Part III
Substantive Law

13. Free Movement of Goods I: Negative Integration  

Introduction

From the very beginning, the central task of the European Union was the creation of a ‘common’ or ‘internal’ market. This is ‘an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured’. The Union’s ‘internal market’ would thus comprise four fundamental freedoms and involve ‘the elimination of all obstacles to intra-[Union] trade in order to merge the national markets into a single market bringing about conditions as close as possible to those of a genuine internal market’.

The economic advantages of uniting various national markets into a common market are manifold. Economic growth and efficiency gains will result from a better division of labour between nations through which comparative advantages can be exploited. States have however not unconditionally followed the promises of free trade in the past. On the contrary, the better part of the history of Europe is a history of economic ‘nationalism’. Each State has been ‘protective’ of its own national economy and erected trade barriers, such as ‘customs duties’ or ‘quantitative restrictions’. The elimination of such national ‘protectionism’ was the primary aim behind the creation of the EU ‘internal market’.

How could the Union create a ‘single’ internal market out of ‘diverse’ national markets? To create a common market, the EU Treaties pursue a dual strategy: negative and positive integration.

The Union was first charged to ‘free’ the internal market from unjustified national barriers to trade in goods, persons, services and capital; and, in order to create these four ‘fundamental freedoms’, the Treaties contained four prohibitions ‘negating’ illegitimate obstacles to intra-Union trade. This strategy of negative integration is complemented by a – second – strategy: positive integration. The Union is here charged to adopt positive legislation to remove obstacles to intra-Union trade arising from the diversity of national legislation. For that purpose, the Treaties conferred a number of legislative ‘internal market’ competences to the Union. The most general of these competences can be found in Title VII of the TFEU; and the most important provision here is Article 114, which entitles the Union to adopt harmonisation measures that ‘have as their object the establishment and functioning of the internal market’. The EU Treaty provisions governing the internal market are set out in Table 13.1.

Chapters 13 and 14 will, respectively, explore the spheres of negative and positive integration in the context of the free movement of goods. The free movement of goods has traditionally been the most important fundamental freedom within the internal market. Chapter 13 here analyses the constitutional regime of ‘negative integration’; and in many respects, that regime has been ‘path-breaking’. It has for a long time provided the general ‘model’ that would be followed by the other three freedoms. Section 1 therefore uses the free movement of goods provisions to introduce and present the general jurisdictional problems governing all (!) four fundamental freedoms and the ‘structure’ of negative integration generally.

Sections 2–4 subsequently concentrate on the specific substantive regime for goods. This regime is – sadly – split over two sites within Part III of the TFEU (see Table 13.2). It finds its principal place in Title II governing the free movement of goods, which is complemented by a chapter on ‘Tax Provisions’ within Title VII. With regard to goods, the Treaties expressly distinguish between fiscal restrictions and regulatory restrictions. Section 2 deals with fiscal restrictions, that is: pecuniary charges that are specifically imposed on imports. By contrast, regulatory measures are measures that limit market access by ‘regulatory’ means, and section 3 explores the multitude of possible regulatory restrictions, such as product requirements. Section 4 finally looks at possible justifications for such regulatory restrictions.

Footnotes

  1. See ex-Art. 2 ECSC and ex-Art. 2 EEC. The latter stated: ‘The Community shall have as its task, by establishing a common market and progressively approximating the economic policies of Member States, to promote throughout the Community, a harmonious development of economic activities, a continuous and balanced expansion, an increase in stability, an accelerated raising of the standard of living and closer relations between the states belonging to it.’ The notions of ‘common market’, ‘internal market’ and ‘single market’ are here used interchangeably. On the history of each specific expression, see K. Mortelmans, ‘The Common Market, the Internal Market and the Single Market: What’s in a Market?’ (1998) 35 CML Rev. 101. 
  2. Art. 26(2) TFEU. 
  3. Case 15/81, Gaston Schul Douane Expediteur BV v. Inspecteur der Invoerrechten en Accijnzen, Roosendaal [1982] ECR 1409, para. 33. 
  4. The two classic studies here are A. Smith, Wealth of Nations (Oxford University Press, 1998); and D. Ricardo, The Principles of Political Economy and Taxation (Dover Publications, 2004). 
  5. J. Pinder, ‘Positive and Negative Integration: Some Problems of Economic Union in the EEC’ (1968) 24 World Today 88. 
  6. Art. 114 TFEU.