The Trade Law in EC - Essay Example

a) Germany’s imposition of a tax rate imposes a burden on German consumers that will not exist in other s. Therefore, the question that arises in this case is – is Germany’s tax valid and sustainable under Community law that needs to allow for free movement of goods within the European Union? It may be noted that case law has established that in all such matters which were once in the province of national law, it is now EC law that will pre-empt national laws. For example in the case of R v Ministry of Agriculture1 para 18 clarifies that it would not be possible for a member State to assert its law where an EU Community Directive with a different objective exists - a Directive that has been established for the harmonizing of relevant measures between nations. In this instance, Germany is proposing to impose a tax to achieve the same objective as an EC directive. There is a Directive in effect, which is that of inspections for salmonella in poultry. Germany’s tax merely helps to ensure that the objectives of the EC Directive to ensure the quality and purity of poultry sold in the member States is protected. The fact that such a Directive exists implies that this issue will have priority in a national framework as well and that the Member States will be expected to do everything they can to implement it. In carrying out tests for Newcastle’s Disease in chickens, Germany is trying to achieve the same goals as the EC directive – i.e, ensuring the quality and purity of chickens, therefore under Community law, it will be considered perfectly legal for Germany to impose such taxes. Although this issue of poultry may not be deemed to constitute an issue important significant enough to declare that other Member States must also impose similar taxes to adhere to the EC Directive, nevertheless Germany’s move to impose this tax will not be considered to be in violation of EU law. b) The basic issue in this case is the conflict between UK’s proposal to control emissions through the imposition of higher road tax rates vis a vis the need to maintain free trade and a single common market within the European Union. The Commonwealth of European nations was established with the aim of promoting economic growth, as laid out in Article 1, which specifies that by “establishing a Common Market” the goal is to “promote “balanced and sustainable development of economic activities” and “a high degree of competitiveness2. The EC Directive on auto emissions3 has already mandated measures to reduce emissions, which has increased manufacturing costs for both British and other European car makers (except Germany, where most cars are already equipped with catalytic converters). Therefore, in essence, the cost of the 2 litre car, which caters to the higher income groups, is already high due to the need to build it with a catalytic converter. Additionally, doubling the road tax on these cars places a further burden on the consumer who purchases these cars. Since the number of cars already being manufactured in the UK is small, placing this additional burden of extra road tax will discourage buyers from investing in the cars, and this in turn, adversely impacts upon the rights of the car manufacturers to fair competition and in fact, their very survival. For example in the case of EC CAR4, the Commission held that when purchasing decisions of customers are affected, this would distort the single market and affect trade. Similarly, competition that is guaranteed under the Common market will also be affected in this case with increased road tax and consumers may opt for the smaller cars where they can pay less taxes. This will provide an unfair advantage to manufacturers of cars with engines of lower engine capacity, including imported cars – at least within Britain, negating the goals of the European Common Market and could thus be construed as illegal under Community law. c) This new rule will be a direct and flagrant violation of EC Directives on emission controls. The EU has proposed more stringent standards and is shooting for an ultimate phase out of leaded gasoline, which cannot be achieved if the use of older cars running on gasoline is encouraged5. There is a possibility that they may not meet the new stringent emissions standards required under Community law. Car manufacturers in France, Italy and the UK have protested against stringent EC emission standards as being violative of competition and have succeeded in their case.6 However, such older cars which may not meet new emission standards are being offered lower rates of tax, particularly those which are imported. In the first place, this provides an advantage to imported car manufacturers in the UK market, over and above British cars. Secondly, such a tax rate is also likely to influence consumer purchase decisions in favor of older imported cars where they will be paying less taxes. But these cars will also have a higher than permissible emission rate, thereby violating the goals of the EC Directive to reduce air pollution that is caused by emissions. It will defeat the objective of the EC to adhere to emission requirements, by encouraging consumers to purchase older cars which are imported. New cars will already be priced higher than older cars, especially because new emission requirements require catalytic converters, which increases the cost of manufacture, especially in cars with smaller engine capacity. Therefore, newer, cleaner cars are in effect, placed at a disadvantage in the European Common market within the UK, hence affecting competition. But most important of all, many of these older cars will not meet current EC emission requirements, thereby violating EC Directives and can therefore be contested successfully in European Courts as being violative of Community law.. d) Swedish exhaust emissions requirements are distinctly higher than other countries in the European Union and their requirements are also higher. Therefore, all imported cars will be placed at a disadvantage in relation to Swedish cars and will be obliged to pay higher rates, which will impede the free movement of goods and people within the European common market. The goal of the EC has been to introduce standards that will be acceptable to all countries within the European Union, and thereby the EC has been gradually introducing stringent requirements for