Trade Law and policy

Trade policy is a key component of EU law and is embodied in two principal forms of legislation, (i) treaties and conventions between the EU as an entity (or between groups of EU member countries) and other, non-EU countries and (ii) EU Primary and Secondary Legislation that binds all EU member countries. In trade matters, the EU is the sole competent authority, although there are occasional national differences in the implementation and interpretation of the treaties and EU Secondary Legislation. Hermes International v. FHT Marketing Choice (Case C-53/96, decided 16 June 1998) [ 1998] ECR I-3603. Although Norway and Switzerland are not part of the EU, they are members of EFTA and their trade policies and laws are similar to those of the EU.

EU trade issues can be viewed from two aspects: (i) internally, a Single Market with no obstacles to trade among member countries and (ii) externally, a Common Commercial Policy in relation to third countries and international organisations (EU Treaty, Articles 131-134).

In order to create a Single Market internally within the EU, the EU Treaty itself (Articles 23-31, 87-89, 90-93) abolishes all trade, customs and tariff barriers, quotas and quantitative restrictions, as between member countries of the EU and forbids member country national taxes

(or measures or charges having an equivalent effect), as well as outlawing prohibitions, regulations and government subsidies (often called "state aids") which can distort the ability of goods to compete on equal terms, throughout the Single Market. Non-distortion of the Single Market is also enforced by the EC (in the internal trade context), using its significant powers under EU antitrust and competition rules.

The following chart tabulates various EU Treaty articles with their main subject matter, with respect to EU trade laws and policies:

Articles Key Trade Policy Subject
23,25 EU = a customs union with
  no customs duties on
  imports or exports (or
  charges having
  equivalent effect) among
  EU member countries
26 Common external EU
  customs tariffs to be fixed
  by the EU
27 Guidelines for the EU
  customs union
28 No quantitative
  restrictions on imports (or
  measures having
  equivalent effect), from
  other EU member
29 No quantitative
  restrictions on exports (or
  measures having
  equivalent effect), to
  other EU member
30 Exceptions for
  quantitative restrictions,
  based upon public
  morality, public policy or
  public security
31 No discrimination by state
87 Prohibition of state aids
  (in any form whatsoever)
88 Notification and
  supervision of state aids
89 EC empowered to
  implement legislation as
  to Articles 87-88
131 Targets of international
  trade policy
132 Harmonization of export
133 Empowering the European Commission
  to deal with international trade
  issues in consultation with the
  European Council

There are special trade rules in the EU regarding its Common Agricultural Policy ("CAP", Treaty Articles 32-38) but these are not specifically addressed in this chapter.

Internal Trade Issues.

Notwithstanding the seemingly straightforward approach of the Treaty Articles in the above chart, there has been considerable need for the ECJ and national courts to clarify what this all means in actual practice. The overall impact of the court cases has been to confirm that, whatever the form of the national measure (subsidy, tax, inspection charge, statistical levy, etc.), the Treaty provisions are rigorously applied in order to ensure a Single Market unimpaired by local barriers and without the imposition of any pecuniary charge on goods merely by virtue of the fact that they cross a national border. This is true whether or not the national government derives any monetary benefit from the measure, whether or not the measure is discriminatory or protective and whether or not any domestic product is affected by competition from imported products. For instance: EC v. Italy (Case 24/68, decided 1 July 1969) [1969] ECR 193 ("Statistical Levy" case, Italy imposed on a non-discriminatory basis a very small tax on both imports and exports for financing the preparation of trade statistics, held, such measures were prohibited as being effectively equivalent to customs duties forbidden by the Treaty); Procureur du Roi v. Dassonville (Case 8/74, decided 11 July 1974) [1974] ECR 837 (importation from France into Belgium of Scotch whiskey properly certified as to origin and authenticity, under French law, but not complying with Belgian certificate of origin requirements, held, the Belgian rules were invalid, as being "indirectly" equivalent to a prohibited quantitative restriction and hence a disguised impediment to free trade between EU member countries); Humblot v. Directeur des Services Fiscaux (Case 112/84, decided 9 May 1985) [1985] ECR 1367 (French annual automobile tax based upon the power rating of the vehicle indirectly discriminated against foreign vehicles, because of the way the rating and the tax bands were established, held, invalid).

