Week 1: Regulating the Internal Market
Chapter 12 Free movement of goods
12.1 Introduction
The aim of the internal market is to enable European producers to sell the
same product in all Member States. The internal market was promoted not
only by Europeans, but also by the American Marshall Plan, which sought
to restore European economies after the Second World War. This plan was
realised by the Economic Cooperation Act of 1948.
Article 3(3) TEU states that the Union shall establish an internal market.
The internal market is defined in Article 26(2) TFEU as an area without
internal frontiers in which the free movement of goods, persons, services
and capital is ensured.
12.2 The customs union
2.1 The concept of a customs union
According to Article 28(1) TFEU, the EU constitutes a customs union
covering all trade in goods. A customs union goes further than a free trade
area, because in addition to the liberalisation of trade between Member
States, uniform rules also apply to goods from third countries. This has
both an external and an internal dimension. The external dimension is
reflected in the common customs tariff and the common commercial
policy (Articles 31 and 207 TFEU).
The internal dimension means that the customs union abolishes barriers
to trade between Member States, such as customs duties, quantitative
restrictions and discriminatory taxation (Articles 30, 34–36 and 110 TFEU).
These provisions ensure that goods can circulate freely within the EU.
2.2 Goods from a Member State and in free circulation
The rules on free movement apply to goods originating in a Member State,
as laid down in Article 28(2) TFEU. These rules also apply to goods from
third countries that are in free circulation within the EU, provided that they
comply with the import formalities and customs duties laid down in Article
29 TFEU. Goods that have been released for free circulation are treated as
products originating in Member States and can be traded freely between
Member States.
12.3 The meaning of ‘goods’
The English version of the TFEU uses the terms ‘goods’ and ‘products’.
Although some language versions use two different words, they have the
same meaning in this context. Some articles refer to ‘imports’ and
‘exports’ without using the terms goods or products, but it is clear that
they refer to trade in goods. In the Commission v Italy case, ‘goods’
were defined as products that can be valued in monetary terms and can
be the subject of commercial transactions. Works of art, electricity and
even waste are considered goods.
,12.4 Nationality and residence
The provisions of the Convention apply regardless of the nationality or
place of residence of the buyer or seller. Only the origin of the goods is
relevant.
12.5 Customs duties and charges of equivalent effect
Article 30 TFEU states that customs duties and charges of equivalent
effect are prohibited between Member States. The Court of Justice
described customs duties as a fundamental prohibition in the Van Gend
en Loos case. This prohibition also applies to customs duties of a fiscal
nature.
5.1 Customs duties
The abolition of customs duties was essential for the internal market, as
they constituted a clear barrier to trade. The Court has rarely ruled on this
issue due to the clear prohibition in the Treaty.
5.2 Charges having equivalent effect
The prohibition on customs duties also covers charges having equivalent
effect (CHE), so that Member States cannot circumvent the prohibition. A
CEE is a monetary charge imposed because goods cross a border,
regardless of the amount or purpose of the charge. Even a minimal
charge, such as 0.33% in the Diamond case, is considered a barrier to the
free movement of goods.
In addition, in the Istanbul Lojistik case, the Court ruled that a charge
imposed not on a product itself but on a necessary activity related to that
product can also be considered an HGE.
5.3 Permissible charges
Despite the Court’s strict approach, there are two situations in which
charges are not covered by the prohibition in Article 30 TFEU:
1. If the payment constitutes consideration for a service rendered, or
2. If it relates to inspections required by EU legislation.
5.3.1 Services rendered
According to case law, the service must offer a specific advantage to the
importer or exporter, and the charge must be proportionate to the
advantage granted. In the case Statistical charges, the Court ruled that
a charge imposed by Italy for the provision of statistical information on the
import and export of goods did not offer a specific advantage to individual
importers or exporters.
5.3.2 Inspections required by EU law
If health inspections are required by EU law, Member States may recover
the costs thereof, provided that the charge does not exceed the actual
cost of the inspections and that the inspections are mandatory and
uniform for all products in the EU.
