Transcript Slide 1

The Free Movement of
Goods
Lecture Aims
• Introduction to the free movement of
goods
• Examination of the relevant Treaty
articles
• In particular an understanding of Article
28
• Follow on lecture
Lecture One
• The Treaty provisions relating to the
free movement of goods
• Definition of goods
• Articles 23-25 and Article 90
• Concentrate on Article 28-quantitative
restrictions on imports
• Exceptions to free movement of goods
The free movement of goods
• Cornerstone of the internal market
• one of the fundamental freedoms
• Art 14 EC
The internal market shall 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.
FREE MOVEMENT OF
GOODS
• Creation of a Customs Union- Arts 2325 (ex 9-12)
• Prohibition of discriminatory taxation Art
90 (ex 95)
• prohibition of quantitative restrictions
Arts 28-30 (ex 30-36)
GOODS?
• Commission v Italy Case 7/68
• “products which can be valued in money, and
which are capable…of forming the subject of
commercial transactions”
• Commission v Belgium Case C-2/90
• Donckerwolke v Procureur de la
Republique Case 41/76
CUSTOMS UNION-ART 23
(ex art 9)
“The Community shall be based upon 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 all charges having
equivalent effect, and the adoption of a
common customs tariff in their relations
with third countries.”
Common Customs Tariff
• Common customs tariff (CCT)
• applies to all goods imported into the
European Union
• single tariff wall
• tariffs set by European Commission
ARTICLE 25 (ex Art 12)
• Customs duties on imports and exports
and charges having equivalent effect
shall be prohibited between Member
States. This prohibition shall apply to
customs duties of a fiscal nature.
Customs duties
• What is a customs duty?
• Steinike & Weinleg Case 78/76
• A pecuniary charge imposed on goods
because they are imported
CHARGES HAVING
EQUIVALENT EFFECT
• Commission v Italy (Statistical Levy)
Case 24/68
– “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 [to a customs duty]”
• Sociaal Fonds voor de
Diamanterbeiders Cases 2&3/69
Permissible charges
• Commission v Germany Case 18/87
– Charges for services rendered to the
importer
– The charge relates to an inspection carried
out by the MS in compliance with EC or
international law
– The charge is part of a general system of
internal taxation (in which case it does not
fall under Art 25 but falls under Art 90)
CHARGES FOR SERVICES
RENDERED
• The services must be of direct benefit to
traders or to the goodsRewe-Zentralfinanz Case 39/73
• the amount charged must be commensurate
with the service
– Donner Case 39/82
– Commission v Belgium Case 132/82
Charges for inspections
• A charge may be
imposed for inspections
which are mandatory
under international or
EC law providing the
charges do not exceed
the actual costs of the
inspection
• Bauhuis Case
• State can not recover
the costs of inspections
that the state imposes
irregardless of whether
the inspection is in the
wider public interest
CHARGES HAVING
EQUIVALENT EFFECT
• Member State is required to repay the
trader where the duty/charge is contrary
to Article 25
– San Giorgio Case 199/82
– Dilexport
Article 90 ex Art 95)
No Member State shall impose directly or
indirectly, on the products of other Member
states any internal taxation of any kind in
excess of that imposed directly or indirectly
on similar domestic products.
Furthermore, no Member State shall impose
on the products of other Member states any
internal taxation of such nature as to afford
indirect protection to other products
Article 90
• Supplements Articles 23-25 by aiming to prevent the
objectives of those articles being undermined by
discriminatory internal taxation
• Member States are free to establish their own system
of internal taxation (for example such as VAT)
provided there is no discrimination against imports or
indirect protection of domestic goods
– see John Walker Case 243/84
A tax or a customs duty?
• May be difficult to distinguish
• Arts 25 and 90 are mutually exclusive so it is necessary to
make the distinction
• Where a tax is genuine Art 25 does NOT apply (but Article
90 will apply)
• Commission v France (Reprographic Machines) Case
90/79
– “a general system of internal dues applied systematically
and in accordance with the same criteria to domestic
products and imported products alike”.
