C-9/73

HAUPTZOLLAMT LÖRRACH,

on the interpretation of Articles 5 and 107 of the Treaty and of the Resolution of the Council of 22 March 1971 concerning the establishment in stages of an economic and monetary union within the Community (OJ C 28 of 27 March 1971, p. 1) as well as on the interpretation and validity of Regulation No 974/71 of the Council of 12 May 1971 concerning certain measures of conjunctural policy to be taken in agriculture following the temporary widening of the margins of fluctuation for the currencies of certain Member States (OJ L 106 of 12 May 1971, p. 1) and of Regulations Nos 1013/71 (OJ L 110 of 18 May 1971, p. 8), 1014/71, (OJ L 110 of 18 May 1971, p. 10) and 501/72 (OJ L 60 of 11 March 1972, p. 1) of the Commission,

THE COURT

composed of:

R. Lecourt, President, A. M. Donner and M. Sørensen, Presidents of Chambers, R. Monaco, J. Mertens de Wilmars (Rapporteur), P. Pescatore, H. Kutscher, C. Ó Dálaigh and A. J. Mackenzie Stuart, Judges,

Advocate-General: K. Roemer Registrar: A. Van Houtte

I — Facts and procedure to the detriment of German and Dutch agricultural producers and disturbance The facts and procedure may be in the exchange of agricultural products, summarized as follows: the Council, in its Resolution of 9 May The system of organization of the 1971, decided to enact 'without delay, the agricultural markets and, in particular, appropriate measures as provided for in the fixing of target, threshold and Article 103 of the Treaty'. intervention prices, from which are In implementation of this Resolution the derived the computations of levies and Council, by Regulation No 974/71, set refunds, is based upon fixed parities between the currencies of the various up a system of compensatory amounts Member States relative to the unit of payable on imports and exports in account. respect both of exchanges between Member States and of exchanges with During the course of the year 1971 the third countries with the aim of increasing influx of fugitive capital into neutralizing the effect of monetary certain Member States, particularly the measures on the prices of basic products Federal Republic and the Netherlands, in respect of which provision is made for led the Council in its Resolution of 9 intervention measures. May 1971 (OJ C 58 of 10 June 1971, p. 1) concerning the monetary position to The detailed rules for the application of indicate its understanding of the this Regulation were enacted by the situation, 'so that, in certain cases these Commission in its Regulation No 1013/71 of 17 May 1971 (OJ L 110 of countries may, for a limited period, widen the margins of fluctuation of the 18 May 1971, p. 8) whilst the compensatory amounts themselves were rates of exchange of their currencies in relation to their present parities'; an laid down by various Regulations, operation referred to as 'floating' the particularly, as regards the importation currencies. which gave rise to the main action, by Regulation No 501/72 of the As, in order to set and calculate the level Commission of 9 March 1972 (OJ L 60 of prices within the framework of the of 11 March 1972, p. 1). organization of the agricultural markets, the former parities were maintained, On the occasion of the importation into even in respect of the Deutschmark Germany on 15 March 1972 of 7 247 and the guilder, the prices have kilogrammes of Emmentaler and remained in principle unchanged within Gruyère cheese from Switzerland by the the Community, at least in respect of firm Carl Schlüter, plaintiff in the main products for which intervention prices action, these products were, in addition are fixed and for products the price of to the levy and the turn-over tax, which depends upon these. These prices, subjected to the payment of a expressed in DM or in guilders have compensatory sum of 3 297.39 DM, that however been subject to a reduction is to say, 45.50 DM per kilogramme. corresponding to the effect of the actual The plaintiff in the main action, revaluation of the said currencies. disputing the validity of Regulation No As this situation gave rise to 974/71, started an action before the expectations of distortion of competition Finanzgericht of Baden-Württemberg for

