Free movement of goods

The free movement of goods, the first of the four fundamental freedoms of the internal market, is secured through the elimination of customs duties and quantitative restrictions, and the prohibition of measures having an equivalent effect. The principles of mutual recognition, elimination of physical and technical barriers, and promotion of standardisation were added in order to continue the completion of the internal market. The adoption of the New Legislative Framework (NLF) in 2008 significantly strengthened product marketing rules, the free movement of goods, the EU’s market surveillance system and the CE mark. The mutual recognition principle was also consolidated, and applies to a wide range of products not covered by EU harmonisation.

Legal basis

Articles 26 and 28-37 of the Treaty on the Functioning of the European Union (TFEU).

Objectives

The right to free movement of goods originating in Member States, and of goods from third countries which are in free circulation in the Member States, is one of the fundamental principles of the Treaty (Article 28 TFEU). Originally, free movement of goods was seen as part of a customs union between the Member States, involving the abolition of customs duties, quantitative restrictions on trade and equivalent measures, and the establishment of a common external tariff for the Community. Later, the emphasis was laid on eliminating all remaining obstacles to free movement of goods with a view to creating the internal market — an area without internal borders, in which goods could move as freely as on a national market.

Achievements

The elimination of customs duties and quantitative restrictions (quotas) between Member States was accomplished by 1 July 1968, i.e. one and a half years early. This deadline was not met in the case of the supplementary objectives — the prohibition of measures having an equivalent effect, and the harmonisation of relevant national laws. These objectives became central in the ongoing effort to achieve free movement of goods.

a.Prohibition of charges having an effect equivalent to that of customs duties: Articles 28(1) and 30 TFEU

Since there is no definition of the aforementioned concept in the Treaty, the case-law has had to provide one. The Court of Justice of the European Union considers that any charge, whatever it is called or however it is applied, ‘which, if imposed upon a product imported from a Member State to the exclusion of a similar domestic product has, by altering its price, the same effect upon the free movement of products as a customs duty’ may be regarded as a charge having equivalent effect, regardless of its nature or form (Cases 2/62 and 3/62 of 14 December 1962, and Case 232/78 of 25 September 1979).

b.Prohibition of measures having an effect equivalent to quantitative restrictions: Articles 34 and 35 TFEU

In its Dassonville judgment, the Court of Justice took the view that 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 an effect equivalent to quantitative restrictions (Cases 8/74 of 11 July 1974 and points 63 to 67 of Case C-320/03 of 15 November 2005). The Court’s reasoning was developed further in the Cassis de Dijon (Case 120/78 of 20 February 1979) jurisprudence, which laid down the principle that any product legally manufactured and marketed in a Member State in accordance with its fair and traditional rules, and with the manufacturing processes of that country, must be allowed onto the market of any other Member State. This was the basic reasoning underlying the debate on defining the principle of mutual recognition, operating in the absence of harmonisation. As a consequence, even in the absence of European harmonisation measures (secondary EU legislation), Member States are obliged to allow goods that are legally produced and marketed in other Member States to circulate and to be placed on their markets.

Importantly, the field of application of Article 34 TFEU is limited by the Keck jurisprudence, which states that certain selling arrangements fall outside the scope of that article, provided that they are non-discriminatory (i.e. they apply to all relevant traders operating within the national territory, and affect in the same manner, in law and in fact, the marketing of domestic products and products from other Member States) (Joined Cases C-267/91 and C-268/91 of 24 November 1993).

c.Exceptions to the prohibition of measures having an effect equivalent to that of quantitative restrictions

Article 36 TFEU allows Member States to take measures having an effect equivalent to quantitative restrictions when these are justified by general, non-economic considerations (e.g. public morality, public policy or public security). Such exceptions to the general principle must be interpreted strictly, and national measures cannot constitute a means of arbitrary discrimination or disguised restriction on trade between Member States. Exceptions are no longer justified if Union legislation that does not allow them has come into force in the same area. Finally, the measures must have a direct effect on the public interest to be protected, and must not go beyond the necessary level (principle of proportionality).