However, in EC v. Germany (Case 18/87, decided 27 September 1988) [1988] ECR 1-5427, it was held that where EU legislation itself mandates a border inspection, in this case live animals being imported into Germany, the member country may recover a reasonable monetary amount to defray the costs of the mandated inspections) and in Keck & Mithouard v. EC (Joined Cases C-267/91 and C-268/91, decided 24 November 1993) [1993] ECR 1-6097 it was held that local regulation of "certain selling arrangements" (in those cases a national ban on resale of goods at a loss) may be permissible, even though there may be some impact upon the overall volume of sales of goods from other member countries. Under the Keck formula, some national measures and prohibitions may be outside

the scope of Article 30 of the EU Treaty and outside the scope of the Dassonville indirect equivalent effect approach if (1) the national measures do not discriminate on the basis of the national origin of the goods and (2) if the national measures do not have a greater effect on foreign products than on domestically produced ones. The Keck and Dassonville approaches are sufficiently flexible and vague that specific situations tend to be resolved on the facts of each case. See, for example, the so-called "Mars Bar" case, Verein gegen Unwesen in Handel & Gewerbe Kiiln v. Mars (Case C-470/93, decided 6 July 1995) [1995] ECR 1-1923 (invalidating national legislation which viewed as misleading the labelling of ice-cream bars as being 10% larger than ones marketed elsewhere in the EU, but such labelling not making it clear that the product was offered at the same price as the smaller versions, the Court applying both the Keck and the Dassonville approaches and taking the view that consumers, even if likely to be misled, could be protected by means less restrictive on the free movement of goods).

Please also see the Cassis de Dijon "rule of reason" case, in the chapter on "European Legal Terms".

External Trade Issues.

Treaties With Non-EU Participants. The EU has entered into various treaties and conventions which have an impact upon trade, at the multilateral level and at the bilateral level. The most important of such multilateral treaties and conventions are the World Trade Organisation ("WTO") Agreements, including the 1994'General Agreement on Tariffs and Trade ("GATT"), the Agreement on Agriculture, the Anti-dumping Agreements, the Agreement on Subsidies & Countervailing Measures (the so-called "SCM Agreement") and the Agreement on Safeguards.

The EU also has a range of bilateral agreements with various non-EU countries. Among these are a number of Euro-Mediterranean Agreements ("EMAs") entered into pursuant to the 1995 Barcelona Declaration which set forth guidelines for the development of a Euro-Mediterranean free trade zone by the year 2010. Thus far, the EU has concluded EMAs with Egypt (ratification pending), Israel (1 January 1996, Council Decision 96/206), Jordan (ratification pending), the Palestinian Authority (1 July 1997, Council Decision 97/470, interim agreement), Tunisia (1 March 1998, Council Decision 98/238) and Turkey (1 January 1995, Decision of the EU-Turkish Association Council, customs union).

The EU has also granted unilateral market access to developing countries

from the African, Caribbean, and Pacific areas. (Please see "Lome

Convention" and the Cotonou Agreement, in the Chapter on "European

Legal Terms").

The judicial interpretation of EMAs tends to be similar to the interpretation of EU secondary legislation (described below), as regards the prohibition of tariffs, quantitative restrictions and equivalent measures. Opel Austria v. EC (Case T-l 15/94, decided 27 January 1997) [1997] ECR 11-39 (EEA analogy); Aprile Sri v. Amministrazione delle Finanze dello Stato (Case C-125/94, decided 5 October 1995) [1995] ECR 1-2919 (EFTA analogy).

EU Secondary Legislation On Specific Trade Issues.

EU secondary legislation in this area constitutes a comprehensive regulatory structure which covers several specific areas in considerable detail.

Community Customs Code. Regulation 2913/92 establishes the EU Customs Code which, together with its companion implementing Regulation 2454/93, contain the general rules and procedures which ensure the implementation of the tariff and other measures introduced at the EU level in connection with trade in goods between the EU and third countries; contain the general rules and procedures which ensure the implementation of the tariff and other measures introduced at the EU level in connection with trade in goods between the EU and third countries.

The Code sets forth various definitions (including regulations for determining the origin of goods) and sets forth the factors for determining the application, amount and imposition of export or import duties. These rules, taken together, formulate procedures and standards for the valuing of goods for customs purposes and rules for the importation, storage and customs examination of imported goods, including goods in transit. Special provisions relate to the drawback system and to free zones and free warehouses (Articles 166-182). The Code also provides customs procedures whereby all or part of customs duties may be exempted. For example, Article 130 describes the inward processing procedure and Article 145 describes the outward processing procedure.

Anti-Dumping Rules. Regulation 384/96 (also known as the "Anti-Dumping Regulation") (and its various amendments, including Regulations 905/98 and 1972/2002) is directed against dumped imports from countries not members of the EU. Dumping is defined in Regulation 384/96 (Article 1(1)) as involving the sale of any product where its export price to the EU is less than a comparable price for the like product, in the ordinary course of trade, as established for the exporting country (normally the country of origin but also may include intermediate countries). Dumping issues often need to be determined upon the individual facts and circumstances of each case, since terms such as "comparable price" and "like product" are susceptible to a range of interpretations and economic analysis, although Regulation 384/96 itself sets forth detailed rules regarding pricing, comparisons, dumping margins and other relevant factors, including the rules for EU investigations of alleged instances of dumping and the injury caused thereby. The European Commission has the responsibility to carry out investigations and to propose final measures which, when imposed by Regulations, add to the body of EU anti-dumping law.

