1. EU INTERNAL MARKET: FREE MOVEMENT OF GOODS Ljiljana Biukovic Assistant Professor Faculty of Law, UBC October, 2007 LAW 341/EU LAW

2. Setting up the internal market Article 2 TEC: The Community shall have as its task, by establishing a common market and an economic and monetary union and by implementing common policies or activities referred to in Articles 3 and 4, to promote throughout the Community a harmonious, balanced and sustainable development of economic activities a high level of employment and of social protection, equality between men and women, sustainable and non-inflationary growth, a high degree of competitiveness and convergence of economic performance, a high level of protection and improvement of the quality of the environment, the raising of the standard of living and quality of life, and economic and social cohesion and solidarity among Member States.

3. EU as a Custom Union Internal section - regulation of intra- Community trade: Elimination of custom duties and charges; Elimination of internal borders to facilitate four freedoms Veterinary and plant health legislation External section - regulation of trade with third countries: common custom tariffs; common customs code; common commercial policy.

4. DECISION MAKING IN THE INTERNAL MARKET 1.Co-decision procedure prevails: - Article 95 of the EC Treaty (ex Art 100a) stipulates that the majority of legal transactions relating to the establishment and functioning of the internal market are adopted in accordance with the co-decision procedure (Art. 251). This provides for the Council to give a qualified majority ruling by co-decision with the European Parliament 2. The unanimous decision of the Member States within the Council: fiscal provision, certain aspects associated with the free movement of persons and measures involving the rights and interests of employed persons.

5. Administering and monitoring the application of the rules of the internal market The European Commission: a central role in managing the rules of the internal market, particularly in regard to their performance, updating existing rules in close cooperation with Member State representatives meeting within committees to work on technical harmonization; publishes an annual report on the application of Community law in the Member Statestechnical harmonization National authorities: central role in monitoring the application of Community legislation on the internal market falls in the first instance; must verify that European directives are correctly applied following their transposition into national law. The Commission and the ECJ: also ensure that Community law is adhered to and that directives are actually transposed. The Commission's monitoring methods are based on complaints lodged by private individuals, businesses or Member States. If the Commission notes an infringement, it begins an infringement procedure. If the State in question does not comply with the Commission's recommendations following this procedure, the Commission may being the action before the Court of Justice which gives a ruling as a last resort. Since the Treaty on European Union came into force in 1993, the Court has been able to impose sanctions in the form of penalty payments.

6. THE FOUNDATIONS OF FREE MOVEMENT 1.The principle of non-discrimination (Art. 12 TEC): Article 12 prohibits "any discrimination on grounds of nationality; it is prohibited to treat imported goods differently to domestic goods. Discrimination is understood as meaning different treatment, on the basis of nationality, under the same circumstances The ECJ adapted the principle of non-discrimination to other circumstances: in the context of services - cases of discrimination from the point of view of both nationality and residence; gender equality, another context 2. Mutual recognition (derives from the case law) The principle claims that the legislation of another Member State is equivalent in its effects to domestic legislation This principle was laid down by the Court of Justice in the Cassis de Dijon judgment. Although this principle of mutual recognition applies chiefly to products, it has also had an impact on the other freedoms, particularly those involving the performance of services, where it underlies the concept of the recognition of diplomas. 3. Community legislation (in addition to the principle of mutual recognition): Treaty provisions and regulations with direct effect Directives: Article 3 of the EC Treaty provides for "the approximation of the laws of Member States to the extent required for the functioning of the common market".

7. FOUR FREEDOMS 1. Freedom of movement for goods 2. Freedom of movement for persons 3. Freedom of movement for services 4. Freedom of movement for capital

8. INTERNAL MARKET AND FREE MOVEMENT OF GOODS Article 14 TEC: mandates that the EC shall establish an internal market as an area without internal frontiers, in which the free movement of goods, persons, services and capital is ensured in accordance with the Treaty

9. Obstacles to Inter-State Movement of Goods Recognized in TEC 1.Custom duties and charges having equivalent effect (Art. 23-25)): duties on border crossing and any other charges with equivalent effect 2.Discriminatory taxation (Art. 90): taxes in excess of tax for similar domestic products 3.Quantitative restrictions on imports and exports (quotas) and all measures having equivalent effect (Art. 28, 29): MEE could be any public and private measure, including law, an internal regulation, decisions of a judge or a court, administrative rules and regulations giving discretion to discriminate (Irish Souvenirs case 249/81)

10. Quantitative Restrictions and MEE (Articles 28 and 29 TEC) Quantitative restrictions = explicit restrictions such as quotas MEE = implicit restrictions such as a duty to obtain a licence to import or export Procureur du Roi v. Dassonville (case 8/74): seminal case that establishes: - Dassonville formula: All trading rules enacted by MS which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade are to be considered as measures having an effect equivalent to quantitative restrictions [para. 5] - Rule of reason: In the absence of a Community system…if a MS takes measures to prevent unfair practices…it is subject to the condition that these measures should be reasonable… [para. 6]

11. Categories of Measures Possibly Caught in Violation of Art. 28 by the Dassonville Formula 1. Discriminatory measures on the ground of nationality – applying only to imports or differently than to national products (German Quality Products case C- 325/00); it is not only discrimination alone but also discriminatory effect 2. Indistinctly applicable measures: so-called product requirements, related to the production and marketing of goods that apply without distinction to both foreign and domestic goods but it is usually more burdensome for foreign companies/goods (Casis de Dijon case 120/78) 3. Selling arrangements: category created by Keck case C-267/91 related to socio-economic measures as to how goods should be sold (manner of sale)

12. Cassis Principles : 1. The Rule of Reason: Certain measures, even if within Dassonville formula, will not breach Art. 28 if they are necessary (proportionality) to satisfy mandatory requirement (objective justification) relating in particular to the effectiveness of fiscal supervision, the protection of public health, the fairness of commercial transactions and the defence of the consumer 2. Mutual Recognition: There is no valid reason why, provided that goods have been lawfully produced and marketed in one MS, they should not be introduced into any other MS

13. Keck Proviso Selling arrangements are excluded from Article 28 (Dassonville formula) as long as they affect in the same manner, in law and in fact, the sale of domestic products and of those from other MS [para. 16] See also Sunday Trading case C-145/88 (para. 13: national rules governing the hours of work, delivery and sale in the bread and confectionery industry constitute a legitimate part of economic and social policy, consistent with the objectives of public interest pursued by the Treaty; para. 15: prohibition laid down in Art. 28 (ex. 30) covers national measures governing the marketing of products where the restrictive effect of such measures on the free movement of goods exceeds the effect intrinsic to trade rules and para 16. whether the effects of such rules to in fact remain within that limit is a question of fact to be determined by the national court)

14. Exceptions to Free Movement of Goods in TEC Article 30: 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. Article 296: 1. The provisions of this Treaty shall not preclude the application of the following rules: (b) any Member State may take such measures as it considers necessary for the protection of the essential interests of its security which are connected with the production of or trade in arms, munitions and war material; such measures shall not adversely affect the conditions of competition in the common market regarding products which are not intended for specifically military purposes.

15. Treaty Exceptions Art. 30 v. Cassis Principle of Objective Justification 1.Cassis principle excuses non-discriminatory rules as long as they are proportionate and justified; Article 30 excuses discriminatory (and non-discriminatory) measures as long as they are proportionate 2.Article 30 exceptions are true exceptions established by the Treaty, the Cassis principle is establish by the ECJ Case law: German Purity Beer 178/84, Danish Bottles 302/86, Walloon Waste C-2/90, Gourmet international C-405/98