European Union Law - articles 25 and 90 of the EC Treaty.

European Union Law

Coursework assessment – Part 2-

Course code: 4 FBL 201

Seminar teacher: Michael Conneely

Student: Laura Geron

Student registration number: 00145221B

Due to the fact that Carlos is a producer of Spanish wine and fruits, trading within the European Union he can criticise the legality of the payments that certain Member States asked him to pay under the articles 25 and 90 of the EC Treaty. The free Movement of goods is one of the four freedoms guaranteed by the original Rome Treaty that are the Free movement of workers, Freedom of establishment and provision of services and Free movement of capital.

The treaty does not provide a definition of the concept “common market” however Member States are required under the Article 23 (ex 9) E.C. to form a customs union.

In order to create a single internal market of the whole community it was necessary to remove the economic frontiers (free circulation of goods) but Members agree to apply a common level of tariffs on goods entering the union from without. However, it is important to ensure the non-discrimination between domestic and foreign products of the Member States.

In his situation, Member States adopted a protectionist attitude when they attempted to erect customs duties or charges with an equivalent effect, in order to make foreign goods more expensive than their domestics’ products. The Articles 23-25 E.C (ex 9-17) prohibit the increase of existing customs duties and imposition of new duties on imports and exports or any charges having an equivalent effect. The case Van Gend en Loos v. Nederlandse Administratie der Belastinge (Case 26/62)1963), illustrates the importance attached by the ECJ to the customs union by recognising that individuals may enforce their rights under the Article 25 (ex 12) before the national court.

Besides certain states attempted as well to treat their domestic goods more favourably than the goods that Carlos imported applying discriminatory internal taxation which benefit them. The Articles 90-93 (ex 95-99) is design to cope with this problem.

The purpose of the Article 90 is to prevent the objectives of the Article 25 from being undermined by discriminatory internal taxation. We can distinguish two sections in the Article 90:The section 1 of the Article 90 is based on the comparison of similar products define as to be those “which have similar characteristics and meet the same needs from the point of view of consumers”. The subsection (2) of the Article is design to cover, in addition all forms of indirect tax protection in the case of products, which without being similar within the meaning of 90(1) are nevertheless in competition. Tax rates do not have to be the same but are not allowed to give indirect protection to competiting domestic goods.

The EU issued a Notice requiring a health inspection for all imports of Spanish oranges and lemons. However, this outbreak has been brought under control a few months later. When Carlos imported oranges into France that were not infected, he has been required to pay for a health inspection because according to France the Spanish oranges and lemons were still a health risk. A common argument that could be advance by the state is that the charge imposed on the oranges is justified on the ground that it is considering as a service and therefore should not be considering as a Charge Equivalent Effect, which is prohibited under the Article 25.

However if France still intends a public health inspection, despite the fact that the outbreak is under control, it cannot be regarded as a service rendered by the importer. In addition like the ECJ’s judgement in the case Bresciani v. Amministrazione Italiana delle Finanze (case 87/75) 1976 ECR 129 shows clearly; any pecuniary charge unilaterally imposed on goods imported from another Member States because they cross a frontier constitutes a charge having an Effect Equivalent to a custom duty. Consequently, the pecuniary charge becomes unlawful. Finally, if, France wishes to import a type of product which necessities an inspection then it should bear the cost. The cost of inspections to maintain public health should be pay by the public. So the importer of the product will not have to bear what is in reality one the cost of producing the product.

Another exception would be the inspection of goods under EU Law. A reasonable charge here could be required for a compulsory or mandatory inspection. However it is possible to argue that the EU Notice is not required any more due to the fact that the outbreak is under control. Consequently the EU allows the individual country to inspect goods rather than require it, then the charge is not allowed.

Exported goods to Italy involve the payment of taxes, which is covered under Article 90 (1). The tax on imported goods must have the same rate than similar domestic goods. ...

