The right to commence litigation in national forums must be given to the plaintiff by national law. In other words, European law has not (as yet) been interpreted to create national causes of action (основания для предъявления иска). What it does do, according to the “direct effects doctrine,” is give litigants the right to raise many issues (“Euro-defenses” and “Euro-offenses”) in national courts and tribunals. In doing so, individuals often function as guardians of the founding treaties. When challenging member state governments, private parties rely on the “vertical direct effect” of EU law. Americans might analogize this role to that of “private attorney general,” a law enforcement technique adopted in a number of United States statutes.

The direct effect (l’effet utile) doctrine is, to a very large degree, a product of jurisprudence of the European Court of Justice. When any of these measures are of direct effect, this impact generally commences from the date of its entry into force. But the direct effects doctrine is not automatically applied. Both the Council of ministers and the European Council tend to issue resolutions or declarations when there is a political consensus but no desire to adopt legislation. For the most part, the Court of Justice has held such acts incapable of creating direct legal effects in the member states.

Vocabulary Notes:

1. to commence litigation – начинать судебное разбирательство, рассмотрение дела в суде, судебное производство

2. private attorney general – частное лицо, выдвигающее обвинение по вопросу, имеющему общественную важность; частное лицо, действующее как обвинитель: an informal term usually used today in the United States to refer to a private party who brings a lawsuit considered to be in the public interest, i.e., benefiting the general public and not just the plaintiff. The person considered "private attorney general" is entitled to recover attorney's fees if he or she prevails. The rationale behind this principle is to provide extra incentive to private citizens to pursue suits that may be of benefit to society at large. (From Wikipedia)

3. law enforcement technique – правоприменительный метод, прием

4. vigilance – бдительность

5. jurisprudence – (зд.) судебная практика

6. to construe [kэns’tru:] – толковать, интерпретировать

Exercise 9. Suggest synonyms of the words and expressions in bold and translate them into Russian. Paraphrase the highlighted words in the text using the synonyms that better fit the context. Sometimes a more appropriate synonym can be found, and sometimes the words in the text are totally misused. Then discuss in pairs how and to what extent this text contributes to your knowledge about the direct effects doctrine of Union law.

to indicate
to demand
in respect of
to cancel
sphere
obligatory
to endow
in accordance with
to guarantee
to invoke
drawback

DIRECT EFFECT OF UNION RULES

As was briefly shown above, Union law does not demand that national courts raise of their own motion an issue as to a possible breach of provisions of Union law, where examination of that issue would oblige them to set aside the passive role assigned to them by going beyond the sphere of the dispute defined by the parties. However, where by virtue of domestic law, courts must raise of their own motion points of law based on obligatory domestic rules, which have not been raised by the parties, such an obligation also exists where binding Union rules are concerned. The situation is the same, if domestic law gives courts a discretion to apply of their own volition binding rules of law.

Indeed under the principle of co-operation laid down in the Treaty, it is for the national courts to make certain the legal protection which persons derive from the direct effect of provisions of Union law. The basic rule remains, indeed, that it is the national judge who is, in the first place, responsible for the implementation, application, and interpretation of Union law when the parties resort to it in disputes brought before him.

In a 2003 judgment the Court confirmed once more that in the case of a breach of a directive by legislative provisions or by provisions of collective agreements introducing discrimination contrary to that directive, the national courts are required to set aside that discrimination, using all the means at their disposal, and in particular by applying those provisions for the benefit of the class placed at a drawback and are not required to request or await the setting aside of the provision by the legislature, by collective negotiation or otherwise.

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Vocabulary Notes:

1. of one’s own motion / of one’s own volition – по собственному желанию, по своей инициативе

2. by virtue of – в силу, на основании, в соответствии с

3. at one’s disposal – в своем распоряжении

4. otherwise – (зд.) в иных случаях, при иных обстоятельствах

Speaking

Exercise 10. Choose any item and talk about it at length in pairs with follow-up questions. Practise using linkers to build a topic.

