Opinion of the Economic and Social Committee on 'The single market and the protection of the environment: coherence or conflict (SMO)'
Date: 1997-10-30
Institutions: European Economic and Social Committee
Subjects: approximation of laws, environmental law, environmental protection, free movement of goods, single market

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Official Journal of the European Communities

C 19/95

Opinion of the Economic and Social Committee on ‘The single market and the protection of
the environment: coherence or conflict (SMO)’

(98/C 19/26)

On 11 July 1996, the Economic and Social Committee, acting under Rule 23(3) of its Rules of
Procedure, decided to draw up an Opinion on ‘The single market and the protection of the
environment: coherence or conflict (Single Market Observatory)’.

The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing
the work on the subject, adopted its opinion on 8 October 1997. The rapporteur was
Mr Gafo-Fernandez.

At its 349th plenary session (meeting of 30 October 1997) the Economic and Social Committee
adopted the following opinion by 72 votes to 8 with 1 abstention.

1. Legal basis of the situation

1.1.
Several articles of the EC Treaty reflect this
potential conflict of interests between environmental
protection and the completion of the single market.
Among these are Articles 130r, s and t on environmental
protection, Articles 100a and 102 on the single market,
Article 129a on consumer protection, Articles 92 and 93
on state aid, Article 99 on the harmonization of tax
legislation, Article 30 on non-tariff barriers to trade and
Article 36 on exceptions to free movement for public
safety reasons.

1.2. Whilst Article 130r calls for ‘a high level of
protection taking into account the diversity of situations
in the various regions of the Community’, Article 130s
allows temporary derogations or the use of resources
from the Cohesion Fund when the costs of implementing
the Community measures are disproportionate for a
particular Member State or
region. Article 130t
authorises Member States to maintain or introduce more
stringent protective measures.

1.3.
Article 100a (4) allows Member States to intro-
duce more stringent measures for the protection of the
environment, provided they are justified and approved
beforehand by the Commission, which is to ensure that
they are not disproportionate and do not constitute a
disguised restriction on free trade in goods. A similar
provision can be found in Article 129a (3) on consumer
protection.

1.4.
The practical implementation of these articles
involves both approaches at the same time, i.e. harmon-
ization and ‘non-harmonization’; by not harmonizing
and opting for a higher level of protection, Member
States force a constant upwards adjustment of environ-
mental standards. This leads to a halfway house situation

where there are technical barriers to trade, but these
barriers may help to reach the ultimate aim — environ-
mental protection.

Tax provisions, especially Article 99 and,
1.5.
indirectly, Article 102 will also have to be reviewed
along the same lines. Article 99 requires a unanimous
decision for the harmonization of legislation concerning
taxes such as VAT, excise duties and other forms of
the
indirect taxation. However,
completion of the single market, Article 102 provides for
the implementation of special administrative measures,
subject to a compatibility analysis by the Commission.

in the context of

1.6.
Under these provisions the Member States are
authorized to establish special tax concessions or incen-
tives designed to speed up the introduction of environ-
mental protection measures which go much further than
the Community provisions in terms of time-frames or
requirements. In line with Commission criteria, the cost
of implementing such measures must not exceed the
total cost of adopting the Community provisions,
must not be discriminatory toward goods from other
Community countries and must come to an end before
the Community law becomes binding.

1.7.
Very similar criteria are applied for the author-
ization of state aid. In a recent communication, the
Commission accepts that Member States may provide
assistance to companies adopting environmental protec-
tion measures that go further than Community measures
(in addition to the usual aid for regions lagging behind
and suffering decline, and for specific sectors). Such aid
should, of course, be proportionate to the highest costs
and should not distort competition.

1.8.
Finally, whilst Article 30 states that ‘quantitative
restrictions on imports and all measures having equiva-
lent effect shall be prohibited between Member States’,

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especially artificial administrative barriers or technical
protectionist measures, Article 36 stipulates that the
principles of free movement shall be disregarded when
justified on the grounds of public policy or public
security, protection of human health, protection of
plants and protection of national treasures of artistic or
historical value, many of which are directly or indirectly
related to the environment.

