THE SUBSTANTIVE LAW OF THE EU
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1 THE SUBSTANTIVE LAW OF THE EU THE FOUR FREEDOMS CATHERINE BARNARD OXFORD UNIVERSITY PRESS
2 CONTENTS Preface Table oflegislation Table ofcases Table of Equivalences Abbreviations List offigures xix xxi xxxv Ixxix lxxxvii xci PART I INTRODUCTION 1 INTRODUCTION TO THE ISSUES 3 Introduction 3 The Importance of Free Trade 3 Introduction 3 The Theory of Comparative Advantage 4 The Problems with the Basic Model 6 The Different Stages of Integration 8 Introduction 8 Free Trade Area and Customs Union 8 Common Market and Single Market 10 The Common Market 11 The Single Market 11 Economic, Monetary, and Political Union 13 Understanding the Integration Process 14 The Principles Underpinning the Common Market 17 Introduction 17 The Decentralized Model 18 Non-discrimination 18 Market Access 19 Competitive Federalism 19 The Centralized Model 21 Conclusions 23
3 VI CONTENTS PART II FREE MOVEMENT OF GOODS 2 INTRODUCTION TO THE FREE MOVEMENT OF GOODS 27 Introduction 27 The Internal Dimension: the Rules on Free Movement of Goods 28 The External Dimension: the Common Commercial Policy 29 The Effect of the WTO 30 Conclusions 33 3 ARTICLE 25: CUSTOMS DUTIES AND CHARGES HAVING EQUIVALENT EFFECT 35 Introduction 35 Customs Duties and Charges Having Equivalent Effect 36 Customs Duties 36 Charges Having Equivalent Effect to Customs Duties 36 Introduction 36 'Any pecuniary charge, however small...' 37 '... whatever its designation and mode of application...' 37 '... imposed unilaterally on domestic or foreign goods by reason of the fact that they cross a frontier..." 38 '... even if it is not imposed for the benefit of the State, is not discriminatory or protective in effect and if the product on which the charge is imposed is not in competition with the domestic product.' 38 Remedies 39 Direct Effect 39 Repayment of Unlawful Charges 39 'Permissible' Charges 41 Payments for Genuine Administrative Services Rendered to the Importer/ Exporter 42 Charges for Inspections Required by Community Law 43 Charges Falling Within the Scope of Internal Taxation 44 4 ARTICLE 90: INTERNAL TAXATION 45 Introduction 45 Member State Autonomy to Determine its own Taxation Policies 46 The Relevant Treaty Provisions 48 Goods which are Similar (Article 90( 1)) 49 Definition of 'Similar' 49
4 CONTENTS VÜ Types of Discrimination 51 Direct Discrimination 51 Indirect Discrimination 53 (a) Establishing a Prima Facie Case of Discrimination 53 (b) Objective Justification 54 Goods which are in Competition (Article 90(2)) 55 The Court's Approach to Article 90(2) 55 The Globalized Approach to Article Remedies 58 The Boundary between Article 90 and Other Treaty Provisions 59 Introduction 59 The 'Exotic' Import 60 Para-fiscal Charges 60 Other 'Levies' 62 Conclusions 62 5 QUANTITATIVE RESTRICTIONS UNDER ARTICLE 28; DEROGATIONS UNDER ARTICLE Introduction 63 Quantitative Restrictions 64 The Article 30 Derogations 64 Introduction 64 Public Morality 66 Public Policy 66 Public Security 71 The Protection of Health and Life of Humans, Animals, or Plants 73 The Protection of National Treasures Possessing Artistic, Historie, or Archaeological Value 77 The Protection of Industrial and Commercial Property 78 The Second Sentence of Article 30 and the Principle of Proportionality 78 Arbitrary Discrimination and a Disguised Restriction on Trade 78 Proportionality 79 Decision 3052/95/EC on Exchange of Information about National Measures Derogating from the Principle of Free Movement of Goods 83 Harmonization and Trust 84 6 MEASURES HAVING EQUIVALENT EFFECT TO QUANTITATIVE RESTRICTIONS UNDER ARTICLE Introduction 86
