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5.1.1.  The abolition of customs barriers to trade in the EU

    According to Article 28 of the Treaty on the functioning of the EU (ex Article 23 TEC), the Union is based upon a customs union which covers all trade in goods and which involves the prohibition between Member States of customs duties on imports and exports and of all charges having equivalent effect, and the adoption of a common customs tariff in their relations with third countries. The customs union of the EU covers "all trade in goods". This means that products coming from a third country can move freely within the European Union if the import formalities have been complied with and any customs duties or charges having equivalent effect, which are payable, have been levied in the importing Member State (Article 29 TFEU, ex Article 24 TEC].

    Articles 13 and 14 of the Treaty of Rome provided that customs duties and charges having equivalent effect to customs duties on imports were to be progressively abolished during the twelve-year transitional period from 1 January 1958 to 31 December 1969. Although the Treaty gave the Member States the option of varying the rate of reduction of customs duties according to product (should a sector have difficulties), the reduction was constant and problem-free. The rate of tariff dismantling was even accelerated by two Council decisions, and completed on 1 July 1968, 18 months ahead of schedule. This demonstrates that tariff dismantling caused no major problems to the industries of the Member States, as any country's objection would have prevented the change of schedule provided by the Treaty. The States which acceded to the European Community/Union later on had a five-year transitional period to eliminate customs duties in intra-Community trade. This was also problem-free. Certainly, many of the previously protected industries were obliged to renovate or shut down, but many new industries were created or expanded on sound premises.

    The accelerated completion of the tariff union meant that, as of 1 July 1968, intra-Community trade was freed of customs duties and quantitative restrictions on imports and exports. However, other trade obstacles, such as charges having equivalent effect to customs duties and measures having equivalent effect to quantitative restrictions, were far from gone. The proper functioning of the tariff union required the removal of these obstacles too by the end of the transitional period. Indeed, the Treaty of Rome expressly noted the necessity of "reducing formalities imposed on trade as much as possible" (Article 10 EEC). In reality, as soon as tariff disarmament was accomplished, the "formalities war" was stepped up between Member State administrations anxious to protect national production and at the same time prevent the decrease of their own functions and powers. Of course, every form, every stamp required for cross-border trade had a reason: tax collection, statistics, and customs checks aimed at preventing the import of products not conforming to national regulations, etc. But each stamp meant time and money to European businesses.

    A great number of those trade barriers were hidden in regulations, such as consumer or environment protection standards, which varied from one State to another [see section 6.1]. Their restrictive effects were often more damaging than customs duties and quantitative restrictions. Indeed, while customs barriers raised the price of imports or quantitatively limited them, various regulations could completely block the import of a product. Fortunately, such extreme cases were rather limited. However, as seen in the chapter on the common market, the elimination of non-customs barriers to trade proved to be much more difficult and took three times as long as did the elimination of customs barriers.

    Despite the non-completion of the customs union by 1968, the economic results of the free circulation of goods achieved by it were indisputable. From 1958 to 1972, while trade between the six founding Member States and the rest of the world had tripled, intra-Community trade had been multiplied by nine. Such exceptional trade growth was a key factor in economic development and the raising of the standard of living in all member countries of the original EEC. The stimulating effect of the wider market created a feeling of business confidence, which resulted in investment growth. Consumers emerged as the overall winners; supply was much more diverse and products cheaper than before tariff dismantling. The welfare objective of European integration was undoubtedly well pursued through the customs union. The task of the common institutions was, therefore, to eliminate the remaining problems and increase the benefits of the customs union.

    In the eventuality of a grievance for trade restrictions, the Commission examines its validity and, pursuant to Article 258 of the TFEU (ex Article 226 TEC), calls upon the concerned State to amend or suppress a rule or practice contrary to European law. If the government concerned does not comply with this request, the Commission brings the matter before the Court of Justice, whose opinion is binding as much for the Member State as it is for European institutions. It must be said that the majority of these cases are settled after notice the Commission serves notice to the Member State in question. An Advisory Committee on Customs Matters and Indirect Taxation. made up of representatives of professional organisations or of consumers concerned by customs and fiscal problems, strengthens the dialogue between the various parties to customs union [Decision 91/453].

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