European Community Trade Law

PART A
The trade was one of the first areas, in which countries of EU have agreed to unite their sovereignty, transferring to the European Commission the responsibility for handling trade matters, including negotiating international trade agreements on their behalf. It means, that 25 States - members of EU negotiate as one unity, both with their trading partners and at the World Trade Organization, so maximizing their influence on the international scene.
“EU trade policy is enshrined in Articles 131 and 133 of the EC Treaty, which set the objectives and modalities of the common commercial policy. These are to contribute, in the common interest, to the harmonious development of world trade, the progressive abolition of restrictions on international trade and the lowering of customs barriers.” (1)
The goal of European Union is free but fair world trade – in other words a system where all countries trade freely with one another on equal terms and without protectionist barriers. The EU wants a "level playing field" for all countries and clear "rules of the game" for everyone to follow. The system needs to be transparent and fully open to public scrutiny. In order to achieve this, the strategy of EU should open up its own markets while others do the same. It seeks to remove obstacles to trade gradually, at a pace the EU and others can sustain, to settle disputes peacefully and to build up a body of internationally agreed rules.
“The European Union is a completely new creation which is distinguished from earlier efforts to unite Europe in that it works, not by means of force or domination, but simply by means of law. Law is intended to succeed where 'blood and iron' have for centuries failed. For only unity based on a freely made decision can be expected to last: unity founded on fundamental values such as freedom and equality, and protected and translated into reality by law. That is the insight underlying the Treaties that created the European Communities and the European Union.” (2)
The EU is not simple creation of the law; it also pursues its objectives purely by means of law. It is a Community based on law. The general economic and social life of the peoples of the Member States is governed not by the threat of force but by the law of the Community. This is the basis of the institutional system. It establishes the procedure for decision-making by the Community institutions and regulates their relationship to each other. It provides the institutions with the means ' in the shape of regulations, general ECSC decisions, directives, ECSC recommendations and individual decisions ' of enacting legal instruments binding on the Member States and their citizens. Thus the individual himself becomes a main focus of the Community. Its legal order directly affects his daily life to an ever-increasing extent. It accords him rights and imposes duties on him, so that as a citizen both of his State and of the Community he is governed by a hierarchy of legal orders ' a phenomenon familiar from federal constitutions. “Like any legal order, that of the Community provides a self-contained system of legal protection for the purpose of recourse to and the enforcement of Community law. Community law also defines the relationship between the Community and the Member States. The Member States must take all appropriate measures to ensure fulfilment of the obligations arising from the Treaties or resulting from action taken by the institutions of the Community. They must facilitate the achievement of the Community's tasks and abstain from any measure that could jeopardize the attainment of the objectives of the Treaties. The Member States are answerable to the citizens of the EU for any harm caused by violations of Community law.” (3)
“The EC Treaty requires the Commission to ensure that EU law is correctly implemented. The Commission has been granted powers to do so under the infringement procedure laid down in Articles 226 and 228 of the Treaty. The main purpose of this procedure is not to bring infringement proceedings before the Court of Justice, but to bring the Member State back into line with EU law during a pre-litigation phase. (5)
The main stages of the pre-litigation procedure are:
1. Letter of formal notice
The letter of formal notice represents the first stage in the pre-litigation procedure, during which the Commission requests a Member State to submit its observations on an identified problem regarding the application of Community law within a given time limit. The Commission does not make an accusation but offers the Member State the opportunity to give its explanation regarding an alleged infringement. The Member States is given two months to reply.
2. Reasoned opinion
The reasoned opinion gives a detailed statement, grounded on the letter of formal notice, of the reasons that have led the Commission to conclude that the Member State concerned has failed to fulfill one or more of its obligations under the Treaty or other EU legislation. The Member State has two months to reply.
3. Decision to refer a case to the Court of Justice”
In European Union law, the Four Freedoms is a common term for a set of Treaty provisions, secondary legislation and court decisions, protecting the ability of Goods, Services, Capital, and Labour to move freely within the Internal Market of the European Union. More precisely, they are:
• The free movement of goods;
• The free movement of capital.