1.9. Of course, applying these principles has given
rise to serious contradictions. Throughout the history
of the European Union, these contradictions have had
to be resolved by the Court of Justice whose rulings,
based on the order of priority to be assigned to
Community objectives, have helped to shed light on
potentially conflicting interests and laws. Nevertheless,
several points remain obscure.

1.10.
The following guiding principles could be used
by the European Commission and the Court of Justice
to assess the compatibility of national laws and standards
with the various articles of the Treaty:

In all cases, the measures, whether legal or
1.10.1.
regulatory, must be of a public nature, i.e. measures
taken by any public authority, or a private entity, the
actions of which are strongly influenced by the public
authorities.

1.10.2.
Each specific case must, in legal terms, be
examined in the light of a single article of the Treaty,
since it is not possible to combine two or more articles
in assessing the compatibility of a national measure with
the Community patrimony.

1.10.3. Generally, if the product in question has been
covered by a harmonization directive (or regulation),
Article 100a will provide the appropriate legal basis for
assessing the compatibility of a national measure with
Community law.

1.10.4.
All tax provisions must be assessed in the
light of Article 95, except where the taxable product is
manufactured nationally .

1.10.5. With the exception of the latter criteria,
Article 30 will apply as a criterion for assessing compati-
bility to all cases where there is no harmonization of the
product concerned at Community level or where there
is a tax provision affecting imported products only, in
the absence of national production.

2. Main decisions of the Court of Justice

The most innovative and symbolic decision was
2.1.
the ‘Cassis de Dijon’ ruling (C-120/78). Here, the Court

ruled that Member States are responsible for regulating
all aspects of the production, marketing and labelling
of goods in their respective countries, provided the
measures taken apply equally to their own and imported
goods and are not, in practice, disguised barriers to
intra-Community trade.

2.2.
Another recent but important decision concerns
pentachlorophenol (C-41/93): although the request was
prompted by Germany’s unilateral ban on the use of
this product, citing Article 100a(4), the decision stressed
the Commission’s failure to properly justify, before and
during the case, the incompatibility of the German
measure with this article. The court stressed the need to
justify the de facto and de jure reasons why the
Commission considered a national measure to be incom-
patible with Article 100a.

2.3.
Decisions on Sandoz, Van Beenekom, beer purity
in Germany (C-178/84) and Centrafarm (C-104/75):
these decisions seek to reconcile public and consumer
health with the free movement of goods. Whilst Member
States are responsible for determining the standard of
health they want for their citizens, they cannot — except
in exceptional cases where special caution is required —
call for stricter laws for goods legally marketed in
another Member State, for example, for the use of
additives and preservatives, and, in any event, the means
employed should be proportionate to the end sought,
i.e. to safeguard public health.

Decision on packaging in Denmark (C-302/86):
2.4.
this established that environmental protection was in
itself a sufficient reason for restricting the absolute
freedom of movement
for goods provided by the
Treaties. The payment of a deposit to ensure the return
of the packaging was authorized for environmental
reasons, but the Court noted that some of the proposed
measures failed to take the proportionality criterion into
account and were, therefore, contrary to the free
movement of goods. Importers were required to only
use packaging approved by the Danish authorities or to
restrict to a certain quantity the marketing of products
not packaged in authorized containers.

2.5.
Decisions on titanium dioxide (C-300/89) and on
waste — the Commission versus the Council (C-155/91):
both cases focused on the fact that a Community act
had given precedence to Article 100a of the EC Treaty
over Article 130r. The decisions are to some extent
ambivalent: the first stated that when both harmon-
ization (internal market) and environmental protection
were at issue, Article 100a should be used, given that
paragraph 3 establishes a high level of environmental

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protection as an alternative legal basis for the directive.
In the second case, the Court ruled that the appropriate
legal basis was Article 130r, since protection of the
environment was the directive’s main aim and free trade
in wastes only a secondary objective.

