Analysis
This area of the survey covers three core areas of European
Union legislation – the free movement of goods,
the free movement of services
and freedom of establishment
– as well as a central part of what many people consider the
raison d’etre of the EU, the common market. Or, the largely
unadulterated, economic features of the EU.
Questions A and B relate directly to the free movement of
goods, and indirectly reference the customs union
and intrastat VAT regime. As can be seen from the results to
question A 87% and 96% (UK and EU respondents respectively)
believed that it was a benefit to their home state to be able
to offer goods and services cross-border to other EU member
states. This dropped to 74% and 88% respectively when such
trade was linked to the absence of a base in the other member
state, in question B.
As noted above this freedom to trade cross-border is a
central element of the European Union, and as such there are
very few legitimate reasons to prevent it. Those that do exist
are contained in art 30 and relate to issues such as security,
morality, health and public policy. It follows that this free
movement of goods element precludes establishing bases in other
member states in order to trade with those states. The
provision of a customs union, and the creation of an internal
market “in which the free movement of goods, persons,
services and capital is ensured”
also prohibits the imposition of customs duties and tariffs or
charges having equivalent effect – which are seen as
representing barriers to trade.
As an example of charges having equivalent effect the
European Court of Justice found that a fee for inspecting
animal feed at the border was effective as a tariff,
and thus prohibited by art 23(1). Restrictions on trade that
fall foul of EU law can be much more subtle, and can come in
the form of measures equivalent to quantitative restrictions
(MEQR). So, for example, in the Dassonville
case the ECJ found that national measures requiring a
certificate of origin on goods claimed to have a specific
origin (Scotch whisky) were equivalent to a restriction on the
movement of goods. Similarly the UK requiring the country of
origin to be shown on electrical goods
and Irish measures to mark as “foreign” (Irish-themed)
souvenirs that were not made in Ireland
failed to pass the test of legitimacy in the face of treaty
obligations.
Questions C and D concern freedom of establishment rights
for the self-employed and companies – that they may set-up
bases from which to trade in any of the member states.
Respondents from the EU were ambivalent about whether such
rights were available to their national businesses serving
other member states, or vice versa – with over 90% support.
UK respondents exhibited a national interest bias: 78%
supported UK businesses in the EU, but this dropped to 65% when
they were asked if they supported EU businesses in the UK.
Article 43 of the EC Treaty most directly addresses the
issues raised in the survey, that no restrictions shall be
placed on the self-employed and companies in establishing
“agencies, branches or subsidiaries” in member states, and
that such shall be subject to regulation in the same way as
nationals of that state.
One of the more curious applications of freedom of
establishment is found where a company (Centros) registered in
the UK attempted to establish a branch in Denmark from which to
trade.
At issue was the fact that Centros had no other connection to
the UK and intended to complete all of its trading through its
Danish branch office. The regulator in Denmark attempted to
prevent this claiming that the objective of Centros was to
avoid national regulations on minimum share capital. The ECJ
found that the company could not be prevented from establishing
a base in Denmark, as this would equate to a restriction on the
freedom of establishment.
The BSE, or “mad cow”, crisis of the early 1990s
prompted a ban on the movement of UK produced beef across the
EU – this is the subject of question E, and has an effect in
question F. At a first glance this would appear to contravene
the EC Treaty provisions on the free movement of goods, since
UK beef was still available in the domestic market. However,
the limited scope of art 30 was invoked, to prevent circulation
of such products in the other member states, on the grounds of
public health – leading to a total ban from 1996,
until it was largely lifted in 1999.
However France refused to lift its ban, and the European
Commission took enforcement action against it through the ECJ.
The court found in favour of the Commission and the UK.
As the results of question E show, 63% of UK respondents
believe that France was acting unfairly in continuing with its
ban – despite it having legitimate concerns about bovine
products originating in the UK, and raised doubts over the
decisions of the European Commission. Question F directly
addresses this ban, in asking whether the EU should be able to
take enforcement action in such matters. Of the EU respondents
68% believed that the EU should take such action, while in the
UK only 56% agree. This is one of the few areas that provoke
such a slim majority for the affirmative votes. This represents
something of a clash between the respondents believing that
France acted unfairly, and only a slim majority believing that
EU should take action. The issue respondents may consider
retrospectively is who should take action if the EU does not –
bearing in mind the background that the scientific reports to
the Commission had persuaded the other member states to lift
their bans. Some may also reflect on the results of question H,
where over 80% of all respondents agree that free movement in
the EU fosters competition and helps develop more competitive
markets.
Question G asks whether it is a benefit to EU businesses and
consumers to be able to buy goods and services from businesses
in other member states without restriction – 78% of UK
respondents and 88% of EU respondents agreed that it was. A key
issue in such matters is whether, in taking part in such
transactions, parties have similar legal protection as they
would when dealing with a domestic business. A matter that is addressed in the consumer protection section of this
survey. This is a genuine issue, as international businesses
increasingly centralise their EU operations and legally
establish themselves in a single member state. As with question
A this area is within the domain of the EU doctrine of free
movement of goods, as well as the free movement of services.
The basis for these doctrines is discussed above, but what
may be more interesting are the areas in which member states
have variously succeeded in preventing consumers accessing
goods and services via other member states. In Alpine
Investments a Dutch company was making sales calls to potential
customers outside the Netherlands – the Dutch financial
regulator wished to place a prohibition on such calls. At the
ECJ the court found that although the action of the regulator
did amount to a restriction on cross-border services this was
justified by public policy and the protection of investors, to
preserve the good reputation of Dutch financial services.
In the Republic of Ireland there is a constitutional ban on
abortion, and in the ECJ this medical procedure has been
classed as the provision of services – thus bringing a
contentious issue involving the “right to life” within the
scope of legislation of an economic nature centred on the
provision of goods and services. In Society for the
Protection of the Unborn Child v Grogan
Dublin-based students were providing information about abortion
services, in other member states, to Irish citizens. The court
found that the Irish state could act to prevent the
distribution of such information, since, as the students were
not paid, there was no economic or financial aspect to the
information, and thus it did not fall within the scope of a
service for the purpose of EU law.
Another example where the ECJ has found that states may
impose legitimate restriction on goods involves the importation
of pornography into the UK from Denmark.
Although this was prima facie a restriction on the free
movement of goods the ECJ found that since materials were
prohibited in the UK a bar could be imposed upon imports via
the public policy and public morality grounds of art 30.
Finally, question H asks whether the respondents believe
that the provisions of EU law, the creation of the internal
market, fosters competition and helps develop more competitive
markets. In excess of 80% of all respondents believed that this
was the case. This issue does not require further analysis, but the elements of law that
underlay it are examined throughout the analysis of these survey results.
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