Prohibition of Customs Duties and Charges

Prohibition of customs duties and charges having equivalent effect Course number: EUI18/5A-4 Lecturer:

Aims of the lecture • To enhance the general knowledge of EU internal market, • To familiarize participants with the foundations of free movement of goods, • To allow participants to appreciate how free movement of goods has developed over the years, • To facilitate understanding of key concepts and rules underpinning the foundations of free movement of goods, • To allow participants to appreciate the relationship between primary and secondary legislation, on the one hand, and the case-law of the Court of Justice, on the other hand.

Customs tariffs between the Member States were abolished in three phases (see repealed Arts. 14-15 EEC Treaty) and the process of creation of the customs union was completed a bit earlier than scheduled, that is on July 1st, 1968; There is no precise definition of customs duty, however it is rather obvious what customs duties are. Abolition of tariff barriers

Article 30 TFEU ‘Customs duties on imports and exports and charges having equivalent effect shall be prohibited between Member States. This prohibition shall also apply to customs duties of a fiscal nature.’ Tariff barriers

In case 24/68 CoJ explained the rationale behind the prohibition of customs duties, The Court held: ‘In prohibiting the imposition of customs duties, the Treaty does not distinguish between goods according to whether or not they enter into competition with the products of the importing country. [cont.] Abolition of tariff barriers

‘Thus, the purpose of the abolition of customs barriers is not merely to eliminate their protective nature, as the Treaty sought on the contrary to give general scope and effect to the rule on the elimination of customs duties and charges having equivalent effect, in order to ensure the free movement of goods.’ (para. 6) Abolition of tariff barriers

‘It follows from the system as a whole and from the general and absolute nature of the prohibition of any customs duty applicable to goods moving between Member States that customs duties are prohibited independently of any consideration of the purpose for which they were introduced and the destination of the revenue obtained therefrom’ (para. 7) Abolition of tariff barriers

The rationale behind prohibition of charges having an equivalent effect is rather simple – to avoid measures other than customs duties, which are capable of creating similar barriers to trade, See: CoJ, case 87/75 Bresciani, para. 8, There is no legal definition of charges having equivalent effect to customs duties, Case-law of the Court of Justice may be very instructive. Charges having an equivalent effect

CoJ gave a very broad meaning to the term ‘charges having an equivalent effect to customs duties’ See: CoJ, case 24/68 Commission v. Italy; CoJ, case 2-3/69 Diamantarbeiders. (both cases very similar in contents, delivered on the same day), - CoJ, case C-72/03 CarbonatiApuani. Charges having equivalent effect

‘THE CONCEPT OF A CHARGE HAVING EQUIVALENT EFFECT REFERRED TO IN ARTICLES 9 AND 12 OF THE EEC TREATY INCLUDES ANY PECUNIARY CHARGE, OTHER THAN A CUSTOMS DUTY IN THE STRICT SENSE, IMPOSED ON GOODS CIRCULATING WITHIN THE COMMUNITY BY REASON OF THE FACT THAT THEY CROSS A FRONTIER, IN SO FAR AS SUCH A CHARGE IS NOT PERMITTED BY A SPECIFIC PROVISION OF THE TREATY’ Charges having equivalent effect

NOTE: there are no derogations available as per Article 30 TFEU, A common defence for the Member States has been an argument based on consideration for the services rendered (i.e. veterinary inspection), See i.e.: CoJ, case 87/75 Bresciani; but see CoJ, Case 18/87 Commission v. Germany. Charges having equivalent effect

In case BrescianiCoJ held that charge for a public health inspection of imported meat is measure having an equivalent effect to customs and it could not be considered as remuneration for the service – costs of the inspection shall be met by the general public. Charges having equivalent effect

The situation was slightly different in Case 18/87 Commission v. Germany, The Court emphasized that additional charges may be imposed if are part of the general system of internal dues and apply in accordance with the same criteria to domestic and imported products, or are payments for the services, however the sum is in proportion to the service or payment is made for the inspection which is imposed by EU Law. Charges having equivalent effect

In the last case the CoJ held that a charge will be allowed, if: it does not exceed the actual costs of an inspection, an inspection is obligatory and uniform for all products concerned in the EU, it is prescribed in the general interest of the Union, promotes the free movement of goods. Charges having equivalent effect

Free movement of goods is one of four freedoms of Internal Market, It required abolition of customs duties as well as prohibition of charges having equivalent effect, It also required prohibition of tax discrimination, quantitative restrictions and measures having equivalent effect, All key provisions of TFEU regulating free movement of goods produce direct effect. Points to remember

Prohibition of Customs Duties and Charges