European Union Law

We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Due to the fact that Carlos is a producer of Spanish wine and fruits, trading within the European Union he can criticise the legality of the payments that certain Member States asked him to pay under the articles 25 and 90 of the EC Treaty. The free Movement of goods is one of the four freedoms guaranteed by the original Rome Treaty that are the Free movement of workers, Freedom of establishment and provision of services and Free movement of capital.

The treaty does not provide a definition of the concept “common market”1 however Member States are required under the Article 23 (ex 9) E.C. to form a customs union.

In order to create a single internal market of the whole community it was necessary to remove the economic frontiers (free circulation of goods) but Members agree to apply a common level of tariffs on goods entering the union from without. However, it is important to ensure the non-discrimination between domestic and foreign products of the Member States.

In his situation, Member States adopted a protectionist attitude when they attempted to erect customs duties or charges with an equivalent effect, in order to make foreign goods more expensive than their domestics’ products. The Articles 23-25 E.C (ex 9-17) prohibit the increase of existing customs duties and imposition of new duties on imports and exports or any charges having an equivalent effect. The case Van Gend en Loos v. Nederlandse Administratie der Belastinge (Case 26/62)1963)2, illustrates the importance attached by the ECJ to the customs union by recognising that individuals may enforce their rights under the Article 25 (ex 12) before the national court.

Besides certain states attempted as well to treat their domestic goods more favourably than the goods that Carlos imported applying discriminatory internal taxation which benefit them. The Articles 90-93 (ex 95-99) is design to cope with this problem.

The purpose of the Article 90 is to prevent the objectives of the Article 25 from being undermined by discriminatory internal taxation. We can distinguish two sections in the Article 90:The section 1 of the Article 90 is based on the comparison of similar products define as to be those “which have similar characteristics and meet the same needs from the point of view of consumers”. The subsection (2) of the Article is design to cover, in addition all forms of indirect tax protection in the case of products, which without being similar within the meaning of 90(1) are nevertheless in competition. Tax rates do not have to be the same but are not allowed to give indirect protection to competiting domestic goods.3

The EU issued a Notice requiring a health inspection for all imports of Spanish oranges and lemons. However, this outbreak has been brought under control a few months later. When Carlos imported oranges into France that were not infected, he has been required to pay for a health inspection because according to France the Spanish oranges and lemons were still a health risk. A common argument that could be advance by the state is that the charge imposed on the oranges is justified on the ground that it is considering as a service and therefore should not be considering as a Charge Equivalent Effect, which is prohibited under the Article 25.

However if France still intends a public health inspection, despite the fact that the outbreak is under control, it cannot be regarded as a service rendered by the importer. In addition like the ECJ’s judgement in the case Bresciani v. Amministrazione Italiana delle Finanze (case 87/75) 1976 ECR 1294 shows clearly; any pecuniary charge unilaterally imposed on goods imported from another Member States because they cross a frontier constitutes a charge having an Effect Equivalent to a custom duty. Consequently, the pecuniary charge becomes unlawful. Finally, if, France wishes to import a type of product which necessities an inspection then it should bear the cost. The cost of inspections to maintain public health should be pay by the public. So the importer of the product will not have to bear what is in reality one the cost of producing the product.

Another exception would be the inspection of goods under EU Law. A reasonable charge here could be required for a compulsory or mandatory inspection. However it is possible to argue that the EU Notice is not required any more due to the fact that the outbreak is under control. Consequently the EU allows the individual country to inspect goods rather than require it, then the charge is not allowed.

Exported goods to Italy involve the payment of taxes, which is covered under Article 90 (1). The tax on imported goods must have the same rate than similar domestic goods. If not it could have a discriminatory effect against imports, as the difference in tax may favour domestic production. In the case Hausen v. Hauptzollampt flensbury [1978] ECR 1787 Case 148/77 5, Germany made available tax relief to certain producers whom produced spirits in the country to encouraged the small businesses. The state claimed that this tax was for an economical purpose (helping small wine producers in Italy in Carlos situation).

However, the ECJ held that this benefit should be applied to small businesses importing goods into Germany as well. The reason was that the drinks were similar and treating the importer differently would be seen as a direct discrimination like in Carlos situation with Blanca in Italy.

On the other hand we could argue on the indirect discrimination of a Member State that impose higher taxes on imported goods than on domestic goods. This issue was encountered in the case Humblot v. Directeur des services Fiscaux (case 112/84)6. The French government imposed a higher tax rate on cars imported and domestic of more than 16 c.v, which was the highest engine capacity for cars made in France. The ECJ held the system to be a breach of Article 90 (ex 95) because this could only apply to imported goods.

So the higher tax on Blanca than may be seen as indirectly protecting domestic competing products. This example is illustrated by the cases Commission v. U.K and Commission v. Italy7 where that large difference in taxes between the competiting products would change the drinking habits of the consumers who would purchase the cheapest product.

When the United Kingdom impose a higher tax on Rossa than on beers and tax Blanca like certain spirits sold in the UK, it is important to clarify if they are similar products. This is exemplified by the ECJ’s approach in John Walker v. Ministeriet for skatter.Case 243/84 [1986] ECR 8758. In that case the issue was whether the liqueur fruit wine was similar to whisky for the purposes of the old article 95(1). The ECJ analysed the objective characteristics of the products and concluded that they were not similar and so should treated under the Article 90 (2).

Concerning the competition between wine and beer the ECJ considered that the two beverages were capable of meeting identical needs in the case 170/78, Commission v. United Kingdom [1983] ECR 2265, [1983] 3 CMLR 512.9

To reach this decision the court considered if consumers thought the goods could be substituted from each other but not only this point of view was taken into account, the court stated as well that the tax system could influence consumers behaviour towards the substitution of a product.

In the case 184/85 [1987] Commission v. Italy ECR 2013 10, the court kept the same approach and found that bananas were not similar but were in direct competition with other fresh fruits.

Therefore concerning Carlos and referring to the Commission v United Kingdom11 case (the ECJ found that wine and beer were in competition but the court then moves on to determine whether the tax system was in fact protective of beer), Rossa and the beers are competitive but not similar. They can be tax however we can argue that Rossa has a much higher tax than beers around the same strength that are mainly produced in the UK. It looks like the UK is protecting beers imposing a higher tax on Blanca that could lead consumers to purchase beers instead. In this situation the Article 90 (2) is breached.

However if we refer to the case Commission v. Belgium [1987] ECR 3299 Case 356/85 [1988] 3 CMLR 27712, the existence of a tax differential between domestic and imported product will not, however, always suffice to establish protectionism under the Article 90 (2). There was no breach of this Article as long as the difference in tax didn’t give a protective advantage. Therefore Blanca would be in competition with certain spirits because they are both high alcohol content and so could be substituted to each other. They are subject to the same tax so there is no breach of Article 90(2), however further researches should be done to determine the exact relationship between Blanca and the spirits concerning.

As explained earlier the court has accepted that a charge imposed by a state will escape the prohibition under the Article 25 or if the charge is for a service rendered by the importer for example unloading and checking goods. Furthermore the handling fee required by Fruits Ltd should not be seems as unlawful but it is always possible to argue on the purpose of checking the goods. Is it conducted due to the health risk that concerned the Spanish oranges and lemons and so could it be interpreted as a health inspection?

Tagged In :

Get help with your homework

Haven't found the Essay You Want? Get your custom essay sample For Only $13.90/page

Sarah from CollectifbdpHi there, would you like to get such a paper? How about receiving a customized one?

Check it out