An Analysis of EU Legislation and ECJ Jurisprudence on the Free Movement of Goods

The principle of free movement of goods is one of the most fundamental principles of the EU which facilitating deeper economic integration and promoting efficient cross-border trade. This principle is regulated in Articles 28-30 and 34-36 of the Treaty on the Functioning of the European Union (TFEU) and also further elaborated by the case law of the European Court of Justice (ECJ). Both EU legislation and decisions of the European Court of Justice aim to support economic integration through free movement of goods within the Union.

Articles 28-30 of the Treaty are aimed at removing non-financial technical barriers to the free movement of goods. The importance of this Article lies in its breadth. Article 28 covers a wide range of practices, from customs formalities to government propaganda campaigns in favor of domestic products, even to the definition of additives in food, for example, which does not differentiate between domestic and imported products. On the other hand, article 34 prohibits quantitative restrictions on imports as well as measures having equivalent effect, while Article 35 extends similar prohibitions to exports. Collectively, these provisions aim to eliminate protectionist tendencies among Member States and ensure equitable market conditions.

The ECJ first interpreted the concept of “measures equivalent to quantitative restrictions” under Article 28 in the 1974 Dassonville judgment. In this framework, the ECJ defined measures equivalent to quantitative restrictions as “all trade rules imposed by Member States which are capable of affecting, directly or indirectly, already or potentially, intra-Community trade”. While the Court has adopted a very broad interpretation here, it has also stated that an unequal and unfair national practice may constitute a limit to the scope of the Article if it is reasonable. With this statement, the Court has also recognized a “rule of reason” in the famous Dassonville formula. Although the Article is considered to have direct effect, it has been interpreted in such a way as to impose obligations only on Member States, which may have vertical direct effects.

Directive 70/50 issued by the Commission on the implementation of Article 28 also attempts to define the concept of measures equivalent to quantitative restrictions and to provide a non-exhaustive list of the situations that fall within its scope. Accordingly, setting minimum or maximum prices for imported goods, the obligation to have an agent or representative in the importing country, setting special payment terms for imported products, conditions regarding the stockpiling of goods, etc. may be considered within the scope of equivalent measures. Furthermore, the Directive provides that measures relating to the marketing of goods, in particular with regard to the shape, size, weight, presentation, etc., which, although applied equally to domestic and imported products, have an impact on the free movement of goods between Member States in such a way that their effects exceed the extent required by commercial rules, shall also be incompatible with Article 28.

Nonetheless, the principle of free movement is not absolute. Article 30 of the Treaty provides an exception to the elimination of quantitative restrictions set out in Articles 28-29. According to the Article, “The provisions of Articles 28-29 shall not preclude restrictions or prohibitions on imports and exports justified by reasons of public morality, public order, public safety, the protection of the health and life of persons and animals or the protection of plants, national wealth of artistic, historical or archaeological value or of commercial and industrial property. However, such prohibitions or restrictions shall not be applied in such a manner as to constitute arbitrary discrimination or disguised restriction of trade between Member States.”

Like all exception clauses, however, Article 30 must be interpreted narrowly. Likewise, general economic grounds are not valid under Article 30. The principles of “proportionality” and “alternative means” are important in the application of the Article: the restrictions imposed on the imported product must be proportionate to the risk posed by the product and, at the same time, the interest to be protected cannot be protected by less trade-restrictive means. The burden of proof on both issues falls on Member States.

These derogations are stringently circumscribed by the principle of proportionality, a doctrine elucidated in cases such as Keck and Mithouard (Cases C-267/91 and C-268/91). In Keck, the Court refined its approach by differentiating between product requirements, which are subject to scrutiny under Article 34 due to their inherently restrictive nature, and selling arrangements, which may escape such scrutiny if they apply uniformly to all relevant traders.

The principles of harmonization and the rule of reason play significant roles in addressing the complexities of balancing free movement of goods with legitimate national interests. Harmonization, as pursued under Article 114 TFEU, seeks to align divergent national standards and technical regulations, thereby eliminating barriers that arise from inconsistent legal frameworks. This ensures that goods meeting unified standards can circulate freely across Member States without the need for further adaptation. On the other hand, the rule of reason, established through ECJ jurisprudence, provides a nuanced approach by allowing certain restrictions on free movement if they are justified by overriding public interest objectives, such as consumer protection or environmental preservation. However, these restrictions must satisfy strict conditions, including proportionality and necessity, ensuring that they do not constitute disguised protectionism. Together, harmonization and the rule of reason embody the EU’s dual commitment to fostering economic integration while respecting legitimate national concerns.

Even though having come a long way, there are still restrictions to the free movement of goods in the internal market of the EU. Despite the legal safeguards enshrined in the TFEU and ECJ rulings, barriers to the free movement of goods persist. Divergent national regulations, technical standards, and certification requirements frequently act as de facto trade barriers. To address these challenges, the EU has pursued harmonization measures under Article 114 TFEU, aiming to align national standards and mitigate discrepancies. The ECJ remains vigilant in adjudicating cases that blur the line between legitimate public interest objectives and covert protectionism.

In conclusion, the interplay between EU legislation and ECJ jurisprudence creates a comprehensive framework that supports the free movement of goods while accommodating legitimate national interests. However, the persistence of lawful restrictions and practical impediments underscores the necessity for sustained legal vigilance and ongoing harmonization efforts to achieve an optimally integrated internal market.