Free Movement of Goods - Essay Example

Answer: The free movement of goods between the Member s is one of the four fundamental freedoms established by the Treaty of Rome. The original 1957 Treaty spoke of creating 'a common market', but in the Single European Act of 1986, the term 'internal market' was substituted. This term is defined in what is now Article 14 EC, as 'an area without internal frontiers. In Art Treasures case, Commission v. Italy (re Export Tax on Art Treasures (No.1))1, The ECJ defined goods as "products which can be valued in money and which are capable, as such, of forming the subject of commercial transactions." In order to answer this question it is necessary to discuss quantitative restriction, measure equivalent to quantitative restriction and relevant Articles. (a) Under Portuguese law the Company has to pay a small fee to the Portuguese government agency when it exports goods to Portugal. In order to answer this is question it needs to discuss Article 23-25. The creation of a Customs Union is provided for in Article 23 says that the prohibition between Member States of customs duties on imports and exports and of all charges having equivalent effect. For trade between Member States of the EU, the basic rule is laid down in Article 25(12) EC. 'Customs duties on imports and exports and charges having equivalent effect shall be prohibited between Member States. This prohibition shall also apply to customs duties of a fiscal nature.' It was held that Article 25 (then Article 12) could be relied on by individuals in the national courts in Case 26/62 Van Gend en Loos2. This was the first case in which the ECJ held that a Treaty article could have 'direct effect' Customs duties as such were successfully abolished early in the history of the Community (July 1968). However, it was not originally clear what was covered by the concept of 'a charge having equivalent effect' (CEE). The Commission brought a number of cases against Member States in the 1960s and the ECJ took the opportunity to give a very wide meaning to this phrase. One such Case 24/68 Commission v Italy ('Statistical Levy')3, involved an Italian levy on imports and exports across its borders. The levy was a very small sum and it as used to pay for the gathering and publication of statistics on trade patterns. The ECJ emphasised that it is the effect, not the purpose, of the levy that matters: extra fees and charges are likely to put imported goods at a disadvantage compared with domestically produced goods. It also dismissed the Italian Government's argument that the statistical data was a 'service' to traders, which they should pay for. The ECJ ruled: '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 constitutes a charge having equivalent effect'. The key part of this definition or test is whether the sum of money has become payable because goods have crossed a frontier within the EU. If it can be shown that the sum is payable for some other reason - for example as payment for a specific service carried out for the trader, such as provision of storage facilities, then it follows that it is not payable because goods have crossed a frontier, and so does not fulfil the Court's definition of an illegal charge. The ECJ has held that the prohibition on 'charges of equivalent effect' also applies to goods imported directly from third countries: see Case 37, 38/73 Diamantarbeiders v Indiamex,4. This means that the CCT duty can be levied on such goods, but no other charges can be added by the Member States. The EC Treaty does not contain any exceptions or defences to Article 25 (the prohibition is strict and absolute) but there are some situations that fall outside the prohibition because they do not fulfil the above test. The money raised by those fees is to pay for a data information service in respect of goods imported into and exported from Portugal. In Case 63/74 W. Cadsky SpA v Instituto nazionale peril Commercio Estero 5 and Case 87/75 Bresciani6 the ECJ held that general benefits, for which it would be illegal to levy a charge, include inspections of goods on import or export. Such inspections are usually for public health reasons, or to ensure quality. In Case 24/68 Commission v Italy (Statistical levy)7 there must be a specific benefit individually conferred on the importer/exporter. If it is simply a benefit in the 'general interest of all exporters', or a general benefit to the public at large, it will not qualify. On the other hand Case 132/82 Commission v Belgium8 (Public Warehouses - storage charges) the ECJ held that a charge for a service will be lawful where the benefit paid for is a service actually rendered to the importer, probably at his request AND the cost charged for the service is based on the actual cost of providing it. But from the fact of the question it can be assumed that a data information service may be in general. As a result Portugal is liable for Article 10 EC for state liability. (b) French law, which provides that all advertising, catch phrases and slogans connected with products marketed in France have to be in the French language its amounts to MEQR where the slogan was "Monster Bangs are Best". Before attempt to answer this part it is necessary to discuss the