3.2.1.     Free movement of goods

LEGAL BASIS

Articles 3 (1)(a) and (c), 14, 23 to 31 and 90 (3a and 3c, 7a, 9 to 37 and 95) ECT.

OBJECTIVES

- Freedom of movement applies to products originating in the Member States and products from third countries which are in free circulation in the Member States [Article 23(9), second subparagraph ECT].

- To start with, free movement of goods was seen as part of a customs union of 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 with a view to creating the internal market – an area without internal frontiers, in which goods (among other things) could move as freely as on a national market.

ACHIEVEMENTS

The elimination of customs duties and quantitative restrictions (quotas) between Member States, which was due to be completed by the end of the transitional period, was in fact accomplished by 1 July 1968, i.e. one and a half years early.

On the other hand, this deadline was not met in the case of the supplementary objectives – the prohibition of measures having an effect equivalent to that of customs duties and of quantitative restrictions, and harmonisation of the relevant national laws. These came to be the central objectives of an ongoing effort to achieve freedom of movement, to which the plans for a single market gave a new impetus.

1. Prohibition of charges having an effect equivalent to that of customs duties: Articles 23(1) and 25 (9(1) and 12) ECT

Since there is no definition of this concept in the Treaty, case law has had to provide one. The Court of Justice considers that any charge ‘whatever it is called and whatever its mode of application, (…) which, if imposed specifically 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. The Court is thus not interested in the nature or form of the charge, but only in its effect (CJ Cases 2 and 3/62, 14 December 1962, and 232/78, 25 September 1979).

2. Prohibitions of measures having an effect equivalent to quantitative restrictions: Article 28(30), ECT

a. The concept of a measure equivalent to a quantitative restriction is much vaguer than that of a charge of equivalent effect. The Court of Justice has therefore defined it in very broad terms. In the Dassonville judgement it takes 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" (CJ Case 8/74, 11 July 1974).

b. The measures in question are generally those which affect only imported products. However, in the Cassis de Dijon judgement (CJ Case 120/78, 20 February 1979), the Court ruled that a measure could be deemed to have equivalent effect even without discrimination between imported and domestic products. In particular, imposing the technical rules of the importing State on products from other Member States is tantamount to introducing an equivalent measure since the imported products are penalised by being forced to undergo costly adjustments. The fact that there is no Community harmonisation of the rules cannot be used to justify this attitude, which effectively hinders freedom of movement, and the Court therefore laid down the principle that any product legally manufactured and marketed in a Member State in accordance with the fair and traditional rules and manufacturing processes of that country must be allowed onto the market of any other Member State. This is the principle of mutual recognition by the Member States of their respective rules in the absence of harmonisation.

c. To prevent the emergence of further obstacles a directive was adopted in 1983 (now replaced by Directive 98/34 of 22 June 1998) requiring Member States to inform the Commission of all projected technical regulations. National standardisation bodies are for their part required to forward their work programmes and draft standards.

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

a. Article 30 (36) of ECT allows Member States to take measures having an effect equivalent to quantitative restrictions when these are justified by general, non-economic considerations (public morality, public policy or public security, the protection of health and life of humans, animals or plants, the protection of national treasures and the protection of industrial and commercial property).

Control over the use made of this possibility is of course exercised by the Court of Justice. Such an exemption, constituting as it does an exception to a principle, must be strictly interpreted: it can be based only on the restricted list of reasons set out in Article 30. Exceptions are no longer justified if Community legislation has come into force in the same area. Finally, the measures must have a direct bearing on the public interests to be protected and must not go beyond the necessary level (principle of proportionality).

b. The Court of Justice has recognised (Cassis de Dijon case) that, over and above the considerations set out in Article 30, the 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, fairness of commercial transactions and consumer protection).

c. To facilitate supervision of national exemption measures a procedure for the exchange of information has been devised (decision of the European Parliament and Council of 13 December 1995), which requires the Member States to notify any such measure to the Commission.