2.6.
Decision on waste in Germany (C-422/92): the
court ruled that the concept of waste cannot exclude
waste which might be suitable for economic re-use, and
that the obligation to obtain prior authorization before
transporting waste overrides the requirements of the
control system established in Community legislation.

2.7.
Decision on waste in Wallonia (C-2/90): this
decision, referring to preventing regional authorities
from importing and storing waste that was not produced
in their region, examines the relationship between
Articles 30 and 36 of the EC Treaty. The Court accepted
the ban on the grounds that the problem had to be
tackled at source and waste production reduced to a
minimum — both these principles being laid down in
Community environmental policy and in the Basle
Convention regulating cross-border movement of such
waste.

2.8.
Decisions on Inter-Oils (C-172/82) and Lesage
(C-37/92): these decisions on the granting of an adminis-
trative authorization for the collection of used oils point
to the conflict of interests involved in applying this type
of administrative concession to a company belonging to
the Member State granting the concession and in
preventing these used oils from being exported to other
Member States for processing.

2.9.
Decisions on diesel cars in Italy (C-200/85),
bananas in Italy (C-184/85) and wines in France
(C-196/85) these decisions relate to the establishment of
discriminatory domestic taxation vis-à-vis imports. The
decisions require tax neutrality for ‘similar’ products,
‘similar’ here meaning that the products have the same
characteristics and fulfil the same purpose. However,
the first decision ruled that a tax measure based on
objective terms (higher tax on vehicles of over a certain
engine size) was acceptable, even if in practice the
tax affected imported cars more, or indeed almost
exclusively.

2.10. Decision Lornoy en Zonen (C-17/91): the court
ruled that a parafiscal charge which makes no distinction
between a national and an imported product, but the
revenue from which is used only for national products,
is a customs duty which contravenes Article 12 if the
charge on national products is fully compensated, or a
state aid which contravenes Article 95 if the charges
borne by national products are only partly compensated.

2.11. Decision on VAG Sverige (C-3289-95): this
decision refers to the certificate of vehicle exhaust gases
(issued by a national body) which the Swedish authorities
required all car importers to provide in addition to any
other conformity certificate issued in another Member
State. This dual requirement for a national certificate of
conformity as well as one from another Member State
has been declared incompatible by the Court, which has
decided that a certificate of conformity issued in one
Member State is sufficient.

3. Possible infringements of the free movement of
goods, on the grounds of health or environmental
protection, brought to the attention of the European
Commission and currently under examination

3.1.
The Commission departments have received a
series of complaints relating to possible distortions of
the internal market resulting, directly or indirectly, from
health or environmental protection standards. Many of
these complaints are currently being considered by the
departments. Most of them have not however led to
formal proceedings against the Member State or Member
States concerned. The cases under examination can,
however, be analyzed in order to identify the areas
where potential conflict is greatest or most frequent.
These areas are as follows:

3.2.
Parallel imports of plant health products: these
complaints regarding various plant health products and
pesticides concern several Member States. The general
focus of complaints is that, despite the existence of a
simplified authorization procedure, before each individ-
ual transaction operators must send a sample of the
product (with the conformity analysis costs and the
delays this entails), thus jeopardizing the confidentiality
of the transaction. The initial assessment of the Com-
mission is that these requirements are disproportionate
given that in accordance with the Primacrown decision
(Case 201/94), no Member State may require an imported
product — coming from another Member State where
it has received a certificate of conformity — to be
identical to the product of national reference. The
Commission also considers that systematic identification
checks are only justified for the initial consignment, but
not for subsequent consignments where random checks
could be used at a lower cost. It should be noted that
one of these cases has given rise to a consultation under
the preliminary ruling procedure before the Court of
Justice in Luxembourg. Cases where, on the grounds of
health or environmental protection, there are mutual
recognition problems for products legally marketed in
another Member State, also occur in relation to solvents
and filters for water destined for human consumption.

3.3.
Banning the marketing of disposable barbecues:
this case provides an interesting example of pro-
portionality, since a Member State placed a total ban
on the import of these products claiming that disposable

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barbecues, or inappropriate use thereof, could cause
forest fires. The solution appears to have been found
through improving the stability of the barbecues (with
approval by the standardization body of the importing
country) and considering limiting or banning marketing
only in those regions of the country where the risk of
fire is most acute.

with regard to the Commission’s ability to resolve the
complaints.

