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The legal system of the European Communities is a few years younger than the GATT, but has developed a much higher case-density over the years. This faster and more intensive legal development is due to the litigation activity of the European Commission and, even more importantly, private rights of action. Therefore, the various non-discrimination provisions contained in the EC Treaty have been applied to formally neutral rules far more frequently than in the GATT/WTO. Despite the significant differences between the two legal systems, this makes it worthwhile to position the EC jurisprudence in the field of tension between asymmetry and diagonal approach.
The tax discrimination prohibition in Article 90 EC 122 is very similar to GATT Article III:2, except that the EC Treaty does not provide for a written exception or justification like GATT Article XX. This difference obviously makes the diagonal approach even more problematic than it already is in the GATT context. Another difference is that the high number of cases has also resulted in a considerable amount of academic writing which did not fail to address the topic of this paper. For reasons of space, this section will therefore not reproduce an analysis of the case-law, but confine itself to a general description of the most relevant aspects.
The Court of Justice has not only relied on asymmetric effects in condemning discriminatory taxes in a large number of cases, but also has dismissed repeatedly violation claims where it found that the taxes generated a symmetric effect.123 The latter is precisely the piece of evidence that does not (yet) exist with equal clarity and certainty in the GATT/WTO jurisprudence. 124
Asymmetric impact on imports as a condition for a violation of
Article 90 EC has also received widespread support125 and only little
criticism 126 in
the academic literature. Namely, it has been supported with the consideration
that a national legislator is not obliged to treat all "similar products"
identically.127 Where
practical reasons preclude the application to imports of the objective criteria
that domestically serve to differentiate within similar products, it is
inconsistent with Article 90 EC to grant an advantage, of which all
similar imports are deprived, to some similar domestic
goods. 128
The
Court of Justice has been criticized, however, for not being consistent in its
application of the asymmetry approach. For instance, the Court is considered to
be overly generous in some cases in accepting that the effects of a tax are
symmetric, although no domestic products fall into the highest tax
bracket. 129
Another observation is that it seems sufficient for the Court to reject an
asymmetry claim if both imports and domestic goods face the higher tax,
irrespective of the fact that the lower tax benefits almost exclusively
domestic goods. 130
The literature remains unsettled on the question whether, according to the case-law, an innocent legislative motive is able to exonerate the Member State in a case where the legislation produces an asymmetric impact to the detriment of imports. 131 This is the question that is familiar in connection with the WTO under the label "aims and effects". More importantly, it is also somewhat contentious whether the asymmetry rationale, as opposed to the diagonal test, applies only to Article 90(2) EC, 132 the functional equivalent to GATT Article III:2, second sentence, or also to Article 90(1) EC, 133 the provision matching GATT Article III:2, first sentence.
In the area of sex discrimination, for instance in Article 141 EC, 134 the Court of Justice has developed a consistent jurisprudence under the term "indirect discrimination", outlawing sex-neutral differentiations which hit predominantly one sex and do not serve a legitimate objective. 135 Leaving aside the possibility of justification, it becomes apparent how far a diagonal approach would lead: even a minimum age for the purchase of alcohol would result in a prima facie sex discrimination, because there are women above the age treated better than men below the specified age. Transferred to the area of national and most-favored-nation treatment, one conceptual difference, admittedly, weakens this reductio ad absurdum: these obligations mostly136 contain the limiting notion of likeness, similarity or substitutability, which narrows their scope.
122 Article 90 (ex Article 95) of the Treaty Establishing the European Community, 25 March 1957, 298 U.N.T.S. 3, as amended (1997 O.J. (C 340) 173-308), provides:
No Member State shall impose, directly or indirectly, on the products of other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products.
Furthermore, no Member State shall impose on the products of other Member States any internal taxation of such a nature as to afford indirect protection to other products.