,5.4 Charges imposed at the internal boundaries of Member States
A charge imposed at the border between Member States is considered an
HGE. The traditional approach was that this only applied to national
borders. However, subsequent case law, such as in the Lorncy case, has
made it clear that charges at internal borders within Member States can
also be considered HGE, as they constitute an obstacle to the free
movement of goods.
5.5 Remedies
If a Member State violates the rules, it must abolish the HGE and the
persons concerned are entitled to a refund. The refund is subject to
national procedures, which may not be less favourable than for
comparable claims relating to national levies.
12.6 Quantitative restrictions and measures of equivalent effect
Article 34 TFEU prohibits quantitative restrictions (QRs) and measures of
equivalent effect (MEEs) on imports. These articles are intended to remove
non-tariff barriers to trade between Member States. However, Article 36
TFEU provides for an exception, whereby QRs or MEEs may be justified on
grounds of public interest.
6.1 Quantitative restriction: imports and exports
Although the TFEU does not define the concept of QRs, the Court of Justice
has ruled that QRs include measures that result in a total or partial
restriction on imports, exports or transit of goods. A total restriction means
that imports or exports are completely prohibited, while a partial
restriction concerns, for example, quotas, such as limiting imports to
10,000 units per year.
This definition shows that the concept of QRs is the same for both imports
and exports. This is in contrast to MEEs, for which the definitions for
imports and exports differ significantly. The following section focuses on
the differences between these two concepts.
6.2 Measures of equivalent effect: imports
6.2.1 The definition
The definition of Measures of equivalent effect (MEEs) according to
Article 34 has given rise to much case law.
The classic definition of MEEs comes from the Dassonville case, in which
the Court ruled that “all rules of trade of Member States which may hinder
intra-Community trade, directly or indirectly, actually or potentially, must
be regarded as measures having an effect equivalent to quantitative
restrictions”. This broad definition implies that any measure that may
constitute a barrier to trade can be considered an MEE, even if there is no
actual discrimination.
In subsequent cases, such as Commission v France, the Court ruled that
a measure also falls under Article 34 if it only constitutes a potential or
, indirect barrier, even if there are no concrete cases of economic or
statistical data. This means that the Court focuses on the nature of the
measure and not on its concrete or statistical data.
An illustrative example of this is the case Commission v Ireland, in
which Ireland conducted an advertising campaign to promote domestic
goods. Ireland argued that imports had increased despite the campaign,
but the Court rejected this argument because imports could have
increased even more without the campaign.
Some measures fall outside the scope of Article 34 because their effect on
trade is too uncertain or indirect. An example of this is the Krantz case, in
which the Court ruled that Dutch bankruptcy law did not constitute a
barrier to trade between Member States because the effects were too
indirect. However, the Court has consistently refused to apply a ‘de
minimis’ rule, which means that even very minor restrictions on trade may
fall within the scope of Article 34.
Cassis de Dijon case
In the Cassis de Dijon case, the Court introduced the principle of mutual
recognition. This means that goods legally produced in one Member
State must be able to be traded freely in other Member States, even if
they do not comply with the specific national rules of that state. This
principle was crucial for the further development of the internal market.
In this case, the Court ruled that a German law stipulating that alcoholic
beverages must have a minimum alcohol content constituted a MEE. This
law favoured German producers and imposed additional costs on foreign
producers to adapt to the German market, which amounted to de facto
discrimination.
The De Keck case
In the years following the Cassis de Dijon case, the Court was confronted
with the question of whether measures that did not directly discriminate
against imports also fell under Article 34. This culminated in
the Keck case, in which the Court distinguished between ‘product-related’
measures (relating to the characteristics of products) and ‘sales
arrangements’ (relating to how products are sold).
The Court ruled that sales arrangements fall outside the scope of Article
34, provided that they apply to all traders within the national territory and
do not discriminate against imports. This was an attempt to limit the scope
of Article 34 and to provide more clarity on which measures could be
considered barriers to trade.
Despite the Court’s clear intentions, the Keck ruling led to new problems.
The distinction between product-related measures and sales
arrangements often proved difficult to make in practice.
