Josephine Shaw

Non-tariff Barriers to Trade in Goods

While the Community succeeded in removing the tariff barriers to trade in goods between the Member States, as well as most of the more visible non-tariff barriers (quotas or quantitative restrictions and import licences) by the end of the 1960s, it did not succeed in eliminating the many other non-tariff measures which have just as much influence on the national segmentation of the Community market. Almost any regulatory divergence between two national markets represents a potential hindrance to trade. The most obvious obstacles are state aids to industry (subject to separate regulation under Articles 92 and 93 EC), public procurement restrictions favouring national suppliers and divergent product and technical standards, but included also are divergent retail market rules (e.g. advertising rules, shop opening hours, product licensing, price regulation), and even divergent labour market regulation measures which restrict the production or marketing of goods. Differences in the rules which govern the operation of the market in goods within the various Member States interfere with the creation of a level competitive playing field within which market forces may operate and market integration can occur ‘naturally’.

The Sources of Community Law

We are concerned in this chapter with identifying the body of legal rules which comprise the sources of Community law and, where this is not already clear from earlier discussion, the origins and authors of these rules. Sources of law are often divided into different categories; for example, there are external sources (international agreements) and internal sources (the founding treaties, Community legislation), as well as primary sources (treaties, general principles of law) and secondary sources (Community legislation). All these categories of sources of law will be considered in this chapter, which also outlines certain basic features of each type of legal rule (e.g. nature and extent of binding force). Discussion in detail of the relationship between Community law and national law is reserved for consideration in Chapter 8.

The Implementation and Enforcement of Community Law

Two of the most important factors which distinguish the Community legal order from that of other international legal orders are the complexity of the regulatory structure and associated implementation mechanisms and the relative effectiveness of the enforcement mechanisms available. It is crucial that the binding legislative measures envisaged by the Treaty should not only be passed, but also implemented and enforced. However, the Community largely lacks the means and personnel whereby it can itself implement Community law. It cannot, for example, police and enforce the external borders and collect customs duties and agricultural levies, or carry out the detailed implementation of the Common Agricultural Policy (CAP). Only exceptionally is direct implementation by the Community envisaged, although where it is, it is the Commission which is the institution charged with this task (see 3.4). The Community is therefore in large measure dependent upon the effective implementation of Community law by the national administrations, in accordance with detailed procedures laid down in individual Community measures and the general duty of Community loyalty incumbent upon the Member States by virtue of Article 5 EC. This is termed ‘indirect implementation’. Here the Commission’s role will principally be that of supervising the Member States in order to ensure the effective enforcement of Community law (see 3.6). To this end, the Treaty provides a mechanism in Article 169 EC which permits the Commission to bring alleged Treaty violations by the Member States before the Court of Justice for a declaratory judgment. A similar procedure is also available to Member States in Article 170 EC, which can themselves pursue the interests of the Community by taking defaulting states before the Court of Justice.

The Evolving Community

This chapter uses the title ‘the evolving Community’ rather than the more customary phrase ‘the evolution of the Community’ in order to emphasise the dynamic and changing nature of the Community, and to highlight the fact that it has not yet reached a final stage of evolution. A basic knowledge of the history of the Community offers a number of benefits to the student: it gives a context to contemporary events, demonstrating that the current debates on the integration process have a long pedigree, and that ideas such as monetary union are not simply novelties dreamt up by Jacques Delors in the late 1980s; it puts the Community firmly in the context of other developments within and outside Europe, recognising the significance for the European Community of events such as the end of the Cold War and the unification of Germany; it highlights the ebbs and flows of the Community, which have coincided quite closely with the low and high points of the European economy since the Second World War; finally, the stop-start progress of political and economic integration emphasises the unparalleled contribution made by the Court at crucial points. Yet although the Court has been characterised as the ‘engine of integration’, when the events discussed in this chapter are reviewed subsequently in the context of developments in the Community’s legal system which form the main focus of this book, it will be seen that the work of the Court of Justice has not always run parallel to the political and economic evolution of the Treaty. In particular, there often appears to be a lag of some years between the point when work begins towards a new goal in the sphere of politics and correspondingly significant progress in the construction of the Community’s legal framework.

The Community and its Institutions at Work

This chapter introduces the work of the Community, focusing on its ability to make binding legal acts, to raise and to spend its own revenue, and on the key mechanisms which have evolved to make these activities more effective and to extend the role of the Community. The Chapter concludes with a discussion of interinstitutional disputes.

The Institutions of the European Community

This chapter examines the composition and basic powers and functions of the Community institutions. Discussion of the institutions at work is reserved for consideration in Chapter 4.