123 For instance in Case 243/84, John Walker [1986] ECR 875, para. 23 and in Case 200/85, Commission v. Italy [1986] ECR 3953, paras. 21, 24. See also Case 196/85, Commission v. France, [1987] ECR 1597, para. 10. For an analysis of the case-law see Barbara Balke, Steuerliche Gestaltungsfreiheit der Mitgliedstaaten und freier Warenverkehr im Europäischen Binnenmarkt 109-129 (1998); Paul Farmer & Richard Lyal, EC Tax Law 69, 70, 75 (1994); Massimiliano Danusso & Ross Denton, Does the European Court of Justice Look for a Protectionist Motive under Article 95?, 1990 LIEI, No. 1, at 67, 87; Wolfgang Schön, Der freie Warenverkehr, die Steuerhoheit der Mitgliedstaaten und der Systemgedanke im europäischen Steuerrecht, 36 Europarecht 341, 351-352 (2001).
124 See supra section IV.C.
125 A.J. Easson, Taxation in the European Community 61-63 (1993); Paul Farmer & Richard Lyal, supra note 123, at 69, 75; Barbara Balke, supra note 123, at 128-129; Wolfgang Schön, supra note 123, at 351.
126 E.g. Gregory P. Lubkin, Is Europe's Glass Half Empty or Half Full? Alcoholic Beverages Taxation and the Development of a European Identity, 3 Colum. J. Eur. L. 357, 395-396 (1997/98).
127 Wolfgang Schön, supra note 123, at 344.
128 Id., at 346, referring to Case 45/75, Rewe-Zentrale, [1976] ECR 181, para. 15; Case 127/75, Bobie, [1976] ECR 1079, para. 4; Case C-152/89, Commission v. Luxembourg, [1991] ECR I-3141, paras. 18-20; Case C-213/96, Outokumpu, [1998] ECR I-1777, paras. 39-41.
129 A.J. Easson, supra note 125, at 62, referring to Case C-132/88, Commissionn v. Greece, [1990] ECR I-1567, paras. 18-20, where the Court reasoned that the tax encouraged consumers to purchase the less heavily taxed smaller cars, one tax category of which included only cars of foreign manufacture and the other both imported and domestic cars. For a different reason why a regulatory differentiation, which in fact disfavors only imported products, may nevertheless be permitted under the asymmetry approach, see the discussion infra in section X.B, text accompanying notes 212-218, and A.J. EASSON, supra note 125, at 64.
130 Paul Farmer & Richard Lyal, supra note 123, at 74; A.J. Easson, supra note 125, at 62.
131 Massimiliano Danusso & Ross Denton, supra supra note 123, at 80, 82 and 87; Wolfgang Schön, supra note 123, at 351-352. Skeptical: A.J. Easson, supra note 125, at 64; objecting: Barbara Balke, supra note 123, at 121, note 121.
132 Renée Barents, Nieuwe ontwikkelingen met betrekking to het fiscale discriminatieverbod van artikel 95 EEG-Verdrag, 12 Sociaal-Economische Wetgeving 767, 773-776 (1991). Also, although less clearly, Steven R. Swanson, The Concepts of Similarity and Indirect Protection under EEC Treaty Article 95, 15 Vand. J. Transnat'l L. 277, 285; and 299, 304, 306 (1982).
133 Barbara Balke, supra note 123, at 128, pointing to Case 140/79, Chemial Farmaceutici, [1981] ECR 1, para. 18 and Case 46/80, Vinal v. Orbat, [1981] ECR 77, para. 18. See also Case 127/75, Bobie, [1976] ECR 1079 and Wolfgang Schön, supra note 123, at 350-352.
134 The first paragraph of Article 141 EC (ex Article 119) provides:
Each Member State shall ensure that the principle of equal pay for male and female workers for equal work or work of equal value is applied.
135 Since Case 96/80, Jenkins v. Kingsgate [1981] ECR 911. Most clearly since Case 170/84, Bilka-Kaufhaus, [1986] ECR 1607, para 11; Case 171/88, Rinner-Kühn, [1989] ECR 2743, para. 16.
136 Not, however, the national treatment provision in Article 3.1 of the Agreement on Trade-Related Aspects of Intellectual Property Rights, Annex 1C of the WTO Agreement, supra note 1.