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Exported goods to Italy involve the payment of taxes, which is covered under Article 90 (1). The tax on imported goods must have the same rate than similar domestic goods. If not it could have a discriminatory effect against imports, as the difference in tax may favour domestic production. In the case Hausen v. Hauptzollampt flensbury [1978] ECR 1787 Case 148/77 , Germany made available tax relief to certain producers whom produced spirits in the country to encouraged the small businesses. The state claimed that this tax was for an economical purpose (helping small wine producers in Italy in Carlos situation).

However, the ECJ held that this benefit should be applied to small businesses importing goods into Germany as well. The reason was that the drinks were similar and treating the importer differently would be seen as a direct discrimination like in Carlos situation with Blanca in Italy.

On the other hand we could argue on the indirect discrimination of a Member State that impose higher taxes on imported goods than on domestic goods. This issue was encountered in the case Humblot v. Directeur des services Fiscaux (case 112/84). The French government imposed a higher tax rate on cars imported and domestic of more than 16 c.v, which was the highest engine capacity for cars made in France. The ECJ held the system to be a breach of Article 90 (ex 95) because this could only apply to imported goods.

So the higher tax on Blanca than may be seen as indirectly protecting domestic competing products. This example is illustrated by the cases Commission v. U.K and Commission v. Italy where that large difference in taxes between the competiting products would change the drinking habits of the consumers who would purchase the cheapest product.

When the United Kingdom impose a higher tax on Rossa than on beers and tax Blanca like certain spirits sold in the UK, it is important to clarify if they are similar products. This is exemplified by the ECJ’s approach in John Walker v. Ministeriet for skatter.Case 243/84 [1986] ECR 875. In that case the issue was whether the liqueur fruit wine was similar to whisky for the purposes of the old article 95(1). The ECJ analysed the objective characteristics of the products and concluded that they were not similar and so should treated under the Article 90 (2).

Concerning the competition between wine and beer the ECJ considered that the two beverages were capable of meeting identical needs in the case 170/78, Commission v. United Kingdom [1983] ECR 2265, [1983] 3 CMLR 512.

To reach this decision the court considered if consumers thought the goods could be substituted from each other but not only this point of view was taken into account, the court stated as well that the tax system could influence consumers behaviour towards the substitution of a product.

In the case 184/85 [1987] Commission v. Italy ECR 2013 , the court kept the same approach and found that bananas were not similar but were in direct competition with other fresh fruits.

Therefore concerning Carlos and referring to the Commission v United Kingdom case (the ECJ found that wine and beer were in competition but the court then moves on to determine whether the tax system was in fact protective of beer), Rossa and the beers are competitive but not similar. They can be tax however we can argue that Rossa has a much higher tax than beers around the same strength that are mainly produced in the UK. It looks like the UK is protecting beers imposing a higher tax on Blanca that could lead consumers to purchase beers instead. In this situation the Article 90 (2) is breached.

However if we refer to the case Commission v. Belgium [1987] ECR 3299 Case 356/85 [1988] 3 CMLR 277, the existence of a tax differential between domestic and imported product will not, however, always suffice to establish protectionism under the Article 90 (2). There was no breach of this Article as long as the difference in tax didn’t give a protective advantage. Therefore Blanca would be in competition with certain spirits because they are both high alcohol content and so could be substituted to each other. They are subject to the same tax so there is no breach of Article 90(2), however further researches should be done to determine the exact relationship between Blanca and the spirits concerning.

As explained earlier the court has accepted that a charge imposed by a state will escape the prohibition under the Article 25 or if the charge is for a service rendered by the importer for example unloading and checking goods. Furthermore the handling fee required by Fruits Ltd should not be seems as unlawful but it is always possible to argue on the purpose of checking the goods. Is it conducted due to the health risk that concerned the Spanish oranges and lemons and so could it be interpreted as a health inspection?

