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Free Movement of Goods

Free Movement of Goods. Free Movement of Goods. Arts 23-25 & 28-31 TEC Arts 26-27 – Common Customs Tariff Basic Objective:

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Free Movement of Goods

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  1. Free Movement of Goods

  2. Free Movement of Goods • Arts 23-25 & 28-31 TEC • Arts 26-27 – Common Customs Tariff • Basic Objective: Competition between goods coming from different M-S is neither prevented nor distorted by the existence of government provisions which impose limits on the amount of goods to be imported (quotas) or increase their price (tariffs).

  3. Forms of State Protectionism treated by Free Movement of Goods: • A state attempts to erect customs duties which have an equivalent effect with the aim of making foreign goods more expensive than domestic ones – Arts 23-25 TEC • A state attempts to treat domestic goods more favourably than imported goods by discriminatory taxes – Arts 90-93 TEC

  4. Forms of State Protectionism treated by Free Movement of Goods: 3. A state tries to preserve advantages for domestic goods by imposing quotas or measures having equivalent effect, thereby reducing the quantum of imported goods – Arts 28-31 TEC.

  5. Which Goods are regulated? • Goods produced in a M-S • “…originating from outside M-S but allowed to be in free circulation (art 23§2 TEC). The conditions and criteria of free circulation are in art 24 TEC: ‘Goods must comply with import formalities and any customs duties & charges must have been paid by the trader and the have been reimbursed”

  6. Art 25 TEC • “Customs duties and charges having an equivalent effect shall be prohibited” Case 7/68 Commission v Italy (‘Italian Art’) The ECJ ruled on: • What are goods • The importance is on the effect, not on the purpose (similar decision in Cases 2&3/69, ‘Diamantarbeiders’)

  7. Charges of Equivalent Effect • Case 24/68 Commission v Italy • Case 87/75 ‘Bresciani’ BUT: Case 18/87 Commission v Germany: for inspections mandated by the Commission, it is acceptable to impose charges.

  8. Arts 90-93 TEC • Purpose: prevent the objectives of arts 23-25 from being undermined by discriminatory internal taxation. • National measures seeking to levy charges at the border (in the import) will be caught by arts 23-25 TEC. • National measures seeking to impose discriminatory taxes on imported products when inside are caught by art 90 TEC (Cases 2&3/62 Commission v Belgium and Luxembourg).

  9. Art 90(1) TEC • The purpose is not to impose a tax system, just to prohibit discriminatory taxation • Case 21/79 Commission v Italy • Case 148/77 ‘Hansen’ Indirect discrimination is also caught Case 112/84 ‘Humblot’ BUT: Case 196/85 Commission v Greece

  10. Art 90 TEC • Art 90(1) – no discrimination on similar products • Art 90(2) – no discrimination on dissimilar but competitive products Example: Wine – Beer Cross-elasticity of demand: as the price of the one rises in relation to the other, consumers will top some extent turn to the other with the lower price. Case 168/78 Commission v France Determination of similarity: Again, Case 168/78 Commission v France

  11. Art 90(2): Protective Effect Case 170/78 Commission v UK • Difference between arts 23-25 TEC & arts 90-93 TEC: - Breach of 25 constitutes the fiscal measure unlawful - Taxation set by M-S under art 90 TEC is not unlawful, but has to be assessed whether it is discriminatory against the importer (art 90(1) TEC) or have a protective effect (art 90(2) TEC). Case 193/85 ‘Co-Frutta’

  12. Quantitative Restrictions • Arts 28-31 TEC (ex 30-36 TEC) • General Objective: Restrict states from placing quotas (quantitative restrictions) or take measures of equivalent effect. • Quantitative Restriction: ‘Measures which amount to a total or partial restraint of imports, exports or goods in transit’ Case 2/73 ‘Geddo’.

  13. Measures of Equivalent Effect • Directive 50/70 & Case 8/74 ‘Dassonville’ Art 2 Directive 50/70: ‘minimum or maximum prices specified for imported products; less favourable prices for imported products; lowering the value of the imported product by reducing its intrinsic value or increasing costs; payment conditions different for imported goods; conditions of packaging, composition, identification, size, weight etc; preference for the purchase of domestic goods as opposed to imports; limiting publicity in respect of imported goods compared with domestic ones; stocking requirements different between imported and domestioc good; imposing on importers to have local agents’ etc

  14. Measure Equivalent to Quantitative Restrictions (MEQR) • ‘Dassonville’ para 5: important for MEQR is its effect. A discriminatory intent is not necessary Discriminatory Barriers to Trade: • Import and export restrictions (import or export licenses, requirements imposed only on imported goods) Case 154/85 Commission v Italy ‘Procedures and data requirements for the registration of imported cars, making their registration longer, more complicated and more costly than that of domestic vehicles are prohibited by art 28 (ex 30) TEC Also Case 4/75 ‘Rewe’ & Case 53/76 ‘Bouhelier’

