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The Single Market of the EU summary notes
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THE SINGLE MARKET OF THE EUROPEAN UNIONDavid Ricardo – economist in 18th century. Prominent economist at his time. Made an
important observation. Before his time trade was a zero sum trade and countries try to
retain resources in order to be successful. He made the following observation – let’s assume
Britain was very good at producing clothes, whilst Portugal was very good at making wine.
Various options, Britain can try to produce clothes and wine, and Portugal the same, but
bearing in mind that each isn’t very good at one thing. He said if Britain focuses on making
clothes and Portugal on wine, everyone would be better off. If we have free trade this will
benefit everyone for the better. His argument that free trade without restrictions for
everyone is beneficial. This is known as comparative advantage. Everyone should focus on
what they do best and share this with everyone, as long as no restrictions this will be much
better.
The concept of a free trade area - Here the basic idea is that there is abolition of custom
duties within a free trade area. Removal of the quantitative barriers. However, one problem
here is that they may abolish custom and trade duties between themselves but they are still
free to impose these duties against other countries (third countries). No barriers inside but
freedom to impose different quotas with third countries. The problem with this is that the
third countries will not want to trade with the higher tariff countries. In practice there are
certificates which shows where the product has come from. What some people do is send to
the lower tariff country and from there send to the higher tariff country as there is free
trade between them.
Basic aims of the single market include:
Optimal allocation of resources – about making the most out of something by taking
advantage of the country that provides most in this area. i.e. unemployment, people can
move to other countries to solve unemployment within the EU.
Lasting and sustainable peace – if migrants and EU citizens are integrated you are less likely
to treat other countries as enemies and less likely for war to arise.
Path towards a political union – failed in the past but the path to that is to have what is
called spill-over effect. We start with the single market which involves inter-political union,
bit by bit getting closer to a political union.
THE FREE MOVEMENT OF GOODS
Two types of barriers, fiscal and non-fiscal. Fiscal barriers are relating to the government
and revenue. See LLB answered book if this comes up. However, this is unlikely. Instead,
focus on non-fiscal barriers, which is a lot more substantive. There are two types of non-
fiscal barriers – QR’s and MEQR’s.
Key Cases: (INSERT PINPOINTS WHEN WE CAN)
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,Geddo – defines QR’s as a measure which amounts to the partial or total restraint on
imports, exports, or goods in transit. (para 16)
Dassonville – defines MEQR’s as trading rules that are capable of hindering, directly or
indirectly, actually or potentially, intra-community trade . (paragraph 5)
Commission v France (angry farmers/ Spanish strawberries) – Positive obligation on MS’s
to prevent protectionism.
Cassis de Dijon – distinctly/indistinctly applicable measures , the presumption of mutual
recognition and the rule of reason/mandatory requirements applicable to indistinctly
applicable measures.
Keck – selling arrangement/product requirement distinction. If a selling arrangement,
outside of scope of art 34. If product requirement they do fall within scope of art 34 and
need to be justified by either rule of reason/mandatory requirements or art 36 derogations.
Commission v Italy (Art Treasures) – defined goods as products which can be valued in
money and which are capable, as such, of forming the subject of commercial transactions.
(page 428)
Groenweld – art 35 covers both distinctly applicable (discriminatory) measures and QR’s in
relation to export restrictions. This was then expanded in the case below (Lodewijk) to
include also indistinctly applicable MEQR’s
Lodewijk Gysbrechts
Leclerc – AG Jacobs criticised the Keck selling arrangement distinction and rather proposed
a market access distinction, whereby if a measure posed a substantial barrier to market
access, it would be in conflict with art 34. His question was: does the measure impose a
substantial restriction of access to the market. For him, if a measure is discriminatory, it is
automatically restricting access to the internal market. Keck not very clear.
Key Treaty Provisions:
General internal market
Article 26 TFEU
The Union shall adopt measures with the aim of establishing or ensuring the functioning
of the IM...
The IM shall comprise an area without internal frontiers in which the free movement of
goods, persons, services and capital is ensured...
+ Protocol No27: ‘On The Internal Market And Competition’: includes a system ensuring
that competition is not distorted
Article 18 TFEU
Within the scope of application of the Treaties, and without prejudice to any special
provisions contained therein, any discrimination on grounds of nationality shall be
prohibited.