Bibliography:

Craig & de Burca, “EC Law: Text, Cases & Materials”,Oxford.2nd edition. Chapter 13.
Steiner, J, “Textbook on EC Law “, [1998](7th edition) Chapters 7,8,9,10,17.
Lasok & Bridge, “Law & Institutions of the EU”, 6th edition. Butterworths.[1994]
Burrows, F, Free movement in European Community Law (oxford University press)[1987]
Tillotson, chapters 2 and 12. New edition [1999]
Charlesworth & Cullen. Chapter 11.[1998]

Chocco Ltd. could argue that the restrictions encountered recently in trading their products throughout the EU are unlawful within the European Union with the Free movement of goods designed to ensure the removal of duties, quotas and other quantitative restrictions on the movement of goods within the Community: Article 28- 30 (ex 30-37).

“Article 28 (ex 30) does not apply to selling arrangements by Member States, which do not affect inter-member trade. Restrictions on exports will only breach Article 29 (ex 34) if they have as their object or effect the restriction of patterns of exports, providing an advantage to the home product or market. Article 30 to 34 (ex 28 and 29) do not preclude prohibitions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of life or health of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial or commercial property. Such prohibitions must not constitute means of arbitrary discrimination or a disguised restrict5ion on trade between Member States: Article 30 (ex 36).”

In the case Geddo v. Ente Nazionale Risi [1973] Case 2/73 ECR 865 [1974] CMLR 13, the notion of quantitative restriction was defined as “measures which amount to a total or partial restraint of, according to the circumstances, imports, exports or goods in transit”. The Article 28 encloses quantitative restrictions and all measures, which have an equivalent effect (MEQR).

Chocco Ltd. must be able to identify if the French law result in MEQR or QR. However MEQR are more difficult to define and the Directive 70/50 [1970] OJL 13/29, Art 2 (3) makes the distinction between these two rules. This directive divides measures into distinctly effective measures (which do not apply equally to domestic and imported goods) and indistinctly effective measures (which apply alike to both domestic and imported goods).

The case 8/74, Procureur du roi v. Dassonville [1974] ECR 837, [1974] 2 CMLR 436 is the first case that give an interpretation of MEQRs: “ All trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-community trade are to considered as measures having effect equivalent to quantitative restrictions”. This definition makes clear that the crucial element in proving MEQRs is its “effect”. The requirement to obtain a certificate was a MEQR and illegal under Article 28 (ex 30).

The French law that prohibit the use in chocolate bars of nuts exceeding a certain size has to be interpreted in terms of its effect on trade. No reasonable explanation is provided concerning the national law which would have enable us to decide if the rule was distinctly applicable and so being a MEQR and a breech of the Article 28 or indistinctly applicable and therefore could have been objectively justified. I would advice Chocco Ltd to support his argumentations with the following “Cassis de Dijon” case.

The ECJ took another decisive step in the case of Rewe-zentral A.G.v. Bundesmonopolverwaltung fur Branntwein (“ Cassis de Dijon”) 120/78 [1979]. This made a distinction between distinctly and indistinctly applicable measures. The German Law required a minimum alcohol level of 25% for certain spirits and a French liqueur that had an alcohol content of 15-20% was refused to the German market.

Therefore, there is no valid reason why “Feast” which have been lawfully produced and marketed in one Member State (UK) should not be introduced into any other Member State. If the rule of a national court conflict the fundamental principle of free movement within the community those rules will not be accepted, unless they can be justified by one mandatory requirement.

Chocco Ltd product was banned from Germany for failing standards because it contained additives in the chocolate despite the fact that several EU chocolate producers use these additives. In the case Commission v. Germany (case 178/84) a long-standing ban on additives in beer was found to be unjustifiable on health grounds. The ECJ considered that the product was used in other Member State production then it should not be refused in Germany. It is important to mention that distinctly applicable measures may only be justified under Article 30 (ex 36) but it has to be proved that the additives used represent a threat to public health. Therefore Chocco Ltd should be able to sell their product in Germany because the additives have not been proved dangerous and are accepted by other EU countries. There is a breach of the Article 28 by Germany. Other means, such as labelling could have been used instead.

