Introduction
According to the European Union (EU), the EU is the global largest trader, responsible for 16.5 percent of the global exports and imports. To the Union, free trade among member states is one of the most firm regulations, and it is dedicated to advancing world trade too. In this critical analysis and discussion paper, the focus is on the contribution made by the Court of Justice of the European Union (CJEU) case law regarding Article 36 TFEU to the achievement and maintenance of the EU’s single market.
The European Union Single Market and Free Movement of Goods and Services
The Single Market shows the EU as one region with no internal borders, restrictions, or other administrative impediments to the free flow of products and services. A working Single Market invigorates fair competition and commerce, enhances effectiveness, improves quality, and assists in cost reduction. The EU Single Market is among the EU’s most noteworthy accomplishments. It has facilitated economic growth and made the regular activities of European organizations and customers less demanding.
The Single Market approach is the European Commission (EC) arrangement to open up and facilitate trade in the Single Market. The Single Market remains the most important element of the European trade project, empowering individuals, enabling services, merchandise, and capital to flow more unreservedly, providing new opportunities for European firms, more prominent consumer choices, and lower costs for customers. It allows citizens to move, live, work, or pursue studies in any part of the EU member state without restrictions.
The free movement of goods, which is the first principal among the four primary freedoms that guide the internal market, is based on the concept of the removal of the custom duties and quantitative limitations, and the exclusion of measures bearing a proportional impact. To advance, the internal market practices, the EU has adopted the standards of mutual recognition, removal of physical and procedural hindrances, and advancement of institutionalization.
The enactment of the New Legislative Framework (NLF) fundamentally reinforced product marketing regulations, the free movement of products, the EU’s market observation framework, and the CE (European Conformity) mark. The mutual recognition guideline was additionally merged, and it applies to an extensive variety of items not included under the EU harmonization.
In any case, at times, these benefits are not realized in light of the fact that Single Market principles are not widely recognized or actualized or they are simply weakened by different other legal obstacles. Additionally, in a quickly evolving environment, the Single Market should adjust to new thoughts, business models, and plans of action. That is the reason the EU has opted to review the Single Market provisions and eliminate as many obstacles as possible, and in this case, Article 36 is extremely important.
Article 36
“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.”
It is important to recognize that the provisions of Articles 34 and 35 refer to quantitative limits on imports and exports and all procedures with the corresponding outcome to be forbidden between the EU Member States.
The Contribution Made by the Court of Justice of the European Union’s Case Law Regarding Article 36 TFEU to the Achievement and Maintenance of the EU’s Single Market
Three fundamental provisions of the Article 36 stand out. They include public morality, public health, public policy, public security, national treasure, and intellectual property. That is, in Article 36, the basis for restrictions of free movement of merchandise, persons, services and capital, the so-called the four freedoms. There are also exceptions to the restriction of measures having an equivalent effect to that quantitative restriction.
Specifically, Article 36 does not prohibit the EU member states from taking measures having an effect equivalent to quantitative restrictions based on the justification derived from regular, non-economic public factors. Such exemptions to the common rule have to be interpreted entirely and stringently, and national measures are not applied as methods for subjective discrimination or masked limitations on trade between the EU member countries.
Special cases of exceptions are not legitimized anymore if the Union law that does not permit them has been enacted in the same state. Lastly, the measures must directly affect the interest public to be protected, and should not go past the fundamental level (this is the principle of proportionality).
Besides, the Court of Justice acknowledged in its law (Cassis de Dijon) that the EU Member States may apply special cases to the restriction of measures having an equivalent effect. Such exceptions can be made on the premise of obligatory prerequisites, which relate, in addition to other things, to the effectiveness of financial supervision, public health protection, reasonableness of business engagements and consumer protection. It is recommended that member states should inform the Commission about national exception measures.
Public Morality
To illustrate the public morality key principle, the Case 34/79 R v Henn and Darby shows that the UK held movies and published materials shipped from the Netherlands into the UK. The shippers were indicted under the provisions of the custom and excise law with bringing in profane and indecent materials. However, in defense, the importers argued that the restriction negated Article 28 (ex 30) in that a stringent measure was being used for imports than to the UK domestic products.
The Court held that a member state might legitimately disallow based on public morality the shipment from another member state of lewd or licentious materials as applied by its domestic legislation. A ban on imports that is stringent than the domestic ban is not a measure intended to give circuitous protection to a national merchandise or formulated to be subjective discrimination based on which location the goods are manufactured.
The case of Henn and Darby shows the fundamental prerequisite of Article 30 (ex 36), which requires a measure to be indispensable, but must not include discretionary discrimination or a hidden limitation between member states involved in trade. The measure held to be true due to protection of public morality because there was no arbitrary discrimination.
