Week 3 Lecture PDF

Week 3 NON-FISCAL BARRIERS TO TRADE Dr. Calum Alasdair Young  Learning objectives: You will be able to identify a QR and a MEQR. You will be able to understand the difference between distinct...

Week 3 NON-FISCAL BARRIERS TO TRADE Dr. Calum Alasdair Young  Learning objectives: You will be able to identify a QR and a MEQR. You will be able to understand the difference between distinctly and indistinctly applicable measures You will understand the role of mutual recognition. You will be able to understand the exceptions to free movement of goods. You will understand the concept of mandatory requirements. You will identify what is a ‘selling arrangement’. 2 Free Movement of Goods II - Young  Free Movement of Goods Fiscal Barriers (last week) Non-Fiscal Barriers (this week) 3 Free Movement of Goods II - Young  Articles 34 and 35 TFEU Article 34 - “Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States” Article 35 - “Quantitative restrictions on exports and all measures having equivalent effect shall be prohibited between Member States” 4 Free Movement of Goods II - Young  Two prohibitions: Restrictions to trade Going to focus on Article 34 rather than 35 as cases are much more frequent Quantitative restrictions on imports/exports MEQRs on imports/exports 5 Free Movement of Goods II - Young  Quantitative restrictions What is a quantitative restriction? The prohibition on quantitative restrictions covers measures which amount to a total or partial restraint of, according to the circumstances, imports, exports or goods in transit - See C-2-73, Geddo, para. 7 6 Free Movement of Goods II - Young  Quantitative Restrictions Quotas Numerical restrictions Restraint of imports 7 Free Movement of Goods II - Young  What is a MEQR? “All trading rules enacted by the MS which are capable of hindering, directly or indirectly, actually or potentially, intra- EU trade” - See C- 8/74, Dassonville, para. 5 8 Free Movement of Goods II - Young  What is an MEQR? Dassonville is extremely broad Could mean anything with some creative lawyering 9 Free Movement of Goods II - Young  Distinctly applicable v indistinctly applicable In the subsequent case law, a distinction was made between distinctly applicable measures (DAMs) and indistinctly applicable measures (IAMs). Distinctly applicable measures – do not apply equally to foreign and domestic goods Indistinctly applicable measures – apply equally to all goods 10 Free Movement of Goods II - Young  Examples of DAMs Direct overt discrimination uncommon but would obviously count ‘Buy national’ campaigns, even if ineffective: see Commission v. Ireland (Buy Irish). Certificate of origins (if unrelated to quality): Commission v. Ireland (Irish souvenirs, Case 113/80). 11 Free Movement of Goods II - Young  Examples of IAMs Rule requiring saying liqueurs had to have at least 25% alcohol (Cassis de Dijon) All meat manufacturers prohibited from stocking horse (Groenveld, on Article 35 and exports) Goods bearing a designation of origin required a certificate to import (Dassonville) 12 Free Movement of Goods II - Young  Indistinctly applicable measures Why did/does this distinction matter? DAMs clearly covered by Article 34, less clear if IAMs are 13 Free Movement of Goods II - Young  Cassis de Dijon: landmark case Question as to whether IAMs covered by Article 34 arose in Cassis de Dijon Rule requiring saying liqueurs had to have at least 25% alcohol 14 Free Movement of Goods II - Young  Mutual Recognition: Cassis de Dijon “Obstacles to movement within the community resulting from disparities between the national laws relating to the marketing of the products in question must be accepted in so far as those provisions may be recognized as being necessary in order to satisfy mandatory requirements relating in particular to the effectiveness of fiscal supervisions, the protection of public health, the fairness of commercial transactions and the defence of the consumer.” 15 Free Movement of Goods II - Young  Mutual Recognition: Cassis de Dijon “There is therefore no valid reason why, provided that they have been lawfully produced and marketed in one of the member states, alcoholic beverages should not be introduced into any other member state; the sale of such products may not be subject to a legal prohibition on the marketing of beverages with an alcohol content lower than the limit set by the national rules.” 16 Free Movement of Goods II - Young  Mutual Recognition: Cassis de Dijon Indistinctly applicable measures also caught by Article 34 Principle of mutual recognition Rule of Reason: States have the right to regulate, but only in so far as they could be justified by a mandatory requirement (including but not limited to those listed on previous slide) Significant alteration in terms of burdens 17 Free Movement of Goods II - Young  Why is this case so significant? 18 Free Movement of Goods II - Young  Post-Cassis jurisprudence Glut of cases followed Lots of restrictions unexpectedly struck down General sense the interpretation of Article 34 has gone too far 19 Free Movement of Goods II - Young  Example: Rau Belgium imposed rules requiring margarine in cubic-shaped packages as opposed to parallel-piped packages to distinguish it from butter. Justification: consumer protection. Held as an MEQR Struck down as disproportionate. 20 Free Movement of Goods II - Young  Limits of the scope of art. 34 TFEU – selling arrangements Torfaen case on Sunday trading – raised a discussion. The Court decided that a prohibition to sell products on Sunday violates art. 34 TFEU After the criticism, a court decided to change its line in Keck (even though Keck was not about Sunday trading as such) 21 Free Movement of Goods II - Young  Keck – selling arrangements The Court decided to use this opportunity to change the previously established interpretation of art. 34 TFEU (that was seen as too broad) Laid down a new test. 22 Free Movement of Goods II - Young  Keck test The application to products from other Member States of national provisions restricting or prohibiting certain selling arrangements is not such as to hinder directly or indirectly, actually or potentially, trade between Member States within the meaning of the Dassonville judgment […] so long as those provisions apply to all relevant traders operating within the national territory and so long as they affect in the same manner, in law and in fact, the marketing of domestic products and of those from other Member States. 