European Union Single Market

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Questions and Answers

What is the primary objective of establishing an internal market within the EU, as stated in Article 3(3) of the Treaty on European Union (TEU)?

  • To create a military alliance for collective defense.
  • To ensure the free movement of goods, persons, services and capital. (correct)
  • To promote cultural exchange and tourism within Europe.
  • To establish a common currency and fiscal policy among member states.

Which article of the Treaty on the Functioning of the European Union (TFEU) specifically addresses the free movement of goods?

  • Articles 34 & 35 TFEU (correct)
  • Article 45 TFEU
  • Article 63 TFEU
  • Article 56 TFEU

Why is the free market considered important for supranational organizations like the EU?

  • It stimulates business efficiency, productivity, and innovation across member states. (correct)
  • It allows member states to maintain strict protectionist policies.
  • It ensures that all businesses, regardless of efficiency, can thrive.
  • It guarantees equal distribution of wealth among all citizens.

What is a key characteristic of national markets within the context of the EU's single market?

<p>Production is based where it is most efficient, considering factors like raw materials and workforce availability. (C)</p>
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How do controls established at the EU level contribute to a 'free but fair' market?

<p>By preventing market abuse and ensuring a level playing field for all competitors. (D)</p>
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What is a common characteristic of protectionist measures?

<p>They aim to protect local economies by restricting or handicapping foreign competitors. (A)</p>
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What is the key distinction between a free trade area (FTA) and a customs union?

<p>A customs union requires a common external tariff, while an FTA does not. (C)</p>
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What is the ultimate goal of harmonizing rules within the EU's single market?

<p>To mimic the market of a single country, ensuring the free flow of goods, services, people, and capital. (C)</p>
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What is the primary objective of establishing an economic and monetary union (EMU) within the EU?

<p>To establish unified monetary and fiscal policies. (B)</p>
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According to Article 30 of the TFEU, what is prohibited between member states?

<p>Customs duties on imports and exports and charges having equivalent effect. (D)</p>
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What constitutes a 'charge having equivalent effect' to a customs duty?

<p>An equivalent charge imposed when a good crosses a border, such as a fee for an import license. (C)</p>
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In the Commission v Italy (Statistical levy) case (24/68), what was the Court's ruling regarding the charge on certain agricultural exports?

<p>The charge was deemed a charge having equivalent effect and was prohibited. (C)</p>
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According to the Court's rulings, which factors are immaterial when determining whether a charge is considered a 'charge having equivalent effect'?

<p>The size of the charge and what the charge is called. (B)</p>
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Under what specific conditions might a service charge related to inspections be considered permissible, according to EU law?

<p>If the inspections are obligatory and uniform for all products concerned in the community, prescribed by community law, and promote the free movement of goods. (A)</p>
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In Commission v Germany, what was the key factor that determined whether a veterinary inspection charge was permissible?

<p>Whether the inspection was required by EU law and promoted the free movement of goods. (D)</p>
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What was the outcome in Conceria Daniele Bresciani v Amministrazione italiana delle finanze regarding the charge for inspecting raw cowhides?

<p>The charge was deemed discriminatory because domestic hides were under a different scheme. (D)</p>
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According to TFEU Article 31, who is responsible for fixing common customs tariff duties?

<p>The Council, on a proposal from the Commission. (B)</p>
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What happens when goods from a non-EU member state enter the customs union and the EU tariff is paid?

<p>They have a right of free circulation within the EU. (C)</p>
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A member state imposes a tax on imported gas that is pumped by motors, arguing that it's a tax on the activity of pumping gas, not a charge related to crossing a border. Is this permissible under EU law?

<p>Yes, because the tax is on the activity, not the border crossing. (D)</p>
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Imagine a new regulation requires all imported food products to undergo radioactivity testing at the border, with a substantial fee attached. Domestic products are exempt. Which principle of EU law does this most likely violate?

<p>Free movement of goods. (D)</p>
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A country within the EU introduces a new regulation mandating that all imported electronics meet a specific, nationally-unique safety standard. Electronics from other EU countries already comply with harmonized EU safety standards. What legal issue does this raise?

<p>Potential barrier to the free movement of goods. (D)</p>
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The government of Freedonia, an EU member state, decides to boost its local apple industry by imposing a high tariff on imported apples from other EU countries. They argue that this is necessary to protect local farmers and preserve traditional Freedonian apple varieties. What is the most likely legal consequence of this action under EU law?

