The Government of Media - Assignment Example

Case of Media- Case Facts: The Government of Media announced that a charge is to be introduced on all dairy produce imported into Media. It wanted that the charge will come into force on October 1, 2005 and will be applied to all foods, which are made from dairy products, so as well as traditional milk, butter and cheese. It also wanted to include in the definition, produce containing substantial proportions of dairy ingredients, such as low-fat spreads, yoghurts and other foodstuffs, which are made from milk or milk products. The government wanted that the flat-rate charge would be applied regardless of whether the imports come from other EU countries or from other parts of the world. It also announced that the purpose of the charge is to provide support for the rural areas of Media, where the traditional copper mining has been in decline, causing considerable economic hardship. It recognized that over the past twenty years there has been steady erosion in the earnings of those living in the countryside, particularly the mountains in the western part of the country. It stated: “The funds raised by this charge will be used to support the communities in the most remote areas of the country, both by providing direct support to communities and by encouraging the development of new industries in rural areas, particularly tourism.” In relation to proposed charge, Minister for Rural Affairs, Paulos Bergman, said: “These additional funds will enable us to alleviate the hardship suffered by people living in rural areas. We anticipate that in a full year the charge will raise a sum of 30 million euros which will transform the social conditions in the most deprived parts of our country.” In trying to explain the charge for Media, the government narrated that Northwest Province of Media is largely mountainous, and while offering spectacular scenery, does not support any local industry apart from some forestry and very limited tourism. Until recently, it said that the population relied on the copper-mining industry, which had been the mainstay of the region’s economy since the thirteenth century. It admitted that the copper reserves have now largely been exhausted, causing widespread unemployment in the region. It was quick to state however, that the regional government has been supporting the development of tourism in the area, particularly ski resorts, but lack of resources has meant that this initiative has only taken effect in one area so far. Issue : Would the 1% charge to be imposed on all dairy produce imported into Media violate the treaty on free movement of goods? Resolution: The first thing to do is to determine if it violates the provision of Article 25, which provides no customs duty. Article 25 reads: “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.” There is a possibility of not violating Article 25 although there is required payment of what may appear to be a “customs” duty. The act may be permitted if the two requirements are complied with as per flowchart: 1. When the charge that is imposed is not having an equivalent effect of that of a customs duty, and 2. The charge is for a genuine service. Based on the above, I submit that there is a no violation of Article 25 of the treaty because the charge is not having an equivalent effect of that of a customs duty and that the charge is for genuine service. The genuine service is found in the purpose of the charge that is “to alleviate the hardship suffered by people living in rural areas.” Closely related to the case is the case of Commission v. France (Reprographic Machines) 90/79 (1981) as reported by DTI, 2006. In that case, the ECJ found a genuine system of taxation. Facts of case reveal French government had established a tax on photocopying machines, most of which were imported. The money from the tax was used to support publishing and buying books (i.e. fending off the negative effects of the spread of reprographic technology). The report said further: The Commission took the case to the ECJ claiming that the tax system was not genuine, but established to impose a charge on 18 imports. The ECJ held that the tax system was genuine because it was "a general system of internal dues applied systematically to categories of products in accordance with objective criteria irrespective of the origin of the product". Therefore, in a genuine system of internal taxation, the tax is imposed according to the same objective criteria on both domestic and imported products (and there is no reimbursement to the domestic sector). The tax has to be imposed at the same stage of marketing, according to same rules, by the same taxation authorities. In effect, the taxation system has to be completely neutral as to the origin of the goods. Applying the ruling in the above case of Commission v. France, it appears that Media’s 1% charge is a genuine system of taxation and therefore not violative of the treaty. References: 1. Commission v. France (Reprographic Machines) 90/79 (1981) 2. DTI, 2006, {WWW document], URL (http://www.dti.gov.uk/) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Case -2 Case of Media on requirement of certification Facts: To protect its citizens on possible effects of mad-cow disease associated with imported meat and animal products the government of media took action when it announced that it will be introducing measures to ensure that all meat and animal products on sale in Media are safe, a move that was widely welcomed in parliament. The Minister for Health is reported to have explained the move as ‘an essential measure to protect the health of the people of Media. Media is proud to have the highest standards of consumer protection in Europe, and the welfare of our citizens must be our highest priority.’ One of the measures adopted is the Certificate system. It required that, all beef and dairy products imported into Media would have to be accompanied by a certificate, which confirms that the foodstuffs have been heated to a sufficiently high temperature to ensure that all infectious agents have been destroyed. It also required that systems would apply to not only meat and meat products (which are implicated in the spread of BSE) but also all dairy produce (such as milk, cheese and yoghurt). Issue: Whether the certification system unduly restricts importation of goods and therefore violative of Article 28 of the treaty. Resolution: I submit that the certification system will not be violative of the treaty. The "Cassis de Dijon" judgement may not be applied here in principle. The principle is taken from Case 120/78 Rewe-Zentrale v Bundesmonopolvwerwaltung fur Branntwein [1979 ] ECR 649). The decision in the case was is refers to the application of what is now Article 28 of the EC Treaty (formerly Article 30), which relates to the free movement of goods within the internal market. Department of Trade and Industry (DTI) ,2006 cites the said principle in discussing “Mutual Recognition and Technical Harmonisation “ principle. It said that the principle is one of the cornerstones of the Single Market. The principle relates to the free movement of goods within the internal. Under the principle of mutual recognition, DTI said “no Member State has the right to forbid the sale on its territory of any product, which has been lawfully produced and marketed in another Member State, even if that product has been produced according to different technical or quality standards from those applied to its own products. This means that any product imported from a Member State should, in principle, be allowed entry into another Member State’s territory if it has been lawfully produced i.e. if it is in conformity with the regulations and with the production processes of the exporting country, and marketed within that country.” (DTI,2006) explained that Member States may only act against this principle in very limited circumstances, which involve "overriding requirements of general public importance" for example public health, protection of consumers or the environment. It further said that any measures taken by Member States must also be both necessary and proportionate. (DTI,2006) (Paraphrasing made) Based on the above article by DTI, the certification system is not duly burdensome and as long as the requirement, that the product had been lawfully produced i.e. “in conformity with the regulations and with the production processes of the exporting country and marketed within that country. References: 1. (DTI), 2006, {WWW document], URL (http://www.dti.gov.uk/) 2. Case 120/78 Rewe-Zentrale v Bundesmonopolvwerwaltung fur Branntwein [1979 ] ECR 649 Case of Dextra Facts: Dextran Daily News on October 19th 2005 announced that the government of Dextra would be introducing a Sales Tax on all dairy produce. It said that tax on full-fat milk, cheese, cream and other dairy products is to be 5% and that on low-fat products (defined in the regulation published today as lower than 45% of the normal fat content), 15%. A government representative cited that the said tax is being introduced in order to meet the shortfall in the government budget, and that this was more equitable means of raising revenue than an increase in the basic income tax. Prior to October 2005, Dextran Daily News on August 3rd 2005 reported that angry farmers held a noisy protest against the declining fortunes of the farming industry in Dextra. It reported that over the past ten years, farmers have seen the price of milk plummet by over 50%, while their outgoings (particularly for diesel) have undergone a substantial rise. The same news report said that over 95% of the milk produced in Dextra is turned into butter and cheese on the small farms in the hills. The local cheeses derive their distinctive flavour from the high fat content of the milk used in their production, which comes from the traditional Spotted Dextran breed of cattle. . Dextra is assumed a member of the European Union (EU), which recognizes a treaty among member states on free movement of goods. Part of the treaty is Article 90, which provides: 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. Issue: Will the new sales tax imposed on all dairy product violate article 90 (1) or Article 90 (2) of the Treaty on Free Movement of Goods? Resolution: By analyzing the turn of events, there seem to be no relevance of the sales tax with the problem of farmers. It would seem that the sales tax is not only imposed on imported products but to all dairy products without exemption. Case facts say, “Sales Tax on all dairy produce”. This tax is being imposed despite the protest from local farmers that these farmers are operating at loss because of cheaper imported products. A further look into the purpose of the sales tax tells us: “A government spokesman said that