has paid a customs duty or a CEE except in the case of unjust enrichment 

Claim for damages for loss of sale 

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Non Fiscal Restrictions

Relevant Treaty Provisions 

Art 34 TFEU prohibits QR and MEEQR on imports 

Art 35 TFEU prohibits QR and MEEQR on exports 

Art 36 TFEU provides a list of justifications + test of proportionality 

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Art 34 TFEU

'shall be prohibited between member states' 

Articles 34 and 35 have vertical direct effect

Enacted by MS - Commission v Ireland 

Art 34 imposes an obligaiton to act on MS - Commission v France 

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QR's and MEEQR's

QR defined in Geddo - 'a total or partical restraint of... imports, exports or goods in transit' 

A total ban on imports is a QR - Henn and Darby  A ban on imports for personal use is also a QR - Rosengren 

MEEQR defined in Directive 70/50 Art 2 (distinctly applicable) and Art 3 (indistinctly applicable) 

Definition given in Dassonville - 'all trading rules enacted by MS which are capable of hindering... intra-community trade' 

Distinctly applicable measures: Targets imports only and discrimates against them: Can only be justified by one of the Art 36 derogations 

Indistinctly applicable measures 

  • Both imports and domestic products , they fall within Art 34 if they have a particular burden on imported goods 
  • Can be justified under Art 36 derogations and the 'mandatory requirements' doctrines developed in Cassis de Dijon 
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Cassis de Dijon

'In the absence of common rules... it is for the member states to regulate all matters... obstacles to movement in the community resulting from disparities between national laws... must be accepted insofar as... being necessary in order to satisfy mandatory requirements' 

No common EU rules - regulatory independence of MS

Advantages of Cassis case 

- Increased consumer choice 

- Increased competition 

- Limits legislative interference 

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Justifications and burden of proof

It is for the MS to decide whether a measure is justified on three grounds 

  • objective grounds 
  • measure is suitable 
  • doesn't restrict free movement for than necessary to achieve the objective 

2+3 test of proportionality

Broad margin of discretion sometimes granted to member state

Public morality - court willing to leave some margin for discretion to MS in public morality: Henn and Darby. But the measure must not be a disguised restriction on trade aiming as discriminating against imports - Conegate

Protection of health and life - very often invoked by MS, discretion of MS in light of scientific uncertainty. However, restrictive measures must satisfy the test of proportionality 

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Scotch Whisky Case

'It is for the Member States to decide on the level of protection of human life and health which they propose to provide... it is for the national authorities to demonstarte thta they legislation is consistent with proportionality... it is for the national court to review the lagality' 

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Difficulties of Art 34

How to deal with those measures which may restrict trade in some way but are not designed to protect the home market? 

Towards more clarity? Keck 

Acceptance by the court that there was a need to 're-examine' and clarify its case law on this matter' 

Distinction drawn by the court between two categories of measures

Products requirements- within the scope of art 34 

Certain sellaing arrangements - outside the scope of art 34, provided that certain conditions are satisifed 

Rules relating to selling arrangements may craete obstacles to imports. The effect is what should matter 

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