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«Russia and the World Community’s Respond to a Challenge of Instability of Economic and Legal Systems Materials of the International Scientific-practical Conference ...»

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In the EU, this accusation was first formulated by H. Rasmussen in On Law and Policty in the European Court of Justice: A Comparative Study In Judicial Policymaking (Martinus Nijhoff Publishers, 1986). The WTO Panels are definitely more restrained, but nevertheless the Appellate Body has also been accused of judicial activism on the grounds that it may have gone too far in submitting non-discriminatory restrictions to review; see Pauwelyn, ‘Rien ne Va Plus?’, 170.

Another reason for scepticism is that the test of non-discriminatory restrictions may not always be easy to apply. This is especially true in the EU, where it is not always clear which restrictions are subject to review nor what should be the outcome of a review, and it is thus unclear which restrictions are disallowed;

see sections 4-5 below. The consequence is that the state and the national courts – if these are making the test, which is often the case in the EU – may not know how to apply the test correctly.

Also, applying the test of non-discriminatory restrictions may lead to results that may not be acceptable to all those affected. Removing trade barriers will normally benefit imports and thus importers. This may not be popular with domestic industry, and the same is true when discriminatory rules are set aside.

However the result of setting aside non-discriminatory rules is that imported products and services, as well as service providers and establishments, will not be subject to national legislation in the state of importation or where they do business. For instance, it may be that imported goods are produced according to different process and production methods (PPMs), the goods may comply with different technical standards, or a service provider may be authorised under different rules than those applying in the state where the service is provided. A consequence of this is that consumers and others cannot be sure that the products they buy or the services they receive are of the standard they are used to.

There may be more competition and more goods and services to choose from, but at the same time consumers have to be more careful when making their choices. Therefore consumer organisations in particular may not welcome all the consequences of the removal of certain non-discriminatory restrictions. Another effect of removing non-discriminatory restrictions may be regulatory competition. Since foreign products, services providers, companies etc. may not be subject to all the national legal requirements in the state of importation or the state where they do business, they may be subject to a less burdensome regime than domestic products, service providers or companies. As a consequence, states will be under pressure to create a level playing field, and the only way to do this may be by lowering the regulatory burden for domestic industry to a level equivalent to that in other states. There have been signs of this kind of regulatory competition observable in the EU. Such scepticism has been expressed in both the EU and the WTO; see G. Davies, ‘Is Mutual Recognition an Alternative to Harmonisation? Lessons on Trade and Tolerance of Diversity in the EU’, in L. Bartels and F.

Ortino (eds.), Regional Trade Agreement and the WTO Legal System (Oxford University Press, 2006), p. 269; J.

P. Trachtmann, ‘Embedding mutual recognition at the WTO’, Journal of European Public Policy, 14 (2007), 780-799 at 783; and Hoekman and Kostecki, The Political Economy of the World Trading System, p. 343. For the different concepts of consumer interest applied by the Court, see S. Weatherill, ‘Recent case law concerning the free movement of goods’, Common Market Law Review, 36 (1999), 51-85.

For a general discussion of regulatory competition in the EU, see e.g. N. Reich, ‘Competition between legal orders: A new paradigm of EC law?’, Common Market Law Review, 29 no. 5 (1992), 861-896; and J.-M. Sun and J. Pelkmans, ‘Regulatory Competition in the Single Market’, Journal of Common Market Studies, 32, no. (1995), 67-89.

Some of these disadvantages may be overcome by harmonisation. For instance, if product standards are harmonised the consumer will know that the same standards apply no matter where the product is produced. Also, harmonisation will remove the discrepancies which may trigger regulatory competition.

Therefore it is often pointed out that if greater steps are taken to remove nondiscriminatory restrictions to trade, this should be combined with harmonisation efforts. 89 This may be possible in the EU, but it is more difficult in the WTO.

This is one more reason why the removal of non-discriminatory barriers is less advanced in the WTO than in the EU.

2. Moving towards reviewing non-discriminatory restrictions In what is now the TFEU, the basic freedoms ensure the free movement of goods, persons, services and capital. Some freedoms are formulated as prohibitions of national discrimination, such as the general prohibition of discrimination on grounds of nationality in Article 18 TFEU, the prohibition of discriminatory State monopolies of a commercial nature in Article 37 TFEU, and the prohibition of discriminatory taxes in Article 110 TFEU. However, the freedoms focusing on free movement of goods, workers and capital as well as freedom of establishment and freedom to provide services have a more open-ended formulation and may therefore both prohibit discrimination and some nondiscriminatory restrictions.