the annulment of the demand for the 5. Were Member States on 15 March compensatory duty, following which that 1972, prohibited from having floating tribunal, by an order of the 8 November rates of exchange by reason of 1972 referred the following questions to (a) Article 107 of the EEC Treaty the Court: (b) the Resolution of the Council of 1. Is Regulation (EEC) No 974/71 of the 22 March 1971, on the gradual Council of 12 May 1971 valid in so establishment of an economic and far as it authorizes levying monetary union within the compensatory amounts on imports Community from third countries (Article 1)? (c) Article 5 of the EEC Treaty? As a subsidiary question; The Reference of 8 November 1971 was 2. Is Article 2 of Regulation (EEC) No received at the Court Registry on 19 974/71 valid in so far as February 1973. compensatory amounts are related Upon hearing the preliminary report of solely to the relationship of the DM the Judge-Rapporteur and the opinion of to the US dollar? the Advocate-General, the Court decided that there was no need for any As a subsidiary question; preparatory inquiry. 3. Are Regulation (EEC) No 974/71 and The plaintiff in the main action, the implementing Regulations Nos German Government, the Commission 1013/71 and 1014/71 of the and the Council submitted written Commission of 17 May 1971 and No observations. 501/72 valid in so far as they provide, in trade with third countries, for the The oral observations of the plaintiff in the main action, represented by Mr Ehle, levying of compensatory amounts on of the Cologne Bar, of the Commission, Emmentaler and Gruyère cheese of represented by its legal adviser, Mr tariff No 04.04 which, together with the levy, exceed the bound maximum Gilsdorf, of the Council, represented by customs rates of GATT? its Agent, Mr Lambers and of the German Government, represented by Mr As a subsidiary question; Seidel, Regierungsdirektor, were made at the hearing on 27 June 1973. 4. Was the authority contained in Regulation (EEC) No 974/71 for The Advocate-General presented his levying compensatory amounts in opinion at the hearing on 11 July 1973. trade with third countries in accordance with Article 8 (2) of this Regulation no longer effective on 15 II — Observations submit­ March 1972 because ted under Article 20 (a) the Member States were once of the Statute of the again applying the international Court rules on margins of exchange-rate fluctuation around official parity, The observations of the parties may be or summarized as follows :

action, the compensatory amounts legal basis by reference, inter alia, to the constitute prohibited customs duties or provisions of the Treaty relating to charges having an equivalent effect agriculture — recourse to such a unless a provision of the Treaty or of the procedure would, in the present case, be market organizations entitles the Council futile, as the consultation with the to take exceptional measures. European Parliament required by the Such an exception could not, in this third subparagraph of Article 43 (2) did case, be based on Article 103 (2).

Regulation No 509/73 of 23 February relation to the Deutschmark. 1973 (OJ L 50 of 23 February 1973, p. The plaintiff claims that the collection of 1.) amending Regulation No 974/71 compensatory amounts of the order of upon Articles 28, 43 and 235 of the 13 % at a time when the maximum Treaty. difference between the Swiss franc and The plaintiff in the main action also the Deutschmark amounted to 3 % rejects any possible reference to Article infringes the prohibition of charges 113 of the Treaty, for the Regulation in having an effect equivalent to customs dispute deals not with problems of duties, included in Article 19 of commercial policy but with problems of Regulation No 804/68 of the Council of rates of exchange, which under Article 27 June 1968, establishing a common 107 fall basically within the powers of organization of the market in milk and the Member States. milk products (OJ L 148 of 28 June

SCHLÜTER v HAUPTZOLLAMT LÖRRACH

intervention, as well as the limitation of On the third question losses incurred by producers. Whilst compensatory amounts which are The rate of customs duty imposed upon confined to neutralizing the effect of Emmentaler and Gruyère cheese on revaluation in relation to the currencies importation has been bound within the of third countries would have sufficed to framework of GATT (Annex II of protect Community producers, the Regulation (EEC) No 1/72 amending system used, on the other hand, gives Regulation No 950/68 in respect of the them additional protection, disturbs the Common Customs Tariff (OJ L 1 of 1 operation of the common market, leads January 1972, p. 375)).

Government, which considered that the With regard to the calculation of extension of compensatory amounts to compensatory amounts, the plaintiff in all agricultural products infringed Article the main action considers that it is not 12 of the Treaty, show the relationship possible to justify the system adopted by between these amounts and customs invoking practical and administrative duties. Representations were even made considerations. According to the on the subject by the United States in plaintiff, account should have been taken accordance with Article XXIII, of the fact that, for the types of cheese in paragraph 2 of GATT, and these question, there are no intervention prices moreover led the Community to suppress and that it would be possible to the compensatory amounts in respect of determine specific compensatory many of the products covered by GATT, amounts for the principal third States and eventually in April 1973 in respect trading with the Community, or at the of Emmentaler and Gruyère cheese also.