5 Vlll CONTENTS What are Measures having Equivalent Effect? 87 Introduction: The Dassonville Formula 87 'AU Trading Rules' 87 'Enacted by Member States' 89 'Directly or Indirectly, Actually or Potentially' 91 'Actually or Potentially' 91 'Directly or Indirectly' 92 Distinctly Applicable Measures 93 Introduction 93 Examples of Distinctly Applicable Measures 93 Imposing an Additional Requirement on the Imported Goods 93 Rules Limiting Channels of Distribution 94 National Rules Giving Preference to Domestic Goods 94 Discrimination Arising fxom Treating National and Imported Goods Alike: Price Fixing ' 98 'Reverse Discrimination' 99 Indistinctly Applicable Measures 100 Definition of Indistinctly Applicable Measures 100 Introduction 100 Examples of Indistinctly Applicable Measures: Product Requirements 101 Cassis de Dijon 104 The 'Mandatory Requirements' 108 Proportionality 112 Fundamental Human Rights 117 Blurring the Distinction between Distinctly and Indistinctly Applicable Measures 117 Litigation Avoidance: Directive 98/34 on the Provision of Information in the Field of Technical Standards and Regulations 119 Conclusions ARTICLE 28 AND CERTAIN SELLING ARRANGEMENTS; QUANTITATIVE RESTRICTIONS AND MEASURES HAVING EQUIVALENT EFFECT ON EXPORTS UNDER ARTICLE Introduction 128 Market Circumstances Rules and Article The Problem with Market Circumstances Rules 129 The Road to Keck 132 The Decision in Keck 134 The ludgment 134
6 CONTENTS ix What are 'Certain Selling Arrangements'? 137 Criticisms of the Court's Approach 137 Discriminatory Certain Selling Arrangements 140 Non-discriminatory Certain Selling Arrangements 144 Quantitative Restrictions and Measures having Equivalent Effect on Exports (Article 29) 149 Introduction 149 Quantitative Restrictions (QRs) 149 Measures having Equivalent Effect (MEEs) 149 The Difference between Artides 28 and 29 in Respect of MEEs 152 Conclusions 154 INTELLECTUAL PROPERTY AND THE FREE MOVEMENT OF GOODS 155 Introduction 155 The Concepts, Rules, and Principles 155 The Role of IPRs in National and Community Law 155 The Relevant Treaty Provisions 157 The General Principles: Existence and Exercise of IPRs, the Specific Subject Matter of IPRs, and die Doctrine of Exhaustion of Rights 158 Patents 162 Trade Marks 166 Introduction 166 Specific Subject Matter, Exhaustion, and Consent 167 The General Principles 167 Consent and the (Abortive) Doctrine of Common Origin 168 International Exhaustion 172 Legitimate Reasons for the Trade Mark-Holder to Oppose Further Marketing of the Trade-Marked Goods 175 Repackaging 175 (a) Hoffmann-La Röche 175 (b) Elaboration of the Hoffmann-La Röche Requirements 178 Affixing a New Trade Mark 181 Advertising 183 Similarity of Trade Marks and Risk of Confusion 184 Copyright and Designs 186 Copyright 186 Introduction 186 Rights in Reproduction and Säle of Products Incorporating Copyright Material 186
7 { CONTENTS Rights in Performance and Other Temporary Use 188 Conclusions 189 Industrial Designs 190 Quasi-IP Cases 191 Conclusions EXTERNAL ECONOMIC RELATIONS OF THE EU: THE COMMON COMMERCIAL POLICY 194 Introduction 194 The Constitutional Foundations of EC External Relations 195 The Power to Act 195 Express Powers 195 Implied Powers 199 The Nature of the Power: Exdusive or Shared Competence? 200 Express Powers 200 Implied Powers 201 Tariff Barriers to External Trade: the CCT 203 Introduction 203 Combined Nomenclature 204 The Process of Classification 204 The Role of the European Court of lustice 207 Valuation 208 Determination of (Non-preferential) Origin 209 The Customs Tariff 211 TariffQuotas 212 The Role of the Member States 212 Non-tariff Barriers to External Trade 213 The Export Regime: Regulation 2603/ Introduction 213 Derogations 214 The Import Regime: Regulation 3285/ Introduction 216 Derogations and Safeguard Measures 217 The Commercial Defence Instruments 218 Goods in Free Circulation 221 Definitions 221 Restrictions on Free Circulation: Article 134 EC 222 The Bananas Dispute 223 Conclusions 227
