Summary of all the mandatory readings from Catherine Barnard's book (6th edition). Only the free movement of persons is partly summarized, focusing on the discrimination vs. the market access approach. All the other chapters are complete!
European Internal Market Law - Complete and Extensive summary - Radboud University
Free Movement of Services, Problem and Essay Question Approach
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Summary European Internal Market Law
Week 1
Chapter 1: Introduction to the issues
The different stages of integration
Free Trade Area (FTA): Member States remove all impediments to free movement of goods
among themselves but each state retains the autonomy to regulate its trading relations with
non-Member States
Customs Union (CU) - FTA + common external policy in respect of non-Member States (e.g.
single customs tariff)
Common Market (CM) - CU + free movement of persons, services, and capital
Monetary Union (MU) - CM + single currency
Economic Union - MU + single monetary and fiscal policy controlled by a central authority
Political Union (PU) - Economic Union + central authority sets not only monetary and fiscal
policies but is also responsible to a central parliament with the sovereignty of a nation’s
government. Such a parliament might also set foreign and security policies.
1. Free Trade Area
It is characterized by a common internal policy (free movement of goods between participating
states), but different external policies (each state retains the competence to regulate trade with
non-members). Some FTAs merely eliminate customs duties (tariff barriers), others go further
and eliminate some or most regulatory differentials (e.g., different standards regulating goods)
(non-tariff barriers). Customs duties make imported goods more expensive, so they are imposed
to protect domestic production. A potential problem with an FTA is the need for rules of origin (to
examine whether goods do in fact come from a certain state).
2. Customs Union
2.1 What is it?
It is similar to an FTA internally (no tariffs), but differs from an FTA externally because
participating states have a common policy in respect of the non-members. The EU Member
States are in a customs union. However, the EEA States are not (they are part of the EU’s
single market, not part of the customs union); they can set their own tariffs on goods imported
from outside the single market, but their own goods (except for farm produce and fish) are
imported tariff-free into the EU. This creates problems for Norway, because its exporters have to
show (through rules of origin) that their goods definitely originated in an EEA state and are
therefore eligible for tariff-free entry to EU countries.
Case Study: The EU-Turkey Customs Union
It is a separate customs union between Turkey and the EU Customs Union. Like other customs
unions, it does not cover services. See pp. 10-12 for the specifics. Relevant to note: Since
Turkey is not a member of the EU, it cannot participate in the EU’s FTAs as a Member State.
Benefits granted through the EU’s FTAs do not automatically apply to Turkey. Neither does
Turkey have a say in the EU’s trade policies. Because the EU’s partners already enjoy access
,to the Turkish market via the EU-Turkey customs union, they have little incentive to negotiate an
agreement with Turkey. The UK might encounter similar problems post-Brexit. Furthermore,
Turkey is under an obligation to harmonize its laws as far as possible with the EU’s legal
framework in areas of direct relevance to the operation of the customs union (Article 47 CU
Decision). Provisions which mirror EU law must be interpreted in conformity with the relevant
decisions of the CJEU (Article 66 CU Decision).
2.2 Common External Tariff
Goods entering from a third country (a non-Member State) pay a single tariff set by the central
body (the EU). In order for customs officers to know what tariff to charge, they need to be able
to identify what the particular good actually is (this is guided by detailed tariff classification).
Once the goods have paid this tariff, they enjoy free movement within the EU; just like goods
originating in the EU, they are not subject to further tariffs. This means the tariff rates must be
set centrally at the Union level, which is why the Customs Union and the EU’s Common
Commercial Policy are areas of exclusive EU competence. Consequently, as a member of a
CU, an individual Member State cannot have an independent free trade deal with third
countries.
3. Common Market, Single Market and Beyond
An FTA and CU focus on the free movement of products. A common market goes beyond this
by liberalizing free movement of the factors of production. The idea behind it is that it allows for
the optimum allocation of labor and capital. In practice however, factors are not perfectly mobile
(as opposed to goods), and countries are differently endowed with natural resources. The
Treaty free movement Articles are based on the principle of negative integration: removing
barriers to trade. Positive integration is harmonization.
4. Economic, Monetary, and Political Union
Economic union: requires a high degree of coordination of economic policy, including
macroeconomic and monetary policies and possibly redistributive policies. In a monetary union,
the currencies of the Member States are either linked to irrevocable fixed exchange rates and
are fully convertible, or one common currency circulates in all Member States. An economic and
monetary union (EMU, introduced by the Maastricht Treaty) combines the characteristics, and
presupposes a high degree of coordination of macroeconomic and budget policies. A political
union goes further, with integration extending beyond economics to include police, foreign policy
and security policy (the Lisbon Treaty introduced examples of this, such as the introduction of
the Union minister of foreign affairs). The closest form of integration is a full union: this implies
the complete unification of the policies involved, and a common policy on such sensitive issues
as social security and income tax (the union is then virtually indistinguishable from the nation
state).
