Thursday, 5 May 2011

Free Movement of Goods

European Law To what extent has the ECJ case law on Article 28 contributed to the achievement of a single market in goods in the European Union?

The objective of Article 28 is to prevent Member States from engaging in strategies that have the effect of restricting the free flow of goods between Member States. Article 28 states that “quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between member states”. The prohibition contained in Article 28 applies to measures, which have been adopted by the State as opposed to those taken by private parties.
Article 28 is one of the Treaty articles concerning the integration of national markets for goods. The Community’s efforts to integrate national markets are basically attempts to limit the influence of national governments on production and consumption activities throughout the Community. One way that the Commission has sought to deal with trade rules that differ between Member States is for these rules to be harmonized through Commission legislative initiatives.
The ECJ has construed Article 28 as being breached not only when there has been discrimination in the way in which a State treats its own goods and those coming from outside, but also when the same rule applies to both domestic goods and imports in circumstances where the relevant rule can inhibit the free flow of goods across borders within the community. The fact that an indistinctly applicable rule, that is rules which apply to all goods irrespective of their origin, can be caught by Article 28 constituted a major contribution by the ECJ to the attainment of a real single market for goods. Therefore, in order to invoke or rely on Article 28 discrimination is a sufficient condition although not a necessary condition.
There are numerous examples of instances where the Court has struck down national rules, which directly or indirectly discriminate between domestic and imported goods. One common scenario is where a State applies discriminatory rules in the form of import or export restrictions. Measures such as import or export licences are caught by Article 28. The ECJ has always been particularly harsh on such measures. So, too, are provisions which subject imported goods to requirements, which are not imposed on domestic products.
The Court’s approach has been to hold that national rules cannot hinder the free movement of goods unless they could be justified on certain specific grounds such as consumer protection. Article 28 will catch quantitative restrictions and all measures which have an equivalent effect (MEQR). In Case 8/74 Procureur du Roi v. Dassonville , the ECJ signaled that it will take a very broad view of measures, which may hinder the free flow of goods within the Community. The crucial element in proving the existence of a MEQR is its effect: a discriminatory intent is not required. However, the ECJ indicated in the above case that reasonable restraints may not be caught by the prohibition in Article 28. The impact of Article 28 is that it renders inapplicable national regulatory measures on a particular subject.
Another form of discrimination which is caught by Article 28 is that in which a State promotes or favours domestic products to the detriment of competing imports. This can occur in a number of different ways. The most obvious form which this type of discrimination can assume is where a State engages in a campaign to promote the purchase of domestic as opposed to imported goods. A clear example of this is seen in Case 249/81, Commission v. Ireland . Here, the Irish Government sought to promote sales of Irish goods with the objective of increasing consumer spending from imports to domestic products.
The ECJ’s approach was to look at the substance of the provision not its form. The ECJ held that the campaign implemented by the Irish government reflected the government’s intention to substitute domestic products for imported products on the Irish market and thereby check the flow of imports from other Member States. This clearly constituted a breach of Article 28 and the ECJ expressed this in Paragraph 28 of the judgment. It stated that measures adopted which although not binding but which have the effect of influencing the conduct of consumers and traders in that State are capable of frustrating the aims of the Community. The ECJ’s reasoning in this case provides an excellent example of its more general strategy under Article 28.
Another form of indirect discrimination which has been caught by Article 28 is where a State has rules on the origin-making of certain goods, or inhibit the penetration of the market by imports, is equally apparent in this type of case, even though the discriminatory effect on imports, is equally apparent in this type of case, even though the discriminatory effect on imports is more indirect.
There are diverse ways in which a State can treat imported goods less favourably than domestic products. Price fixing regulations imposed by a State may have this effect by rendering it more difficult for importers to market their goods within the territory of the State which is imposing the restrictions. If the price fixing is discriminatory it is clearly caught by Article 28. Thus in Case 181/82, Roussel Labaratoria BV v. The State of The Netherlands , the ECJ held that maximum selling prices for certain drugs which were fixed according to different criteria for domestic and imported goods were discriminatory and infringed this Article. However, the Article can catch pricing rules even where they are not, on their face discriminatory.