Various decided ECJ cases also help to give an idea of the range of such cases, as they have been addressed by the Court. Ajinomoto Co. & NutraSweet Co. v. EC (Cases T-l59/94 & T-l60/94, decided 18 December 1997) [1997] (aspartame from Japan and USA); EFMA v. EC (Case T-121/95, decided 17 December 1997) [1997] ECR 11-2391 (urea from Czech Republic); Sinochem Heilongjiang v. EC (Case T-l61/94, decided 11 July 1996) [1996] ECR 11-695 (oxalic acid from China and India); NMB France v. EC (Case T-l62/94, decided 5 June 1996) [1996] ECR 11-427 (ball bearings from Singapore); Dysan Magnetics v. EC (Case T-l35/95, decided 14 March 1996) [1996] ECR 11-181 (microdisks from Canada, Indonesia, Macao and Thailand); Canon v. EC (Case T-l71/87, decided 10 March 1992) [1992] ECR 1-1237 (plain paper photocopies from Japan).

Anti-Subsidy Rules. Regulation 2026/97 (also known as the "Countervailing Duty Regulation") sets forth detailed rules designed to protect the Single Market against subsidised imports from countries which are not members of the EU. It (in conjunction with the provisions of the SCM Agreement) approaches this task by imposing an EU countervailing duty on such imported goods which cause injury to EU businesses and industry. The countervailing duty is calculated so as to offset ("countervail") any subsidy granted, directly or indirectly, for the manufacture, production, export or transport of any such product imported into the EU.

Regulation 2026/97 sets forth detailed definitions and rules to determine what is a "countervailable subsidy" (namely, a subsidy susceptible to EU countervailing duties) and what is a "like product" (to compare the impact within the EU of the imported products) and it applies equally to situations where the products are exported directly from the country where any such subsidy has been granted and to situations where the export took place from some intermediate country. The Regulation contains a useful list of export country measures which may constitute an "export subsidy", including direct subsidies contingent upon export performance, practices (including currency retention programs) which involve a bonus on exports, internal transport and freight charges on export shipments on terms more favourable than for domestic shipments, and/or any exemption, remission or deferral of direct taxes or social welfare charges if related to export activities. This list follows the provisions of the WTO SCM. As with anti-dumping, the European Commission has the responsibility to carry out anti-subsidy investigations and to propose final measures which, when imposed by Regulations, add to the body of EU anti-subsidy law.

As with Regulation 384/96, cases involving Regulation 2026/97 are usually highly dependent upon a detailed factual and economic analysis of the full (and often complex) background and circumstances of the matter at hand. See, for example, Descom Scales Manufacturing Co. v. EC (Case C-6/94, decided 11 March 1994) [1994] ECR 867 (describing circumstances warranting judicial grant of interim relief from countervailing duty); Technointorg v. EC (Case C-77/87, decided 9 April 1987) [1987] ECR 1793 (interim relief must be based upon showing that damage suffered is special to the applicant and that the balance of interests vis-a-vis appreciable injury to EU industry favour the applicant).

Similarly, with respect to indirect or oblique state aid: North Atlantic salmon matters (Regulation 1891/97: differentiated employers' social security contribution scheme); USA-FSC (WT/DS108/AB/R, 24 February 2000: forgoing revenue otherwise due); Indonesian automobiles (WT/DS54/R-WT/DS55/, 23 July 1998: exemption from luxury taxes).

Safeguards. Regulation 3285/94 (also known as the "Safeguards Regulation") brings EU procedures into line with the 1994 WTO "Agreement on Safeguards" (measures provided for in Article XIX of the GATT). This Regulation sets forth EU rules whereby member countries may implement safeguards against imported products which they deem to pose an imminent threat of serious injury to EU industry. The basic test set forth in the Regulation is that "serious injury" must be a "significant overall impairment in the position of [EU] producers of like or directly competing products". The Regulation sets up mechanisms for surveillance, investigations and appeals, provisional import duties and an array of other safeguard measures which may be needed to meet imports which pose problems for EU producers.

