Institutional and - Wealth Institutions Sovereignty Democracy EU Tr...

Institutional and Substantive Law of the EU Block 2 1 / 4

Reflection week assignment: Three Models of Market Integration

Wealth Institutions Sovereignty Democracy EU Treaties

HOST COUNTRY

• Different levels of protection

across MS

• Higher production costs

Member States Low level of sovereignty loss Under-inclusive Article 36 TFEU

HARMONISED

• Economies of scale (compliance

with 1 rule)

• Diversity of preferences
• Rule creation & changing difficult

EU Legislature Vertical transfer of sovereign powers Democratic deficit of EU Article 114 TFEU

HOME COUNTRY

+/- Regulatory competition Court of Justice Reassignment o sovereign powers Favoring capital over workers Mutual recognition

Chapter 11: The Internal Market and the

Philosophies of Market Integration •Article 26 TFEU —> definition internal market but quite vague •Three ways an internal market can be

organised:

(1) Host Country Control •Means that rules of the country where

economic activity takes place apply: if

good is produced in country A but is traded in country B, rules of country B will apply •Normal situation for trading between independent countries •Fewest constraints on country’s autonomy, if non-discrimination is in place.•National) legislatures play dominant role (occasionally judiciary too) •Allows trade; makes all participants wealthier

•Democratically speaking under-inclusive:

people not properly represented (2) Harmonised Model •General rules for an entire area, e.g. EU; there is one rule for everything in this group (of countries) •Vertical transfer of power from State level to EU level (pooling of sovereignty) •Central legislature is dominant; judiciary can apply central rules or MS specific rules •Economic benefits; reduces compliance and transaction costs, can focus on other issues (e.g. environmental), but difficult with applying globally (not country- specific) (1), of quality (2) and without lengthy EU process (3) falls prey to democratic deficit of EU (3) Home Country Model

•Mirror image of host country model:

means that rules apply or where product/ service is produces; if good is produced in country A but traded in country B, rules of country A will apply •Requires mutual recognition/high levels of trust •Reassignment of sovereignty ; sometimes MS loses power in its own territory

•Judiciary power is dominant: has to

ensure mutual recognition •Regulatory competition; between markets but also legislatures; increases choice but decreases ability for initiatives for non- economic interests •Distorts national democracy by favoring capital over workers Spaak Report —> Treaty of Rome (1957); internal market with freedom and fairness Single European Act (SEA) to complete internal market after Rome; however internal market not seen as satisfactory regarding European integration Internal market and economic monetary union (EMU)

• A strong internal market increases the

benefits of the single currency, which in turn strengthens the internal market.

• The problem with a single currency is that

it reduces flexibility: an individual Member

State can no longer respond to economic developments by changing interest rates or the value of its currency.

• Labour mobility has been identified as

one of the key factors for a successful currency union. Free movement of labour assumes a greater significance under a single currency.

• A well-functioning internal market allows

the real exchange- rate channel to work.What this means is that acountry whose economy is overheating due to low real interest rates, which result from acentrally set nominal interest rate and a high level of inflation, is automatically cooled down.

Digital Single Market: Legislating internal

market: Article 114 TFEU - paragraph 1 with

definition, does not provide general power to regulate economy! Gives power to harmonize!•Includes ordinary legislative procedure

•Article 50 TFEU: specific legal basis for

right of establishment

•Article 26 TFEU: establishment and

functioning internal market Tobacco advertising •Total harmonization = when an EU measure, such as a directive, regulates something exhaustively, not leaving any room for divergent rules of the Member States. All laws have to comply to EU Treaties (unless it cheats its own primary law).•Minimum harmonization = sets the floor below which no Member State may go, but leaves them free to adopt more demanding rules, respectful of national

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Lecture 9: Free movement of !ods (5 November 2024)

Types of integration: positive and negative

Negative integration Positive integration Free movement of goods, services, capital, establishment and persons -> Removing barriers/restrictions (national laws) by prohibiting them

