C-38/69

JUDGMENT OF 18. 2. 1970 — CASE 38/69

In Case 38/69

Commission of the European Communities, represented by its Legal Adviser, Cesare Maestripieri, acting as Agent, with an address for service in Luxembourg at the Chambers of its Legal Adviser, Émile Reuter, 4 boulevard Royal, applicant,

ν

Italian Republic, represented by Adolfo Maresca, Minister Plenipotentiary, Head of the Diplomatic Legal Department of the Ministry for Foreign Affairs, acting as Agent, assisted by Pietro Peronaci, Deputy State Advocate-General, with an address for service in Luxembourg at the Italian Embassy, defendant,

Application for a declaration that the Italian Republic has failed to fulfil its obligations under Decision No 66/532/EEC of the Council of 26 July 1966 and Article 23 (1) (c) of the EEC Treaty, concerning the imposition of customs duties on imports of unwrought lead, unwrought zinc and lead and zinc waste and scrap,

Issues of fact and of law

I — Facts territories comprised in the Community and that the duties taken as the basis for calcu­ Article 19 of the EEC Treaty provides that lating this average are, subject to certain duties in the Common Customs Tariff are exceptions, to be those applied by Member to be at the level of the arithmetical average States on 1 January 1957. of the duties applied in the four customs Under Article 20 of the Treaty the duties

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one month. Under the terms of the decision tion in the mining and metallurgical it was possible to extend this period on the industry of the sector concerned. basis of the requirements of the parliamen On 23 February 1966 the Italian Govern tary proceedings. ment requested the Commission to extend In a memorandum of 28 May 1969 the the isolation of the domestic market in lead Italian Government submitted to the and zinc to 30 June 1968 and to prepare Commission a statement of the economic time-tables and procedures for a gradual and social reasons which, in its opinion, reduction in intra-Community customs rendered it necessary to maintain a residuary duties and a gradual alignment with the customs protection on imports of lead and duties in the common external tariff to take zinc until 31 December 1969. place after 30 June 1968. By application lodged on 11 August 1969 By a decision of 6 July 1966 the Commission in accordance with the second paragraph authorized the Italian Republic under of Article 169 of the Treaty the Commission Article 226 to take certain protective brought before the Court of Justice the measures in respect of unwrought lead and alleged failures of the Italian Republic to

Customs Tariff for products other than The Commission waived its right to lodge those listed in Annex II to the Treaty a reply. (OJ No 165 of 21.9.1966, p. 2971/66) Upon hearing the report of the Judge- On 7 December 1967 the Italian Govern- Rapporteur and the views of the Advocate-

JUDGMENT OF 18. 2. 1970 — CASE 38/69

General, the Court decided that there was other Member States and by failing at no necessity for any preparatory inquiry. the same date to apply the duties in the Before the opening of the oral procedure Common Customs Tariff in respect of the parties produced several documents at unwrought lead and zinc imported from the request of the Court. third countries, the Italian Republic has The parties presented oral argument at the failed to fulfil its obligations under hearing on 26 November 1969 when they Articles 1 and 2 of Decision No 66/532/ replied to the questions of the Judge- EEC of the Council of 26 July 1966; Rapporteur. Order the Italian Republic to pay the The Advocate-General delivered his opinion costs.

at the hearing on 10 December 1969. The Italian Republic contends that the Court should: III — Conclusions of the parties Dismiss the application made by the Commission; The Commission claims that the Court Order the Commission to pay the costs. should:

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Lead Zinc

Duties Duties Duties Duties authorized applied authorized applied (Lire/Kg) (Lire/Kg) (Lire/Kg) (Lire/Kg)