If trade rules are found to be discriminatory, that is measures which is caught by Article 28, then they can only be saved through Article 30 which provides that the provisions of “Article 28 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, historical or archaeological value; or the protection of industrial and commercial property”. A State is not able to raise possible justifications, which do not appear within Article 30, even if they are to be found in the list, which may be invoked in the case of indistinctly applicable measures.
Article 28 has made a notable contribution to the creation of a single market. The removal of discriminatory trade barriers is undoubtedly a necessary condition for the attainment of single market integration. It is not however sufficient. There are many rules which do not discriminate as such between goods but which nevertheless can create real barriers to the passage of products between Member States. The removal of discriminatory trade barriers is undoubtedly a necessary condition for the attainment of single-market integration. It is not, however, dependent upon the country of origin, but which nevertheless can create real barriers to the passage of products between Member States.
The court’s ruling in Case 120/78, Rewe-Zentrale Agv. Bundesmonopolverwaltung fur Branntwein , affirms and develops the Dassonville judgement in the sense of making it clear that Article 28 can indeed apply to national rules which do not discriminate against imported products as such, but which inhibit trade nonetheless merely because they are different from the trade rules which apply in the country of origin. The effect of the judgment is de-regulation, in the sense of rendering inapplicable trade rules which prevent goods lawfully marketed in one State from being imported into another State. The presumption is that once goods have been lawfully marketed in one Member State, they should be admitted into any other State without restriction.
The ECJ’s judgement in Cassis was, in part, a response too the difficulties faced by the Commission in securing acceptance by the Member States of harmonization measures. This difficulty was in partly due to the technically complex nature of many harmonization measures, which might therefore not prove easy to draft; it was in part because the Member States might not readily reach agreement on the substantive content of a proposed harmonization measure; and it was in part a result of the fact that harmonization measures, even if they were passed, would result to some degree, in the standardization of the rules applicable to an area, with the result that national diversity might be stifled or lost, being replaced by one Community concept of beer, cheese, sausage and the like.
Cassis highlighted the willingness of the ECJ to extend what is now Article 28 to catch indistinctly applicable rules that inhibited trade in some manner. The difficulty is that all rules that concern trade directly or indirectly could be said to affect the free movement of goods in various ways.
In the above sense, the Cassis judgment had the advantageous consequence of fostering single market integration by breaking down barriers to trade which resulted from the existence of indistinctly applicable national trade rules and obviating the need for specifically Community Harmonization provisions. The Cassis case involves dual-burden rules. Dual-Burden arises where State A imposes certain rules on the content of goods, and these rules are applied to goods imported from State B, even though the goods produced in State B would already have had to comply with the relevant trade rules from that State. The impact of Cassis is to render such rules incompatible with Article 28 unless they can be saved by one of the mandatory requirements. The rule is hence prima facie subject to Article 28.
Equal burden rules are those applying to all goods, irrespective of origin, which regulate trade in some manner, which are not designed to be perfectionist, which may have an impact on the overall volume of trade, but which have no greater impact in this respect on imports than they do on domestic products. These are generally outside the ambit of Article 28.
In Cases 60 and 61/84, Cinetheque SA v. Federation Nationale des Cinemas Francais , the court defined the national provision in that case as being prima facie within Article 28, but it might be regarded as lawful if there was an objective justification for it which was acceptable with regard to Community Law, and provided also that the method of attaining the objective was proportionate. This case provides a good illustration of problems that can be posed by equal-burden rules.
The effect of Article 28 is creating a sort of negative regulation. Even if one does agree that certain national trade rules should be regarded as incompatible with the Treaty, this species of negative regulation may still require supplementation with more positive regulation, which can only be produced through Community Legislative action. There is little doubt that the decisions of the ECJ in this area have made a significant contribution to the effective realization of a single market. The court’s jurisprudence has consistently looked behind the form of a disputed measure to its substance, and the ECJ has interpreted the relevant Articles in the manner best designed to ensure that the Treaty objectives are achieved.


Burrows, F., Free Movement in European Community Law, Oxford University Press, 1987
Craig, P. and De Burca, EU Law Text and Materials, Oxford University Press 3rd edition, 2003
Gormley,L.W., Prohibiting Restrictions on Trade within the EEC (Elsevier/North Holland, 1985)
Green, N., Hartley, T.C., and Usher,J.A., The legal Foundations of the Single European Market Oxford University Press, 1991)
Oliver, P., Free Movement of Goods in the EC, Sweet and Maxwell, 3rd edition, 1996

No comments:

Post a Comment