meaning of Quantitative restrictions, measures having equivalent effect on quantitative restrictions (MEQR). According to Case2/73 Geddo v Ente Nazionale Risi9 Quantitative restrictions are 'measures which amount to a total or partial restraint of imports, exports or goods in transit'. These measures are not listed or defined in the Treaty. The Commission attempted to fill this gap by adopting Directive 70/50. The main focus of the Directive Article 2 on discriminatory measures that is, measures which apply only to imported goods and 'make importation more difficult or costly than the disposal of domestic production'. An important point is that it applies to measures not just affecting goods at the point of importation, but the disposal of the goods 'at any marketing stage' (Article 2(2)). The Commission, in Directive 70/50, Article 3, says that it also covers: 'Measures governing the marketing of products which deal, in particular, with shape, size, weight, composition, presentation, identification or putting up and which are equally applicable to domestic and imported products, where the restrictive effect exceeds the effects intrinsic to trade rules'. The European Court, however, developed its own, broader, approach in Case 8/74 Procureur du Roi v Dassonville10, Dassonville was prosecuted in Belgium for selling Scotch whisky without a certificate of origin required by Belgian law. He had imported the whisky from France where such a certificate was not required. He argued that the Belgian rule prevented the free movement of whisky from France to Belgium. The ECJ agreed, and said that Article 28 covers all trading rules enacted by Member States which are capable of hindering, actually or potentially, directly or indirectly, intra- Community trade. While normally the actions of individuals are not covered by Article 28, in Case 265/95 Commission v France11, the ECJ held that inaction by the state in the face of organised and persistent disruption by French activists was a breach of Article 28. The French had not done enough to prevent activists obstructing imports into France of cheaper fruit and vegetables from Spain and Portugal. The problem had gone on for ten years without a single prosecution being brought. Besides the exceptions in Article 30 (formerly 36), the ECJ has also recognized the mandatory requirements that Member States should impose on the free movement of goods such as the consumer protection, the environmental protection, In Cassis de Dijon, (Rewe-Zentral AG v. Bundesmonopolverwaltung fur Branntwein [case 120/78]) and as the exceptions to the general provisions of Articles 28 (formerly 30) and 29 (formerly 34). One of the most important cases for this exception is. (a) the effectiveness of fiscal supervision, (b) the public health, (c) the fairness of commercial transactions, or (d) the defence of the consumer. However, the measures are subjected to further requirements: i) they must be justified and proportionate; ii) there is no community system of rules, and iii) their must be neither an arbitrary discrimination nor a disguished restrictions on trade. The Court established a second important principle in Cassis (the second Cassis principle) it suggested that there was no valid reason why 'provided that [goods] they have been lawfully produced and marketed in one of the Member States, [they] they should not be introduced into any other Member State. Here it can be said that fireworks have been lawfully produced and marketed in Ireland. If ECJ applies the second Cassis principle Monster Bang need not to change in French language. It merely gives rise to a presumption that goods, which have been lawfully produced and marketed in another state will comply with 'the mandatory requirements' of the importing state. This can be rebutted by evidence that further measures are necessary to protect the interest concerned. In Plantl (case 16/83), article 28 was invoked in the contents of criminal proceedings against Plantl for breach of a German law designed to prevent unfair competition. He had imported wine from Italy in bulbous-shaped bottles, which closely resembled like a German bottle known as 'Bocksbuete'. The Bocksbuete was protected under German law as denoting a quantity wine from a particular region of Germany. The Italian bottle was a traditional bottle known to Italy. Although the matter was arguably justifiable under Cassis in the interests of fair trading (the fairness of commercial transactions) and consumer protection, the court held that as long as the Italian wine was in accord with fair and traditional practice in its states of origin there was no justification for its exclusion from Germany. Case 261/81 Walter Rau12 (Belgian margarine). Belgian rules stated that margarine sold in Belgium must be packaged in cube-shaped containers. Belgium based its case on the mandatory requirement of consumer protection: that the packaging rule was to prevent confusion with butter. The result of the rule was to make imports of margarine from countries where margarine is normally packaged in tubs or rectangular blocks more difficult or impossible (repackaging would make the sale uneconomic). The Court held that the rule could not be imposed on imported margarine because it