Quantitative Restrictions on Trade and Measures Having Equivalent Effect

A fundamental tenet of what is now the European Union has from the outset been that the constituent States should form a common (eventually ‘internal’) market. According to the current Article 26 TFEU, the internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services, and capital is ensured in accordance with the provisions of the Treaties. A cornerstone in the creation of the internal market is the fact that the EU, in accordance with Article 28 TFEU, is a customs union with respect to all trade in goods. This involves a prohibition between Member States of customs duties on imports and exports and of all charges having equivalent effect, and the adoption of a common customs tariff in their relations with third countries. The actual prohibition on customs duties on imports and exports and charges having equivalent effect is found in Article 30 TFEU. The prohibition, motivated by the simple fact that customs duties make imported goods more expensive than rival domestic goods, also applies to customs duties of a fiscal nature.2 As to charges having equivalent effect, the Court of Justice has made clear that ‘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’ qualifies as such a charge and is thereby prohibited.^[1] This applies even if the charge ‘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 any domestic product’.^[2] The prohibition has direct effect.5

While a prohibition on customs duties is relatively simple to implement, it has been shown to be much more challenging to deal with the abundance of national rules and other measures that limit the flow of goods between the Member States. One important way to address this issue is by harmonising the Member States’ national rules in specific areas. This is discussed in Chapter 4. However, there are also more general and directly applicable rules regarding free movement to be found in the TFEU.

Article 34 TFEU sets out a general prohibition on quantitative restrictions on imports and measures having equivalent effect. A similar prohibition pertaining to exports can be found in Article 35 TFEU. The rule on exports, which has been construed somewhat differently than that on imports, will be dealt with more briefly later in this chapter since restrictions on exports are much less prevalent than those on imports.

The Court of Justice established in the early 1960s that the prohibition on quantitative restrictions and measures having equal effect has direct effect and thus is to be applied in the Member States’ legal orders without first having to take the form of secondary EU law and being implemented by the Member States.⁶

What then is a quantitative restriction? Unsurprisingly, it is a measure that limits the quantity of a certain good that may be imported or exported. The quantity may be expressed as a number of units (eg 10,000 cars per annum) but also, for example, in terms of weight (eg 10,000 tonnes of wheat per annum), volume, or value (eg copper at a value of €100 million per annum). The most extreme forms of quantitative restrictions are import and export bans, since the quantity is then set to zero. These kinds of measures are nowadays unusual within the EU. What still has major practical significance is that ‘measures having equivalent effect’ to quantitative restrictions are also covered by the prohibitions in Articles 34 and 35 TFEU.

As early as 1974, in Dassonville, the Court of Justice established that the notion of measures having equivalent effect to quantitative restrictions covers all measures that are ‘capable of hindering, directly or indirectly, actually or potentially’ trade between Member States.⁷

Article 34 TFEU can be described as requiring the Member States to respect the principles of non-discrimination and mutual recognition with respect to goods that are legally manufactured and sold in other Member States.⁸ The fact that a certain good may be sold in one Member State thus entails a presumption that it may be legally marketed also in the other Member States.⁹

One important consequence is that product requirements concerning, for example, designation, form, size, weight, composition, presentation, labelling, or packaging are regarded as measures with equivalent effect, and thus prima facie prohibited, if applied to goods that have been lawfully manufactured and marketed

« Ibid.

• 7 Case 8/74 Dassonville ECLI:EU:C:1974:82, para 5. On direct effect see further section 1.6.
• 8 See eg Case C-110/05 Commission v Italy ECLI:EU:C:2009:66, sec 34 with references to further case law.
• 9 Case 120/78 Rewe-Zentral ECLI:EU:C:1979:42 (‘Cassis de Dijon’), para 14.

in another Member State. The main rationale for this is that imported goods will have to meet the product requirements of the Member State of import in addition to those that apply in the Member State of origin, whereas domestically produced goods only have one set of requirements that must be met. This will typically make it more costly or burdensome to get imported goods into the market of any specific Member State compared to goods originating from that State. Importantly, it is not necessary for a national measure to make a distinction between goods based on their origin in order for it to qualify as a measure of equivalent effect.¹⁰ This is highly relevant for environment and health-related product requirements, since they do typically not distinguish between products based on their origin. They do, however, often impose requirements regarding composition and/or labelling of products, for example by prohibiting the presence of certain chemicals in a product or by requiring that a product be labelled in a certain way.