Art 90 (1)
•
No Member State shall impose directly or indirectly, on the products of
other Member states any internal taxation of any kind in excess of that
imposed directly or indirectly on similar domestic products.
– ‘Products of other Member States’-includes goods that are
manufactured outside the EC but are in free circulation in the
EC-Cooperativa co-Frutta Case 193/85
– direct or indirect discrimination
– discrimination between imports and similar domestic
products
similar domestic products
• Need not be identical
• Commission v Denmark Case 106/84
– first consider the objective characteristics of the
the products (e.g.. Ingredients, raw materials,
method of manufacture); and secondly whether
they “meet the same needs from the point of view
of the consumer… not according to whether they
are strictly identical but whether their use is similar
or comparable”
Similar products
• John Walker Case 243/83 (Danish tax
higher for whiskey than on fruit liqueur wines-not
similar)
• Commission v France Case 168/78
(higher tax on grain based spirits (Whiskey) than on
fruit based sprits (Brandy))
Directly/Indirectly
• Direct discrimination is overt-it is clear that on the
face of it that the taxation on imported goods is
discriminatory
• Treaty recognises situations where the internal tax is
prima facie non discriminatory but in fact indirectly
discriminates against imports
– Humblot v Directeur des Services Fiscaux
Case 112/84
– Commission v France (tobacco) Case C302/2000
ARTICLE 90(2)
• “No Member State shall impose on the products of
other Member States any internal taxation of such
nature as to afford indirect protection to other
products”
• not necessary for the goods to be similar
• Prohibits internal taxation giving indirect protection to
other products
– Cooperativa co-Frutta Case 193/85 “all forms of indirect
protection in the case of products which, without being similar
within the meaning of Article 90 (1), are nevertheless in
competition, even partial, indirect or potential competition with each
other”
Article 90 (2)
• Commission v UK Case 170/78
• Is beer similar to wine? Are they in competition?
• Will consumers substitute one for the other?
• In measuring possible degree of substitution
should consider future consumer preferences.
• Need to consider whether the present tax system
cements consumer preferences.
– “in fact those habits which are essentially variable in time and
space, cannot be considered to be a fixed rule;the tax policy of a
Member State must not therefore crystallise given consumer habits
so as to consolidate an advantage acquired by national industries”
Art 90(2)
• If products are in competition with one
another the ECJ will consider the ‘protective
effect’ of the tax.
– “the effect of the United Kingdom tax
system is to stamp wine with the hallmarks
of a luxury product which, in view of the tax
burden which it bears, can scarcely
constitute in the eyes of the consumer a
genuine alternative to the typically
domestically produced beverage”
Article 90 (2)
• Commission v Italy Case 184/85
• higher rate of tax on bananas than other
fruit such as apples/pears
• products not similar because of different
characteristics
• but products were in competition
• the higher tax on bananas afforded
indirect protection to home-grown fruit
Free movement of goods
• Fiscal measures
– Arts 23-25 deal with customs duties and charges having
equivalent effect
– Art 90 deals with internal taxes
• Non-fiscal restrictions
– Arts 28-30 Qualitative restrictions
Article 28
• Quantitative restrictions on imports and all
measures having equivalent effect shall be
prohibited between Member States
– Note-Article 29 provides exactly the same for exports
– A national measure which contravenes Art 28 is prima facie
in breach of the Treaty-however there are exceptions
– Article 30 provides exceptions/derogation's to Article 28
– The ECJ has developed a line of case law restricting the
scope of Article 28 (known as the ‘rule of reason’ and also in
relation to certain ‘selling arrangements)
Article 28
• Quantitative restrictions on imports
• and all measures having equivalent effect (to
