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EU law II lecture 3 - Goods I

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Theodore Konstadinides

on 26 February 2015

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Transcript of EU law II lecture 3 - Goods I

Free Movement of Goods I
Lecture 3: Free Movement of Goods I
"The Union shall establish an internal market..."
Article 3(3) TEU
Art 34 TFEU
Article 26(2) TFEU
The internal market shall comprise an area without internal frontiers in which the free movement of
goods,
persons, services and capital is ensured in accordance with the provisions of the Treaties
The 'internal market'remains the core of substantive EU law

You cannot understand the law of the EU, nor the EU itself without a good understanding of the 'FOUR FREEDOMS' of the EU
The Internal Market
Relationship with EU I
EU Law I was primarily concerned with two things:

1. The institutions & functioning of the EU ("EU Public Law")
2. The enforcement of EU law & its mechanisms

EU II is an introduction to the SUBSTANTIVE LAW of the EU.

So far you have studied HOW EU law is enforced.

We will study WHAT EU law says.

So...you know how EU law is produced and how it is enforced.

But...Only in EU law II can you develop a critical understanding of the CONTENT of EU law
How is the Internal Market to be achieved?
NEGATIVE INTEGRATION:
"DEREGULATION"
POSITIVE INTEGRATION:
"HARMONISATION"
EU law prohibits Member States from restricting the four freedoms.
EU law REMOVES BARRIERS to cross-border trade
EU law mandates or allows the EU itself to legislate common standards in such a way as to encourage the four freedoms
Negative Integration
Art 28 TFEU
Art 30 TFEU
Art 110 TFEU
Fiscal Barriers To Trade
The Union shall comprise a customs union...
Customs duties on imports and exports and charges having equivalent effect shall be prohited between Member States
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
Non-Fiscal Barriers to Trade:
Physical and Technical Barriers
Art 34 TFEU
Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States
Art 35 TFEU
Quantitative restrictions on EXPORTS, and all measures having equivalent effect, shall be prohibited between Member States
Art 36 TFEU: Defences
The provisions of Articles 34 and 35 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.
Art 36 demonstrates two tensions at the heart of EU law:

1. The areas of sovereignty left to Member States to regulate.
2. The relationship between the economic goals of the Treaties and other, non-economic, goals.
Harmonisation
Art 26(1) TFEU
The Union shall adopt measures with the aim of establishing or ensuring the functioning of the internal market, in accordance with the relevant provisions of the Treaties.
Save where otherwise provided in the Treaties, the following provisions shall apply for the achievement of the objectives set out in Article 26. The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market.
Art 114(1) TFEU
How shall EU Institutions exercise their competence under Art 114 TFEU?
What values should inform the regulation?
When is it most appropriate field that the EU should act, and when should the Member State be responsible instead?
Art 34 TFEU
Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.
"Quantitative Restrictions"
Case 2/73
Geddo

'[national] measures which amount to a total or partial restraint of, according to the circumstances, imports, exports or goods in transit'
"Measures having equivalent effect"
DIRECTIVE 70/50
Directive only applicable for a transitional period, but still cited by the CJEU at times

Gives first insights into meaning of "MEQR" - measures equivalent to quantitative restrictions

Article 2 lists numerous examples of measures which might be seen to restrict imports, in violation of Art 34 TFEU

They include different requirements re: price, advertising, packages for imports
Lists numerous ways in which a MS might *discriminate* against foreign goods, directly or indirectly
DASSONVILLE
Case 8/74 [1974] ECR 837
Dassonville is the first important treatment of this area by the CJEU, which has come to be the key actor regarding Art 34 TFEU
Belgian law required that goods bearing a designation of origin have a certificate of authenticity
Dassonville imported Scotch Whisky from Belgium to France
This made it almost impossible to obtain such a certificate, as the goods were already in a third country
CJEU:
"All trading rules enacted by Member States which are capable of hindering, directly or indirectly actually or potentially, intra-Community trade are to be considered as measures having effect to quantitative restrictions"
The CJEU does not mention discrimination
DISCRIMINATION
Promotion of domestic goods
Campaigns which promote goods manufactured at home - Are these illegal under Art 34?
Commission v Ireland (Case 249/81 [1982])
The Irish government part-funded campaigning by the 'Irish Goods Council' to encourage people to 'buy Irish'.
CJEU: such activities were designed to achieve 'the substitution of domestic products and are liable to affect the volume of trade between MS.
CJEU rejected the argument that this was not MEQR under Art 34 TFEU.
Commission v UK (Case 207/83 [1985])
CJEU: English law on goods displaying country of origin was an MEQR as it would enable consumers "to assert any prejudices which they have against foreign products".