<p>It violates Article 30 TFEU, which prohibits customs duties between member states. (D)</p>
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The fictional country of 'Ecotopia' wants to encourage its citizens to buy locally-produced electric cars. It offers a subsidy to anyone purchasing an electric car made in Ecotopia, but this subsidy is not available for those buying imported electric cars. Considering EU competition law, is this practice permissible?

<p>No, because it may constitute prohibited State aid. (A)</p>
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A small village located close to the border between two EU member states decides to impose a small 'road maintenance fee' on all goods vehicles crossing the local border crossing, irrespective of their origin. The revenue is used to maintain the road. Is this charge likely to be compatible with EU law?

<p>No, this likely constitutes a charge having equivalent effect to a customs duty. (D)</p>
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An EU member state introduces a law that requires pre-approval of all imported video games by a national board, which assesses their cultural and artistic merit. Games without approval cannot be sold. Domestic games are not subject to such assessment. Is this restriction legal under EU law?

<p>No, it places an additional hurdle only on imported goods, hindering free movement. (D)</p>
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What is the MOST likely outcome if an EU member state consistently fails to implement EU regulations on the free movement of goods, despite receiving warnings and legal challenges from the European Commission?

<p>The European Commission can impose financial penalties on the member state. (B)</p>
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Imagine the EU passes a new directive harmonizing standards for phone chargers, requiring a universal charger type. However, one member state, 'Technoland', insists on maintaining its own, different standard, arguing it’s technologically superior. What legal principle is MOST directly challenged by Technoland's stance?

<p>Supremacy of EU law (A)</p>
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A highly specialized manufacturer in a small EU country produces a niche chemical product essential for the semiconductor industry. To ensure national security, the government prohibits exporting this chemical outside its borders. Which fundamental freedom of the single market does this MOST directly restrict?

<p>Free movement of goods (A)</p>
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A country decides to give preferential treatment to local construction companies for all government construction projects. Companies from other EU states can bid, but are given fewer points in the evaluation. Which treaty articles are most relevant to assessing the legality of this practice?

<p>Articles on right of establishment and free movement of services. (D)</p>
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Article 3(3) of the TEU mandates the establishment of an internal market by the union.

<p>True (A)</p>
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The four freedoms essential for the single market include the free movement of goods, services, capital, and ideas.

<p>False (B)</p>
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Limitations or derogations to the fundamental freedoms are not allowed under any circumstances.

<p>False (B)</p>
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According to the content, trade is not a key driver of growth and prosperity.

<p>False (B)</p>
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EU competition law reflects a laissez-faire approach, minimizing market intervention.

<p>False (B)</p>
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The single market is considered a peripheral goal of EU integration.

<p>False (B)</p>
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National markets within the EU are not subject to the same rules and standards.

<p>False (B)</p>
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International markets encourage local producers to maintain the status quo without seeking improvements.

<p>False (B)</p>
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Inefficient producers in a free market always thrive due to protectionist measures.

<p>False (B)</p>
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EU competition law operates at a national level.

<p>False (B)</p>
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Protectionism aims to expose local industries to global competition immediately.

<p>False (B)</p>
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A free trade area (FTA) mandates a common external tariff policy towards non-member countries.

<p>False (B)</p>
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The EU is currently classified as a free trade area.

<p>False (B)</p>
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In a customs union, member states maintain independent rules on product standards.

<p>False (B)</p>
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Economic and monetary union involves independent monetary policies across member states.

<p>False (B)</p>
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Article 30 of the TFEU prohibits customs duties between member states.

<p>True (A)</p>
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A 'charge having equivalent effect' to a customs duty must be a substantial amount to be prohibited.

<p>False (B)</p>
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The purpose for which money is raised by a charge having equivalent effect is a determining factor in its permissibility.

<p>False (B)</p>
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A charge for inspecting raw cowhides is permissible even if domestic hides are inspected under a different scheme.

<p>False (B)</p>
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Veterinary inspections charges required by EU law are never permissible, as they impede free movement of goods.

<p>False (B)</p>
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Member states retain the authority to unilaterally determine tariffs on goods from non-EU states.

<p>False (B)</p>
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The requirement for a single market is a harmonized set of tax rates across all member states.

<p>False (B)</p>
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Permissible service charges can exceed the actual cost of specific inspections.

<p>False (B)</p>
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A tax on motors pumping gas is permissible, even if it is based on the fact that the frontier is crossed.

<p>False (B)</p>
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If a good from a non-EU member state has paid the EU tariff, it has a right of free circulation.

<p>True (A)</p>
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Charges for opening customs posts during business hours are generally considered permissible to cover administrative costs.

<p>False (B)</p>
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According to the ruling in Commission v Italy (Statistical levy), a charge is permissible if it covers the cost of gathering statistical information, regardless of how it affects trade.

