Free movement of Goods
Many businesses succeed by buying and selling goods to other countries. Whether the business is a manufacturing company or a supply chain, the free movement of goods is an essential feature of many of our UK businesses.
The free movement of Goods applies to all European Union countries, These include all the 27 countries that have signed up to the European Union and are therefore bound by the rules governing the free movement of goods from one member state to another member state.
By allowing the free movement of goods we create a dynamic, competitive market that benefits both the consumers and the producers and interlinks all the member states creating an interdependent union.
What is a Free trade area?
A free trade area exists where all the custom duties such as taxes etc are removed between all the member states to allow all the countries of the European Union to freely trade with each other without being overcome with taxes, quotas and many more penalties.
Countries that are members of a free trade area have the power to create their own external policies including any duties payable by third countries (those outside the European Union) on importing on exporting goods.
A custom Union
A custom union creates a common custom tariff. This occurs where the same charge is payable on goods entering the customs union regardless of where they have been imported from.
The Establishment of an Internal Market
A common/ Internal market is where a customs union provides not only for the elimination of charges/ duties on goods originating in other EU member states but also on goods originating in third countries which are in free circulation within the EU common market on which duties/ charges have already been paid.
The charges payable on goods imported from outside the EU will be fixed by the European Union.
Discriminatory taxation will not be accepted in the free movement of goods
No member state shall impose either directly or indirectly any internal taxation of any kind on the producers of other member states in excess of the taxation that they impose on their own products.
A main objective of the European Union is discrimination on the grounds of nationality shall be prohibited in all circumstances. This applies in just the same way in relation to importing and exporting goods.
All goods will be subject to the same internal taxation regardless of where they have originated. The only difference involves the external systems of charges.
On what grounds can imports or exports be restricted?
Member states cannot restrict imports or exports unless there is a justification on the basis of:
Public morality, policy and security
The protection of health, life of humans, animals or plants
The protection of natural treasures possessing artistic, historic or archaeological value
The protection of industrial and commercial property
If any of these reasoning’s are used as a justification for restricting the import or export of goods into or out of a particular country they must be justified to the extreme.
These reasons cannot be used as a means of arbitrary discrimination or as a disguised restriction on trade between different countries.
What is a quantitative restriction?
A restriction of this nature limits the amount of products that can be imported or exported into/ out of country.
Quantitative restrictions would include quotas (a physical limit on the amount of goods allowed to be imported /exported), bans on imports and exports, and also any form of licensing system.
Quantitative restrictions often discriminate against imports and are therefore considered a barrier to free trade within the European Union.
The concept of proportionality
Any measure taken by a member state to control the free movement of good into the country and also out of the country must in any case be proportionate.
Where a product has been lawfully and freely produced and marketing within a member state it should be freely capable to circulate around all member states of the European Union.
The rule of reason
Where a rule is indistinctively applicable (those rules that can apply to imports or exports) and they restrict trade in some way, they may still be acceptable if they satisfy certain requirements such as:
The effectiveness of fiscal provisions
The protection of public health
The fairness of consumer transactions or
The defence of the consumer