Understanding the Integration Process
Neo-functionalists argue that there is a spillover effect from one type of integration to another. If
states integrated one sector of their economies, usually an area of low controversy (e.g.
harmonization of technical standards), technical pressures would push them to integrate other
,sectors which are increasingly controversial. In practice, there was pressure for some form of
political union to ensure political accountability of the economic actors. Other scholars reject this
theory. In liberal intergovernmentalism, integration proceeds as far and as fast as the
governments of the Member States allow (so the focus is on the role of the European Council).
Another theory is new institutionalism, which involves the study of formal and informal
institutions, conventions, the norms and symbols embedded in them, policy instruments, and
procedures. Another concept is multilevel governance: decision-making competences are
shared by actors at different levels, rather than monopolized by governments.
The Principles Underpinning the Common Market
1. The Decentralized Model
The essence of the decentralized model is that states retain the freedom to regulate matters as
diverse as product standards, qualifications to practise, and employment law so long as those
national rules do not interfere with key principles of ‘federal’ law. In the EU’s early days, the key
principle was non-discrimination. In more recent years, the Court has developed the more
intrusive ‘market access’ (or ‘restrictions’) test to remove barriers to free movement.
1.1 Non-Discrimination
The principle of non-discrimination on the grounds of nationality is the cornerstone of the four
freedoms: it requires out-of-state goods, persons, services and capital to enjoy the same
treatment as their in-state equivalents. This model presupposes that domestic and imported
goods, and national and migrant persons, services and capital are similarly situated and that
they should be treated in the same way (if they are not similarly situated, then different
treatment is permitted (Denkavit)). The advantage with the non-discrimination model is that it
does not interfere with national regulatory autonomy. Member States remain free to regulate the
way that goods are produced and services provided, on condition that their regulation applies
equally to home and host state goods or persons. National rules which are genuinely
non-discriminatory are lawful. However, if there is (unjustified) discrimination, Union law requires
the discriminatory element of the national measure to be set aside, but the substance of the
national rule remains intact.
1.2 Market Access (v. Discrimination Tests)
The discrimination test also has disadvantages. It is premised on the fact that migrants and
nationals are similarly situated when, by definition, they are not. Furthermore, the effect of the
non-discrimination model is to allow barriers to movement to remain: it permits the host state to
impose its own rules on imported goods/migrants provided those rules apply equally to domestic
goods/persons.
For this reason, some advocate that a broader, market access test, be applied. This provides
that national rules preventing or hindering market access are unlawful, irrespective of whether
they actually discriminate against imports or migrants. The CJEU increasingly favors the market
access approach (Gebhard; Commission v. Italy (trailers) . This approach focuses solely on the
perspective of the out-of-state traders or migrants: what stands in their way of getting onto the
market? The advantage of this approach is that it goes a long way towards building a single
,market by removing any unjustified obstacles to trade. It is based on the idea articulated in
Cassis de Dijon that goods lawfully produced in one Member State should presumptively have
free and unrestricted access to the market in another Member State (the principle of mutual
recognition).
The disadvantage with the market access approach is that it is far more intrusive into national
regulatory autonomy since Union law requires the national measure to be struck down, unless it
can be justified, even though it may not discriminate against the non-national. This has
implications for national legislation adopted by democratically elected governments, not least
because a case can be made that almost any national rule has some effect on inter-state
movement (even if that was never the intention of the rule and the effect on inter-state trade is
slight; see Grunkin-Paul p aras. 23, 24 and 29 (“serious inconvenience”) and Commission v. Italy
(trailers) (“considerable influence”)).
The meaning of ‘market access’
A further disadvantage is the uncertainty which surrounds the concept of market access.
Spaventa offers three interpretations:
- Narrow approach to market access: barriers to market access are those created by
circumstances or legislation that make it more costly for new firms to enter an industry (example
in Commission v. Italy (motor insurance) para. 70). There is some overlap between this
approach and the non-discrimination model, especially if it is assumed (as the Court often does)
that new market entrants come from out of state;
- Broader approach to market access: any regulation can be seen as a potential barrier to
access, since any regulation imposes and implies compliance cost (example in Golden Share
case Commission v. UK (British Airports Authority)).
- Intuitive approach to market access: rules which interfere with intra-Union trade should be
subject to judicial scrutiny while rules considered neutral as regards intra-Union trade should not
(example in Laval) .
Despite the problems with the market access test, the Court still sees it as the mainstay of its
analysis, as demonstrated in Commission v. Italy (trailers) (para. 56: “considerable influence on
the behaviour of consumers”) and Commission v. Italy (motor insurance) (paras. 66 and 68
“significant additional costs for such undertakings”). J. Snell: “As the term lacks a clear content,
the Court may use it freely either to approve or to condemn measures that it happens to like or
dislike. Market access may simply provide a sophisticated-sounding garb that conceals
decisions based on intuition”.
