Foundations of the Free Movement of Goods in the EU
The free movement of goods is the basis of the EU financial legislation system. The Treaty on the Functioning of the European Union (TFEU) ensures that any fiscal and non-fiscal restrictions on imports and exports within the union are removed. Member States have the right to impose certain taxes on certain services provided. However, taxes that favor local goods and increase imported products’ prices are considered charges having an equivalent effect (CHEE).
Additionally, the EU prohibits any quantitative restrictions on import and export between Member States (MEQR). Therefore, the EU financial regulations ensure that all the products and services within the state have the same value and market conditions across all the union countries. The free movement of goods helps to balance market relationships between distinct financial regulations in EU countries.
Fiscal Restrictions: Customs Duties and Charges Having Equivalent Effect
The Treaty ensures the free movement of goods in the EU on the Functioning of the European Union (TFEU). Article 28 prohibits charging any duties on exports and imports and of all charges having equivalent effect (CHEE) (Consolidated version of the Treaty, 2020). All the goods produced in the EU countries can be imported and exported to other countries without customs charges. Once goods imported from other countries are registered in the EU, they are moved freely across the states of the union (Consolidated version of the Treaty, 2020).
Article 30 of the TFEU states that “customs duties on imports and exports and charges having equivalent effect shall be prohibited between Member States” (Consolidated version of the Treaty, 2020). Thus, any fees applied to importing or exporting goods within EU borders are considered unlawful. The free movement of goods is based on removing the fiscal restrictions of the EU Member States.
Taxation of Imported Goods Within the EU
The distinction between CHEE and taxes imposed on imported and exported goods within the EU ensures the removal of fiscal restrictions. Case 24/68 Commission v Italy (Statistical Levy case) proved that even the smallest fees imposed on the movement of goods in the EU violate the provisions of TFEU (Case 24/68, 1996). The case concerns charging 10 lira charges on imports and exports to fund statistical surveys (Case 24/68, 1996). It was ruled that the fee is CHEE, which violates the principles of free movement of goods. The case established essential criteria for defining CHEE, including three characteristics to help identify it.
However, several cases showed that not all the charges imposed on imports and exports within the EU are considered CHEE. For example, Case 18/87 Commission v Germany acknowledges that specific fees are acceptable if they are proportionate to the services provided (Case 18/87, 1988). In the case of Case 170/88 Ford of Spain v the Spanish State, it was ruled that the charges imposed were excessive for the services offered (Case 170/88, 1989). Therefore, CHEE is considered to account for the interests of importers, which can render it acceptable in some instances.
Member States can impose taxes on imported goods, but the distinction between taxes and CHEE is challenging. The main criterion that justified taxation on imported goods is that it does not cause an increase in price for this good in the market. Otherwise, the tax can be considered a way to protect local goods, CHEE. Case 90/79 Commission v France shows that taxes should be imposed on imported and local goods that are equivalent (Case 90/79, 1981).
Case 132/78 Denkavit v France ruled that taxes imposed on imported products cannot be considered CHEE if they are similar to those imposed on local manufacturers (Case 132/78, 1979). Such an approach ensures free competition in the market, preventing countries from favoring local products over those imported from other Member States. Taxation policies allow the EU to protect the free movement of goods and create fair market conditions for all manufacturers.
Non-Fiscal Barriers and Measures Equivalent to Quantitative Restrictions
Additionally, TFEU removes any non-fiscal barriers that can hinder the free movement of goods between Member States. Articles 34 and 35 state that any quantitative restrictions on imports and exports and “all measures having equivalent effect shall be prohibited between Member States” (Consolidated version of the Treaty, 2020). Therefore, the EU prohibits restricting the volume of imported and exported goods within the union.
Any licensing, quotas, or outright bans are considered quantitative restrictions and measures having an equivalent effect (MEQR). The main criterion for measures not to be considered MEQR is the lack of a direct effect on the competition of imported goods. Case 8/74 Procureur du Roi v Dassonville showed that even the requirement of the certificate of origin can be considered a MEQR (Case 8/74, 1974). Additionally, case 249/81 Commission v Ireland illustrates the example of MEQR as the government launched a campaign that promotes local Irish products that obstruct the unrestricted flow of goods (Case 249/81, 1982). Thus, the EU encourages Member States to maintain fair market conditions for all products imported or exported across the union.
The Role of Case Law in Maintaining a Unified EU Market
The structure of regulations regarding the free movement of goods is complex. However, the cases are the basis for the unified legislation that ensures fair market conditions for all Member States. The CHEE, taxation, and MEQR principles help remove fiscal and non-fiscal barriers that can hinder the import and export of goods within the union. The EU maintains the balance between markets of distinct countries, creating a unified goods exchange system that favors equality.
References
Case 132/78 Denkavit Loire v France. (1979). EUR-Lex. Web.
Case 170/88 Ford of Spain v the Spanish State. (1989). EUR-Lex. Web.
Case 18/87 Commission v Germany. (1998). EUR-Lex. Web.
Case 24/68 Commission v Italy. (1996). EUR-Lex. Web.
Case 249/81 Commissioner v Ireland. (1982). EUR-Lex. Web.
Case 8/74 Procureur du Roi v Dassonville. (1974). EUR-Lex. Web.
Case 90/79 Commission v France. (1981). EUR-Lex. Web.
Consolidated version of the Treaty on the Functioning of the European Union. (2020). Legislation.gov. Web.