The decision of Italy to refuse to import the box called “Chocco Adult Selection” could be as well unlawful. Concerning the level of alcohol authorised in chocolate in Italy the case of “Cassis de Dijon” explained earlier can be again quoted because it stated that the importer couldn’t lawfully demand for a product characteristics, labelling, packaging etc. without a breach of the Article 28. Furthermore it is quite unlikely that the mandatory requirement of protection of children would be sufficient to ban the chocolate. Concerning the packaging, Chocco Ltd should use the case of Walter Rau Lebensmittelwerke v. De Smedt PVBA, [1982], ECR 3961, [1983] 2CMLR 496.Case 261/81. This case concerned national rules on packaging rather than the actual content. Belgium law required all margarine to be marked in cube-shaped packages. Because it was indistinctly applicable, the non- Belgian manufacturers had to invest more in changing their packaging. The ECJ decided that the Article 28 was applying and could not be justified on the basis of consumer protection as it led to consumer confusion.

For Chocco Ltd the issue is different because the chocolate box is said to indecent. Such restrictions on imports or exports may be justifiable on grounds of public morality contained in the Article 30(ex 36). The case R. v. Henn and Darby (case 34/79)[1980] illustrates the general requirement of Article 30 that a measure must be necessary, but must not involve arbitrary discrimination or a disguised restriction on inter-member trade and in the case of Conegate Ltd v. Commissioners of Custom and Excise, [1986] ECR 1007, [1986] 1CMLR 739(case 121/85), in contrast there was a lawfully domestic trade in the goods in question (inflatable dolls or chocolate here).

The seizure of dolls being imported from Germany into the UK on grounds that they were indecent and obscene was a breach of Article 28 (ex 30), being discriminatory on grounds of nationality. Italy in the case of Chocco Ltd does not have strict policy against the manufacturing against these particular types of chocolate box and the good was only described as indecent and not obscene or pornographic. Therefore Italy would have to ban all similar goods domestic or imported in order to avoid being unlawful under arbitrary discrimination.

Concerning the last problem encountered by Chocco Ltd regarding their sells in Spain, the issue depend on whether or not the Court see this law as being part of a “selling arrangement” recognised in the case Keck and Mithouard (joined cases C-267 & 268/91) [1993]. The court was anxious to discourage excessive use of Article n28 (ex 30) E.C with regards to “certain selling arrangement” which are non-discriminatory. However such arrangements have apply to all affected traders in the territory of the Member State and affect all traders in the same manner in law and in fact, in order to be outside of the scope of Article 28 (ex 30). However in this case Spanish law prevent the access of the market to Chocco Ltd’s product that constitute a breach of the Article.

To summarise, European Union Law under the Articles 28 &29 protects Chocco Ltd. The Article 30 allows Member States to limit the freedom of movement of goods and thus derogate from principles comprised in Articles 28 and 29 (ex 30 and 34) E.C. Although the grounds in Article 30 (ex 36) E.C. appear extensive they have been narrowly construed by the court. They must not constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.

Bibliography:

Craig & de Burca, “EC Law: Text, Cases & Materials”,Oxford.2nd edition. Chapters 13,14,19,20,25.
Steiner, J, “Textbook on EC Law “, [1998](6th edition)Chapters 7,8,9,10,11,16,17.
Lasok & Bridge, “Law & Institutions of the EU”, 6th edition. Butterworths.[1994]
Burrows, F, Free movement in EuropeanCommunity Law (oxford University press)[1987]

Craig& Burca, 1998, EU Law Text, Cases and Materials (2nd edition), New York, Oxford University Press.

Weatherill $ Beaumont, 1995, EC Law, (2nd edition).

Craig& Burca, 1998, EU Law Text, Cases and Materials (2nd edition), New York, Oxford University Press.

Steiner, J, « Textbook on EC Law », 6th edition,1998.

Craig& Burca, 1998, EU Law Text, Cases and Materials (2nd edition), New York, Oxford University Press.

Steiner, J, « Textbook on EC Law », 6th edition,1998