If prior approval is required in order to, for example, import, acquire, market, keep, transport, or sell a certain type of good, that in itself is deemed to constitute a measure with equivalent effect.ⁿ The same applies if the offering for sale of certain goods requires that the goods have been included on an ‘authorised list’, since that makes the marketing more difficult and more expensive and consequently hinders trade between the Member States.12

Also, national measures that may not at first glance be seen to lay down requirements for goods have been found to constitute measures of equivalent effect. A telling example is the so-called Danish bees cased³ In this case a prohibition against the keeping of certain bee species^ on Thso, an island constituting less than 0.5 per cent of the territory of the Member State in question, that is, Denmark, was deemed to be a measure having equivalent effect. The measure did indeed prevent, for example, French bees from being imported into Thso.

The notion of ‘measure having equivalent effect’ is not reserved for active measures by Member States. Also, failure by a Member State to take adequate steps to prevent obstacles to the free movement of goods caused by private individuals may qualify. For example, a decision not to prohibit a demonstration by environmental protesters, which resulted in the complete closure for more than twenty-four hours of a major link for trade between northern Europe and the north of Italy, has been found to constitute a measure of equivalent effect to a quantitative restriction.^ A similar conclusion has been drawn with respect to a Member State’s failure to take all necessary and proportionate measures in order to prevent threats and violence directed against transports of fruit and vegetables from other Member States to supermarkets selling such goodsd⁶ The Court of ^{[3] [4] [5] [6] [7] [8] [9]}

Justice has accordingly found that Article 34 TFEU does not merely require the Member States themselves to abstain from adopting measures or engaging in conduct liable to constitute an obstacle to trade. When read with the principle of sincere cooperation in what is now Article 4 (3) TEU, it also obliges them to ‘take all necessary and appropriate measures to ensure that that fundamental freedom is respected on their territory’.^{[10] [11]}

It is not only importation or exportation to or from a specific Member State that enjoys protection. The Court of Justice has also made clear that the fundamental principle of free movement of goods, as elaborated in what are now Articles 34 and 35 TFEU, entails the existence of a general principle of free transit of goods within the EU.18 In line with this, a prohibition against heavy vehicles carrying certain categories of goods travelling along a road section of paramount importance has been found to violate the right to free transit. The prohibition, which was deemed capable of limiting trading opportunities between northern Europe and the north of Italy, was therefore regarded as constituting a measure having equivalent effect to quantitative restrictions^⁹ Also, the obligation for each Member State to ensure the free movement of products in its territory by preventing any restriction caused by the acts of individuals applies without the need to distinguish between cases where such acts affect the flow of imports or exports and those affecting merely the transit of goods.2⁰

Considering the broad interpretation given to the phrase ‘measure having equivalent effect to quantitative restrictions’, it seems capable of capturing almost any national measure with even the vaguest connection to goods and markets. Some delimitation was, however, provided by the Court of Justice in Peralta.²i It concerned an Italian prohibition for any vessel, regardless of nationality, to discharge hydrocarbons or certain other substances harmful to the marine environment in territorial waters and internal maritime waters, including ports. Having noted that the legislation in question made no distinction according to the origin of the substances transported and did not have as a purpose to regulate trade in goods with other Member States, the Court concluded that ‘the restrictive effects which it might have on the free movement of goods are too uncertain and indirect’ for it to be regarded as restricting trade between Member States.22 However, this should not be understood as there being a specific magnitude below which trade-impeding effects are automatically accepted, that is, a de minimis rule. A measure capable of hindering imports from another Member State will be considered a measure having equivalent effect even though ‘the hindrance is slight’ and even if the products can be marketed in other ways.2³ The significance of Peralta is merely that such an effect may not be too uncertain or indirect if it is to be considered a measure having equivalent effect.

