Examination of Module European Union Law
Internal Market
Prof. Dr. Thomas Eger
- Model answer -
Question 1:
a)
What is the difference between a Free Trade Area and a Customs Union?
Customs Union: All tariffs and quotas on trade between Member States are abolished
and common external tariffs are imposed on imports from outside (i.e. third countries).
Free Trade Area: All Tariffs and quotas on trade between Member States are
abolished,
but
there
is
no
common
external
tariff.
Both are stages of economic integration. Free Trade Area is the second stage, Customs
Union is the third stage.
b)
Explain the effects of trade creation and trade diversion.
Trade creation and trade diversion are both effects of a Customs Union. In both cases
the resources of a country are reallocated. Trade diversion is the negative effect, trade
creation the positive one.
Trade diversion is the effect that due to the discriminating tariffs consumers in the
domestic country are induced to buy the higher cost products imported from a partner
country inside the union instead of buying these products from the lower cost world
market.
Trade creation means the shift of consumption from the more expensive home
production to the cheaper products of a partner country.
Generally, this leads to the so-called production effect (i.e. the saving of real
production costs by shifting the production from the home to a partner country) and
the consumption effect (i.e. the increase in consumer surplus resulting from increased
consumption).
c)
What are the differences between Articles 30 and 110 TFEU, and why do you think
these differences exist?
The prohibition in Article 30 (no custom duties) is absolute, with no objective
justifications, and regardless of discriminatory effect (Commission v Italy, Diamond
workers).
Article 110 requires a discriminatory effect (Commission v Ireland; Humblot/Feldain)
and also appears that some defences exist (Commission v Greece).
Reason for difference: Applying the same approach to customs duties as taxation
would prohibit all taxation, which is obviously undesirable. Therefore necessitates an
effects based analysis of provisions. Distinction also reflects a desire on the part of MS
to maintain sovereignty over taxation.
d)
In what circumstances can the provisions of Articles 34 and 35 TFEU be deviated
from?
The taken action needs to meet:



The mandatory requirements (Article 36, Cassis de Dijon). List with
examples of objective justifications, and cases.
Proportionality (Cassis de Dijon, Commission v. Germany)
Equivalence (Henn and Derby, Conegate).
(Please select 3 out of 4 sub-questions)
Question 2:
a)
Describe some possible positive or negative effects of the free movement of workers
for the countries concerned.
Most important is the distinction whether there is a movement of homogeneous or
heterogeneous labor!
Immigrant countries:
With homogeneous labour, loss to the existing working force, gain to the capital
owners. With heterogeneous labour, also the existing working force may win.
Emigrant countries:
With homogeneous labour: gain to the remaining working force, loss to the capital
owners. With heterogeneous labour, risk of brain drain.
b)
What are the possible problems if migration is not induced by productivity differences,
but by differences in the social welfare systems?
Two negative consequences may result:
Firstly, labor force is induced to emigrate even though its marginal productivity is
lower in the country of destination than in the country of origin.
Secondly, the social welfare systems in the country of destination get under pressure.
c)
Explain the importance of the Bosman judgement for the free movement of workers.
The Bosman judgement dealt with two aspects: a rule that in a (football) team not
more than three foreigners were allowed to play and the transfer fee that had to be paid
by a player`s new club to their old one in case of a change although the contract of the
player had expired.
Important findings of the decision are:






d)
Football players are workers in terms of EU law
The limitation of three foreign players per team is a discrimination based on
nationality and therefore illegal
Transfer fees (after an expired contract) are an obstacle for the free movement
of work even though it is a non-discriminatory one
Non-discriminatory obstacles are possible, but need to be proportionate
The transfer fee wasn´t proportionate and therefore illegal
Not just the Member States but also private entities are subject to the rules for
the free movement of work
How does EU law regard jobseekers and unpaid workers for the purposes of Article
45? Does the treatment of jobseekers by the ECJ have any basis in the treaties?
The definition of worker logically includes jobseekers (Antonissen). However, ECJ
appears to have created a second tier of worker (Antonissen, Lebon) with fewer rights
(leave to remain, tax and social advantages, etc) which does not appear to have any
basis in the treaties.
ECJ has ruled that it does not matter whether or not what you are paid provides
minimum level of subsistence (Lawrie-Blum) provided that you receive something in
exchange for it (Steymann). However, the requirement of remuneration means that
volunteers are not workers for the purposes of EU law.
(Please select 3 out of the 4 sub-questions)