emission controls on cars. In 1989, the EC adopted its directive on emissions from small cars with an engine capacity of 1.4 litres, and standards approximating higher U.S. and Swedish standards were adopted.7 Therefore, it is likely that there will be opposition from other member states within the European union if such higher fees are charged for emission tests. However, it must also be noted that while the European Union does not impose any fees, it does not effectively help member States to enforce such taxes and fines either8. Inherent in the notion that such fees have to be paid for emission tests in Sweden is the possibility of imported cars being found inadequate in terms of Swedish emission control requirements. This will entail higher fees and costs for the owners and/or users of such imported cars to make necessary improvements to their cars to meet the enhanced requirements and pass the test and their activity and free movement will be restricted until they are able to pass such stringent tests. Thus, they will be placed at a disadvantage as compared to Swedish cars, who will have greater freedom of movement within Swedish territory. As a result of such requirements, consumers and transport companies may prefer to purchase Swedish cars, which they can use throughout Europe, as opposed to cars from other countries which they cannot drive in Sweden without passing a more stringent test. As such, this would distort trade and the free movement of goods which is contrary to the goals of competition of the European Union and could be construed as illegal under community Law. However, under the precedent set out in the Cassis case8, it is likely that Sweden’s higher fees may form the basis for revision of procedures in Member States through the issue of an EC Directive, since this is a matter that involves the environment. e) In the matter of imports and exports within individual countries within the European Union, the provisions of the EC Treaty need to be applied with references to the relevant articles that offer guidance in the kind of legislation that is to be applied in each case9. Articles 28 and 29 of the EC Treaty are geared toward ensuring the free movement of goods within the European Union, but where exclusions to this legislation must be considered, Article 30 will have to be taken into account10. Article 30 of the EC Treaty introduces certain important qualifications when restrictions on imports from other countries will be deemed to be justified. Such qualifications include the “grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property”. This provision was first tested in the case of Cassis11, where France contested Germany’s move to restrict import of its wines on the grounds that it did not meet the minimum alcohol standards laid out in Germany. The concern for the health of its citizens was cited by Germany as its reason for restricting French wines which had a lower alcohol content and were likely to introduce a tolerance for alcoholism. The need to protect its consumers from unfair producer or distributor practices was cited as yet another reason for Germany’s restriction of imports. Germany argued that allowing a lower standard would result in an overall lowering of EU standards. However this argument was rejected by the European Court of Justice on the grounds that when certain standards had been applied and found relevant in one member state, there was no reason to reject them in another State without a compelling reason. The Court held that “there is therefore no valid reason why, provided that they have been lawfully produced and marketed in one of the Member States, alcoholic beverages should not be introduced into any other Member State.” The “mandatory requirements” that would permit barriers to trade between member countries could only include such national legal provisions that pertained to public health protection, or the maintenance of fairness in commercial transactions or wherever the interests of the consumer were threatened. In such an instance, where a mandatory measure in existence in a particular state was deemed to be valid, the Commission deemed that it would be necessary for minimum standards to be set through the issue of an EC Directive. Therefore, this case is significant in that it has attempted to resolve the conflicts arising out of principle of absolute harmonization between member States which was in existence before this case, in favor of creating a common set of standards that are established on the basis of “mutual recognition.” This has been deemed to be particularly relevant in such areas as environmental protection where the interests of all nations are affected and where it would be necessary for the Commission to issue Directives. Therefore, this case has set the precedent for arriving at a reconciliation of differing standards among the Member States, especially since in the matter of environmental protection, it is better to follow the precautionary principle, that restricts environmental pollution. Therefore, under this principle, a member state would be justified in restricting the imports of a particular product/s on environmental grounds. For example in the Danish Bottle case12 the Danish bottling regulations requiring reusable containers with licenses, the Commission held that it was a barrier to trade but the EU overruled in favor of the Danes, on environmental grounds. Bibliography * Case C-5/94, R. v. Ministry of Agriculture, Fisheries and Foods, ex parte Hedley Lomas, [1996]E.C.R. I-2553 * Case 19, Danish Beer Bottle case. [Online] Available at: http://www.american.edu/TED/danish.htm * Case 21, ECCAR, EC Vehicle Emissions Limits [Online] Available at: http://www.american.edu/TED/eccar.htm; accessed 1/28/2006. * Craig P and de Burca G, EU Law, Text Cases and Materials, Oxford, 3rd edition * “Consolidated version of the EC Treaty” [Online] Available at: http://europa.eu.int/eur-lex/en/treaties/dat/C_2002325EN.003301.html; accessed 1/28/2006 * Economic Instruments GEO Outlook. [Online] Available at: http://www.unep.org/geo2000/english/0173.htm; accessed 1/28/2006. * Directive 89/458/EEC of the European Union * Directive 89/458/EEC * McCormick, John , 2001, Environmental Policy in the European Union, New York: Palgrave * Weatherill S. and Beaumont P., "EU Law", Third Edition, 1999, Penguin Books, pp. 1065-1070 Read More