3.6.3.
The significant number of cases resolved by
the European Commission without having recourse to
proceedings demonstrates its negotiating skills and also,
generally speaking, the willingness of Member States to
seek solutions based on the proportionality criterion.

3.4.
Eco-taxes on disposable razors: this case, which
affected only one Member State, originated in a law
taxing all disposable products. For disposable razors,
the tax was so high that the product was practically
eliminated from the market. In response to Commission
action, the government of the Member State is now in
the process of amending the law in question. For
the same country, information proceedings have been
opened to check whether or not labelling requirements
for disposable products, used for environmental and tax
monitoring purposes, may be considered proportionate
to the objective of protecting the environment.

3.5.
Environmental standards for public tenders:
these barriers relate to the establishment of dispro-
portionate or unjustified environmental requirements
which, intentionally or in practice, restrict the partici-
pation of companies from other Member States. Such
obstacles occur in a large number of Member States, as
has been pointed out in previous Committee opinions (1).

In summary, the following conclusions may be

3.6.
drawn:

3.6.1.
The usual procedure, that is, notification of
the Commission, prior examination by the Commission,
meetings with the national authorities from the Member
State concerned, possibly a ‘warning letter’, followed by
a ‘reasoned opinion’ in accordance with Article 169 of
the EC Treaty, and, lastly, intervention by and a decision
from the European Court of Justice in Luxembourg,
may take between two to three years from the complaint
to the issue of the ‘reasoned opinion’ and an additional
two years before the Court’s decision. Clearly a lengthy
procedure.

3.6.2.
The number of such cases brought before the
European Commission is surprisingly low, even though
various publications on the operation of the single
market published in the Member States and the Single
Market Observatory’s own assessments indicate that
this is a major obstacle. This suggests a certain lack of
familiarity with the procedures for bringing complaints
before the European Commission or a certain scepticism

(1) OJ C 212, 22. 7. 1996.

4. Comments made at the hearings held by the Econ-

omic and Social Committee

4.1.
As part of its work, the Economic and Social
Committee’s study group held two hearings, one in May
1997 in Malmö (Sweden), and another in June 1997
in Seville (Spain). Representative socio-occupational
organizations from the north and south of the European
Union were invited to these hearings. Prior to the
the
hearings,
response rate to which was good. The questionnaire
served both to inform the organizations with a view to
the hearings, and to prepare for the discussions. The
results of the surveys and the hearings were vital to the
preparation of this opinion, and are to be found in the
Appendix.

the organizations received a survey,

During the hearings, the participants, who rep-
4.2.
resented a large number of employers’ organizations,
trade unions, SMEs and consumer and environmental
protection organizations, made a number of points,
both orally and via the questionnaires as follows:

There should in principle be no conflict between
environmental protection and the smooth running of
the single market.

The main conflicts arise from delayed or inadequate
implementation of Community legislation in national
law, coupled, in some cases, with difficulty in inter-
preting the law at both Community and national level.

Compatibility between both objectives — the internal
market and protection of the environment — should be
achieved through greater harmonization of product
characteristics at EU level (even at international level, if
possible) and by stricter checks on the implementation
of the rules.

As regards production conditions, there was no agree-
ment as to whether these should be standardized
throughout the European Union or whether they should
reflect the specific features (air, water, soil) of each
individual region. However, there was agreement that
there were grounds for higher levels of protection in
certain regions, as long as circumstances so required
and as long as proper reasons were given.

Environmental policy should be an additional com-
ponent of the European Union’s external trade policy.

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The implementation of single market and environmental
legislation is easier for large companies; it is more
difficult for SMEs to be familiar with and interpret the
law.

Different recycling systems in the Member States,
coupled with varying interpretations of the concept of
waste, are a significant obstacle to the single market.

Environmental rules, including those applicable to public
contracts need to be more exactly defined in order to
prevent abuse and possible discrimination.

