Article 28: Prohibition on Quantitative Restrictions

Article 28 has been developed by the Court into a broad anti-protectionist charter. The vigour of Article 28 lies in its remarkable scope. It covers tangible physical barriers to trade, such as formalities imposed at the frontier of a member state, and extends to more subtle barriers to trade, such as a government-sponsored campaign in favour of home-produced goods or a requirement that a manufacturer must have a presence in the state in which a product is marketed. Furthermore, Article 28 has been used to challenge national rules that apply equally to domestic and imported goods, such as those governing the permitted ingredients of foodstuffs. Such rules apply to all products, wherever produced, but have the effect of impeding the sale of products from other states where manufacture occurs in accordance with different traditions. Article 28 is capable of prohibiting national rules even in this area and consequently Community law may be used to challenge rules that on their face are quite irrelevant to cross-frontier trade. There are exceptional circumstances in which member states may legitimately maintain barriers to the free movement of goods, but the state wishing to make such an exceptional case bears a heavy burden of proof.

The idea of the 'quantitative restriction' or 'quota system' is well established in international trade law. The typical case involves state A imposing a numerical limit on the imports of a certain product from state B. The purpose of such a system is commonly to offer protection to the industry of state A that produces the item in question. Such trade restrictions are, if anything, more prejudicial to free trade than the fiscal barriers, because they impose an absolute ban on trade beyond the stipulated ceiling of imports, rather than simply rendering importation more expensive. Indeed, in extreme cases state A may completely forbid any imports from state B. It is well established that in Community law both a partial restraint and an absolute ban on importation constitute 'quantitative restrictions' caught by Article 28. Plainly, quotas run contrary to the very notion of a common market and their incompatibility with Article 28 is a fundamental tenet of the Community's substantive law. In practice, it has rarely proved necessary to challenge numerical quotas under Community law, for quotas on trade between member states were in the main abolished by virtue of international agreements during the 1950’s.

Article 28's remarkable evolution into an instrument for the removal of a wide range of hindrances to the free movement of goods is attributable to the second limb of the Article 28 definition. It was always assumed that the quantitative restriction or quota, covered by the first limb, is unlawful; the majority of the case law and writing on Article 28 has concentrated on the second limb, the notion of the 'measure having equivalent effect' to the quantitative restriction, often abbreviated to the MEQR. Whereas the quota is well understood as an element of trade policy, the measure having equivalent effect is much harder to pin down. The European Court has elaborated the notion of the MEQR through a long line of case law to the point where it has become an instrument for tackling national laws that are far removed from the relatively simple idea of a numerical limit on imports. The objectives of the free movement of goods in particular and of market integration in general have been greatly advanced by eliminating a host of national rules that have an effect on trade on the basis that they constitute MEQRs contrary to Article 30.

Ex. 1. Answer the following questions:

1. What is one of the main objectives of the European Community?

2. Does the Treaty provide for concrete ways to achieve the common market? What are they?

3. When did the “internal market” term appear?

4. What is the difference between the two terms: the internal market and the common market?

5. Does the ECJ distinguish between them?

6. Is the access of goods to the common market an important consideration for member states?

7. Does the principle of freedom of movement cover only the goods produced on the territory of the EC?

8. What was the subject matter of the Commission v Italy case? What arguments were presented by Italy? What was the Court’s decision?

9. How does the ECJ define CEE?

10. Is a government-sponsored campaign in favour of home-produced goods a barrier to trade?

11. Is it possible for a member to maintain barriers to the free movement of goods?

Ex. 2. Give the oral/written summary of the text (in English/ Russian).

Ex. 3. Translate the text into Russian orally.

Ex. 4. Suggest the Russian equivalents for the following words and phrases:

to specify; internal market; competition policy; to distinguish between the two terms; to enhance competitiveness; to originate in member states; under special dispensation; ambit; to submit; to follow this line of reasoning; to impede transfrontier trade; to pervade; a pecuniary charge; subtle barriers to trade; on their face; to bear a heavy burden of proof; a fundamental tenet; case law; MEQR.

Ex. 5. Find in the text the English equivalents for the following Russian words and phrases:

конкретные действия; общая торговая политика; сближение законодательств; потребительский выбор; устранить возможные нарушения правил конкуренции; промышленные и сельскохозяйственные товары; находиться в свободном обращении; признать незаконными национальные сборы; бесспорно; взимать пошлину; провести экономическую оценку; добиться отмены сборов; облагать пошлиной на границе; подпадать под действие статьи; материальное право.

The Court's Cassis de Dijon principle

Cassis de Dijon is a blackcurrant liqueur, commonly drunk with white wine. It was lawfully produced in France and contained 15 to 20 per cent alcohol by volume. German law precluded the sale of any spirits of the category into which cassis fell unless they were of at least 32 per cent alcohol content. A prospective importer was consequently advised by the German authorities that although there was no objection to the importation of cassis into Germany from France, it could not be marketed there. The importer initiated proceedings before the German courts to establish the incompatibility of the German rule relating to alcohol strength with Article 30 of the Treaty.

The rule was not discriminatory. It applied to all fruit liqueurs marketed in Germany without making any distinction according to origin. It was an indistinctly applicable technical rule. However, the subject-matter of the case was ample demonstration that the rule restricted free trade across national frontiers within the common market. A product lawfully produced in France was excluded from the German market simply because the rules in Germany differed from the rules in France. An obstacle to trade that led to the partitioning of the common market arose as a result of the different traditions of two member states. As might have been expected in the light of the Dassonville formula, the Court was persuaded by the fact that the German rule exerted a restrictive effect on trade that Article 28 was indeed capable of applying. However, the Court established a principle in Cassis de Dijon that represented an important new initiative in its Article 30 jurisprudence:

Obstacles to movement in the Community resulting from disparities between the national laws relating to the marketing of the products in question must be accepted in so far as those provisions may be recognized as being necessary in order to satisfy mandatory requirements relating in particular to the effectiveness of fiscal supervision, the protection of public health, the fairness of commercial transactions and the defence of the consumer.

The Court further emphasized that any measure taken to protect a 'mandatory requirement' must be proportionate to that end and must be the least restrictive of trade available. These principles are closely analogous to those that the Court has developed on the basis of the second sentence of Article 30. The Court therefore indicated that where the alleged objective could be achieved by a less burdensome rule - for example, a requirement that drinks be labelled clearly to show their alcohol strength instead of the imposition of an outright ban — then a state is not entitled to maintain its unduly onerous rule.