CASE NUMBER: 220 CASE MNEMONIC: CASSIS CASE NAME: Cassis Spirit Trading in the EC A. IDENTIFICATION 1. The Issue In the "Cassis de Dijon" case, the European Court of Justice struck down a German import prohibition. The prohibition disallowed the import, sale and/or marketing of liqueurs in Germany that didn't meet minimum German alcohol standards. The ruling gave the European Commission an opportunity to develop the principle of "mutual recognition." Ultimately, the principle implies that any national law with reasonable policy goals, such as environmental conservation, health, and so on, will be tolerated within the regional trading block of Europe. 2. Description In February 1979, the European Court of Justice struck down a German prohibition on imports from other European Union (EU) countries. The prohibition banned the importation of alcoholic beverages that did not meet minimum alcohol content requirements. The case involved Cassis de Dijon, a French liqueur manufactured from black currants. Cassis contains 15%-20% alcohol and the German standards prescribed 25%. Rowe-Zentral AG, a German import/export firm, brought suit charging that the German regulation on minimum alcohol contents was an illegal non-tariff barrier. The German government argued the validity of its regulation primarily on health grounds, claiming that the law existed to avoid the proliferation of alcoholic beverages within the German market. It argued that beverages with low alcoholic content induce a tolerance toward alcoholism more so than highly alcoholic beverages. Germany also offered a consumer protection justification claiming there was a need to protect consumers from unfair producer and distributor practices (see ONTARIO case). In its final argument, the German government argued that the elimination of the import ban would mean that one country could set the standards for all member states, thus precipitating a lowering of standards throughout the EU. After the case was brought against the German courts, the European Court of Justice ruled that because Cassis met French standards, it could not be kept out of the German market. The European Court rejected the German health argument as unconvincing and dismissed the its consumer protection justification. After rejecting the German defense claims, the Court spelled out the general principle, which is now the most famous part of the ruling: "There is therefore no valid reason why, provided that they have been lawfully produced and marketed in one of the Member States, alcoholic beverages should not be introduced into any other Member State." The Court ruled that barriers to trade were allowed only to satisfy mandatory requirements relating to the effectiveness of fiscal supervision, the protection of public health, the fairness of commercial transactions and the defense of the consumer. When these conditions are threatened and import prohibitions are found to be valid, the EU's Commission would provide minimum standards in the form of a directive. Member states would then be obliged to harmonize their standards to meet the criteria set out in Commission directives. There were cases before Cassis which formed new ideas about the integration of standards. The German law had previously been challenged in 1974 in the Dassonville case. It established the legal basis for challenging the validity of domestic standards that create nontariff barriers. The Dassonville case was identical to Cassis, only the liquor in question was French Anisette. The case was dropped after the German government made an exception for Anisette and allowed it to be imported. But it was the Cassis ruling that was exploited by the Commission in its attempt to foster free trade throughout the EU. Cassis gained notoriety when a political debate was instigated by the Commission. The Commission extracted the aspects of the ruling that were useful for eliminating nontariff trade barriers. In the Fall of 1979 Etienne Davignon, the internal market commissioner, suggested in front of the EU Parliament that trade policy should take a new direction based on the Cassis ruling. The Commission's new approach towards liberal trade was to effect the way the member states would harmonize their divergent environmental standards. The principle of 'mutual recognition', as set out in the Cassis case, was to replace the policy of 'absolute harmonization.' Mutual recognition allowed the Commission to issue directives in order to assure a high minimum standard in areas such as environmental protection. A year and a half after the ruling, the European Commission spelled out the implications for free movement of goods within the EU. The Official Journal of the European Communities states, "Any product imported from another member state must in principle be admitted...if it has been lawfully produced, that is, conforms to rules and processes of manufacture that are customarily and traditionally accepted in the exporting country." The actual task of defining the standards was established by the 1985 Single European Act. European standards bodies, including the European Committee for Standardization (CEN), were created to uphold the level of standards to ensure that the manufacturing process complied with the requirements set out by Commission directives. If a product is not manufactured in accordance with the European standard then the onus is on the producer to prove that the fundamental safety and health requirements are met. This had an immense impact upon the