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 UK businesses.
The free movement of goods applies to all EU 28 countries and binds them to the rules governing the free movement of goods from one member state to another.
The aim of free movement of goods is to create a dynamic, competitive market that benefits both consumers and producers and interlinks all the member states creating an interdependent union.
What is a free trade area?
A free trade area exists where custom duties, such as taxes etc, are removed between all the member states to allow all the countries of the EU to freely trade with each other without being overcome with taxes, quotas and other penalties.
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 EU) on importing on exporting goods.
A customs union
A customs 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 for the elimination of charges/ duties on goods originating in other EU member states and 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 EU.
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 EU is discrimination on the grounds of nationality shall be prohibited in all circumstances. This applies in 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;
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.