Furthermore, the Court of Justice has recognised in its jurisprudence (Cassis de Dijon) that Member States may make exceptions to the prohibition of measures having an equivalent effect on the basis of mandatory requirements (relating, among other things, to the effectiveness of fiscal supervision, the protection of public health, the fairness of commercial transactions and the defence of the consumer). Member States have to notify national exemption measures to the Commission. Procedures for the exchange of information and a monitoring mechanism were introduced in order to facilitate supervision of such national exemption measures (as provided for in Articles 114 and 117 TFEU, Decision 3052/95/EC of the European Parliament and of the Council of 13 December 1995 and Council Regulation (EC) No 2679/98 of 7 December 1998). This was further formalised in Regulation (EC) No 764/2008 on mutual recognition, which was adopted in 2008 as part of the so-called New Legislative Framework (NLF).

d.Harmonisation of national legislation

Since the late 1970s, considerable efforts have been made to harmonise national legislation. The adoption of harmonisation laws has made it possible to remove obstacles created by national provisions by making them inapplicable and to establish common rules aimed at guaranteeing both free circulation of goods and products and respect for other EC Treaty objectives, such as protection of the environment and of consumers, competition, etc.

Harmonisation has been further facilitated by the introduction of the qualified majority rule, required for most directives relating to the completion of the single market (Article 95 of the EC Treaty, as modified by the Maastricht Treaty), and by the adoption of a new approach, proposed in a Commission White Paper of June 1985, aimed at avoiding onerous and detailed harmonisation. In the new approach based on the Council resolution of 7 May 1985 (confirmed in the Council resolution of 21 December 1989 and Council Decision 93/465/EEC), the guiding principle is the mutual recognition of national rules. Harmonisation must be restricted to essential requirements, and is justified when national rules cannot be considered equivalent and create restrictions. Directives adopted under this new approach have the dual purpose of ensuring free movement of goods through the technical harmonisation of entire sectors, and guaranteeing a high level of protection of the public interest objectives referred to in Article 114(3) TFEU (e.g. toys, building materials, machines, gas appliances and telecommunications terminal equipment).

e.Completion of the internal market

The creation of the single market necessitated the elimination of all remaining obstacles to free movement of goods. The Commission White Paper of June 1985 set out the physical and technical obstacles to be removed, and the measures to be taken by the Community to this end. Most of these measures have now been adopted. However, the single market still requires substantial reforms if it is to meet the challenges of technological progress — the key factor in improving the EU’s competitiveness on global markets.

Role of the European Parliament

Parliament supported the completion of the internal market and has always given particular support to the ‘new approach’ in connection with the free movement of goods, clarifying its definition in a 1987 report. It has also made a strong legislative contribution to the harmonisation directives. Parliament made a significant contribution to the NLF package adopted in 2008. The key issues for Parliament, in its negotiations with the Council, were to secure agreement that all economic operators involved should increasingly be responsible for assuring the compliance and safety of the products they put on the market, and further to strengthen the CE mark by making consumers more aware of it. Parliament continues to work in this area, with the Alignment Package consisting of nine directives covering different products, including lifts, pyrotechnic articles and explosives.

In its resolution of 8 March 2011[1] Parliament called on the Commission to establish a single market surveillance system for all products (harmonised and non-harmonised), based on one legislative act covering both the General Product Safety Directive and Regulation (EC) No 765/2008 on market surveillance, in order to attain a high level of product safety and market surveillance, and to clarify the legal basis. On 13 February 2013, at Parliament’s request, the Commission presented the Product Safety and Market Surveillance Package, which aims to improve market surveillance systems in the Member States. The package consists of new enforcement rules for the internal market for goods, which will enable national market surveillance authorities to enforce the law and to provide better and more extensive means of consumer protection. In particular, authorities will be better able to track down unsafe products, while, at the same time, the rules on consumer product safety will be simplified and merged into a single piece of legislation.

The three most important parts of the package are:

  1. a proposal for a new regulation on consumer product safety (CPSR);
  2. a proposal for a single regulation on market surveillance for products, unifying and simplifying existing fragmented legislation;
  3. a multiannual plan for market surveillance of 20 individual actions that the Commission will take over the next three years.