  15. Discriminatory Barriers to Trade b) Promotion or favouring of domestic products caught by art 28 TEC. How? • the state engages in a campaign to promote the purchase of domestic as opposed to imported goods Case 249/81 ‘Buy Irish’ • the state has rules on the origin-making of certain products Case 207/83 Commission v UK • public procurement preference for domestic tenderers Case 45/87 ‘Dundalk Water Supply’

  16. price-fixing Case 82/77 ‘Van Tiggele’ & Case 181/82 ‘Roussel’ • measures which make imports more difficult or costly Case 50/85 ‘Schloh’

  17. Discriminatory Barriers to Trade c) National Measures v Private Action Art 28 TEC relates to measures adopted by a state (indication of what can be considered state in ‘Buy Irish’ Case) Actions by private parties – arts 81&82 (ex 85&86) TEC BUT: Case C-265/95 Commission v France The Commission brought action against the French Government for failing to take sufficient measures to prevent French farmers from disrupting imports. The ECJ held that it was incumbent upon the government to take all measures to ensure that free movement was respected even where obstacles were raised by private parties.

  18. Justifying Discriminatory Barriers to Trade • Art 30 (ex 36) TEC • Public morality Case 34/79 ‘Henn & Darby’ Case 121/85 ‘Conegate’ b) Public Policy Case 231/83 ‘Cullet v Centre Leclerc’ c) Public security Case 72/83 ‘Campus Oil’ • Health and Life of Humans, Animals or Plants Case 174/82 ‘Sandoz’

  19. Cassis de Dijon • Outcome: • Reaffirmation of Dassonville - of para 5 of Dassonville: art 28 TEC can apply to national rules which do not discriminate against imported goods as such, but which inhibit trade because they are different from the trade rules applying in the country of origin of the product

  20. Cassis de Dijon • of para 6 of Dassonville and the idea of the ‘rule of reason’: in the absence of Community harmonisation on a particular subject, reasonable measures could be taken by a state to prevent unfair trade practices. In Cassis, para 8, 4 such reasons – mandatory requirements - are mentioned: • Fiscal supervision • Protection of public health • Fairness of commercial transactions • Defence of consumer The list is not exhaustive! Case 302/86 Commission v Denmark: protection of the environment

  21. Cassis de Dijon 2) Once goods have been lawfully marketed in one M-S, they should be admitted into any other without restrictions unless the state of import can successfully invoke one of the mandatory requirements (para 14§4 Cassis). So, Cassis develops the principle of mutual recognition: a M-S must respect the trade rules of other M-S and not seek to impose its own on goods which have been lawfully marketed in the territory of another M-S.

  22. Cassis de Dijon • Reasoning: - initial affirmation of M-S rights to regulate all matters which have not yet been the subject of Community harmonisation BUT: - state regulation of such areas must be accepted together with any obstacles to trade which may follow from disparities in national laws, only insofar as these trade rules can be justified by one of the mandatory requirements of para 8 of Cassis. The Cassis doctrine was applied in many instances since: Case 286/86 ‘Deserbais’

  23. Cassis de Dijon • Cassis signaled the intention of the ECJ to extend the application of art 28 TEC to catch indistinctly applicable rules which inhibit trade in the same manner. But don’t all rules concerning trade have the possibility of affecting the free movement of goods in some way?

  24. Cassis de Dijon • Dual Burden – Equal Burden Rules 1) Dual Burden: a state imposes certain rules on the content of goods and these rules are applied to goods imported from another M-S, even though they would already have to comply with the relevant rules of the state where they were produced. Cassis renders such rules incompatible with art 28 TEC, unless they can be saved by ‘mandatory requirements’

  25. Cassis de Dijon 2) Equal Burden Rules applying to all goods, irrespective of origin, which regulate trade in some manner, which are not designed to be protectionist, which may have an impact on the overall volume of the trade, but which have no greater impact in this respect on imports than on domestic products. Equal burden rules are in principle not caught by art 28 TEC. BUT: • Cases 60&61/84 ‘Cinetheque’ • Case 145/88 ‘Sunday Trading’

  26. Keck • Again, distinction between dual-equal burden rules • The ECJ distinguished between: • Rules relating to the goods themselves (composition, packaging, presentation etc) which were caught by art 28 TEC under the Cassis doctrine • Rules relating to selling arrangements (selling below cost etc) which, although they may affect the total volume of goods sold, remain outside the reach of art 28 TEC, provided that the conditions of para 16 of Keck are met.

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