was disproportionate - clear labeling would be enough to prevent confusion with butter! However, this case has chance to fall in Keck principle. In Keck and Mithouard13 the ECJ held that certain equally applicable provisions restricting selling arrangements are not to be onsidered a hinderance on trade according to the Dassonville case and thus conform to Article 28. There is no doubt that the 'formalistic' approach introduced in Keck creates uncertainty. The ambit of the phrase 'certain selling arrangement' is unclear. The ECJ summed the position up in Morellato (case C-416/00), that 'the needs to alter packaging or labeling of imported products prevent such requirements from partially baked dough, but finished off on-site, such packaging to contain certain information. Here the ECJ held that the prior packaging did not mean it was necessary to alter the product. The rules therefore concerned selling arrangements and would be acceptable provided t5rhe applied equally in law and in fact. It seems that a requirement to package will also constitute a product requirement [Scwarz (case C-366/04)]. Australian law required chewing gum to be packaged if it was to be dispensed via certain types of vending machine, whereas other Member states, specifically Germany, did not impose this requirement. Those manufacturers of gum established in a State where there was no such requirement would there fore have to go to an extra expense of packaging the gum to distribute in Austria. Without considering the question of a selling arrangement, the ECJ went on to assess and accept the question of justification under Article 30. The Advocate general adopted the same approach as the court in Morellato, and found the requirement to be a product requirement. (c) Under Italian law the Company can only sell its products there in retail outlets, which are specifically licensed to sell fireworks by the government. The Company considers that if fireworks could be sold in non-licensed premises, sales would increase to the same level as in other EU countries, where it has a market. This decision has no effect upon content of the products rather selling arrangement. So Keck principle need to discuss. In Keck and Mithouard14, concerned the legality under EC law of a French law prohibiting the resale of goods in an unaltered state at prices lower than their actual purchase price. Keck and Mithouard, who had been prosecuted for breach of this law, claimed that it was incompatible with EC law. Although Article 28 was not expressly invoked, the reference being made for interpretation of Article 3 and 12, the Court, to provide the French Court with a useful reply, focused on Article 28. The ECJ ruled that these were permissible: "provided that those provisions apply to all affected traders operating within the national territory and provided they affect in the same manner, in law and in fact, the marketing of domestic products and those from other member states". The fact of the question is Under Italian law the Company can only sell its products there in retail outlets, which are specifically licensed to sell fireworks by the government. In this particular case, the measure regarding falls within selling arrangement because it does not affect the content of the product rather it regulates the method of sale. In Keck the ECJ held that certain equally applicable provisions restricting selling arrangements are not to be considered a hinderance on trade according to the Dassonville case and thus conform to Article 28, provided that they affect all traders and all domestic products and imports in the national territory, in the same manner, i.e, equal effect in law and in fact. The judgment creates two categories of trading rules: those which lay down 'product requirements', affecting in some way the goods themselves, and 'selling arrangements' which do not require any change to the product itself but only restrict the way it is marketed. 'Product requirements' are still governed by the existing rules on discriminatory and dual burden measures. 'Selling arrangements' fall outside the scope of Article 28 and are legal. They do not have to be justified or proportionate under Community law. This issue came to a head in the 'Sunday Trading' cases, see Case 145/88 Torfaen Borough Council v B&Q plc15 and Case C-169/91 Stoke-on-Trent City Council and Norwich City Council v B&Q plc16. A national law restricting what kinds of goods could be sold on Sunday restricted the sale of imported goods to exactly the same extent as the sale of domestically produced goods (it imposed an 'equal burden'), yet the ECJ still required such a rule to be justified. The ECJ itself undertook the assessment of the equal operation of the selling arrangement in law and in fact in Schutzverband gegen unlauteren Wettbewerb v TK heimdienst Sass GmbH (case C 254/98). Under Austrian legislation bakers, butchers and grocers may offer goods for sale on rounds from door to door, provided such sales are made by traders who have permanent establishment in that distinct or in a municipality adjacent to it to it and the sales relate to the type of good sold at that establishment. This rule became the subject of proceedings and the question as to whether the rule is