Free movement of goods - Full lecture notes LLB Law PDF

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EU LAW LARGE GROUP 5 Student Guide

Free movement of goods Context International trade is a vital component of all the Member States’ economies. The EU aims to boost trade between Member States through the creation of a single market. This enables goods, services, businesses and people to move freely from one Member State to another without being subject to unnecessary restrictions. The Treaty on the Functioning of the European Union contains provisions which enable businesses to challenge restrictions on the free movement of goods. It also recognises that sometimes Member States will have a legitimate reason to restrict imports. Businesses need to know when they will be able to rely on EU law in their national courts to challenge restrictions on free movement of goods. The UK’s exit from the EU will have a significant impact, but British businesses are likely to mitigate the impact by adapting their business models so they can still rely on EU free movement rights; e.g. by setting up subsidiaries in EU Member States. Outcomes By the end of this Large Group you should be able to: 1.

Identify and explain when national rules restrict free movement of goods and breach Article 34 TFEU

2.

Explain the difference between distinctly and indistinctly applicable restrictions

3.

Explain when Member States can rely on Article 36 TFEU or the Cassis mandatory requirements to justify restrictions on imports

4.

Explain how the ECJ has attempted to combat the overuse of Article 34 TFEU through its case law on selling arrangements

5. 1. FREE MOVEMENT OF GOODS Creation of a single market that removes barriers to trade. Benefit from more consumer choice in our economy and cheaper prices.  Articles 28 and 30 TFEU – customs union No customs duties when goods are transported from one member state to another  Article 110 TFEU – discriminatory taxation

Prohibits discriminatory taxation – member states cannot charge higher rates of tax on products from other member states. VAT rates are same regardless of origin. 2. ARTICLE 34 TFEU Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.  Quantitative restriction / Quota examples: Full / Partial French ban on import of British pork French permit 1,000 British sausages to be imported each year  Measures having equivalent effect to quantitative restrictions (‘MEQRs’) Procureur du Roi v Dassonville (case 8/74) [1974] ECR 837 All trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, trade between Member States, are to be considered as measures having equivalent effect to quantitative restrictions.  State measures only – Government rule Commission v Ireland (‘Buy Irish’ Campaign) (case 249/81) [1982] ECR 4005 Irish Goods Council ran a publicity campaign. Some members of this were appointed by the Irish Government so therefore the ECJ ruled that there was sufficient state involvement so could be challenged. The prohibition in Article 34 TFEU will cover a state rule which has not yet affected trade between Member States, but which might do so in the future 3.

DISTINCTLY APPLICABLE AND INDISTINCTLY APPLICABLE MEASURES

3.1 Distinctly applicable measures examples – imports only effected  The French government imposes a restriction on the import of wine from Bulgaria. Only 100,000 bottles of Bulgarian wine can be imported into France each year.  The UK government states that importers of UHT milk require a licence before they can import UHT milk into the UK from France  The Italian government bans the import into Italy of sausages made in Germany Commission v Ireland (Re Restrictions on Importation of Souvenirs) (case 113/80) [1981] ECR 1625 Imported goods must be stamped ‘foreign’ or state their origin. Was to try and increase Irish made goods. 3.2 Indistinctly applicable measures examples – imports and domestic products Capable of restricting imports and applies to all products.  Cider with an alcohol content over 10% cannot be sold in Italy  All chocolate sold in Poland has to be inspected by the Chocolate Standards Office in Warsaw. Walter Rau Lebensmittelwerke v De Smedt PvbA (case 261/81) [1982] ECR 3961 A Belgian law which required all margarine to be sold in cube-shaped packaging.

Commission v UK (Re Origin Marking of Retail Goods) (case 207/83) [1985] ECR 1201 A UK law which stated that certain retail goods could only be sold if they were marked with their country of origin. Creates national prejudice.

A national rule which affects all goods being sold on the national market, whether those goods originated outside that country or not, is known as an indistinctly applicable measure A distinctly applicable national rule can only be justified by a Member State under Article 36 TFEU. An indistinctly applicable national rule can only be justified under Article 36 TFEU or by the mandatory requirements in Cassis. 4.

JUSTIFICATIONS FOR IMPOSING RESTRICTIONS APPLICABLE MEASURES (Article 36 TFEU)   

–

DISTINCTLY

Public morality, public health, public policy, public security, protection of national treasures, protection of industrial and commercial property (intellectual property) (exhaustive) Must be proportionate – not go beyond what is necessary to achieve desired results Not ‘a means of arbitrary discrimination (genuine and not protectionist) or a disguised restriction on trade between Member States’.