this was being introduced in order to meet the shortfall in the government budget, and that this was more equitable means of raising revenue than an increase in the basic income tax.” Hence, it appears that the sales tax is a genuine taxation since it was not being used to discriminate imported goods but is reported as an equitable means of raising revenue. Therefore Article 90 (1) could not be violated. As to the possibility of violation of Article 90 (2), it would seem to be not violated as well because there is also no evidence that the sales are particularly imposed on imported products to protect the close substitute of dairy produce or other products in competition must be studied. There seems to be discrimination on substitute products because again the sales tax covers all dairy produce. Very relevant to resolution of this case is an article on Internal Trade: Free Movement Of Goods, n.d.,p16, which discusses the topic On Prohibition On Discriminatory Or Indirectly Protective Taxation (Art. 90) where it distinguished a cee and a genuine system of taxation. Cee is illegal and in violation of the treaty on free movement of goods while the other one is legal because it is "a genuine system of taxation". The same article argued that the main rule is that a non-genuine taxation is considered an unlawful charge and that genuine systems of taxation fall under Art. 90, and forbidden only when discriminatory or indirectly protective. It cited the case of Capalongo v. Maya 77/72 (1973) where the Italian government had established an internal tax on egg boxes. It reported that the tax was levied on both imported and domestic products but the money collected was used to benefit the domestic product (i.e. reimbursed). The same article further reported: The ECJ held that the system was not a genuine system of taxation but an illegal charge on imports because the money was used to support the domestic product.” The definition of internal taxation actually constituting an illegal charge was given in Interzuccheri 105/76 and Cucchi v. Avez 77/76 (1977). The ECJ decided that a system of internal taxation constitutes a cee if it has the sole purpose of financing activities for the specific advantage of the taxed domestic product, the taxed imported product and the domestic product benefiting are the same, and the charges imposed on the domestic product are made good in full. In an earlier case, IGA V 94/74 (1975) also a partial reimbursement of tax was considered to constitute a cee, but nowadays that kind of situation would be considered as a case of discriminatory taxation (Art. 90). From the above case, it is clear that although in the first place the tax is imposed on both domestic and imported goods, the domestic producers are reimbursed in full, there is a case of illegal charges. This is because in the end, only the goods that cross-frontiers lose money. In the case of Dextra, there appears to be no reimbursement, hence not illegal. On the other hand, it discussed the definition of a genuine system of taxation as can be found in Commission v. France (Reprographic Machines) 90/79 (1981). In that case, that French government had established a tax on photocopying machines, most of which were imported. The money from the tax was used to support publishing and buying books (i.e. fending off the negative effects of the spread of reprographic technology). The report said further: The Commission took the case to the ECJ claiming that the tax system was not genuine, but established to impose a charge on 18 imports. The ECJ held that the tax system was genuine because it was "a general system of internal dues applied systematically to categories of products in accordance with objective criteria irrespective of the origin of the product". Therefore, in a genuine system of internal taxation, the tax is imposed according to the same objective criteria on both domestic and imported products (and there is no reimbursement to the domestic sector). The tax has to be imposed at the same stage of marketing, according to same rules, by the same taxation authorities. In effect, the taxation system has to be completely neutral as to the origin of the goods. Applying the ruling in the above case of Commission v. France, it appears that Dextra’s sales tax is genuine system of taxation and therefore not violative of the treaty. References: 1. Capalongo v. Maya 77/72 (1973) 2. Commission v. France (Reprographic Machines) 90/79 (1981) 3. Internal Trade: Free Movement Of Goods, no date Case of Sinistra Facts : Republic of Sinistra has the Law Governing the Retail Sale of Dietary Aids (Law No. 657/1928). Said law which was made effective 12th of April, 1928, regulates sale of foodstuffs intended to fulfill a specific dietary need. Certain regulatory provisions of the law read: Section 1 a) All foodstuffs which have been modified, or subjected to the addition of supplementary ingredients which are intended to promote health or wellbeing may only be sold through approved retail outlets. b) ‘Modified’ shall be interpreted as meaning subjected to any process which alters the nature of the product concerned in order to make the product more suitable for the dietary needs of a specific section of the population. c) ‘Supplementary ingredients’ includes any substance which is added to a product in order to meet a specific dietary need. Section 2 a) Such approved retail outlets