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, but ... MSs can apply reverse discrimination - treat their ‘own’ worse than those from
other MSs
QR’s (Quantitative restrictions):
- Articles 28 and 30 TFEU – prohibition of customs charges – both customs duties, and
charges having the equivalent effect, i.e. a charge which is a pecuniary charge that is
not a customs duty In the strict sense but which is imposed by reason of the fact that
goods cross a frontier(Commission v Italy (Art Treasures)). Both articles have direct
effect according to Van Gend En Loos.
- Article 110 TFEU – prohibition of discriminatory taxation. (also has direct effect
according to Alfons Lutticke)
MEQR’s (Measures having an equivalent effect of quantitative restrictions):
- Article 34 TFEU – prohibition of QR’s and MEQR’s
- Article 35 TFEU – prohibition of QR’s and MEQR’s on exports
- Article 36 TFEU – derogations to articles 34 and 35.
The above articles 34-36 are binding on public bodies and semi-public bodies, i.e. they
have vertical direct effect. Furthermore, a MS is under a positive obligation to take action to
prevent individuals within the state abusing these rules, and the MS can be held directly
liable if they fail to do so (Commission v France, Angry Farmers/Spanish Strawberries case).
Example cases to illustrate this positive obligation to prevent protectionism:
- Commission v France (angry farmers/ Spanish strawberries) – French producers of
fruit objected to Spanish imports of strawberries on the grounds that they caused
economic loss to French farmers. The French producers collectively took steps to
prevent Spanish imports of strawberries. The Commission therefore took action
against France as France was under a positive obligation to take action to prevent
the protectionism in the form of blocking the Spanish imports, but France had failed
to exercise such an obligation. Violation of art 34.
- Apple & Pear Development Council – it was decided that a MS could create a
specialised national product group to research and give technical advice, provided no
attempt was made to lure customer to only buy home/domestic produce.
- Commission v Ireland (buy Irish) – the Irish government organised a campaign to
promote domestic products over similar products from other Member States. This
was found to be a violation of art 34.
What are goods?
Goods are defined broadly as “products which can be valued in money and which are
capable, as such, of forming the subject of commercial transactions” – Commission v Italy
(Art Treasures)
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, ARTICLE 34 – QR’S AND MEQR’S
QR’s
Def – a measure which amounts to the partial or total restraint on imports, exports, or
goods in transit (Geddo).
Examples of QR’s:
- R v Henn and Darby – UK ban on certain pornographic material
- International fruit – forcing importers to have licences was held to be a QR.
ALTHOUGH, other cases have held this to be an MEQR.
- Rosengen – Swedish ban on buying alcoholic drinks over the internet, where the
same drinks were available through a monopolistic national alcohol supplier.
IMPORTANT: Quantitative restrictions will automatically breach article 34 (or article 35)
unless any defences under art 36 apply. Thus, unlikely to come up in a PQ. Rather, focus on
MEQR’s.
MEQR’s
Def – Not defined by article or directive. However, the case of Procurer du Roi v Dassonville
defines them as “trading rules that are capable of hindering, directly or indirectly, actually or
potentially, intra-community trade”. Note the term potentially, so something need not
actually hinder intra-community trade, it has to merely be capable of hindering, or potential
to hinder,
MEQR’s can be distinctly applicable or indistinctly applicable (Cassis de Dijon).
Distinctly applicable MEQR’s
Distinctly applicable rules are rules that do not apply equally to domestic and imported
products. They discriminate against imports. For example:
- Firma Denkavit – making imports more difficult or costly by imposing additional
requirements for imported goods.
- Commission v Ireland (Buy Irish); Commission v Ireland (Irish Souvenirs) – promoting
and giving precedent to domestic goods.
- Procureur du Roi v Dassonville – restricting channels of distribution for imported
goods (whisky in Belgium requiring a certificate of origin).
IMPORTANT: With the above, as with QR’s, distinctly applicable MEQR’s will automatically
breach art 34 (or art 35) unless any defences apply under art 36. The rule of reason defence
under Cassis de Dijon does not apply.
Indistinctly applicable MEQR’s
These are rules that apply equally in law to both domestic and imported products, but in
practice have a greater impact on the imported product. For example:
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