• The free movement of services and freedom of establishment;
• The free movement of goods;
• The free movement of persons (and citizenship), including free movement of workers;
These four freedoms form part of the substantive law of the EU. Although it is not easy to summarize compactly the activities of the European Union, one can define them as the free flow of economic factors, in pursuit of greater prosperity of the states and its citizens. The law of the Single Market plays a key role there by removing the barriers that Member States might otherwise impose on trade originating in other Member States.
1. Following an outbreak of bird ‘flu in the UK, the UK Department of Environment, Food and Rural Affairs (DEFRA) requires all live poultry to be tested for the virus before export or before being moved to another area of the country.
Comment. “Article 12 of the EC Treaty prohibits discrimination on the basis of nationality and is one of its fundamental provisions. However, on its own it would not suffice to ensure free movement of factors of productions for the simple reason that not all barriers discriminate. For instance, a prohibition on discrimination would make illegal any measure in State A imposing a total ban or a quota on, say, toys from State B. But that provision would not prevent a measure that mandates that all toys sold in State B be packaged in recyclable material, even if such measure can in practice act as a ban or at least make the export of toys to State B more expensive. This difficulty has largely been eliminated in EU law through the concept known as “home country control”. According to this, a product or a service is allowed to access markets of other Member States if it has lawfully been made/provided in the state of origin (Home State). Host State rules that present a barrier to this movement will be illegal unless justified by a set of specifically provided rules in the EC Treaty.” (7)
2. Hungary has banned the importation of all turkey products from the UK and launched a public information campaign under the slogan: ‘Buy Hungarian poultry – you know it’s safe!’. Many Hungarian supermarkets have stopped selling products from the UK altogether.
Comment. “Discriminatory rules distinguish between national and imported goods in law and in fact. A prohibition of imports imposed by state A on goods from state B is directly discriminatory but restrictions do not have to take the shape of prohibitions or quotas. A Member State can lead advertising and promoting campaigns that favours domestic products, or it can impose higher prices or more stringent conditions (such as health inspections) on imported goods. The key to discrimination is that domestic products are not subject to the added difficulties, and are therefore put at an advantage.” (6)
3. In country areas of France, meat is sold from mobile vans. France has adopted regulations whereby owners of mobile shops must have permanent establishments in France so that their vehicles can be subject to regular public health inspections. Manwell has a shop across the border in Germany and, as a result of these new rules, will no longer be able to sell produce from his mobile shop in France.
Comment. Free movement of goods, doorstep sales. So, this is one of the most important principals of the Community law, which is broken completely.
4. Italy is concerned about the reputation of the famous ‘Sicilian Duck Pate’ which is a speciality regional product made by a small number of Sicilian companies which keep the recipe and production method a close secret. To prevent other pate makers from labelling their products as ‘Sicilian Duck Pate’, Italy has passed a decree restricting use of this name for pate manufactured and packaged on the island of Sicily. Maria has been importing the pate in bulk into Greece and packaging it there. Paulo has been buying it in bulk and packaging it in his factory in Rome. They are both concerned that this will no longer be allowed.
Comment. “The European Union is a customs union. This means that Member States have removed customs barriers between themselves and introduced a common customs policy towards other countries. Customs duties are, therefore, prohibited between Member States. On the other hand, as Article 90 of the EC Treaty provides, the states are free to tax as long as they do not discriminate towards other Member States. Therefore, Member State A will be able to tax cars at a rate that is twice as high as in Member State B, provided that it taxes all cars equally – imported as well as those produced domestically.” (10)
5. Italy has also decreed that all pate sold in Italy must be labelled in Italian and must not contain more than 0.5 milligrams of salt per kilo. The EC Directive on Salt Content of Processed Meat Products allows a maximum of 0.7 milligrams per kilo. Italy voted against the Directive but it was adopted by qualified majority vote.