23 Free Movement of Goods II - Young  Keck test Certain selling arrangements do not hinder intra-EU trade if: 1. They apply to all traders in national territory. 2. They affect national and foreign products in the same way, in law and in fact. 24 Free Movement of Goods II - Young  Result of Keck Several different types of measures under consideration: - product-bound measures (‘product requirements’), which concern the inherent characteristics of a product such as designation, form, size, weight, composition, presentation, labelling - measures relating to ‘certain selling arrangements’ 25 Free Movement of Goods II - Young  Result of Keck Measures related to product itself fall under art. 34 TFEU Measured related to ‘selling arrangements’ are less restrictive, therefore ONLY if they affect imports differently ‘in law or in fact’, they would fall under art. 34 TFEU 26 Free Movement of Goods II - Young  Examples of selling arrangements Restrictions on when goods may be sold Restrictions on where or by who, goods may be sold Advertising restrictions etc 27 Free Movement of Goods II - Young  Different in law or in fact? Differential in law is simple enough Differential in fact is trickier De Agostini – ban on advertising directed at children under 12 – disproportionately affects non-domestic sellers as they lack other methods to penetrate the market compared to nationals. Gourmet International – ban on advertising of alcohol on radio and television, hinders market access 28 Free Movement of Goods II - Young  Product Use Rules – a third type Rules on how a product may be used in later jurisprudence Can be caught by Article 34 Case 110/05 Commission v Italy - rules on towing trailers and motorcycles Case C-142/05 Mickelsson and Roos - where are you allowed to ride jetskis? 29 Free Movement of Goods II - Young  Market Access? Some argumentation that anything that hinders ‘market access’ counts as an MEQR under Artilce 34 Debates over whether that can be / should be / is an accurate description of the law Some support from AGs and in some cases 30 Free Movement of Goods II - Young  Where is the law currently? How does it impact Member States? 31 Free Movement of Goods II - Young  BREAK 32 Free Movement of Goods II - Young  What ability do Member States have to regulate? Many restrictions on Member States abilities to regulate due to the free movement of goods Especially given indistinctly applicable measures can be caught by Article 34 Why might states want to regulate in a way that might be a barrier to trade? 33 Free Movement of Goods II - Young  What if the measure is prohibited under Art. 34 TFEU? Can be justified either on the ground of Article 36 TFEU or ‘mandatory requirements’ developed in Cassis de Dijon 34 Free Movement of Goods II - Young  Justifications for barriers to trade – Article 36 TFEU The provisions of Articles 34 and 35 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. 35 Free Movement of Goods II - Young  Treaty-based justifications The precise nature of each of these objections has been developed in specific case law, eg. - public morality - Henn & Darby on pornography, Conegate on blow up dolls - public policy or public security - Campus Oil on importance to maintain own oil-refining capacity - the protection of health and life of humans, animals or plants - Sandoz on unhealthy vitamins, scientific evidence 36 Free Movement of Goods II - Young  Court-developed justifications: mandatory requirements In addition to Treaty based justifications, the Court developed additional grounds to justify QR and MEQR First, in Cassis de Dijon and then in subsequent case law developing these examples - The protection of public health - The defence of the consumer - The fairness of commercial transactions - Effectiveness of fiscal supervisions See German Beer case for a good example of what this looks like in practice 37 Free Movement of Goods II - Young  Court-developed justifications: mandatory requirements Cassis de Dijon list is non-exhaustive (including but not limited to). Other current examples include: Protection of the environment (Case 302-86 Commission v Denmark) Protection of fundamental rights (Case C-112/00 Schmidberger) 38 Free Movement of Goods II - Young  Court-developed justifications: mandatory requirements “Rule of reason” as developed by Cassis de Dijon A rule is permitted if: - no full harmonization - indistinctly applicable rule - justified by a mandatory requirement in the public interest - proportional 39 Free Movement of Goods II - Young  Proportionality requirement: “The means which they choose must therefore be confined to what is actually necessary to ensure the safeguarding of public health; they must be proportional to the objective thus pursued, which could not have been attained by measures which are less restrictive of intra-Community trade” - See C-319-05, Garlic, para. 87 40 Free Movement of Goods II - Young  IAMs and DAMs In principle, IAMs and DAMs are justified differently DAMs can be justified based on art. 36 TFEU IAMs can be justified based on art. 36 TFEU and/or based on mandatory requirements But this distinction becomes more blurred in recent case law, including cases where protection of the environment was used to justify a DAM 41 Free Movement of Goods II - Young  Summary - flowchart Is it a QR (Geddo) or MEQR? (Dassonville) Is it a selling arrangement? (Keck) If it is a selling arrangement, does it pass the Keck test and is thus excluded from the scope Article 34? If it is a non-excluded selling arrangement, a product-bound, or product use rule, is it distinctly or indistinctly applicable? If distinctly applicable, can it be justified using Article 36, and is it proportional? If indistinctly applicable, can it be justified using Article 36 or a mandatory requirement (Cassis de Dijon)? 42 Free Movement of Goods II - Young  Summary Article 34/35 prohibits restrictions on QRs and MEQRs on imports/exports 34 much more common than 35 Quantitative restrictions are relatively easy to identify MEQRs defined by Dassonville Quantitative restrictions can only be justified using Article 36, if done proportionally 43 Free Movement of Goods II - Young  Workshop Fact pattern up on Brightspace 44 Free Movement of Goods II - Young  QUESTIONS? 45 Free Movement of Goods II - Young