As to the question whether, contrary to Agreements of 18 December 1971 fixed the opinion of the Court making the new margins, particularly for the Reference, the application of bound Deutschmark, while requesting the duties constitutes more than just an Bundesbank to intervene in order to obligation of public international law, maintain parity within these new the plaintiff in the main action points margins. The absence of notification of out that the judgment of the Court of 12 new parities is of no importance as far as December 1972 (joined cases 21 to the application of Article 8 of Regulation 24/1972 International Fruit Cy., Rec. No 974/71 is concerned. 1972) was not a mere pronouncement on According to the plaintiff, the second the direct effect of a single provision part of the fourth question must have (Article XI) of the General Agreement. sprung from a misinterpretation of Article II on the other hand, taken Article 8 (2), which did not refer to a together with the list annexed to the return to former parities. Agreement, in which the duties were laid down, constitutes a clear and unreserved On the fifth question rule which can be invoked by interested parties independently of the reaction of The freeing of rates of exchange the State concerned in this case, Switzer­ infringed Articles 5 and 107 of the land. Treaty. The latter made provision only with respect to modifications of parity, In any case the binding of the duty in floating being permitted by the practice dispute arises from the list forming Annex II to the Common Customs of the IMF only for a short period. The Resolution of the Council and of the Tariff (as set out in Regulation No 1/72). It consequently forms an intergral Representatives of the Governments of the Member States of 22 March 1971 part of this Tariff and has the same direct effect. relative to the establishment in stages of an economic and monetary union within Moreover, the plaintiff in the main the Community included in paragraphs 6 action states, according to Article 14 (3) and 7 of heading No III a prohibition of of Regulation No 804/68 on the the freeing of currencies. This common organization of the market in prohibition was binding on the milk and milk products, levies cannot, Community and the Member States as for the products in respect of which the from the very day the Resolution was customs duty has been bound within the passed. This applies in particular to the framework of GATT, exceed the total said heading No III where the Council amount resulting from that binding. This and the Member States agreed to a series provision applies to all the charges of steps to be taken during a first stage imposed upon the products referred to of three years. by this Regulation and consequently to the compensatory amounts. B — On the observations of the Commission

The powers conferred by Articles 103 (2) stabilizing markets (Article 39 (1) (c)), or and 43 of the Treaty are cumulative. finally of Article 110 of the Treaty. Thus the measures taken may legitimately constitute an obstacle to the On the third question free movement of goods, provided that they are taken in the common interest The Commission, on considering the and left to the minimum necessary for compatibility of the compensatory the purpose. It is not possible to restrict amounts with the rules of GATT, takes the application of Article 103 by the view that the question is more referring to the possibility of invoking complex than the plaintiff in the main action thinks it to be. the more specific provisions of Articles

therein. The expression 'decide', in the balance of payments is not entirely paragraph 2 has no specific meaning and covered by the provision of GATT, the expression 'directives' in paragraph 3 although Articles XII and XVIII allow applies to the method of giving effect to the imposition of quantitative restric the measures decided upon. Article 155 tions of this nature. of the Treaty refers expressly to the The compensatory amounts may general powers for the implementation likewise fall within the provisions of the of its rules which the Council may exception in Article II paragraph 2 (a) confer upon the Commission. relating to charges 'equivalent to an internal tax imposed .

On the other hand when, on 16 achieve in practice and, in short, May 1972 it proposed that the products bound within the framework of GATT unrealistic. In any case, in choosing this criterion the Council did not go beyond should be exempted from the the margin of discretion with which, as a compensatory amounts, this was not for legislature, it was endowed, because the reasons arising from the incompatibility choice was based on relevant of these amounts with the General

