European Law: Soups You Sir Ltd - Case Study Example

European Law In the case of Tom Ato, managing director of Soups You Sir Ltd., the decision to begin marketing soup to all of Europe is certainly influenced by certain member sates and their allowance of free movement of goods. To begin, Tom is faced with a few specific hindrances imposed by specific states such as Latvia, Belgium, Germany and Poland. Latvia has made it clear that if Soups You Sir Ltd. is to market and sell their products in Latvia, that packaging changes are necessary first. The problem which this poses for Tom’s company is that a great deal of money has already been spent on the existing packaging of the soup which is of course, in a carton. Latvia is asking that the soups be sold in jars within Latvia or not at all. It is wise to first take a look at the criteria for free movement of goods within Europe and how these regulations apply to the dilemma Tom is facing; with marketing his company’s product in Latvia. One of the benefits of being a part of the European Union is being able to reap the benefits of free trade with and among other member sates, “The objective of the European Community is to establish a Common Market which is built on a Customs Union. The first basic concept of a customs unions is the free movement of goods produced in Member States. Goods produced in one Member States should be able to move freely in all Member States without the payment of custom duties”(Pitiyasak, 2008). In order for a state to reap and enjoy such benefits, they must adopt EU laws. Latvia has been a member of the European Union since 2004 and therefore is among the 15 member states in the union which can enjoy free trade of goods with one another. The free movement of goods within member states is regulated in such a manner that member states may not violate free trade rules without consequence. In the case of Latvia and its imposition of a package change upon Tom’s company, it is actually in violation of several articles of legislation which serve to protect and govern free trade. First of all, imports are not to be treated any differently than domestic goods within EU states. It would be helpful for Tom to find out whether Latvia permits domestic products similar to his, to be marketed in cartons or in glass containers. If the same type of product Is typically required to be sold in jars, than Latvia is merely imposing a universal rule upon Tom’s products versus acting differently toward his products because they are not domestic. This is actually set forth in Article 12 TEC of the European Free Movement of Goods. Similarly, Article 27 indicates that “indistinctly applicable measures” may not be imposed on imports. This can be translated to mean that alleged ‘product requirements’ may not be arbitrarily imposed upon imports which may hinder the free trade of goods within the EU. This is indicative that Latvia is in direct violation of the free movement of goods with respect to the attempt of Tom to market his products within Latvia. Because Latvia is in such violation, Tom may opt to remit a case against Latvia top the Court of Justice where Latvia if found in violation, may be fined, “The Ministry of Economics monitors the application of the regulations for the free circulation of goods and ensures the exchange of information between the European Commission and Member States with respect to the measures taken by Latvia in cases when the free circulation of goods is not respected or is interfered with”(European Commission, 2008). Tom has also found Belgium to be a hindrance as they are actively banning all commercials that advertise food as the epidemic of obesity is becoming a great concern. While this may be a problem from a marketing angle, Tom may have to reason that any and all products sold within Belgium are subject to this advertising imposition such that consumers in Belgium will be prompted to make food purchasing decisions based on impulse buys at the store universally so the lack of sales of Tom’s product may not be a problem after all. In other words, it is not as though some products are able to be advertised via commercial in Belgium while some are not. This means that all food products are at the same disadvantage here which ultimately, may not be a problem at all for Tom’s company. It is also important to mention that if the ban on commercials is applicable universally, to domestic and imported products, then Tom must abide by the rules of advertising which Belgium is imposing. Article 28 indicates that discrimination towards imported goods may not exist and that imported goods and domestic goods must be treated equally by a member state. Therefore, Belgium is not in any direct violation of the EU’s free movement of Goods. Belgium is one of the oldest EU members as it was in fact, one of the original 6 members of the union therefore, it is most likely not a stranger to the regulations of free trade within union states. In the case of importing Tom’s product into Germany, he is told that Germany is charging his company a “3EUR fee” which is allegedly for a compilation of data deemed beneficial to importers. Article 90 (formerly Article 95) indicates that such a fee is not legally applicable, “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 a nature as to afford indirect protection to other products. According to Article 90(formerly 95), internal taxation may not be discriminatory imposed between domestic products and imports. This covers not only the finished products but also the raw materials or components of such products”(Pitiyasak, 2008). Clearly, the imposition of such a fee is in violation of the free movement of goods from Tom’s member state to Germany. Germany has directly claimed that the fee is specifically applied to ‘importers’ which clearly makes it a discriminatory fee which is not legal with the EU. Once again, Tom may choose to file a complaint against Germany as they are clearly acting outside of the free trade agreement of member states in the EU. Article 25(formerly 12): The abolition of customs duties and charges having equivalent effect Article 25(formerly 12) of the EC Treaty deals with customs duties. It aims to abolish customs duties and charges having equivalent effect. Article 25(formerly 12) provides: Member States shall refrain from introducing between themselves any new customs duties on imports or exports or any charges having equivalent effect, and from increasing those which they already apply in their trade with each other. According to Article 25(formerly 12), it prohibits the introduction of new customs duties or charges having equivalent effect, and equally prohibits the increase of those which are already in existence. This prohibition applies both to imports and exports. The impact of this Article was enhanced by the ECJ in the following cases. (Pitiyasak, 2008). Finally, Tom is experiencing a tax from Poland which is set at 15% for soups in particular. Soups which are sold in cartons are taxed at 15% whilst soups in tins are taxed at 1.5%. Poland does not sell soups in cartons domestically due to the difficulty that cartons impose on recycling. This tax is one which exists obviously in a domestic and imported arena such that Poland is not discriminating towards Tom’s imported product, only his packaging methods which are universally unacceptable within that particular state. In this case, it is probably wise for Tom to look at the cost of the 15% tax upon the cartons of soup versus the cost of producing soup in tins in order to receive only a 1,5% tax. Whichever method is less costly is the method of production that Tom should use when manufacturing soup for Polish buyers. Poland is not acting outside of the free movement of products agreement between EU states and therefore, their tax will have to be honored by Tom and his company. References: ------------------. 2008. “Legal Requirements”, The European Commission. [online] available at http://ec.europa.eu/youreurope/business/profiting-from-eu-market/selling-goods/czech-republic/index_en.htm [accessed 6 January 2008] Pitiyasak, Saravuth. 2008. “Legal Research of the Free Movement of Goods Within the EU” [online] available at http://asialaw.tripod.com/articles/saravuth.html [accessed 6 January 2008]. -----------------. 2008. “Selling Goods”, The European Commission [online] available at http://ec.europa.eu/youreurope/business/profiting-from-eu-market/selling-goods/czech-republic/index_en.htm [accessed January 2008]. Read More