All right, the first freedom we're going to look at in depth is the free movement of goods. Before we dive into the actual freedom, it's always good to have a look at where the freedom is organized in the treaty, and I will do that for every one of the freedoms that we're talking about. about.
You will find the free movement of goods in title two of part three of the Treaty on the functioning of the European Union and we learn a couple of things from those articles and I will show you in this video First of all, how the free movement of goods is organized, what the idea is behind the free movement of goods, and second of all, how the prohibitions, because remember we are going to talk about negative integration, how these different prohibitions find their way into the treaty. Actually the free movement of goods is more or less defined by Article 28. It says that the free movement of goods shall take the form of a customs union. customs union that comprise all trades in goods, goods that originate in the member states and also goods that originate outside the member states but that are brought in free circulation. I'll talk about that more in a second.
A customs union, as you may know from previous courses, means that there is free movement of goods between the participating member states, but that there is also a common external tariff. So that means that from the viewpoint of a producer from a third country from outside the European Union it doesn't matter whether a producer brings that good into the European Union via Belgium or via Greece for example that's exactly the same set of rules. As I said, it comprises both goods that originate in the European Union, which may speak for itself, but it also comprises goods that are, that originate outside but that are brought in free circulation.
And that is where Article 29 comes in, because Article 29 defines when goods are brought in free circulation. And it says products coming from from a third country shall be considered to be in free circulation in a member state if the import formalities have been complied with and any customs duties or charges having equivalent effect which are payable have been levied in that member state and if they have not benefited from a total or partial drawback of such duties or charges. So that means that if a good is lawfully brought into the European Union through the common external tariff.
that is the same for all member states and it's brought lawfully into one of the member states, it will then be regarded as a good that more or less originated in that member state and that benefits from the rules on the customs union that are enforced between the member states. That is very different when it comes to persons. So when we get to persons, there is a huge distinction between, on the one hand, how goods from the rest of the world are dealt with, and how persons from the rest of the world are dealt with. Before we go into the actual prohibitions that are laid down or the types of prohibitions that are laid down and that will form the basis of the further discussions and the further videos that are coming, it's perhaps good to think for a moment about what a good actually is. It might speak for itself.
And it more or less does. So what is a good, according to your gut feeling, is normally a good within the meaning of the articles in the treaty. explained is in the art treasures case where it said that a good is any object that can form the subject of a commercial transaction.
So basically anything that can be bought or sold. And for 99.9% of all the cases, it will speak for itself that a certain item that you are dealing with is a good. If you think about borderline cases, there are a couple in the body of case law of the Court of Justice of the European Union.
And they, at least the two I want to mention here, are both somewhat older. They are. There is a case that deals with a lottery ticket, where the court actually argued that The lottery ticket as such is not a good because the ticket, the piece of paper, is only a receipt or a piece of evidence for a claim that you might have were you to win the lottery.
And along similar lines, the court has also ruled that. A fishing license, for example, is not a good because the piece of paper or nowadays the piece of plastic that would form your fishing license is not a good per se or even if you think about it with a lottery ticket, even if you're able to sell it. because it's not the object that counts but it's the claim that lies behind it.
So that is basically what borderline cases are and within these two situations and also if you think about more modern borderline cases certain non-tangible objects things like objects you may have collected within a video game for example would more likely to be dealt with under the free movement of services rather than free movement of goods. So we're looking for objects that can form the subject of a commercial transaction. So those objects both that originate in member states and that originate outside member states, but are brought into the customs union as such by being in... free circulation through Article 29 are the subject of the free movement of goods. The next step then is to look at how does the treaty regulate the free movement of goods.
And I said in a previous video that the treaty chooses different ways for different freedoms. And what the treaty has chosen, or what the drafters of the treaty has chosen, the treaty doesn't choose for itself, but what the drafters of the treaty have chosen with regards to free movement of goods, is to prohibit a number of measures that a state would normally be able to take to regulate international trade. So thank you.
about this if a state wants to discourage buying products that were made outside of that member state it can basically make them more expensive more expensive than they would need to be in a deregulated free market where the interplay between supply and demand would lead to what economists call an equilibrium price so basically a market price of that particular good. The state can intervene and a state can intervene to make such a product more expensive than it needs to be. It can do that directly by just imposing a surcharge on the actual price of that good for no other reason than that good moving into the territory of that particular member state. We call those import duties or customs duties.
If you ever ordered products over a certain value outside the European Union, in China for example, you may have run into this. You may have run into the situation that you would have to pay a customs duty in order to abide by the rules that are in force. And the sole purpose of that customs duty is to make that good more expensive, to basically discourage you from buying that good, from looking for a domestic alternative.
And if you don't, if you're not deterred by the customs duty, it's free extra money for the state because it will flow into the revenues of the state. So that's the direct way, by just imposing an amount of money. There's a more indirect way, and that basically also fiddles about with this interplay between supply and demand.
But if you lower the supply as a state by giving a certain measure... what we then call a quantitative restriction or quota, then you make sure that there is actually less of that product. And what happens if supply is lower than demand, then price will necessarily go up. And In that sense, that's more indirect because that more or less creates a situation where the market price cannot be achieved. So those two measures...
Customs duties on the one hand and quantitative restrictions on the other hand are the two ways in which a state can generally speaking control the influx or outflux for that matter of goods that either originate in the case of influx or If a state wants to discourage the export of its own domestic products to other states, then it can also do that via a more direct method by imposing a charge on that, a charge in money, or in a more indirect way where you fiddle about with the supply side of things through a quantitative restriction by limiting the amount of a certain product that can move in or out of a member state. And it's exactly those two measures that the treaty drafters have chosen to mimic in the treaty. So the two things that are prohibited within the free movement of goods for states are actually the imposing a customs duty or As the treaty also expands on that, so-called charges have an equivalent effect, and that's Article 30 of the Treaty on the Functioning of the European Union, and it has chosen to... prohibits the imposing of quantitative restrictions. So that second more indirect measure.
And it has also expanded that by saying that also applies to measure having equivalent effect. In the course of these videos on free movement of goods we will focus almost entirely on import situations. The treaty also provides for rules on export and where that is important or where that differs from the rules on imports I will explicitly deal with them.
But import situations or control Rolling import situations are the situations that actually occur most. So in the videos to follow we will dive in separately into first Article 30 on what we call financial restrictions and then Article 34 on the quantitative restrictions and the measures having equivalent effect. So that's generally the situation in which we deal with the free movement of goods. So we have a customs union that applies to all domestically produced products and to all products that originate from outside the European Union that have gone through the common customs tariff.
And we have in the treaty actually two main prohibitions that intertwine with the two measures that a state normally takes to regulate trade in goods, namely financial restrictions on the import of those goods. or quantitative restrictions on the import of those goods. Well, I will dive deeper into those two different ways of trying to influence the trade in goods, and we'll start with financial restrictions. So see you in the next video.