any legal sanctions. Customs Tariff. Being lex posterior and lex specialis this Regulation derogates The same solution thus applies equally from the provisions of Regulation No to Article II, paragraph lb. It is not 950/68. Had the Council wished in the possible, in assessing the direct effect of implementing provisions to keep the this provision, to apply the criteria Commission to the duties bound under which have been developed in respect of GATT, an explicit clause to this effect the direct applicability of Community would have had to appear in Regulation law just as they stand, such, for example No 974/71. as the absence of enforcement measures to be taken by national authorities. In any event the Commission can always exempt products on the GATT list from The Commission admits, nevertheless payment of compensatory amounts. that the inclusion of duties bound within Regulation No 974/71 however, contains the framework of GATT among the no general exemption clause. annexes to the Common Customs Tariff (Regulation No 950/68, of the Council as amended by Regulation No 1/72) conferred a direct effect upon them. On the fourth question Interested parties were accordingly able to invoke them as against inconsistent The Commission considers that the subordinate Community provisions. But conditions in which the system of according to the Commission, the compensatory amounts was to cease to Regulation establishing the system of apply, as specified by Article 8 (2) of compensatory amounts is neither Regulation No 974/71, had not yet been subordinate to, nor inconsistent with, fulfilled on 15 March 1972. Regulation the Common Customs Tariff. No 974/71 attempts to offset the difference between the real and official It is not inconsistent because both by parities because the latter, by virtue of their function and by their legal basis the Regulation No 129/62, determine the compensatory amounts are distinguish­ whole common agricultural policy. able from the customs duties properly so called, referred to in the Common On the 15 March 1972, the Member Customs Tariff. They constitute at the States had still not re-applied the very most, 'charges having equivalent international rules since the neither effect' to customs duties, which, had it central rate nor the fluctuations due to been desired to link them with the floating were in conformity with them. principle of compliance with the system The fact that it was clear that the of duties bound under GATT, would Member States would not return to the have had to be made the subject of a former parities, has, according to the

Commission, no importance, as the The Commission suggests a reply to the 'international rules' mentioned in Article effect that an examination of the first 8 of Regulation No 974/71 are directed two questions has not shown any factor towards the return to parities fixed calculated to call in question the validity within definite margins of fluctuation, of Regulation No 974/71 in so far, either, and not a return to the former parities. as it permits the collection of compensatory amounts payable or On the fifth question imports from third countries or uses the fluctuations of parity of the DM with The Commission considers that, even if reference to the dollar for fixing it were admitted that floating parities compensatory amounts. could not in the long term be reconciled Furthermore Regulation No 974/71 of with the monetary concepts underlying the Council and Regulations Nos the EEC Treaty, Article 107 contains no 1013/71 and 501/72 of the Commission absolute prohibition preventing Member are valid even if the compensatory States from freeing their exchange rates. amounts levied on imports from third No such prohibition moreover is, countries exceed the customs duties included in the European Monetary bound within the framework of GATT Agreement of 5 August 1955 or in the (third question). Agreement relating to the IMF, the provisions of which have furthermore no The reply to the fourth question ought direct effect. to be that the authority for levying compensatory amounts contained in It is true that the freeing of rates has Regulation No 974/71 was still valid on unfortunate consequences for the 15 March 1972. agricultural policy, the latter being based as a matter of fact on a system of fixed Lastly, on the fifth question, the Commission considers that neither parities. It could not, however be deduced from this that the system is Article 107 of the Treaty nor the Resolution of the 22 March 1971 nor unalterable. The objective of a single agricultural market has been achieved Article 5 of the Treaty contain any before that of the economic and prohibition of the freeing of rates of monetary union. However even if the exchange. two objectives no longer coincide it is necessary to provide the necessary rectifications. C — Observations of the Council

between the Community and Switzer Common Customs Tariff is only by way land within the framework of Article of information, there would have to be XXVIII of GATT, the Council takes the an express provision to link them to the view that the compensatory amounts may bound tariffs. be considered not to form part of the In any event the Council was able by duties in respect of which tariff Regulation No 974/71 to make provision concessions have been agreed. They are for exceptions to the subject matter of not a new tax but do no more than Regulation No 950/68 such provision as compensate for the reduction in the a lex specialis taking precedence over the previous tax due to monetary latter Regulation.

products. No such exemption of a On the first question general nature has been brought into force as can be seen moreover from the According to the German Government Council's refusal to adopt the the 'conjunctural policy' which is Commission's proposal of 16 May 1972 mentioned in Article 103 of the Treaty to that effect. has as its specific purpose the Moreover the Council considers that the safeguarding of general economic considerations enunciated by the Court development by measures intended to in joined cases 21 to 24/72 (Judgment of control the periodic upward and 12 December 1972, International Fruit downward movements occuring during the course of such economic Cy.), refusing to ascribe a direct effect to

It is quite correct, according to the German Government, The Council considers that the position that the Treaty provides in Article 38 et is no different if Regulation No 974/71 seq. for special powers in agricultural is compared with the Common Customs matters, but there is no limitation in Tariff (Council Regulation No 950/68, these Articles to the powers available amended by Council Regulation No within the framework of Article 103. 1/72 of 20 December 1971) which The expression 'without prejudice to any repeated the concessions made within other procedure' in Article 103 (8) tends the framework of GATT. to show the existence of cumulative In the first place the Council does not powers so that action based on Article believe that the compensatory amounts 103 could apply to all sectors and the fall within the provisions of the measures taken could be adapted to each Common Customs Tariff. Their legal individual case.

