Lecture 1: free movement and the market; Goods, tariff barriers and purely internal
situations
Today’s objectives
1. Quick recap
● Understanding the rationale for economic integration in Europe
● Overview of different forms of economic integration
● Goods and services: same legal regime or not?
2. Understanding the role of Art 30 and 110 TFEU
Background
● Important article for Internal market:
○ Art 26 TFEU (establishes internal market) → EU shall adopt measures with the aim of
establishing an internal market in accordance with the treaties
○ Internal market is an area
■ Goods, services, capital and persons
● Overall rationale of allowing the 4 factors of production →
○ optimal allocation; the unemployed could easily cross the border to work and therefore
the internal market would grow
● fiscal and non-fiscal measures to goods:
1. Fiscal measures
- are usually pecuniary charges
- Art 30 (Custom duties)
- art. 110 TFEU (taxation)
2. non-fiscal
- Art 34 (quantitative restrictions(imports))
- 35 TFEU (quantitative restrictions (exports))
→ The goal of the internal market is to get rid of physical barriers in customs duties
Fiscal measures: Article 30 & 110
● Article 30 → “Custom duties on import and exports and charges having equivalent effect shall
be prohibited between Member States”
○ Relevant for similar products
■ Van Gend en Loos case is case law for custom duties
■ CEE: fiscal measures such as sanitary checks
○ What is the reason for the prohibition of CEEs?
■ Difference bt discrimination and protection
■ → more about protection, not about discrimination
■ example for discrimination:
, ● tomatoes from Spain being taxed more than tomatoes from NL (similar
products)
■ You cannot justify a measure that happens under Art 30
○ Formula Court uses:
■ measure used unilaterally on a good based on the fact that it is crossing the
frontier → then it is in the sphere of Art 30
■ existence of similar product does not have to be proven
● Article 110 →
○ Meaning:
■ No MS shall impose, directly or indirectly, on the products of other MS any
internal taxation of any kind in excess of that imposed directly or indirectly on
similar domestic products
■ No MS shall impose on the products of other MS any internal taxation of such a
nature as to afford indirect protection to other products
○ Related to products that are in competition with each other, but are not similar
○ Ex. Beer and cheap wine → NL cannot tax foreign products in a way that would have a
protectionist effect
● Distinction between Article 110(1) and (2)
1. products are similar
- Result: the tax o n the domestic and imported good has to be equalised
2. products are not similar but in competition
● Art 30 and 110 are mutually exclusive → both cannot be used to solve a case
○ using 30 (you have to get rid of the measure
○ using 110 → you have to get rid of protectionist or discriminatory effect
● Art 30 or 110? Outokumpu Oy case
○ Facts:
■ Finnish government charging electricity coming from abroad differently than
coming nationally
○ Question:
■ Whether this tax scheme si in line with EU law
■ But first: whether scheme fall under Art 30 or 110 TFEU?
○ Finding:
■ ECJ said that this was a taxing scheme under Art 110
■ Court lays out 2 criteria when art 110 applies:
1. A scheme is part of a general system of internal taxation that applies
the dues or fees systematically to these products (para 221)
- Internal taxation as long as it is the same marketing stage
, 2. The duty is levied both on domestic and imported product independent
of the origin of the product or the fact that it crosses a frontier
- usually a result of the 1st criteria
○ Regarding 1st condition:
■ even tho electricity was taxed in different stages of the market, the court said it
didn’t matter bc it was taxed as soon as it entered the system
○ 2nd criteria:
■ Charged is also imposed on domestic electricity
→ Both conditions were fulfilled and thus this case fall sunder Art 110
→ The text was regarded as discriminatory → tax treated similar products differently
→ Practical difficulties are not considered a sound legal argument
Difference between Article 30 & article 110
● Article 30 TFEU →
○ Addresses fiscal barriers to trade levied at the frontier
○ relate to charges levied as result of goods crossing border
○ About CEES
○ Restrictive → states cannot impose customs duties
● Article 110 TFEU →
○ Deals with fiscal rules that apply internally within a MS
○ prevents discrimination against goods once entered internal system of taxation
○ About discriminatory internal taxation
○ prohibits Member States from imposing internal taxation that discriminates against
products from other MS
○ 2 tests:
1. Similar products? → art. 101(1)
2. Or in competition? → art. 101(2)
Economic integration in Europe: Why?