1. Direct applicability of EU law.

2. Direct effects doctrine of Union law.

3. Primacy of Union law.

4. Sources of Union law.

5. Application of EU law by national courts.

Linkers: To begin with; Let’s start with…; As to…; As far as … is concerned,…; In respect of…; Another point to make is …; By the way, …; Incidentally, …; Going back to …; What can be added is …; The emphasis must be put on…; Generally speaking, …; Frankly speaking, …; Obviously, …; Apparently, …; Moreover, …; Furthermore, …; However, …; Contrary to what has been said…; As was pointed out in …; Indeed, …; Hence the question: …; Consequently… ; In fact if not in law, …; The latter being referred to as …; It must be clearly understood that…; In other words, …; In addition, …; In regard to …; On the other hand, …; Smth reads as follows: …; etc.

Research

Exercise 11. Find the information about the case Francovich v Italy 1990) C-6/90 and work at it as at a project (a group of 3-4 students) or prepare a PowerPoint presentation.

Writing

Exercise 12. Write a mini-composition on one of the the topics in Exercise 10, using appropriate linking words to help structure a piece. Mind that the composition must contain 200-250 words.

Exercise 13. Write a summary of the text UNION LAW reducing it to 25 percent.

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Unit 5

THE FREE MOVEMENT OF GOODS

Discussion

1. Have you ever heard the term ‘common market’? In what context is it usually used? What does the term mean?

2. In what way does the free movement of goods differ from the free movement of persons? What legal aspects are involved in the issue?

3. What do you know about the Customs Union?

4. Is it profitable for the EU Member States to be within the Customs Union? What about its profitability for third countries?

Legal terms

1	free movement of goods	свободное движение товаров
2	customs union	таможенный союз (соглашение между двумя или более странами о снятии таможенных пошлин и устранении других барьеров для торговли между собой и введении общих ставок на товары, импортируемые из стран, не являющихся членами союза)
3	commercial policy	торговая политика (государственная политика в области управления торговыми потоками; в частности, политика в области ограничения импорта и стимулирования экспорта)
4	competition	конкуренция
5	economic area	экономическая зона
6	tariff barrier	тарифный барьер (для ограничения торговли)
7	state monopoly	государственная монополия
8	agreement between undertakings	соглашение между предприятиями
9	abuse of dominant position	злоупотребление господствующим положением
10	mergers and acquisitions	слияния и поглощения (корпоративные сделки по обмену акциями и т. п., результатом которых является создание укрупненных (часто транснациональных корпораций))
11	state aid	государственная субсидия
12	fiscal discrimination	налоговая дискриминация
13	customs duty	таможенная пошлина
14	common customs tariff	единый таможенный тариф
15	levy the duties on	взимать, взыскивать пошлины с чего-л.
16	free circulation of goods	свободное товарное обращение
17	invisible trade barriers	невидимые торговые ограничения, помехи на пути развития торговли
18	trading rule	правило торговли
19	internal/external taxation	внутреннее/внешнее налогообложение
20	charge	сбор, налог

THE FREE MOVEMENT OF GOODS

The term ‘common market’ was eliminated by the Treaty of Lisbon and, furthermore, it was nowhere described, as such, in any of the other Treaties, but it followed from their provisions, that it encompassed the ‘internal market’ and, possibly, various common policies such as the customs union, commercial policy and competition.

The internal market, on the other hand, is defined in the TEFU as, ‘an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of the Treaties’. The first of those freedoms – the free movement of goods – means that goods can circulate unimpeded across the whole Union. This freedom practically constitutes the point of departure of all the other freedoms and of most, if not all, of the common policies and activities of the Union. The central idea is that the whole Union constitutes one single economic area, similar to a national market, wherein trade can develop without obstacles, making, however, allowance for differences in development of certain economies.

This absence of obstacles is extremely significant since it is generally admitted that free trade contributes to the creation of wealth, i.e. employment and rising standards of living that are objectives of the Union.

The establishment of this single market required not only the elimination, between Member States, of all existing obstacles of free trade, i.e. tariff, as well as non-tariff barriers and indirect obstacles such as state monopolies, agreements between undertakings, abuses of dominant position, mergers and acquisitions, state aids and fiscal discriminations, it also called for the adoption of measures to prevent the creation of new barriers.