<p>False (B)</p>
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The principle of mutual recognition completely eliminates the need for any form of harmonisation in the EU single market.

<p>False (B)</p>
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Under WTO rules, basic world trade organization rule dictates that one state must treat all states equally; exceptions apply exclusively to members of customs unions, without consideration for free trade areas.

<p>False (B)</p>
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The harmonisation of rules within the single market dictates that all member states must adopt identical product specifications, regardless of local conditions or consumer preferences, to ensure seamless trade.

<p>False (B)</p>
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Flashcards

Internal Market

An area without internal frontiers ensuring free movement of goods, persons, services and capital as per the treaties.

Exceptions/Derogations to Freedoms

Agreements to balance free markets with public interests, allowing limited restrictions.

Importance of Free Trade

A key driver of growth, boosting efficiency, productivity, job growth and access to wider choice of goods.

National Market

Rules apply equally across the nation, fostering fair competition.

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EU Market Controls

Controls established at EU Level to ensure fair competition and prevent market abuse.

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Protectionism

Protecting local economy by restricting or handicapping foreign competitors.

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Free Trade Area (FTA)

No internal tariffs or quotas, but each country sets its own tariffs with non-member countries.

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Customs Union

Abolishing internal tariffs and establishing a common customs tariff with the outside world.

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Harmonised Rules

Shared rules allowing free flow of goods, services, people and capital across the single market.

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Economic and Monetary Union

Unified monetary and fiscal policies including a common currency.

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EU Customs Union

Prohibition of customs duties and equivalent charges between member states, and a common customs tariff with third states.

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Customs Duties (Tariffs)

Financial charge on imports or exports.

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Charges Having Equivalent Effect

Any pecuniary charge, however small, imposed unilaterally on goods crossing a frontier.

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Permissible Service Charges

Charges permissible if they cover actual inspection costs, are obligatory, uniform and prescribed by EU law.

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Common Customs Tariff

Determined by the EU, ensuring same charges regardless of entry point, allowing free circulation after payment.

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Trade as a Driver of Growth

The idea that trade is key for economic growth, encouraging efficient business practices and productivity, and that it helps to improve living standards.

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Threats of Wider Trade

This can occur when producers are forced to leave the market resulting in negative knock-on effects like reduced tax, increased unemployment etc.

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Building the Single Market: Harmonised Rules

Step 3 of 4. Going further with shared rules, harmonisation and mutual recognition to mimic the market of a single country.

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Customs Duties Definition

Financial charge made on import or export of a product, often reported to the WTO.

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Custom Union: Article 30

Art 30 prohibits tariffs and equivalent charges, immaterial of what the charge is called.

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Permissible Service Charge Conditions

A charge is permissible if it doesn't exceed inspection costs, is obligatory, uniform and prescribed by EU law.

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Free Circulation Right

Once goods from a non-EU state are within the customs union and have paid the EU tariff, they have a right of free circulation.

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Unpermissible Charge Example

A charge for opening customs posts during business hours is an unpermissible charge.

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Study Notes

  • The single market is a key goal of the European Union, aiming to create an area without internal frontiers where goods, persons, services, and capital can move freely. The single market is a fundamental goal of EU integration which drives all that the EU does.

Internal Market Foundations

  • Article 3(3) TEU (first sentence) mandates the establishment of an internal market by the Union.
  • Article 26(2) TFEU defines the internal market as an area without internal frontiers ensuring the free movement of goods, persons, services, and capital.
  • Article 26(1) allows the union to ensure the functioning of the internal market, using relevant treaty provisions to establish the measures necessary for it.

Fundamental Freedoms

  • Essential for the single market: free movement of goods (Articles 34 & 35 TFEU), workers (Article 45 TFEU), services (Article 56 TFEU), and capital (Article 63 TFEU), plus the right of establishment (Article 49 TFEU).
  • Exceptions/derogations to these freedoms are allowed to balance free market principles with public interests.

Importance of a Free Market

  • Trade drives growth and prosperity by increasing business efficiency, productivity, and innovation.
  • It creates jobs, raises living standards, and enables access to a wider range of goods at lower costs.
  • A market approach requires intervention to ensure fair operation, aligning with EU competition law.
  • The EU is founded on the ideal of a free market. Arguments for leaving EU are sometimes based on anti-globalisation and the issue of capitalist structures and free trade.

National vs. International Markets

  • National markets apply the same rules across the country, fostering a level playing field for producers.
  • Production can be based where it is most efficient due to local resources, workforce, and transport costs. Larger scale encourages greater innovation and efficiency.
  • International markets encourage local producers to improve and seek efficiency due to outside competition.
  • Customers benefit from a wide choice of goods at the lowest prices. Inefficient producers have to change or go out of business.