Chapter 12 Free movement of goods
12.1 Introduction
The aim of the internal market is to enable European producers to sell the
same product in all Member States. The internal market was promoted not
only by Europeans, but also by the American Marshall Plan, which sought
to restore European economies after the Second World War. This plan was
realised by the Economic Cooperation Act of 1948.
Article 3(3) TEU states that the Union shall establish an internal market.
The internal market is defined in Article 26(2) TFEU as an area without
internal frontiers in which the free movement of goods, persons, services
and capital is ensured.
12.2 The customs union
2.1 The concept of a customs union
According to Article 28(1) TFEU, the EU constitutes a customs union
covering all trade in goods. A customs union goes further than a free trade
area, because in addition to the liberalisation of trade between Member
States, uniform rules also apply to goods from third countries. This has
both an external and an internal dimension. The external dimension is
reflected in the common customs tariff and the common commercial
policy (Articles 31 and 207 TFEU).
The internal dimension means that the customs union abolishes barriers
to trade between Member States, such as customs duties, quantitative
restrictions and discriminatory taxation (Articles 30, 34–36 and 110 TFEU).
These provisions ensure that goods can circulate freely within the EU.
2.2 Goods from a Member State and in free circulation
The rules on free movement apply to goods originating in a Member State,
as laid down in Article 28(2) TFEU. These rules also apply to goods from
third countries that are in free circulation within the EU, provided that they
comply with the import formalities and customs duties laid down in Article
29 TFEU. Goods that have been released for free circulation are treated as
products originating in Member States and can be traded freely between
Member States.
12.3 The meaning of ‘goods’
The English version of the TFEU uses the terms ‘goods’ and ‘products’.
Although some language versions use two different words, they have the
same meaning in this context. Some articles refer to ‘imports’ and
‘exports’ without using the terms goods or products, but it is clear that
they refer to trade in goods. In the Commission v Italy case, ‘goods’
were defined as products that can be valued in monetary terms and can
be the subject of commercial transactions. Works of art, electricity and
even waste are considered goods.
,12.4 Nationality and residence
The provisions of the Convention apply regardless of the nationality or
place of residence of the buyer or seller. Only the origin of the goods is
relevant.
12.5 Customs duties and charges of equivalent effect
Article 30 TFEU states that customs duties and charges of equivalent
effect are prohibited between Member States. The Court of Justice
described customs duties as a fundamental prohibition in the Van Gend
en Loos case. This prohibition also applies to customs duties of a fiscal
nature.
5.1 Customs duties
The abolition of customs duties was essential for the internal market, as
they constituted a clear barrier to trade. The Court has rarely ruled on this
issue due to the clear prohibition in the Treaty.
5.2 Charges having equivalent effect
The prohibition on customs duties also covers charges having equivalent
effect (CHE), so that Member States cannot circumvent the prohibition. A
CEE is a monetary charge imposed because goods cross a border,
regardless of the amount or purpose of the charge. Even a minimal
charge, such as 0.33% in the Diamond case, is considered a barrier to the
free movement of goods.
In addition, in the Istanbul Lojistik case, the Court ruled that a charge
imposed not on a product itself but on a necessary activity related to that
product can also be considered an HGE.
5.3 Permissible charges
Despite the Court’s strict approach, there are two situations in which
charges are not covered by the prohibition in Article 30 TFEU:
1. If the payment constitutes consideration for a service rendered, or
2. If it relates to inspections required by EU legislation.
5.3.1 Services rendered
According to case law, the service must offer a specific advantage to the
importer or exporter, and the charge must be proportionate to the
advantage granted. In the case Statistical charges, the Court ruled that
a charge imposed by Italy for the provision of statistical information on the
import and export of goods did not offer a specific advantage to individual
importers or exporters.
5.3.2 Inspections required by EU law
If health inspections are required by EU law, Member States may recover
the costs thereof, provided that the charge does not exceed the actual
cost of the inspections and that the inspections are mandatory and
uniform for all products in the EU.