Competition law: prohibitions of cartels,

abuse of market power & state aid Harmonisation (art. 5 TEU -> art. 114 TFEU) Harmonising national laws through EU law •Common external tariffs in Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code

The Customs Union: internal dimension

Two categories of trade barriers: similar

purpose to impose a restriction on imports and exports

• Tariff barriers (fiscal rules -> obligation to

pay a sum of money) •Article 30 TFEU (custom duties and CEE) -> when the duty is paid on solely national or foreign products -> national tax -> adding a duty at the border •Article 110 TFEU (internal taxation) -> when the tax is paid as part of general taxation system within national -> tax added once product is in the country •Mutually exclusive, either one or the other but never at the same time •Customs duties •Exise duties •Tolls

• Non-tariff barriers (non-fiscal rules ->

obligation to comply with other types or requirement) Article 34-36 TFEU •Import and export quota’s •Minimum import prices Definition of goods Case 7/68 Commission v Italy (“works of art”)

(1968): “By goods, within the meaning of

[article 28], there must be understood products which can be valued in money and which are capable, as such, of forming the subject of commercial transactions.” -> meant otherwise that Art would not be a good •Waste, electricity, human corpses and body parts are regarded as a goods •Broadcasting, operation of a lottery, intangibles other than electricity are services NOT goods •Coins and banknotes are NOT goods if they are still legal somewhere in the world •Positive integration involves the EU enacting laws to establish common standards across MS to ensure a level for each country, usually done by setting minimum standards.•Negative integration removes trade barriers and other restrictions within the EU without necessarily establishing a common standard. It is often made actual through the rulings of the CJEU, which prohibit national measures that restrict the internal market.

Internal market: basis

Article 26 TFEU -> within the internal market they seek to remove frontiers -> related to negative integration The Customs Union Article 28 (1) TFEU •External dimension -> uniform common rules which apply to products originating from third countries •Internal dimension (internal market) -> abolition of internal barriers to trade in goods between MS -> to be achieved trough directly effective provisions Article 28 (2) TFEU and 29 TFEU -> provisions extend to products coming from third countries which are in free circulation in MS

The Customs Union: external dimension

•Provision applies to goods originating in any MS •Goods originating in third countries “definitely and wholly assimilated to products originating in MS” (Case 41/76 Donckerwolcke (1976), para 17)

Tariff Barriers: Custom duties and charges

having equivalent effect •Custom duties = charges levied on goods because they cross a frontier between MS •Article 30 TFEU -> Charges having Equivalent Effect (CEE)

• CEE is a pecuniary charge -> an

obligation to pay a sum of money

• The charge must be imposed on domestic

or foreign goods because they cross a frontier

• Diamonds case stated that any charge

however small constitutes an obstacle to the free movement of goods

• Designation and mode of application are

irrelevant

• CEE is not confined to charges imposed

for the benefit of the state (often) but also to those who finance another entity such as a social fund

• Charges can be CEE’s even if they are not

discriminatory or protected -> charge on both important and export (but not on domestic products) can be a CEE -> even if there is no domestic production ->

Diamonds case: Antwerp is one of the

biggest diamond trading centers but they have no trading mines Cases 2 and 3/69 Diamantarbeiders (Diamonds) (1969), para 9 •Belgium had established a Social Fund for Diamond Workers. All imports of unworked diamonds were subjected to a contribution intended to enable the fund to fulfill its tasks, the contribution amounted to 0.33 percent of the value of the value of the unworked diamonds -> constituted as a CEE even if the amount was very small, it was still an obstacle to the free movement of goods Permissible charges outside of scope of article 30 TFEU = NOT CEE’S AT ALL!