4. Harmonisation of national provisions

The adoption of Community laws enables the obstacles created by national provisions to be removed by rendering these inapplicable when they clash with Community law. This is, indeed, the only course available when the national provisions are justified by Article 30 or the concept of a "mandatory requirement". Since the mid-sixties, the Community has made considerable efforts in this respect: more than 250 directives on a great variety of subjects have been adopted. Harmonisation was often an extremely arduous process, since the directives incorporated all the technical specifications and required unanimity in the Council (Article 94 (100) ECT).

5. Completion of the internal market

The creation of the single market implies the elimination of all remaining obstacles to free movement. 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 taken.

a. Elimination of checks at internal borders (physical barriers)

- Customs formalities were simplified during the period 1985-1992 (single administrative document, common border posts, simplification of Community transit procedures) before being abolished on 1 January 1993.
- Border controls were abolished on 1 January 1993. Checks, particularly in connection with animal and plant health, may be carried out inside Member States, in the same way as such checks are made on domestic products moving within the States, i.e. without discrimination based on the origin of the goods or the mode of transport.

b. Elimination of technical barriers

After the removal of customs formalities and border controls, technical barriers are the chief remaining obstacle to complete freedom of movement. They are numerous, highly diverse and constantly changing. There are two main ways in which they can be eliminated:

- monitoring of compliance with the principle of mutual recognition of national rules by means of Article 28 (30) ECT;

- legislative harmonisation, facilitated not only the qualified majority requirement for most directives relating the completion of the single market [Article 95 (100a)] but by the adoption of a new approach to avoid an onerous total harmonisation. This approach, set out in the Commission White Paper of June 1985, has the following implications in practice:

• Since the guiding principle is that of mutual recognition of national rules, Community harmonisation is only justified when these rules cannot be considered equivalent.
• Harmonisation must be restricted to essential requirements of health, safety and environmental protection, rather than covering detailed technical specifications. For technical specifications, harmonisation directives refer to the industrial standards. However, such standards must not be national ones, because the latter's diversity obstructs manufacturers and impedes the freedom of movement, without leading to mutual recognition because they are not mandatory since they are not laid down by the national governments. Manufacturers will thus refer to European standards, laid down by European standardisation bodies. As with the other standards, they will not be mandatory but manufacturers who comply with them will automatically comply with the legal requirements.

Many directives have been adopted following the new approach. They include those dealing with simple pressure vessels, toys, building materials, machines, gas appliances and telecommunications terminal equipment.

The need for European standards arising from the new approach and the more general need to deal with national barriers has led to major development of the European standardisation system. This was originally based on two bodies – CEN, a general-purpose organisation set up in 1961, and Cenelec, set up in 1962 for the electrotechnical field – but was relatively inactive during the 1960s and 1970s. It was revived on the initiative of the Community authorities in the early 1980s. Under Directive 83/189 (replaced by Directive 98/34 referred to above), the Commission would allocate standardisation mandates to the standardisation bodies, which were thus much in demand during the ensuing period for the production of the standards required by the ‘new approach’ directives. The production of European standards has by and large expanded considerably, but the process is still hampered by its slowness and the practice of transposing European standards into national ones. In the course of further discussion (see especially its Green Paper of January 1991, its Communications of December 1991 and October 1996 and its report of 13 May 1998 to the Council and Parliament), the Commission has proposed ways of increasing the quality and efficiency of European standardisation, in particular by replacing consensus with majority voting as the normal method for adopting standards and by directly applying European standards (to avoid national transposition). The Council has generally supported it (for instance, in the Resolution of June 1992).

ROLE OF THE EUROPEAN PARLIAMENT

Apart from its general supporting role in the completion of the internal market (* 3.1.0), Parliament has given particular backup to the "new approach" in connection with the free movement of goods, clarifying its definition in a report in 1987. It has made a strong legislative contribution to the directives on the subject and taken a close interest in the work of the European standardisation bodies (it debated the Commission Green Paper on the subject in depth).

06/11/2000