From 1 January to 30 June 1968 5.25 17.5 3.75 12.5

As from 1 July 1968 0 7 0 5

Lead waste and scrap Zinc waste and scrap

From 1 January to 30 June 1968 19 27 15 20

As from 1 July 1968 8.25 18.9 8.25 14.9

JUDGMENT OF 18. 2. 1970 — CASE 38/69

Lead wa ste and scrap Zinc waste and scrap

Duties Duties Duties Duties authorized applied authorized applied

From 1 January to 30 June 1968 4% 7% 4.5 % 7.7 %

The Italian Republic does not contest the only concerned the acceleration in the time­ Commission's statement but puts forward table for achieving the objectives of the various arguments with which to reject the Treaty and thus could not be invoked in complaint of a failure to fulfil its obligations order to avoid the obligations resulting under the Treaty or the measures taken in directly from the Treaty itself, in this implementation thereof. instance from Article 23 (1)(c). In the light of the terms of the so-called Acceleration Decision, No 66/532/EEC, В — The justification for the maintenance of and its preliminary documents and in the protective measures accordance with the case-law of the Court, this statement can only be regarded as 1. The content and scope of the declaration confirmation that the anticipated abolition of the Italian delegation made at the of customs duties between Member States Council meeting on 26 July 1966 and the anticipated introduction of the Common Customs Tariff were not likely to The Italian Republic maintains that, as the hinder the future application of Article 226, Italian market in lead and zinc had been provided that the requirements of form and isolated since 1960 in pursuance of Protocol substance laid down for this purpose were No XV annexed to the agreements con­ satisfied. cerning List G, during the Council's meeting Decision No 66/532/EEC, the wording and on 26 July 1966 which adopted a decision to meaning of which are perfectly clear, pro­ bring forward the implementation of the vided for the total abolition of customs customs union by 18 months in relation to duties on imports of non-agricultural the dates provided for in the Treaty the products coming from the Member States Italian delegation had recorded in the and the application of the Common minutes a statement to the effect that its Customs Tariff in its entirety before the date acceptance of the acceleration decision did provided for by the Treaty, without laying not signify abandonment of the protective down any reservation or exception as measures in force in the lead and zinc regards industrial products. sector; this statement, which was accepted The Italian Republic maintains that the without objection by the other Member negotiations which resulted in the so-called States, must be interpreted as a refusal to Acceleration Decision, No 66/532/EEC, comply with the acceleration decision con­ were specific and independent negotiations cerning the customs union in the lead and held in pursuance of Article 235 of the zinc sector. The reference to Article 226 is Treaty. In such negotiations, which concern thus purely formal. objectives which go above and beyond the The Commission observes that, at all events, undertakings provided for in the Treaty, the the statement made by the Italian delegation Commission only has a power to put for­ at the Council's meeting on 26 July 1966 ward proposals, as the power to take de-

cisions belongs to the Member States alone. support for the application of Article 226 The statements of the Member States are of the Treaty entailing the isolation of the legislative in nature, as is the final agreement Italian market in lead and zinc. itself. In fact, such agreements, which This protocol is of great significance and supplement the Treaty, have legislative refers to Article 226 as a means of ensuring effect. Although they are presented in the that the Italian market in the products in form of decisions, they constitute inter question receives the necessary protection. national agreements having the same effect The Commission, basing its arguments on as a protocol annexed to the Treaty. the case-law of the Court, maintains that Additional statements appearing in the Protocol No XV does not lay down a minutes of the Council meetings during mandatory rule but merely provides a which such agreements are negotiated form guideline for it to follow without being part of the agreement and condition its bound by any specific legal obligation.

domestic market. These special features warranted the intro The effect of this decision could not deprive duction and maintenance of protective the Commission of its powers to authorize measures. They also enabled a wide pro protective measures under Article 226 of the gramme of rationalization to be imple Treaty. mented in the sector concerned. For reasons of a financial, economic and social nature, it was not possible to carry 2. The applicability of Protocol No XV out this programme according to the time table laid down.

JUDGMENT OF 18. 2. 1970 / CASE 38/69

precede the adoption of the measures re­ to by the Italian Republic they cannot quired by the situation existing in the lead justify measures taken unilaterally by that and zinc sector in Italy. State in a departure from the rules of the The Commission considers that however real Treaty or, as a result, legalize a posteriori the economic and social difficulties referred the resultant breach.

Grounds of judgment

1 By application of 11 August 1969 the Commission requested the Court under Article 169 of the EEC Treaty to declare that:

(1) 'By applying, during the first six months of 1968, to imports from other Member States of unwrought lead (tariff heading No 78.01 A), unwrought zinc (tariff head No 79.01 A), lead waste and scrap (tariff heading 78.01 B) and zinc waste and scrap (tariff heading No 79.01 B), customs duties which exceeded by 15 per cent those applied on 1 January 1957, and to imports of the same products from third countries customs duties in excess of those applied in practice on 1 January 1967, as reduced by 60 per cent of the difference between the latter duties and those in the Common Customs Tariff, the Italian Republic has failed to fulfil its obligations under:

(a) Article 1 of Decision No 66/532/EEC of the Council of 26 July 1966 concerning the abolition of customs duties, the prohibition of quantitative restrictions between Member States and the application of the duties in the Common Customs Tariff for products other than those listed in Annex II to the Treaty;

These protective measures were extended beyond the period of six years envisaged by Protocol No. XV on the last occasion by Decision No 66/429/EEC of the Commission of 6 July 1966 (OJ 1966, p. 2543).