SCHLÜTER v HAUPTZOLLAMT LÖRRACH

Rec. 1972). influenced first by the freeing of rates of exchange, and secondly by the Neither is the system established by organizational structure of the agricul Regulation No 974/71 contrary to the tural markets. common interest since it covers the Though it is true that the Community greater part of the agricultural sector, also is bound by the terms of the and even prevents serious imbalances General Agreement on Tariffs and between the various Member States. Trade, interested parties cannot, even so, pray in aid a possible breach of the said With regard to the form of this Agreement, since, in the view of the Regulation, the German Government German Government, the Court's recalls that under the terms of Article judgment of 12 December 1972 (joined 103 of the Treaty, the Council was not cases 21 to 24/72, International Fruit bound to use either a decision or a Cy.) established that the Agreement

It was the agricultural prices expressed in units of Council's duty to find a solution account continued to be converted on coinciding as closely as possible with the the basis of the former parities. monetary fluctuations, and yet remaining The central rates consequent upon the practicable. This last requirement Washington Agreements are distinct justified the choice of a comprehensive from the official parities within the system rather than a system related to meaning of the Agreement setting up the the fluctuations of each currency of third International Monetary Fund.

On the fifth question a system which offered the best guarantees of accuracy, efficiency and The only limit on the powers of Member feasibility. States as to their policies regarding rates

Grounds of judgment

1 By Order dated 8 November 1972, lodged at the Registry on 19 February 1973, the Baden-Württemberg Finanzgericht referred to the Court for a preliminary ruling the question of the interpretation and validity of various provisions contained in Regulation No 974/71 of the Council of 12 May 1971, concerning certain measures of conjunctural policy to be taken in agriculture following the. temporary widening of the margins of fluctuation for the currencies of certain Member States (OJ L 106, 12. 5. 1971); also of Regulations of the Commission Nos 1013/71, 1014/71 (OJ L 110, 18. 5. 1971) and 501/72 (OJ L 60, 11. 3. 1972) implementing the former; and finally on the interpretation of Articles 5 and 107 of the EEC Treaty and the Resolution adopted by the Council and Government Representatives of the Member Sta­ tes of 22 March 1971 on the establishment in stages of an economic and monetary union within the Community (OJ C 28, 27. 3. 1971, p. 1).

2 On 15 March 1972 the plaintiff in the main action imported 7 247 kg of Emmentaler and Gruyère cheese from Switzerland into the Federal Republic of Germany and was charged, under Regulation No 974/71, compensatory amounts at the rate of 45.50 DM per 100 kg, a sum calculated, for products

SCHLÜTER v HAUPTZOLLAMT LÖRRACH

under heading 04.04 of the Common Customs Tariff, by reference to the Annexes to Regulation No 501/72 of 9 March 1972 fixing the compensatory amounts applicable at the time of the importation in question.

The plaintiff brought an action in the Finanzgericht disputing the amounts charged, claiming that the system of compensatory amounts introduced by Regulation No 974/71 was incompatible with the Treaty.

But while these prices thus remained unaltered in theory, they were in fact reduced — particularly when they were expressed in DM — in proportion to the effects of the de facto revaluation of this currency, causing disturbances in agricultural trade detrimental to producers and capable of disrupting the intervention system established by Community legislation.

JUDGMENT OF 24. 10. 1973 — CASE 9/73

5 As a result, the Council decided that the measures to be taken immediately should consist in the introduction of a system of compensatory amounts which these Member States would be authorized to charge on imports and grant on exports in their trade both with other Member States and with third countries, with a view to offsetting the effects of the monetary measures on the price of basic products for which intervention prices have been imposed, and for agricultural products whose price depends on the price of those products.

