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Brief 480658
This essay will assess the efficacy of the principle of mutual recognition.
Mutual recognition was established in Cassis de Dijon, where the European Court of Justice (ECJ) sought to resolve the problem regarding standard for products moving through the internal market. Due to the different standards required and accepted in the various Member States (MS), it was problematic for exporters to market their products uniformly through the Union without having to manufacture and market them under different standards in order to accommodate the various requirements existing in MS. The existing differences caused the markets in the smaller MS to be at a disadvantage and unable to compete fairly unless the European Union (EU) had established harmonising measures. In turn, the process of harmonisation was hindered by the fact that product development moved faster than the capacity of the EU institutions to effect harmonisation.
Cassis determined that products marketed and manufactured lawfully in one MS should be recognised as such throughout the Union, thus they could be freely marketed within any other MS: the principle of mutual recognition. Nevertheless, the ruling in Cassis also recognised that there are certain mandatory requirements in some MS that could not be overlooked. Thus, the ECJ also developed the rule of reason, under which derogations could take place, allowing MS to reject products being imported into their territory where they did not satisfy national standards, as long as the rejection was not discriminatory.
The consequence of this approach was the creation of a mediating mechanism between two conflicting MS, making it possible to promote effective trade within the internal market whilst at the same time, allowing MS to maintain their own legal requirements. However, effectively, although mutual recognition places the choice for regulation on the country of origin, it places tolerance for that choice on the importer MS. This makes the principle far from effective in promoting free trade because as a concept it is too abstract and open-ended, too dependent on the willingness of the relevant authorities of the MS to accept or reject the product by deferring to domestic law and requirements, which tend to be favoured and protected.
The ability of MS to derogate from mutual recognition on grounds of consumer protection and public health makes it a principle based on minimum approximation and one that it neither automatic nor unconditional. Arguably, this approach was necessary in order to avoid direct and illegitimate interference over politically charged issues such as the right of the MS to protect the well-being and health of its citizens.
Nevertheless, from the legal point of view, the scope of mutual recognition is unclear, and the ECJ decisions have been inconsistent, creating legal uncertainty. In Cassis, the ECJ stated that mandatory requirements are not a closed class, yet, in cases such as Campus Oil the ECJ has been reluctant to expand the scope to justify derogation on the grounds of mandatory requirements, imposing limits on the public interest objective. Despite that, in Bellamy and English Shop, the public interest objective was construed to allow MS to give it precedence over imported goods. This makes the scope of derogation wide but its width is not fully determined.
Arguably, the main justification for derogation from mutual recognition remains consumer protection as seen in the German Beer case, where the ECJ recognised that consumers should be protected in respect of the ingredients used in a product, but the ECJ was also quick to point out that it was disproportionate to reject the import of the product as consumers could be protected through labelling to make them aware of the ingredients. A confusing decision because labelling is subject to justification.
Further limitations to mutual recognition exist under Article 36 TFEU, which contains the principle of 'arbitrary discrimination' by which MS are prevented from using derogations for covert protectionism. Yet, it can be argued that the effect of mutual recognition is inherently geared towards protectionism, which creates tensions. Davies has argued that mutual recognition is only apparently based on local regulatory diversity, but being a principle with a great deal of failings because of being heavily qualified, in fact, it is a principle used to justify centralisation. Thus, he defines it as a 'stalking horse' for harmonisation. His view is also reflected by Tridimas, who states that mutual recognition is a temporary principle, only to be relied upon on the absence of harmonising measures and only until harmonisation is imposed.
Looking at the procedure established by the EU to deal with mutual recognition disputes, such views are justified. The initial procedure consists of written notification to the Commission by the importer MS who is refusing to allow the goods into its territory. Reasons must be given for the derogation, and this applies whether the MS is basing the derogation on the grounds established in Cassis, or on Treaty grounds. The accompanying legislation enacted to control mutual recognition then takes effect: Directive 2015/1535 exerts ex ante action and triggers an early warning system in order to prevent the derogating MS from introducing national measures to justify the derogation of a particular product. This is followed by the post facto effect of Regulation 764/2008, which allows for tackling the specific application of national measures to the product in question. The result then is that the Commission can identify specific problems, and this leads to harmonisation.
