The European Union has managed to come up with a uniform way of dealing with goods and services that flow through the borders of the member states. In the economic sense, the union has formed a single market with the characteristics of a customs union. This means that they have come up with a free trade area and a common external tariff. What is the basis of the formation of the European Union? The fluidity in the flow of the factors of production is the major motivation for the common market. The member states have collectively referred to these factors of productions as the four freedoms which include the free movement of people, capital, services, and goods. To achieve total freedom, the European Court of Justice has been engaged in several legal tussles whereby other forms of levies that are not customs union per se but are likely to have the same impact have been identified and banned as well. In this paper, these levies which have been referred to as charges having an equivalent effect will be discussed as well as the themes emerging from these charges and the legal implications of a charge being found to have an equivalent effect to duties. The criteria for identifying charges with equivalent effect will also be examined.
To start with, in the case of the European Commission v Italy, the theme that emerges is absolutism in the enforcement of the regulations about duties and charges having an equivalent effect to duties. In this particular case, the Commission was very categorical that in pursuit of the common market regulations, the element of non-state imposition of levies or charges having an equivalent effect as duties does not make these charges differ from duties. They still fall into the category of charges having an equivalent effect and therefore unacceptable under the European Union law.
The case of the Commission v Italy also brings up the theme of frontier crossing. In this particular case, when goods that are either domestic or foreign are subjected to a charge for the reason of crossing a frontier, the charge qualifies as a charge having an equivalent effect as a duty. This, therefore, makes the charge prohibitive to the objectives of the common market and an obstacle to the application of the Union law. What happens when a charge is found to be having an equivalent effect to a duty?
Legally, the realization that a charge has an equivalent effect as a duty is followed by the legal advice by the European Commission through the European Court of Justice to remove the concerned charge. Failure to comply is followed by procedural but aggressive legal action that brings the European Court of Justice and its allied structures against the individual, organization, or member state that is responsible for the charge having an equivalent effect. How does the European Union identify charges that have an equivalent effect?
The criterion for the identification of charges with an equivalent effect is threefold, and it seeks to tell what a charge having an equivalent effect is not. First, a charge is not having an equivalent effect if it is imposed in fulfillment of the law laid down by the European Union. This is what came out of the case of the Netherlands v Bauhuis. Also, a charge that is supposed to meet the services rendered to the goods or services being procured is not considered to be an equivalent effect as a duty. The case of Denmark v the Commission made this clear. And lastly, if the charge is according to the established standards for all domestic and foreign goods, then it is not considered to be having the effect of duty. This was made clear in the case of Denkavit v France.
In conclusion, the aspect of charges having an equivalent effect to duty has the themes of absolutism in duty elimination as well as frontier checking. Legal implications of charges with an equivalent effect to a duty include lawsuits and the criteria for identification tells us what a charge having the effect of duty is not.
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