The Court of Justice has also, in the well-known Keck case, established that national provisions that restrict or prohibit certain selling arrangements are not to be considered as hindering trade between Member States so long as they apply to all relevant traders operating within the national territory and so long as they affect in the same manner, in law and in fact, the marketing of domestic products and of those from other Member States^⁴ Such selling arrangements have been found to include, inter alia, rules on business opening hours and requirements that certain products may be sold only by authorised distributors.25

The rules established by the Court of Justice for selling arrangements have turned out to be of limited significance for environmental and health protection measures, since these typically govern the characteristics of products rather than merely the forms under which they are sold. The Court’s findings in Keck have also been criticised as containing contradictions and as lacking in clarity and therefore being of limited use7⁶

A central issue has been whether the delimitation on the applicability of Article 34 TFEU, which according to Keck applies to selling arrangements, also applies to national measures that do not pertain to imports or marketing of products but only to their use. In a case concerning an Italian prohibition on mopeds and motorcycles towing a trailer the Court of Justice concluded that ‘a prohibition on the use of a product in the territory of a Member State has a considerable influence on the behaviour of consumers, which, in its turn, affects the access of that product to the market of that Member State’, which is why such a prohibition constitutes a measure having equivalent effect to quantitative restrictions on imports^⁷ The Court did not, however, limit itself to the specific circumstances of the case but also stated, in more general terms, that every measure which hinders access of products originating in other Member States to the market of a Member State is a measure having equivalent effect.2⁸ This should simplify the assessment of national measures since it makes products’ access to the market of a Member State the ultimate criteria. But it also raises new questions such as when an obstacle to market access exists and how this should be measured or assessed^⁹

Subsequent case law may give some, although still limited, guidance. In ANETT the Court ofJustice found Spanish legislation prohibiting tobacco retailers from directly importing tobacco products from other Member States, thereby forcing them ^{[12] [13] [14] [15]}

to procure their supplies from authorised wholesalers, capable of having a negative effect on the choice of products that the tobacco retailers include in their range of products and, ultimately, on the access of various products coming from other Member States.^{[16] [17] [18] [19] [20] [21]} According to the Court of Justice ‘the mere fact that an importer might be dissuaded from introducing or marketing [certain products in a Member State] constitutes a restriction on the free movement of goods for the importer’^¹ It has also been established that a negative effect on access to a national market may follow from rules that make it harder to receive a subsidy associated with a product. In Bonnarde a requirement that the registration document for demonstration vehicles must state that the vehicle has been a ‘demonstration vehicle’ (and is therefore not a used car in the ordinary sense despite already being registered) in order for a new owner to be granted an ecological subsidy was found to affect those vehicles’ access to the Member State’s market since it may influence the behaviour of consumers.32

It should be noted that even though the prohibition on quantitative restrictions and measures having equivalent effect typically comes into play in relation to measures by Member States, they are equally applicable to measures adopted by EU institutions, such as directives, regulations, and decisions by the Commission.33 However, measures of EU institutions are in principle presumed to be lawful and accordingly produce legal effects until they are withdrawn, annulled in an action for annulment, or declared invalid by the Court of Justice following a reference for a preliminary ruling or a plea of illegality^⁴

Importantly, Article 34 TFEU does not apply to so-called reverse discrimination, that is, when national measures result in domestic goods receiving less favourable treatment than goods originating in other Member States. The Court of Justice has made clear that differences in treatment between goods which are not capable of restricting imports or of prejudicing the marketing of imported goods do not fall within the prohibition contained in Article 34.35

As mentioned previously, Article 35 TFEU prohibits quantitative restrictions on exports and all measures having equivalent effect. Although the wording is the same as in Article 34, except that this Article deals with exports rather than imports, Article 35 has been given a more limited area of applicability. In Groenveld in 1979 the Court of Justice famously declared that the prohibition on exports only concerns national measures which have as their specific object or effect the restriction of patterns of exports and thereby the establishment of a difference in treatment between the domestic trade of a Member State and its export trade in such a way as to provide a particular advantage for national production or for the domestic market of the Member State in question, at the expense of the production or of the trade of other Member States.³⁶

National measures that are applied objectively to goods of a certain kind, without any distinction being made based on whether the goods are intended for the domestic market or for export, are thus not affected by the prohibition. However, several arguments have been put forward for dropping the requirement for the existence of different treatment and bringing the interpretation of measures having an equivalent effect to quantitative restrictions on exports more in line with what applies to imports^⁷ The Court of Justice seems also to have moved in this direction, for example by finding a national measure which applied to all traders active in the national territory to be contrary to Article 35 on account of its actual effect being greater on goods leaving the market of the exporting Member State than on the marketing of goods in the domestic market of that Stated⁸ But further case law will be needed to bring full clarity in this regard.