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Under the heading ‘free movement of goods’ the Treaty provides that ‘the Union shall comprise a customs union which shall cover all trade in goods and which shall involve the prohibition between Member States of customs duties on imports and exports and of all charges having equivalent effect, and the adoption of a common customs tariff in their relations with third countries’. It also provides that, ‘quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between the Member States’.

THE CUSTOMS UNION

The free movement of goods requires in the first place, as indicated, the creation of a customs union involving:

• the prohibition, among the member States, of all customs duties and of all charges having equivalent effect; and

• the adoption of a common customs tariff (CCT) in relation with third countries. Without this CCT, products from third countries would all enter the Union through the country with the lowest external tariff, since once inside, those products can circulate freely throughout the whole Union. This would ‘deflect’ trade from the other Member States.

By ‘goods’ must be understood products which can be valued in money and which are capable, as such, of forming the subject of commercial transactions. They are both industrial and agricultural goods, whether originating in the Member States or imported from third countries. Where imported goods are concerned, as soon as the import formalities have been complied with and all customs duties and charges have been paid, and not reimbursed, those imports are in free circulation just like Union goods.

‘Charges having equivalent effect’ have been defined by the Court as all charges demanded on the occasion or by reason of importation which, imposed specifically on imported products and not on similar domestic products alter their cost price, and thus produce the same restrictive effect on the free movement of goods as a customs duty.

Unless such a charge is a consideration for a benefit provided for the importer or exporter it is prohibited. The concept ‘charge having equivalent effect’ gave rise to an abundant case law and, in one of its first judgments, the Court stated that the Treaty provisions on this point create, for the citizens of the Union, individual rights which the national courts must uphold.

The CCT constitutes, in the first place, a measure of commercial policy towards third countries. It is interesting to note that actions undertaken by the Union for its internal functioning have repercussions worldwide. The CCT was adopted by a Council regulation, and gradually introduced in parallel with the elimination of the customs duties. Since that time, Member States no longer have jurisdiction over the duties they levy on the goods entering their territory from third countries. They may not modify them, nor interpret them, nor keep the proceeds, which now belong to the Union as own resources. Modification or suspension of CCT duties is an exclusive Union matter and is decided by the Council.

Mention should also be made of the possible exception to the CCT where tariff quotas at reduced rate or zero-rate and generalised preferences are provided for. It should be noted however that, from a commercial point of view, a reduction of customs tariffs is less important than the elimination of tariff trade within the Union itself.

In terms of trade, the creation of the Customs Union has resulted in shifts in the trade patterns, since industrial goods are sometimes less expensive for Union users and consumers when imported from other Member States than from third countries. Also trade among the Member States has grown much faster than trade between the Union and third countries. In relation to the latter, the Union also uses the CCT as an instrument to guarantee the effectiveness of its commercial and external policy.

Prohibition of quantitative restrictions

The elimination of customs duties and charges having equivalent effect is not sufficient to guarantee the free circulation of goods within the Union. There are indeed many other ways of hindering imports and exports; quotas are one such way, but they have since long been abolished among the Member States. The worst offenders are the so-called measures having equivalent effect to quantitative restrictions. These are all the measures which have an effect equivalent to quantitative restrictions on imports and exports, and are not covered by other provisions adopted in pursuance of the Treaties. They are often referred to as ‘invisible trade barriers’, since they are, generally speaking, difficult to detect and only discovered by their effects on trade. The latter is disrupted to the prejudice of traders and consumers alike and they must therefore be hunted down by all parties concerned.

The court has defined those measures as ‘all trading rules’ enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra Union trade. This means that the prohibition applies not only when trade is actually prevented, but already when it is simply made unnecessarily difficult. Secondly, it means that the hindrance does not have to be actual. It suffices that it can be shown that the possibility exists that interstate trade may be hampered. In other words, one does not have to wait till the measure has produced its ill effects. It is not necessary, either, that those trading rules have an appreciable effect on intra-Union trade. Thirdly, the word ‘indirect’ means that there is an infringement of the principle of the free movement of goods even when the hindrance is only indirectly attributable to the contested measure. This is the case when a measure applies to both national and imported products but, in practice, produces protective effects by favouring typical national products and, by the same token, operates to the detriment of certain types of products from other Member States.