Along with the principle of mutual recognition, standardisation plays a central role in the proper functioning of the internal market. Harmonised European standards help to ensure free movement of goods within the internal market and allow enterprises in the EU to become more competitive. These standards help to protect the health and safety of European consumers and also contribute to environmental protection. Aiming to enhance the content of the standardisation reform, Parliament adopted a resolution on 21 October 2010[2] in which it called for the standardisation system’s many successful elements to be maintained and improved, and for the right balance to be struck between the national, European and international dimensions. Parliament further argued that the addition of the principle of ‘appropriate representation’ is a vital element, given that it is of the utmost importance to incorporate all stakeholder positions in an appropriate manner whenever the public interest is concerned, especially in the development of standards intended to support EU legislation and policies.

On 25 October 2012 Parliament and the Council adopted Regulation (EU) No 1025/2012 on European standardisation, modernising and improving the mechanism for setting European standards.

The seventh legislature concluded the legislative review of nine directives in the alignment package, in areas such as low-voltage equipment, electromagnetic compatibility, non-automatic weighing instruments, measuring instruments, explosives for civil uses, equipment and protective systems intended for potentially explosive atmospheres, pyrotechnic articles and simple pressure vessels, as well as directives on pressure equipment and radio equipment. Parliament also concluded legislative work on: the regulation laying down harmonised conditions for the marketing of construction products; the labelling and marking of the fibre composition of textile products; the safety and environmental performance of two- and three-wheeled vehicles and quadricycles; and the directive on recreational craft and personal watercraft (improving safety through better categorisation of watercraft)[3]. The eighth legislature has continued these efforts through its work on regulations on cableway installations, appliances which burn gaseous fuels, medical devices and personal protective equipment. Parliament has successfully completed work on the e-Call regulation[4] and the decision on interoperability solutions for European public administrations, businesses and citizens (ISA2)[5]. In the framework of the Circular Economy Package, Parliament is currently preparing legislation on the making available on the Single Market of CE marked fertilising products[6].

Parliament supports the need for stronger cooperation between EU and national authorities in order to improve the quality of EU legislation and identify legislation in need of simplification or codification, in accordance with the goal of putting more effort into better regulation, prompt transposition and correct implementation. Parliament also calls on the other institutions to support co-regulation and voluntary agreements whenever possible, in accordance with the same principle of better law-making.

Recent research indicates that the ongoing Brexit process will generate significant uncertainties and negative impacts on the Single Market and the rights of European citizens[7]. Parliament will need to play a significant role in ascertaining that democratic legitimacy and respect for citizens’ rights are present in this process[8].

[1]OJ C 199 E, 7 7 2012, p. 1.

[2]OJ C 70 E, 8.3.2012, p. 56.

[3]For more information see the study prepared for Parliament’s Committee on the Internal Market and Consumer protection (IMCO) on ‘EU Mapping: Overview of IMCO related legislation’: http://www.europarl.europa.eu/RegData/etudes/STUD/2015/536317/IPOL_STU(2015)536317_EN.pdf

[4]Regulation (EU) 2015/758 of the European Parliament and of the Council of 29 April 2015 concerning type-approval requirements for the deployment of the eCall in-vehicle system based on the 112 service and amending Directive 2007/46/EC (OJ L 123, 19.5.2015, p. 77.).

[5]Decision of the European Parliament and of the Council establishing a programme on interoperability solutions for European public administrations, businesses and citizens (ISA2). Interoperability as a means for modernising the public sector (Text with EEA relevance) (COM(2014) 0367) http://ec.europa.eu/isa/documents/isa_2_proposal_en.pdf

[6]Proposal for a regulation of the European Parliament and of the Council laying down rules on the making available on the market of CE marked fertilising products and amending Regulations (EC) No 1069/2009 and (EC) No 1107/2009 (COM(2016) 0157).

[7]Eeckhout P., The Consequences of Brexit for the Customs Union and the Internal Market Acquis for Goods, 2017, http://www.europarl.europa.eu/RegData/etudes/BRIE/2017/602053/IPOL_BRI(2017)602053_EN.pdf

[8]Stoll P-T., The Role and Powers of the European Parliament in the Brexit Process, 2017, http://www.europarl.europa.eu/RegData/etudes/IDAN/2017/602054/IPOL_IDA(2017)602054_EN.pdf

Mariusz Maciejewski

06/2017