shall be those which are registered for the sale of pharmaceutical products and the dispensing of prescribed medicines. b) A central register of such outlets shall be maintained by the Ministry of Health c) Approval for the addition of premises to the list shall be granted by the Licensing Committee of the Ministry of Health following consideration of an application made by the retail company concerned. Issue: Whether this present law of Sinistra violates the treaty on free movement of goods among EU countries particularly on quantitative restriction on movement of goods under Article 28 which provides: “Quantitative restrictions on imports, and all measures having equivalent effect, shall be prohibited between Member States.” Resolution: I submit that that the present law of Sinistra would violate the treaty on free movement of goods. The requirement for foodstuffs to be sold by authorized outlets in Sinistra would constitute having the equivalent effect of restriction on free movement of goods. The "Cassis de Dijon" judgement may be applied here in principle. The principle is taken from Case 120/78 Rewe-Zentrale v Bundesmonopolvwerwaltung fur Branntwein [1979 ] ECR 649). The decision in the case was is refers to the application of what is now Article 28 of the EC Treaty (formerly Article 30), which relates to the free movement of goods within the internal market. Department of Trade and Industry (DTI),2006 cites the said principle in discussing “Mutual Recognition and Technical Harmonisation “ principle. It said that the principle is one of the cornerstones of the Single Market. The principle relates to the free movement of goods within the internal. Under the principle of mutual recognition, DTI said “no Member State has the right to forbid the sale on its territory of any product, which has been lawfully produced and marketed in another Member State, even if that product has been produced according to different technical or quality standards from those applied to its own products. This means that any product imported from a Member State should, in principle, be allowed entry into another Member State’s territory if it has been lawfully produced i.e. if it is in conformity with the regulations and with the production processes of the exporting country, and marketed within that country.” DTI explained that Member States may only act against this principle in very limited circumstances, which involve "overriding requirements of general public importance" for example public health, protection of consumers or the environment. It further said that any measures taken by Member States must also be both necessary and proportionate. (Paraphrasing made) DTI proceeded to explain mutual recognition v harmonisation saying: The principle of mutual recognition means that not all sectors need to be harmonised, or harmonisation may be restricted to the "essential requirements". This ensures the free movement of goods within the single market while at the same time allowing diversity of products and services to be maintained. Directive 98/34/EC and Decision 3052/95/EC Mutual recognition and free movement of goods are reinforced by two specific instruments Directive 98/34/EC and Decision 3052/95/EC. Directive 98/34/EC seeks to prevent the creation of new technical barriers to trade by laying down a procedure for the provision of information in the field of technical standards and regulations.... Decision 3052/95/EC obliges national authorities to notify the Commission, who in turn notifies other Member States, when they take action which impedes or prohibits marketing of products which have been lawfully produced or marketed in another Member State. This aims to ensure the transparency of individual decisions on the application of the mutual recognition principle through a straightforward information exchange procedure. (DTI,2006) DTI concluded: Following its judgement on free movement of goods, the ECJ has also developed similar ‘mutual recognition’ case law to apply to the free movement of workers, freedom of establishment and freedom to provide services. Trade barriers-exercising Single Market Rights. There are a number of options open to businesses when, in the course of marketing their products in another Member State, they consider that they have encountered trade barriers related to national regulations. This problem solving network seeks to enable businesses to exercise their Single Market rights and various options exist including:making a confidential complaint directly to the European Commission, who may, where appropriate, take legal action against the Member State concerned (known as infraction proceedings). (DTI,2006) The law of Sinistra may not be deemed to be considered an exception under article 30, which reads: The provisions of Articles 28 and 29 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on 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. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States. 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 may not be prematurely invoked because there is no actual or imminent danger that may justify the undue restriction. The act to require sale by authorized outlets is in effect a disguised restriction. References: 1. DTI, 2006, {WWW document], URL (http://www.dti.gov.uk/) 2. Rewe-Zentrale v Bundesmonopolvwerwaltung fur Branntwein [1979 ] ECR 649), Case 120/78 Read More