Such requirements are only allowed if they imply a certain quality or tradition of the goods.
Favouring Domestic Goods Through Procurement
Commission v Ireland (case 45/87 [1988])
CJEU upheld the complaint that a requirement by Dundalk Council that bidders for a procurement contract for water supply use Irish-approved pipes was an MEQR.

The Irish rule would have the effect of restricting internationally approved imports.
Discrimination in the PRACTICE of the state
Commission v France (Case 21/84 [1985])
The practice of the French authorities to favour the purchase of French franking machines even though the law was neutral regarding the origin was an MEQR.
Price Fixing of Imports
Libro
Case C-532/07 [2009]
Austrian law requiring that imported books be sold at the price fixed by the publisher put them at a disadvantage compared to Austrian-published books, and it was an MEQR.
Measures making imports more costly or difficult
Schloh
Case 50/85 [1986]
"The requirement that an imported car from Germany to Belgium must undergo a roadworthiness test 'makes the registration of imported vehicles more difficult and more onerous and consequently is in the nature of a [MEQR]"
In the 'Buy Irish' case, it was crucial that the Irish government was a coordinator and funder of the campaign.

Individuals and private companies are not bound by Art 34: there is no 'horizontal' application - you cannot be sued by Orangina for prefering Irn Bru.

However, the State's failure to intervene in certain private actions which restrict imports may make it liable:

In
Commission v France (C-265 [1997])
aka, the 'Spanish Strawberries' Case, the French government's failure to prevent French farmers from disrupting the importation of foreign agricultural produce breached EU law.
Cassis de Dijon
Rewe-Zentral AG v Bundesmonopolverwaltung fuer Branntwein Case 120/78 [1978] ECR 649
What of rules which apply to all products equally but which might still tend to put imports at a disadvantage?

Art 3 of the transitional Directive 70/50 envisaged such measures by classifying rules which insisted upon shape, weight, composition, presentation, and identification of products and which would have a restrictive effect on the movement of goods
Indistinctly
Applicable Rules

The applicant challenged a German law which mandated that liqueurs must have a minimum alcoholic content of 25%
This meant that the applicant could not import Creme de Cassis de Dijon, a French drink, which could be legally sold in France, with an alcoholic content of between 15 and 20%.
The CJEU'S decision is the MOST IMPORTANT with regard to the free movement of goods, and one of the most historic judgments of the CJEU in the history of the EU
You should read the judgment in full! Or at least paragraphs 8-14!
The CJEU held that the German law, although it applied equally to all products, was an MEQR, as it was more difficult for a foreign product, which was already legally sold and marketed in another MS to meet such a requirement

However, the judgment is very complex:

The CJEU starts by saying that Member States have the right to regulate the sale of goods in their territory (this is called the
Rule of Reason
), as long as the EU has not already pre-empted State Regulation though harmonisation (NB: Arts 26, 114 TFEU)

However, any regulation of the market which creates obstacles for foreign goods is an MEQR
The limits of Cassis...?
The Court's expansive approach in Cassis has very fuzzy edges. How far should it be taken?

Post-Cassis it was extended to fat-level requirements of cheese in France (
Deserbais [1988]
), an Italian law requiring vinegar to be made from wine (
Gilli & Andres [1980]
and a Belgian law that margarine be sold in square packages (
Rau [1981]
)

The Member States had to show that these rules could be justified using the
mandatory requirements
defence

However, ALL rules can be said to affect trade in some way

.....very wide scope....
The early approach: An expansive interpretation of Cassis
Cineteque [1985]
A French law banning the sale/rental of films for a year after their release was held to be an MEQR under the Cassis rule.
AG Slynn opined that this rule is outside Art 34 - no extra requirements on foreign films.
On the facts, France justified the rule - mandatory requirements defence.
Torfaen v B&Q [1989]
B&Q relied on Art 34 TFEU as a defence when prosecuted for violating Sunday Trading Laws.
CJEU followed Cineteque: a restriction on trading would have an effect on 'Community trade' (i.e. imports).
On the facts the MEQR was justified - mandatory requirements defence.
Keck & Mithouard (1993)
Keck and Mithouard were prosecuted for breaching a law banning reselling at a loss. They claimed that this violated Art 34 TFEU