2.1.1. Free movement of goods The central provision ensuring the free movement of goods is Article TFEU which provides: ‘Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.’ The prohibition of quantitative restrictions includes discriminatory import restrictions which totally or partially restrict imports, such as quotas, import bans etc. 90 The provision also prohibits measures having equivalent effect, but at quite an early stage it was also interpreted so as to include certain nondiscriminatory restrictions. In its seminal judgment in the Cassis de Dijon case the Court established that: ‘Obstacles to movement within the Community resulting from disparities between the national laws relating to the marketing of the products in question must be accepted in so far as those provisions may be recognised as being necessary in order to satisfy mandatory requirements relating in particular to the effectiveness of fiscal supervision, the protection of the public health, the fairness of commercial transactions and the defence of the consumer.’ Thus national measures can be measures equivalent to quantitative restrictions, even if they do not discriminate against imports. The fact that regulations See J. H. H. Weiler, ‘Epilogue: Towards a Common Law of International Trade’ in J. H. H. Weiler (ed.), The EU, The WTO and the NAFTA: Towards a Common Law of International Trade? (Oxford University Press, 2000) p. 215; Davies, ‘Lessons on Trade and Tolerance’, 279; and Trachtmann, ‘Embedding mutual recognition’, 780-799.

See e.g. the definition given in Case 2/73, Geddo [1973] ECR 865, para. 7.

See Case 120/78, Rewe-Zentral AG [1979] ECR 649, para. 8.

differ from Member State to Member State is enough to create a barrier, and such barriers are only allowed if they can be justified. In its judgment the Court made it clear that, if goods lawfully marketed in one Member State are not allowed to be marketed in another Member State, there must be a justification.

The Court thereby made use of the principle of mutual recognition. Even though the judgment clearly indicated that Article 34 prohibits certain nondiscriminatory restrictions, it is debatable whether in this case the Court in fact moved beyond discrimination as it can be argued that the refusal to allow the marketing of a product produced according to equivalent rules in another Member State amounts to discrimination. Be that as it may, in its subsequent case law the Court confirmed that Article 34 can be applied to test all national measures that are capable of hindering trade between Member States, whether directly or indirectly, actually or potentially. 93 All types of rules have been reviewed, including rules on packaging, labelling, regulation of the advertising and marketing of goods, rules on Sunday trading etc. 94 The Court thus aimed to include a broad spectrum of nondiscriminatory restrictions, and there was a call for a limit to the extent to which non-discriminatory restrictions were subject to review. In the judgment in the Keck case the Court refined the interpretation of Article 34. 96 The Court stated that, in view of the increasing tendency of traders to invoke the provision to challenge any rule whose effect was to limit their commercial freedom, it was necessary to re-examine and clarify its case law. 97 The Court then introduced the distinction between what it termed ‘product requirements’ and ‘selling arrangements’. The former were defined as requirements to be met by goods, such as those relating to designation, form, size, weight, composition, presentation, labelling and packaging. 98 The Court explained that for these types of requirements it had already been made clear in the Cassis de Dijon case that goods lawfully marketed in another Member State should not be subject to rules governing these matters in the importing Member State, unless this can be justified. On the other hand, for rules falling within the category of ‘selling arrangements’, the previous case law was changed; such rules would See e.g. T. Connor, ‘Goods, Persons, Services and Capital in the European Union: Jurisprudential Routes to Free Movement’, German Law Journal (2010), 159-209, at 162; K. Nicolaidis and G. Shaffer, ‘Transnational mutual recognition regimes: Governance without global concern’, Law and contemporary Problems, 68 (2005), 263-317, at p. 271; and J. Snell, Goods and Services in EC Law (Oxford University Press, 2002), p. 55.

This broad definition was introduced by the Court in Case 8/74, Procureur du Roi v Dassonville [1974] ECR 837, para. 5.

For references to the case law see P. Oliver (ed.), Oliver on Free Movement in Goods in the European Union (Hart Publishing, 2010).

See e.g. E. White, ‘In search of the limits of Article 30 of the EEC Treaty, Common Market Law Review, no. 2 (1989), 235-280; and J. Steiner, ‘Drawing the line: Uses and abuses of Article 30 EEC’, Common Market Law Review, 29, no. 4 (1992), 749-774. Also several Advocates General have called for a limit to the scope; see e.g. Advocate General Van Gerven in his Opinion in Case C-145/88, Torfaen [1989] ECR 3851; and Advocate General Tesauro in his Opinion in Case 292/92, Hnermund [1993] ECR I-6787.

See Joined Cases C-267/91 and C-268/91, Keck and Mithouard [1993] ECR I-6097.

Para. 14 of the judgment.

Para. 15.

only infringe Article 34 if they could not pass a new test introduced by the Court – a test which had many similarities to a discrimination test. The Court explained that the reason for making a distinction between product requirements and selling arrangements was that if a selling arrangement is not discriminatory, it will not prevent foreign goods having ‘access to the market’ or ‘impede access any more than it impedes access of domestic products’. The consequence of the judgment was that the test of non-discriminatory restrictions no longer applied to national rules falling within the category of ‘selling arrangements’. Subsequent case law showed, however, that the two categories introduced by the Court in Keck did not cover all types of rules, and it was not clear how to fit all these rules (such as the regulation of the use of products, regulation of process and production methods etc.) into the new system.

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