Nevertheless, the relationship between the Treaty-based exemptions under Article 34 TFEU and the mandatory requirements remain unclear: it is questionable whether the latter in fact derogate from Article 34 or whether Cassis should be used to determine the scope of the prohibition rather that defining the derogation. This confusion is aggravated by the ECJ's approach of transforming mandatory requirements into indistinctively applicable measures. Examples of this approach can be found particularly in cases dealing with environmental issues, and it has led to contradictory judgments. The ECJ stated in Commission v Denmark, that the imposition of a rule allowing only the import of products on specific containers in order to aid recycling was not justifiable because it curtailed the import of a wide variety of products and it interfered with the functioning of the internal market. Thus, this was not a mandatory requirement but an indistinctively applicable measure.
The decision was highly criticised because the ECJ omitted to take into account the increase on recycling costs when it stated that the recycling requirements could be achieved through alternative means. Furthermore, it showed a lack of understanding of environmental issues and its importance. A different approach was taken in Radlberger, where the ECJ appeared to have departed from the principle of mutual recognition and simply delved into political correctness by recognising that a measure taken by the German government through a deposit and return scheme to aid recycling was a mandatory measure with a justified environmental aim.
Furthermore, mutual recognition is a rule that is difficult to reconcile with the centralistic approach of the EU, which is inherently geared towards harmonisation rather than allowing national rules to prevail. It could be argued that in fact, mutual recognition makes a horizontal transfer of sovereignty to MS, contrary to the ethos of the EU institutions as centralising bodies. In order to remedy this effect, Regulation 764/2008 becomes essential. However, recent cases such as Noria Distribution SARL, show that MS tend to ignore the Regulation, under which the MS distributing products must apply for authorisation to distribute the products to a MS where the product is non-compliant due to national mandatory requirements. This is done by way of a notification. If refused, the exporter MS can resolve the matter in court unless the refusal is based on the product representing a risk to health, in which case it is justifiable.
In Noria, a French company marketing products through the EU was subject to criminal proceedings because the food supplements it distributed had too high a nutrient content, which was illegal in France but not in other MS. Yet, France did not provide for an authorisation procedure that should have existed according to Regulation 764/2008. The main reason why this can happen is that making a notification is infrequent except in very specific cases involving precious metals.
This case shows that current EU legislation does not help a trader being faced with bureaucratic intransigence and it further shows that despite decades of legal precedent and legislation, the internal market is incomplete. It can be argued that the principle of mutual recognition has failed to contribute towards closing some important gaps, which was its aim in the first place.
Additionally, even if a MS has the authorisation procedure under the Regulation in place, making it possible for a trader to resolve the matter in court, proceedings are kept out of the public domain. It becomes a private matter between the Commission and the regulatory authorities of the derogating MS. This approach does not help legal development and as a consequence it could be argued that the principle of mutual recognition as stated in Cassis remains just as open-ended and uncertain as it was initially, and that the possible derogations continue to justify barriers to trade. This makes mutual recognition a principle that is conditional and non-absolute, and not efficacious to prevent obstacles to free trade within the Union.
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BIBLIOGRAPHY
Secondary Sources
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Table of Cases
Campus Oil v Minister for Industry and Energy (Case 72/83) [1984] ECR 2727
Commission v Denmark (Case 302/86) [1988] ECR 4607
Commission v Germany (German Beer) (Case 178/84) [1987] ECR 1227
Criminal Proceedings Against Bellamy and English Shop Wholesale (Case C-123/00) [2001] ECR I-2795
Criminal Proceedings against Noria Distribution SARL (Case C-672/15) [2017] 3 CMLR 32 ECJ
Radlberger Getränkegesellschaft mbH & Co v Land Baden-Württemberg (Case C-309/02) [2004] ECR I-11763
Rewe-Zentrale AG v Bundesmonopolverwaltung für Branntwein (Cassis de Dijon) (Case120/78) [1979] ECR 649
Table of Legislation and Treaties
Directive 2015/1535
Lisbon Treaty, Treaty on the Functioning of the European Union, TFEU, 2009
Regulation 764/2008