Customs duties on imports and exports
The EU is, at its core a common market which necessitates that goods flow between its constituent member states unimpeded by customs duties and other measures. Article 23 prohibits “customs duties on imports and exports and of all charges having equivalent effect.” (CEE). Article 25 reinforces this and contains a total prohibition of any CEE being levied at any member's border. CEEs were defined widely in Commission-v-Italy-(Statistical Levy case) as “any pecuniary charge, however small and whatever its designation and mode of application, which is imposed unilaterally on domestic or foreign goods by, reason of the fact that they cross a frontier”.
We will focus on the actual pecuniary charge imposed on Canute now and later on the potential Article 28 breach by the actual health-check itself. Canute's charge would appear to fall into this category above as they are being charged at the frontier. In cases like Commission-v-Belgium (Re Health Inspection) nationally mandated health inspections charges have been struck down (exceptions apply only when mandated by Community law as per Commission-v-Germany and where a quantifiable advantage was conferred on the importer ). However, we are told that charges also apply for domestic producers for similar checks. However, this does not mean a breach of Article 25 has not occurred. In Marimex-Spa-v-Italian Minister-for-Finance a charge for veterinary inspections was applied to both domestic and imported meat. However, because there was differences in the collection procedure and criteria it was held to be a breach of Article 25. Furthermore, in Bresciani-v- Amministrazione-Italiana-dell-Finanze (see also Rewe-Zentralfinaz) , the importer of cow hides was subject to “compulsory veterinary and public health inspections carried out on raw cowhides”. Similar checks were demanded from local producers but this did not assuage the court. The court said “the fact that domestic production is, through other charges, subjected to a similar burden matters little unless those charges and the duty in question are applied according to the same criteria and at the same stage of production, thus making it possible for the them to be regarded as falling with a general system of internal taxation.” Furthermore, in Denkavit-v-France it was held by the ECJ that in order for a charge to be found to be a tax - covered under Article 90 - it must be similar in every respect and charged at the same rate and applied at exactly the same marketing stage.
Applying this to our facts demonstrate the problems the Swedish charge has. They cannot be a tax as any internal taxation system must be that “internal” and only “applied internally within a member state” not at frontiers. On the other hand we are told that Gelatine products produced in Sweden are subject to similar checks and charges are also required , but this suggests the charges and checking regime are not identical and so the Swedish charges will fail as CEEs as per Marimex and Bresciani. Furthermore, because they are charged at the border for imported goods they are unlikely to be charged at the equivalent “stage of production” as local production.
It is very important to remember that the ECJ views any charges at frontiers - no matter what he excuse - with the closest of scrutiny as they act a barrier to free movement of goods. In Bresciani they said they had the “obligation to abolish charges having equivalent effect in order to prevent the fundamental principle of the free movement goods being circumvented.” It is vital to realise when assessing cases that the ECJ actively interprets the Articles to achieve the core aims of the free market. Conclusion for the Commission is that the Swedish law and the charges are likely CEEs and breach Article 25. N.B. see comments later on application of Article 28 for Canute.
Some detailed law must be laid out before being applied to all parties. Article 28 states that ”quantitative restrictions on imports and all measures having equivalent effect (MEQR) shall be prohibited between member states.” The seminal case in relation to MEQRs was Procureur-du-Roi-v-Dassonville where the ECJ said “all trading rules enacted by member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade are to be considered measures having an effect equivalent to quantitative restrictions.” Thus it did not matter whether any measure was applied to both imports and exports; what mattered was the effect it could have on intra-European trade. The Rau-Margarine case is a typical instance of this where Belgium required all margarine be sold in cube shaped tubs so consumers, presumably, knew what they were buying. It was irrelevant whether it was Belgian or imported margarine, the same rule applied. The ECJ held it to be a MEQR and so a violation of Article 28. The rationale behind tackling such MEQRs is that they potentially compartmentalised trade within national boundaries. If Belgians can dictate special boxes then so can France, Germany, and Holland and so on. This inhibits the free movement of goods within the community because a national manufacturer would have to have numerous production runs for different countries so limiting intra-EU trade and not allowing the benefits of economies of scale and other such advantages to emerge. The critical point from Dassonville is simply that “a discriminatory intent is not required” . The ruling in Dassonville meant that the ECJ were now tackling indistinctly applicable MEQR - i.e. they are indistinct because they applied equally to all goods so appear not to discriminate. Nonetheless, they could disadvantage imports more than domestic goods as importers had to comply with what the domestic producers were already doing.