On the contrary, one can also look at the case law of Conegate Ltd v HM Customs and Excise (Case 121/85) where there was legitimate domestic trade involving inflatable dolls. The confiscation of dolls brought from Germany into the UK on the basis that they were profane and obscene, which breached Article 28 (ex 30). It was noted as discriminatory based on nationality. The decision was held to be arbitrary discrimination since the dolls could legally be produced in the United Kingdom.
Public Health
In public health issues, there must be actual health risks, which are regarded as serious in the health policy. The case law, Commission v UK (Case 40/82) 1982 illustrates the real health risk. The UK singularly and quickly imposed a restriction on the importation of poultry products after a sustained campaign by UK poultry producers shortly prior to Christmas in 1981. The UK government argued that the measure was important under Article 30 (ex 36) to protect its flocks from getting Newcastle Disease.
The Court held that the restriction was not a constituent of a health policy but rather was a hidden measure on trade. Less prohibitive techniques would have been adequate. Further, the UK could not support the restriction on animal health based on the provisions under Article 30 (ex 36).
The measure imposed by the UK seemed, by all accounts, to be an endeavor to shield the UK producers from their French counterparts and competition. Turkey farmers from France later opted to recuperate their losses from the UK government in the case law, Burgoin v MAFF (CA). In spite of the fact that the case was struck out, French farmers won after an out of court settlement of £3.5 million.
In another case law, Commission v UK (Re UHT Milk), the UK law stated that the importation of the milk required a permit, packaging, and promotion by local authorized traders. The UK contended that this approach was important to ensure optimal protection of public health. This case further shows the need to demonstrate a genuine health risk to the public. Additionally, the UK, as a member state, had the burden proof, which had to be supported by scientific evidence. The case also was futile on proportionality because a certificate from the producer could have been sufficient. Thus, it is unlikely for a member state to succeed if the exporting country has established comparable benchmarks and those standards can satisfactorily account for the risk.
Public Policy
The main principle on the restrictions is based on grounds of the public policy, as the case law, R. v Thompson (Case 7/78) 1978. The UK law applied in that period restricted gold coins importation and exportation of silver-alloy coins made prior to 1947. The case argument was based on the claims of whether the coins were merchandise or methods for payments. Based on the UK law, it was unlawful to melt down or ruin such coins, regardless of the possibility that they were not considered legal tender.
The Court held that the coins were not legal tender, but they were merchandise under Article 28 (ex 30). Nonetheless, a prohibition on obliterating such coins with a view to stop the coins being melted down or obliterated in a different member state was supported on grounds of the public policy provision under Article 30 (ex 36). This argument emanated from the necessity to secure the right to mint coins, which is customarily viewed as interacting with the major interests of the state.
This case shows that public policy provision under R. v Thompson was a rare example of the invocation of the exception because it was justified under “the fundamental interests of the state”. Public policy is not considered under consumer protection as shown in the case law Kohl v Ringelhan (Case 177/83) or economic issues as demonstrated by the case law, Case 213/83 – Cullet v Centre Leclerc. The case Cullet v Centre Leclerc showed that public policy was difficult to establish as a ground in itself.
Public Security
Member states are justified to impose restrictions on public security basis, as shown by the case law, Case 72/83, Campus Oil. The Irish law stated that shippers of oil-based commodities ought to purchase up to 35% their stock from the Irish National Petroleum Company (INPC) at fixed costs. Ireland opted to legitimize this prerequisite based on both public security and public policy grounds, asserting that this was the main strategy by which the national refining limit could be sustained and the petroleum products sold.
The Court held that measure was justified based on public security instead of public policy. Sustaining a refinery allowed Ireland to go into long-term arrangements with petroleum producers who might guarantee more noteworthy progression of oil supplies amid an emergency.
The Court acknowledged that a restriction justified on grounds of public security might likewise accomplish economic goals without necessarily diverging outside Article 30 (ex 36). It is imperative to recognize that the burden of proof lies with the member state that is striving to depend on this provision to legitimize a measure.
Protection of National Treasures
A member state may restrict trade to protect national treasures with artistic, historic, or archeological worth. The case law, Commission v Italy (Case7/68) is used to explain this measure. The Italian government introduced a duty on the export of treasures of art from Italy, asserting that such a tax duty would be less prohibitive than a ban on exports. The Commission based its argument on Article 226 (ex 169).
The Court argued that the measure was unlawful under Article 25 (ex 12), which prohibited customs taxes and measures equivalent to those customs taxes. Thus, the measure could not be supported under Article30 (ex 36).