6 Under Article 2 of Regulation No 974/71, the compensatory amounts are obtained by applying to the prices of agricultural products covered by intervention arrangements the percentage difference between the official parity and the true parity of the national currency in relation to the US dollar. For the other products covered by Regulation No 974/71, the compensatory amounts are equal to the incidence, on the price of the products concerned, of the application of the compensatory amount to the price of the product on which they depend. Moreover, according to the last sentence of Article 1 of the Regulation, compensatory amounts can be charged only where the monetary measures would lead to disturbances in trade in the agricultural products mentioned.

9 The circumstances outlined above and their continuing development must be borne in mind in considering the intervention made by the Council and the Commission.

I — Question one

10 The first question asks whether Regulation No 974/71 is valid in so far as it authorizes the charging of compensatory amounts on imports from third countries.

(a) The legal basis of Regulation No 974/71

11 This question concerns, first, whether the validity of the above Regulation could be affected by the fact that it is based on Article 103 of the Treaty, which does not touch on the common agricultural policy, the latter being governed by the specific provisions of Articles 38 to 47 of the Treaty, and that in any case, the said Article 103 authorizes only the adoption of conjunctural measures, which the disputed measures are not.

12 Article 40 of the Treaty states that Member States shall bring the common agricultural policy into force by the end of the transitional period at the latest and that, in order to attain the objectives set out in Article 39 a common organization of agricultural markets is to be established. The same Article provides that this common organization may include any measures required and in particular regulation of prices, aids for production and marketing, storage and carry-over arrangements and common machinery for stabilizing imports and exports.

The real object envisaged by Article 103 is the coordination of Member States' conjunctural policies, and, according to the terms of paragraph 2 of that Article, the adoption of common measures appropriate to the situation.

14 The floating of the exchange rates for the German and Dutch currencies, deemed essential if the wave of speculative capital into the Federal Republic and the Netherlands was to be checked, imperilled the unity of the common market and made measures designed to safeguard the machinery and objectives of the common agricultural policy imperative.

The introduction of compensatory amounts was not intended to provide extra protection, but to maintain uniform prices, the foundation of the present organization of the markets, despite the temporary departure from fixed parities, thus preventing the collapse of the intervention-price system and preserving the normal flow of trade in agricultural products both within the Community and with third countries.

These measures, intended to compensate temporarily for the harmful effects of national monetary measures, so that the process of economic integration may meanwhile continue its progress, are of an essentially transitory nature, and would normally have had to be adopted by virtue of the powers conferred on the Council by Articles 40 and 43 and in accordance with the procedures set out therein, in particular after consulting the Assembly.

15 However, owing to the time needed to give effect to the procedures laid down in Articles 40 and 43, a certain amount of trade might then have passed free of the Regulations, and this could jeopardize the relevant common organizations of the market.

17 Although by Article 103 (1) Member States are bound to regard their conjunctural policies as a matter of common concern, the wording does not preclude Community Institutions from having power to lay down themselves, without prejudice to other procedures set out in the Treaty, conjunctural measures on matters within the spheres of their competence.

On the contrary, Article 103 (2), by declaring that the Council may, 'acting unanimously... decide upon the measures appropriate to the situation', confers on that body — subject to the condition referred to above — the powers necessary to adopt, in principle, any conjunctural measures which may appear to be needed in order to safeguard the objectives of the Treaty.

Without some such faculty, the natural concomitant of any kind of economic administration, the Institutions of the Community would find it impossible to accomplish the tasks entrusted to them in this field.

18 The phrase 'measures appropriate to the situation' in Article 103 (2) means that as regards form too, the Council may choose whichever seems best suited to the case in hand.

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Subject to the requirement of a unanimous decision, Article 103 (2) refers to the general procedures whereby the Council may exercise its powers, described in Articles 145, 155 and 189, including therefore its right to delegate to the Commission the implementation of Regulations it has laid down.

The plaintiff in the main action claims that the Council ought either to have varied the compensatory amounts in accordance with the rates of exchange against the dollar of the different currencies of countries importing from or exporting to the Federal Republic and the Netherlands, or to have computed them on the basis of a set weighted average dependent on the volume of trade.

SCHLÜTER. v HAUPTZOLLAMT LÖRRACH

21 Faced with the necessity of drawing up measures of immediate effect and applicable to all imports and exports of the products concerned, in a situation developing constantly and more or less unpredictably, the Council contrived to make an overall assessment of the advantages and disadvantages of the system to be introduced.

