Institutional and
Substantive Law
of the EU Block 2
,Reflection week assignment: Three Models of Market Integration
I
HOST COUNTRY HARMONISED HOME COUNTRY
Wealth + Different levels of protection + Economies of scale (compliance +/- Regulatory competition
across MS with 1 rule)
- Higher production costs - Diversity of preferences
- Rule creation & changing difficult
Institutions Member States EU Legislature Court of Justice
Sovereignty Low level of sovereignty loss Vertical transfer of sovereign powers Reassignment o sovereign powers
Democracy Under-inclusive Democratic deficit of EU Favoring capital over workers
EU Treaties Article 36 TFEU Article 114 TFEU Mutual recognition
Chapter 11: The Internal Market and the (3) Home Country Model 3. Labour mobility has been identified as
Philosophies of Market Integration • Mirror image of host country model: one of the key factors for a successful
• Article 26 TFEU —> definition internal means that rules apply or where product/ currency union. Free movement of labour
market but quite vague service is produces; if good is produced in assumes a greater significance under a
• Three ways an internal market can be country A but traded in country B, rules of single currency.
organised: country A will apply 4. A well-functioning internal market allows
(1) Host Country Control • Requires mutual recognition/high levels of the real exchange- rate channel to work.
• Means that rules of the country where trust What this means is that acountry whose
economic activity takes place apply: if • Reassignment of sovereignty ; sometimes economy is overheating due to low real
good is produced in country A but is MS loses power in its own territory interest rates, which result from
traded in country B, rules of country B • Judiciary power is dominant: has to acentrally set nominal interest rate and a
will apply ensure mutual recognition high level of inflation, is automatically
• Normal situation for trading between • Regulatory competition; between markets cooled down.
independent countries but also legislatures; increases choice but
• Fewest constraints on country’s decreases ability for initiatives for non- Digital Single Market: Legislating internal
autonomy, if non-discrimination is in economic interests market: Article 114 TFEU - paragraph 1 with
place. • Distorts national democracy by favoring definition, does not provide general power to
• National) legislatures play dominant role capital over workers regulate economy! Gives power to
(occasionally judiciary too) harmonize!
• Allows trade; makes all participants Spaak Report —> Treaty of Rome (1957); • Includes ordinary legislative procedure
wealthier internal market with freedom and fairness • Article 50 TFEU: specific legal basis for
• Democratically speaking under-inclusive: Single European Act (SEA) to complete right of establishment
people not properly represented internal market after Rome; however • Article 26 TFEU: establishment and
(2) Harmonised Model internal market not seen as satisfactory functioning internal market
• General rules for an entire area, e.g. EU; regarding European integration
there is one rule for everything in this Tobacco advertising
group (of countries) Internal market and economic monetary union • Total harmonization = when an EU
• Vertical transfer of power from State level (EMU) measure, such as a directive, regulates
to EU level (pooling of sovereignty) 1. A strong internal market increases the something exhaustively, not leaving any
• Central legislature is dominant; judiciary benefits of the single currency, which in room for divergent rules of the Member
can apply central rules or MS specific rules turn strengthens the internal market. States. All laws have to comply to EU
• Economic benefits; reduces compliance 2. The problem with a single currency is that Treaties (unless it cheats its own primary
and transaction costs, can focus on other it reduces flexibility: an individual Member law).