Protection of Industrial and Commercial Property
In the case law EMI Electrola v Patricia (Case 341/87), Patricia and associated record organizations aimed to exploit the fact that Cliff Richard copyright had expired in Denmark but not in Germany. Consequently, they bought recordings in Denmark purposefully to resale in Germany.
The Court held that the holder of recordings copyright, EMI Electrola had not been marketed them or granted their assent, despite the fact that they had been legally put available on the market. Hence, the copyright holder could use the copyright to restrict distribution in Germany.
Proportionality
Two elements are used to the application of proportionality. The first one involves the suitability/necessity/appropriateness to attain some preferred objectives of the measure, while the second application is based on the minimum restrictive measure. Tests for proportionality are also noted, for instance, the case law, Case 72/83, Campus Oil. In this case, Article 36 recognizes an exception to a crucial rule of the Treaty must be interpreted such that its scope is not beyond than is appropriate for the protection of the public interests, which is planned to secure, and the measures taken in accordance with that Article must not make impediments, which are unrealistic to those goals.
Further, the case law, Walter RauLebensmittelwerke v De Smedt PVBA (Case261/81) demonstrates the case of minimum restrictive measure. It is imperative to recognize that the last part in Article 36 refers “no arbitrary discrimination or disguised restrictions,” which is seen as an additional basis. This implies that regardless of the possibility that an actual reason has been established, the way in which the law is actualized should not go beyond the objectives of the measure. The Belgian law insisted on different packaging for butter and margarine to avoid confusion in consumers, and it applied to both domestic and imported products.
Walter Rau claimed that the measure was illegal and went against Article 34 TFEU. The Court held that the measure was illegal. Even though measures to protect consumers from confusion are justified, such measures must be proportionate to the objective of the view.
There are also vaguely applicable measures to assess. Wherever the Court refers “measures having equivalent effect to a quantitative restriction”, it does not require the measure to be discriminatory. Notably, the EU member state can justify indistinctly applicable measures based on the provisions of Article 36 or provisions of the mandatory requirements, as shown in the case law of Cassis De Dijon.
The German law outlawed any alcohol with less than 25 percent alcohol content (weak liquors). The German law was applied within the domestic context based on indistinctly application measure. For Cassis, its alcohol content ranged between 15%-20% and, thus, it was directly banned in Germany. Germany argued based on public health because weaker liquors enhanced alcohol tolerance and consumer protection because consumers could opt for cheaper liquors with the weaker alcohol content. According to the Court, any measure that is considered indistinctly applicable may be justified based on the ‘rule of reason’.
The rule of reason is applied when a measure is required to meet obligatory conditions attached to effective supervision of finance, public health, and just commerce activities. Others include culture and environmental protection. It is imperative to recognize that the application of the rule of reason is viewed and influenced by proportionality.
Further, the Court introduced the principle of mutual recognition. This principle recognizes that the assumption that if products are legally manufactured in one member state, there is no reason to make them illegal in another member state, but this assumption might be invalidated. The case law, Commission v Germany (Case 178/84) on beer purity levels, Germany insisted that beverage not purely made from yeast, barley, water, and hops could not be classified as ‘bier.’
It was still possible to sell different beverage, but not as ‘bier’. Likewise, brews with any additives were utterly prohibited in Germany. Germany contended the measures were meant to protect consumer. The Court, however, argued the measure went far beyond what is required to protect German consumers – labelling. The measures violated Article 34 as customers’ tastes and conception tend to develop over time and markets are responsible for such developments and thus, the restrictions would curtail the development. Member state laws should not thrive to restrict consumer habits, which shape the developments national producers.
The Court also held that a ban on additives could not be justified based on the claim of public health because other member state strictly monitor and completely test additives. Thus, after the rule of mutual recognition, Germany had the burden of proof to establish a real health risk, which it could not truthfully prove. It is therefore necessary for member states to communicate all applications of mutual recognition.
Any obstacles that restrict the movement across the EU due to disparities in national laws referring to product marketing can only be accepted if such provisions are recognized as important to meet the provision of mandatory requirements for a specific protection of consumer and public health. Notably, the principle of mutual recognition is not automatically applied in each case.
Rather, a member state has the right to review the levels of equivalence of protection against the level provided by the national laws of the country of origin. On Brexit, one cannot be so sure of what the future holds for the UK and its trade relations with the EU.
Conclusion
The developments that led to the establishment of a single market dictated the needs to remove all other obstacles that limit free movement of goods across member states. Although the Court has given several landmark rulings to advance trade, many measures adopted by individual member states still restrict business. Nonetheless, some developments, such as the rule of reason and the principle of mutual recognition, have improved achievements and maintenance of the EU’s Single Market.
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