● Geo-political goals:
○ Peace (Schuman declaration)
■ Economic interdependence makes war less likely
○ Increase Europe’s standing in the international order
■ However, realistically there were more objectives than just peace, such as
economic integration (came later on)
● Economic goals (in hopes of enhancing democracy →
, ○ link between economic integration & democracy bc EI leads to more welfare and new
technologies → this leads to more political freedom; and creates space for Civil societies
(awareness of middle class)
a. Prosperity/growth
b. Allocative efficiency
c. More opportunities for companies and consumers: how?
■ → through the removal of custom duties and other obstacles to trade
■ → free trade = specialisation = comparative advantage
d. Link free movement and competition law?
■ Create a level playing field where fair competition is ensured
Levels of intensity of Economic Integration
● ↓Preferential trade area (e.g. Commonwealth)
● ↓free trade area (e.g. USA-Mexico-Canada USMCA agreement
● ↓Customs union (e.g. EU - Turkey (Common external border as to trade on goods))
● ↓Common market (free internal market)
● ↓Economic union (common economic policy e.g. market regulation, competition policy…)
● ↓Monetary union (one common currency e.g. Euro)
● ↓Political Union (incl. common foreign policy)
● ↓Full union (e.g. US)
→ (arrow signifies that there are more elements added each time, the further you go down)
Which internal market? Negative and positive integration
● Negative integration → integration coming about through prohibitions (by the Treaties)
● Positive integration → Integration by enacting measures at EU level (e.g. Directives, regulations)
● Goods v. Services - different legal regimes under the Treaty provisions?
● Growth services sector - different legal regimes?
1. Treaty provisions (56-62 TFEU)
■ Until the 90s, the services sector wasn’t very developed
2. Services Directive 2006/123
3. Specific legislation:
■ Sectoral legislation (banking (usually secondary legislation implemented) ,
audiovisual services)
■ Horizontal legislation (e-commerce, digital services, posted workers)
situations
Today’s objectives
1. Quick recap
● Understanding the rationale for economic integration in Europe
● Overview of different forms of economic integration
● Goods and services: same legal regime or not?
2. Understanding the role of Art 30 and 110 TFEU
Background
● Important article for Internal market:
○ Art 26 TFEU (establishes internal market) → EU shall adopt measures with the aim of
establishing an internal market in accordance with the treaties
○ Internal market is an area
■ Goods, services, capital and persons
● Overall rationale of allowing the 4 factors of production →
○ optimal allocation; the unemployed could easily cross the border to work and therefore
the internal market would grow
● fiscal and non-fiscal measures to goods:
1. Fiscal measures
- are usually pecuniary charges
- Art 30 (Custom duties)
- art. 110 TFEU (taxation)
2. non-fiscal
- Art 34 (quantitative restrictions(imports))
- 35 TFEU (quantitative restrictions (exports))
→ The goal of the internal market is to get rid of physical barriers in customs duties
Fiscal measures: Article 30 & 110
● Article 30 → “Custom duties on import and exports and charges having equivalent effect shall
be prohibited between Member States”
○ Relevant for similar products
■ Van Gend en Loos case is case law for custom duties
■ CEE: fiscal measures such as sanitary checks
○ What is the reason for the prohibition of CEEs?
