'The free movement of goods is an essential element of the internal market and both EU legislation and the decisions of the Court of Justice support the achievement of this aspect of economic integration. However, the EU internal market is imperfect, so far as goods are concerned. There remain impediments to free movement which are not only embedded in the legislation but also arise from the case law of the Court of Justice.'

In the light of this statement, critically discuss the extent to which EU legislation and the case law of the Court of Justice ensure the free movement of goods in the internal market.

Introduction

• The internal market, four freedoms, Article 26 TFEU.
• Free movement of goods is a fundamental EU principle and key to economic integration.

Ensuring the free movement of goods – EU legislation and the case law of the Court of Justice

• Article 30: tariff barriers – customs duties/CEE.
• Article 34/35 non-tariff barriers – quantitative restrictions/MEQRs.
• Article 110 discriminatory taxation.
• The Court of Justice interprets the provisions broadly, in support of economic integration.
• Positive integration: the harmonisation programme; principle of mutual recognition.

Article 30: prohibition of tariff barriers to trade

• Customs duties (define, Diamonds) – easily identified so unlikely to occur.
• Scope of tariff barriers drawn widely by inclusion of CEEs (define, Diamonds).
• No derogation in relation to Article 30, but in limited circumstances charges may fall outside the scope of Article 30. A charge for a service which is of direct and specific benefit to importer (Statistical Levy) and proportionate to service provided (Customs Warehouses) – may fall outside Article 30.
• Fees for health inspections required by EU law fall outside Article 30, provided they are proportionate, in the EU interestand mandatory under EU law (and not merely permissive), and promote the free movement of goods (Commission v Germany (Animal Inspection Fees)).Protectionist intent is not required to show a breach of Article 30.Freedom of cross-border trade is paramount (Diamonds).

Article 34: prohibition of non-tariff barriers to trade

• The Scope of non-tariff barriers is wide, comprising quantitative restrictions and all measures having equivalent effect (Article 34 on imports).
• Quantitative restrictions include both import/export quotas and bans (Geddo).
• Court of Justice – wide definition of MEQRs – Dassonville 'all trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade' – also Directive 70/50 covering both distinctly (eg San Jose Scale, Dassonville) and indistinctly applicable measures (eg Cassis, Walter Rau).
• Note, however, the proviso on 'reasonable' restraints that is pursued later in Cassis de Dijon.
• However, the Court of Justice has placed limits on the scope of 'MEQR'. Keck provides that 'selling arrangements' having no greater impact on imports than on domestic products fall outside Article 34. Note subsequent cases on 'selling arrangements': Tankstation 't Heukske (shop opening hours), Commission v Greece (restrictions on the kinds of retail outlets from which certain goods can be sold), De Agostini (product advertising). Note that selling arrangements which may hinder market access must still be justified by Member States (see below).

 Article 110: prohibition of discriminatory internal taxation

• The recognition that restrictions can arise from charges/levies/taxes that are imposed other than by virtue of importation. Prohibition of discriminatory internal taxation (Article 110) – systems of internal dues – (Denkavit definition).
• Court of Justice held that Article 110 covers both direct discrimination (Lütticke) and indirect discrimination (Humblot).
• Paragraphs 1 and 2 together have wide scope – equal taxation for 'similar' products (paragraph 1) – no advantage to domestic products where similarity cannot be established but nevertheless products are in competition (paragraph 2).

Harmonisation: positive integration

• Harmonisation: elimination of disparities between national product standards hindering interstate trade – sets binding EU-wide standards.
• Harmonising measures preclude further restrictions by Member States in the relevant area.

Exceptions/impediments to free movement of goods

Article 36 derogation and Cassis

This part of the answer requires a full analysis of the Article 36 derogation and the Cassis principles. You should draw out the similarities and differences and underline the heavy burden on states seeking to derogate. Like all exceptions from the free movement rules, the provisions are interpreted restrictively by the Court of Justice. The following points should be included:

• Exceptions apply only where there are no EU harmonising measures covering the interest concerned.
• Mutual recognition is the fundamental principle underlying free movement of goods, articulated in Cassis: provided goods have been lawfully produced and marketed in one Member State, there is no reason why they should not be introduced into another without restriction.Unless restrictions are justified and proportionate, there is no reason why goods that have been lawfully produced and marketed in one Member State should not be introduced into another.
• Exceptions apply to Article 34 only – no justifications for breaches of Article 30, though possible to exclude charges from scope of Article 30 in limited circumstances.
• Court of Justice has accepted objective justification of indirect taxation, but this is outside scope of Article 36, Cassis and considered below.
• Both distinctly and indistinctly applicable measures may be justified – note the scope of Article 36 and Cassis and respectively, here.
• The Court of Justice requires evidence of the risk/threat (eg San Jose Scale).
• Article 36 grounds (set them out) are apparently wide but have been interpreted restrictively – the list is exhaustive (Irish Souvenirs).
• Article 36 – proportionality requirement often an insurmountable hurdle for Member States (eg Beer Purity).
• Article 36 – a further requirement – there must be no arbitrary discrimination/disguised restriction on trade – catches protectionist motives (Turkeys).
• Cassis – mutual recognition is the underlying assumption supporting the free movement of goods – like harmonisation, it provides for positive integration – the assumption is set aside only by proportionate justifications.
• Cassis – rule of reason – mandatory requirements wider than Article 36 grounds in that the list has been extended by the Court of Justice: includes environmental protection (Danish Bottles), legitimate interests of economic and social policy (Oebel) and national and regional sociocultural characteristics (Torfaen Borough Council).
• Cassis: indistinctly applicable measures only; they must be proportionate.

Objective justification of discriminatory taxation

• Court of Justice has accepted the principle of objective justification for indirectly discriminatory taxation (eg Chemial Farmaceutici) but no systematic formulation of policy, in contrast to the Article 36 exceptions.

Conclusion

Free movement of goods is secured both by deregulation and positive integration. The scope of unlawful restriction is drawn widely by the Court of Justice, in support of economic integration, though in Keck the Court laid down limits to Article 34. Whilst certain kinds of restriction are permissible, the Court interprets these narrowly and they must always be proportionate to their objective.