Implementation and monitoring of public subsidies for
environmental protection vary between Member States
and may lead to distortions of competition.

The use of eco-taxes may be appropriate where there
are sound reasons for them and providing they do not
lead to trade distortions inside and outside the European
Union.

4.4.3.
Ban on the use of sewage sludge as an agricul-
tural fertilizer in Denmark: the Danish Environmental
Protection Agency has set very strict limits for the use
of sewage sludge, with some concentration limits for
LAS (linear alkylbenzene sulphonates) being much lower
than those required in the other Member States. LAS
is commonly used in the manufacture of domestic
detergents and the low maximum permitted concen-
tration constitutes an effective barrier to trade, since it
prevents the sale of a significant proportion of detergents,
and the controlled treatment of non-biodegradable
residues, including these in the process of purifying and
treating urban and industrial waste water. According
to various scientific studies made available to the
Committee, LAS is not considered to be a toxic or
dangerous substance, nor is it included on lists of
such substances maintained at European Union and
international level. Moreover, the concentration of LAS
in sewage sludge — between 0,1 and 0,5 g/kg — does
not justify a measure such as that adopted by the Danish
Environmental Agency. As a result of this hearing and
the presentation of the case, the European Commission
has begun to examine the situation, in order to check
compliance with Community legislation.

Use of the Product Life Cycle Analysis system (PLCA or
eco-balance) should be encouraged in both the public
and private sector, in parallel with more extensive and
harmonized use of the ISO 14000 standards, in particular
through participation in the eco-audit.

5. Conclusions

4.3.
The hearing highlighted the need to progress, at
the same time and with a view to the future, towards
higher levels of environmental protection whilst safe-
guarding the single market.

4.4.
Furthermore, during the hearings, a number of
specific cases of potential conflict between protection of
the environment and completion of the single market
were brought to the attention of the ESC study group
responsible for preparing the opinion. Three of the most
interesting cases are quoted below.

4.4.1.
Export of drinks in returnable packaging from
Denmark to Germany: in Germany packaging has to be
recycled; sorting and returning packaging to Denmark
creates a practically insurmountable economic barrier
for Danish exporters. It is worth noting that it was in
fact the Kingdom of Denmark’s packaging legislation
which prompted a decision from the Court of Justice
stating that the recycling requirement for packaging
was compatible with the objective of environmental
protection, subject to the proportionality criteria.

Export of Portuguese-manufactured furniture
4.4.2.
in this case, some British
to the United Kingdom:
authorities are requiring that Portuguese furniture manu-
facturers provide a conformity guarantee to the effect
that the wood derives from sustainably managed forests.
In the absence of Community harmonization, this case
could come under the scope of Article 30 of the EC
Treaty.

Protection of the environment and completion of
5.1.
the single market have equal importance at Community
level, and both principles should work in the interests
of the harmonious and balanced development and
sustainable growth referred to in Article 2 of the EC
Treaty.

There are numerous examples of the internal
5.2.
market and protection of the environment working in
positive synergy. However, where cooperation could
potentially give way to conflict, Community action
should be guided by the following principles:

— clear, unchallengeable precedence of health and
public safety criteria, as defined in Article 36, over
all others;

— criterion of prudence in taking action;

— proportionality criterion;

— objective justification of measures to be adopted in

accordance with the precautionary principle.

In its capacity as guardian of the Treaties, the European
Commission should guarantee that these principles are
implemented. The same could be said of the work of
the Court of Justice in Luxembourg, whose decisions
should gradually build a clear and specific ‘legal corpus’
to facilitate interpretation of similar cases in the future.

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5.3.
The growing implementation of subsidiarity
criteria, with the decrease in harmonization measures at
Community level, may be the source of the greater
number of conflicts emerging between the Community-
scale single market and environmental protection stan-
dards with a growing national or even local dimension.

single market from the various Member States. The
committee would help the Commission to interpret
conflicts. The committee should, by agreement with the
Commission, adopt rules of procedure; these rules of
procedure should ensure that the different points of
view of committee members are taken into account.