■ Difference bt discrimination and protection
■ → more about protection, not about discrimination
■ example for discrimination:
, ● tomatoes from Spain being taxed more than tomatoes from NL (similar
products)
■ You cannot justify a measure that happens under Art 30
○ Formula Court uses:
■ measure used unilaterally on a good based on the fact that it is crossing the
frontier → then it is in the sphere of Art 30
■ existence of similar product does not have to be proven
● Article 110 →
○ Meaning:
■ No MS shall impose, directly or indirectly, on the products of other MS any
internal taxation of any kind in excess of that imposed directly or indirectly on
similar domestic products
■ No MS shall impose on the products of other MS any internal taxation of such a
nature as to afford indirect protection to other products
○ Related to products that are in competition with each other, but are not similar
○ Ex. Beer and cheap wine → NL cannot tax foreign products in a way that would have a
protectionist effect
● Distinction between Article 110(1) and (2)
1. products are similar
- Result: the tax o n the domestic and imported good has to be equalised
2. products are not similar but in competition
● Art 30 and 110 are mutually exclusive → both cannot be used to solve a case
○ using 30 (you have to get rid of the measure
○ using 110 → you have to get rid of protectionist or discriminatory effect
● Art 30 or 110? Outokumpu Oy case
○ Facts:
■ Finnish government charging electricity coming from abroad differently than
coming nationally
○ Question:
■ Whether this tax scheme si in line with EU law
■ But first: whether scheme fall under Art 30 or 110 TFEU?
○ Finding:
■ ECJ said that this was a taxing scheme under Art 110
■ Court lays out 2 criteria when art 110 applies:
1. A scheme is part of a general system of internal taxation that applies
the dues or fees systematically to these products (para 221)
- Internal taxation as long as it is the same marketing stage
, 2. The duty is levied both on domestic and imported product independent
of the origin of the product or the fact that it crosses a frontier
- usually a result of the 1st criteria
○ Regarding 1st condition:
■ even tho electricity was taxed in different stages of the market, the court said it
didn’t matter bc it was taxed as soon as it entered the system
○ 2nd criteria:
■ Charged is also imposed on domestic electricity
→ Both conditions were fulfilled and thus this case fall sunder Art 110
→ The text was regarded as discriminatory → tax treated similar products differently
→ Practical difficulties are not considered a sound legal argument
Difference between Article 30 & article 110
● Article 30 TFEU →
○ Addresses fiscal barriers to trade levied at the frontier
○ relate to charges levied as result of goods crossing border
○ About CEES
○ Restrictive → states cannot impose customs duties
● Article 110 TFEU →
○ Deals with fiscal rules that apply internally within a MS
○ prevents discrimination against goods once entered internal system of taxation
○ About discriminatory internal taxation
○ prohibits Member States from imposing internal taxation that discriminates against
products from other MS
○ 2 tests:
1. Similar products? → art. 101(1)
2. Or in competition? → art. 101(2)
Economic integration in Europe: Why?
● Geo-political goals:
○ Peace (Schuman declaration)
■ Economic interdependence makes war less likely
○ Increase Europe’s standing in the international order
■ However, realistically there were more objectives than just peace, such as
economic integration (came later on)
● Economic goals (in hopes of enhancing democracy →
, ○ link between economic integration & democracy bc EI leads to more welfare and new
technologies → this leads to more political freedom; and creates space for Civil societies
(awareness of middle class)
a. Prosperity/growth
b. Allocative efficiency
c. More opportunities for companies and consumers: how?
■ → through the removal of custom duties and other obstacles to trade
■ → free trade = specialisation = comparative advantage
d. Link free movement and competition law?
■ Create a level playing field where fair competition is ensured
Levels of intensity of Economic Integration
● ↓Preferential trade area (e.g. Commonwealth)
● ↓free trade area (e.g. USA-Mexico-Canada USMCA agreement
● ↓Customs union (e.g. EU - Turkey (Common external border as to trade on goods))
● ↓Common market (free internal market)
● ↓Economic union (common economic policy e.g. market regulation, competition policy…)
● ↓Monetary union (one common currency e.g. Euro)
● ↓Political Union (incl. common foreign policy)
● ↓Full union (e.g. US)
→ (arrow signifies that there are more elements added each time, the further you go down)
Which internal market? Negative and positive integration
● Negative integration → integration coming about through prohibitions (by the Treaties)
● Positive integration → Integration by enacting measures at EU level (e.g. Directives, regulations)
● Goods v. Services - different legal regimes under the Treaty provisions?
● Growth services sector - different legal regimes?
1. Treaty provisions (56-62 TFEU)
■ Until the 90s, the services sector wasn’t very developed
2. Services Directive 2006/123
3. Specific legislation:
■ Sectoral legislation (banking (usually secondary legislation implemented) ,
audiovisual services)
■ Horizontal legislation (e-commerce, digital services, posted workers)