The Court has in a number of cases dealt with de iure or de facto restrictions on exports of waste. These have often been found to be prohibited export restrictions since their objective has been to promote disposal or recycling of the waste in domestic waste treatment plants.3⁹ If such a policy is deemed to have a purely economic basis, that is, if treating the waste domestically rather than exporting it has not been shown to provide environmental benefits, it is not acceptable.⁴⁰

• [1] Case 24/68 Commission v Italy ECLI:EU:C:1969:29, para 9. 4 Ibid, para 9.
• [2] 5 Case 26/62 Van Genden Loos ECLI:EU:C:1963:1. On direct effect see section 1.6.
• [3] Joined cases C-267/91 and C-268/91 Keck andMithouardECLI:EU:C:1993:905, para 15.
• [4] Case C-400/96 Harpegnies ECLI:EU:C:1998:414, para 30.
• [5] CaseC-24/00 Commission v France ECLI:EU:C:2004:70, para 23.
• [6] CaseC-67/97 Bluhme ECLI:EU:C:1998:584.
• [7] 14 Any species of bee other than L^so brown bee or Apis mellifera mellifera.
• [8] Case C-112/00 Schmidberger ECLI:EU:C:2003:333.
• [9] Case C-265/95 Commission v France ECLI:EU:C:1997:595.
• [10] Ibid, para 32.
• [11] Case C-320/03 Commission v Austria ECLI:EU:C:2005:684, paras 63—65. 19 Ibid, paras 66—69. 2o Case C-112/00 Schmidberger (n 15), para 60. 21 Case C-379/92 Peralta ECLI:EU:C:1994:296. 22 Ibid, para 24. 23 Case C-309/02 Radberger Getrankegesellschaft and Others ECLI:EU:C:2004:799, para 68.
• [12] Joined Cases C-267/91 & C-268/91 Keck andMithouard (n 10), para 16.
• [13] Joined Cases C-401/92 and C-402/92 Tankstation 'tHeukskeandBoermansECLI:EU:C: 1994:220(rules on petrol station opening hours), and Case C-387/93 Banchero ECLI:EU:C:1995:439 (legislation that reserved the retail sale of manufactured tobacco products to authorised distributors). Onso-called selling arrangements see further C Barnard The Substantive Law of the EU: The Four Freedoms(Oxford University Press, 2013) Chap 5.
• [14] 26 See, eg, Opinion of Mr Advocate General Leger in Case C-110/05 ECLI:EU:C:2008:386, para77 with further references.
• [15] Case C-110/05 Commission v Italy (n 8), paras 56—58. 28 Ibid, para 37. 29 See eg I Lianos ‘Shifting Narratives in the European Internal Market: Efficient Restrictions ofTrade and the Nature of “Economic” Integration’ (2010) 21 European Business Law Review 705—60,719 et seq.
• [16] Case C-456/10 ANETTECLI:EU:C:2012:241, paras 38—42.
• [17] Case C-385/10 Elenca ECLI:EU:C:2012:634, para 22.
• [18] 32 Case C-443/10 Bonnarde ECLI:EU:C:2011:641, para 30.
• [19] Case 15/83 Denkavit Nederland ECLI:EU:C:1984:183, para 15 and Case C-51/93 MeyhuiECLI:EU:C:1994:312, para 11.
• [20] Case 101/78 Granaria ECLI:EU:C:1979:38, para 4 and Case C-45/91 Commission v GreeceECLI:EU:C:1992:164, para 18.
• [21] Case 98/86 Mathot ECLI:EU:C:1987:89, para 7.