This decision, which was still in force when the Council adopted the Acceleration Decision, ceased to have effect on 31 December 1967.

4 By decisions of 20 March 1968 and 16 July 1969 the Commission rejected sub­ sequent applications by the Italian Government for a further extension of these protective measures.

5 Without disputing the accuracy of the facts in relation to which it is criticized by the Commission, the defendant considers that its action is justified by a set of circumstances existing prior to the entry into force of Acceleration Decision No 66/532/EEC of 26 July 1966 (OJ 1966, p. 2971), taking into account the special conditions which in Italy characterize the production sector in question. According to the defendant, both during the discussions which preceded the Acceleration Decision of 26 July 1966 and during the 191st meeting of the Council, held on 22, 23, 26 and 27 July 1966 during which it was adopted, the Italian delegation expressed reservations concerning lead and zinc in order to ensure that the Acceleration Decision should not become 'a factor liable to hinder a possible extension of the measures to protect lead and zinc, even under Article 226 of the Treaty'.

6 The defendant maintains therefore that these various factors clearly show its acceptance of the decision of 26 July 1966 to be subject to the proviso that lead and zinc would enjoy appropriate protection until 31 December 1966 and these reserva­ tions justify the maintenance in force of the rates criticized by the Commission.

10 The Acceleration Decision was taken by virtue of Article 235 which provides that 'If action by the Community should prove necessary to attain, in the course of the operation of the Common Market, one of the objectives of the Community and this Treaty has not provided the necessary powers, the Council shall, acting unanimous­ ly on a proposal from the Commission and after consulting the Assembly, take the appropriate measures'. The power to take the measures envisaged by this article is conferred, not on the Member States acting together, but on the Council in its capacity as a Community institution. Under Article 235 the Council acts on a proposal from the Commission and after consulting the Assembly. Although the effect of the measures taken in this manner by the Council is in some respects to supplement the Treaty, they are adopted within the context of the objectives of the Community.

11 In these circumstances, a measure which is in the nature of a Community decision on the basis of its objective and of the institutional framework within which it has been drawn up cannot be described as an 'international agreement'.

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12 The scope and effect of the Acceleration Decision must be assessed in the light of its terms and therefore cannot be restricted by reservations or statements which might have been made in the course of drawing up the measure concerned. Although formally addressed to the Member States alone this decision is intended to have repercussions on the Common Market as a whole and it conditions or prepares for the implementation of measures which are directly applicable within the Member States as a consequence of Article 9 (1) of the Treaty and, as regards relations with third countries in particular, of Regulation No 950/68/EEC of the Council of 28 June 1968 concerning the Common Customs Tariff (OJ, L 172 of 22. 7. 1968, p. 1).

Costs

Under the terms of Article 69 (2) of the Rules of Procedure the unsuccessful party shall be ordered to pay the costs.

JUDGMENT OF 18. 2. 1970 — CASE 38/69

The defendant has failed in its submissions.

On those grounds,

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the parties ; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Articles 9, 14, 19, 20, 23, 169, 171, 189, 226 and 235; Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community; Having regard to the Rules of Procedure of the Court of Justice of the European Communities ;

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obligations under Articles 1 and 2 of Decision No 66/532/EEC of the Council of 26 July 1966;

3. Orders the defendant to pay the costs.

Lecourt Monaco Pescatore

Donner Trabucchi Strauß Mertens de Wilmars

Delivered in open court in Luxembourg on 18 February 1970.

in certain cases, on imports of lead waste and scrap (heading No 78.01 B) and zinc 1. Lead and zinc, which are products of waste (heading No 79.01 B) constitute a acute concern for the Italian Republic and failure to fulfil its obligations both under which hold an important place in the the Acceleration Decision of the Council of economy of the least developed areas of 26 July 1966 and Article 23(1)(c) of the Sardinia, appear in List G annexed to the Treaty. Treaty of Rome. For this reason the duties There is no disagreement about the duties applicable to them in the Common Customs actually applied during the period in Tariff were to be determined by negotiations question — I shall deal with this matter in between the Member States; they were in detail later. However, for reasons developed fact so determined by an agreement of 2 in its defence and during the oral procedure, March 1960. At the same time, however,

1 — Translated from the French.