8 CONTENTS XI PART III FREE MOVEMENT OF PERSONS AND SERVICES 10 INTRODUCTION TO THE FREE MOVEMENT OF PERSONS 231 Introduction 231 Common Principles 233 Introduction 233 Refusal of Entry/Deportation 234 Non-discrimination on the Grounds of Nationality 234 Introduction 234 Direct and Indirect Discrimination; Distinctly and Indistinctly Applicable Measures 236 Non-discriminatory Measures 238 Defences and lustifications 240 Proportionality 243 Fundamental Human Rights 244 Reverse Discrimination 252 Going Beyond the Model of 'Discrimination on Grounds of Nationality' 256 Restrictions Liable to Prohibit or Otherwise Impede Free Movement 256 Access to the Market and Exercise of the Freedom 258 Obstacles to Free Movement 260 Direct Effect of Articles 39,43, and Conclusions FREE MOVEMENT OF WORKERS 264 Introduction 264 The Definition of a 'Worker' 264 The Right Conferred on Workers by EC Law 267 Introduction 267 Rights ofdeparture.entry, and Residence 268 The Right to Depart the Home State 268 The Right to Enter the Host State 268 The Right of Residence in the Host State 269 Employment and Family Rights 271 Introduction 271 Access to Employment 271 Equal Treatment during the Employment Relationship 274 (a) Equal Treatment in Respect of Terms and Conditions of Employment 274
9 Xll CONTENTS (b) Equal Treatment in Respect of Social and Tax Advantages 276 Tax Advantages 276 Social Advantages 278 (c) Equal Treatment and Vocational Training 281 (d) Equal Treatment and Other Benefits 284 Workers' Families 284 (a) Introduction 284 (b) Spouse 285 (c) Dependants 287 (d) Housing 287 (e) Other Family Rights 287 The Right to Remain in the Host Member State 289 Conclusions THE RIGHT OF ESTABLISHMENT 291 Introduction 291 Who is Entitled to Benefit from the Right of Establishment? 291 The Right of Establishment for Individuais 291 The Right of Establishment for Companies 292 The Rights Conferred on Natural Persons: the Self-employed 293 Introduction 293 Rights of Departure, Entry, and Residence 293 The Right of Access to Self-employment 294 Primary and Secondary Establishment 294 Equal Treatment and Beyond 295 Qualifications 297 (a) Where there is No Community Legislation 297 (b) Where there is Community Legislation 299 The Vertical Approach 299 The Horizontal Approach 300 The Legal Profession 303 Non-application of Horizontal Directives 303 (c) Qualifications Obtained in Third Countries 304 The Exercise of Activities as a Self-employed Person 305 Equal Treatment and Beyond 305 Social Advantages, Equal Treatment, and Beyond 307 Equal Treatment and Taxation 308 The Right to Remain 309 The Rights Conferred on Legal Persons: Companies 309 Introduction 309 The Right to Leave the Home State 310
10 CONTENTS XÜi Access to the Market of the Host State 311 Primary and Secondary Establishment 311 (a) The Basic Rules 311 (b) Regulatory Competition 320 Equal Treatment and Beyond 324 The Exercise of the Right of Establishment 325 Social Advantages, Equal Treatment, and Beyond 325 Equal Treatment and Taxation 326 Conclusions FREEDOM TO PROVIDE AND RECEIVE SERVICES 330 Introduction 330 Who can Rely on Articles 49 and 50? 331 TheScopeofArticles49and The Freedom to Provide Services 331 The Freedom to Travel to Receive Services 332 Neither Provider nor Recipient Travels 333 Performance of a Service for Remuneration 335 What Activities Constitute 'Services'? 335 Services are 'Normally Provided for Remuneration' 335 (a) The Need for an Economic Link 335 (b) Services and the Weifare State 342 The Temporary Nature of Services 343 The Rights Conferred on Service Receivers or Providers 343 Rights of Departure, Entry, and Residence 343 Rights of Access to the Market in Services in Other Member States 346 Discriminatory Measures 346 (a) Distinctly Applicable Measures 346 (b) Indistinctly Applicable Measures 348 (c) Non-discriminatory Measures 349 Measures 'liable to prohibit or otherwise impede' the activities of a Service provider 350 lustification 351 Proportionality 353 The Exercise of Rights to Provide or Receive a Service 360 Discriminatory Measures 360 Measures Liable to Prohibit or Impede the Exercise of the Freedom to Provide or Receive Services 361 Abuseof Rights 369 Conclusions 370