Trade Barriers. Regulation 3286/94 (also known as the "Trade Barriers Regulation") sets forth EU procedures designed to ensure the exercise of the EU's rights under various international trade rules, in particular those established under the auspices of the World Trade Organisation. For example, among other things, this Regulation describes the EU response to obstacles to trade in non-EU countries that have an injurious effect on EU industry and describes various measures to be taken by the EU to avoid injury from such obstacles. In this context, the regulation contains definitions of ""obstacles to trade", "adverse effect" and "injury" and sets up a grievance mechanism whereby EU member countries and private parties may make complaints to the EC and seek redress of alleged injuries arising from obstacles to trade.

Exclusive State Rights & State Aids. The central issue under this heading is the control of activities by member country governments which affect the level playing field which is a fundamental feature of the Single Market.

Article 86 of the EU Treaty covers two type of situations in which government activity may come under scrutiny. One type is where public undertakings (or enterprises) have been granted special or exclusive rights by a member country. For example, the case of France, Italy and the UK v. EC (Cases 188-190/80, decided 6 July 1982) [1982] ECR 2545 involved Directive 80/723/EEC (now Directive 2000/52/EC), designed to make publicly available financial information relating to the relationship between member country government and their public undertakings. The ECJ upheld the Directive and approved the very broad definition of "public undertaking" as being any enterprise or undertaking over which the public

authorities may exercise, directly or indirectly, a dominant influence and that this is to be presumed whenever a government holds all or a majority of the undertaking's capital stock, controls a majority of the votes represented by its voting securities or can appoint more than half of the members of its administrative, managerial or administrative bodies.

The other type is where any enterprise has been granted special or exclusive rights or advantages. See, for example, Merci Convenzionali Porto di Genova v. Siderurgica Gabrielli (Case C-179/90, decided 10 December 1991) [1991] ECR 1-5889] (statutory monopoly over unloading of ships at the port of Genoa exercised by private company, held, this amounts to a "dominant position" covered by Article 86); Bodson v. Pompes Funebres des Regions Liberees (Case 30/87, decided 4 May 1988) [1988] ECR 2479 (French municipalities could not grant special or preferential concessions regarding external services in connection with funerals and thereby prevent private enterprises from providing the same services).

Instead of dominance or outright ownership, a member state government may seek to assist some domestic industrial sector or particular business enterprise or government controlled business undertaking, only to find that Article 87 of the Treaty forbids such aid "in any form whatsoever". There have been many court cases under this heading, of which these may be taken as representative. Kwerkerij Gebroeders Van der Kooy v. EC (Cases 67/85, 68/85 and 70/85, decided 2 February 1988) [1988] ECR 219 (Dutch company which was only 50% government owned received preferential rates for the provision of natural gas, held, this was prohibited state aid and it was deemed action by the Dutch government); Executif Regional Wallon & Glaverbel v. EC (Cases 62/87 and 72/87, decided 8 March 1988) [1988] ECR 1573 (Belgian government aid to certain local glass producers, held, the EC could lawfully exercise discretion to exempt this aid, on the potential ground that the aid would enable the glass makers to adopt new technology which would reduce dependence for such technology on non-EU providers of the same and thereby be in the interest of the EU, but the ECJ found that the EC had abused its discretion under the facts of this case); Intermills v. EC (Case 323/82, decided 14 November 1984) [1984] ECR 3809) (Belgian government loans to local paper manufacture to help it through a period of financial difficulties, held, this was an impermissible form of state aid).

The EU has issued detailed guidelines which are of assistance in determining which state aids may and may not be permissible. Guidelines on National Regional Aid [1998], OJ C74/6, paragraph 3.6. The European Commission has authority to enforce the EU state aid rules and also has power to grant regulatory approval to EU member countries for certain types of state aids.

Interesting Europe-facts: Some useful Portuguese and Spanish employment law abbreviations:

Abbreviation Language Full English
    Transliteration Translation
CCT Portuguese contrato Collective
    colectivo de employment
    trabalho agreement
CNSDP Portuguese Caixa nacional National
    de seguros e insurance fund
    doencas for
    profissionnais professional
CNT Spanish Confederacion National
    nacional del employment
    trabajo confederation
CPT Portuguese Codigo de Code of
    Processo do employment
    trabalho procedure
FGS Portuguese Fundo de Salary
    garantia guarantee
    salarial fund
FGS Spanish Fondo de Salary
    garantia guarantee
    salarial fund
INEM Spanish Instituto National
    nacional de employment
    empleo institute
LPL Spanish Ley de Employment
    procedimiento procedure law
TT Portuguese Tribunal do Labour court
UGT Spanish Union general General
    de trabajadores employment

+ Some Scottish legal terms:

assoilzie decide in favour of
books of Sederunt records of the
  court of session
patrimonial loss compensatory
pursuer/defender plaintiff/defendant
resile withdraw from a
solatium damages for pain
  and suffering
WS (Writer to the lawyer, solicitor

Sample Database "Query"

From Chart, Pages 90-97

Untitled Page