• The payment is consideration for the

service rendered -> service must confer a specific advantage on the importer/ exporter & must be proportionate (Case C132/82 Commission v Belgium (1983)) A A

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•Case 24/68 Commission v Italy (Statistical Levies) (1969), para 15-16. -> Italy had imposed a small charge on imports and exports of goods, they argued that the charge constituted consideration for a service rendered -> availability of accurate statistics on imports and exports -> Court rejected statistical information was beneficial to the economy as a whole not to the individual

• It relates to inspections required by EU law

-> (Case 18/87 Commission v Germany (1988), para 8) •Charges must not exceed the actual costs of inspection •The inspections must be obligatory and uniform for all products in the EU •The inspections must be required by EU law •They must facilitate free movement of goods -> eliminate all obstacles arising from unilateral measures of inspection (3. Internal taxation) Article 30 TFEU and third countries •Prohibition only applies to MS, but countries with which the EU has association agreements (Turkey, Morocco) can be protected by article 30 TFEU •Third country products -> Article 31 TFEU

Non-tariff barriers: Quantative Restrictions

and Measures of Equivalent Effect

Two types of prohibited measures:

1. Quantitative restrictions: “measures which

amount to total or partial restraint of … imports, exports, exports or goods in transit” (Case 2/73 Geddo (1973)) •Article 34 (import) & 35 TFEU (export) •Total restraint = total prohibition on import or export •Partial restraint = import or export quotas

• Measures having equivalent effect

•Case 8/74 Procureur du Roi v Dassonville (1974) -> Belgian rules requiring certificate of origin for import of Scotch whiskey from France -> The Court decided that the requirement for a certicifacte in Belgium law was contrary to art 30 TFEU.•“All trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-community trade are to be considered as measures having equivalent effect.” (para 5)

MEE: Scope

•“all trading rules”: includes also national

policies and practices -> Commission v Ireland (‘Buy Irish’)

•Defendant: contested advertising

campaign encouraging pubic to buy local products in preference to imports was not an MEQR because imports had actually risen since campaign started

•Court: imports might have risen

even more in absence of the campaign

•“Enacted by Member States”: vertical

direct effect: state bodies and quasi-state

bodies but no horizontal direct effect of article 34 TFEU -> Case C-265/95 Commission v France (Spanish

strawberries): indirect responsibility of

government

•Actually or potentially”: but no MEE if

effect is “too uncertain and indirect” to hinder inter-state trade, C-69/88 Krantz (1990), para 11 •German company which had sold a machine on installment terms to a company in the Netherlands, before all the installments were paid the purchaser went bankrupt -> Dutch law that allowed tax authorities to seize goods to recover unpaid taxes.Plaintiff said that this law infringed art 34 TFEU -> disincentive to traders in other MS to sell goods by installments

•Court: effects of this rule were too

uncertain and indirect to warrant the conclusion that it was liable to hinder trade between MS

•Directly or indirectly”: distinct and

indistinct measures -> Cassis de Dijon Cassis de Dijon (para 8) •All early cases concerned the so-called ‘distinctly applicable’ measures (those which discriminate against imports on their face). Court first encountered indistinctly applicable measures in Cassis de Dijon

Facts of the case:

•Plaintiffs wanted to import French ‘Cassis’-drink and contested the validity of a provision of an indistinctly applicable German law requiring spirits to have a minimum alcohol content, double bourdon to comply with DE and FR requirements -> higher costs -> indirect discrimination •Cassis de Dijon fell under category required by Germany to have at least 25%, however plaintiff had only 15 – 20% •German government argued that there is no harmonization of policy field in EU law, that the de facto extension of FR laws to DE undermined democratic legitimacy •Court rules that this constitutes an MEE and established the fundamental principle of mutual recognition -> MS mutually recognize that their respective rules equally protect the public interests being pursued •Measure did not discriminate against imports in their face, but was a more subtle form of discrimination -> discrimination in fact

Problems of indistinct measures: Sunday

Trading

Case 145/88 Torfaen BC v B & Q plc (1989):

•Irish law that prohibited retail shops from selling on Sundays

•Indistinct measure: no disadvantage for

imported products

•Breach of art. 34 TFEU: “all trading rules…

which are capable of hindering… actually

or potentially” intra-EU trade, but:

justified with mandatory req

Consequences:

•Art. 34 applies -> prima facie unlawful •Art. 34 does not apply -> prima facie lawful

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