4.1 Public morality R v Henn and Darby (case 34/79) [1979] ECR 3795 Regarding import of pornographic films from the Netherlands to the UK. Prohibited in the UK and therefore could’ve restricted imports. Conegate Ltd v Customs and Excise Commissioners (case 121/85) [1986] ECR 1007 Not successful – no prohibition in UK and could not restrict imports. Couldn’t restrict sex dolls entering the UK. 4.2 Public health – real health risk Commission v UK (Re UHT Milk) (case 124/81) [1983] ECR 203 UHT milk could only be imported into UK with a licence UHT milk could only be sold by licensed dealers who had packaged the milk in a UK dairy Necessary to protect public health. The burden of proof is on the member state to show a real health risk including scientific evidence. It must also have a degree of proportionality. Can bypass rules if the good comes with a certification from state of origin.  

4.3 Public policy Interpreted strictly. Does not include consumer protection. Must show threat to a fundamental interest of the State. Commission v Ireland (Re Restrictions on Importation of Souvenirs) (case 113/80) [1981] ECR 1625



Consumer protection falls outside scope of public policy

R v Thompson (case 7/78) [1978] ECR 2247  Threat to a fundamental interest of the State 5.

JUSTIFICATIONS FOR IMPOSING RESTRICTIONS – INDISTINCTLY APPLICABLE MEASURES (Article 36 TFEU and Cassis) 5.2 Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein (case 120/78) [1979] ECR 649 (note – this is the Cassis case)

German law banned weak liqueurs which applied to all products regardless of origin. The French cassis was too weak. If people buy weak liqueurs, they may get a taste for alcohol and want to try some stronger under public health. Applicable if measure is necessary, for mandatory requirements of the state, and the means of protection is proportionate. 5.3 First Cassis principle – mandatory requirements  Effectiveness of fiscal supervision (tax), protection of public health, fairness of commercial transactions and the defence of the consumer  Also; protection of cultural activities and protection of the environment Proportionate - Walter Rau Lebensmittelwerke v De Smedt PvbA (case 261/81) [1982] ECR 3961 ECJ emphasised use of alternative means that is less restrictive of trade. 5.4 Second Cassis principle – mutual recognition 1. There is a presumption that goods lawfully manufactured in one Member State should be able to be sold in another Member State; and 2. If there is a national rule that prevents this, it is up to the Member State to try to justify that rule 6.

CONCLUSION – DISTINCTLY APPLICABLE MEASURES  

APPLICABLE

AND

INDISTINCTLY

Distinctly applicable measures can only be justified using Article 36 TFEU. Indistinctly applicable measures can be justified using Article 36 or the Cassis mandatory requirements.

7. SELLING ARRANGEMENTS – OVERUSE OF ARTICLE 34 TFEU Widely defined. 7.1 Sunday opening hours – background Shops were opening on a Sunday going against acts. 7.2 Keck and Mithouard (cases C-267 and C-268/91) [1993] ECR I-6097 Article 34 TFEU does not apply to rules which are selling arrangements provided they apply in the same way to all products, whether imported or not. Selling arrangements don’t follow A34 and member state can have that rule. 7.3 Selling arrangement - when, where or how goods are sold.  When goods can be sold - restrictions on shop opening hours Punto Casa v Capena (case C-69 and 258/93) [1994] ECR I-2355  Where goods can be sold

Commission v Greece (case C-391/92) [1995] ECR I-1621  How goods can be sold – advertising restrictions Société d’Importation Edouard Leclerc-Siplec v TFI Publicité SA and M6 Publicité SA (case C-412/93) [1995] ECR I-179) 7.4 Rules that will not be selling arrangements - characteristics of the product Rules that require changes to the product itself, its name or to its packaging. They prevent a product lawfully produced and sold in one Member State from being sold in another Member State in its original form.  Brand names Verband Sozialer Wettbewerb v Clinique Laboratories SNC et Estée Lauder GmbH (case C-315/92) [1994] ECR-I 317 German law said that ‘clinique’ cannot be used as it suggests that it has medicinal properties. Was challenged and Clinique won.  Product packaging Verein gegen Unwesen in Handel und Gewerbe Kőln v Mars GmbH (case C470/93) [1995] ECR I-1923 Not a selling arrangement as it was involved in the packaging. 7.5 Can a selling arrangement still be a MEQR and fall within Article 34 TFEU?  Proviso to Keck - Article 34 does not apply to selling arrangements provided they apply in just the same way to all products, whether or not they are imported.  Should not discriminate against imports Konsumentombudsmannen (KO) v Gourmet International Products AB (GIP) (case C-405/98) [2001] ECR I-1795 New market/new product – could be discrimination against import as without widespread advertising consumers tend to buy familiar, domestic products. Selling arrangement: - WHEN/HOW/WHERE? - ARE CHARACTERISTICS DISCUSSED? - DOES IT EQUALLY MATCH FOR BOTH IMPORTS AND DOMESTIC PRODUCTS IN FACT AND IN LAW?...