5.4. National and local authorities in the Member
States do not seem to have accurate information on
how to develop environmental legislation in order to
safeguard the progress achieved towards the single
market, especially since 1985.

5.5.
Companies, especially SMEs, but also workers,
consumers and socio-occupational associations, do not
seem to be well enough informed as to the European
Commission’s information mechanisms for these areas
and the possibility of lodging complaints with the
Commission.

5.6.
The ability of the Commission departments to
respond both in terms of resources and, in particular,
of procedures and time frames, appears insufficient,
especially in the event of an increase in conflicts between
the two objectives.

6. Recommendations

6.1.
The European Commission urgently needs to
begin preparing a green paper, white paper, communi-
cation series on the situation and the possibilities for
cooperation or conflict between the single market and
protection of the environment. This sequence of actions
would enable the participation of all the organizations
and sectors concerned and the preparation of a Com-
munication to the Council and European Parliament,
which could lead to a formal Resolution on the matter
by the Single Market and Environment Councils. The
Commission communication and the Council decision
should be linked with the continuation of the Fifth
Action Programme on the environment.

6.2.
The objective of such a communication would
be to establish clearly, for all the Member States, the
criteria governing compatibility between the single
market and protection of the environment. At the same
time, there should also be a summary of the case law
established by the Court of Justice and the action of the
European Commission itself as regards its specific
powers. The didactic nature of the Communication
would be reinforced by the political agreement embodied
in the Council Resolution.

The European Commission should be assisted
6.3.
by a committee of experts on the environment and the

6.4.
The Member States should be required to for-
ward any proposals for legislation which could affect
the operation of the internal market to the Commission
at least three months before a decision is taken. These
proposals should be followed as soon as possible by a
Product Life Cycle Analysis (PLCA or eco-balance) or a
study demonstrating the positive environmental impact
and proportionality of the measures proposed. The
Commission would then be able to initiate measures
under the EC Treaty.

6.5.
If the Commission felt that the proposal consti-
tuted an unjustified distortion of the single market, it
could consult the advisory committee. If the committee’s
opinion coincided with that of the Commission, the
Commission would be empowered to request that
the Member State voluntarily suspend the proposed
legislation on a temporary basis. The Commission could
initiate proceedings at the European Court of Justice in
order finally to clarify matters.

In accordance with the relevant provisions of the
6.6.
Treaties, no Member State may prevent the sale of a
product legally sold in another Member State. Com-
munity rules on the free movement of goods in the
internal market should be unaffected by the proposed
procedure. The Commission would also be able to have
recourse to the advisory committee provided for in point
6.3.

6.7.
In the European Union’s representative offices in
the Member States and the EEA countries, there should
be a special unit providing information on the single
market, and receiving and channelling information on
possible obstacles resulting from national environmental
legislation or from other measures of a public or private
nature. Existing possibilities in the Euro info centres
should also be enhanced.

6.8.
in each
The European Commission should,
Member State and EU candidate countries, hold infor-
mation and awareness seminars geared primarily to civil
servants working in these areas, but also to representative
socio-occupational organizations. The European Parlia-
ment, the Committee of the Regions and of course the
Economic and Social Committee should be involved in
this effort.

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6.9.
The European Commission departments work-
ing in these areas should be provided with human,

logistical and budgetary resources commensurate with
the importance of the task.

Brussels, 30 October 1997.

The President

of the Economic and Social Committee

Tom JENKINS

APPENDIX

to the opinion of the Economic and Social Committee

The following amendments which received more than one quarter of the votes cast, were defeated in the
course of the discussion:

Point 3.5

Delete.

Reason

It is incorrect to say that environmental requirements intentionally restrict the participation of companies.

Result of the vote

For: 24, against: 34, abstentions: 6.

Points 4.4, 4.4.1, 4.4.2 and 4.4.3

Delete.

Reason

The Plenary Assembly cannot be expected to subscribe to allegations made at a hearing held by the
study group, especially as they contain factual errors.

Result of the vote

For: 24, against: 44, abstentions: 2.