Matters then moved to the case of Rewe-Zentral AG-v- Bundesmonopolverwaltung fuer Branntwein - Cassis De Dijon, where the German government had a law defining the lower limits of the drink called Cassis at a minimum of 25% proof. However, French Cassis was only 15% -20% proof and so could not be sold in Germany. Distributors took a case claiming the alcohol limit was an MEQR. The ECJ both confirmed and refined Dassonville thus establishing two vital new principles. The first one became known as the principle of mutual recognition or the dual burden rule. It held that a product marketed legally in one member-state and presumably complying with all their mandatory requirements could not be prohibited in another. The second principle was the rule of reason. This stated that in order to derogate from the mutual recognition principle, it must be proved that there was some “mandatory requirement” relevant to the prohibition. The court left the boundaries of these undefined but Steiner lists some examples which have been accepted such as cultural concerns in Cinetheque-SA and environmental concerns in Re Disposable-Beer-Cans and the protection of young people in Dynamic-Medien. Thus there were now some exceptions to Dassonville but they are obviously significant issues which involve public interest matters. One important point to take from Cassis is that the ECJ did partially accept the German arguments that lower alcohol content may mislead consumers but that a ban was disproportionate to the problem i.e. the concept of proportionality applies. The ECJ said the problem could have been solved by better labelling or warnings etc.
The cases of Keck and Mithouard added a further new dimension to Article 28 and indistinctly applicable measures. The facts of the case are not as important as the comments made in the ruling. In it, the ECJ said “contrary to what has previously been decided Article 28 will no be infringed by national rules relating to certain selling arrangements that apply in the same manner, both in law and in fact, to all traders within the national territory.” The point to take from the Keck case is that situation now moved to one where “product characteristics are regulated by the exporting state” due to the principle of mutual recognition but “matters of marketing, distribution, retail and use are regulated by the importing state”. Although the dividing line may not always be clear.
We now need to apply this law to James. The blood pressure monitors are legally sold in the UK and so would potentially fall within the principle of mutual recognition as per Cassis. However, this might not be the situation. The restriction on the methods of selling under Finnish law relates not to an attribute of the product but rather to how and when they are sold i.e. it is potentially a selling arrangement as per Keck as so possibly may not be an MEQR. We are presuming that in law and in fact all blood pressure monitors are subject to the same limitations in Finland. This logic is supported by cases such as Commission-v-Greece (infant milk) and Steiner who said “” rules relating to the place of sales of particular products, as well as limitations as to who call sell them, should be seen as selling arrangements”. Nonetheless , the case of DocMorris potentially rescues James' situation - see also Gourmet International. In the DocMorris case, a pharmacy in the Netherlands was attempting to sell medications over the internet into Germany even though a national law blocked Germany pharmacies from doing the same. The German pharmacy union tried to have it stopped utilising the logic of Keck but the ECJ held the German law - for non-prescription supplies at least - breached article 28. They said that selling on the internet was an ancillary one for German pharmacies but a primary one in Doc Morris's case and so the legal ban was an MEQR as per Cassis/Dassonville as it affected DocMorris substantially more. Barnard rightly states that the “ruling is a particularly important ruling for opening up the single market. New market entrants, however small, can now gain a foothold on markets in other states-via the internet.” Applying this to our situation, the advice to the Commission is that the Finnish prohibition on James' s mail-order business is a deterrent to the free movement of goods in that it prevents him gaining a foothold as a new business entrant. An MEQR breaching Article 25. Blood pressure monitors do need to be controlled like prescription drugs and so it should meet the DocMorris ‘exception' to Keck. The mail order sales channel is vital to him and he loses much more by its banning than any indigenous supplier. The obvious point again here is that the ECJ are willing to look to the effect of a law and not ritualistically apply precedents.
