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One of the foundations of the original European Communities was free trade in certain goods (notably coal and steel). More recently, the EC has emphasized free movement of all goods (see FreeMovementOfGoods), and in the means of production of goods. One of the main methods for achieving free movement of goods has been legislation to abolish duties chargeable against nationals of one member state by another member state when goods cross a frontier.
This article is concerned with Arts. 25-27 of the ECTreaty, which call for member states to abolish duties and `charges having like effect'. These Articles do not prohibit member states from blocking imports altogether, although Arts. 28-31 might have that effect. Import restrictions and quotas are dealt with in AbolitionOfQuanititativeRestrictions.
The prohibition of duty-like charges as well as explicit duties is important: member states generally benefit collectively from free trade, but some benefit more if they can impose some control on which goods pass in and out of their borders. So a mere abolition of duties is not sufficient -- to ensure free trade member states must abolish all fiscal disincentives to cross-border commerce.
To be fair to the governments of the member states, the charges imposed on imports and exports were not always revenue-raising or protectionist -- sometimes they were imposed for creditable motives (protection of national art treasures, for example -- the Italian art (1968) case). Nevertheless, it would have thwarted the entire European program had the member states been able to get away with imposing what amounted to duties, in the guise of something unobjectionable.
Consequently, the Commission (see EuropeanCommission) and the ECJ have take an extremely broad view of what constitutes a `charge having equivalent effect'. That it is necessary to do so is clear from the ingenuity with which some member states appear to have tried to conceal their import/export duties. For example, in Commission v Italy (C-24/68), the italian government levied fees on imports and exports, which were to ostensibly to cover the costs of statistical data collection. The ECJ held that, in principle, a genuine service rendered by the state to the importer or exporter might not amount to a duty -- however, there had to be a genuine `exchange', that is, a business transaction with equivalent value given by both parties. Italy argued that the data collected was of benefit to importers and exporters, but the ECJ held that it was not of specific benefit to particular persons; there was no exchange.
In fact, the `exchange' argument has rarely succeeded, even in circumstances in which one might expect a bit of leeway to be given. In Bresciani (C-87/75) the Italian government sought to argue that the `exchange exception' ought to apply to fees charged for the veterinary inspection of imported livestock. The inspection was necessary for the protection of health, the fees charged were proportionate to the work carried out (and not the value of the livestock), and domestic producers were subject to similar burdens.
However, even here the ECJ was unprepared to budge from its entrenched `no fees' position. It argued that, although domestic producers were, indeed, subject to similar burdens, they were not subject to the same burdens. Inspections were not mandated, for example, at the same stage in production. So it was not possible to say for certain that domestic producers would not be favoured over importers.
In short, any financial penalty imposed on goods that cross a frontier is very likely to be ruled unlawful, with one exception. The ECJ has held (Commission v Germany (C-18/87); another case concerning veterinary inspection) that states can recover fees from importers in pursuance of satisfying mandatory obligations under EC law. In this case, the ECJ held that because the duty to carry out inspections was imposed on the state by the EC, the member state could recover the cost from the importer. The reason that this exception to the general `no fees' principle is allowed is that there is no question of protectionism on the parts of the member states, and all member states are equally burdened.
Although the ECJ does not normally stipulate what remedies are available to private individuals who are the victims of breaches of EC law (see RemediesInEULaw), it is now well established that a person who pays duties charged unlawfully by the state is entitled to have them refunded (San Giorgio (C-199/82)).
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