It was able to conclude that to vary the compensatory amounts according to the geographical origin of the products would have prejudiced the practicability of the scheme, largely because of the multiplicity of individual situations, such as those which might arise from the multiple-rate systems employed in some countries, or from the special characteristics of State-trading countries.

A system of this kind might in any case have tended to provoke diversions of trade, which would be difficult to regulate otherwise than by means of systems involving certificates of origin or by controlling the movements of goods in such a way as to inhibit their free circulation.

Furthermore, the choice of contractual currency made by the parties could have rendered the system nugatory.

Given the multiplicity and complexity of economic circumstances, such an evaluation would not only be impossible to achieve, but would also create perpetual uncertainty in the law.

An overall assessment of the advantages and disadvantages of the measures contemplated was justified, in this case, by the exceptionally pressing need for practicability in economic measures which are designed to exert an immediate corrective influence; and this need had to be taken into account in balancing the opposing interests.

23 The Court is not satisfied, then, that in weighing up the advantages and disadvantages of the system linking compensatory amounts to the relationship with the dollar of the national currency of each Member State concerned, and in opting for the system in force, the Council imposed burdens on traders which were manifestly out of proportion to the object in view.

III — Question three

24 The third question is whether the validity of Regulation No 974/71 and of the Regulations implementing it can be questioned on the ground that the disputed compensatory amount, plus the levy, exceeds in total the amount of bound duty for tariff heading 04.04, under the General Agreement on Tariffs and Trade (GATT), hereinafter referred to as the 'General Agreement'.

25 The customs duties applicable to imports of Emmentaler and Gruyère (heading 04.04 AI a ex 2) were bound at the rate of 7.5 u.a. per 100 kg under a tariff concession resulting from an Agreement concluded by the Community and Switzerland on 6 October 1969 in accordance with Article XXVIII of the General Agreement (OJ L 257, 13. 10. 1969, p. 3) and this rate is included under 'agreed duty rates' in Annex II of the Common Customs Tariff in force when the disputed imports were made (Regulation No 950/68 of the Council of 28. 6. 1968) amended by Regulation No 1/72 of the Council of 20. 12. 1971 (OJ L 1/72).

For this, one must bear in mind the meaning, the structure, and the wording of the General Agreement.

29 A particular feature of this Agreement, founded — according to the preamble — on the principle of negotiations undertaken on 'a reciprocal and mutually advantageous basis', is the broad flexibility of its provisions, especially those concerning deviations from general rules, measures which may be taken in cases of exceptional difficulty, and the settling of differences between the contracting parties.

For settling disputes, these measures comprise, as the case requires, written arguments or proposals which are 'to be accorded sympathetic consideration', inquiries to be followed up, if necessary, by recommendations, consultations or decisions by the contracting parties, including any authorizing certain contracting parties to suspend the application to others, of any concession or other obligation derived from the General Agreement, and lastly, where such a suspension occurs, an option given to the affected party to withdraw from the Agreement.

JUDGMENT OF 24. 10. 1973 — CASE 9/73

Finally, where as a result of some obligation assumed under the General Agreement or of a concession with respect to a preference, serious injury is caused or threatened to certain producers, Article XIX grants an opportunity for one of the contracting parties to suspend the obligation unilaterally, or to withdraw or modify the concession, either after consulting all the contracting parties, or even, in the absence of agreement between the contracting parties concerned, if there is urgency in the matter and by way of a temporary measure, without prior consultation.

We must therefore now see whether the compensatory amounts in question are compatible with the Common Customs Tariff.

33 Although the compensatory amounts do constitute a partitioning of the market, here they have a corrective influence on the variations in fluctuating exchange rates which, in a system of market organization for agricultural

SCHLÜTER v HAUPTZOLLAMT LÖRRACH

products based on uniform prices, might cause disturbances in trade in these products.

Diversion of trade caused solely by the monetary situation can be considered more damaging to the common interest, bearing in mind the aims of the common agricultural policy, than the disadvantages of the measures in dispute.

Consequently these compensatory amounts are conducive to the maintenance of a normal flow of trade under the exceptional circumstances created temporarily by the monetary situation.