,5.4 Charges imposed at the internal boundaries of Member States
A charge imposed at the border between Member States is considered an
HGE. The traditional approach was that this only applied to national
borders. However, subsequent case law, such as in the Lorncy case, has
made it clear that charges at internal borders within Member States can
also be considered HGE, as they constitute an obstacle to the free
movement of goods.
5.5 Remedies
If a Member State violates the rules, it must abolish the HGE and the
persons concerned are entitled to a refund. The refund is subject to
national procedures, which may not be less favourable than for
comparable claims relating to national levies.
12.6 Quantitative restrictions and measures of equivalent effect
Article 34 TFEU prohibits quantitative restrictions (QRs) and measures of
equivalent effect (MEEs) on imports. These articles are intended to remove
non-tariff barriers to trade between Member States. However, Article 36
TFEU provides for an exception, whereby QRs or MEEs may be justified on
grounds of public interest.
6.1 Quantitative restriction: imports and exports
Although the TFEU does not define the concept of QRs, the Court of Justice
has ruled that QRs include measures that result in a total or partial
restriction on imports, exports or transit of goods. A total restriction means
that imports or exports are completely prohibited, while a partial
restriction concerns, for example, quotas, such as limiting imports to
10,000 units per year.
This definition shows that the concept of QRs is the same for both imports
and exports. This is in contrast to MEEs, for which the definitions for
imports and exports differ significantly. The following section focuses on
the differences between these two concepts.
6.2 Measures of equivalent effect: imports
6.2.1 The definition
The definition of Measures of equivalent effect (MEEs) according to
Article 34 has given rise to much case law.
The classic definition of MEEs comes from the Dassonville case, in which
the Court ruled that “all rules of trade of Member States which may hinder
intra-Community trade, directly or indirectly, actually or potentially, must
be regarded as measures having an effect equivalent to quantitative
restrictions”. This broad definition implies that any measure that may
constitute a barrier to trade can be considered an MEE, even if there is no
actual discrimination.
In subsequent cases, such as Commission v France, the Court ruled that
a measure also falls under Article 34 if it only constitutes a potential or
, indirect barrier, even if there are no concrete cases of economic or
statistical data. This means that the Court focuses on the nature of the
measure and not on its concrete or statistical data.
An illustrative example of this is the case Commission v Ireland, in
which Ireland conducted an advertising campaign to promote domestic
goods. Ireland argued that imports had increased despite the campaign,
but the Court rejected this argument because imports could have
increased even more without the campaign.
Some measures fall outside the scope of Article 34 because their effect on
trade is too uncertain or indirect. An example of this is the Krantz case, in
which the Court ruled that Dutch bankruptcy law did not constitute a
barrier to trade between Member States because the effects were too
indirect. However, the Court has consistently refused to apply a ‘de
minimis’ rule, which means that even very minor restrictions on trade may
fall within the scope of Article 34.
Cassis de Dijon case
In the Cassis de Dijon case, the Court introduced the principle of mutual
recognition. This means that goods legally produced in one Member
State must be able to be traded freely in other Member States, even if
they do not comply with the specific national rules of that state. This
principle was crucial for the further development of the internal market.
In this case, the Court ruled that a German law stipulating that alcoholic
beverages must have a minimum alcohol content constituted a MEE. This
law favoured German producers and imposed additional costs on foreign
producers to adapt to the German market, which amounted to de facto
discrimination.
The De Keck case
In the years following the Cassis de Dijon case, the Court was confronted
with the question of whether measures that did not directly discriminate
against imports also fell under Article 34. This culminated in
the Keck case, in which the Court distinguished between ‘product-related’
measures (relating to the characteristics of products) and ‘sales
arrangements’ (relating to how products are sold).
The Court ruled that sales arrangements fall outside the scope of Article
34, provided that they apply to all traders within the national territory and
do not discriminate against imports. This was an attempt to limit the scope
of Article 34 and to provide more clarity on which measures could be
considered barriers to trade.
Despite the Court’s clear intentions, the Keck ruling led to new problems.
The distinction between product-related measures and sales
arrangements often proved difficult to make in practice.