quantitative restrictions)
• shall be prohibited between Member States
Article 28
• Article 28 is directly effective
• It confers rights on individuals
• Ianelli & Volpi SpA v Meroni Case
74/76
– “the prohibition …[in Article 28] is
mandatory and explicit…[it] therefore has
direct effect and creates individual rights
which national courts must protect”
Article 28
• Article 28 is addressed to Member States
• However the ‘State’ has been given a very
wide meaning in the context of Art 28
• Art 28 also applies to bodies for whose accts
the state is responsible
Article 28-the State
• Apple and Pear Development Council v KJ Lewis
Ltd Case 222/82 (semi public bodies/quangos)
• R v Chief Constable of Sussex, ex parte
International Trader’s Ferry Ltd [1998] (the police
force)
• R v Pharmaceutical Society of GB, ex parte
Association of Pharmaceutical Importers Cases
266 & 267/87 (professional regulatory bodies
established under statutory authority)
ARTICLE 28
• Quantitative restrictions on imports and all
measures having equivalent effect shall be
prohibited between Member States
• Case 2/73, Geddo
– “ measures which amount to a total or partial
restraint of imports, exports or goods in transit”
• Case 34/79 R v Henn & Darby
Article 28-MEQR’s
• Quantitative restrictions on imports and all
measures having equivalent effect shall be
prohibited between Member States
Dassonville 8/74
• “all trading rules which are capable of hindering
, directly or indirectly, actually or potentially,
intra-Community trade”
Dassonville Formula
•
•
•
•
•
•
all trading rules (measures)
enacted by Member States
which are capable of hindering
directly or indirectly
actually or potentially,
intra-Community trade”
Dassonville
• Dassonville 8/74
• Belgian legislation requiring certificate of origin in
respect of certain goods (including whiskey)D bought
whiskey from France where the goods were in free
circulation
• attempted to sell the whiskey in Belgium with forged
certificate
• Held the requirement to have a certificate of origin
was a MEQR
MEQR’s
• Some rules only apply to imported goods- these are known as
distinctly applicable rules- such as import licenses
• However the majority of MEQRs considered so far relate equally
to imported and domestic goods alike-these are known as
indistinctly applicable rules-these are also capable of breaching
Art 28 where they are capable of hindering intra community
trade
MEQR’S
• Import Licenses
– Commission v UK (UHT Milk) Case 124/81
– Sandoz BV Case 174/82
MEQR’S
• Hygiene/Health Inspections
– Rewe-Zentralfinanz eGmbH v
Landwirtschaftskammer Case 4/75
MEQR’S
• Origin Marking– Dassonville Case 8/74
– Commission v Ireland (Irish souvenirs)
Case 113/80
MEQR’s
• Buy National Campaigns
– Commission v Ireland (Buy Irish
campaign) Case 249/81
– Apple and Pear Development Council v
Lewis Case 222/82
MEQR’s
• Packaging Requirements
• rules are usually indistinctly applicable
• increase cost for manufacturers that
have to comply with differing packaging
requirements
– Walter Rau v De Smedt Case 261/81
MEQR’s
• Packaging Requirements
– Mars Case C-470/93
– Prantl Case 16/83
MEQR’s
• Contents and Ingredients restrictions
– Commission v Germany (Beer Purity
case) Case 178/84
– Cassis de Dijon Case 120/78
– Commission v France Case C-24/00
MEQR’s
– Name restrictions
– Clinique Laboratories & Estée Lauder
Case C-315/92
– Commission v Italy Case C-14/00
(Chocolate)
– See also - Deserbais Case 286/86 (Edam
cheese)
DASSONVILLE FORMULA
• Distinctly applicable
measures
• Indistinctly
applicable measures
• only affect imported
goods
• imposed on all
products regardless
of origin
• rules may be
imposed in the
general ‘good’
• often protectionist
Article 29
•
•
•
•
Relates to exports
Dassonville formula not applicable
Groenveld BV Case 15/79
Bouhelier Case 53/76
Conclusion
• Free movement provisions are the cornerstone of the
internal market
• Arts 23-25 prohibit customs duties and charges
having equivalent effect
• Article 90 prohibits discriminatory internal taxation
• Art 28 prohibits quantitative restrictions on imports
and measures having equivalent effect
• Broadly interpreted by the ECJ
• Follow on lecture