issues (e.g. environmental), but difficult State can no longer respond to economic • Minimum harmonization = sets the floor
with applying globally (not country- developments by changing interest rates below which no Member State may go,
specific) (1), of quality (2) and without or the value of its currency. but leaves them free to adopt more
lengthy EU process (3) falls prey to demanding rules, respectful of national
democratic deficit of EU
,Lecture 9: Free movement of !ods (5 November 2024) Tariff Barriers: Custom duties and charges
Types of integration: positive and negative • Common external tariffs in Regulation having equivalent effect
A
Negative integration
(EU) No 952/2013 of the European • Custom duties = charges levied on goods
Free movement of goods, services, capital, Parliament and of the Council of 9 because they cross a frontier between MS
establishment and persons -> Removing October 2013 laying down the Union • Article 30 TFEU -> Charges having
barriers/restrictions (national laws) by Customs Code Equivalent Effect (CEE)
prohibiting them 1. CEE is a pecuniary charge -> an
Competition law: prohibitions of cartels, The Customs Union: internal dimension obligation to pay a sum of money
abuse of market power & state aid Two categories of trade barriers: similar 2. The charge must be imposed on domestic
A
Positive integration purpose to impose a restriction on imports or foreign goods because they cross a
I frontier
Harmonisation (art. 5 TEU -> art. 114 TFEU) and exports
Harmonising national laws through EU law 1. Tariff barriers (fiscal rules -> obligation to 3. Diamonds case stated that any charge
• Positive integration involves the EU pay a sum of money) however small constitutes an obstacle to
enacting laws to establish common • Article 30 TFEU (custom duties and CEE) the free movement of goods
standards across MS to ensure a level for -> when the duty is paid on solely 4. Designation and mode of application are
each country, usually done by setting national or foreign products -> national irrelevant
minimum standards. tax -> adding a duty at the border 5. CEE is not confined to charges imposed
• Negative integration removes trade • Article 110 TFEU (internal taxation) -> for the benefit of the state (often) but also
barriers and other restrictions within the when the tax is paid as part of general to those who finance another entity such
EU without necessarily establishing a taxation system within national -> tax as a social fund
common standard. It is often made actual added once product is in the country 6. Charges can be CEE’s even if they are not
through the rulings of the CJEU, which • Mutually exclusive, either one or the discriminatory or protected -> charge on
prohibit national measures that restrict other but never at the same time both important and export (but not on
the internal market. • Customs duties domestic products) can be a CEE -> even
• Exise duties if there is no domestic production ->
Internal market: basis • Tolls Diamonds case: Antwerp is one of the
Article 26 TFEU -> within the internal market 2. Non-tariff barriers (non-fiscal rules -> biggest diamond trading centers but they
they seek to remove frontiers -> related to obligation to comply with other types or have no trading mines
negative integration requirement) Article 34-36 TFEU
• Import and export quota’s Cases 2 and 3/69 Diamantarbeiders
The Customs Union • Minimum import prices (Diamonds) (1969), para 9
Article 28 (1) TFEU • Belgium had established a Social Fund for
• External dimension -> uniform common Definition of goods Diamond Workers. All imports of
rules which apply to products originating Case 7/68 Commission v Italy (“works of art”) unworked diamonds were subjected to a
from third countries (1968): “By goods, within the meaning of contribution intended to enable the fund
• Internal dimension (internal market) -> [article 28], there must be understood to fulfill its tasks, the contribution
abolition of internal barriers to trade in products which can be valued in money and amounted to 0.33 percent of the value of
goods between MS -> to be achieved which are capable, as such, of forming the the value of the unworked diamonds ->
trough directly effective provisions subject of commercial transactions.” -> meant constituted as a CEE even if the amount
Article 28 (2) TFEU and 29 TFEU -> provisions otherwise that Art would not be a good was very small, it was still an obstacle to
extend to products coming from third • Waste, electricity, human corpses and the free movement of goods
countries which are in free circulation in MS body parts are regarded as a goods
• Broadcasting, operation of a lottery, Permissible charges outside of scope of
The Customs Union: external dimension intangibles other than electricity are article 30 TFEU = NOT CEE’S AT ALL!