Background: Free but Fair Market

  • Controls, established at EU level, are needed to prevent market abuse and ensure fair competition.
  • These controls include EU competition law (Articles 101-106 TFEU) and the prohibition of State Aid (Articles 107-108 TFEU).

Protectionism Tactics

  • Protectionism involves measures to shield local economies from outside competition, such as import bans, quotas, tariffs (customs duties), and burdensome regulations.
  • While it may help local industry in the short term, customers pay higher prices due to reduced competition.

Four Steps to EU Economic Integration

  • Step 1: Free Trade Area (FTA) with no internal tariffs or quotas among members, but each country sets its own tariffs with third states (EU is NOT a free trade area).
  • Step 2: Customs Union, where members abolish customs tariffs between themselves and establish a common customs tariff with the outside world.
  • Step 3: Single Market with harmonized rules to allow free flow of goods, services, people, and capital, including harmonization and mutual recognition. The overall idea is to mimic the market of a single country. Need to have shared rules on these to allow free flow across the single market (no national rules acting as direct or indirect obstacles)
  • Step 4: Economic and Monetary Union (Article 3(4) TFEU) with unified monetary and fiscal policies, exemplified by the Eurozone with 20 EU member states using the Euro.

Free Movement of Goods: Customs Union and Tariffs

  • Article 28 TFEU establishes a customs union covering all trade in goods, prohibiting customs duties between member states and creating a common customs tariff with third countries.
  • Article 30 TFEU prohibits customs duties on imports and exports, as well as charges having equivalent effect, including those of a fiscal nature.

Prohibited Charges

  • Customs duties (tariffs) are financial charges on imports or exports; all countries must publish and report to the world trade organisation (WTO).
  • Charges having equivalent effect are any equivalent charge imposed when a good crosses a border, like charges levied for a safety check.

Customs Union: Charges Having Equivalent Effect

  • Article 30 prohibits customs duties and charges having equivalent effect, such as fees for import licenses or health certificates.
  • Commission v Italy (Statistical levy)(case 24/68):Any pecuniary charge, however small, imposed unilaterally on goods crossing a frontier is considered a charge having equivalent effect, even if not for the benefit of the state. The Commission v Italy (Statistical levy) case involved a small charge on certain agricultural exports, supposedly to cover cost of gathering statistical information.
  • The size and name of the charge are immaterial, as seen in Rewe-Zentralfinanz GmbH v Direktor der landwirthschaftskammer Westfalen Lippe, regarding a charge for phyto-sanitary examination. The charge in Rewe-Zentralfinanz GmbH v Direktor der landwirthschaftskammer Westfalen Lippe was on a wholly different basis from domestic charges.
  • The use of money raised is also immaterial - Social Fonds voor de Diamantarbeiders v SA Ch Brachfeld & Sons: levy on imported diamonds for social fund for diamond workers.
  • The charge must be based on crossing the frontier, not on transport - Air liquid industries Belgium SA v Ville de Seraing: tax on motors pumping gas.

Customs Union: Permissible Charges

  • Commission v Italy (statistical levy): A specific service actually rendered may justify a proportional payment.
  • Commission v Germany (veterinary inspection required by EU law): Service charges are permissible if:
  • They do not exceed actual inspection costs.
  • The inspections in question are obligatory and uniform for all the products concerned in the community.
  • They are prescribed by community law in the general interest.
  • They promote the free movement of goods, in particular by neutralising obstacles from unilateral inspection measures.

Customs Union: Non-Permissible Charge

  • Commission v Italy (case 340/87): A charge for opening customs posts during business hours is not permissible.
  • Conceria Daniele Bresciani v Amministrazione italiana dell finanze: Charge for inspecting raw cowhide – pro rata, but domestic hides under different scheme.

Customs Union: Summary

  • Article 31 TFEU dictates that the council fixes common customs tariff duties based on a commission proposal.
  • All tariffs are set by the EU
  • Same charges regardless of where goods enter EU; once inside EU and tariff paid, no further charge.
  • Outside the EU, tariffs are complex, following WTO rules of equal treatment, with exceptions for free trade areas and customs unions.
  • No customs duties between member states
  • No charges having equivalent effect to customs duties
  • Member states give up their ability to determine tariffs to non-EU states (third states), instead EU determines the tariff (common customs tariff)
  • Once good from non-EU member state are within the customs union and have paid the EU tariff, they have a right of free circulation

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