development of environmental policy coordination within the EU. Although not mentioned in its founding treaty, environmental policy is one of the Community's most highly regulated area of competence. There is a European consensus that believes, while the environmental management is a national issue, it has obvious international dimensions. Harmonization of national environmental standards was necessary to avoid distortions within the single market. Before 1990, the Commission issued over 100 directive measures relating to the coordination of environmental standards. A number of these were designed to combat water pollution and exhaust emissions. Moreover, Cassis has been used as a precedent in determining the viability of national standards. The mutual recognition principle, as defined through Cassis de Dijon, is used as a basis for determining a countries right to block goods from being imported on environmental grounds. This was made apparent in the Danish Bottle case which the Court ruled on in 1988. The Commission had argued that the Danes bottle regulations, which required returnable containers for beer and soft drinks together with licenses for new types of containers, represented a trade barrier. But the EU ruled in favor of the Danes on the grounds of environmental protection (see DANISH case). The implications of the Cassis case are spread throughout the development of the integration within the EU. The evolution of a cohesive environmental policy was put in motion after the Commission cited this case as the method for reconciling divergent standards. The influence of the Cassis ruling on the policy-making process has been apparent in prior environmental rulings and continues to influence the coordination of environmental policy today. 3. Related Cases PISCO case Keyword Clusters (1): Trade Product = SPIRIT (2): Bio-geography = TEMPerate (3): Environmental Problem = Regulatory Standard [REGSTD] 4. Draft Author: Timothy Conley B. Legal Clusters 5. Discourse and Status: AGReement and COMPlete 6. Forum and Scope: EURCOM and REGION 7. Decision Breadth: 15 (EURCOM) 8. Legal Standing: Treaty C. GEOGRAPHIC Clusters 9. Geographic Locations a. Geographic Domain : EUROPE b. Geographic Site : Western Europe [WEUR] c. Geographic Impact : Germany and France 10. Sub-National Factors: NO 11. Type of Habitat: TEMPERATE D. TRADE Clusters 12. Type of Measure: Import Ban [IMBAN] 13. Direct vs. Indirect Impacts: INDirect 14. Relation of Measure to Environmental Impact a. Directly Related : NO b. Indirectly Related : YES FOOD c. Not Related: : NO d. Process Related : NO 15. Trade Product Identification: FOOD The principle of mutual recognition limited legislative harmonization by means of Article 100 of the Treaty of Rome to the establishment of essential health and safety requirements with which all products had to conform. For example, technical requirements are required for motor vehicles. The Community now harmonizes all technical regulations applying to motor vehicles including forty-four directives covering the types of materials go into the car as well as limits on exhaust emissions (see GERMANAUTO case). 16. Economic Data The Commission's attempt to reduce non-tariff trade barriers was largely successful because of the Cassis de Dijon case. The mutual recognition principle opened the door to achieving a genuinely single market. Since the ratification of the SEA trade has increased significantly in several sectors. 17. Impact of Measure on Trade Competitiveness: HIGH 18. Industry Sector: FOOD 19. Exporter and Importer: France and Germany E. ENVIRONMENT Clusters 20. Environmental Problem Type: HEALTH 21. Name, Type, and Diversity of Species Name: NA Type: NA Diversity: NA 22. Resource Impact and Effect: HIGH and REGULatory 23. Urgency and Lifetime: NA and NA 24. Substitutes: LIKE F. OTHER Factors 25. Culture: YES It is important to recognize the level of integration that Europe has been largely achieved. The member countries share many facets of their culture with one another. Where national pride distinguishes the traditions of each country (such as wine production), history has shown that they all have evolved with relatively (on a global scale) common heritage. The similarity in interests and socio-economic development has contributed to the integration process and the culmination of the Cassis de Dijon case. EU politics also played a large role in the exposure and implications of the Cassis case. The success of the Commission's "White Paper" which outlined the path to economic integration, drew upon the aspects of the ruling that supported its cause. The Commission used the ruling to satisfy its own political agenda of completing the internal market and furthering European integration. 26. Trans-Border: YES 27. Rights: NO 28. Relevant Literature Alter, Karen J., and Meunier-Aitsahalia, "Judicial Politics in the European Community." Comparative Political Studies (January 1994): 535-559. Dinan, Desmond. An Ever Closer Union. (Boulder, CO: Lynne Rienner, 1994). Harrison, Glennon J. Europe and the United States. (Armonk, NY: M.E. Sharpe 1994). Nugent, N. The Government and Politics of the European Community. (London: Manmillan, 1989). Pelkman, Jaques. "The New Approach to Technical Harmonization and Standardization," Journal of Common Market Studies 25, 3 (March, 1987). Rewe-Zentrale A.G. v. Bundesmonopolverwaltung fr Brantwein, 1979, 3 CMLR 494. Swann, Dennis. The Single European Market and Beyond. (New York: Routledge, 1993). References