• Provision applies to goods originating in services NOT goods 1. The payment is consideration for the
any MS • Coins and banknotes are NOT goods if service rendered -> service must confer a
• Goods originating in third countries they are still legal somewhere in the specific advantage on the importer/
“definitely and wholly assimilated to world exporter & must be proportionate (Case
products originating in MS” (Case 41/76 C132/82 Commission v Belgium (1983))
Donckerwolcke (1976), para 17)
, • Case 24/68 Commission v Italy (Statistical • “All trading rules enacted by Member Cassis de Dijon (para 8)
Levies) (1969), para 15-16. -> Italy had States which are capable of hindering, • All early cases concerned the so-called
imposed a small charge on imports and directly or indirectly, actually or ‘distinctly applicable’ measures (those
exports of goods, they argued that the potentially, intra-community trade are to which discriminate against imports on
charge constituted consideration for a be considered as measures having their face). Court first encountered
service rendered -> availability of equivalent effect.” (para 5) indistinctly applicable measures in Cassis
accurate statistics on imports and exports de Dijon
-> Court rejected statistical information MEE: Scope Facts of the case:
was beneficial to the economy as a whole • “all trading rules”: includes also national • Plaintiffs wanted to import French
not to the individual policies and practices -> Commission v ‘Cassis’-drink and contested the validity
2. It relates to inspections required by EU law Ireland (‘Buy Irish’) of a provision of an indistinctly applicable
-> (Case 18/87 Commission v Germany • Defendant: contested advertising German law requiring spirits to have a
(1988), para 8) campaign encouraging pubic to minimum alcohol content, double
• Charges must not exceed the actual costs buy local products in preference to bourdon to comply with DE and FR
of inspection imports was not an MEQR because requirements -> higher costs -> indirect
• The inspections must be obligatory and imports had actually risen since discrimination
uniform for all products in the EU campaign started • Cassis de Dijon fell under category
• The inspections must be required by EU • Court: imports might have risen required by Germany to have at least 25%,
law even more in absence of the however plaintiff had only 15 – 20%
• They must facilitate free movement of campaign • German government argued that there is
goods -> eliminate all obstacles arising • “Enacted by Member States”: vertical no harmonization of policy field in EU
from unilateral measures of inspection direct effect: state bodies and quasi-state law, that the de facto extension of FR laws
(3. Internal taxation) bodies but no horizontal direct effect of to DE undermined democratic legitimacy
article 34 TFEU -> Case C-265/95 • Court rules that this constitutes an MEE
Article 30 TFEU and third countries Commission v France (Spanish and established the fundamental principle
• Prohibition only applies to MS, but strawberries): indirect responsibility of of mutual recognition -> MS mutually
countries with which the EU has government recognize that their respective rules
association agreements (Turkey, Morocco) • Actually or potentially”: but no MEE if equally protect the public interests being
can be protected by article 30 TFEU effect is “too uncertain and indirect” to pursued
• Third country products -> Article 31 TFEU hinder inter-state trade, C-69/88 Krantz • Measure did not discriminate against
(1990), para 11 imports in their face, but was a more
Non-tariff barriers: Quantative Restrictions • German company which had sold a subtle form of discrimination ->
and Measures of Equivalent Effect machine on installment terms to a discrimination in fact
Two types of prohibited measures: company in the Netherlands, before
1. Quantitative restrictions: “measures which all the installments were paid the Problems of indistinct measures: Sunday
amount to total or partial restraint of … purchaser went bankrupt -> Dutch law Trading
imports, exports, exports or goods in that allowed tax authorities to seize Case 145/88 Torfaen BC v B & Q plc (1989):
transit” (Case 2/73 Geddo (1973)) goods to recover unpaid taxes. • Irish law that prohibited retail shops from
• Article 34 (import) & 35 TFEU (export) Plaintiff said that this law infringed selling on Sundays
• Total restraint = total prohibition on art 34 TFEU -> disincentive to traders • Indistinct measure: no disadvantage for
import or export in other MS to sell goods by imported products
• Partial restraint = import or export quotas installments • Breach of art. 34 TFEU: “all trading rules…
• Court: effects of this rule were too which are capable of hindering… actually
2. Measures having equivalent effect uncertain and indirect to warrant the or potentially” intra-EU trade, but:
• Case 8/74 Procureur du Roi v Dassonville conclusion that it was liable to hinder justified with mandatory req
(1974) -> Belgian rules requiring trade between MS Consequences:
certificate of origin for import of Scotch • Directly or indirectly”: distinct and • Art. 34 applies -> prima facie unlawful
whiskey from France -> The Court decided indistinct measures -> Cassis de Dijon • Art. 34 does not apply -> prima facie
that the requirement for a certicifacte in lawful
Belgium law was contrary to art 30 TFEU.