Comment. Non-discriminatory rules that hinder trade do not distinguish in law but do so in fact. They impose a higher burden on the importer due to additional work it has to complete to make the product marketable. Although in law the rules apply equally to domestic producers and importers, in reality the burden is born by importers, the domestic producers already complying with the rules. If, in addition, the product is marketed in a number of Member States, the exporter from state A might be subject to as many different regimes as there are countries into which he is hoping to import.
“For example, a (fictitious) law in state A is that alcoholic drinks of a particular kind must not contain more than 20% alcohol. Producer from state B makes and regularly exports drinks which contain 25% alcohol. It will be observed that law in state A applies to all those who wish to market the alcoholic drinks in question – whether they are domestic in origin or foreign. In that respect, in law, they do not discriminate. On the other hand, as a result of their presence, a legally marketed drink from state B either has to be modified and its alcohol contents reduced to only 20% or must be absent from market of state A altogether. EU law, under the circumstances mentioned in the previous paragraph, prohibits this kind of distinction: although the law appears to treat all parties equally, in fact domestic producers are favored.” (10)
The free movement of goods lies at the heart of achieving an open market for business in Europe. In May 1985, European Community Ministers agreed on a "New Approach to Technical Harmonisation and Standards" to fulfil this objective.
"New Approach" Directives (that is Community Law) set out the essential requirements (on safety for example), written in general terms which must be met before products may be sold in the UK or anywhere else in the European Community. European harmonised standards provide the detailed technical information enabling manufacturers to meet the essential requirements. The directives also explain how manufacturers are able to demonstrate conformity with the essential requirements. Products which meet the essential requirements are to display the CE marking, as described in the particular directive, which means that the products can be sold anywhere in the Community/EEA.
Main Features of the Legislation
• Legislation is limited to goal-setting essential health and safety requirements
• Standards bodies draw up the technical specifications - European Standards - needed to ensure conformity with these requirements
• The standards are voluntary
• Products made to European Standards enjoy a presumption of conformity with the essential requirements of the directives.
The law of the Single Market relies on two models of integration. One is negative and consists of prohibitions imposed on Member States of discriminatory behaviour and other restrictive practices . The four freedoms mainly, but not exclusively, rely on this approach. There are other examples in the Treaty where it is utilized (e.g. prohibition on State Aid in Article 87). The other is positive and consists in approximation of laws and standards (such as common customs tariff (Art. 23 EC Treaty) or common commercial policy (Article 133 EC Treaty). Especially important (and controversial) in this respect is the adoption of harmonizing legislation under Article 95 of the EC Treaty.
Since late 80s, the Community adopted the so-called 'New Approach' to the regulation of the Single Market. This is a combination of positive and negative integration. It relies on 'minimum' rather than 'exhaustive' harmonisation, obliges Member States to recognize legally produced goods and services from other Member States ('mutual recognition') and gives Host States the ability to defend some of their (otherwise) restrictive laws on the basis of public policy or other narrowly interpreted grounds ('mandatory requirements').
The appropriate balance between positive and negative integration measures is strongly contested although both play an important role.












References:
1.http://europa.eu/rapid/pressReleasesAction.do?reference=IP/06/446&format=HTML&aged=1&language=EN&guiLanguage=en
2. http://europa.eu.int/eur-lex/en/about/abc/abc_18.html
3. http://europa.eu.int/eur-lex/en/about/abc/abc_19.html
4. http://en.wikipedia.org/wiki/European_Union_law
5. http://ec.europa.eu/unitedkingdom/information/policy_briefs/bb40_en.htm
6. http://en.wikipedia.org/wiki/Four_Freedoms_(European_Union)
7. European Union Law by Damian Chalmers and Chirtos Hadjiemmanuil, Cambridge University Press, 2006
8. Free movement of goods in the European Community by Oliver, Sweet&Maxwell
9. Articles of EC Treaty C-420/01 Commission v Italy (Caffeine) ECJ 19.06.03
10. Articles of EC Treaty C-24/00 Commission v France, ECJ 5.2.04