Market access v. exercise
A further practical problem with the language of market access is that it suggests that
restrictions on initial access to the market are more serious than restrictions imposed by the
host state when migrants have actually got onto the market but are trying to exercise their
freedoms. Yet, rules restricting exercise of a free movement right can have just as serious a
consequence on free movement as the initial refusal of access. Given that it is often difficult to
distinguish market access situations from those concerning exercise, the Court increasingly
,says that the national rules are ‘restrictions’ or ‘obstacles’ to free movement, rather than
hindering market access (see para. 64 Commission v. Italy (motor insurance)).
The convergence or unity thesis
An important question is whether a single principle (e.g., non-discrimination or market access)
should cover all four freedoms. The arguments in favor relate to the need for clarity, certainty,
and consistency in interpretation, particularly as an increasing number of cases raise issues
affecting a number of freedoms. On the other hand, there are significant differences between
the freedoms (e.g., more significant role for human rights in free movement of persons than
when goods are at stake). In addition, there are differences between the freedoms in respect of
which state has particular responsibility for regulation. In respect of free movement of goods and
services, the principal regulator is the home state so any requirements imposed by the host
state must take into account the controls already imposed by the home state. In respect of free
movement of workers and freedom of establishment, the principal regulator is the host state,
which might suggest that there is more room for the host state to impose its requirements on the
migrant. In concentrating on the market access test rather than discrimination as the basic test
for establishing whether there is a brach of the Treaty, the Court has subtly altered the balance
of power between the Union and Member States (back in favor of the Union): it gives the Court
the power to scrutinize an ever-wider category of national measures for their compatibility with
Union law.
1.3 Competitive federalism
Both the non-discrimination and market access tests are premised on a decentralized model to
market-building: Member States retain the freedom to regulate provided that they do not
overstep the limits laid down by the Treaty. The effect of the EU free movement rules is to place
the different national system into competition because those individuals or companies not
satisfied in a Member State are free to move to another. This freedom has the effect of forcing
the national systems to compete to produce the best rules to attract (or retain) valuable assets
(capital and labor). This is known as competitive federalism or regulatory competition. Not very
relevant, see for more details pp. 30-31.
2. The Centralized Model
The need to have centralized standards is largely premised on market failure. Centralization
offers advantages in terms of economies of scale by establishing a single set of rules applying
to a broad class of transactions. It reduces the costs that stem from evasion, through forum
shopping, externalization, and extraterritoriality. It also raises difficulties, both legal
(competence/subsidiarity/proportionality) and political (e.g. reducing national diversity). Not
relevant, see pp. 32-33.
Conclusion
Nothing relevant, see pp. 33-34.
, Week 2 - Barnard
Chapter 2 - Free movement of goods - fiscal measures
A. Introduction
The core of the rules on goods can be found in Article 28 TFEU: “The union shall comprise a
customs union which shall cover all trade in goods and which shall involve the prohibition
between Member States of customs duties on imports and exports and of all charges having
equivalent effect, and the adoption of a common customs tariff in their relations with third
countries.” From this, we can conclude the free movement of goods has an internal and external
dimension.
Goods in the sense of Articles 34-36 TFEU are defined as products which ‘can be valued in
money and which are capable, as such, of forming the subject of commercial transactions’
(Case 7/68 Commission v. Italy, the art treasures case). They possess tangible physical
characteristics (Jägerskiöld). Where goods are merely ancillary to the main activity, then other
provisions apply (Schindler).
B. Article 30 TFEU: Customs duties and charges having equivalent effect
1. Introduction
An absolute prohibition on the topic of customs duties is found in Article 30 TFEU: “Customs
duties on imports and all charges having equivalent effect shall be prohibited between Member
States. This prohibition shall also apply to customs duties of a fiscal nature”. The Article thus
prohibits both customs duties (CDs) and charges having equivalent effect (CEEs).
2. Customs Duties
A customs duty is a charge, determined on the basis of a tariff, specifying the rate of duty to be
paid by the importer to the host state. They are prohibited because they are protectionist. Van
Gend en Loos is one of the few cases where the Court has considered customs duties.
3. Charges having equivalent effect to customs duties
3.1 Introduction
Article 30 TFEU prohibits CEEs, preventing Member States from circumventing the prohibition
on customs duties by dressing up the charge as something else (Cases 2 and 3/62). This was
first recognised in Deutschmann. The court gave a fuller definition in the Statistical Levy case:
“Any pecuniary charge however small and whatever its designation and mode of application,
which is imposed unilaterally on domestic or foreign goods by reason of the fact that they cross
a frontier (...) constitutes a charge having equivalent effect (...) even if it is not imposed for the
benefit of the State, is not discriminatory or protective in effect and if the product on which the
charge is imposed is not in competition with the domestic product”.
3.2 ‘Any pecuniary charge, however small…’
There is no de minimis rule in Article 30 TFEU (Statistical Levy).
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