#14638 - Free Movement Of Goods - GDL EU Law

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The Internal Market

Treaty Basis

Art 3 TEU

• 3(1): Union’s aims of peace & wellbeing for its people

• 3(2): an area of ‘freedom, security and justice without internal frontiers’

• 3(3): ‘the Union shall stablish an internal market’:

  • ‘It shall work for the sustainable development of Europe based on balanced economic growth and price stability,

  • ‘a highly competitive social market economy,’

  • ‘aiming at full employment and social progress,’

  • ‘and a high level of protection and improvement of the quality of the environment. ‘

  • ‘It shall promote scientific and technological advance.’

• One of the most basic integration mechanisms is a market. A customs union is a more advanced structure of integration, with internal policies and customs for foreign trade. An internal market is the most sophisticated form, with internal & external laws.

Art 26 TFEU

• Competence to adopt measures to establish the internal market - the Union’s institutions will actually intervene & introduce conditions which will lead to an internal market. Not just the removal of obstacles, but positive intervention.

Art 27 TFEU

• ‘Commission shall take into account the extent of the effort that certain economies showing differences in development will have to sustain for the establishment of the internal market and it may propose appropriate provisions.’

Art 28 TFEU

• Customs union applying to products from MS & third countries

Art 29 (ex Article 24 EC)

• Free circulation of products after import formalities

  • Once a product has been imported from a 3rd country to a MS, and has been subject to customs & trade rules in that MS, it is assimilated to domestic products

• It doesn’t make a difference whether it was produced here or another country

Art 30 TFEU (ex Article 25 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.’

Art31 TFEU (ex Article 26 EC)

• ‘Common Customs Tariff duties shall be fixed by the Council on a proposal from the Commission.’

Art 32 TFEU (ex Article 27 EC)

• Guiding aims for the Commission:

  • Promoting trade

  • Developing competition

  • Supply of raw materials & semi-finished goods – avoiding distorting conditions of competition in this regard

  • Avoiding serious disturbances in MS economies

Harmonisation of the Market

Emerging themes:

• Incremental, evolving set of principles: going from broad to narrow to broad

• Drastic principles of Dassonville & Cassis de Dijon (below) must be seen in their political contexts: the Commission was finding it very hard to adopt legislation (and when they were successful it was adopted on the lowest common denominator), so the CoJ took it upon itself to implement EU objectives

• Deregulatory measures (creation of competition): by being forced to accept other MS’s standards, the market is being deregulated

• The role of national courts: the CoJ is viewed as deeply political and there can be conflict, however there is often complicity between the domestic & EU courts through preliminary references

• Limited trade freedom: Art 36, for instance, defines that it is permissible to restrict free movement to protect a non-economic interest. Note also the inventions of CoJ - mandatory requirements

This is negative harmonization i.e. national rules have been harmonized by removing obstacles. It works from the bottom up; on an ad hoc basis with the CoJ gradually removing restrictions.

Positive harmonization is not from the CoJ but from the legislature. It is from the top down. The implementation of one set of rules which stretches throughout the EU would get rid of the need for mutual recognition. However this is a bold political move (especially considering the EU’s tumultuous present condition):

• This is both deregulatory and reregulatory: it removes 28 legal structures, but replaces them with one

• In order for it to work, it requires the Union to pick and choose regulations worthy of protection and make sweeping legislative changes that may affect different national environments differently

• Two practical difficulties:

  • Substantive limitations: the Union may only adopt measures in an area where they have competence

  • Procedural constraints: how to implement measures & at what standard? QMV? Normal legislative procedure? At present our textual basis in Art 115 TFEU gives the Union power to harmonise the free market unanimously

• Robert Schuman, 9 May 1950:“Europe will not be made all at once, or according to a single plan. It will be built through concrete achievements which first create a de facto solidarity. The coming together of the nations of Europe requires the elimination of the age of old opposition of France and Germany…The pooling of coal and steel production should immediately provide for the setting up of common foundations for economic development as a first step in the federation of Europe. … The solidarity in production thus established will make it plain that war between France and Germany becomes not merely unthinkable, but materially impossible’.

• COM (86) 310 final, Commission White Paper on the Internal Market, “The reason for getting rid entirely of physical and other controls between Member States is not one of theology or appearance, but the hard practical fact that maintenance of any internal frontier controls will perpetuate the costs and disadvantages of a divided market.’

Art 114 TFEU (ex Article 95 TEC)

• Competence for EP & Council to adopt measures in order to establish the internal market using the ordinary legislative procedure

• This uses the ordinary legislative procedure via QMV - they have the competence to establish the internal market

  • Para 1: most fundamental change as this makes it much easier

  • Para 2: exceptions remain in the competence of Art 115 (unanimity), as these are the most sensitive elements of market integration

  • Para 3: limitations on the opening up of the market; this provision takes note of the non-economic interests that make MS cautious about unrestricted trade

  • Para 4: potential exemptions for MS to maintain some national restrictions

  • Paras 5-6 (added at Amsterdam): extends previous para 4 exceptions & leaves ultimate adjudicative powers with the CoJ

Art 115 TFEU (ex Article 94 TEC)

• ‘Without prejudice to Article 114, the Council shall, acting unanimously in accordance with a special legislative procedure and after consulting the European Parliament and the Economic and Social Committee, issue directives for the approximation of such laws, regulations or administrative provisions of the Member States as directly affect the establishment or functioning of the internal market.’

Naturally, in the 50s-70s there was not much legislation going on according to the special legislative procedure; this threshold being too high to push through directives in any real sense. Thus the CoJ took it upon itself to give traders access to the free market in practical terms, on an ad hoc basis and rooting principles therefrom. (Cassis de Dijon below)

Tobacco Advertising Case Study

Directive 98/43 effectively banned tobacco advertising. At the time 8 MS were tobacco producers. This was adopted by majority voting. Austria & Germany voted against; Spain & Denmark abstained; and UK voted in favour.

Germany then challenged the directive under an annulment action:

Germany v European Parliament and Council (Tobacco Advertising)

The argument for the directive was that there was inconsistency in the Union on tobacco advertising, and traders would be attracted to those MS with the least onerous laws in that regard, and this would distort the market

Germany said that the measure, at its root, was actually about public health: the Union has no competence to adopt measures on public health

Held: it upheld the provision; but also suggested that it would be unrealistic to suggest the measure would not affect public health. It confirmed that Art 114 does not give a general power to regulate the market: rather, the provision is there to:

• Establish the internal market

• To improve the functioning of the internal market

This can be done by adopting harmonising measures that eliminate obstacles to the internal market; these obstacles may be actual, or potential (but future obstacles must be likely). Thus different rules across MS must be proved to be obstacles i.e. significant distortions. This has an important constitutional dimension: it limited the Union’s power, and also establishes the CoJ as the final arbitrator of the Institutions & MS.

Thus, the Court held that, though advertising in magazines had a direct effect, the advertising in poster form was too remote an effect on the market, and therefore the Union had no competence to adopt the measure. Accordingly they annulled the measure.

British American Tobacco

Argued that the Union had no competence to adopt this measure

Held: measure was perfectly legal & within competence of Art 114. They held that there was growing public concern regarding tobacco health risks; it would be likely to affect the market when MS responded to such public concerns, and such responses would likely be inconsistent

This is a different approach: no references were made to the limits of conferred competence. Rather it focusses on principles of significant market distortion, and uses the information given by the legislature to justify this i.e. the legislature says there is growing public...