Read this judgment! Or at least paragraphs 12-18
'the Court considers it necessary to re-examine and clarify its case-law on this matter'

CJEU approved the decision in Cassis re: national
product requirements rules.
However, 'national provisions restricting or prohibiting certain
selling arrangements
is not such as to hinder directly or indirectly, actually or potentially, trade between Member States within the meaning of the Dassonville judgment[...], so long as those provisions apply to
all
relevant traders operating within the national territory and so long as they affect in the
same
manner, in law and in fact, the marketing of domestic products and of those from other Member States
So, after Keck...
Keck means that rules regulating
how, where or when goods are marketed or sold
, as long as they apply, in law and in fact, in the same manner to domestic and foreign goods, do not consitute MEQRs.
This has been justified on the basis that goods must only meet one standard (the
single burden
argument) whereas 'product requirements' mean that imports are subject too a
dual burden
. That of their country of origin, and that of the country of destination.
It therefore becomes crucial to distinguish between rules relating to selling arrangements and those regulating product requirements.

This can be very difficult!!

In
Familiapress C-368/95 [1997]
, an Austrian law banning prize competitions from newspapers (ostensibly regulating marketing) was held to constitute an MEQR as the effect was that a newspaper legally sold in Germany could not be sold in Austria.

As such, it must be justified if it is to remain legal under Art 34 TFEU.
Distinguishing between Cassis and Keck
Selling arrangements which are also MEQRS: Revisiting the detail of Keck
Swedish law banning advertising for products for children under 12 years old was challenged.

CJEU revisited the requirement that rules on selling arrangements 'affect in the
same manner, law and fact,
the marketing of domestic products and of those from other Member States'.

CJEU held: an
outright ban
might affect imported goods more than domestic ones if 'television advertising was the only effective for of promotion enabling it to penetrate the Swedish market'.

Selling arrangements may thus include rules that restrict the possibilities of advertising.
De Agostini C-34-36/95 [1997]
Applying De Agostini...
In
Gourmet International [2001]
, CJEU followed De Agostini to a
ban on advertising of alcohol
in most publications in Sweden.
The ban affected imports more than domestic products.

In
Franzen [1997]
, CJEU held: a law requiring a
licence for alcohol retailers
is also an MEQR as such licences were mostly granted to Swedish firms.
The rule applied differently in fact to foreign products.
A new approach?
Some new cases seem difficult to rationalise according to the Cassis/Keck/De Agostini line of cases...
Commission v Italy C-110/05 (Trailers Case)
An Italian ban against the
USE
of motorcyle trailers was an MEQR - effect of hindering intra-EU trade.

CJEU held: such rules block
Market Access
for such products. They must be justified - Mandatory Requirements.

The CJEU applied similar reasoning to a Swedish ban of watercraft
USE
except on designated waterways, which were very limited.

The effect would be to hinder the import of such watercraft. As such, the law must be justified. (
Aklagaren C-142/05 [2009]
)
Next Time
Balancing economic and non-economic values
Art 36: justifying QRs and MEQRs.
Mandatory Requirements and justifying Cassis-type measures which constitute MEQRs.
How much margin for error do Member States have?
Harmonisation and pre-emption. EU market-marking and positive integration. What level of protection?
Key themes so far
1. Quantitative restrictions
2. Measures having equivalent effect
3. Defences under art 36 TFEU (next week)
4. Indistinctly applicable measures as MEQRs
5. The Rule of Reason (where no harmonisation)
6. Mutual Recognition
7. Mandatory Requirements justification (next week)
8. Selling arrangements v Product requirements
9. Selling arrangements as MEQRs: Different effect in fact or in law
10. Market access: A new approach?
Dr Theodore Konstadinides
*
*
WHO IS BOUND?
Two judicial inventions!

In Cassis the CJEU introduced

the principle of MUTUAL RECOGNITION - ie when a good is legally sold in one country, it should not be illegal to sell it in another country

This means that the Member State of origin of a product is the one which regulates the conditions of sale

The CJEU also held that such MEQRs can be JUSTIFIED 'in so far as those provisions may be recognized as being necessary in order to satisfy mandatory requirements relating in particular to [certain legitimate policy aims]'

"Mandatory Requirements" = overwhelming policy considerations
1
2
Held...
Full transcript