The point raised by this question is whether or not the conditions imposed by Article 8 of Regulation No 974/71 for its ceasing to be applicable had been

JUDGMENT OF 24. 10. 1973 — CASE 9/73

met on that date by reason of the fact that, after the Washington Agreement of 18 December 1971, Member States had decided not to float their currencies, while accepting a margin of fluctuation for exchange around a rate, known as a central rate, greater than that permitted by the Bretton Woods Agreements.

36 Article 8 of Regulation No 974/71 provides that it shall cease to be applicable as soon as all the Member States concerned again apply the international rules on margins of exchange-rate fluctuation around official parity.

This provision envisages the abolition of compensatory amounts as soon as all the Member States have decided to observe again the original parities, or new parities declared to the IMF.

37 The Agreement of 18 December 1971 did not meet those requirements.

economic and monetary union should be interpreted as prohibiting Member States, at the time of the importation in dispute, from 'freeing their rates of exchange', that is, from floating their currencies.

39 One of the cardinal aims of the Treaty is to create a single economic region, free from internal restrictions, in which economic and customs union may be progressively achieved.

This requires the parities between the currencies of the various Member States to remain fixed; as soon as this requirements ceases to be met, the process of integration envisaged by the Treaty will be retarded or prejudiced.

It is therefore the duty of the Community Institutions and of Member States to cooperate in and to ensure the creation and maintenance of these conditions.

To that end, Article 3 (g) provides for the procedures to be followed in order to coordinate the economic policies of Member States and to remedy any disequilibria in their balances of payments.

But until the procedures envisaged by this provision have been put into operation, Articles 5 and 107 allow Member States, despite the duty imposed on each of them to regard its policy on rates of exchange as a matter of common concern, such freedom of decision that the obligation contained in these Articles 5 and 107 cannot confer on interested parties rights which the national courts would be bound to protect.

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the oral observations of the plaintiff in the main action, the Government of the Federal Republic of Germany, the Council and the Commission; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Articles 3, 5, 38 to 47, 103, 107, 110 and 177; Having regard to the General Agreement on Tariffs and Trade, especially Articles II and XXVIII; Having regard to the Agreement concluded between the European Economic Community and Switzerland on 6 October 1969; Having regard to Regulations of the Council Nos 804/68 of 27 June 1968, 823/68 of 28 June 1968, 974/71 of 12 May 1971, 1/72 of 20 December 1971 and 2746/72 of 19 December 1972; Having regard to Regulations of the Commission Nos 1013/71 and 1014/71 of 18 May 1971 and 501/72 of 9 March 1972;

THE COURT

in answer to the questions referred to it by the Finanzgericht of Baden-Württemberg by an order of that court dated 8 November 1972, hereby rules:

1. Examination of the questions referred has not revealed any elements capable of affecting the validity of Regulation No 974/71 of the Council nor that of Regulations Nos 979/72 and 980/72 of the Commission fixing the compensatory amounts applicable during the period indicated in the questions referred.

2. Neither Articles 5 and 107 of the Treaty, nor the Resolution adopted by the Council and Government Representatives of the Member States of 22 March 1971 on the establishment in stages of an economic and

Registrar President

OPINION OF MR ADVOCATE-GENERAL ROEMER

DELIVERED ON 11 JULY 1973 1

Mr President, refer to the opinion I gave on 26 June in Case 5/73. Members of the Court, I need only say now that the firms of The two joined cases referred for Schlüter and Rewe-Zentral, the plaintiffs preliminary ruling by the Finanzgericht in the main actions were affected by the Baden-Württemberg (Cases 9/73 and system of compensatory amounts 10/73) on 19 February 1973 were argued introduced, after the floating of the on 27 June in what might be called a exchange rates of the German mark and single oral proceeding. For this reason Dutch guilder, by Regulation No 974/71 and also because the content of the cases (OJ 1971, L 106). Accordingly the firm is in part indentical, in part closely of Schlüter, on importing Emmentaler related in their subject matter, I can and Gruyère cheese from Switzerland permit myself to deal with the into the Federal Republic of Germany on submissions in one combined opinion. 15 March 1972, had to pay a Moreover as the problems of the cases compensatory amount of DM 45-50 per now before us correspond in part with 100 kg of cheese under Regulation No those of Case 5/73, it appears to me 501/72 (OJ 1972, L 60) of the superfluous to specify the legal matters Commission in force at the time. The at issue in my indroduction. On these I same applied to the firm of

1 — Translated from the German.