compatible with Article 28 was referred. The ECJ found that the rules constituted a selling arrangement; it that went on to consider whether the rules applied equally in law and in fact. The fact that traders established in one part of Austria would also be affected in respect of home delivery services in other areas of Austria does not change this assessment. What was important is that the national legislation impedes access to the market of Member States for importation for products from other member States more than it impedes access for domestic product. Whereas the application of equality in law is based on the notion of discrimination, the approach to equality infact seems to bring us back to questions about access to the market, characteristic pre-Keck jurisprudence. If Keck apply, then Italian government will not be infringing Article 28. However, the argument of selling arrangements is really difficult to prove. (d) Under German law the Company faces prosecution for marketing its products in non- biodegradable wrappers that are inflammable. The German government claims this is an environmental hazard that endangers the life and health of animals and people. For the fact of the question it can be said that German government will rely on Article 30(ex 36) EC. Article 30(36) states that the provisions of Articles 28 and 29 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of: a) public morality, public policy or public security, b) the protection of health and life of humans, animals or plants; c) the protection of national treasures possessing artistic, historic or archaeological value; or d) the protection of industrial and commercial property. In this case German government will show the ground of the protection of health and life of humans, animals or plants. There are many cases where this ground has been pleaded. The following show the Court's approach. The ECJ will consider whether the risk to health is genuine, or a disguised restriction on trade as was found in Case 40/82 Commission v UK (re Imports of Poultry Meat)17. The UK law limited imports of French UHT milk by means of dealers' licenses on the ground of consumer protection. The Court found that a requirement that UHT milk should be marketed only by approved dairies or distributors (allegedly to ensure that milk was free from bacterial or viral infections), which necessitated the repacking and retreating of imported milk, was not justified, since there was evidence that milk in all Member States was of similar quality and subjected to equivalent controls. However in Case 124/81 Commission v United Kingdom (UHT milk)18 ECJ held that public health inspections of imports from other Member States have also attracted close scrutiny. Any inspection is, in principle, an MEQR, because, even if there is no charge for it, it causes delay and is a hindrance to importation. The importing state must take into account evidence of any tests already complied with in the exporting state, and only if it can show those are insufficient can it require additional tests. In contrast Rewe-Zentralfinanz eGmbH (Case 4/75) a plant health inspection applied only to imported apples, designed to control a pest called San Jose scale, which was clearly in breach of Article 28, was found to be justified on health's ground, since the imported apples constituted a real risk which was not arbitrary. The Court will take into account the attitude of other Member States and of international health bodies such as the World Health Organisation when assessing whether particular additives pose a real risk to health. In Case 178/84 Commission v Germany (Additives in Beer)19, Germany prohibited a large number of additives to beer. These were permitted in other Member States. The ECJ was not swayed by the argument that they posed an increased danger to German consumers because so much beer was consumed in Germany. In Commission v UK (Re imports of Poultry Meat) Case 40/82, a specific import licence requirement for Poultry and eggs, allegedly designed to prevent the spread of Newcastle disease, was found not to be justified. Yet in Commission v Ireland (Re protection of animal health) Case 74/82, which also concerned Newcastle disease, a similar import licence requirement was permitted under Article 30 on account of the exceptionally high health standards of Irish poultry, a standard which was not matched by British flocks. The court said it was necessary in each case to weigh the inconvenience caused by the administrative and financial burden against the dangers and risks to animal health. Thus it may be difficult to predict when a specific import licence requirement will or will not be justified. From the above discussion it can be said that German government has to show genuine evidence to success. Bibliography: Josephine Steiner, Lorna Woods, and Christian Twigg-Flesner, EU Law 9th edition 10 Aug 2006, Pg. 115-124 Craig, P., and De Burca, G., EU law: text, cases and materials 3rd edition (Oxford University Press, 2002) Chapter-15 Alston, P., Bustelo, M., and Heenan, J. (edition.), The EU and Human Rights (Oxford University Press, 1999) Pg. 77-79 Jacqueline Martin. & Chris Turner, Unlocking EU Law, ISSN0 340 88759 1, September 2005 Pg. 78-93 Read More