Piscine Products Plc
This is potentially an indistinctly applicable MEQR - the product is the sausage not the marketing services. The German position would no doubt be similar to their arguments in Cassis. They would likely argue that the lack of any meat and/or the presence of shrimp/horseradish in a sausage could lead to consumer confusion with meat sausages. Contingent upon this they might seek to use one of the exceptions outlined in Cassis claiming the minimum meat requirement was a mandatory measure and possibly affect consumer interests or health and so not an MEQR. Specifically they could claim the marketing of shrimp based sausages could lead to confusion and not be fair to German consumers. However, this is unlikely to be effective as the ECJ has taken a narrow view on these exemptions and that the response must be proportionate to the problem. They are designed as public interest exemptions not to protect national industries or minor concerns.
It is likely that the ECJ would make the same ruling as they did in Cassis and the subsequent cases of Drei Glocken and Commission-v- Germany (sausage purity case). This would be that whatever concerns the Germans have about the product it is a disproportionate response to effectively ban the product with their law. Labelling requirement could indicate to the consumer what was in the product. Furthermore, simple logic tells you that if they did not like the test of the Piscine “sausages” when they ate them they would also not buy them again. The product is not inherently dangerous and so consumers would quickly reject it if they did not like it - there could be no lasting confusion. The advice to the Commission is that the German national law likely contravenes EU article 28.
NB this would not be a “keck” style case as the issue is with intrinsic attributes of the product not the marketing. The meat content falls under Cassis and can be regulated by the UK under the mutual recognition principle.
N.B. It is implied in the question that the gnomes are not actually sold in the UK and so the Principe of mutual recognition may not apply. However, the seizure of the gnomes at the Austria border upon the grounds that they are covered in toxic paint is no doubt an attempt by the Austrian government to utilise the exceptions under Article 30. Article 30 provides an exhaustive list of grounds for derogations from Articles 28 thus effectively allowing states to ban goods without breaching the article. The second of these listed in Article 30 is the protection of the health of humans and animals. Broad as this term may seem, it is clear that these derogations have ”been narrowly construed”. In Commission-v-UK, for example, the ECJ rejected a ban on the importing of live turkey to the UK from France because only a handful of the French turkeys were infected with the highly contagious Newcastle disease. There was also suspicion that Article 30 was simply being used to gain advantage for local farmers. Nonetheless there is no doubt that if the gnomes really were poisonous then there would be a derogation allowable. Yet the facts suggest otherwise in this case. In the German Commission-v- Germany (beer purity laws), the German government argued that additives in Dutch beer that was about to be imported would be harmful to human health as per Article 30. The ECJ responded that if this was the case then it would have to be supported by reputable scientific research. The ECJ pointed out that the additives were not only in use in other countries in the EU in beer but also imported into in Germany in other drink products. If the chemical was harmful then it should have been banned in all products and it wasn't in Germany. This in this case with Molly as the “toxic” paint is in use in other products in Austria. It is clearly an attempt by the Austrians to utilise Article 30 to circumvent the freedom of movement of goods - which is prohibited by Article 30 itself. The advice to the commission would be that Molly would have a strong case to have the national law in Austria overturned as an MEQR.
EXTRA POINT: N.B. in Canute case the health checks at the border - ignoring the pecuniary element - could be descried as MEQR that is indistinctly applied. It is applied to both domestic producers and importers. However, by the simple fact of imposing it at the border on Canute - thus risking queues, extra costs, possible strike action by customs officials etc - it is a disadvantage to him as domestic suppliers would not have these costs no matter where the domestic health check is made. Thus the actual health check applied to Canute would most certainly fail as an MEQR. The Swedish could try to use one of the Cassis “mandatory requirement” exceptions such as health concerns. However, if the domestic production can have the checks done at some other point in the supply chain then why not Canute. It is disproportionate to apply heath-checks at the border when they could be harmonised at the distributor or retail sector for all gelatine. Plus there would need to be strong scientific evidence that health checks were even necessary in the first place.