eu4journalists

Internal Market

3. Free movement of goods

Issues

• Harmonisation of VAT and Excise duties
• Markets being redefined by growth in e-commerce
• Consumer protection needs to be strengthened

The clearest achievements of the Union have come in this area. Significant non-tariff barriers have been dismantled, in particular as a result of the 1986-92 single market program. As a result, manufacturers of goods work to common standards, accepted by all member states. Mutual acceptance of testing and certification mean that goods need only be certified once to be valid across the EU. Harmonised regulations mean that member states cannot impose additional rules on top of common EU standards before goods are marketed in their country.

Manufacturers both within and outside of the EU know that they can produce their products to a single technical specification and sell them in the whole EU. Of course appearance (non-technical design ) and language requirements may vary from country to country, but such can be overcome. In short, the EU has largely succeeded in removing barriers to trade in goods that allowed companies in specific countries an unfair advantage.

For consumers, there are a number of barriers which may discourage purchases outside their home state, such as the inability to enforce a warranty, or lack of support in their mother tongue.

Tax rates may discourage or encourage cross-border shopping. This is particularly so in the case of sales of alcohol and tobacco. For example, many people travel from the UK to France, or from Sweden to Germany, to purchase large stocks of alcohol where excise duties are much lower. The purchase of such goods for “personal use” is allowed by EU law, but authorities in the ‘high-tax’ states are keen to discourage it.

With the growth of e-commerce, consumers are taking ever greater advantage of the ability to purchase goods from suppliers anywhere in the EU.

With respect to branded goods, where manufacturers try to control prices to consumers through designated merchants, there is growing trade in parallel imports. Middlemen purchase high-value goods in lower-cost markets and then sell them in other member states where the manufacturer-controlled prices are significantly higher. Test cases in the European Court of Justice have found that manufacturers cannot block this type of trade, but many will take great steps to limit it.