The External Aspects of the Customs Union

This chapter covers two topics: a description of the workings of the common customs tariff (CCT), concentrating on basic principles rather than operational detail, and a general analysis of the Community’s external trade, or common commercial policy (CCP). The CCT is one of the main tools of an external trade policy which is based on the basic principle of uniformity of treatment vis-a-vis third countries, rather than the abolition of barriers and integration of markets. However, the Community is committed to the furtherance of global free trade. Article 18 EC states: ‘The Member States declare their readiness to contribute to the development of international trade and the lowering of barriers to trade by entering into agreements designed, on a basis of reciprocity and mutual advantage, to reduce customs duties below the general level of which they could avail themselves as a result of the establishment of a customs union between them.’ Article 110 EC further links together the customs union, the CCP and the pursuit of free trade: ‘By establishing a customs union between themselves the Member States aim to contribute, in the common interest, to the harmonious development of world trade, the progressive abolition of restrictions on internal trade and the lowering of customs barriers.’ The common commercial policy shall take into account the favourable effect which the abolition of customs duties between Member States may have on the increase in the competitive strength of undertakings in those States.’ It should be noted that these Articles are phrased in terms of encouragement to action, rather than obligation. They do not create justiciable duties on the part of the Member States as a Community to lower their customs barriers towards third countries, but at the most articulate a duty to negotiate in good faith for the achievement of free trade within organisations such as the GATT where it is largely the Community which negotiates and concludes agreements rather than the Member States. The objective is to ensure that the existence of the customs union does not undermine the GATT system. The policies, as formulated unilaterally by the Community or in negotiation with other countries, are concerned principally with ensuring that external trade conditions do not create distortions of competition between the Member States and thus with preventing external factors from damaging the fabric of integration within the Community. The interpenetration of the Community market and the world market is clearly not the first focus of the CCT or the CCP.

Studying European Community Law

The purpose of this introductory chapter is to equip you, the reader, with the basic tools you need to embark upon the study of European Community law, a subject which has something of a reputation for being impenetrable. It assumes that you have some knowledge of the basic components of a legal system, but very little knowledge of what the European Community can do, what it cannot do, and why it is important in a specifically legal sense. It offers in 1.5 a brief overview of the Community legal system, containing basic pointers on to which more detailed study can be grafted, which highlights the pivotal role of the Court of Justice in the system of integration as set up by the Treaties of Rome and Paris in the 1950s and as evolved through the Single European Act (SEA) and the Treaty of Maastricht or Treaty of European Union (TEU) in the 1980s and 1990s.

Community Law and the Legal Systems of the Member States

The problem we shall consider in this chapter is how the evolving Community legal order has established itself as a superior legal order operating within, but nonetheless independent of the national legal systems. It demonstrates how the Court of Justice has used the organic connection offered by Article 177 EC both to assert its own ability to give authoritative interpretations of the meaning and effect of Community law, and to emphasise that where Community law applies, national courts themselves must act as ‘Community courts’, interpreting and applying Community law subject to the authority of the Court.

The Basic Framework of Community Social Policy

The previous chapters on the institutional and substantive law of the European Community have proceeded on the assumption that the Community’s central mission is the achievement of economic integration, embodied most forcefully in the project to complete the internal market by the end of 1992. The dominance of this mission is not challenged here. What is questioned is the extent the Community should be seeking to pursue the objective of economic interpenetration principally by applying what Pelkmans (1991: 63) has termed ‘rigorous scrutiny of the hindrances to the free movement of goods, services and capital, with a multitude of proposals about the minimum harmonisation needed to achieve such freedoms, complemented by a fairly strict competition policy applied to distortions in product and services markets, with, on the other hand, little or no scrutiny of the economic obstacles to the free movement of workers or massive distortions of competition in the labour markets.’ He concludes: ‘How can one speak of a completed internal market if the national regulatory provisions with respect to the labour market are highly restrictive and diverse?’ Against this negative assessment can be placed the declaration of the Summit Meeting in Paris in October 1972, just as the Community moved from six to nine members. The government leaders declared that: ‘they attribute the same importance to energetic proceedings in the field of social policy as to the realisation of the economic and financial union and consider it essential to ensure the increasing involvement of labour and management in the economic and social decisions of the Community.’ In similar terms, the eleven Member States which adopted the Community Charter of Fundamental Rights for Workers in 1989 asserted their belief that ‘in the context of the establishment of the single European market, the same importance must be attached to the social aspects as to the economic aspects.’ Yet despite these commitments, as Pelkmans indicates, relatively little of substance has emerged, although the debate about the extent to which the Community can and should pursue a social policy, as a necessary component of or complement to its primary economic policies, has raged since the very beginning. This chapter seeks to assess whether the Community can in truth be said to have a social policy, and examines the extent of the contribution of law to that policy, in the form of legally binding legislative measures and social rights conferred on individuals. It begins, however, with a brief discussion of whether it is correct in fact to set up a dichotomy in Community policy-making between ‘the social’ and ‘the economic’.