Italy taxes the sale of denatured ethyl alcohol (a chemical substance used for industrial purposes) at different rates, depending on how it has been produced. There are two basic methods of production: synthetic (i.e. made from ethylene, a product derived from petroleum) and natural fermented (i.e. distilled from agricultural products, such as potatoes, grain, and fruit). The denatured ethyl alcohol that results from these different processes is chemically identical. Italy imposes a high tax rate on synthetic alcohol made from petroleum, and a low rate on natural fermented alcohol.
Practically all the synthetic alcohol marketed in Italy is imported from other Member States, whereas Italy itself produces a large amount of natural fermented alcohol. However, Italy also produces ethylene, which can be used to manufacture synthetic alcohol, as well as other industrial products.
The Commission has challenged this differential taxation scheme as incompatible with the EC Treaty. As special advisor to the Italian government, you are asked to justify its claim that the taxation system is compatible with the EC Treaty. Your analysis should clearly and thoroughly address all legal issues raised by these facts. In particular, you should state the Italian government's response to all arguments that you expect the Commission to make, and carefully develop your defenses. Be sure to substantiate your arguments by referring to the known facts. In this regard, it may also be useful to state any additional facts that you would need to know to complete or strengthen your arguments.
QUESTION 2 (1 HOUR)
The United Kingdom adopted an import ban on slaughtered whole turkeys in order to prevent the spread of Newcastle disease (a contagious disease affecting poultry). However, the U.K measure still permitted imports of turkeys from countries which followed a similar disease control policy (i.e. requiring that the exporting country be totally free from Newcastle disease and prohibiting the use of vaccine).. This measure represented a sudden reversal in the U.K.'s Newcastle disease policy, which up until then had required immunization of turkeys.
The ban was introduced in November, just in time to prevent imports of Christmas turkeys. During the two years prior to introduction of the U.K. measure, French exports of slaughtered whole turkeys to the United Kingdom had risen dramatically. During that period, U.K. turkey producers became increasingly upset about (allegedly high) subsidies being paid by the French government to its domestic turkey producers.
The French government quickly responded by passing a Newcastle disease policy similar to the new U.K. one. Still, the United Kingdom refused to permit import of any French turkeys, on the ground that France permitted import of turkeys from Central and Eastern Europe, where turkeys were still vaccinated against Newcastle disease.
You are special counsel to the French government and have been asked to prepare the case against the United Kingdom. Please draft the complaint of the French government against the United Kingdom measure. Your complaint should also analyze and refute any defenses that you expect to be raised by the United Kingdom.
QUESTION 3 (1 HOUR)
The opinion of the European Court of Justice (ECJ) in Case 205/84 [Commission v. Germany (Insurance Services)] provides in part:
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[§28] |
[T]he requirements in question
in these proceedings, namely that an insurer who is established in another
Member State, authorized by the supervisory authority of that State and
subject to the supervision of that authority, must have a permanent
establishment within the territory of the State in which the service is
provided and that he must obtain a separate authorization from the
supervisory authority of that State, provide services inasmuch as they
increase the cost of such services in the State in which they are
provided, in particular where the insurer conducts business in the State
only occasionally.
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| [§29] |
It follows that those requirements may be regarded as compatible with Articles 59 and 60 of the EEC Treaty only if it is established that in the field of activity concerned there are imperative reasons relating to the public interest which justify restrictions on the freedom to provide services, that the public interest is not already protected by the rules of the State of establishment and that the same result cannot be obtained by less restrictive rules. |
The "imperative reasons relating to the public interest which justify restrictions on the freedom to provide services" echo the "mandatory requirements" which the ECJ found could result in acceptable "obstacles to movement within the Community resulting from disparities between the national laws relating to the marketing of the products in question." [REWE v. Bundesmonopolverwaltuna fur Branntwein (Cassis de Dijon), case 120/87 S9].
The ECJ has used the concepts "imperative reasons" and "mandatory requirements" to work out an analytical framework that enables it to balance the Community interest in a common market for goods and services (unhindered by national obstacles) against the Member States' interest in the exercise of legitimate police powers.
As the only attorney in your law firm who has studied EC law, you are asked to prepare a memorandum explaining the meaning of the ECJ case law on free movement of goods and services in such a way as to make it readily understandable to other lawyers from your country who have never read these cases. At the very least, your memorandum should address the similarities and differences in the ECJ's reasoning in cases involving free movement of goods and free movement of services, as well as the role of the Commission's White Paper (1985) and Article 100A in the integration process.