11 XIV CONTENTS 14 FREE MOVEMENT OF PERSONS: DEROGATIONS, LIMITATIONS, AND CONDITIONS 373 Introduction 373 Public Policy, Public Security, Public Health 374 Introduction 374 Public Policy and Public Security 375 Public Policy and the Individual 375 (a) Personal Conduct 375 (b) Measures which can be Taken against the Migrant 379 (c) The Right to Reapply 381 Public Policy and Legal Persons 381 Public Health 382 Public Health and the Individual 382 Public Health and Weifare Policies 383 Procedural Requirements 384 General Provisions 384 Remedies 385 (a) Article 8: Same Legal Remedies 385 (b) Article 9: The Decision of a 'Competent Authority' 386 Article 9(1) 386 Article 9(2) 388 (c) The Relationship between Articles 8 and I Public Service Exception 391 Introduction 391 Article 39(4): 'Employment in the Public Service' 391 The Exercise of 'Official Authority' 394 Other Limitations 396 Conclusions UNION CITIZENSHIP 400 Introduction 400 Citizenship of the Union 401 Rights and Duties 403 The Rights 403 Article 18(1) EC: the Right to Move and Reside Freely 405 Early Days 405 The Initial Right to Entry under Article 18(1) 407 The Right of Residence under Article Social Advantages for Citizens Lawfully Resident 409
12 CONTENTS XV (a) Direct Discrimination 409 (b) Equality, Integration, and Solidarity 413 (c) Indirect Discrimination and Beyond 417 The Relationship between Article 18(1) and Articles 39, 43, and Membership 421 Participation 423 Representative Democracy 423 Deliberate or Participatory Democracy 425 Access to Justice 428 Conclusions THIRD-COUNTRY NATIONALS AND THE EU 432 Introduction 432 The Historical and Legal Context 432 Introduction 432 The Evolving Legal Context 434 The Creation of an Area of Freedom, Security, and Justice 439 Measures under Title IV EC 442 Introduction 442 Border Control at External Frontiers 443 Immigration Policy 445 Conditions of Entry and Residence 445 Illegal Immigration, Residence, and Repatriation 454 Conclusions 455 Conclusions 455 PART IV FREE MOVEMENT OF CAPITAL 17 FREE MOVEMENT OF CAPITAL AND ECONOMIC AND MONETARY UNION 461 Introduction 461 Free Movement of Capital 461 Introduction 461 The Legal Context 462 The Prohibition of Restrictions on Movement of Capital between Member States 465
13 XVI CONTENTS Introduction 465 The Definition of'capital' 465 The Discrimination Model 466 The Model Based on Restrictions 469 Justifications 472 Express Derogations 474 Introduction 474 Article 58(l)(a): Tax Provisions Distinguishing between Resident and Non-resident Taxpayers 476 Article 58( 1 )(b): General Derogations 477 (a) 'All requisite measures to prevent infringements of national law and regulations, in particular in the field of taxation and the prudential supervision of financial institutions' 477 (b) To Lay Down Procedures for the Declaration of Capital Movements for the Purposes of Administrative or Statistical Information 478 (c) Public Policy and Public Security 478 The Prohibition of Restrictions on the Movement of Capital and Payments between Member States and Third Countries 480 The Relationship between the Provisions on Capital and the Other Freedoms 481 Economic and Monetary Union 482 Introduction 482 Monetary Union 483 The Stages to Monetary Union 483 (a) StageOne 483 (b) StageTwo 484 (c) StageThree 485 Monetary Policy 486 Economic Union 487 Conclusions 489 PART V COMPLETING THE SINGLE MARKET 18 REGULATING THE INTERNAL MARKET 493 Introduction 493 The Power to Harmonize: Article 95 EC 493 Introduction 493 The Circumstances in which Article 95(1) can be Used 497 Elimination of Obstacles to the Exercise of Fundamental Freedoms 497 Removal of Appreciable Distortions of Competition 498
14 CONTENTS XV11 Choice of Legal Basis 500 The Application of the Principles of Subsidiarity and Proportionality to Measures Adopted under Article Derogations from Measures Adopted under Article 95(1) 504 Different Approaches to Harmonization 506 Introduction 506 Mutual Recognition 507 Exhaustive Harmonization 508 Optional Harmonization 515 Minimum Harmonization 515 Introduction 515 Reverse Discrimination 517 The New Approach to Technical Harmonization and Standardization 520 Introduction 520 The New Approach 520 Reflexive Harmonization and the Open Method of Co-ordination 525 Completing the Internal Market: Beyond Introduction 528 Simplification, Implementation, and Enforcement 528 Problem Avoidance Mechanisms 532 Conclusions 534
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