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It is interesting to ascertain that the above-mentioned Court formula defining ‘measures with equivalent effect’ has also been used in various judgments applying the union competition rules. This similarity should not surprise, since the competition rules and the provisions concerning the Customs Union have an identical objective: the free movement of goods.

Prohibition of discriminating or protective taxation

No Member State may impose, directly or indirectly, on the products of other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products, nor any external taxation of such a nature as to afford indirect protection to other products. The above-mentioned prohibition supplements, within the system of the Treaty, the provisions on the abolition of customs duties and charges having equivalent effect. Their aim is to ensure free movement of goods between the Member States under normal conditions of competition by the elimination of all forms of protection which results from the application of internal taxation which discriminates against products from other Member States. What distinguishes a protective internal taxation from a charge having an effect equivalent to a customs duty is that the first is imposed on both imported and domestic products, whilst the second is imposed exclusively on the imported product.

The Court has defined as ‘similar’ products, those which have similar characteristics and meet the same needs from the point of view of the consumer. As for protective taxation, it affects products which, without being similar, are nevertheless in competition, even partial, indirect or potential, with national products. Although the Treaty refers explicitly only to imports, the prohibition extends, according to the Court, also to exports.

Reading Comprehension and Vocabulary Work

Exercise 1. Look through the text and answer the following questions.

1. What is the difference between the common market and the internal market?

2. Give examples of Union common policy.

3. What is understood by the term ‘free movement of goods’?

4. Why is the term ‘single economic area’ considered to be important in the context of the EU?

5. Give examples of direct and indirect obstacles of free trade mentioned in the text. Can you explain what policies or activities are meant by each of the terms.

6. Name the two most important aims of the Customs Union.

7. What is meant by the term ‘goods’ in the text above?

8. What economic measures are referred to as ‘invisible trade barriers’

Exercise 2. Suggest Russian equivalents of the following expressions. Use them in your own sentences.

A to follow from the provisions; to encompass the ‘internal market’; to circulate unimpeded; to contribute to the creation of wealth; to circulate freely throughout the whole Union; to ‘deflect’ trade from; to pay customs duties and charges; to reimburse; to be in free circulation; to alter their cost price; to produce restrictive effect; to have repercussions worldwide; to keep the proceeds; to hinder imports and exports; to favour typical national products; to extend to exports

B rising standards of living; elimination of all existing obstacles of free trade; charge having equivalent effect; adoption of a common customs tariff; quantitative restriction on imports; domestic products; abundant case law; suspension of CCT duties; intra Union trade; interstate trade; contested measure; Union competition rules

C in accordance with the provisions; on this point; in terms of trade; in pursuance of the Treaties; it suffices that; by the same token

Exercise 3. Answer the questions on the text.

1. Why is the free movement of goods so important for the Union?

2. What were the results of the establishment of the single market on the territory of the EU?

3. What are the functions of the Customs Union provided for in the Treaty?

4. What would the non-adoption of a common customs tariff lead to?

5. Are there any differences between imported goods and those originating in the Member States in the way they circulate within the territory of the EU?

6. How did the Court define ‘charges having equivalent effect’? Is it always prohibited?

7. What is the primary role of CCT? How was it adopted? What are the legal consequences of its adoption?

8. What has the creation of the Customs Union resulted in?

9. Can we say that an economic measure constitutes an invisible trade barrier if it makes trade unnecessarily difficult?

10. Give an example of an invisible trade barrier mentioned in the text.

11. Is it possible for a Member State to impose extra taxation on the products of other Member States?

12. What is the aim of the prohibition of discriminating or protective taxation?

13. What distinguishes a protective internal taxation from a charge having an effect equivalent to a customs duty?

14. What products are affected by protective taxation? What products are referred to as ‘similar’?

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