The past weeks the blog series TERRITORIAL DISPUTES introduced the case of Northern Ireland. In doing that, the first posts presented some of the most controversial issues that were the pillars of the Brexit campaign. So far, the posts covered European Union citizenship, free movement of persons, provision of services, workers, benefits, and family members. Today, the post includes another freedom: free movement of goods. This is of particular importance for the United Kingdom (and therefore, Northern Ireland).
Originally, the principal aim of the European Economic Community treaty was a greater economic integration via creation of common market involving abolition of obstacles or restrictions on free movement of goods, services, workers and capital. Free movement of goods was (and still is) one of the fundamental freedoms on which the European Union is based.
Art 3(3) TEU) states as an objective of Community the creation of a common market, furthered now by EMU. The European Union must ensure that all obstacles to free movement of goods, services, persons and capital are abolished.
Art 26(2) TFEU defines the internal (common/single) market as an area without frontiers in which there is free movement of goods, persons, services and capital. Free movement of goods is central to the operation of a common market because it aims to ensure that imported goods are not placed at disadvantage by imposition of extra costs. For example, a French exporter of wine into the United Kingdom would not fear any unfair disadvantage in relation to British wine producers (and vice-versa) as long as the United Kingdom remains part of the European Union.
Some basic yet crucial questions: What is a free trade area? What is a customs union? What is an internal (or single) market?
Free Trade Area (FTA): it means a removal of customs duties, border taxes between states, quotas or limitations on what can be imported but each state keeps own duties towards countries outside the FTA.
Customs union: FTA in addition to a common level of duty on goods coming from outside the FTA. This implies a removal of internal customs or quotas in addition to the erection of uniform external tariff.
Single/internal market: it means customs union in addition to free movement of factors of production. The terms “single market” or “internal market” replaced common market in 1986 (SEA).
What about goods coming from third countries outside the European Union?
An European Union tariff is charged on all goods coming into the European Union from third countries. It is the same tariff regardless of where the goods enter. The monies raised are part of the EU budget. The Common Custom Tariff (CCT) is different from charges levied by a member state as part of their own internal taxation system. The CCT rates are fixed by the EU Council on a proposal from the EU Commission.
What is meant by goods in free circulation?
Once the CCT is applied to third country goods, they are in “free circulation” in the Union, not subject to customs duties between member states. These goods are allowed to move freely between member states exactly like goods originating in the within the European Union. For example, fruit imported from Latin America by a Spanish importer into Spain can be moved freely into the United Kingdom without paying an extra levy. After Brexit, this same procedure would imply not one (CCT) but two customs duties (one to enter the European Union and one to enter the United Kingdom of the goods first entered via the European Union into the United Kingdom).
What does the term “goods” mean within European Union law?
The term “goods” is used interchangeably with the term “products.” The European Court of Justice defines it as follows:
Commission v Italy (The Art Treasure Case) (7/68): products which can be (1) valued in money and which (2) are capable of forming the subject of a commercial transaction.
Tomorrow, the post will introduce financial (pecuniary) and non-financial (non-pecuniary) barriers prohibited by European Union law in relation to free movements of goods.
Jorge Emilio Núñez
16th July 2018